WEBVTT - Surveillance: Subway Shooting with Mayor Adams 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa Brownwitz Jay Lee. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg 0:00:23.360 --> 0:00:30.040 dot com, and of course, on the Bloomberg Terminal. A 0:00:30.200 --> 0:00:34.280 conversation this morning with the Mayor of New York. Based 0:00:34.320 --> 0:00:38.080 on the briefing I'm from my law enforcement officials and 0:00:38.159 --> 0:00:41.200 based on the evidence that we were able to accumulate, 0:00:41.680 --> 0:00:45.080 he has now been upgraded to a suspect and we're 0:00:45.120 --> 0:00:48.680 asking all New york Is to assist us in his apprehension. 0:00:49.240 --> 0:00:52.720 H please do not approach him. If you see him, 0:00:52.840 --> 0:00:55.480 or if you know about his you know his whereabouts, 0:00:55.600 --> 0:00:58.880 please notify law enforcement. Can you tell us what you 0:00:59.240 --> 0:01:02.080 and all of your staff have learned about Mr James 0:01:02.400 --> 0:01:06.520 in the last six or seven hours. Well, you know 0:01:06.640 --> 0:01:10.040 this is moving and is extremely fluid of There is 0:01:10.080 --> 0:01:13.480 a host of evidence that we have been recovering of 0:01:13.680 --> 0:01:18.640 the NYPD, the FBI, as well as our state law 0:01:18.760 --> 0:01:23.520 enforcement entities have all collaborated together. I cannot say enough 0:01:23.800 --> 0:01:26.560 about the fast of growth that you have you are 0:01:26.640 --> 0:01:29.880 witnessing of. They had to piece together this case, from 0:01:29.920 --> 0:01:33.520 the band arrival here to the city, to the devices, 0:01:34.880 --> 0:01:37.840 things that we collected. They're doing a great job in 0:01:37.920 --> 0:01:40.560 bringing this person to justice. Mayor, I want to talk 0:01:40.680 --> 0:01:43.160 here about what we're gonna do. As Governor Hoco said 0:01:43.200 --> 0:01:46.319 about crime, you know the numbers in Chicago, you don't 0:01:46.319 --> 0:01:48.360 know the numbers here. I would say that you are 0:01:48.480 --> 0:01:52.600 arguably the most qualified politician in the nation with your 0:01:52.640 --> 0:01:57.080 experience from Bushwick years ago, after where you are now 0:01:57.120 --> 0:02:01.960 to talk about this First, I'm cameras in amendments and 0:02:02.080 --> 0:02:05.840 civil liberties and all that London is covered with cameras 0:02:06.240 --> 0:02:10.280 after terror events. Is this the tipping point where New 0:02:10.360 --> 0:02:14.280 York City one fifth of the cameras of London, begins 0:02:14.320 --> 0:02:18.960 to monitor the public like London. Well, I think that 0:02:19.000 --> 0:02:22.639 I've been talking about this since the time I took office. 0:02:22.680 --> 0:02:26.040 In January. I sent to my deputy mayor public safety 0:02:26.320 --> 0:02:29.440 across the globe to find out, how are we protecting 0:02:29.520 --> 0:02:32.560 human beings throughout the entire globe. And we are not 0:02:32.760 --> 0:02:36.520 going to sit back and allow this technology to exist 0:02:36.760 --> 0:02:38.959 and not protect the people of the city. And we're 0:02:38.960 --> 0:02:42.720 going to continue to explore it. Mayor Adams, you also 0:02:42.800 --> 0:02:46.680 had put more police forces into subway stations to protect 0:02:46.720 --> 0:02:48.640 the people of the city, given that this is just 0:02:48.760 --> 0:02:52.120 one in a series of events that have unfolded over 0:02:52.240 --> 0:02:55.840 the last year during the pandemic, even in subway stations, 0:02:55.880 --> 0:02:59.600 acts of violence. Clearly that failed yesterday. I know you've 0:02:59.600 --> 0:03:02.320 said you given yourself an incomplete on crime in the 0:03:02.360 --> 0:03:05.000 first one hundred days of your campaign. Is that incomplete 0:03:05.040 --> 0:03:08.960 looking more like a failure, less like anything of semblance 0:03:08.960 --> 0:03:12.520 of a passing grade. Well, we should be clear. We've 0:03:12.560 --> 0:03:14.280 been here before, as New York is. You know, I 0:03:14.360 --> 0:03:17.600 often talk about my mid eighties when I started into 0:03:17.639 --> 0:03:21.880 transit police ironically, and I'm aware of what it takes 0:03:21.960 --> 0:03:29.440 to turn around generational poverty, generational crisis, that violence in 0:03:29.480 --> 0:03:32.880 our cities. And then we cannot ignore the over proliferation 0:03:32.919 --> 0:03:37.560 of guns. Uh No, NYPD. My administration has not failed. 0:03:37.720 --> 0:03:41.800 We have removed eighteen hundred guns up the streets of 0:03:41.880 --> 0:03:45.640 our cities since being elected. Think about that. You are 0:03:45.960 --> 0:03:50.000 experts at the study of games. On January four, you 0:03:50.160 --> 0:03:52.600 stated you showed up at a press conference and said, 0:03:52.640 --> 0:03:55.720 we gotta do something about gangs. These kids three dead 0:03:55.760 --> 0:03:59.040 in the last twenty four hours, not the headlines like Brooklyn, 0:03:59.280 --> 0:04:02.600 but three days on Gates Avenue, on the Avenue, on 0:04:02.680 --> 0:04:06.440 Laconia Avenue. What are we gonna do about the gangs 0:04:06.480 --> 0:04:10.720 that pull these kids into crime and violence at a 0:04:10.800 --> 0:04:14.320 zero And it's called precision policing, not just throwing out 0:04:14.320 --> 0:04:19.000 a wide net. Having a precision approach to those who 0:04:19.160 --> 0:04:22.359 are trigger police and violent gangs. That is at the 0:04:22.400 --> 0:04:26.040 heart of our crisis. Uh, they're the mayor of New 0:04:26.120 --> 0:04:28.840 York City and an important conversation and we really need 0:04:28.880 --> 0:04:31.719 to be abundantly clear that we had a headline at 0:04:31.800 --> 0:04:34.760 that moment of the apprehension of the suspect, and that 0:04:34.920 --> 0:04:38.279 was corrected by ABC or sorry for that. That happens 0:04:38.279 --> 0:04:44.800 within the news flow that we have, as you know 0:04:44.880 --> 0:04:47.680 on Bloomberg surveillance. We've done everything we can to speak 0:04:47.680 --> 0:04:50.719 to experts into people who have lived so much of 0:04:50.760 --> 0:04:54.080 continental Europe and this new war. It is our honor 0:04:54.120 --> 0:04:57.720 now to speak to Nina Krascheva, professor of International Affairs 0:04:58.160 --> 0:05:00.800 at the New School, with the hair didge of her 0:05:00.880 --> 0:05:04.640 family far and back to World War Two. And you know, 0:05:04.800 --> 0:05:07.320 we don't have time to go into the story of 0:05:07.360 --> 0:05:09.559 your family coming out of the death of I believe 0:05:09.600 --> 0:05:13.720 your grandfather in World War Two. But we can speak 0:05:13.760 --> 0:05:16.920 to you with your academics at New School, your work 0:05:16.920 --> 0:05:21.120 at Princeton, of the mind of Vladimir Putin. As we've 0:05:21.120 --> 0:05:25.359 talked to Angela Stent, you have studied Putin and his 0:05:25.560 --> 0:05:30.640 affair with not the Russia the Soviet Union of Christeff 0:05:30.680 --> 0:05:33.880 but the Russia and Soviet Union of Stalin. What is 0:05:33.920 --> 0:05:38.520 the distinction of how Vladimir Putin looks at the early 0:05:38.640 --> 0:05:43.160 Soviet Union. Well, we thank you very much. We know 0:05:43.360 --> 0:05:46.479 that he doesn't like the early Soviet Union because he 0:05:46.600 --> 0:05:50.040 thinks it was an interruption of great imperial history when 0:05:50.520 --> 0:05:55.600 the Soviet Union was trying to become part of its 0:05:55.640 --> 0:06:00.680 own self, sort of as Stallion put it, um country 0:06:00.760 --> 0:06:05.200 within its own nation. So socialism or communism with um 0:06:05.839 --> 0:06:09.920 within one taken country Putin wants to be. And I 0:06:09.960 --> 0:06:12.120 disagree with a lot of experts who say he wants 0:06:12.160 --> 0:06:15.160 to recreate the Soviet Union. He actually wants to go 0:06:15.240 --> 0:06:19.480 back into history thousand years and the only reason he's 0:06:19.520 --> 0:06:22.120 interested in study, well, one of the reasons he's interested 0:06:22.160 --> 0:06:25.520 in studed because Studin was a gather of lands such 0:06:25.600 --> 0:06:28.440 as Catherine the Great, right such just Peter the Great. 0:06:28.560 --> 0:06:30.880 So he was a gather of lands, and he sees 0:06:30.920 --> 0:06:35.240 cruse Chef as somebody who gave away those lands. And 0:06:35.320 --> 0:06:38.200 if you need to be very brutal and very firm 0:06:38.480 --> 0:06:42.200 and very angry at the world together lands, Putin is 0:06:42.240 --> 0:06:46.200 going to be that. Mr Kristcheff was very much affiliated 0:06:46.200 --> 0:06:51.200 with Poland in the news this morning, Professor Kristcheva is Finland. 0:06:51.480 --> 0:06:54.200 I refuse to believe that Vladim and Putin will not 0:06:54.320 --> 0:06:58.800 focus on Finland, given this heritage of Leningrad and St. Petersburg. 0:06:59.279 --> 0:07:02.640 What is the embolism to Mr Putin of this new 0:07:02.680 --> 0:07:08.800 independence of Sweden and the eight under mild border of Finland. Well, 0:07:08.880 --> 0:07:12.520 it is you know, originally the Russians were saying, well, 0:07:12.520 --> 0:07:15.480 we're not afraid of Finland and Sweden becoming part of 0:07:15.560 --> 0:07:19.080 NATO because we have good relationship with them. I think 0:07:19.080 --> 0:07:22.440 the tone may be changing, but I think what's important 0:07:22.520 --> 0:07:26.560 here is that Putin trying to prevent NATO from expanding east, 0:07:26.720 --> 0:07:30.760 in fact made NATO even more expensional in in the 0:07:30.880 --> 0:07:34.200 East and that in the East, and that's that's what 0:07:34.480 --> 0:07:37.520 should really give them pause on the other hand, what 0:07:37.640 --> 0:07:41.320 I also know about Puttin is that once you challenge him, 0:07:41.560 --> 0:07:45.320 he's going to challenge back. So I think that it's 0:07:45.320 --> 0:07:49.600 about time for Sweden and Finland to think about NATO, 0:07:49.760 --> 0:07:52.840 because if Putin gets angry, he does get angry, and 0:07:52.920 --> 0:07:55.200 we did. We do see it. We we've seen it 0:07:55.240 --> 0:07:57.600 and we do see it in Ukraine. Now, Nina, does 0:07:57.640 --> 0:08:02.480 this end with regime change in Russia? Well, this is 0:08:02.520 --> 0:08:05.320 a very terrifying words to say, because we go to 0:08:05.400 --> 0:08:09.240 prison for this for even utter those words. Um No, 0:08:09.600 --> 0:08:13.239 I don't think it does. Uh, it may get less toxic, 0:08:13.320 --> 0:08:16.080 because Puttin is toxic. But I do think that. I mean, 0:08:16.120 --> 0:08:18.400 what happened now, and we've never seen it before, even 0:08:18.440 --> 0:08:22.240 under Stallion, because now the KGB over that security Forces, 0:08:22.280 --> 0:08:25.520 the FSB and Putting they are one and the same. 0:08:25.640 --> 0:08:28.760 Even on the Stallion they were sort of on parallel tracks. 0:08:28.800 --> 0:08:32.480 But starting with the brutal Dictator and f F KGB 0:08:33.080 --> 0:08:35.360 Uh it was a different name then, but security forces 0:08:35.400 --> 0:08:38.800 worked for him. Now Putting works with He is the 0:08:38.880 --> 0:08:41.720 security force. And so in this sense, even if the 0:08:41.760 --> 0:08:45.480 main hydroid at the top of it is the main dragon, 0:08:45.640 --> 0:08:48.160 is gone, the system will remain the system is not 0:08:48.200 --> 0:08:50.480 going to give itself up, so maybe they would be 0:08:50.559 --> 0:08:54.079 slightly better relationship with outside world. But for the Russians, 0:08:54.080 --> 0:08:57.200 it really doesn't look good inside. Well, let's talk about 0:08:57.240 --> 0:09:03.400 inside Russia, professor. Does domestic feeling within Russia a have 0:09:03.480 --> 0:09:06.600 a bearing on the Kremlin or on Vladimir Putin's decision 0:09:06.640 --> 0:09:11.600 making whatsoever? And be what is that feeling at this moment? Well, 0:09:11.640 --> 0:09:14.160 it was. It's really very interesting what happened because at 0:09:14.160 --> 0:09:17.360 the beginning was such a shock on February twenty and 0:09:17.720 --> 0:09:22.920 about fifty one of the country was just terrified, horrified, 0:09:23.240 --> 0:09:25.040 and a lot of people went, as you remember, went 0:09:25.120 --> 0:09:29.559 to protest, and then the state completely regrouped and basically 0:09:29.600 --> 0:09:33.679 any word of opposition now became a crime. Everything is 0:09:33.720 --> 0:09:36.839 a crime. People just stopped in the streets. My niece 0:09:37.160 --> 0:09:40.880 was arrested three times. Uh stopped and asked why are 0:09:40.920 --> 0:09:44.720 you here when you're um when your passport shows that 0:09:44.760 --> 0:09:47.600 you live in an entirely different part of part of Moscow. 0:09:47.760 --> 0:09:50.160 So it is like that, I mean, it's very stealininless 0:09:50.679 --> 0:09:53.480 right now, and so slowly but surely, with also great 0:09:53.520 --> 0:09:56.640 propaganda on TV that we are liberating with the Russian 0:09:56.760 --> 0:10:01.520 liberate our Ukrainian brothers from Nazi regime installed by the 0:10:01.600 --> 0:10:06.679 United States and NATO. Then now about support they as 0:10:06.679 --> 0:10:09.640 they call it special Operation. I mean, the numbers are fudge, 0:10:10.080 --> 0:10:12.040 but there is a lot of patriotism. And one of 0:10:12.080 --> 0:10:15.240 the patriotism part is because the sanctions now and not 0:10:15.360 --> 0:10:19.000 just financial and economic, they are cultural, they are society, 0:10:19.160 --> 0:10:22.960 they're humanitarian and everything, and so Russians have no other 0:10:23.040 --> 0:10:25.360 choice but to rally around the flat. Professor, I've got 0:10:25.400 --> 0:10:28.920 thirty seconds. We saw Vladimir Putin yesterday at the Cosmo 0:10:29.000 --> 0:10:32.000 Drome in the far east of Russia. Is he healthy? 0:10:34.440 --> 0:10:36.800 A lot of rumors once again, a lot of rumors. 0:10:36.840 --> 0:10:39.199 He doesn't look sick to me, but the people do, 0:10:39.400 --> 0:10:41.559 saying that the reason he went into Ukraine sort of 0:10:41.600 --> 0:10:46.040 follow up the cliff so quickly and on Februar, because 0:10:46.040 --> 0:10:49.240 he's rushing for something. I don't know that, but they're rumors. 0:10:50.160 --> 0:10:52.880 For Nina Kristcheffer, thank you so much for joining Bloomberg 0:10:52.960 --> 0:10:57.240 this morning, Professor kristef at the New School UH here 0:10:57.360 --> 0:11:00.000 in New York City, and of course, with their heritage 0:11:00.000 --> 0:11:03.160 age across so many decades of the Soviet Union in 0:11:03.200 --> 0:11:11.640 the Russian Federation. We're now gonna do what we do 0:11:11.760 --> 0:11:15.440 best at Bloomberg Surveillance, and that is speak to someone 0:11:15.559 --> 0:11:20.160 truly expert. Stephen Englanders, Global head of G ten FX 0:11:20.200 --> 0:11:24.240 Research at Standard Charter. They have a fantastic Bill Winter's 0:11:24.280 --> 0:11:28.120 remit to look at emerging markets and particularly the Pacific 0:11:28.240 --> 0:11:31.920 rim up to Japan. Stephen Englander, thank you so much 0:11:31.960 --> 0:11:36.280 for joining us this morning. The ramifications of a weaker 0:11:36.400 --> 0:11:41.520 Japanese yen now at one out to one thirty. What 0:11:41.640 --> 0:11:44.520 does that do to the degrees of freedom that Powell 0:11:44.640 --> 0:11:49.800 and Laguard have? How does weak yen redound back to 0:11:50.520 --> 0:11:54.559 and unraveling of the yen red down back to America? 0:11:54.760 --> 0:11:59.400 In Europe, well, I'd say that the yend is the 0:11:59.559 --> 0:12:03.320 very optional along with the euro where the central banks 0:12:03.320 --> 0:12:07.719 have some ambiguity with respect to how hockey is they 0:12:07.720 --> 0:12:10.520 want to be. In fact, the the b o J's 0:12:10.559 --> 0:12:14.840 downright dubbish ecbats kind of on offense. UM. I don't 0:12:14.840 --> 0:12:19.120 think it's going to change very much what the Fed does. UM. 0:12:19.160 --> 0:12:22.640 I don't think the impact on US inflation or global 0:12:22.720 --> 0:12:27.720 growth is that strong. Um And the end is weakness 0:12:27.840 --> 0:12:32.760 is probably partly reflecting Chinese economic growth weakness, and the 0:12:32.960 --> 0:12:37.360 you know, the Governor Coroda's adamant insistence that they can 0:12:37.360 --> 0:12:41.800 continue the same kind of policy with Japanese rates drifting 0:12:41.840 --> 0:12:45.040 further and further away from everyone else's. It is such 0:12:45.080 --> 0:12:49.079 an artificiality, particularly with this phrase of buying their own 0:12:49.200 --> 0:12:53.160 paper on board at the Bank of Japan. The standard 0:12:53.240 --> 0:12:57.600 charter view on this is Japan something that will amend 0:12:57.679 --> 0:13:01.280 in a melleable way to the shocks of weekend and 0:13:01.400 --> 0:13:04.199 all around it. In this experiment of y s C 0:13:05.240 --> 0:13:10.440 or do you worry that something could snap, Well, I'd 0:13:10.440 --> 0:13:13.880 say we're not very exciting about the continuation of y 0:13:13.960 --> 0:13:17.880 c C under current circumstances. Um. We we don't see 0:13:18.520 --> 0:13:21.240 a huge benefit to Japan from a weaker yen at 0:13:21.240 --> 0:13:26.240 this point in a world where um growth is is 0:13:26.320 --> 0:13:31.080 kind of limited by supply, having a weaker currency doesn't 0:13:31.400 --> 0:13:35.120 really increase your ability to supply more um. You just 0:13:35.160 --> 0:13:38.600 pay more for imports. Now, in the case of Japan, 0:13:38.800 --> 0:13:42.320 the they've wanted to get their inflation up um, you know, 0:13:42.400 --> 0:13:45.720 for many years, almost a decade or more. But the 0:13:45.800 --> 0:13:48.280 problem is that they want to get domestic inflation up, 0:13:48.400 --> 0:13:51.600 not kind of make the population poorer because the port 0:13:51.640 --> 0:13:54.640 costs are higher. So, you know, so we don't see 0:13:54.800 --> 0:13:58.560 kind of where this has ended. And I'm looking right 0:13:58.559 --> 0:14:00.520 now at a very confusing picture when you take a 0:14:00.520 --> 0:14:04.080 look at the at the words from the Bank of Japan, 0:14:04.160 --> 0:14:07.920 Governor Quarta versus other authorities that are concerned about what 0:14:07.960 --> 0:14:10.760 you said, which is rising costs. Quota meanwhile is the 0:14:10.800 --> 0:14:14.000 one who's doubling down uneasing policies and the sort of 0:14:14.200 --> 0:14:17.440 yield curve control. At what point will there be a 0:14:17.559 --> 0:14:19.960 break and will be he'd be forced to back away 0:14:20.040 --> 0:14:22.720 from the purchases that Tom was talking about and really 0:14:22.760 --> 0:14:28.200 pay more attention to the end. It may not be immediate. Um. 0:14:28.240 --> 0:14:30.840 You know, in a number of places, the you know, 0:14:31.120 --> 0:14:33.120 the limit to how weak the currency can be in 0:14:33.560 --> 0:14:35.760 g ten countries and sometimes how expensive it is to 0:14:35.840 --> 0:14:39.680 travel abroad. But there's not that much of it now. Um. 0:14:39.760 --> 0:14:44.080 Quite possibly the erosion of real wages to Japan is 0:14:44.120 --> 0:14:47.360 going to become a political issue down down the road, 0:14:47.440 --> 0:14:51.320 So that might end up being the limiting factor. And 0:14:51.760 --> 0:14:55.280 I think as um, you know, many have discussed. I mean, 0:14:55.440 --> 0:14:59.160 y CC is great if it's kind of demand shocks 0:14:59.240 --> 0:15:02.600 that you're kind of trying to control and if your 0:15:02.840 --> 0:15:07.160 forecast of developments are are good and it provides guidance 0:15:07.680 --> 0:15:11.720 when circumstances have changed as much as they have. UM, 0:15:11.760 --> 0:15:14.160 it's not clear that y CC is the tool that 0:15:14.160 --> 0:15:18.120 that really gives you the flexibility that you need. Steve, 0:15:18.200 --> 0:15:20.480 you mentioned that part of the end weakness may have 0:15:20.560 --> 0:15:22.680 to do with the growth story in China, and it 0:15:22.760 --> 0:15:25.160 strikes me that the b o J isn't the only 0:15:25.160 --> 0:15:28.600 central bank we're talking about keeping policy easy while everyone 0:15:28.640 --> 0:15:30.880 else is out there hawking. China is as well. We 0:15:30.880 --> 0:15:34.720 were just talking about China, uh, talking about further triple 0:15:34.760 --> 0:15:37.400 our cuts if needed. Why aren't we seeing more weakness 0:15:37.400 --> 0:15:42.080 for unman B that we're seeing for the Japanese end. Well, 0:15:42.120 --> 0:15:45.400 you know, there's lots of moving parts for China. I 0:15:45.520 --> 0:15:49.000 think that the entry of China into the global um, 0:15:49.880 --> 0:15:53.240 you know, financial system, the the opening up of China markets, 0:15:53.240 --> 0:15:59.120 so there is capital inflow into China and the it's 0:15:59.360 --> 0:16:01.840 very music. But you know the fact that they have 0:16:01.920 --> 0:16:05.880 such a large trade surplus on an ongoing basis, UM, 0:16:06.000 --> 0:16:08.880 they're just not spending much abroad. They usually travel a 0:16:08.960 --> 0:16:12.840 lot or not and UM, you know, their current account 0:16:12.840 --> 0:16:15.720 is strong and they have capital influence that usually you know, 0:16:16.400 --> 0:16:19.120 that's that's a good sign for the currency. Obviously. I 0:16:19.120 --> 0:16:24.080 think that there's some concerns about the impact of the 0:16:24.200 --> 0:16:28.600 latest COVID wave and their ability to UM grow and 0:16:28.880 --> 0:16:31.760 how aggressive the policy easing is going to be, but 0:16:31.800 --> 0:16:36.360 there's some tail winds to c n Y that you 0:16:36.360 --> 0:16:41.040 you can't ignore. Steve Angelders, thank you so much. Greatly appreciated. 0:16:41.080 --> 0:16:50.120 With Standard Charter Bank, we get a perspective, a change 0:16:50.160 --> 0:16:53.800 perspective on the American economy. Kathleen bus Johnstick joins us 0:16:54.160 --> 0:16:56.440 right now. We are thrilled for that here with mixed 0:16:57.000 --> 0:16:59.080 moments in the market. Kathy, thank you so much for 0:16:59.160 --> 0:17:02.800 joining us from Oxford Economics. Kathy, what has changed for 0:17:02.880 --> 0:17:06.480 you on the duration of high inflation in the last 0:17:06.520 --> 0:17:10.760 twenty four hours. Thanks Tom, happy to be with you. Um. 0:17:10.800 --> 0:17:14.040 You know, the numbers really just confirm our view that 0:17:14.080 --> 0:17:17.800 we've had for a while now that inflation is untolerably high, 0:17:17.880 --> 0:17:20.360 and you're hearing that from Fed officials. That's why they're 0:17:20.359 --> 0:17:22.920 saying we need to get to neutral quickly and then 0:17:23.160 --> 0:17:26.800 actually moved to restrictive. Now we're going to debate whether 0:17:26.840 --> 0:17:30.080 the peak and inflation for consumer prices that is is 0:17:30.160 --> 0:17:33.199 in whether it was March or April May, and we 0:17:33.280 --> 0:17:36.760 think it's probably April. But nevertheless, the real issue is 0:17:37.040 --> 0:17:40.760 how quickly does it decelerate um and and there I 0:17:40.800 --> 0:17:43.560 think most believe it's going to be much more gradually 0:17:44.080 --> 0:17:48.960 than previously thought. And we still see headline inflation still 0:17:49.000 --> 0:17:51.360 above five percent by the end of the year. So yes, 0:17:51.400 --> 0:17:54.480 it's a bit of a reprieve, but still really high 0:17:54.560 --> 0:17:58.040 and uncomfortably high for the Fed reserve. Kathleen, can you 0:17:58.080 --> 0:18:01.160 make that help us understand that can action between pp 0:18:01.359 --> 0:18:05.080 I and cp I Basically the prices that consumers pay 0:18:05.119 --> 0:18:07.840 in stores when they go out to eat versus the 0:18:07.920 --> 0:18:11.280 prices that producers have to pay and how much that 0:18:11.320 --> 0:18:15.320 directly gets passed through to future inflation that people feel 0:18:15.600 --> 0:18:18.480 in the grocery store or when they go on a vacation. 0:18:18.800 --> 0:18:21.239 What do we have a sense of how direct and 0:18:21.280 --> 0:18:25.880 what the time is for that transmission. Yeah, so it's 0:18:25.880 --> 0:18:28.320 a great question. And you know what we have seen 0:18:28.520 --> 0:18:31.399 in this business, Suguli, So that's really different than the 0:18:31.440 --> 0:18:36.240 prior decade is that Corporate America has really strong pricing power. 0:18:36.720 --> 0:18:39.440 So let's say if we went back five six years ago, 0:18:40.080 --> 0:18:43.040 you would have hopefel prices would have won up, but 0:18:43.160 --> 0:18:45.560 corporations would have had a hard time pass laying it 0:18:45.600 --> 0:18:49.200 on to consumers and it would have erode it profit margins. 0:18:49.640 --> 0:18:51.879 Now we're not really seeing that right Earnings. I know 0:18:51.960 --> 0:18:54.000 you've been speaking a lot about earnings for the last 0:18:54.000 --> 0:18:56.840 few days. We're going to get the um the next 0:18:56.920 --> 0:19:00.440 quarterly earnings data rolling out, But up until this point, 0:19:00.440 --> 0:19:03.200 everything have actually been quite good and that's helped fuel 0:19:03.240 --> 0:19:05.879 the equity market. That's because Corporate America has pricing power 0:19:06.200 --> 0:19:08.679 and we see that many surveys. But Kathy, are we 0:19:08.720 --> 0:19:10.960 starting to reach the limits of that? Lisa has brought 0:19:11.000 --> 0:19:12.800 it up a few times during the show bed Bath 0:19:12.880 --> 0:19:16.800 and beyond disappointing facing inflationary pressure, supply chain headwinds, and 0:19:16.800 --> 0:19:19.160 a headline just coming out from the company, they see 0:19:19.200 --> 0:19:23.440 a slowdown in consumer demand. If demand starts to deteriorate, 0:19:23.480 --> 0:19:26.720 consumers start to push back against higher prices, are less 0:19:26.720 --> 0:19:29.360 tolerant of it. Is that the point we're at now, 0:19:30.720 --> 0:19:34.359 we may be and that is the critical point of 0:19:34.400 --> 0:19:37.080 the cycle. Right we all know we're late cycle. How 0:19:37.160 --> 0:19:40.040 late are we in the cycle and how much pressure 0:19:39.800 --> 0:19:43.560 on corporate profits. Right, So if you see input costs 0:19:43.600 --> 0:19:46.639 still rising as a PPI data suggest unit labor costs, 0:19:46.640 --> 0:19:50.040 we know wage games are still high. If companies are 0:19:50.040 --> 0:19:54.200 no longer able to pass it on as easily to consumers, 0:19:54.240 --> 0:19:57.800 then it is gonna start to bite into corporate profit margins. 0:19:57.840 --> 0:20:01.320 There's no way around that, and we may be reaching 0:20:01.359 --> 0:20:03.679 that point now. The consumers to us still look like 0:20:03.720 --> 0:20:06.399 they're in really good shape, but remember they don't have 0:20:06.520 --> 0:20:08.919 that fiscal stimulus, right, the checks that we're given out 0:20:08.960 --> 0:20:11.439 a year ago, that's gone, and now you really have 0:20:11.560 --> 0:20:14.479 to rely on private wage gains to really carry you 0:20:14.520 --> 0:20:17.600 through and the expect savings. The real question really for 0:20:17.640 --> 0:20:19.080 all of us when we fork I asked and look 0:20:19.080 --> 0:20:20.880 at this, is how much of that you know, two 0:20:20.920 --> 0:20:24.480 point seven trillion worth of accumulated savings does the consumer 0:20:24.520 --> 0:20:28.440 rely on? Kathy, We're also talking about an inflation surge 0:20:28.520 --> 0:20:30.960 stemming from commodities, and this often has been thought of 0:20:31.000 --> 0:20:35.359 as something that's temporary, transient, pick your poisonous word. How 0:20:35.440 --> 0:20:38.680 much is that changing in an era where it does 0:20:38.720 --> 0:20:41.600 seem like we are deglobalizing and it seems like these 0:20:41.640 --> 0:20:44.399 shocks are all having the same impact even though they 0:20:44.440 --> 0:20:48.520 are very different in nature. Yeah, that is something that 0:20:48.600 --> 0:20:51.360 could play out, you know, over the medium to long 0:20:51.520 --> 0:20:54.600 term and it and it is a real potential game 0:20:54.720 --> 0:20:59.760 changer to the backdrop um that globalization really brought in 0:21:00.040 --> 0:21:04.439 disinflationary forces where it kind of capped overall price games. 0:21:04.520 --> 0:21:06.679 If that's changing and praying on the ends, which it 0:21:06.720 --> 0:21:10.000 looks like it may be, that is very different. You know, 0:21:10.080 --> 0:21:12.480 scenario doesn't necessarily it's hard to say, you know, we're 0:21:12.480 --> 0:21:15.320 exactly oil prices or or copper or where that will 0:21:15.320 --> 0:21:17.560 play out. But what we can say is that you 0:21:17.600 --> 0:21:24.439 know that disinflationary impulse could be behind us or economics. 0:21:30.119 --> 0:21:33.400 This is a very confusing moment. I am here with 0:21:33.480 --> 0:21:36.359 Tom Keane, with Kaylee Lines. We are broadcasting both on 0:21:36.560 --> 0:21:40.240 radio as well as on television at a delicate moment 0:21:40.480 --> 0:21:43.840 where we're looking at earnings reflecting both strength when you 0:21:43.880 --> 0:21:46.359 take a look at delta and the incredible demand, and 0:21:46.359 --> 0:21:49.280 then you look at JP Morgan talking about increased credit 0:21:49.359 --> 0:21:52.280 loss provisions as a result of some of this uncertainty. 0:21:52.640 --> 0:21:55.320 Peter Sheer has been passing through all of this and 0:21:55.400 --> 0:21:59.160 has a fantastic view uh joining us right now, Peter 0:21:59.240 --> 0:22:02.320 sheer a orse I have with back economics with the 0:22:02.520 --> 0:22:05.600 full view. What's your view on how we should read 0:22:05.760 --> 0:22:09.640 this moment. So I'm starting with equities. I think equities 0:22:09.680 --> 0:22:11.640 right now are to me an easier read. I expect 0:22:11.640 --> 0:22:14.520 equity indust needs to go back to the pre March 0:22:14.600 --> 0:22:16.960 fed lows. So I think we get back and retest that. 0:22:17.000 --> 0:22:18.680 So I think you're gonna see ongoing pressure in the 0:22:18.720 --> 0:22:23.200 equity markets. To me, that translates to pressure on credit spreads. 0:22:23.200 --> 0:22:25.080 So I think we see credit spreads wide in particularly 0:22:25.119 --> 0:22:27.200 the I G spector, which is held in pretty well 0:22:27.200 --> 0:22:29.560 in the last month or so. And then finally on 0:22:29.680 --> 0:22:32.280 treasury yields, it's a little bit more up in the air. 0:22:32.520 --> 0:22:34.840 I really actually think the two year, three or four 0:22:34.920 --> 0:22:36.479 year stage I want to be buying those. I think 0:22:36.520 --> 0:22:38.359 those yields can head lower. I'm a little bit more 0:22:38.400 --> 0:22:41.239 confused in the tense to thirties. Peter, You're great at 0:22:41.280 --> 0:22:45.960 looking across equities, bonds, currencies, commodities. I'm seeing tangible currency 0:22:46.119 --> 0:22:49.800 signals of an unraveling with your almost hitting a one 0:22:49.800 --> 0:22:53.000 oh seven. It's almost like a David focus landal moaning 0:22:53.040 --> 0:22:56.560 from Deutsche Bank. With the depreciation we're seeing against the dollar. 0:22:57.000 --> 0:23:01.240 From where you sit at the academy, is the system 0:23:01.240 --> 0:23:05.239 malieable now and functionable or do you look at it 0:23:05.280 --> 0:23:09.040 with kinks or with breakpoints? So I think we're at 0:23:09.080 --> 0:23:11.480 this early stages of a real shift and how we 0:23:11.520 --> 0:23:13.200 have to think about Europe, how we have to think 0:23:13.200 --> 0:23:16.320 about dealing with autocratic nations, not just Russia, but also 0:23:16.440 --> 0:23:19.240 China the Middle East. And I think that's creating this 0:23:19.480 --> 0:23:22.560 new shift where you're getting the commodity nations and the 0:23:22.600 --> 0:23:26.040 autocrats aligning with China because China is a massive consumer 0:23:26.040 --> 0:23:28.679 of what they're selling, they need it. I think Europe 0:23:28.720 --> 0:23:30.359 is going to struggle. I think you're gonna start seeing 0:23:30.359 --> 0:23:32.399 all these second order effects and you don't know what 0:23:32.440 --> 0:23:34.840 it's gonna be, whether it's gonna be car harnesses or 0:23:35.040 --> 0:23:37.920 neon production. Europe is gonna have a lot of trouble, 0:23:37.920 --> 0:23:39.200 and food is going to be a problem over the 0:23:39.240 --> 0:23:41.119 summer as well. So I think it makes sense to, 0:23:41.240 --> 0:23:44.040 you know, avoid European assets right now. Well, and when 0:23:44.040 --> 0:23:46.680 we're talking about food, that leads me to the idea 0:23:46.720 --> 0:23:49.359 of just higher prices across the board, higher input costs 0:23:49.520 --> 0:23:51.800