WEBVTT -  Rebecca Patterson Talks Warsh, FOMC Preview

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news news flow.

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<v Speaker 2>Here with the President landing for the G seven meeting,

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<v Speaker 2>we're going to go to Tyler kendabut dash to Rebecca

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<v Speaker 2>Patterson right now to be kind senior fellow at the

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<v Speaker 2>Council on Foreign Relations, her work at Bridgewater, bestsemmer at

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<v Speaker 2>JP Morgan over the years, thrilled she could join. I

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<v Speaker 2>guess I got to do the FED meeting. To me,

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<v Speaker 2>it could be dramatic. If he's going to change things.

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<v Speaker 2>He doesn't want to dawdle around, does he?

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<v Speaker 3>I mean, I think priority one, two and three this

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<v Speaker 3>week is reinforce the Fed's credibility. You don't want any

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<v Speaker 3>questions about any political bias. So that's goal number one

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<v Speaker 3>for Kevin Warsh this week, I think, which he should

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<v Speaker 3>be able to execute beautifully. I think beyond that, if

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<v Speaker 3>he does a press conference, I expect you will, but

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<v Speaker 3>it's not a given. If he does a press conference,

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<v Speaker 3>then that'll be his opportunity to lay out the priorities.

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<v Speaker 4>What is he going to focus on? First?

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<v Speaker 3>I would imagine he wants to review all the economic models,

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<v Speaker 3>the processes.

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<v Speaker 4>He's going to review communication.

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<v Speaker 3>He's already been very vocal about having less communication, think

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<v Speaker 3>more less.

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<v Speaker 2>It has been for years.

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<v Speaker 1>Yes, a new thing, the balance sheet will wait.

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<v Speaker 5>Yeah, so, Rebecca, obviously he's got some level of pressure

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<v Speaker 5>from the President, from the White House to lower rates.

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<v Speaker 5>But wait, the data is not there. He's got a

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<v Speaker 5>committee he has to deal with.

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<v Speaker 2>Yep.

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<v Speaker 4>Wait.

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<v Speaker 5>I would think the messaging this week is as much

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<v Speaker 5>for the rest of US i e. The market, maybe

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<v Speaker 5>even more so for the President.

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<v Speaker 4>Yeah.

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<v Speaker 3>I mean, he's got a difficult needle to thread here, right,

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<v Speaker 3>Keep the President on his side ideally, but build credibility

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<v Speaker 3>and trust with his colleagues at the FOMC, I mean,

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<v Speaker 3>And to your point on the data, I mean, right now,

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<v Speaker 3>core PCE for May is tracking at around three point

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<v Speaker 3>three percent year on year. If that's the number that

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<v Speaker 3>comes in or something like that, there's no way they

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<v Speaker 3>can cut rates anytime soon. And even if the Straight

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<v Speaker 3>of the Hormotes Straight of Hormones does open soon, which

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<v Speaker 3>we all hope it does, and oil prices retreat further,

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<v Speaker 3>you still have a strong economy now probably stronger. You

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<v Speaker 3>have inflation coming through the AI channel as well as

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<v Speaker 3>other channels, and so it seems like the market pricing

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<v Speaker 3>and the possibility of a hike makes a lot more sense.

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<v Speaker 3>So that is going to be a challenge for Chairman

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<v Speaker 3>Warsh for sure.

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<v Speaker 5>About US dollar here, we kind of came into the year,

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<v Speaker 5>I guess the consensus on the street was for a

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<v Speaker 5>weeker dollar, and then the war with Iran starts and

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<v Speaker 5>we had that flight to quality like we typically see.

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<v Speaker 3>Now what Well, the dollar until the news over the

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<v Speaker 3>weekend was down or sorry, it was down against only

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<v Speaker 3>two major currencies, the Norwegian crown and the Australian dollar,

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<v Speaker 3>both big commodity exporters.

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<v Speaker 4>It was stronger against everything else.

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<v Speaker 3>Primarily on rate expectations, higher interest rates following higher energy

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<v Speaker 3>prices and broader inflations. Now that that is off the table,

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<v Speaker 3>you have seen yields, as you guys just mentioned, down

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<v Speaker 3>a little bit. You are seeing the dollar down a

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<v Speaker 3>little bit today. And the question again it goes back

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<v Speaker 3>to the Fed. Do we have a hawkish bias in

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<v Speaker 3>the press conference this week or not?

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<v Speaker 4>I think the raid expectations.

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<v Speaker 3>Will continue to be pretty important for the dollar going ahead.

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<v Speaker 3>And again it's not just the US, right two sides

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<v Speaker 3>to every currency trade. We expect a Bank of Japan

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<v Speaker 3>hike this week, the ECB, the Euthpean Central Bank.

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<v Speaker 4>Just raised rates. So it's it's not clear how much

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<v Speaker 4>stronger the dollar gets.

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<v Speaker 2>Out of Florida. And Johns Hopkins, I mean, there was

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<v Speaker 2>this idea that if you end a war, even as

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<v Speaker 2>Caplin says, a middle war, the idea is you get

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<v Speaker 2>a disinflationary tendency. So not Rebecca Patterson now at CFR.

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<v Speaker 2>But if you're on Wall Street right now, in what's

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<v Speaker 2>clearly a boom investment banking environment, do you just assume disinflation?

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<v Speaker 3>I wouldn't assume anything right now. Look, we have we

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<v Speaker 3>have some tweets and some headlines suggesting that we have

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<v Speaker 3>a step forward towards peace, but the deal isn't supposed

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<v Speaker 3>to be signed till Friday, and even then it's not

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<v Speaker 3>clear yet if it sticks, it's not clear what the

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<v Speaker 3>terms are going to be. I mean, Iran wants and

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<v Speaker 3>needs funding. I think they could still pressure to have

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<v Speaker 3>some sort of fee, service fee to go through the

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<v Speaker 3>straight not at all a service fee.

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<v Speaker 2>And Paul, this is really Rick Wilson just down on

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<v Speaker 2>Twitter with just a scathing quick note like where are

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<v Speaker 2>the details?

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<v Speaker 4>Yeah?

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<v Speaker 2>When do we get the details?

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<v Speaker 4>I don't have an answer, and we might not for

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<v Speaker 4>sixty days. Right.

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<v Speaker 2>The markets will flip right around if we do that.

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<v Speaker 3>Well, they may do that, right, and that's the point.

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<v Speaker 3>Oil has come down, stocks are up. Does it last?

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<v Speaker 3>Do you want to chase it here? I mean, if

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<v Speaker 3>we have peace and it's certainly in both sides interest

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<v Speaker 3>to have peace. Iran desperately needs money, it needs to rebuild.

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<v Speaker 3>US does not want oil at a four handle or

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<v Speaker 3>thirty year year olds at a five handle going into midterms.

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<v Speaker 5>Gold, well, it seems like just a cup of coffee.

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<v Speaker 5>Ghost tom And said, we're at five thousand dollars and

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<v Speaker 5>now so we've seen a pullback hereda forty three hundred.

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<v Speaker 2>Yeah.

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<v Speaker 3>Yeah, I mean you had a lot of speculative money

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<v Speaker 3>going to gold at the beginning of the year. We

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<v Speaker 3>had a little bit of a parabolic move, So that

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<v Speaker 3>was part of it. But the other part of it

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<v Speaker 3>is we did have two big central banks, Russia and

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<v Speaker 3>Turkey selling Russia sold for four months in a row.

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<v Speaker 3>Turkey was the biggest seller of gold in March. But

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<v Speaker 3>those are the outliers. Central banks in general are continuing

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<v Speaker 3>to buy.

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<v Speaker 2>Bloomberg surveillance across the Snaetion boy and for San Antonio.

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<v Speaker 2>Three am at a diner a re order tried to

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<v Speaker 2>get over the hangover. Joining us now with Rebecca Patterson

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<v Speaker 2>and studio is Anri Horden, who was doing a seminar

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<v Speaker 2>in Houston. Can you get me tickets to Santonio? I'll

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<v Speaker 2>take it over. How did you get from Houston to

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<v Speaker 2>San Antonio?

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<v Speaker 1>Our friend drove me.

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<v Speaker 2>Friend.

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<v Speaker 1>Yeah, so a friend saw that I was in Houston.

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<v Speaker 4>Also saw I was at.

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<v Speaker 1>Game three with the Presidents that I'm going to game five.

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<v Speaker 1>Why didn't you come?

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<v Speaker 6>And I made a game time, game time decision Saturday

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<v Speaker 6>morning and I was like, you know what, Like, I'm

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<v Speaker 6>so cool?

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<v Speaker 2>Are you sitting with Prince Harry?

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<v Speaker 1>I was not sitting with Prince Harry. Oh yeah, you

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<v Speaker 1>texted me.

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<v Speaker 4>I saw him. I saw Spike Lee.

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<v Speaker 6>I was sitting more by Patrick Ewing, which was pretty amazing,

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<v Speaker 6>and did a block your view?

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<v Speaker 1>He did not block my view. He was actually behind me.

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<v Speaker 6>So I will say San Antonio was the sixth borough

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<v Speaker 6>on Saturday night. It was how to be fifty percent

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<v Speaker 6>maybe seventy five percent New York Knick fans, and the

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<v Speaker 6>first quarter or two obviously we were behind, but we've

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<v Speaker 6>been there before and it was a little a little intense,

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<v Speaker 6>and then Jalen Brunston does what he does. This team

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<v Speaker 6>works together so well and they clinched it.

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<v Speaker 1>It was incredible.

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<v Speaker 2>You have to call him my Jalen. Missus Keen is

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<v Speaker 2>called Jalen this week, Jalen. I gotta ask what was

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<v Speaker 2>in the arena the energy that was not captured for

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<v Speaker 2>America on TV.

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<v Speaker 6>I think what was not captured was the moment you

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<v Speaker 6>realize they were about to become champions after fifty three years.

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<v Speaker 1>There was literally.

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<v Speaker 6>Tears from New Yorkers and their faces, grown men just

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<v Speaker 6>absolutely crying. One guy next to me was a New Yorker,

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<v Speaker 6>stayed for the whole thing, moved to San Antonio in

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<v Speaker 6>nineteen ninety four, so he was technically there supporting the Spurs,

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<v Speaker 6>but even he was emotional and he said, this is

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<v Speaker 6>pretty bittersweet.

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<v Speaker 4>For me, for our fans.

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<v Speaker 5>On radio, I just have to highlight the outfits that

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<v Speaker 5>are in this studio.

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<v Speaker 2>Here.

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<v Speaker 5>Rebecca Patterson, New York k Knick, orange head to toe, fantastic,

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<v Speaker 5>Amory Horden comes in the whole thing going and the

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<v Speaker 5>Tom's got the blink I mean.

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<v Speaker 1>I didn't know Tom either. You were a Celtics fan.

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<v Speaker 5>Well, we're all Nick fans today.

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<v Speaker 4>Yes, I said that.

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<v Speaker 7>I just sold it out, writes the paycheck. One more

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<v Speaker 7>question for Rebecca Patterson. Here the spirit of this to me,

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<v Speaker 7>the single miscall a New York city in the gloom

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<v Speaker 7>was a census of twenty twenty where everybody, including the

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<v Speaker 7>smart people, said, oh we added six hundred thousand in

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<v Speaker 7>the MSA here, I mean, it's his bet against New

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<v Speaker 7>York that's always been there.

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<v Speaker 3>You know what, I think there is a human emotion

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<v Speaker 3>that you always want to go after whoever's on top.

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<v Speaker 3>And that could be a company, it could be a person,

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<v Speaker 3>it could be a city. So it's easy to go

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<v Speaker 3>after New York. But look, New York's back. People are

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<v Speaker 3>working five days a week in the office. Real estate

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<v Speaker 3>prices are coming back.

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<v Speaker 4>God.

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<v Speaker 3>I mean last week, if you tried to get around

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<v Speaker 3>the city in a cab or even on the subway.

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<v Speaker 4>It was packed.

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<v Speaker 2>Yeah, Rebecca, thank you so much. Rebecca Patterson with us

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<v Speaker 2>writing for the Council Foreign Relations. A terrific podcast with

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<v Speaker 2>Sebastian Albi