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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg terminal. We're not gonna

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Speaker 1: waste time now the statistics, but to be very serious,

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Speaker 1: eight deaths are reported by the New York Times and

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Speaker 1: other organizations here on building collapses over historic rain. With

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Speaker 1: that note, we get immediately to someone with the largest

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Speaker 1: headaches of the morning. The acting chairman, the chief executive

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Speaker 1: officer of the MTA, Genna Liebert, joins us this morning, Jenna,

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Speaker 1: where's your biggest headache at this time in the morning. Well,

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Speaker 1: with that, the subway system is coming back. It's incredibly

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Speaker 1: resilient and um we've got you know, operating service from

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Speaker 1: most areas of the city. It's obviously got some limitations,

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Speaker 1: but we're putting Humpty Dumpy back together again. And bravo

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Speaker 1: to the cruise that that worked throughout the night to

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Speaker 1: do it. There's there's one area in fourteenth ch area

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Speaker 1: of West Side of Manhattan where there's the pumping is

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Speaker 1: still going on in order for us to restore service

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Speaker 1: to that very important line. Um, but we think that

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Speaker 1: by you know, mid afternoon, we're gonna have most of

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Speaker 1: the lines really back in full functioning for an evening commute.

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Speaker 1: So that's exciting. So you're telling you're telling me that

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Speaker 1: we will see an evening commute. Uh yeah, I mean, fortunately,

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Speaker 1: a lot of people elected to work remotely or stay

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Speaker 1: at home today, so a little lighter than usual. But

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Speaker 1: we're we're we're gonna be able to move people on

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Speaker 1: the subways and on the bus system, which performed heroically great.

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Speaker 1: Bus drivers rescued tons of people, moved him home last night. Um.

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Speaker 1: The commuter railroads is a little spotty, or Tom Metro

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Speaker 1: North is really out of business today because in are

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Speaker 1: there in mud slides and trees and so on. They

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Speaker 1: had some hits on their electrical infrastructure. Long Island Railroad, however,

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Speaker 1: really back in action. They are. They've got most branches operating.

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Speaker 1: More Washington Bridge still struggling, but Long Island Railroad is

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Speaker 1: is mostly in operation. And Lisa Joe Ryan just reporting

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Speaker 1: the death count has moved from eight to nine. Traffic

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Speaker 1: flood and that's the flash flood emergency warning that came

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Speaker 1: out that really highlighted that to death could be imminent.

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Speaker 1: I'm wondering, Jeno, this is the second time in a month,

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Speaker 1: in two months rather that the subway system has faced

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Speaker 1: flooding like this, this more extremely the last time. What

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Speaker 1: is the mt A doing to prevent this from happening again. Well,

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Speaker 1: after Superstorm Sandy, we invested a ton in coastal resiliency

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Speaker 1: and are underwater uh tunnels, We've got eleven of them,

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Speaker 1: all been rebuilt, the pumping infrastructure, upgrade and start, and

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Speaker 1: they performed fabulously in this emergency. But what we're seeing

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Speaker 1: now is in the air of climate change, with the

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Speaker 1: extreme weather events, even the up the higher elevations are

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Speaker 1: experiencing this flash flooding. So we're gonna attack that even more.

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Speaker 1: The big problem is when the street drainage and the

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Speaker 1: sewer infrastructure gets overwhelmed, gravity takes water into the subway system.

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Speaker 1: The subways are not a submarine, and and and you

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Speaker 1: know it's not gonna it's not gonna ever be perfectly dry,

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Speaker 1: but we're going to start attacking these higher elevations as well.

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Speaker 1: And general or looking and we're looking at a situation

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Speaker 1: where this is likely to become more and more frequent,

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Speaker 1: and these fortifications have to happen it quickly. Is the

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Speaker 1: m t A sufficiently funded to make some of these

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Speaker 1: adjustments at the same time that ridership is down, at

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Speaker 1: the same time that the city is recovering from a

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Speaker 1: pandemic and getting people and ridership back up to where

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Speaker 1: we were before. Well, I mean, the first thing is

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Speaker 1: that this has to be done in tando, as I said,

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Speaker 1: with the City of New York, which controls the sewers

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Speaker 1: and the street level drainage infrastructure. So that's part we have.

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Speaker 1: We have to do this in partnership. We have a

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Speaker 1: fifty billion dollar capital program that has a lot of

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Speaker 1: resiliency investments in in our yards in some of the

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Speaker 1: low lying areas. But I think that there are some

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Speaker 1: things we can do in tandem with the city to

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Speaker 1: deal with this flash flooding risk, which is you know,

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Speaker 1: new to this era of climate check. One final question,

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Speaker 1: jenn if we can, and it is a way I

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Speaker 1: believe from this crisis and great respect. As you've mentioned

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Speaker 1: to the bus drivers particularly, you've had a changing of

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Speaker 1: the guard in Albany. Will you stay and support the

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Speaker 1: new governor Kathy Hokel. Do you have any understanding of

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Speaker 1: that relationship, the fractious relationship now with the m t

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Speaker 1: A and the capital up the Hudson River. You know,

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Speaker 1: I've had the opportunity to meet with Governor Hokel and

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Speaker 1: talked to her. We've been in touch through the night

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Speaker 1: on our teams have been working together. She is she

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Speaker 1: was a local official before she was a congressman and official.

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Speaker 1: She gets emergency management. She displayed that just a few

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Speaker 1: days ago when she came down to Uh to the

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Speaker 1: city after we had a hit on the m t

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Speaker 1: A subway operation. Um so uh. You know, she's a good,

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Speaker 1: great partner for the m t A and these kinds

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Speaker 1: of emergency management issues and more broadly so we're we're

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Speaker 1: looking forward to working with her very much. Generally, were

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Speaker 1: toll to you and all of the m t A.

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Speaker 1: Thank you so much. He's the acting chairman and chief

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Speaker 1: executive officer as well. Stephen Roschudo is hugely qualified at

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Speaker 1: MASSOO to talk about the American economy and Steve and

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Speaker 1: I really want to take advantage of the encyclopedic knowledge

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Speaker 1: and go where John Farrell was going, which is industry

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Speaker 1: by industry, and to me, the supply dynamics seems to

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Speaker 1: be colored by the American automobile industry. Discussed that how

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Speaker 1: are autos right now for you an asterick an outlier?

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Speaker 1: Are they part of the American economy? Well, they are

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Speaker 1: part of the American economy. They're an important component of

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Speaker 1: the American economy. They have been declining in value as

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Speaker 1: a percentage of your roll economy for years as his

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Speaker 1: whole most of manufacturing. But you have to remember the

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Speaker 1: automobile industry is a pervasive product. I mean when you

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Speaker 1: consider all the components going into them, whether it be glass, steel,

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Speaker 1: electronic components, rubber components, plastic, leather, vinyl, I mean, it's

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Speaker 1: a huge supply chain that's involved when you're talking about

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Speaker 1: building automobiles, and therefore it's multiplier in terms of the economy.

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Speaker 1: Is still very very important. And when you see a

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Speaker 1: retail sales numbers and autos like we did yesterday afternoon

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Speaker 1: of a big drop down in sales to about thirteen

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Speaker 1: point one million units from about fourteen point eight million units,

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Speaker 1: you really get the sense that this is where the

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Speaker 1: economy is losing some of its momentum, and it is

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Speaker 1: related to the supply chain, because this is what's really

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Speaker 1: happening in terms of the auto space. Stephen, Shooto, slow

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Speaker 1: news day. Let us make some news right now. Are

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Speaker 1: you going to reduce your Q three GDP statistic? Now?

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Speaker 1: I mean, I don't. I don't get into that game

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Speaker 1: of trying to, you know, fine tune it one. We

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Speaker 1: have all the data, the key source data coming out

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Speaker 1: because still lots of moving parts in there. I mean,

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Speaker 1: I go back to the days when a couple of

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Speaker 1: people from the Bureau of Labor Statistics who did these

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Speaker 1: components were caught for insider trading, trying to change trade

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Speaker 1: on the GDP number. And John does that. John trades

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Speaker 1: off the GDP number we see him doing and in

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Speaker 1: that result is they made absolutely no money because they

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Speaker 1: couldn't figure out what the numbers were. Because all right,

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Speaker 1: and that's and that's really the key issue they You know,

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Speaker 1: unless you know the trade and you know the inventory numbers,

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Speaker 1: it's really really hard to peg down the GDP number

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Speaker 1: on a key source state of related basis. That's the

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Speaker 1: direction matters. And I want to go back to that

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Speaker 1: Morgan Stanley call ellen Zentner, where they downgraded the third

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Speaker 1: quarter GDP to two point nine percent from six and

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Speaker 1: a half percent previously. David Smith from Regent's Bank said,

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Speaker 1: this is actually significant, and the reason why is because

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Speaker 1: there isn't necessarily a material impact on the full year GDP,

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Speaker 1: but there isn't a mark up in the GDP for

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Speaker 1: Q four. This is not to laid growth. This is

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Speaker 1: lost growth, and I wonder how much that is starting

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Speaker 1: to factor into people's assessment of this recovery. I think

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Speaker 1: you're a percent correct, and I think that's the real

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Speaker 1: key factor there is that this is not going to

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Speaker 1: be growth that's going to be reversed back. When I

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Speaker 1: look at the numbers that they've just put out UH

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Speaker 1: and they look at the big drop that they're anticipating

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Speaker 1: in Q three and then the bounce back they're anticipating

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Speaker 1: in Q four, I'm not so sure you're gonna get

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Speaker 1: that bounce back in Q four. There's a lot of

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Speaker 1: people who keep on talking about pent up demand in

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Speaker 1: this economy. There isn't really any pent up demand in

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Speaker 1: this economy, so you might wind up seeing marking down

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Speaker 1: third quarter GDP. Really marking down the year number in particular,

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Speaker 1: and getting people to really look at their two estimates

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Speaker 1: and begin to realize that those numbers are much too high.

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Speaker 1: We're still much lower than the consensus on twenty two numbers.

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Speaker 1: We're in the three and a half percent area, and

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Speaker 1: most people are substantially harder than that, and that's where

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Speaker 1: we think the risk is from the kind of losses

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Speaker 1: that you're talking about here for the third quarter. Meanwhile,

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Speaker 1: we're looking at a labor economy that still hasn't recovered,

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Speaker 1: and we're looking at millions of people still out of work.

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Speaker 1: The why, though, behind it is less and less clear

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Speaker 1: as a lot of the economy reopens. What are you

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Speaker 1: hoping to find out from Friday's from tomorrow's jobs report

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Speaker 1: to understand more the trajectory of what's keeping people away

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Speaker 1: from filling all those jobs, a record number of them

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Speaker 1: that need to be filled. Well, I think what you're

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Speaker 1: going to discover is is what's true about most of

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Speaker 1: these jobs is that people are looking for a specific

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Speaker 1: qualified person to fill a job. If you're going to

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Speaker 1: be in a work from home environment for a lot

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Speaker 1: of these jobs, and I'm not saying a lot of

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Speaker 1: the service jobs are work from home will have the jobs,

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Speaker 1: but outside the service component, you're looking for a person

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Speaker 1: who is plugged compab. You put them in and they

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Speaker 1: start working s a paid not in an environment when

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Speaker 1: you're working home where it's easy to train somebody and

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Speaker 1: bring them on board. So the net result is I

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Speaker 1: think this work from home environment is one of the

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Speaker 1: factors that is limiting the ability to find that specific

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Speaker 1: worker that we want because those workers are rarer. In

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Speaker 1: an environment where people are working in offices, there is

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Speaker 1: the ability to train get people up to speed. Now

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Speaker 1: we have less and less of that as an opportunity.

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Speaker 1: So therefore you really need to find that unique person

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Speaker 1: and that becomes harder and hard to do. It's finding

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Speaker 1: a needle in a haystack. Steve, what's the dynamic on

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Speaker 1: service sector right now? We mentioned earlier that the GIGA

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Speaker 1: texts are out twenty two of Standard and poors. What's

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Speaker 1: that mean for our service sector versus good sector. What

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Speaker 1: it really comes down to is we're driving everything from

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Speaker 1: a productivity standpoint. I know, you look at the productivity

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Speaker 1: numbers here in the unit labor cost numbers, and you

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Speaker 1: talked about the uptick in the unit labor cost numbers

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Speaker 1: that we've had here. The reality is, when you're looking

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Speaker 1: at the productivity environment of the economy and the increased

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Speaker 1: productivity that has been pushed into the economy as a

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Speaker 1: result of the COVID nineteen environment, it's understandable while you're

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Speaker 1: seeing what you're seeing in terms of the growth related

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Speaker 1: portions of the economy, in particular in the tech space,

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Speaker 1: because we're relying more and more on that technology in

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Speaker 1: this work from home environment. As you look at more

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Speaker 1: and more companies who are sitting there saying we're delaying

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Speaker 1: openings or making it easier for people not to come

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Speaker 1: back to the office after labor day or in October,

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Speaker 1: the net result is you're going to demand more and

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Speaker 1: more on this type of technology, and that's going to

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Speaker 1: continue to drive the demand up for that product. And

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Speaker 1: so I think it just very hits, very very much

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Speaker 1: with the changes in the underlying dynamic that are unfolding

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Speaker 1: as a result of the COVID nineteen mitigation strategy. Meanwhile,

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Speaker 1: throughout the show this morning, we've been talking about mitigation

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Speaker 1: efforts to some of these storms that are historic. We

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Speaker 1: saw what happened with Hurricane Ida over in Louisiana. In

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Speaker 1: New York City, the weather system actually issued its first

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Speaker 1: ever emergency flash fast flood emergency warning, not the fast

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Speaker 1: flood fast flash flood excuse me of warning, but emergency war.

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Speaker 1: Trying to look at how people are possibly going to die.

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Speaker 1: What is the impact on GDP, on growth, on the

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Speaker 1: resumption of people back into their jobs as a result

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Speaker 1: of some of these storms. You know, I will tell

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Speaker 1: you when we go back and look and trying to

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Speaker 1: ascertain the impact of any particular storm. Um, you know,

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Speaker 1: you can go back and you look at Katrini, you

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Speaker 1: can look at Sandy, and those were much much bigger

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Speaker 1: in magnitude. I'm not arguing that the suffering going on

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Speaker 1: by people right now isn't real and isn't important. It is,

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Speaker 1: but the magnitude of it in terms of the population,

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Speaker 1: the breath of the economy involved in that are substantially greater.

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Speaker 1: I don't expect to see much of a real statistical

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Speaker 1: impact at the macro level. At the micro level, to

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Speaker 1: a certain extent, you wind up seeing a lot of

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Speaker 1: the expense expenses that have come to recover from that

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Speaker 1: wind up driving the economy back to fill that void.

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Speaker 1: Very very quickly, which is why statistically we don't see

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Speaker 1: it on a quarterly basis. You'll see it in some

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Speaker 1: of the regional monthly numbers, but you won't see it

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Speaker 1: in the quarterly data. Stave good ahead from you at

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Speaker 1: don't try g d pet The message from statehot the

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Speaker 1: chief US Economists just springing Steve chevaron and continue this conversation,

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Speaker 1: so con federate to them. I support folio. I managed

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Speaker 1: to join just now, Steve, let's build on this. Do

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Speaker 1: you think we can get infrastructure down down at day's sake? Oh? Yeah,

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Speaker 1: I think. Look, I think the BI part is an

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Speaker 1: infrastructure bill. You know, there's certainly a clear path for that.

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Speaker 1: I think when you start thinking about the three and

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Speaker 1: a half trillion dollar kind of softer infrastructure plan, I

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Speaker 1: think there's a lot more uncertainty there, and there's still

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Speaker 1: a battle between the progressives and the model. But I

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Speaker 1: think we've got a pretty clear track over the course

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Speaker 1: of the next several months for at least that by

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Speaker 1: partisan one trillion dollar bill. You know, I would say, though, John,

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Speaker 1: I I could go a little while without one of

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Speaker 1: these five hundred year events between you know, once in

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Speaker 1: every five hundred year plague. You know, once in every

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Speaker 1: five d years storm. I think we've had our fill

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Speaker 1: for a while. Let let's let's just calm down for

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Speaker 1: a while. It's carried over Steve to your great abilities

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Speaker 1: to asset allocate. How do you sset allocate into a

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Speaker 1: once every five hundred years fiscal stimulus? Yeah, I mean, look,

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Speaker 1: and it's even been a little bit more complicated because

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Speaker 1: I think the way you you historically would allocate into

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Speaker 1: a stimulus or a large stimulus as you want to

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Speaker 1: be long in terms of cyclicals, you want to be

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Speaker 1: short on duration on the bond side. And that's been

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Speaker 1: the way that we've been positioned for the better part,

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Speaker 1: you know, the last almost year. However, that really hasn't

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Speaker 1: worked since since since May, and and that's been because

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Speaker 1: you know, you've had this resurgence of covid um and

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Speaker 1: and that's kind of put a damper on some of

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Speaker 1: those animal spirits. With those hospitalizations starting to peak, uh

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Speaker 1: and renewed spending likely to come, we think that that

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Speaker 1: trade can reassert itself, but you've had to have been

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Speaker 1: patient with it because it really hasn't worked over the

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Speaker 1: last couple of months. What's that is most important to you.

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Speaker 1: And I'm thinking about this as you talk about some

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Speaker 1: of the biblical types of events that we've had and

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Speaker 1: the idea that we've seen that reflected in some sentiment

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Speaker 1: surveys that have been coming off recently. I mean, what

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Speaker 1: catches your attention and makes you rethink perhaps a bullish outlook, Well,

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Speaker 1: you know, consumer confidence coming down a little bit. I

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Speaker 1: think it is something to watch. It did that last

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Speaker 1: year going into the fall, so that was a little

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Speaker 1: bit of a head fake. But you know, confidence is important.

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Speaker 1: It's the middle syllable of economy, so we are watching

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Speaker 1: that closely. I think we're likely to get more certainty

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Speaker 1: and confidence over the course of the next couple of months,

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Speaker 1: and I think it really starts with tomorrow's jobs report.

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Speaker 1: If that job's report is at least reasonable, I think

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Speaker 1: that clears the way for the FED to maybe announced

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Speaker 1: taper as soon as September, and then we know the

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Speaker 1: rules of the game, you know, at least for the

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Speaker 1: next let's call it six or nine months. So that's

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Speaker 1: the thing I'm really watching state just quickly. This is

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Speaker 1: a line from Bill Gross his quote a ready out

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Speaker 1: for you, and he's probably had better be dumb with

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Speaker 1: digit plus arrass that could join the garbage truck. Are

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Speaker 1: you expecting decent ernings cross, Steve, absolutely, we had. We

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Speaker 1: had UH record margins in the second quarter. Earning's estimates

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Speaker 1: are moving. Are companies are able to pass on price

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Speaker 1: and the price that they took? You know, they're not

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Speaker 1: giving back. So I think companies are navigating these once

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Speaker 1: in a five year events, you know, extra extraordinarily. Well.

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Speaker 1: I think they'll continue to do so, Steve got ahead

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Speaker 1: from you, Steve Cheffer and federate today and put Filio

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Speaker 1: manager Pausania and Tom Keane with a lovely David Rosenberg

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Speaker 1: this morning with the Dow up a hundred and seventeen points, David,

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Speaker 1: you are the best I know it parsing inflation of

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Speaker 1: our audience worldwide says this is serious inflation. Why does

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Speaker 1: the FEDS say no, it's not. I think the FED

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Speaker 1: is telling you that we do have UH an inflation

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Speaker 1: burst that's caused by all the distortions in and around

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Speaker 1: the pandemic, which clearly hasn't gone away, and the supplied

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Speaker 1: chain issues, and they were fasturbated, of course by the

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Speaker 1: gargantean fiscal stimulus we had back in the second quarter.

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Speaker 1: What the Feds telling you is that they don't believe

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Speaker 1: that it's going to be a permanent situation. And I

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Speaker 1: think it's probably probably the most important thing Powell said

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Speaker 1: on Friday was the risk of making a policy mistake. Uh,

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Speaker 1: you know, not by falling behind the proverbial curve that

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Speaker 1: a lot of people are talking about. Uh, you know,

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Speaker 1: keeping in mind that what the said does today has

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Speaker 1: its maim an impact at least a year down the road. Um.

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Speaker 1: And if they're prevailing view was that this is a

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Speaker 1: temporary inflationary situation. Uh, they're not going to start to

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Speaker 1: tighten policy disturbed demand growth if they believe that inflation

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Speaker 1: is going to And I think that's really it's it's

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Speaker 1: really the state not inflation here. It's really is a

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Speaker 1: temporary or permanent that's the debate. Well, my inflation is

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Speaker 1: add to buy impair of glasses yesterday for afterthought, and

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Speaker 1: it was painful. David, Are we seeing incomes go up

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Speaker 1: to match the inflation and the prices going up? No?

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Speaker 1: In fact, you know when you're taking a look for example,

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Speaker 1: and then we'll get a fresh number tomorrow obviously, Uh,

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Speaker 1: real hourly and weekly earnings and real terms are actually declining.

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Speaker 1: And so what's happening against that backdrop, which nobody talks

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Speaker 1: about because everybody's got inflation on the brain, is they're

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Speaker 1: not talking about what's happened in real economic activity. And

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Speaker 1: you know, we have we have a consensus that is

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Speaker 1: stubbornly near seven percent growth for the third quarter. I

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Speaker 1: don't know how you get there when you have real

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Speaker 1: consumer spending already built into the third quarter that's actually flat.

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Speaker 1: Uh so so real. So this is what's different really

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Speaker 1: about the nineteen seventies when you had radical unionization, pretty well,

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Speaker 1: everybody had a cola clause, so you were fully protected

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Speaker 1: against inflation. That's how you got the weights priced by all.

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Speaker 1: That's not going to exist today. Uh, And so I

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Speaker 1: think that what's going to happen here is that you

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Speaker 1: know what what what prices companies want to impose on

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Speaker 1: the consuming public. Uh, those price increases won't be able

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Speaker 1: to stick so long as wages lagged behind. And really

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Speaker 1: that's exactly what's happening. And Paul, the real economy issue

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Speaker 1: here is so true. And that Paul, you know you're

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Speaker 1: better at this than I am. There's essentially two economies

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Speaker 1: out there, there's everything else and there's the giga text,

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Speaker 1: and it's like two separate worlds, two separate worlds. The

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Speaker 1: real folks are seeing inflation at there. And and David

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Speaker 1: is interesting when we get the job's report tomorrow of

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Speaker 1: interesting to again, just a lot of numbers to part

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Speaker 1: and we talk about wage inflation. UM. Even pre pandemic,

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Speaker 1: when we were at quote unquote full employment or thereabouts,

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Speaker 1: we only had you know, wage inflation of three three

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Speaker 1: and a half percent. Is there something structural in this

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Speaker 1: economy here in terms of the job makeup that just

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Speaker 1: doesn't allow for meaningful inflation and in terms of wages. Well, uh,

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Speaker 1: I think that again, that's something that Powell talked about

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Speaker 1: on Friday, and I'm glad he did, which talked about,

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Speaker 1: you know, the secular forces at play that are still

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Speaker 1: very disinflationary. And look when you go back to the

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Speaker 1: last cycle, and you go back to two thousand and ten,

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Speaker 1: two thousand eleven, we had early cycle uh inflationary pressures

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Speaker 1: um and the same people are saying the same thing.

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Speaker 1: The FED didn't start the snug policy till two and fifteen, UH,

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Speaker 1: and so you know, we've had the situation where you know,

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Speaker 1: we have the pandemic. Uh, the incoming data have been

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Speaker 1: six times more volatile than they've been historically. And that

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Speaker 1: tells me that you have to take a grain of

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Speaker 1: sault in both directions. Um. But yeah, I would say that, UM,

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Speaker 1: that is still I think one of the big differences

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Speaker 1: between now uh and the nineteen seventies is you don't

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Speaker 1: have a labor market that is as protected through unionization

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Speaker 1: antro coal of pauses today that we had back then. Look,

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Speaker 1: there's there's no doubt that there's been shortages in some

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Speaker 1: critical sectors. Um. You know critical well, I guess mostly leisure, hospitality,

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Speaker 1: and retail. Um. That's not a predominant share of of

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Speaker 1: the labor market. But companies have been competing with the

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Speaker 1: government for employment because you know, you've been paid in

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Speaker 1: these sectors, you know, not to go to work. So

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Speaker 1: let's I say, let's let's keep it open mind. Uh.

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Speaker 1: You know, we're we're already pretty well on the precipice

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Speaker 1: of seeing uh, you know, these generous extended federal benefits

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Speaker 1: roll off, uh, and we'll start to see I think

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Speaker 1: greater competition for the job openings out there. And the

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Speaker 1: one thing we know about competition is that it tends

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Speaker 1: to lead to lower, not higher inflation pressures. So in

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Speaker 1: this context in the labor market, I think one can

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Speaker 1: assume that if these people, if if they don't want

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Speaker 1: to starve, they've got to come back and compete for

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Speaker 1: these jobs. I think we're gonna have in the next

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Speaker 1: several months and quarters at different story on wages than

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Speaker 1: we've had over the course of the past several months,

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Speaker 1: just because of the federal government intervention on this score. Yeah,

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Speaker 1: and David, you know it seems like table stakes now

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Speaker 1: for any restaurant or any you know, kind of retail

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Speaker 1: or leisure is fifteen dollars per hour. That's significantly higher

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Speaker 1: than what we've seen before. Um, is that something that

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Speaker 1: is going to move the needle? Do you think? Is that?

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Speaker 1: Are we going to see and an ear come in

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Speaker 1: here as people, as businesses reopened, that we will see

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Speaker 1: on the lower ends some significant pressure upward on wages. Well, look,

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Speaker 1: we've already seen that happen. I think the most dangerous

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Speaker 1: thing you could do in this environment is, um, extrapolate

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Speaker 1: you know, the past several months into the future. Uh,

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Speaker 1: you know, we've we've in some sense you could say

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Speaker 1: in these sectors said a bit of a a wall

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Speaker 1: on labor supply, and a lot of it is related

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Speaker 1: to the pandemic and health concerns. Coming back to work

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Speaker 1: a lot of us because the government's been paying you

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Speaker 1: not to work in these low wage sectors. The corporate factor,

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Speaker 1: especially in these um labor intensive service sector industries, they

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Speaker 1: have been compelled UH to raise their wages for now

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Speaker 1: to attract these people off the couch and back into

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Speaker 1: the workforce. Question is that a permanent shift in the

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Speaker 1: landscape or is this something we're living with now? What

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Speaker 1: are we gonna be talking about twelve months from now?

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Speaker 1: You know, it takes me back to the summer of

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Speaker 1: two thousand and eight UM when inflation was over five percent.

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Speaker 1: Oil is a hundred and forty dollars. Everybody was talking about,

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Speaker 1: you know, the supercycling commodities. Everybody was talking about inflation.

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Speaker 1: People tend to forget that, you know. In the summer

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Speaker 1: of two thousand and eight, the e c B under

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Speaker 1: Creche actually raised rates and Bernankee shifted UM to a

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Speaker 1: tightening stand in the summer of oh eight, so we

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Speaker 1: had over five percent inflation. The summer of o eight.

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Speaker 1: Everybody I was still to do back then was super

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Speaker 1: imposing that inflationary experience into the future. And where were

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Speaker 1: we twelve months later, the year of a Year Princess.

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Speaker 1: You know, I was running negative. So all I'm saying

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Speaker 1: is that, yes we have wage inflation, and now yes

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Speaker 1: we have a a in inflationary bulge. Absolutely, but it

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Speaker 1: doesn't make sense to me that we're going to super

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Speaker 1: impose that into a whole new cycle of inflation. So

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Speaker 1: I line up squarely in the Powell camp that this

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Speaker 1: two shell pass. David gotta leave it there, David Rosenberg,

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Speaker 1: Thank you so much. With David Rosenberg Economics. Uh this morning,

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Speaker 1: this is the Bloomberg Surveillance Podcast. Thanks for listening. Join

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Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six

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Speaker 1: and international relations. And subscribe to the Surveillance podcast on

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Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

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Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg