1 00:00:00,040 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,840 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,479 --> 00:00:37,800 Speaker 3: So here's the latest this morning. 11 00:00:37,840 --> 00:00:40,680 Speaker 2: The future of the Federal Reserve in focus as investors 12 00:00:40,680 --> 00:00:44,760 Speaker 2: anticipated policy changes once former Fed Governor Kevin Walsh returns 13 00:00:44,800 --> 00:00:47,680 Speaker 2: to the Central Bank, joining us now to discusses. Mark Short, 14 00:00:47,720 --> 00:00:51,120 Speaker 2: the former chief of staff, the former Vice president, Mike Pence, Mike, 15 00:00:51,159 --> 00:00:53,080 Speaker 2: welcome back to the program. Let's go through some of 16 00:00:53,120 --> 00:00:55,680 Speaker 2: the details and some of the endorsements we've had over 17 00:00:55,720 --> 00:00:59,880 Speaker 2: the past few days. Geta Gopinath, Mohammad Dalerian, the prim 18 00:01:00,040 --> 00:01:02,600 Speaker 2: Mistry of Canada, Mark Carney, and the list goes on 19 00:01:02,880 --> 00:01:05,440 Speaker 2: and on and on. Is Kevin Walsh a pretty conventional 20 00:01:05,520 --> 00:01:07,679 Speaker 2: Republican pick to lead the Federal Reserve. 21 00:01:09,840 --> 00:01:11,760 Speaker 4: Look, I think he is He's somebody who's been on 22 00:01:11,800 --> 00:01:14,440 Speaker 4: the Reserve before, and I think that of the options, 23 00:01:14,440 --> 00:01:17,280 Speaker 4: it's a pretty strong pick for the president. I know 24 00:01:17,319 --> 00:01:19,679 Speaker 4: there's some people who question, you know, what these hearings 25 00:01:19,680 --> 00:01:21,800 Speaker 4: are going to be like when he gets there because 26 00:01:21,880 --> 00:01:25,360 Speaker 4: of positions he took against quantitative easying after the financial 27 00:01:25,400 --> 00:01:29,400 Speaker 4: crisis and reconciling that with a very dubbish approach. Now. 28 00:01:29,600 --> 00:01:34,400 Speaker 4: But look, if the Senate can confirm Tulsa Gavard and 29 00:01:34,480 --> 00:01:36,720 Speaker 4: he and I and Christy Noman at DHS, I don't 30 00:01:36,720 --> 00:01:38,280 Speaker 4: think it's going to be much of a challenge for 31 00:01:38,360 --> 00:01:40,600 Speaker 4: them to confirm Kevin Warsh here to the Fed. 32 00:01:41,200 --> 00:01:43,880 Speaker 5: Mark, you were in the room in Trump won when 33 00:01:44,080 --> 00:01:46,280 Speaker 5: the debate was going on who Trump was going to pick, 34 00:01:46,319 --> 00:01:50,680 Speaker 5: and he ultimately landed on Minuchin's pick of j Powell, 35 00:01:50,720 --> 00:01:54,600 Speaker 5: which I know was not VP Mike Pence's choice. What 36 00:01:54,680 --> 00:01:57,920 Speaker 5: do you think went behind this process why Kevin Walsh 37 00:01:58,080 --> 00:01:59,880 Speaker 5: was picked and not the other Kevin. 38 00:02:01,480 --> 00:02:04,360 Speaker 4: Well, Look, I think there were basically three finalists in 39 00:02:04,440 --> 00:02:07,480 Speaker 4: the last go round. There's Jay Powell, there was Kevin 40 00:02:07,520 --> 00:02:11,000 Speaker 4: Warrish and there's John Taylor, and I think that there 41 00:02:11,080 --> 00:02:14,000 Speaker 4: were different camps aligned with each But the reality is 42 00:02:14,000 --> 00:02:18,760 Speaker 4: that Steve Manuchin made the appeal to the president. Then 43 00:02:18,760 --> 00:02:21,120 Speaker 4: when the President asked, he said who's going to keep 44 00:02:21,240 --> 00:02:24,200 Speaker 4: rates lower? And Mnuchin was clear and saying it would 45 00:02:24,200 --> 00:02:26,600 Speaker 4: be Jay Powell. And I think that's what the President 46 00:02:26,639 --> 00:02:28,639 Speaker 4: was looking for. It was less of a question about 47 00:02:28,880 --> 00:02:31,320 Speaker 4: sound monetary policy. It was a question of who's going 48 00:02:31,360 --> 00:02:34,639 Speaker 4: to push for lower rates. And I mean there's an irony, 49 00:02:34,680 --> 00:02:36,519 Speaker 4: of course now that the President is upset with j 50 00:02:36,639 --> 00:02:39,080 Speaker 4: Powell for not having rates lower, But I have to 51 00:02:39,120 --> 00:02:42,040 Speaker 4: believe that there's been you know, that same conversation is 52 00:02:42,080 --> 00:02:45,120 Speaker 4: repeated itself this go round, and I think there's probably 53 00:02:45,120 --> 00:02:48,320 Speaker 4: been assurances that wars is going to adopt the doublest 54 00:02:48,320 --> 00:02:48,880 Speaker 4: approach here. 55 00:02:49,000 --> 00:02:51,240 Speaker 5: But that's why it's so precarious, given the fact that 56 00:02:51,240 --> 00:02:54,280 Speaker 5: when he was at the FED, he actually was calling 57 00:02:54,400 --> 00:02:56,720 Speaker 5: for a hawkish, tighter monetary policy. 58 00:02:57,280 --> 00:02:59,119 Speaker 6: Do you think his views have truly. 59 00:02:58,919 --> 00:03:01,960 Speaker 5: Evolved or is he trying to be politically correct in 60 00:03:01,960 --> 00:03:02,720 Speaker 5: the moment. 61 00:03:02,480 --> 00:03:03,120 Speaker 6: To get a job. 62 00:03:04,639 --> 00:03:07,600 Speaker 4: And I don't know that I can put myself in 63 00:03:07,680 --> 00:03:10,360 Speaker 4: the issues and know that I think that I do 64 00:03:10,400 --> 00:03:12,760 Speaker 4: you think he has certainly the credentials here? Again, as 65 00:03:12,760 --> 00:03:15,079 Speaker 4: I said, of the options, I think there's probably a 66 00:03:15,120 --> 00:03:17,320 Speaker 4: lot of comfort on the street and comfort in the 67 00:03:17,360 --> 00:03:20,520 Speaker 4: Senate that this is where the president landed and he's gone. 68 00:03:20,600 --> 00:03:23,919 Speaker 4: He is going to have to address the apparent change 69 00:03:23,919 --> 00:03:26,760 Speaker 4: in position from where he was after the financial crisis 70 00:03:26,800 --> 00:03:31,040 Speaker 4: to where he is today. But nonetheless, I think that 71 00:03:31,360 --> 00:03:33,880 Speaker 4: he's going to have a term that's going to extend 72 00:03:33,919 --> 00:03:37,000 Speaker 4: far beyond President Trump's term, and so he perhaps is 73 00:03:37,000 --> 00:03:38,080 Speaker 4: playing a long game here too. 74 00:03:38,400 --> 00:03:40,480 Speaker 1: Mark, I'd love your take on what we heard from 75 00:03:40,480 --> 00:03:43,080 Speaker 1: Tom Tillis, the North Carolina Senator who seems to not 76 00:03:43,160 --> 00:03:45,360 Speaker 1: care at all since he's not running for reelection and 77 00:03:45,360 --> 00:03:49,240 Speaker 1: it is going to block the process until the DOJ 78 00:03:49,680 --> 00:03:53,320 Speaker 1: lawsuit or complaint against the FED is lifted. Do you 79 00:03:53,360 --> 00:03:57,280 Speaker 1: think that he has more popular support among sitting Republicans 80 00:03:57,720 --> 00:03:59,800 Speaker 1: than he did maybe a couple of weeks ago, not 81 00:03:59,840 --> 00:04:01,280 Speaker 1: just with this, but in general. 82 00:04:02,880 --> 00:04:03,680 Speaker 6: He probably does. 83 00:04:03,720 --> 00:04:06,960 Speaker 4: I think there are others who were applauding some of 84 00:04:07,000 --> 00:04:09,400 Speaker 4: the positions he's taking, but feel they can't take the 85 00:04:09,440 --> 00:04:12,320 Speaker 4: same because they'd be concerned about their own reelection options. 86 00:04:12,360 --> 00:04:15,800 Speaker 4: But you know, I think that as it comes to 87 00:04:16,240 --> 00:04:18,800 Speaker 4: you know, he's going to block this until the investigation 88 00:04:19,000 --> 00:04:19,600 Speaker 4: is concluded. 89 00:04:19,640 --> 00:04:20,440 Speaker 6: On Trump Powell. 90 00:04:21,279 --> 00:04:24,160 Speaker 4: I think most people assume the investigation Droom Powell is 91 00:04:24,240 --> 00:04:26,720 Speaker 4: less on the merits and more in effort to pressure 92 00:04:26,760 --> 00:04:29,040 Speaker 4: the Fed to lower rates. And so at the end 93 00:04:29,040 --> 00:04:31,520 Speaker 4: of the day, is the White House going to say 94 00:04:32,240 --> 00:04:35,039 Speaker 4: we're going to continue investigation 're going to say, hey, 95 00:04:35,040 --> 00:04:36,760 Speaker 4: we've got our own guy now to run the Fed, 96 00:04:37,000 --> 00:04:40,200 Speaker 4: so let's pull back on the investigation. It seems like 97 00:04:40,480 --> 00:04:42,359 Speaker 4: at the end of the day, it seems to me 98 00:04:42,440 --> 00:04:44,159 Speaker 4: that this is not something that's going to continue in 99 00:04:44,160 --> 00:04:47,240 Speaker 4: the next year, as potentially the President suggested, you know, 100 00:04:47,520 --> 00:04:49,160 Speaker 4: on Air Force One the other night. 101 00:04:49,200 --> 00:04:49,760 Speaker 6: It seems to me. 102 00:04:49,800 --> 00:04:52,360 Speaker 4: They'll they'll definitely be in a desire to pull back 103 00:04:52,400 --> 00:04:54,560 Speaker 4: on the investigation to allow this to move forward. 104 00:04:54,720 --> 00:04:57,360 Speaker 1: I guess I was getting at something bigger, especially because 105 00:04:57,360 --> 00:04:59,640 Speaker 1: we are in midterm year where we're going to be 106 00:04:59,640 --> 00:05:01,840 Speaker 1: getting a government shutdown evidently every two weeks. And I'm 107 00:05:01,880 --> 00:05:04,560 Speaker 1: just wondering, Mark, going forward, at what point you start 108 00:05:04,600 --> 00:05:09,560 Speaker 1: to see Republicans look at either distancing themselves from President 109 00:05:09,600 --> 00:05:12,360 Speaker 1: Trump's policies. Are you seeing any groundsful of the especially 110 00:05:12,680 --> 00:05:16,400 Speaker 1: after the special election in Texas after the midterm outcomes. 111 00:05:16,520 --> 00:05:18,599 Speaker 6: Are you seeing anything like that or. 112 00:05:18,600 --> 00:05:20,880 Speaker 1: Is it sort of a case by case situation. 113 00:05:22,360 --> 00:05:24,040 Speaker 4: I think it's more case by case, but I think 114 00:05:24,120 --> 00:05:26,800 Speaker 4: it's going to continue to ramp up, I would say, 115 00:05:26,800 --> 00:05:27,640 Speaker 4: over the course of the year. 116 00:05:28,000 --> 00:05:29,919 Speaker 6: And it's not just taxes. 117 00:05:30,240 --> 00:05:33,159 Speaker 4: I mean, there's been a series of special elections in 118 00:05:33,320 --> 00:05:37,360 Speaker 4: deep red states of Mississippi and Georgia in which Republicans 119 00:05:37,360 --> 00:05:40,719 Speaker 4: have been defeated, and so there's clearly a trend building 120 00:05:40,760 --> 00:05:43,039 Speaker 4: at this point, and there's no doubt that other Senate 121 00:05:43,080 --> 00:05:46,120 Speaker 4: Republicans are recognizing that. However, they also know that the 122 00:05:46,120 --> 00:05:50,560 Speaker 4: president has enormous way over the base and particularly in primaries, 123 00:05:50,600 --> 00:05:54,200 Speaker 4: and so I would look to see more Republican centers 124 00:05:54,240 --> 00:05:57,800 Speaker 4: distance themselves after you get through primary season, but being 125 00:05:57,839 --> 00:06:00,599 Speaker 4: reluctant to do so until they've secured their notation and 126 00:06:00,600 --> 00:06:03,560 Speaker 4: then that's that's behind them. So yeah, till Us is 127 00:06:03,600 --> 00:06:06,920 Speaker 4: a different position, don't I don't anticipate you can see 128 00:06:06,920 --> 00:06:08,839 Speaker 4: too much more of that in the short term, but 129 00:06:08,880 --> 00:06:10,920 Speaker 4: perhaps you know, toward the summer months, I think his 130 00:06:11,040 --> 00:06:13,839 Speaker 4: members look toward the general election in November, and they're 131 00:06:13,880 --> 00:06:16,599 Speaker 4: behind their primaries. That's when you begin to see more 132 00:06:16,640 --> 00:06:19,240 Speaker 4: members begin did perhaps take positions similar. 133 00:06:18,960 --> 00:06:19,719 Speaker 6: To Tillis Mark. 134 00:06:19,760 --> 00:06:21,800 Speaker 5: On a final note on Kevin Warsh, the President spoke 135 00:06:21,800 --> 00:06:24,080 Speaker 5: at a dinner over the weekend. I'm reading a quote 136 00:06:24,120 --> 00:06:26,760 Speaker 5: Washington Post. Had someone in the room actually said to me, 137 00:06:26,839 --> 00:06:27,800 Speaker 5: all of this is accurate. 138 00:06:27,880 --> 00:06:28,120 Speaker 6: Quote. 139 00:06:28,120 --> 00:06:31,080 Speaker 5: If he doesn't lower interest rates, I'm suing his ass off. 140 00:06:31,080 --> 00:06:32,920 Speaker 5: And then the President says, I'm kidding. 141 00:06:33,279 --> 00:06:33,479 Speaker 6: Mark. 142 00:06:33,520 --> 00:06:35,640 Speaker 5: Do you think he's actually kidding or is Kevin Warsh 143 00:06:35,640 --> 00:06:38,360 Speaker 5: potentially going to face the same fate as Jay Powe 144 00:06:38,360 --> 00:06:39,640 Speaker 5: if he doesn't lower interest rates. 145 00:06:40,960 --> 00:06:42,840 Speaker 4: Well, I think he would face the same fate if 146 00:06:42,839 --> 00:06:45,560 Speaker 4: he didn't lower interest rates. But again, I think this 147 00:06:45,640 --> 00:06:47,680 Speaker 4: process has played off for a while. It's pretty hard 148 00:06:47,680 --> 00:06:50,080 Speaker 4: for me to see that the President would not have 149 00:06:50,160 --> 00:06:52,960 Speaker 4: moved forward this nomination as he had pretty strong assurances 150 00:06:53,040 --> 00:06:55,400 Speaker 4: that the Warsh was looking to lower rates when he 151 00:06:55,440 --> 00:06:58,240 Speaker 4: got there, and so so yeah, I think he would. 152 00:06:58,320 --> 00:06:59,960 Speaker 4: If he didn't, I think he would face. 153 00:06:59,760 --> 00:07:01,120 Speaker 6: This pressure from the president. 154 00:07:01,160 --> 00:07:03,599 Speaker 4: I think for president somebody who likes lower rates for 155 00:07:03,640 --> 00:07:06,200 Speaker 4: lots of reasons. He made his resources in real estate. 156 00:07:06,520 --> 00:07:09,560 Speaker 4: The president believes that it's better for exporting and for 157 00:07:09,600 --> 00:07:12,680 Speaker 4: a manufacturing base if the dollar is depreciated, and I 158 00:07:12,720 --> 00:07:15,240 Speaker 4: think he knows the impact on equity markets when rates 159 00:07:15,240 --> 00:07:17,400 Speaker 4: are lower, and so I think he wants to continue 160 00:07:17,440 --> 00:07:19,920 Speaker 4: to push for that agenda regardless of who the personnel 161 00:07:19,960 --> 00:07:20,960 Speaker 4: are inside the FED. 162 00:07:21,600 --> 00:07:25,080 Speaker 2: Stay with us more Bloomberg Surveillance coming up after this. 163 00:07:34,520 --> 00:07:37,600 Speaker 2: Andrew Honjost of City says this the employment data is 164 00:07:37,680 --> 00:07:40,200 Speaker 2: unlikely to maturely change the outlet for the labor market. 165 00:07:40,280 --> 00:07:43,560 Speaker 2: We expect a solid one thirty five added in January 166 00:07:43,600 --> 00:07:47,160 Speaker 2: and the unemployment rate remaining unchanged at four point four percent. Andrew, 167 00:07:47,160 --> 00:07:49,320 Speaker 2: that puts you at the top end of the estimates 168 00:07:49,320 --> 00:07:50,440 Speaker 2: for this coming Friday. 169 00:07:50,560 --> 00:07:51,360 Speaker 3: Walk us through why. 170 00:07:51,320 --> 00:07:53,920 Speaker 2: You're looking for that, but also looking for seventy five 171 00:07:53,960 --> 00:07:55,440 Speaker 2: basis points have counts through the year. 172 00:07:55,720 --> 00:07:57,760 Speaker 7: Yeah, top end of the estimates in terms of where 173 00:07:57,760 --> 00:07:58,920 Speaker 7: that payrolls numbers. 174 00:07:58,640 --> 00:07:59,080 Speaker 6: Are going to be. 175 00:07:59,120 --> 00:08:00,800 Speaker 7: But it goes back to what so as talking about, 176 00:08:00,840 --> 00:08:03,240 Speaker 7: what you're all talking about, which is what does this 177 00:08:03,400 --> 00:08:05,160 Speaker 7: data really tell us about what's going on in the 178 00:08:05,240 --> 00:08:05,920 Speaker 7: labor market. 179 00:08:06,000 --> 00:08:07,960 Speaker 6: So we know we have these issues with the birth 180 00:08:08,000 --> 00:08:09,640 Speaker 6: death model. I would actually. 181 00:08:09,440 --> 00:08:11,520 Speaker 7: Agree with Steve Englander that if we get a big 182 00:08:11,600 --> 00:08:13,640 Speaker 7: update to that birth death model, you could get a 183 00:08:13,720 --> 00:08:15,960 Speaker 7: zero or negative number, and I think that's where the 184 00:08:16,760 --> 00:08:20,119 Speaker 7: underlying pace of job growth is running somewhere right around zero. 185 00:08:20,200 --> 00:08:22,080 Speaker 7: And that's what we had Governor Waller talking about in 186 00:08:22,160 --> 00:08:25,160 Speaker 7: his descent from the Fed staying on hold last week. 187 00:08:25,760 --> 00:08:27,760 Speaker 6: So it's a complex. 188 00:08:27,480 --> 00:08:32,240 Speaker 7: Job market is a complicated situation and complicated data. But 189 00:08:32,520 --> 00:08:35,360 Speaker 7: I would go back to that survey that the Conference 190 00:08:35,360 --> 00:08:37,560 Speaker 7: Board puts out and they just ask people do you 191 00:08:37,559 --> 00:08:39,520 Speaker 7: think jobs are plentiful or do you think jobs are 192 00:08:39,520 --> 00:08:41,800 Speaker 7: hard to get? And month after month people are telling 193 00:08:41,880 --> 00:08:44,200 Speaker 7: us jobs are becoming harder and harder to get. So 194 00:08:44,200 --> 00:08:46,520 Speaker 7: I think it is a loosening labor market. Lots of 195 00:08:46,520 --> 00:08:49,880 Speaker 7: statistical issues. Residual seasonality used to be something people would 196 00:08:49,880 --> 00:08:51,839 Speaker 7: look at me very funny when I said, Now people 197 00:08:51,840 --> 00:08:52,360 Speaker 7: are all. 198 00:08:52,160 --> 00:08:52,880 Speaker 6: Familiar with it. 199 00:08:53,440 --> 00:08:55,600 Speaker 7: Every year we get stronger jobs data at this time 200 00:08:55,600 --> 00:08:57,920 Speaker 7: of year, building that into our forecast. 201 00:08:57,960 --> 00:08:59,199 Speaker 6: That's why we have one hundred thirty five. 202 00:08:59,240 --> 00:09:01,680 Speaker 3: What do you think, Braakie, what's the break even? Right? 203 00:09:02,000 --> 00:09:04,280 Speaker 7: I think the break even rate with the way that 204 00:09:04,320 --> 00:09:06,040 Speaker 7: the data are adjusted now, it seems like we can 205 00:09:06,080 --> 00:09:09,360 Speaker 7: run about fifty thousand jobs per month and fifty thousand 206 00:09:09,440 --> 00:09:12,120 Speaker 7: jobs per month as reported by payrolls is leading the 207 00:09:12,200 --> 00:09:15,600 Speaker 7: unemployment rate to stay stable where it is, But there 208 00:09:15,640 --> 00:09:18,160 Speaker 7: is a question about that fifty thousand should be subtracting 209 00:09:18,200 --> 00:09:21,280 Speaker 7: something like sixty thousand from it because those payrolls numbers 210 00:09:21,520 --> 00:09:25,400 Speaker 7: keeping overstated. We'll get more information about that today or 211 00:09:25,600 --> 00:09:29,040 Speaker 7: on Friday when we get the new report. So that 212 00:09:29,679 --> 00:09:32,440 Speaker 7: break even has slowed down. But again, I think the 213 00:09:32,520 --> 00:09:35,120 Speaker 7: key thing here is do we call a job market 214 00:09:35,200 --> 00:09:39,480 Speaker 7: strong if we have essentially zero increase in labor supply 215 00:09:39,640 --> 00:09:42,640 Speaker 7: and zero hiring. I don't think that's a strong job 216 00:09:42,760 --> 00:09:43,480 Speaker 7: labor market. 217 00:09:43,800 --> 00:09:46,160 Speaker 1: Can you have a strong economy though, if you don't 218 00:09:46,160 --> 00:09:47,720 Speaker 1: have a strong labor market. I mean this has been 219 00:09:47,760 --> 00:09:49,960 Speaker 1: sort of a feature of the entire market for a while. 220 00:09:50,280 --> 00:09:52,640 Speaker 1: The labor market has been sluggish at best, and yet 221 00:09:52,640 --> 00:09:55,040 Speaker 1: the economy has continued to grow pretty dramatically. So at 222 00:09:55,040 --> 00:09:59,000 Speaker 1: what point does that become a hamper potentially to any 223 00:09:59,080 --> 00:10:00,720 Speaker 1: kind of their acceleration. 224 00:10:00,880 --> 00:10:01,960 Speaker 6: Yeah, I think eventually it does. 225 00:10:02,080 --> 00:10:05,000 Speaker 7: Mean there's growth, and then there's whether it's broad based 226 00:10:05,040 --> 00:10:08,080 Speaker 7: growth or fairly focused growth. And to the extent that 227 00:10:08,080 --> 00:10:11,280 Speaker 7: we're getting growth from things that are AI related software 228 00:10:11,400 --> 00:10:14,319 Speaker 7: and data centers. A lot of those kinds of areas 229 00:10:14,320 --> 00:10:18,000 Speaker 7: of investment spending don't actually generate a lot of new jobs, 230 00:10:18,120 --> 00:10:21,280 Speaker 7: and so that eventually becomes an issue for the economy. 231 00:10:21,280 --> 00:10:22,960 Speaker 7: In the short term, you run strong growth and you 232 00:10:23,000 --> 00:10:25,199 Speaker 7: can have weaker labor market. I think that's what we're 233 00:10:25,200 --> 00:10:28,840 Speaker 7: seeing right now. But eventually people don't have the wage 234 00:10:28,840 --> 00:10:32,480 Speaker 7: income to purchase. And if you look at consumer spending, 235 00:10:32,520 --> 00:10:34,400 Speaker 7: it's holding up, but it's holding up because the savings 236 00:10:34,480 --> 00:10:37,400 Speaker 7: rate keeps going down. People are saving less and less 237 00:10:37,679 --> 00:10:39,720 Speaker 7: because their incomes aren't tracking with that consumption. 238 00:10:39,800 --> 00:10:41,280 Speaker 6: So eventually it's an issue for the economy. 239 00:10:41,400 --> 00:10:42,000 Speaker 8: You still think that. 240 00:10:42,000 --> 00:10:44,040 Speaker 1: The FED is on track to cut by seventy five 241 00:10:44,080 --> 00:10:47,040 Speaker 1: basis points this year, even with Kevin worsh potentially being 242 00:10:47,520 --> 00:10:50,280 Speaker 1: the FED share Why not more given some of the 243 00:10:50,320 --> 00:10:54,079 Speaker 1: proclamations that we've heard from certainly President Trump as well 244 00:10:54,120 --> 00:10:57,400 Speaker 1: as Kevin Walsh, and considering the weakness that you see 245 00:10:57,400 --> 00:10:59,120 Speaker 1: in the labor market, I think. 246 00:10:58,960 --> 00:11:01,680 Speaker 7: The risks are that we do end up with more 247 00:11:01,720 --> 00:11:04,160 Speaker 7: cuts than seventy five basis points rather than less cuts 248 00:11:04,160 --> 00:11:06,840 Speaker 7: than seventy five basis points. The reason I think seventy 249 00:11:06,840 --> 00:11:09,040 Speaker 7: five makes sense as a base case is although the 250 00:11:09,080 --> 00:11:13,160 Speaker 7: labor market is softening and loosening, it's happening very gradually. 251 00:11:13,360 --> 00:11:16,400 Speaker 7: So if we just project out that gradual loosening of 252 00:11:16,440 --> 00:11:18,960 Speaker 7: the labor market, the unemployment rate will move up just 253 00:11:19,120 --> 00:11:21,760 Speaker 7: a bit this year, Inflation will come down a bit 254 00:11:21,840 --> 00:11:24,040 Speaker 7: this year, and that would mean that the Fed should 255 00:11:24,120 --> 00:11:26,520 Speaker 7: just ease policy rates by a bit this year back 256 00:11:26,559 --> 00:11:29,480 Speaker 7: to something closer to neutral, which fifty seventy five basis 257 00:11:29,480 --> 00:11:30,520 Speaker 7: points lower be neutral. 258 00:11:30,679 --> 00:11:32,160 Speaker 6: I think that should be the base case. 259 00:11:32,400 --> 00:11:34,960 Speaker 7: The market has about fifty I have about seventy five. 260 00:11:35,280 --> 00:11:36,240 Speaker 6: But what's the risk. 261 00:11:36,320 --> 00:11:38,559 Speaker 7: The risk is that when you're in an environment where 262 00:11:38,640 --> 00:11:41,560 Speaker 7: hiring is so weak, if there's any pickup in layoffs, 263 00:11:41,600 --> 00:11:43,600 Speaker 7: that unemployment rate is going to shoot up and then 264 00:11:43,600 --> 00:11:44,440 Speaker 7: we'll get more cuts. 265 00:11:44,520 --> 00:11:47,280 Speaker 5: Well, you haven't changed your expectation even though we have 266 00:11:47,320 --> 00:11:49,400 Speaker 5: a new nomination for the FED. So do you think 267 00:11:49,480 --> 00:11:51,320 Speaker 5: Kevin Walsh is going to be data dependent? 268 00:11:51,360 --> 00:11:52,360 Speaker 6: Given what you're. 269 00:11:52,240 --> 00:11:52,959 Speaker 8: Basing this off? 270 00:11:53,040 --> 00:11:54,600 Speaker 3: Is the data that you expect to come out? 271 00:11:54,760 --> 00:11:56,959 Speaker 7: It's I mean, it's not just Kevin Warsh And I 272 00:11:57,000 --> 00:11:59,120 Speaker 7: think that's an important point that it's the committee as 273 00:11:59,160 --> 00:11:59,440 Speaker 7: a whole. 274 00:11:59,480 --> 00:12:01,000 Speaker 6: That committee has been data dependent. 275 00:12:01,080 --> 00:12:03,319 Speaker 7: I do expect Kevin Warsh as an individual to be 276 00:12:03,400 --> 00:12:06,680 Speaker 7: data dependent as well, So depending on where that inflation 277 00:12:06,840 --> 00:12:09,319 Speaker 7: data comes in in the second half, and I think 278 00:12:09,360 --> 00:12:13,400 Speaker 7: that's really important and probably underemphasized. A lot of focus 279 00:12:13,400 --> 00:12:16,280 Speaker 7: on the labor market right now, and that's appropriate, But 280 00:12:16,520 --> 00:12:18,760 Speaker 7: those inflation numbers, I think by the second half are 281 00:12:18,760 --> 00:12:21,360 Speaker 7: going to look closer to two percent inflation. And that's 282 00:12:21,360 --> 00:12:23,600 Speaker 7: not just going to give Kevin Warreh's ability to cut 283 00:12:23,640 --> 00:12:25,600 Speaker 7: interest rates. I think that will give a lot of 284 00:12:25,640 --> 00:12:27,959 Speaker 7: members of the committee the confidence that they can bring 285 00:12:28,040 --> 00:12:28,520 Speaker 7: right slower. 286 00:12:28,559 --> 00:12:30,960 Speaker 3: What's the source of that? What's driving us back to two. 287 00:12:31,360 --> 00:12:34,560 Speaker 7: Shelter cooling is where we have the most confidence. I 288 00:12:34,559 --> 00:12:36,680 Speaker 7: think a lot of economists have that in their forecast. 289 00:12:36,720 --> 00:12:39,319 Speaker 7: Now we just have so many indicators. It's a soft 290 00:12:39,320 --> 00:12:41,800 Speaker 7: housing sector. The housing sector is soft right now. Prices 291 00:12:41,800 --> 00:12:45,040 Speaker 7: are soft, rents are soft. But this loosening labor market 292 00:12:45,040 --> 00:12:48,640 Speaker 7: should also give us confidence that inflation will come down further. 293 00:12:49,760 --> 00:12:50,800 Speaker 6: And then finally, that. 294 00:12:51,360 --> 00:12:54,000 Speaker 7: Tariff boost that we think is about fifty basis points 295 00:12:54,040 --> 00:12:57,280 Speaker 7: in CPI and PCE right now, that should be dissipating 296 00:12:57,280 --> 00:12:57,480 Speaker 7: by this. 297 00:12:57,520 --> 00:12:59,360 Speaker 2: So let's just cover the shouts of story, because when 298 00:12:59,360 --> 00:13:02,200 Speaker 2: people like you you explain the shout story, it sounds 299 00:13:02,600 --> 00:13:04,920 Speaker 2: so intuitive, it sounds like common sense. 300 00:13:05,040 --> 00:13:06,320 Speaker 3: Okay, you've put it that way. 301 00:13:06,600 --> 00:13:08,240 Speaker 2: I can see where it's going to be several months 302 00:13:08,240 --> 00:13:11,360 Speaker 2: out in the official data. Why do Federal Reserve officials 303 00:13:11,440 --> 00:13:14,040 Speaker 2: not share the confidence you have about the disinflatory tail 304 00:13:14,080 --> 00:13:15,960 Speaker 2: winds that are already coming down the pipeline. 305 00:13:16,720 --> 00:13:19,760 Speaker 7: I think there's a difference between different Fed officials, and 306 00:13:19,800 --> 00:13:22,400 Speaker 7: different officials will be different places on this where I 307 00:13:22,440 --> 00:13:25,200 Speaker 7: am and maybe some of the more dubbish officials are saying, yeah, 308 00:13:25,200 --> 00:13:27,640 Speaker 7: we basically can forecast this thing six months to a 309 00:13:27,720 --> 00:13:28,480 Speaker 7: year in advance. 310 00:13:28,640 --> 00:13:29,960 Speaker 6: We know that it's going to cool down. 311 00:13:30,200 --> 00:13:33,040 Speaker 7: I think there are other Fed officials that maybe also 312 00:13:33,600 --> 00:13:35,800 Speaker 7: kind of know that we can forecast that, but think 313 00:13:35,800 --> 00:13:37,719 Speaker 7: that the way they should behave is if we can, 314 00:13:38,000 --> 00:13:40,160 Speaker 7: because they think it's important to take a strong stand 315 00:13:40,200 --> 00:13:40,880 Speaker 7: against inflation. 316 00:13:40,960 --> 00:13:42,200 Speaker 6: You see three percent right. 317 00:13:42,040 --> 00:13:44,040 Speaker 7: Now, and they think we're supposed to react to that 318 00:13:44,080 --> 00:13:46,440 Speaker 7: three percent, not the forecast of where we're going. I 319 00:13:46,520 --> 00:13:48,400 Speaker 7: react to the forecast, I think other Fed officials do. 320 00:13:48,480 --> 00:13:50,200 Speaker 7: I think that's a difference of opinion in terms of 321 00:13:50,280 --> 00:13:51,559 Speaker 7: how you conduct monetary policy. 322 00:13:51,600 --> 00:13:53,679 Speaker 1: So in other words, this is about appearances. This is 323 00:13:53,720 --> 00:13:56,560 Speaker 1: about appearing hard on inflation, even if they'll come down 324 00:13:56,960 --> 00:13:58,679 Speaker 1: on the same side as the doves. In other words, 325 00:13:58,679 --> 00:14:00,559 Speaker 1: do you agree with Kevin Walsh that people should just 326 00:14:00,600 --> 00:14:02,320 Speaker 1: talk less and not really give forward guns. 327 00:14:03,200 --> 00:14:06,000 Speaker 7: I think well, I do think forward guidance is We're 328 00:14:06,040 --> 00:14:09,480 Speaker 7: probably overly used to forward guidance because we were in 329 00:14:09,520 --> 00:14:12,040 Speaker 7: these strange scenarios where you had to give guidance about 330 00:14:12,120 --> 00:14:14,520 Speaker 7: keeping policy rates at the lower bound for a long 331 00:14:14,559 --> 00:14:17,800 Speaker 7: period of time. So we should be moving away from that. 332 00:14:18,679 --> 00:14:21,160 Speaker 7: In terms of this, you know, is it kind of 333 00:14:21,200 --> 00:14:25,600 Speaker 7: you know, optics talking about inflation. It's hard to make 334 00:14:25,640 --> 00:14:28,120 Speaker 7: an argument that three percent inflation is a lot worse 335 00:14:28,120 --> 00:14:31,160 Speaker 7: for the economy than two percent inflation. The target is 336 00:14:31,200 --> 00:14:33,480 Speaker 7: two percent, so there is an optics reason that you 337 00:14:33,520 --> 00:14:34,600 Speaker 7: want to be at two percent. 338 00:14:35,640 --> 00:14:37,320 Speaker 6: If central banks were to do it over. 339 00:14:37,160 --> 00:14:39,760 Speaker 7: Again, I think most economists would say, probably we should 340 00:14:39,800 --> 00:14:42,800 Speaker 7: have had a range of inflation that would have been acceptable. 341 00:14:42,840 --> 00:14:44,880 Speaker 7: So I do think it's a lot about optics right now. 342 00:14:44,920 --> 00:14:47,840 Speaker 1: This is fascinating, especially because the person who is likely 343 00:14:47,880 --> 00:14:49,960 Speaker 1: to come into be the next FED chair is an 344 00:14:50,000 --> 00:14:52,840 Speaker 1: inflation hawk at least traditionally more than a decade ago, 345 00:14:52,920 --> 00:14:54,120 Speaker 1: and people are saying people. 346 00:14:53,880 --> 00:14:54,960 Speaker 8: Can change in that time. 347 00:14:55,400 --> 00:14:57,560 Speaker 1: Do you think that he is also potentially going to 348 00:14:57,600 --> 00:15:00,600 Speaker 1: accept three percent is a new two percent, to be 349 00:15:00,680 --> 00:15:04,200 Speaker 1: more dubvish in the approach because it hasn't been a problem, 350 00:15:04,200 --> 00:15:06,480 Speaker 1: and frankly, if people were to come back, that might 351 00:15:06,520 --> 00:15:07,720 Speaker 1: be the more appropriate target. 352 00:15:07,840 --> 00:15:08,200 Speaker 6: Yeah. 353 00:15:08,240 --> 00:15:12,240 Speaker 7: I'm not suggesting, and I don't think that Kevin Warsh 354 00:15:12,320 --> 00:15:14,480 Speaker 7: is going to say that three percent should be the 355 00:15:14,520 --> 00:15:16,720 Speaker 7: new two percent, that we should be changing the target 356 00:15:16,800 --> 00:15:20,440 Speaker 7: right now and we've just overshot for multiple years. But 357 00:15:21,000 --> 00:15:23,920 Speaker 7: I do think this idea that we can't be hyper 358 00:15:23,960 --> 00:15:26,560 Speaker 7: sensitive to his inflation off by a tenth of a 359 00:15:26,600 --> 00:15:30,080 Speaker 7: percentage point here or there. I think the more you 360 00:15:30,160 --> 00:15:32,440 Speaker 7: kind of immerse yourself in this data and understand what 361 00:15:32,480 --> 00:15:35,040 Speaker 7: the data are and all the issues and producing it 362 00:15:35,080 --> 00:15:37,040 Speaker 7: and the different choices that we make, it's hard to 363 00:15:37,040 --> 00:15:39,480 Speaker 7: get really excited about being off by a few basis points. 364 00:15:39,480 --> 00:15:41,080 Speaker 7: So I'd like to see the move in that direction. 365 00:15:41,560 --> 00:15:42,440 Speaker 7: Then possibly they will. 366 00:15:42,480 --> 00:15:45,160 Speaker 2: To your point, though, Manjow, I think there's a realization 367 00:15:45,200 --> 00:15:47,400 Speaker 2: on the committee that they can shank the events they influence, 368 00:15:47,840 --> 00:15:50,720 Speaker 2: and they can basically sit here and say, you know what, 369 00:15:50,760 --> 00:15:53,800 Speaker 2: we can shank the events we anticipate by saying things 370 00:15:53,920 --> 00:15:56,920 Speaker 2: like I'm not worried about inflation could actually contribute to inflation. 371 00:15:57,320 --> 00:15:58,760 Speaker 2: Is that ultimately what you get and gain? 372 00:15:59,040 --> 00:15:59,240 Speaker 6: Yeah? 373 00:15:59,480 --> 00:16:02,720 Speaker 7: I think that that's exactly the concern. The reason I 374 00:16:02,720 --> 00:16:04,720 Speaker 7: would be less concerned about that now is because we 375 00:16:04,840 --> 00:16:07,280 Speaker 7: have all of these indications that we're not in an 376 00:16:07,360 --> 00:16:10,400 Speaker 7: environment where we have a bunch of upside around inflation. 377 00:16:10,680 --> 00:16:13,320 Speaker 7: And it is actually the opposite of where we were 378 00:16:13,520 --> 00:16:15,960 Speaker 7: when FED officials were saying they weren't that concerned about 379 00:16:15,960 --> 00:16:18,120 Speaker 7: inflation when everything was supposed to be transferred. 380 00:16:18,160 --> 00:16:18,880 Speaker 6: We had a tight. 381 00:16:18,760 --> 00:16:21,920 Speaker 7: Labor market, we had wages that were accelerating, prices that 382 00:16:21,960 --> 00:16:24,400 Speaker 7: were accelerating all over the place. All of those things 383 00:16:24,440 --> 00:16:26,360 Speaker 7: are decelerating now, So I think you can be a 384 00:16:26,360 --> 00:16:29,680 Speaker 7: lot more confident that we're going to get inflation lower. 385 00:16:30,120 --> 00:16:33,640 Speaker 3: Stay with us, mulplinbeg Savanna's coming up off to this. 386 00:16:43,280 --> 00:16:46,480 Speaker 2: Join us Natsky City. The conversation Henrita triced upon us. 387 00:16:46,520 --> 00:16:48,920 Speaker 2: Henriettes are welcome. Can we find an off rampay? 388 00:16:50,080 --> 00:16:51,840 Speaker 8: I think we can find an off ramp. 389 00:16:51,880 --> 00:16:55,720 Speaker 9: For now, we have until Tuesday, As the Speaker suggested, 390 00:16:55,800 --> 00:16:58,360 Speaker 9: I'm not going to try to move things forward tonight 391 00:16:58,720 --> 00:17:02,000 Speaker 9: around four or five six o'clock, I would say for investors, 392 00:17:02,000 --> 00:17:04,200 Speaker 9: and you brought up the BLS data, that's huge. There's 393 00:17:04,200 --> 00:17:07,240 Speaker 9: also the IRS funding that lapses, and it's tax filing 394 00:17:07,280 --> 00:17:10,800 Speaker 9: season now. But when I travel around and talk to investors, 395 00:17:10,840 --> 00:17:13,400 Speaker 9: one of the questions I get a lot is what's 396 00:17:13,440 --> 00:17:15,960 Speaker 9: happening with the President's two thousand dollars rebate check? 397 00:17:16,000 --> 00:17:17,560 Speaker 8: Are we going to get that for the tariffs? 398 00:17:18,000 --> 00:17:20,200 Speaker 9: And I would encourage folks to think about the fact 399 00:17:20,200 --> 00:17:23,240 Speaker 9: that we just ate all of January up on this conversation. 400 00:17:23,400 --> 00:17:25,439 Speaker 9: It fell apart of the last minute, and now we 401 00:17:25,480 --> 00:17:28,199 Speaker 9: need to spend all of February basically dealing with the 402 00:17:28,280 --> 00:17:31,639 Speaker 9: same government funding bills and then a DHS package, and 403 00:17:31,640 --> 00:17:33,879 Speaker 9: then while the State of the Union, it's basically already 404 00:17:33,880 --> 00:17:37,600 Speaker 9: March and it's only February second. So for the investment community, 405 00:17:37,760 --> 00:17:41,160 Speaker 9: it's really focused on what will not get done because 406 00:17:41,200 --> 00:17:44,320 Speaker 9: we're not doing this, We're not getting a second reconciliation bill, 407 00:17:44,720 --> 00:17:47,040 Speaker 9: we're not getting movement on other items that the President 408 00:17:47,040 --> 00:17:48,119 Speaker 9: talks about quite a lot. 409 00:17:48,359 --> 00:17:51,760 Speaker 5: Well, it seems like Leader Chuck Schumer, Senator from New York, 410 00:17:51,800 --> 00:17:53,639 Speaker 5: cut a deal at the White House, but it doesn't 411 00:17:53,680 --> 00:17:58,080 Speaker 5: seem like Minority Leader Jakeem Jeffries in the House was 412 00:17:58,160 --> 00:18:00,000 Speaker 5: privy to that. How big of a gap right now 413 00:18:00,240 --> 00:18:02,679 Speaker 5: is it between the Senate leaders for the Democratic and 414 00:18:02,720 --> 00:18:04,399 Speaker 5: the House leader from the Democratic Party. 415 00:18:05,359 --> 00:18:08,200 Speaker 9: Yeah, there definitely is a gap, and you can tell 416 00:18:08,240 --> 00:18:11,639 Speaker 9: because there's not a vote for the rule. As Speaker 417 00:18:11,680 --> 00:18:15,359 Speaker 9: Johnson laid out, I think the disconnect between Jeffries and 418 00:18:15,400 --> 00:18:17,480 Speaker 9: Schumer is unfortunate. 419 00:18:17,600 --> 00:18:19,120 Speaker 8: It will ultimately be bridged. 420 00:18:19,359 --> 00:18:23,000 Speaker 9: You saw the guys right behind Jeffries, Jim Cliburn and 421 00:18:23,040 --> 00:18:24,960 Speaker 9: Standi Hoyer saying that they're going to provide the votes 422 00:18:25,000 --> 00:18:27,360 Speaker 9: for this package and encouraging their members to vote yes. 423 00:18:27,440 --> 00:18:29,399 Speaker 8: So I think a lot of this also is to 424 00:18:29,400 --> 00:18:30,200 Speaker 8: do with what we. 425 00:18:30,040 --> 00:18:32,639 Speaker 9: Went through back in the original shutdown, which is really 426 00:18:32,680 --> 00:18:37,080 Speaker 9: propping up potential Speaker Jeffries in advance of the next 427 00:18:37,080 --> 00:18:39,800 Speaker 9: interm election cycle, giving him an opportunity to really stake 428 00:18:39,840 --> 00:18:43,560 Speaker 9: the ground, get more recognition leadership from the conference on 429 00:18:43,640 --> 00:18:45,720 Speaker 9: the House side. And I think that's what this is 430 00:18:45,760 --> 00:18:47,080 Speaker 9: really functionally about. 431 00:18:47,240 --> 00:18:49,240 Speaker 5: Okay, so Speaker Johnson can find the two hundred and 432 00:18:49,240 --> 00:18:52,159 Speaker 5: eighteen votes and we get back to the government operating 433 00:18:52,160 --> 00:18:54,440 Speaker 5: as normal, and we get the BLS data on Friday. 434 00:18:54,680 --> 00:18:57,120 Speaker 5: They still need to figure out the DHS funding. They're 435 00:18:57,119 --> 00:18:58,919 Speaker 5: going to have two weeks to do that. Do you 436 00:18:59,000 --> 00:19:02,880 Speaker 5: see a deal for that new bill potentially that has 437 00:19:02,920 --> 00:19:04,280 Speaker 5: to be drafted. 438 00:19:05,119 --> 00:19:08,040 Speaker 9: Man, I mean, they don't even agree on whether or 439 00:19:08,040 --> 00:19:10,960 Speaker 9: not I should be wearing masks or have name ideas. 440 00:19:11,480 --> 00:19:14,080 Speaker 9: You know, in the weak of the shooting in Minnesota, 441 00:19:14,200 --> 00:19:17,560 Speaker 9: that was just a really immediate thing that Democrats gravitated to. 442 00:19:17,720 --> 00:19:19,960 Speaker 9: I think you see it out in the ether as well. 443 00:19:20,000 --> 00:19:22,120 Speaker 9: If you talk to folks in Minnesota or anywhere else 444 00:19:22,119 --> 00:19:25,560 Speaker 9: in the world where ice has been inserted into these cities, 445 00:19:25,760 --> 00:19:27,960 Speaker 9: they talk about the masks, and they talk about IDs 446 00:19:28,040 --> 00:19:32,080 Speaker 9: a lot, and video cameras as well. Getting early messages 447 00:19:32,160 --> 00:19:35,000 Speaker 9: that Speaker Johnson's not going to agree to those three 448 00:19:35,040 --> 00:19:37,880 Speaker 9: components suggests that we're in for a very rocky ride 449 00:19:37,880 --> 00:19:39,679 Speaker 9: of the next two weeks. I'd be shocked if we 450 00:19:39,680 --> 00:19:41,840 Speaker 9: were able to pull it off without having this bleed 451 00:19:41,880 --> 00:19:43,440 Speaker 9: into you another two weeks. 452 00:19:43,560 --> 00:19:45,880 Speaker 1: Henry, I have to say none of us I'd excited 453 00:19:45,920 --> 00:19:48,000 Speaker 1: about talking about a government shutdown pretty much. You can 454 00:19:48,040 --> 00:19:50,000 Speaker 1: just feel the pall of exhausted and fall over the 455 00:19:50,040 --> 00:19:52,680 Speaker 1: conversation as soon as you say the two words government shutdown. 456 00:19:52,920 --> 00:19:53,960 Speaker 8: I just wonder if. 457 00:19:53,800 --> 00:19:56,400 Speaker 1: We're moving to a phase we can stop this kind 458 00:19:56,440 --> 00:19:58,760 Speaker 1: of pinata or the sort of this kicking the can 459 00:19:58,840 --> 00:19:59,320 Speaker 1: down the road. 460 00:19:59,400 --> 00:20:00,600 Speaker 6: We're always talking about this. 461 00:20:00,640 --> 00:20:02,480 Speaker 1: Maybe it's two weeks, maybe it's one month, maybe it's 462 00:20:02,520 --> 00:20:04,280 Speaker 1: two months. Are we going to get out of this 463 00:20:04,440 --> 00:20:07,000 Speaker 1: or is this the path of travel for the foreseeable future. 464 00:20:07,840 --> 00:20:10,840 Speaker 9: I think welcome to a interim election year. Look at 465 00:20:10,840 --> 00:20:13,200 Speaker 9: some of the special elections that just took place. There's 466 00:20:13,240 --> 00:20:16,920 Speaker 9: one in Texas where the swing was thirty one points 467 00:20:16,960 --> 00:20:20,080 Speaker 9: away from Donald Trump. And I think what Democrats learned 468 00:20:20,080 --> 00:20:22,120 Speaker 9: in October is that as long as they can steer 469 00:20:22,200 --> 00:20:25,280 Speaker 9: the message, they're winning elections. So I don't see a 470 00:20:25,400 --> 00:20:29,359 Speaker 9: reason why this would necessarily stop. The goodness for investors 471 00:20:29,400 --> 00:20:31,440 Speaker 9: is that once we get BLS donal with, it will 472 00:20:31,440 --> 00:20:33,800 Speaker 9: be done with all the way through September thirtieth, So 473 00:20:34,280 --> 00:20:36,760 Speaker 9: we could talk about DHS, but it won't necessarily be 474 00:20:37,040 --> 00:20:38,960 Speaker 9: you know, hey, what we get the employment report? Hey, 475 00:20:39,000 --> 00:20:40,760 Speaker 9: is the IRS going to be able to process refund 476 00:20:40,840 --> 00:20:43,240 Speaker 9: checks and investors can sort of tune out a little 477 00:20:43,240 --> 00:20:45,680 Speaker 9: bit the immigration narrative in an election year. 478 00:20:45,720 --> 00:20:47,520 Speaker 8: I mean, come on, that's that's the tale as old 479 00:20:47,520 --> 00:20:47,800 Speaker 8: as time. 480 00:20:47,880 --> 00:20:48,080 Speaker 6: Now. 481 00:20:48,440 --> 00:20:51,919 Speaker 1: There's a sense also that maybe President Trump is looking 482 00:20:51,960 --> 00:20:54,720 Speaker 1: for more concessions when it comes to not just getting 483 00:20:54,720 --> 00:20:57,000 Speaker 1: the budget through, but also getting his new FED chair 484 00:20:57,080 --> 00:21:00,440 Speaker 1: picked through, and there is a potential for or maybe 485 00:21:00,440 --> 00:21:03,280 Speaker 1: the lawsuit to be dropped against fedcher J. Powell about 486 00:21:03,280 --> 00:21:06,280 Speaker 1: the renovations. I'm just wondering how realistic you see that 487 00:21:06,400 --> 00:21:09,760 Speaker 1: process in being stymide, whether you do see a potential 488 00:21:10,240 --> 00:21:13,840 Speaker 1: path to get Kevin Warrish as the FED chair by may. 489 00:21:14,520 --> 00:21:16,840 Speaker 9: You know, I've been working with Senator Tillis's staff for 490 00:21:17,000 --> 00:21:18,240 Speaker 9: a really long time now. 491 00:21:18,520 --> 00:21:20,159 Speaker 8: They have very high conviction. 492 00:21:20,359 --> 00:21:22,000 Speaker 9: I do not think he is messing around When he 493 00:21:22,040 --> 00:21:24,200 Speaker 9: says I want this case drops and it will block 494 00:21:24,280 --> 00:21:27,399 Speaker 9: all other nominees and all other considerations at the FED, 495 00:21:27,760 --> 00:21:29,960 Speaker 9: you should take that very seriously. So he's going to 496 00:21:30,040 --> 00:21:33,280 Speaker 9: need to get that concern addressed. We have many months 497 00:21:33,400 --> 00:21:36,760 Speaker 9: before we actually need to replace Ja Powell, and they're 498 00:21:36,760 --> 00:21:38,600 Speaker 9: going to probably take all of those months. 499 00:21:38,600 --> 00:21:40,000 Speaker 8: The President will have to capitulate. 500 00:21:40,240 --> 00:21:42,920 Speaker 9: We saw the market's respond sufficiently to give him a 501 00:21:42,920 --> 00:21:45,679 Speaker 9: message that he needs to drop this lawsuit. Jay Powell 502 00:21:45,680 --> 00:21:48,760 Speaker 9: delivered a very forceful rebuttal to that in real time, 503 00:21:48,800 --> 00:21:50,560 Speaker 9: as we all saw from that video. I would take 504 00:21:50,560 --> 00:21:55,119 Speaker 9: that incredibly seriously. I don't think Speaker Senator Tillis is 505 00:21:55,119 --> 00:21:56,920 Speaker 9: going to get rolled on this in any way, shape 506 00:21:57,000 --> 00:22:00,040 Speaker 9: or form. He's just getting louder if anything else. I 507 00:22:00,040 --> 00:22:00,880 Speaker 9: think they will need. 508 00:22:00,760 --> 00:22:02,520 Speaker 8: To address that. It'll probably take some time. 509 00:22:02,440 --> 00:22:04,239 Speaker 5: And he made that point when he joined us on 510 00:22:04,280 --> 00:22:08,120 Speaker 5: Friday Henrietta. But once the DOJ investigation does get wrapped up, 511 00:22:08,359 --> 00:22:12,160 Speaker 5: and once likely Kevin worsh gets through his Senate Banking Committee, 512 00:22:12,520 --> 00:22:14,280 Speaker 5: how does he play on the floor. Do you think 513 00:22:14,320 --> 00:22:16,240 Speaker 5: Democrats vote for him as FED chair? 514 00:22:17,320 --> 00:22:17,800 Speaker 8: I think so. 515 00:22:18,000 --> 00:22:20,159 Speaker 9: I think you'll have a lot of aisle crossing. I 516 00:22:20,200 --> 00:22:24,399 Speaker 9: think that is generally the direction of travel here. With 517 00:22:24,440 --> 00:22:27,600 Speaker 9: this particular nominee, you probably would have seen much fewer votes, 518 00:22:27,600 --> 00:22:29,840 Speaker 9: maybe even a fifty to fifty split on a Kevin. 519 00:22:29,600 --> 00:22:30,720 Speaker 8: Hassett, for example. 520 00:22:31,040 --> 00:22:33,800 Speaker 9: But judging by the temperature of what I picked up 521 00:22:34,160 --> 00:22:36,679 Speaker 9: this weekend from staff on the Democratic side, there are 522 00:22:36,760 --> 00:22:38,720 Speaker 9: going to be some lingering questions. There's a lot of 523 00:22:38,760 --> 00:22:41,680 Speaker 9: random stuff in there. But as somebody who's already been 524 00:22:41,800 --> 00:22:45,399 Speaker 9: in a similar position, has already gone through these approval processes, 525 00:22:45,760 --> 00:22:48,120 Speaker 9: I think that he's on a path to getting back 526 00:22:48,200 --> 00:22:48,879 Speaker 9: person support. 527 00:22:48,960 --> 00:22:50,359 Speaker 5: Right in two thousand and sixty, he had a voice 528 00:22:50,400 --> 00:22:54,080 Speaker 5: vote and he pretty much sailed through unanimously to join 529 00:22:54,320 --> 00:22:56,159 Speaker 5: the FED. And Henriette, I just wanted to end on 530 00:22:56,240 --> 00:22:58,760 Speaker 5: this point because you sort of mentioned it earlier, what 531 00:22:58,800 --> 00:23:01,160 Speaker 5: went on in Texas over the weekend. I know it's 532 00:23:01,240 --> 00:23:04,720 Speaker 5: just a state a state Senate seat, but how this 533 00:23:04,800 --> 00:23:08,359 Speaker 5: Democrat won in a plus seventeen Trump district when he 534 00:23:08,560 --> 00:23:12,520 Speaker 5: was outspent and outraised money wise. Is this a harbinger 535 00:23:12,600 --> 00:23:14,439 Speaker 5: do you think for the midterm? So is this just 536 00:23:14,960 --> 00:23:16,040 Speaker 5: a special election? 537 00:23:17,000 --> 00:23:20,119 Speaker 9: It is a special election, but those the midterm cycle 538 00:23:20,200 --> 00:23:22,480 Speaker 9: and this pre pre mid term that we're in right now, 539 00:23:22,480 --> 00:23:26,639 Speaker 9: we've been in since November, is highly predictive of electoral outcomes. 540 00:23:26,840 --> 00:23:28,440 Speaker 9: And one of the things that I've been concerned about 541 00:23:28,440 --> 00:23:31,200 Speaker 9: for Republicans all year is their effort to redistrict. 542 00:23:31,480 --> 00:23:32,639 Speaker 8: Redistricting is all. 543 00:23:32,520 --> 00:23:34,679 Speaker 9: Fine and well, you do not do that in a 544 00:23:34,720 --> 00:23:38,640 Speaker 9: waveyear because Dems have already wiped away the potential advantage. 545 00:23:38,640 --> 00:23:41,040 Speaker 9: I think it's one seat here or there that you 546 00:23:41,160 --> 00:23:44,159 Speaker 9: might see any kind of plus up versus what was 547 00:23:44,359 --> 00:23:45,720 Speaker 9: happening when we started this year. 548 00:23:46,080 --> 00:23:47,560 Speaker 8: Now you're looking at a wave election. 549 00:23:47,680 --> 00:23:50,879 Speaker 9: They've diluted their districts so they're not solid red anymore. 550 00:23:50,920 --> 00:23:52,800 Speaker 9: They tried to eat into some of the blue spots. 551 00:23:53,000 --> 00:23:55,760 Speaker 9: You're getting a plus thirty one in the DEM favor 552 00:23:56,080 --> 00:23:59,160 Speaker 9: trajectory in a state seat in Texas. 553 00:23:59,240 --> 00:24:00,000 Speaker 8: You got a problem. 554 00:24:00,359 --> 00:24:03,240 Speaker 9: So the primaries I think are really fascinating to watch 555 00:24:03,320 --> 00:24:07,160 Speaker 9: right now, between Cornyn and Paxton, for example, how that's 556 00:24:07,200 --> 00:24:08,679 Speaker 9: going to play out and what it's setting up for 557 00:24:08,720 --> 00:24:10,479 Speaker 9: the general I think is going to be really exciting 558 00:24:10,480 --> 00:24:12,280 Speaker 9: for anybody who cares about elections to watch. 559 00:24:12,320 --> 00:24:14,080 Speaker 8: Those are big swings we're talking about. 560 00:24:14,760 --> 00:24:18,280 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 561 00:24:18,359 --> 00:24:21,880 Speaker 2: in markets, economics, angiopolitics. 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