Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Leye.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg two
Speaker 1: pm Eastern. That's your main event. The Federal Reserve decides,
Speaker 1: Chairman Powell delivers a news conference. Shortly thereafter, Johnny, Tom
Speaker 1: and I in the studio. I'm pleased to say here
Speaker 1: in New York, Tony Kriscenzi, Pimco market strategist and portfolio
Speaker 1: manage a good morning to your Tony chant. Thanks for
Speaker 1: having me here. Will they all? Won't they cut interest
Speaker 1: rates in a couple of hours time. Yes, we think
Speaker 1: it's highly probable the Federal Deserved did nothing to dissuade
Speaker 1: the markets from thinking they'll be a move. And we
Speaker 1: know from our conversations that we have regularly with Ben
Speaker 1: Berninki that when the pocket has a very high probability
Speaker 1: of a certain action, that the Federal Reserve need follow
Speaker 1: through with it. And what could be called the hall
Speaker 1: of mirrors effect, where the markets looking at the Fed
Speaker 1: and the Feds looking back at the markets, and they
Speaker 1: have to mirror what the markets are doing. So the
Speaker 1: probability of what the markets have in for a hike
Speaker 1: is that's too high for the Fed to say no today.
Speaker 1: What's a Harkers cut a mistake? Uh? In this climate,
Speaker 1: hawker Ish cut would be where the FED cuts and
Speaker 1: then it does something like it's done in the past,
Speaker 1: where it looks back and says, well, with these three
Speaker 1: cuts now we think things will be fine. So if
Speaker 1: they look back at the cuts and speak to what
Speaker 1: they've done, and that would be a Harkets cut to
Speaker 1: the day Chairman Paul is going to be in the
Speaker 1: crucible of the press conference. Let's be honest. The furd
Speaker 1: of the question makes sense the rest of what's the
Speaker 1: question you want to ask? So he can define this
Speaker 1: new phrase, Hawkers cut the press. I'm going after the
Speaker 1: press today. Hawkers cut open for Jethro Tall about twenty
Speaker 1: years ago, they were great Hawkers cut. How do you
Speaker 1: phrase that to the chairman in a constructive way one can?
Speaker 1: Michael McKee will be one of the best works. Michael
Speaker 1: McKee will asked the question, but you would expect that
Speaker 1: power will be evasive on the idea that the federal
Speaker 1: reserve is finished and that this potentially is simply a
Speaker 1: mid cycle insurance like adjustment. He will do everything he
Speaker 1: can to leave his options open. And so those in
Speaker 1: the room asking him questions to try to push and say,
Speaker 1: do you really mean to tell us that you are
Speaker 1: open to another cut in December on the eleventh when
Speaker 1: you meet again, or or you're just trying to have
Speaker 1: us think, uh, there'll be more cuts? Most likely UM
Speaker 1: to be straight. Um that FED in this optionality in
Speaker 1: the statement will probably say something that what has said
Speaker 1: last time in its policy meeting, that will continue to
Speaker 1: monitor the implications of incoming data and act as appropriate.
Speaker 1: That still could mean doing nothing. And so it's it's
Speaker 1: okay to say we are open to another cut and
Speaker 1: not actually file through with it. And markets importantly only
Speaker 1: price for thirty basis points more and cuts between now
Speaker 1: and the end of next year. So you said, there's
Speaker 1: not that much tension between the market basis and FED
Speaker 1: forecasts right now, and he so Powell has been put
Speaker 1: in a very good position by the rising market interest
Speaker 1: rates recently and the re steepening of the yield curve.
Speaker 1: I want to John three months terms. I did a
Speaker 1: very careful study of it today and we are now
Speaker 1: out with the question. As I said to Mr Consensi earlier,
Speaker 1: have we broken the curve flattening cycle got to be
Speaker 1: really careful though, now, because the FED is buying tabills.
Speaker 1: Antonio just wonder if we can't take signal from when
Speaker 1: the curve was inverting, whether we can take any signal
Speaker 1: now The curve is stepening from a three month table
Speaker 1: at the longer end of an extent, but the purchases
Speaker 1: haven't happened in any meaningful size yet, and when the
Speaker 1: problems will become acute more in January or so, when
Speaker 1: the amount of bills available to be bought will be low,
Speaker 1: and so when the FED is out there buying, yes,
Speaker 1: it will have an impact on the curve for three
Speaker 1: months TA bill, one month a bill especially two months
Speaker 1: can't possibly be impacted by future FED purchases because these
Speaker 1: bills will have matured. And so we would say that
Speaker 1: the steepening relates more to confidence in the FED, confidence
Speaker 1: in democracy and capitalism to extent that this faith that
Speaker 1: companies people will wake up each and every day and
Speaker 1: try to make a better living for themselves and produce
Speaker 1: a better economic outcome. How with policy uncertainty down a little,
Speaker 1: and I emphasize a little on Breaxit and China, let's
Speaker 1: talk about that. Since the end of August, the beginning
Speaker 1: of September, when the tenure treasury bottomed out, for risks
Speaker 1: have receded, So repricing markets makes sense now. Whether risks
Speaker 1: have diminished to the degree that you think that everything
Speaker 1: is behind us, that the worst is behind us, and
Speaker 1: that things are going to gradually get better from here
Speaker 1: on out, I guess it's a very different judgment. Cold
Speaker 1: where do you come down on that, Tony at the Mongment,
Speaker 1: As you know, John in your home country in the UK,
Speaker 1: even if breggsit, if the election goes as Boris Johnson
Speaker 1: wants on December twelve, Frank Sinatra's birthday, by the way,
Speaker 1: Amber to say that as an Italian um, if it
Speaker 1: goes as expected, and it goes well, and bregsit and
Speaker 1: and the UK does leave the European Union, as you know,
Speaker 1: there's a transition period and there'll be a lot of
Speaker 1: squabbles about that and a lot of uncertainties that could
Speaker 1: cause businesses to say, well, I'm not so sure about
Speaker 1: the future because trade agreements between the UK and the
Speaker 1: rest of Europe will have to be rewritten. A lot
Speaker 1: of things will have to be rewritten, and no one
Speaker 1: will know what the writing will be, and so there
Speaker 1: will be uncertainties there. And also with China because it
Speaker 1: is an election year in the United States and there
Speaker 1: will be it is a bipartisan issue and so it
Speaker 1: will be there will be tensions and the remaining through
Speaker 1: the election. And in the meantime, tony people are starting
Speaker 1: to load upon risk just a little bit incrementally once again,
Speaker 1: how yield spreads the tightest of the year in and
Speaker 1: around those kind of levels now through engine A fifty
Speaker 1: basis points. Good friend of yours, Mr Rivason and the
Speaker 1: ft this week saying we don't like corporate credit risk.
Speaker 1: Why doesn't PIMCO like corporate credit risk? Right now? Daran
Speaker 1: iverson our group c IO is identified and as we
Speaker 1: all have that the corporate credit markets, the risk is
Speaker 1: part of the fixed income market. It has to do
Speaker 1: with something that happened in the that's endemic to the
Speaker 1: markets in general. That happened in the money market, that
Speaker 1: the intermediaries, those who get between the buyer and the
Speaker 1: seller aren't playing the traditional role. And in other words,
Speaker 1: you saw in the money market when interest rates on
Speaker 1: the short term part of the bond market moved up
Speaker 1: towards ten percent, that was because intermediaries decided, well, we're
Speaker 1: not going to participate in the way we used to.
Speaker 1: This could happen in the corporate on market at a
Speaker 1: time when there's a large amount of risk transfer. In
Speaker 1: other words, when investors go to sell corporate bonds someday
Speaker 1: when they have a reason to do so, and typically
Speaker 1: this is a recession risk. Who is it that will
Speaker 1: be wanting taking these hot potatoes each primary deal? Are
Speaker 1: those who uh do a lot of this intermediary intermediation
Speaker 1: will say I don't want it, you have it, you
Speaker 1: take it risk in the corporate credit market in the
Speaker 1: United States, there's the problems in the in the money market,
Speaker 1: or endemic to the financial markets in general, because intermediaries are,
Speaker 1: due to regulatory changes, are unwilling to house inventry. And
Speaker 1: think of it this way. There no longer in the
Speaker 1: storage business. There in the moving business. They will not
Speaker 1: hold inventories, they will not hold the securities of the
Speaker 1: world wants to sell to them. And so that's what
Speaker 1: the warrior is real quickly here, then you're saying that
Speaker 1: the repo uproar and the raging debate over this can
Speaker 1: fold over into longer duration fixing cumb assets to all
Speaker 1: all types of fixed income securities because of the lack
Speaker 1: of liquidity in these other areas. If it happened in
Speaker 1: the treasury market, can happen in the corporate bond market,
Speaker 1: where many securities trade by appointment. Frank Sinatra December twelve,
Speaker 1: the same day as the UK election, and so he
Speaker 1: sings the song is famously uh old man river keeps
Speaker 1: rolling along, so you could uh the best version of
Speaker 1: ever in my opinion, and one of these emotional song.
Speaker 1: But the ideas of capitalism, etcetera keeps rolling along the
Speaker 1: UK and democracy will keep rolling along on that day.
Speaker 1: SD you get back to two pm this afternoon, is
Speaker 1: this going to be market moving? When they start defining
Speaker 1: whatever in God's name of Hawker is cut, is Powell
Speaker 1: meets what is likely to be his objective, there will
Speaker 1: be no movement in the financial markets because it's already
Speaker 1: priced for the idea that there could be a hawkish cut,
Speaker 1: or that the federal reserves three cuts might be enough
Speaker 1: with only about it one more cut price in between.
Speaker 1: Now in the end of next year, it should be
Speaker 1: a stable market. Yeah, well we'll see you. Thank you
Speaker 1: so much. Appreciate that as well. So one place to say,
Speaker 1: we can bring in David Kirkpatrick of Teconomy, the CEO
Speaker 1: and founder and the author of that book You Love
Speaker 1: The Facebook Effect. It ends with Zuckerberg at the end
Speaker 1: of a driveway in California where his life is changing.
Speaker 1: David Kirkpatrick. I thought of that moment as you end
Speaker 1: your book illegiately and and just to cut to the
Speaker 1: chase out bunch of a train wreck on a Kirkpatrick
Speaker 1: meter was his testimony to Congress. I think it was
Speaker 1: a big train wreck. I mean weirdly people said, um,
Speaker 1: you know, he performed well, and some people liked it.
Speaker 1: But I think he doesn't know what to say in
Speaker 1: public because he's really unwilling to actually compromise in any
Speaker 1: fundament where he's a genius. Come on, he got where
Speaker 1: he got, as you show in the Facebook. In fact,
Speaker 1: folks see it in theaters coming up. David, He's supposed
Speaker 1: to hand off the business stuff to other people. Has
Speaker 1: he done that? Well, yes, he has hand. I mean, basically,
Speaker 1: all he cares about is the product and growth and growth, growth, growth.
Speaker 1: That's the mantra that Facebook has always had and it
Speaker 1: continues to have, and that's his obsession. Um. You know,
Speaker 1: some people said, listening to his testimony that he didn't
Speaker 1: even seem to understand what Liever was supposed to be
Speaker 1: or how it was actually supposed to work. Um. You know,
Speaker 1: he didn't answer many of the toughest questions. Um. But
Speaker 1: but I think it's you know, what he goes to Washington,
Speaker 1: what he really wants is just people to understand that
Speaker 1: he's really doing a good thing. That's in his mind
Speaker 1: what it's all about. He believes he is a a
Speaker 1: gifts to the world. Facebook is a gift to the
Speaker 1: world that we just don't understand. And if he believes
Speaker 1: truly that if we just understood it, we wouldn't be
Speaker 1: so critical of him. That's what we say every day
Speaker 1: about John Farrell. David, It's always great to have you
Speaker 1: with us on the program. Tom and I have thought
Speaker 1: and talked about Inside Bill's Brain, which is this great
Speaker 1: documentary about Bill Gates on Netflix, and within that documentary,
Speaker 1: Bill Gates has asked about his performance down in Washington,
Speaker 1: d C in the nineties and through the early two thousands,
Speaker 1: and he uses one word to reflect on the younger
Speaker 1: Bill Gates naive. Do you think Marks Zuckerberg is repeating
Speaker 1: the errors that Bill Gates made when he had to
Speaker 1: go to d C in the same way. Absolutely, I mean,
Speaker 1: it's funny how much Gates has changed. And yes, I
Speaker 1: absolutely think that analogy is completely apt, and the age
Speaker 1: is not too dissimilar. Gates was a little older at
Speaker 1: that time, so Zuckerberg. Actually, Zuckerberg's probably five to ten
Speaker 1: years younger now that I think of it than it
Speaker 1: was then. So you know, his age, he's just so young.
Speaker 1: Let's face it, the guy worth billion dollars at age
Speaker 1: thirty five or thirty six. And um, I think that also,
Speaker 1: in his own mind, is a legitimizer of his behavior.
Speaker 1: How could I be wrong if I'm so rich? I mean, really, so,
Speaker 1: you know, I think there's a tragedy unfolding with this
Speaker 1: company that is of monumental and historic scale. David Kirkpatrick,
Speaker 1: it's a Facebook effect. David. There was a point in
Speaker 1: the dorms of AMers College a few years ago were
Speaker 1: you walked in some rich kid's room, and they had
Speaker 1: the Apple you know, the mac, the little cub thing
Speaker 1: now in the Smithsonian. Since that's time, Apple has been
Speaker 1: rumored to die what fifteen times every time as a
Speaker 1: product cycle. This is it. They're done, They're over. They're
Speaker 1: really once again proving the resiliency here based on the
Speaker 1: rumors on this new phone. Right, well, they are an
Speaker 1: astonishingly resilient company. You joked before I came on that
Speaker 1: you might have to run down to the Apple store
Speaker 1: again later today. I actually I saw their new AirPod,
Speaker 1: and I was thinking, you know, I have a perfectly
Speaker 1: good AirPod, but I'm so reliant on it, and if
Speaker 1: it worked even slightly better, you like, it would probably
Speaker 1: be better. Therefore, it's worth it to spend twifty bucks
Speaker 1: for a marginal increase of efficiency in my life. Yeah,
Speaker 1: I mean face Apple's products, Like you almost said, Facebook,
Speaker 1: Apple's products are the source of digital efficiency in my life.
Speaker 1: And really, I mean I might think I'm addicted, I
Speaker 1: might think that I'm overstressed because of all the things
Speaker 1: I do, but I need it might work. Life depends
Speaker 1: on it, and Apple facilitates it, and they do it
Speaker 1: with enormous skill and capability. I mean, David, my entire
Speaker 1: team wears AirPods so they don't have to talk to me.
Speaker 1: You know, they in their ear all day, so you know,
Speaker 1: I think they're busy. Okay, over there, I'm okay. Are
Speaker 1: you okay? At Maria's on right now on Fox Biz
Speaker 1: with zet Bill. It's my dog Bill with a superman.
Speaker 1: How much you invoice in? I don't know, I'm not
Speaker 1: you know, you know that Bill is free to do
Speaker 1: what he wants. He can't get back to the conversation.
Speaker 1: I want to talk about Facebook earnings as well after
Speaker 1: the close. Any evidence so far, David, that the political
Speaker 1: spotlight on Mark Zuckerberg is damaging the bottom line? Not really.
Speaker 1: I mean, we've got to keep our ears closely attuned
Speaker 1: to that because obviously their costs of remediating the many
Speaker 1: harms they cause society are raising their their costs generally
Speaker 1: a lot, but not so much that it's really had
Speaker 1: a significant effect on a company whose profits are so monumental.
Speaker 1: So so I don't think we'll see significant harm in
Speaker 1: today's earnings. I think, you know, uh, growth revenues are
Speaker 1: just powering forward. Although you see a massive shift over
Speaker 1: time from the developed countries to the developing countries. I mean, really,
Speaker 1: Americans are not using Facebook as much as they used to,
Speaker 1: the same as true in Europe, and that is a
Speaker 1: significant long term problem for them. On the other hand,
Speaker 1: even to the degree we use it, we remain perfect
Speaker 1: targets for advertising on Facebook because the advertisers don't have
Speaker 1: a better place to go, and that continues to be
Speaker 1: their ace in the whole. Well, David, let's explore the
Speaker 1: analogy and the parallels with Microsoft a little bit further.
Speaker 1: I forget the precise words you use, but it sounded
Speaker 1: like something like tragedy and what was about to happen
Speaker 1: with Facebook wasn't going to end very well. With Microsoft,
Speaker 1: things have ended really, really well. In fact, arguably they've
Speaker 1: got even better. Why does the movie end differently with Facebook? Well,
Speaker 1: I'm not sure that it does. I'm not saying Facebook
Speaker 1: inevitably will cannot respond to these social concerns and revive
Speaker 1: itself somehow, But I think the key would be for
Speaker 1: Zuckerberg to have some kind of fundamental revelation that he
Speaker 1: thus far has not had about his need to change course.
Speaker 1: And you know, a changing course probably would also entail
Speaker 1: a significant hit to earnings over time. But then I
Speaker 1: think they could possibly rebuild from their Look. They have
Speaker 1: a service people want to use, and it's growing in
Speaker 1: in the largest sense, you know, on a planetary level.
Speaker 1: So I think they could revive. But I just don't
Speaker 1: think yet they have the humility or, as we said earlier,
Speaker 1: maybe the maturity to see what they need to do.
Speaker 1: In February two thousand and fourteen, John Ferrell mentions Microsoft
Speaker 1: folks David Kirkpatrick, one of the best practices that Mr
Speaker 1: Nodela did is he revolutionized modern Microsoft. Wow. Uh gee,
Speaker 1: I didn't know you were gonna ask about that. Well,
Speaker 1: you know, I think interview i got Maria's dog into
Speaker 1: the interview I'm doing. Okay. There's a humility at Microsoft
Speaker 1: that is, you know. I recently was interviewing Brad Smith,
Speaker 1: who's the number two of Microsoft stage about his new book,
Speaker 1: which is really really excellent by the way. Uh, and
Speaker 1: it's if there's enormous humility to his book, Microsoft has,
Speaker 1: you know, I think you had to get rid of Bomber.
Speaker 1: Bomber was a great leader in some ways, but he
Speaker 1: had no humility. Uh. Satia recognizes that they are in
Speaker 1: a position that requires a bigger picture view. And somehow
Speaker 1: they had been a bomber, had positioned them in relation
Speaker 1: to the cloud, that the raw material was there and
Speaker 1: thought you had been a big part of it before
Speaker 1: he became CEO. And you know they are now becoming
Speaker 1: I think they're a genuine threat to Amazon as the
Speaker 1: dominant cloud player. I wouldn't wouldn't rule out the possibility
Speaker 1: that over the next few years, Microsoft could grow equally
Speaker 1: strong and maybe even longer than Amazon. For a lot
Speaker 1: of reasons. If Amazon gets very quickly, if Amazon gets
Speaker 1: to a million employees, is out of signal for the
Speaker 1: government to break up Amazon, breakup Microsoft, break up Bloomberg.
Speaker 1: Surveillance were shot. A huge government pressure to break these
Speaker 1: companies up is going to grow. I'm not a strong
Speaker 1: believer that it's the right answer, but the pressure is real.
Speaker 1: I mean. But the problem with Amazon and really some
Speaker 1: expend all these companies is even though everybody loves to
Speaker 1: complain about them and people in Washington hate their scale,
Speaker 1: the average American wants to use their services, and that's
Speaker 1: particularly true with Amazon. So politicians who start messing with Amazon,
Speaker 1: you have to be very careful because customers, which are
Speaker 1: voters are not gonna want too much change. This has
Speaker 1: been wonderful. David. Thanks for a wide ranging fing here
Speaker 1: this morning. Really good. I'm glad you mentioned Facebook. Seriously,
Speaker 1: I would interview it was wide raging. I mean when
Speaker 1: you do that, Patrick. I had Paul Kadrowski and David
Speaker 1: Kirkpatrick on the day of the Facebook I p O
Speaker 1: and they were both brilliant, and Kirkpatrick nailed it. Facebook
Speaker 1: was going down in flames and he said there is
Speaker 1: tangible growth, revenue and profit. This is a really important interview.
Speaker 1: John's got a million questions for IRA Jersey at fixed
Speaker 1: income IRA three months ten years spread, it's a pro spread.
Speaker 1: Everybody looks at it. Inverted, inverted terribly. World's coming to
Speaker 1: an end, summer into autumn, etcetera. It's come back out.
Speaker 1: The tenure yield is higher than the three month Treasury
Speaker 1: bill out to standard deviations off the president's election trend.
Speaker 1: Can you say there's a breakout now away from inversion
Speaker 1: and all that bloom? Well, I think yeah, the answer
Speaker 1: is yes, absolutely. Now part of this has been engineered
Speaker 1: by the Federal Reserve, because remember, the Federal Reserve is
Speaker 1: going to be buying you know, sixty billion dollars of
Speaker 1: tea bills a month over the next couple of months,
Speaker 1: and in doing so, what they've done is that three
Speaker 1: months TA bill yield has this dropped a ton so
Speaker 1: actually on that day that they announced it to drop
Speaker 1: ten basis points, so it uninverted and it kept on uninverting,
Speaker 1: you know, primarily because of the Federal Reserve doing. You know,
Speaker 1: I don't know what you want to call it, but
Speaker 1: you know, not que is what what Jay pallis Ira
Speaker 1: Jersey with us fixing him. And the reason I was
Speaker 1: rattled John is because the only question I want to
Speaker 1: ask him is when John and I go over to
Speaker 1: do the election in Britain, We've got a delay and
Speaker 1: see arsenal Man City, Oh that weekend. Yeah, yeah, that'll
Speaker 1: that would be a fun match. I'm sending laughing because
Speaker 1: our produced has got crazy at you for not introducing
Speaker 1: our guest properly. I Jersey, the FED decides will be
Speaker 1: I'm a Jersey of Blimberg Intelligence. Here's our chief US
Speaker 1: right strategist and it's great to have you with a
Speaker 1: Syrah good morning, good morning to talk about the FED
Speaker 1: decision A whole Kish cut. Is that what you're looking for. Well, yeah,
Speaker 1: so it would only be considered hawkish in that like
Speaker 1: not hawkish, and that the Fed's next move is going
Speaker 1: to be hiking, right, So it's hawkish relative to not easing. Um,
Speaker 1: so I would say it's more like, like, does the
Speaker 1: Fed turn to neutral instead of being in an easing mode?
Speaker 1: And I think that the markets set up for that.
Speaker 1: So when you look at what the market is currently pricing,
Speaker 1: we're pricing a cut today and then not another cut
Speaker 1: until May or June of next year. So basically the
Speaker 1: markets priced for a long pause, and I think some
Speaker 1: of the details around whether or not that's a realistic
Speaker 1: outcome is something that the market's going to listen to,
Speaker 1: particularly in the in the press conference afterwards. This is
Speaker 1: really important because typically we go into these kind of
Speaker 1: meetings with a little bit of tension between the market
Speaker 1: and the Fed. We're saying there's not much tension relative
Speaker 1: to previous matings this time around, Well, it doesn't seem
Speaker 1: that way, you know. That. Being said, it also is
Speaker 1: not it's not out of the question that the Federal
Speaker 1: Reserve could wind up saying and sounding a little bit
Speaker 1: more dubbish maybe than the market currently expects because you
Speaker 1: could point to a lot of data, like even the
Speaker 1: ADP data came out. Last month's data came out a
Speaker 1: little bit better than expected, but the prior month was
Speaker 1: revised down, so it actually winds up being closer to
Speaker 1: a hundred thousand print instead of a hundred print. So
Speaker 1: that means, you know, if if you're worried about the consumer,
Speaker 1: you know, jobs is a thing that you could point
Speaker 1: to that says, you know, it's still some fragility in
Speaker 1: the market. Do we have an information vacuum today at
Speaker 1: two because we're not getting all the other stuff we
Speaker 1: typically get it a FED meeting. I don't think so,
Speaker 1: maybe from two to two thirds, but you'll wind up
Speaker 1: having enough information information after j PAL Now don't no forecast.
Speaker 1: We know there's a ton of division on the fo
Speaker 1: m C. We see in the dot plot. Well, I
Speaker 1: just put out on Twitter shows the division. So Ira
Speaker 1: talked to me about how the division comes out in
Speaker 1: the news conference. Where is the challenge for CHAM and
Speaker 1: PAL today, what's the biggest challenge? Well, first, I would
Speaker 1: not be totally surprised if we saw one or two
Speaker 1: descents of some members who didn't want to cut today
Speaker 1: that would not surprise me at all. We saw a
Speaker 1: couple of them back in July. It would not be
Speaker 1: surprising if those same members ended up dissenting again today.
Speaker 1: But that being said, you know, even if that happens,
Speaker 1: I think j PAL then has to go out and say, look,
Speaker 1: we have some members who think that the economy is
Speaker 1: not doing that badly and therefore we shouldn't be cutting.
Speaker 1: So you know, we're you know, we're going to be
Speaker 1: data dependent from this time forward. Are we cutting into
Speaker 1: negative real yields? Yes? Well so so really yields actually
Speaker 1: have moved a little bit higher recently m esthetics so
Speaker 1: so tenure really yields went from negative five basis points
Speaker 1: to positive ten basis point. So it's not a lot,
Speaker 1: but it's still enough to say that the market is
Speaker 1: expecting some modest but not slowing growth from this point forward.
Speaker 1: And that's I think that's an important important to this
Speaker 1: because what you saw basically from November of eighteen through
Speaker 1: the summer of this year was a slowing manufacturing sector.
Speaker 1: That seems like maybe it's starting to stabilize a little
Speaker 1: bit when you look at some of the survey data
Speaker 1: like I S M new orders, if that turns like
Speaker 1: it did in sixteen, then we can wind up with
Speaker 1: a better economic environment going into fascinating thanks are we
Speaker 1: going to be a different different afternoon today? It's it's
Speaker 1: gonna be just jie, thank you so much. With Bloomberg intelligence.
Speaker 1: Right now, we're gonna consider wester Ross. It'll be reporting
Speaker 1: late on December twelveth Wester Ross will come in a
Speaker 1: little late. Raphael is going right there. She's nailing it
Speaker 1: with a Game of Thrones three theme onto December twelve.
Speaker 1: What's House Targarian gonna do here? On December twelve? Trust
Speaker 1: she'd let do that thing where I introduced the guest
Speaker 1: first original, Let me try it, Let me try it?
Speaker 1: Okayo bug opinion columnist. She's fabulous and she goes right
Speaker 1: to John Snow, okay, what's gonna happen with the House
Speaker 1: Targaryan on December twelve. I did have a reader who
Speaker 1: sent me a note yesterday saying, uh, you know the
Speaker 1: remainders are the Lanisters. How can you write so uh
Speaker 1: leaving leaving aside you know who's going to benefit from
Speaker 1: this winter? But December twelfth is uh, I would say
Speaker 1: the most important election Britain has had in a generation.
Speaker 1: It will determine not only Brexit, not only the how
Speaker 1: and the win, but also really um the shape of
Speaker 1: economic policy because we have two very different uh parties,
Speaker 1: the government and the opposition, with with very divergent proposals
Speaker 1: for how to run the British economy. Um, I wouldn't
Speaker 1: say the Conservative one is a traditional conservative government by
Speaker 1: any means. It's it's uh, you know, they've they've opened
Speaker 1: the spending taps, but the labor offering is very radical
Speaker 1: and so I think the the question for voters on
Speaker 1: December twelve is is this a Brexit election or are
Speaker 1: they voting on something much bigger than that? Is this
Speaker 1: the first election where they become like Europe where it's
Speaker 1: not just classically labor Tory, but that finally it's three
Speaker 1: and four in five parties. Well, it did look for
Speaker 1: a while like this would be a sort of four
Speaker 1: party race with the Conservatives, the Labor Party, the newly
Speaker 1: resurgent Liberal Democrat Party and Nigel Farage is Brexit Party. Now,
Speaker 1: what's happened at Boris Johnson sealed his new deal with
Speaker 1: the European Union is that the Brexit Party has fallen
Speaker 1: back quite significantly in the polls um they were around
Speaker 1: I think even the last I looked and we haven't
Speaker 1: heard a lot from Farage, but the Conservatives are you know,
Speaker 1: quietly and not so quietly, telling him, look back off,
Speaker 1: you want Brexit. We're delivering Brexit. It would be you know,
Speaker 1: crazy to to run against our deal. And indeed many
Speaker 1: Brexit Party UM candidates and supporters are you know, wavering,
Speaker 1: and some of them have said, look, this deal is
Speaker 1: is good enough for us. So I think now we're
Speaker 1: down to maybe three parties. We don't think the Liberal
Speaker 1: Democrats are going to be strong enough to to to
Speaker 1: get a majority by any stretch, but there is a
Speaker 1: possibility that remain parties, if they did well enough, could
Speaker 1: somehow cobble together a coalition. But really, at the moment,
Speaker 1: this is Boris Johnson's election to lose. Told to me
Speaker 1: about the campaigning to wrest the mistakes so many of
Speaker 1: us made, myself included going into the nast election in
Speaker 1: saying June of that year was believing it would be
Speaker 1: a single issue election. Then the campaigning started and Jeremy
Speaker 1: Corbyn hardly talked about the EU and Brexit. Is this
Speaker 1: a lot more than just about Brexit this time around.
Speaker 1: I think it will. It's always more than about Brexit
Speaker 1: because you know, for voters, in their day to day lives,
Speaker 1: what they really care about her you know, how how
Speaker 1: crowded is their child's school classroom? Just Phillips the Labor
Speaker 1: and he just stood up in Parliament and said, my
Speaker 1: son is turning eleven. He can only go to school
Speaker 1: four and a half days a week. His classroom is
Speaker 1: you know, thirty kids in it. What are you going
Speaker 1: to do about that? So the Labor will try to
Speaker 1: make this election about those issues that will that will
Speaker 1: undoubtedly resonate. But Labor has got a problem. It's Brexit
Speaker 1: policy is a bit of a mess. Um entails a negotiation,
Speaker 1: a renegotiation, it entails a referendum, maybe two referendums if
Speaker 1: they if if they join with the Scottish National Party.
Speaker 1: And that's not an easy cell because you capture in
Speaker 1: your writing not only the elite of London and all
Speaker 1: the you know, the hardy stuff we look at every day,
Speaker 1: but also what the people are talking about. Take us
Speaker 1: away from, you know, the day to day madness of
Speaker 1: this and for our American audience, explain and you name
Speaker 1: the village, you named the town, you name the city.
Speaker 1: How are the people responding to December twelfth? I think
Speaker 1: there was a time when people did not want another election.
Speaker 1: There's been you know, four or three or four votes,
Speaker 1: You've had referendums, you had the seen election. At this point,
Speaker 1: they're so tired of the gridlock and parliament and hearing
Speaker 1: about Brexit. I think everyone is resigned to having a
Speaker 1: chance to change this parliament and move forward. But you know,
Speaker 1: you want to talk about a town or place where
Speaker 1: where it gets real. Wolverhampton in the Midlands, Brexit voting
Speaker 1: area but Labor supporting. So what do those voters do.
Speaker 1: Do they go with Boris Johnson or do they stick
Speaker 1: with the Labor Party as their families all aways had
Speaker 1: that that's going to be where this is going to decided.
Speaker 1: Thank you so much. And this is a perspective we value.
Speaker 1: I you know, have to read in on this folks,
Speaker 1: to be honest. I think it's a soccer team. John
Speaker 1: Farroll talks about about once every twelve or fourteen weeks.
Speaker 1: But Chris Raphael, what is the affinity the attraction of
Speaker 1: the Prime minister to people who are generationally in doubt
Speaker 1: of the conservative elite of London. Yeah. I think this
Speaker 1: Prime Minister is going to try to distance himself from
Speaker 1: past Conservative governments. And one way he does that is say,
Speaker 1: I will spend the money. Um, I'm not afraid to
Speaker 1: port into in the NHS. New This is something Americans
Speaker 1: I think. Um, you may not understand that the NHS
Speaker 1: has an eight percent approval rating in this country. Eight
Speaker 1: percent of people love the fact that they have health
Speaker 1: care free at the point of delivery. It's taxpayer funded.
Speaker 1: And you have a concern p bit of government that
Speaker 1: is going, you know, full on towards spending more money
Speaker 1: on that, more money on police, more money on education.
Speaker 1: That's how he's going to try to win over those
Speaker 1: voters who have said, you know, the Conservatives there for
Speaker 1: uh you know, therefore the wealthy voters in the southeast
Speaker 1: and uh, you know, he will try to appeal to that.
Speaker 1: He's also going to try to peel to young voters.
Speaker 1: A Conservatives have lost the youth vote, um in and
Speaker 1: he's going to try to bring them back. Um and uh,
Speaker 1: to the extent that he can do that, he's got
Speaker 1: very good chances, trust, thank you. So much writing for
Speaker 1: Bloomberg Opinion. Can't say enough about the game of Thronese
Speaker 1: angle from twenty four hours ago, as Trres roth Field
Speaker 1: dives into this election to December twelve. I learned a
Speaker 1: lot there. Hope that it it was good for all of
Speaker 1: you as well. She's with Bloomberg Opinion. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at tom Key before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.