1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:36,760 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. We've got a 10 00:00:36,760 --> 00:00:39,720 Speaker 2: lot to discuss President Trump extending trade talks with China 11 00:00:39,920 --> 00:00:42,520 Speaker 2: for another sixty days as both countries continue to win 12 00:00:42,560 --> 00:00:45,120 Speaker 2: out key differences. Joining us now to discuss that and 13 00:00:45,120 --> 00:00:47,639 Speaker 2: a whole lot more. The seventy Night Secretary of the Treasury, 14 00:00:47,960 --> 00:00:50,280 Speaker 2: Scott Besson, mister Secretary, good morning, good to see it. 15 00:00:50,320 --> 00:00:50,800 Speaker 3: Warren John. 16 00:00:51,159 --> 00:00:53,720 Speaker 2: You're a cover model. Now you're famous. Can we get 17 00:00:53,720 --> 00:00:57,279 Speaker 2: that front cover up for Business Week this month? Mister Secretary? 18 00:00:57,320 --> 00:00:59,040 Speaker 2: I remember when you were just Scott Besson and we 19 00:00:59,040 --> 00:01:00,640 Speaker 2: could go for breakfast to get the three of us 20 00:01:00,640 --> 00:01:02,040 Speaker 2: and no one would bother you. What happened. 21 00:01:02,240 --> 00:01:04,120 Speaker 1: I don't know, but I hope it's not the curse 22 00:01:04,280 --> 00:01:11,480 Speaker 1: the cover because it tolf his Historically, the being on 23 00:01:11,520 --> 00:01:12,560 Speaker 1: the cover is a curse. 24 00:01:12,680 --> 00:01:15,120 Speaker 2: So well, the secrety market is not curse that keeps 25 00:01:15,120 --> 00:01:17,680 Speaker 2: grinding out all time highs. There is some confidence that 26 00:01:17,720 --> 00:01:20,560 Speaker 2: we're selling some issues on the trade front. There's one 27 00:01:20,600 --> 00:01:22,440 Speaker 2: issue that came up this week that we'd love to 28 00:01:22,440 --> 00:01:25,000 Speaker 2: hear from you about, and that's in Vidia. Where did 29 00:01:25,000 --> 00:01:28,880 Speaker 2: this agreement come from? You've been quite innovative this administration 30 00:01:28,959 --> 00:01:31,479 Speaker 2: on trade issues. Where did this come from? Who came 31 00:01:31,560 --> 00:01:31,960 Speaker 2: up with it? 32 00:01:32,600 --> 00:01:33,200 Speaker 3: The President? 33 00:01:33,720 --> 00:01:37,920 Speaker 1: The president, As I tell everyone, the President is one 34 00:01:37,959 --> 00:01:40,360 Speaker 1: of the most open minded people I know. He does 35 00:01:40,400 --> 00:01:43,479 Speaker 1: everything at first principles. Why do we do things this way? 36 00:01:43,520 --> 00:01:46,280 Speaker 1: Why shouldn't we do it the other way? And you know, 37 00:01:46,560 --> 00:01:49,920 Speaker 1: I think that this is a very unique solution allows 38 00:01:49,960 --> 00:01:52,680 Speaker 1: in Nvidia to expand into China. 39 00:01:53,080 --> 00:01:55,400 Speaker 3: It can make in Vidia chips. 40 00:01:55,440 --> 00:02:01,600 Speaker 1: The bellweather for Chinese technology, and then the US taxpayer 41 00:02:01,640 --> 00:02:02,520 Speaker 1: gets a share of that. 42 00:02:02,760 --> 00:02:05,840 Speaker 2: Key was unique? Is it unique to Invidia an empty 43 00:02:06,080 --> 00:02:08,000 Speaker 2: or is this a model for other companies? 44 00:02:08,360 --> 00:02:11,480 Speaker 1: I think we could see it in other industries over time. 45 00:02:11,520 --> 00:02:15,280 Speaker 1: I think you know right now this is unique, but 46 00:02:15,960 --> 00:02:18,760 Speaker 1: now that we have the model and the beta test, 47 00:02:19,080 --> 00:02:20,040 Speaker 1: why not expand it. 48 00:02:20,240 --> 00:02:21,880 Speaker 4: What do you say to people who think we're putting 49 00:02:21,919 --> 00:02:26,480 Speaker 4: a price on national security concerns by basically selling export licenses. 50 00:02:27,480 --> 00:02:30,080 Speaker 1: There are no national security concerns here. We would not 51 00:02:30,960 --> 00:02:34,320 Speaker 1: sell any of the advanced chips. So the H twenties, 52 00:02:34,600 --> 00:02:36,240 Speaker 1: I don't know whether you say there are four or 53 00:02:36,240 --> 00:02:39,880 Speaker 1: five six levels down the chip stack. What we do 54 00:02:40,000 --> 00:02:44,280 Speaker 1: not want here, Anne Marie, is for Huawei to have 55 00:02:44,360 --> 00:02:48,800 Speaker 1: a digital Belton road. So we do not want the 56 00:02:48,919 --> 00:02:52,800 Speaker 1: standard to become Chinese across the world or even in China. 57 00:02:53,000 --> 00:02:55,560 Speaker 4: Well, we have exclusive reporting that Beijing is now sending 58 00:02:55,560 --> 00:02:58,440 Speaker 4: out letters to firms saying, actually, shrug off those H 59 00:02:58,560 --> 00:03:02,000 Speaker 4: twenty and use our domestick champions. Is this something you 60 00:03:02,080 --> 00:03:04,160 Speaker 4: might discuss with your counterpart. 61 00:03:04,200 --> 00:03:05,760 Speaker 3: Sure, we can discuss that. 62 00:03:05,919 --> 00:03:09,919 Speaker 1: But it also tells me that they are worried about 63 00:03:09,960 --> 00:03:14,079 Speaker 1: the Nvidio chips becoming the standard in China. Look In 64 00:03:14,200 --> 00:03:18,120 Speaker 1: video is an incredible product. A lot of the technology 65 00:03:18,160 --> 00:03:22,640 Speaker 1: in China is they're piggybacking, And I'll use piggybacking as 66 00:03:22,680 --> 00:03:27,960 Speaker 1: a kind word for acquiring our technology do you mean 67 00:03:28,000 --> 00:03:31,799 Speaker 1: stealing your words? And yes, that's what I mean. 68 00:03:32,200 --> 00:03:33,000 Speaker 3: And the. 69 00:03:34,440 --> 00:03:38,160 Speaker 1: In video Jensen Wang just stays years ahead of them. 70 00:03:38,560 --> 00:03:41,240 Speaker 4: Criticism came from the Wall Street Ternal Editorial Board though 71 00:03:41,320 --> 00:03:44,480 Speaker 4: about this new unique policy. They say it's a step 72 00:03:44,480 --> 00:03:48,640 Speaker 4: toward government control of private business. Are you concerned some 73 00:03:48,720 --> 00:03:50,880 Speaker 4: of these polies are starting to look like the country 74 00:03:50,920 --> 00:03:54,840 Speaker 4: you're actually trying to de risk from central planning basically 75 00:03:54,840 --> 00:03:55,520 Speaker 4: out of the old No. 76 00:03:55,720 --> 00:03:59,040 Speaker 1: No, no, no, not at all, because where we got 77 00:03:59,600 --> 00:04:04,960 Speaker 1: was with this unfettered trade. We did not have secure 78 00:04:05,040 --> 00:04:08,080 Speaker 1: trade or fair trade, and so now we are trying 79 00:04:08,120 --> 00:04:12,080 Speaker 1: to make it secure. So you don't want to We're 80 00:04:12,120 --> 00:04:16,480 Speaker 1: not sending out the highest level chips, and we don't 81 00:04:16,480 --> 00:04:20,599 Speaker 1: want to sell everything to everybody. So there is a 82 00:04:20,680 --> 00:04:25,040 Speaker 1: need for intervention. And you know, the Wall Street Journal 83 00:04:25,680 --> 00:04:28,440 Speaker 1: just let her rip with kind of a bunch of grumpy 84 00:04:28,480 --> 00:04:29,520 Speaker 1: old men over there. 85 00:04:29,600 --> 00:04:30,680 Speaker 3: I was with them yesterday. 86 00:04:31,720 --> 00:04:33,520 Speaker 2: This is going to raise some revenue. What do you 87 00:04:33,520 --> 00:04:34,320 Speaker 2: plan to do with it? 88 00:04:34,760 --> 00:04:35,640 Speaker 3: Paid on the debt. 89 00:04:36,000 --> 00:04:37,480 Speaker 2: It's all going to go to play down the debt. 90 00:04:37,520 --> 00:04:39,800 Speaker 2: Because we have heard some stories about the money going 91 00:04:39,839 --> 00:04:44,480 Speaker 2: back to consumers, going back to citizens of the United States, taxpayers. 92 00:04:43,960 --> 00:04:48,040 Speaker 1: Well, President President Trump's talked about that, and look at 93 00:04:47,440 --> 00:04:52,440 Speaker 1: these the bottom fifty percent of wag journers in the 94 00:04:52,440 --> 00:04:55,440 Speaker 1: One Big Beautiful Bill are getting a lot of money back. 95 00:04:55,520 --> 00:04:58,200 Speaker 1: No tax and tips, no tax on over time, no 96 00:04:58,320 --> 00:05:02,760 Speaker 1: tax on Social Security loans are going to be tax deductible. 97 00:05:03,040 --> 00:05:06,160 Speaker 1: So I think if we could make a substantial dent 98 00:05:06,400 --> 00:05:09,159 Speaker 1: in the debt repayment, then we could talk about a 99 00:05:09,200 --> 00:05:09,920 Speaker 1: program like that. 100 00:05:10,000 --> 00:05:11,480 Speaker 2: Could you share with us the kind of numbers you're 101 00:05:11,520 --> 00:05:13,919 Speaker 2: thinking about at the moment, just in terms of revenue raising, 102 00:05:13,960 --> 00:05:15,680 Speaker 2: and not just the Nvidia deal. I'm talking about the 103 00:05:15,760 --> 00:05:17,360 Speaker 2: terraffs on top of that. What are we raising at 104 00:05:17,360 --> 00:05:18,600 Speaker 2: the moment month on months. 105 00:05:18,440 --> 00:05:21,520 Speaker 1: Well, Johnson, I've been saying that we could hit three 106 00:05:21,600 --> 00:05:24,440 Speaker 1: hundred billion this year, and I think that number is 107 00:05:24,440 --> 00:05:26,560 Speaker 1: going to be low. I think I'm going to I 108 00:05:26,640 --> 00:05:30,240 Speaker 1: always like to come in low and then surprise on 109 00:05:30,279 --> 00:05:32,880 Speaker 1: the upside. But I think in the next days or 110 00:05:32,960 --> 00:05:37,000 Speaker 1: weeks I may have to move that number up substantially. 111 00:05:37,279 --> 00:05:39,120 Speaker 2: You've heard the debate playing out on Wall Street now 112 00:05:39,160 --> 00:05:41,119 Speaker 2: for a number of months. Who's going to pay the teriffs? 113 00:05:41,160 --> 00:05:43,160 Speaker 2: By definition, the importer will pay the tariff. The more 114 00:05:43,200 --> 00:05:45,920 Speaker 2: important question here is who absorbs the costs, whether it's 115 00:05:45,960 --> 00:05:48,200 Speaker 2: the foreign supplier, whether it's the domestic company here in 116 00:05:48,200 --> 00:05:50,279 Speaker 2: the United States, or the end consumer. We've got some 117 00:05:50,360 --> 00:05:53,200 Speaker 2: data yesterday, You've seen it. We've all looked at it. 118 00:05:53,520 --> 00:05:57,799 Speaker 2: Limited tariff pass through relative to what was expected. Because 119 00:05:57,800 --> 00:05:59,680 Speaker 2: of that, a lot of people are suggesting that maybe 120 00:05:59,760 --> 00:06:02,360 Speaker 2: companies are absorbing costs in a way we didn't anticipate. 121 00:06:02,520 --> 00:06:04,720 Speaker 2: Perhaps the past through will be more muted in the future. 122 00:06:04,960 --> 00:06:07,960 Speaker 2: Are you comfortable with where things are now or do 123 00:06:08,040 --> 00:06:10,360 Speaker 2: you think things might rebalance in the months to count. 124 00:06:10,360 --> 00:06:14,200 Speaker 1: Jonathan, I think your framing there is exactly right, exactly right, 125 00:06:14,320 --> 00:06:18,760 Speaker 1: because that obviously that the tariff itself is paid at 126 00:06:18,760 --> 00:06:22,600 Speaker 1: the port, but what if the producer in the other 127 00:06:22,839 --> 00:06:27,080 Speaker 1: country has lowered their price the ten fifteen to twenty percent, 128 00:06:27,200 --> 00:06:30,000 Speaker 1: so that there is no price change with the tariff. 129 00:06:30,400 --> 00:06:35,160 Speaker 1: And obviously our largest trade deficit is with China, and 130 00:06:35,360 --> 00:06:38,800 Speaker 1: China does not have the same profit objective that other 131 00:06:38,920 --> 00:06:43,600 Speaker 1: Western democracies do, so that is an employment agency, and 132 00:06:43,720 --> 00:06:47,279 Speaker 1: my view has been that they would continue to eat 133 00:06:47,320 --> 00:06:51,320 Speaker 1: the tariffs. They are doing that, so I think what 134 00:06:51,360 --> 00:06:54,880 Speaker 1: we've seen is likely to continue happening. I also think 135 00:06:54,960 --> 00:06:57,360 Speaker 1: there are probably a lot of corporate margins that got 136 00:06:57,480 --> 00:07:03,159 Speaker 1: very fat during COVID. We're seeing a return to normal 137 00:07:03,240 --> 00:07:04,320 Speaker 1: pre COVID margins. 138 00:07:04,440 --> 00:07:06,880 Speaker 2: You see this as some kind of redistribution between corporate 139 00:07:06,920 --> 00:07:10,080 Speaker 2: America and maybe the consumer Main Street and Wall Street. 140 00:07:10,840 --> 00:07:14,600 Speaker 1: I think this administration is all about Main Street, but 141 00:07:14,680 --> 00:07:19,640 Speaker 1: Wall Street's at a new high. So it's this fault equivalency. 142 00:07:19,760 --> 00:07:22,960 Speaker 1: It's not either or I tell everyone, I call it 143 00:07:23,000 --> 00:07:27,280 Speaker 1: parallel prosperity. Wall Street's done great, Main Street can now 144 00:07:27,360 --> 00:07:27,760 Speaker 1: do great. 145 00:07:27,960 --> 00:07:30,200 Speaker 2: Wall Street might do even better if the Federal Serve 146 00:07:30,240 --> 00:07:32,720 Speaker 2: cuts interest rates. The President was pretty clear yesterday put 147 00:07:32,720 --> 00:07:35,720 Speaker 2: out this comment, Jerome too late, pal must now lower 148 00:07:36,040 --> 00:07:38,360 Speaker 2: the interest rate. Is it reasonable to give them a 149 00:07:38,400 --> 00:07:40,840 Speaker 2: bit more time to draw conclusions about what's happening here? 150 00:07:41,240 --> 00:07:44,520 Speaker 1: Well, I think what we could see is that, let's 151 00:07:44,640 --> 00:07:47,920 Speaker 1: first of all, what if the BLS data had been 152 00:07:48,480 --> 00:07:51,920 Speaker 1: the higher quality and we'd had those numbers, Jonathan. So 153 00:07:53,080 --> 00:07:57,800 Speaker 1: if we'd seen those numbers in May in June, I 154 00:07:57,840 --> 00:08:01,200 Speaker 1: suspect we could have had rate cuts in June and July. 155 00:08:01,480 --> 00:08:05,000 Speaker 1: So that tells me that there's a very good chance 156 00:08:05,040 --> 00:08:09,040 Speaker 1: of a fifty basis point rate cut, and I think 157 00:08:09,720 --> 00:08:12,400 Speaker 1: President Trump is very good at giving these nicknames. And 158 00:08:12,480 --> 00:08:17,280 Speaker 1: I think the reason that the Jay Powell gets a 159 00:08:17,360 --> 00:08:20,080 Speaker 1: nickname too late is because he wants to go into 160 00:08:20,120 --> 00:08:23,000 Speaker 1: a series of rate hikes. He's not willing. He's not 161 00:08:23,120 --> 00:08:26,600 Speaker 1: Alan Greenspan, who is very forward thinking. They try to 162 00:08:26,640 --> 00:08:28,960 Speaker 1: be more data driven, which I think is a mistake 163 00:08:29,360 --> 00:08:32,480 Speaker 1: because I think we are going back into an economy 164 00:08:32,559 --> 00:08:35,720 Speaker 1: like we had in the nineties, So you know, it's 165 00:08:35,880 --> 00:08:39,760 Speaker 1: just very old fashioned thinking. But I do think we 166 00:08:39,840 --> 00:08:43,200 Speaker 1: could go into a series of rate cuts here, starting 167 00:08:43,800 --> 00:08:46,240 Speaker 1: with a fifty basis point rate cut in September. 168 00:08:46,400 --> 00:08:49,560 Speaker 4: Fifty basis rate cut in September. Does that signal that 169 00:08:49,600 --> 00:08:51,600 Speaker 4: the economy, though, is not doing well. 170 00:08:52,120 --> 00:08:57,360 Speaker 1: That signals that there's an adjustment and the rates are 171 00:08:57,640 --> 00:09:01,520 Speaker 1: too constrictive if you look at it any model that 172 00:09:01,840 --> 00:09:05,839 Speaker 1: the if you we should probably be one hundred and 173 00:09:05,880 --> 00:09:09,079 Speaker 1: fifty one hundred and seventy five bases points lower. So 174 00:09:10,000 --> 00:09:14,000 Speaker 1: I think the committee needs to step back. I think 175 00:09:15,400 --> 00:09:19,920 Speaker 1: probably one of the most politicized governors just went off 176 00:09:19,960 --> 00:09:26,320 Speaker 1: the board and that she was very very political, I believe, 177 00:09:26,840 --> 00:09:28,400 Speaker 1: and I think that. 178 00:09:29,920 --> 00:09:31,959 Speaker 2: Does she do that gave you that impression I'd love 179 00:09:32,000 --> 00:09:34,560 Speaker 2: to know. Sorry I mentioned you're referring to Governor Kugler. 180 00:09:34,600 --> 00:09:35,319 Speaker 2: What does she do that game? 181 00:09:35,880 --> 00:09:38,440 Speaker 1: I think there's a lot of inside baseball. And look, 182 00:09:38,880 --> 00:09:42,079 Speaker 1: Governor Kugler, you read what she was saying when Kamala 183 00:09:42,080 --> 00:09:45,840 Speaker 1: Harris was running, that we needed rake cuts, we needed this, 184 00:09:46,000 --> 00:09:48,719 Speaker 1: We got to phone the runway and then all of 185 00:09:48,760 --> 00:09:53,080 Speaker 1: a sudden it was hard to know whether we know TDS. 186 00:09:53,160 --> 00:09:53,800 Speaker 3: Was it Trump that. 187 00:09:55,640 --> 00:09:59,880 Speaker 1: Dimension syndrome or Trump derangement syndrome or tariff arrangement syndrome. 188 00:10:00,320 --> 00:10:02,800 Speaker 2: You get the opportunity to remake the Federal Reserve. The 189 00:10:02,840 --> 00:10:05,960 Speaker 2: president gets the opportunity to remodel reshape the Federal Reserve. 190 00:10:06,240 --> 00:10:08,600 Speaker 2: And I'm not talking about the remodeling that maybe the 191 00:10:08,640 --> 00:10:10,720 Speaker 2: current chairman's going through. We'll talk about that another time. 192 00:10:10,760 --> 00:10:12,800 Speaker 2: I want to talk about the complexion and character of 193 00:10:12,840 --> 00:10:15,240 Speaker 2: the committee, the changes that you're making at the moment. 194 00:10:15,320 --> 00:10:17,880 Speaker 2: Stephen Maron, let's start with Stephen. How quickly can you 195 00:10:17,920 --> 00:10:18,800 Speaker 2: get more and confirmed? 196 00:10:19,400 --> 00:10:24,880 Speaker 1: We'll see. The President has great sway with Leader Thom. 197 00:10:25,000 --> 00:10:27,880 Speaker 1: Leader Thom has been a great partner during the tax deal, 198 00:10:28,000 --> 00:10:31,559 Speaker 1: and I think that he would like to see Stephen, 199 00:10:31,600 --> 00:10:34,240 Speaker 1: who I've known for a long time, get on there 200 00:10:34,400 --> 00:10:38,240 Speaker 1: as soon as possible. So I'm hopeful about the September meeting. 201 00:10:38,640 --> 00:10:43,000 Speaker 1: And Jonathan, the President's concerned about the building and those 202 00:10:43,120 --> 00:10:47,200 Speaker 1: massive costs overrun, which just tell you that there is 203 00:10:47,240 --> 00:10:49,120 Speaker 1: no accountability at that organization. 204 00:10:49,679 --> 00:10:52,160 Speaker 3: There's no oversight in terms of the spending. 205 00:10:52,559 --> 00:10:55,000 Speaker 1: But the President and I are both concerned about the 206 00:10:55,040 --> 00:10:58,360 Speaker 1: foundations of the FED, the foundations of the FED and 207 00:10:59,160 --> 00:11:02,280 Speaker 1: how did this happen and why did it happen? And 208 00:11:02,400 --> 00:11:04,320 Speaker 1: you know, how did the leadership let it happen. 209 00:11:04,400 --> 00:11:06,559 Speaker 4: When it comes to Director Myron, do you expect him 210 00:11:06,600 --> 00:11:09,960 Speaker 4: to stay on past the January term that expires from 211 00:11:10,040 --> 00:11:10,720 Speaker 4: Coogler seat? 212 00:11:11,040 --> 00:11:12,000 Speaker 3: I wouldn't expect that. 213 00:11:12,600 --> 00:11:15,120 Speaker 4: So who are some names you're thinking of the Cooglar seat? 214 00:11:15,120 --> 00:11:17,320 Speaker 4: Because everyone has been focused on who is going to 215 00:11:17,320 --> 00:11:20,240 Speaker 4: fill the chairmanship role? Who are you thinking to fill 216 00:11:20,240 --> 00:11:20,959 Speaker 4: that extra seat? 217 00:11:21,000 --> 00:11:26,400 Speaker 1: Well, e Marie, we're working on the big list right now. 218 00:11:26,960 --> 00:11:29,079 Speaker 1: I think they're going to be a couple more names 219 00:11:29,800 --> 00:11:32,679 Speaker 1: revealed today. They're going to be private sector names. So 220 00:11:33,280 --> 00:11:38,200 Speaker 1: we had a series or a list of current FED members. 221 00:11:38,240 --> 00:11:41,160 Speaker 1: We're going to have some private sector very well respected, 222 00:11:41,640 --> 00:11:47,080 Speaker 1: very well respected people and then we will get to 223 00:11:47,200 --> 00:11:48,120 Speaker 1: the second seat. 224 00:11:48,679 --> 00:11:50,160 Speaker 4: Can you give us some names, a little bit of 225 00:11:50,200 --> 00:11:52,600 Speaker 4: a tease, maybe people that have been on this program. 226 00:11:52,920 --> 00:11:54,840 Speaker 1: Well, I just did tease telling you there'll be some 227 00:11:54,920 --> 00:11:56,000 Speaker 1: private sector names. 228 00:11:56,040 --> 00:11:58,719 Speaker 4: Okay, when it comes to the FED chair, though, can 229 00:11:58,760 --> 00:12:00,600 Speaker 4: you give us a sense of how many names you're 230 00:12:00,640 --> 00:12:01,880 Speaker 4: actually thinking about. 231 00:12:01,920 --> 00:12:03,760 Speaker 3: Well, I'm going to interview. 232 00:12:03,760 --> 00:12:07,000 Speaker 1: I'm going to cast a wide net ten to eleven people, 233 00:12:07,600 --> 00:12:10,240 Speaker 1: and then there'll be a group of us who are 234 00:12:10,240 --> 00:12:14,040 Speaker 1: meeting with them, and we want to talk about monetary policy. 235 00:12:14,120 --> 00:12:17,840 Speaker 1: We want to talk about regulatory policy, which is very, 236 00:12:18,040 --> 00:12:22,199 Speaker 1: very important because the FED step I think bigfoot of 237 00:12:22,240 --> 00:12:25,760 Speaker 1: the other regulators. The Fed's one of three regulators, Federal Reserve, 238 00:12:25,880 --> 00:12:32,320 Speaker 1: OCC and FDIC, and I think that they need to 239 00:12:32,520 --> 00:12:34,199 Speaker 1: understand that they are one of three. 240 00:12:34,640 --> 00:12:35,440 Speaker 3: And then the. 241 00:12:35,320 --> 00:12:38,760 Speaker 1: Third is the institution itself, which I think is what 242 00:12:38,880 --> 00:12:41,200 Speaker 1: President Trump has been focused on quite a bit too. 243 00:12:41,520 --> 00:12:43,880 Speaker 4: After you do this process, how many names are going 244 00:12:43,920 --> 00:12:45,720 Speaker 4: to give to the President and when does he start 245 00:12:45,720 --> 00:12:46,840 Speaker 4: those in person interviews? 246 00:12:47,400 --> 00:12:48,520 Speaker 3: We don't have a timeline. 247 00:12:48,880 --> 00:12:53,200 Speaker 1: By putting Stephen Myron in that gives us more time, 248 00:12:53,559 --> 00:12:56,240 Speaker 1: and again, I want to cast a wide net. The 249 00:12:56,280 --> 00:13:03,160 Speaker 1: President's very open minded before he chose A Powell. Janet 250 00:13:03,240 --> 00:13:07,000 Speaker 1: Yellen was interviewed, John Taylor was interviewed. Two of them 251 00:13:07,080 --> 00:13:10,679 Speaker 1: couldn't have been more different, so they were under consideration. 252 00:13:11,280 --> 00:13:12,679 Speaker 2: I give you credit for coming up with a really 253 00:13:12,760 --> 00:13:15,440 Speaker 2: credible list to replace the frontal Reserve chair, Jake pab 254 00:13:15,480 --> 00:13:16,760 Speaker 2: without a doubt. I think most people that come on 255 00:13:16,800 --> 00:13:18,720 Speaker 2: this program agree with that. What I want to talk 256 00:13:18,720 --> 00:13:21,000 Speaker 2: about is the BLS now because there's some controversy around 257 00:13:21,000 --> 00:13:22,679 Speaker 2: this pick. I'm sure you've heard some of the concerns. 258 00:13:22,920 --> 00:13:23,160 Speaker 3: E J. 259 00:13:23,240 --> 00:13:25,760 Speaker 2: Anthony had said the following earlier this week before getting 260 00:13:26,040 --> 00:13:28,720 Speaker 2: the pick from the President. Until this issue with Payrose 261 00:13:28,760 --> 00:13:31,120 Speaker 2: is corrected, he said, quote, the BLS should suspend issuing 262 00:13:31,160 --> 00:13:34,160 Speaker 2: the monthly jobs report, but keep publishing the more accurate, 263 00:13:34,200 --> 00:13:37,760 Speaker 2: though less timely, quarterly data. We'd love your thoughts on this. 264 00:13:38,000 --> 00:13:40,520 Speaker 2: Is that something you'd support, not at all? 265 00:13:40,600 --> 00:13:43,280 Speaker 3: And look what somebody says when. 266 00:13:43,120 --> 00:13:46,800 Speaker 1: There are are private citizens is very very different. 267 00:13:47,400 --> 00:13:50,079 Speaker 3: You know. I called for a shadow fed chair. 268 00:13:50,320 --> 00:13:54,280 Speaker 1: And now that I'm in the seat, I don't think 269 00:13:54,320 --> 00:13:57,600 Speaker 1: we need to do that. And I was there when 270 00:13:57,720 --> 00:14:02,600 Speaker 1: EJ was interviewed, and he is incredibly qualified, and I 271 00:14:02,640 --> 00:14:05,160 Speaker 1: think The most important thing here is that we get 272 00:14:05,200 --> 00:14:07,840 Speaker 1: back to the integrity of the numbers, because it just 273 00:14:07,920 --> 00:14:11,760 Speaker 1: became okay, just like so many things in our government, 274 00:14:12,960 --> 00:14:18,240 Speaker 1: to get sloppy. And ej is precise. He has a 275 00:14:18,640 --> 00:14:22,880 Speaker 1: doctorate in economics. I think President Trump put a lot 276 00:14:22,920 --> 00:14:26,800 Speaker 1: of thought into this. He was very thorough in his 277 00:14:27,000 --> 00:14:30,120 Speaker 1: questioning of him. So what we want is good data, 278 00:14:30,200 --> 00:14:33,080 Speaker 1: because you can't make good decisions without good data. 279 00:14:33,240 --> 00:14:35,920 Speaker 3: As I just said, is very likely. 280 00:14:35,760 --> 00:14:40,000 Speaker 1: That the FED would have been doing something else in 281 00:14:40,120 --> 00:14:42,880 Speaker 1: June in July if they had had this data. 282 00:14:43,120 --> 00:14:45,160 Speaker 2: Well, let's talk about the data we've got and the 283 00:14:45,200 --> 00:14:47,920 Speaker 2: process we have, and how we might improve that process. 284 00:14:48,320 --> 00:14:50,360 Speaker 2: As you know that data is prone to big revisions 285 00:14:50,360 --> 00:14:52,280 Speaker 2: in your career on More Street, we've all been dealing 286 00:14:52,280 --> 00:14:54,160 Speaker 2: with this for a long long time because of the 287 00:14:54,200 --> 00:14:56,040 Speaker 2: process and the lack of time. And the response is 288 00:14:56,240 --> 00:14:59,040 Speaker 2: it is constantly reviewed month on month as you get 289 00:14:59,040 --> 00:15:03,040 Speaker 2: more responses from America. How can we improve that process 290 00:15:03,240 --> 00:15:06,200 Speaker 2: so this data is less prone to these big revisions. 291 00:15:06,360 --> 00:15:09,840 Speaker 1: Well, I've been in government now for seven months and 292 00:15:10,080 --> 00:15:13,240 Speaker 1: I can tell you that if we take the irs, 293 00:15:13,320 --> 00:15:16,360 Speaker 1: which I'm now ahead of, they've been working on a 294 00:15:16,400 --> 00:15:17,840 Speaker 1: tech upgrade. 295 00:15:17,360 --> 00:15:19,800 Speaker 3: Since nineteen ninety. Nineteen ninety, we. 296 00:15:19,800 --> 00:15:24,920 Speaker 1: Brought in a young person to fix that. The tech 297 00:15:25,000 --> 00:15:29,400 Speaker 1: upgrade has been underway for longer than he is old, 298 00:15:29,840 --> 00:15:32,680 Speaker 1: so he wasn't born when the tech upgrade started. So, 299 00:15:32,960 --> 00:15:35,080 Speaker 1: you know, I just think like this idea that we're 300 00:15:35,080 --> 00:15:39,120 Speaker 1: accepting this mediocrity in government. Why don't we bring things 301 00:15:39,160 --> 00:15:42,360 Speaker 1: into the twenty first century? Why don't we bring it 302 00:15:42,400 --> 00:15:47,600 Speaker 1: into the digital age? Because I don't know about political 303 00:15:47,640 --> 00:15:50,400 Speaker 1: bias one way or the other, but what I can 304 00:15:50,560 --> 00:15:54,560 Speaker 1: tell you is that the sample response size kept getting 305 00:15:54,600 --> 00:15:59,240 Speaker 1: smaller and smaller, and then they they filled in the cells. 306 00:16:00,160 --> 00:16:04,880 Speaker 1: Anytime you get judgment versus data, then things become qualitative 307 00:16:04,880 --> 00:16:07,160 Speaker 1: and not quantitative. And I think EJ is going to 308 00:16:07,200 --> 00:16:11,000 Speaker 1: do a great job of bringing back quantitative standards. I 309 00:16:11,320 --> 00:16:14,960 Speaker 1: think he like these attacks in the press. I think 310 00:16:15,000 --> 00:16:15,600 Speaker 1: they're all wrong. 311 00:16:16,080 --> 00:16:19,360 Speaker 4: It's not in the press, it's even within conservative economic 312 00:16:19,440 --> 00:16:22,320 Speaker 4: circles that don't think that he is credible to run 313 00:16:22,440 --> 00:16:25,600 Speaker 4: the commission. Is the Trump administration open to putting more 314 00:16:25,640 --> 00:16:28,400 Speaker 4: resources then to bls, maybe lifting a hiring freez Well 315 00:16:28,840 --> 00:16:29,320 Speaker 4: and Marie. 316 00:16:29,320 --> 00:16:31,920 Speaker 1: That's more of a democratic idea that you know, we 317 00:16:31,960 --> 00:16:36,320 Speaker 1: need more. It's always money. It's always money. It's New 318 00:16:36,400 --> 00:16:40,400 Speaker 1: York City schools, Chicago schools, DC schools. You get terrible outcomes. 319 00:16:40,760 --> 00:16:42,920 Speaker 1: I think that he's going to sit back, look at 320 00:16:42,920 --> 00:16:46,080 Speaker 1: the process, and how can we use technology to do 321 00:16:46,760 --> 00:16:50,400 Speaker 1: this better. I got the Treasury and it was shocking. 322 00:16:50,560 --> 00:16:54,800 Speaker 1: We process one point five billion payments a year, and 323 00:16:55,240 --> 00:16:58,160 Speaker 1: five hundred million of them, one third of them did 324 00:16:58,200 --> 00:17:02,680 Speaker 1: not have what's known as a task Treasury accounting symbol 325 00:17:02,840 --> 00:17:06,000 Speaker 1: on them, and people are just hitting sin sin Sin. 326 00:17:06,480 --> 00:17:10,240 Speaker 1: And it wasn't a gigantic leap just to try to 327 00:17:10,240 --> 00:17:11,680 Speaker 1: get people to do their jobs. 328 00:17:11,920 --> 00:17:15,560 Speaker 2: This has big implications for how people view credible economic data, 329 00:17:15,600 --> 00:17:17,480 Speaker 2: but also the markets as well. So let's talk about 330 00:17:17,480 --> 00:17:19,920 Speaker 2: financial markets. In the bond market, you've always been a 331 00:17:20,000 --> 00:17:22,320 Speaker 2: ten year man. The spread between the two year and 332 00:17:22,320 --> 00:17:24,600 Speaker 2: the ten year, I think has been really stable over 333 00:17:24,600 --> 00:17:26,480 Speaker 2: the last several months, where we've start to see some 334 00:17:26,560 --> 00:17:30,040 Speaker 2: leakages between tens out of thirties. That thirty year bond. 335 00:17:30,240 --> 00:17:32,399 Speaker 2: As a tracery secretary, I remember you referring to yourself 336 00:17:32,440 --> 00:17:35,480 Speaker 2: as the nation's top bond salesman. What's the usefulness of 337 00:17:35,560 --> 00:17:38,200 Speaker 2: issuing a thirty year bond when it feels like at 338 00:17:38,200 --> 00:17:42,080 Speaker 2: the moment we're outsourcing borrowing cost to what happens in Japan, 339 00:17:42,320 --> 00:17:44,800 Speaker 2: what might happen in the UK, what happens in Europe. 340 00:17:44,800 --> 00:17:47,199 Speaker 2: What's the value of issuing that. 341 00:17:47,200 --> 00:17:50,760 Speaker 1: That's a great question, Jonathan, And look, we are committed 342 00:17:50,800 --> 00:17:55,840 Speaker 1: to keeping inflation expectations glow and this is a global phenomenon, 343 00:17:56,520 --> 00:18:00,119 Speaker 1: whether it's the ten or the thirty. The US tenure 344 00:18:00,240 --> 00:18:02,480 Speaker 1: is one of the few ten years where the yield 345 00:18:02,720 --> 00:18:06,040 Speaker 1: is down on the year, So that tells me that 346 00:18:06,240 --> 00:18:11,840 Speaker 1: there's credibility from Treasury, credibility from FED, that the inflation 347 00:18:12,000 --> 00:18:16,560 Speaker 1: expectations are well anchored. But there's definitely leakage from the 348 00:18:16,880 --> 00:18:20,760 Speaker 1: Japanese have an inflation problem. I've spoken to Governor u Wada, 349 00:18:21,480 --> 00:18:24,720 Speaker 1: my opinion not his. They're behind the curve, so they're 350 00:18:24,760 --> 00:18:28,240 Speaker 1: going to be hiking and they need to get their 351 00:18:28,240 --> 00:18:32,960 Speaker 1: inflation problem under control. In Germany, we saw a substantial 352 00:18:33,000 --> 00:18:37,159 Speaker 1: spike in German rates in the past week also, so 353 00:18:37,440 --> 00:18:41,359 Speaker 1: you know, our thirty year is getting dragged along with that. 354 00:18:41,480 --> 00:18:47,159 Speaker 1: We've been refilling the Treasury General account, which during the 355 00:18:47,200 --> 00:18:50,480 Speaker 1: debt ceiling standoff got run down, and we're doing that 356 00:18:50,560 --> 00:18:51,680 Speaker 1: with short term bills. 357 00:18:52,000 --> 00:18:54,119 Speaker 2: Do you see more reason then to pare back on 358 00:18:54,200 --> 00:18:56,560 Speaker 2: thirty year issuants? With all this in mind, and this 359 00:18:56,640 --> 00:18:58,200 Speaker 2: is a change again for you now and to see 360 00:18:58,200 --> 00:19:01,000 Speaker 2: as you look at these developments and rethink, how are 361 00:19:01,040 --> 00:19:02,440 Speaker 2: your thoughts on that matter evolving? 362 00:19:02,880 --> 00:19:06,960 Speaker 1: Yeah, they are evolving, and we'll see where things go. 363 00:19:07,600 --> 00:19:12,440 Speaker 1: I do think as we bring down this big deficit 364 00:19:12,520 --> 00:19:16,719 Speaker 1: that we inherited, I think that the US, that the 365 00:19:16,880 --> 00:19:20,920 Speaker 1: entire US curve, can have a parallel shift down relative 366 00:19:20,960 --> 00:19:21,840 Speaker 1: to the rest of the world. 367 00:19:21,920 --> 00:19:23,480 Speaker 2: Do you think you can work with the Federal Reserve 368 00:19:23,480 --> 00:19:25,959 Speaker 2: on this matter? So if we take the weighted average 369 00:19:25,960 --> 00:19:28,520 Speaker 2: maturity of FED holdings at the moment, believe that's running 370 00:19:28,520 --> 00:19:31,600 Speaker 2: it about nine years, the issuance of the average maturity 371 00:19:31,560 --> 00:19:35,040 Speaker 2: about standing bills notes bawns, that's closer to six. Do 372 00:19:35,080 --> 00:19:36,920 Speaker 2: you need to narrow that gap a little bit? 373 00:19:37,800 --> 00:19:38,000 Speaker 3: Yeah. 374 00:19:38,160 --> 00:19:41,280 Speaker 1: Look, I don't think the FED needs to get back 375 00:19:41,280 --> 00:19:46,120 Speaker 1: into the large scale asset purchase business, and we've had 376 00:19:46,359 --> 00:19:50,000 Speaker 1: very good demand, especially in the belly of the curve, 377 00:19:50,200 --> 00:19:54,200 Speaker 1: which is where asset managers seem most interested. 378 00:19:54,280 --> 00:19:56,560 Speaker 4: Now, when it comes to other things you're working on 379 00:19:56,600 --> 00:19:59,879 Speaker 4: in Washington, D C. There's still this stock band legislation 380 00:20:00,119 --> 00:20:03,159 Speaker 4: that has been circulating around Congress. Is a president prepared 381 00:20:03,200 --> 00:20:03,920 Speaker 4: to sign that bill. 382 00:20:05,520 --> 00:20:09,320 Speaker 1: I don't think we have the perfect bill yet, but 383 00:20:09,520 --> 00:20:13,600 Speaker 1: I am going to start pushing for its single stock 384 00:20:13,720 --> 00:20:18,679 Speaker 1: trading band because it is the credibility of the House 385 00:20:18,760 --> 00:20:21,600 Speaker 1: and the Senate that you look at some of these 386 00:20:21,640 --> 00:20:27,680 Speaker 1: eye popping returns, whether it's a Representative Pelosi, Senator Widen, 387 00:20:28,480 --> 00:20:31,520 Speaker 1: every hedge fund would be jealous of them, and the 388 00:20:31,560 --> 00:20:35,760 Speaker 1: American people deserve better than this. People don't shouldn't come 389 00:20:35,800 --> 00:20:37,879 Speaker 1: to Washington to get rich, They should come to serve 390 00:20:37,920 --> 00:20:42,040 Speaker 1: the American people. And it brings down trust in the 391 00:20:42,119 --> 00:20:45,080 Speaker 1: system because I can tell you that if any private 392 00:20:45,119 --> 00:20:48,600 Speaker 1: citizen traded this way, the sec would be knocking on 393 00:20:48,600 --> 00:20:48,920 Speaker 1: their door. 394 00:20:49,000 --> 00:20:51,320 Speaker 4: Do you think it needs to extend? They'll beyond single stocks? 395 00:20:51,359 --> 00:20:55,560 Speaker 4: These individuals can still have ets and other products. 396 00:20:55,720 --> 00:20:58,639 Speaker 1: Well, what I used to do my old firm was 397 00:20:58,680 --> 00:21:01,960 Speaker 1: you could buy ETFs had to be widely held ETF 398 00:21:02,080 --> 00:21:06,600 Speaker 1: so they couldn't be of a small size, and there 399 00:21:06,640 --> 00:21:09,960 Speaker 1: was a long holding period. The House and the Senate, 400 00:21:10,040 --> 00:21:13,000 Speaker 1: they're supposed to be working for the American people, their constituents. 401 00:21:12,960 --> 00:21:18,879 Speaker 1: They're supposed to be making law and they shouldn't be 402 00:21:18,880 --> 00:21:21,879 Speaker 1: trading every day. I'm not going to name names, but 403 00:21:21,920 --> 00:21:25,000 Speaker 1: there was one person in Congress who had twelve or 404 00:21:25,040 --> 00:21:28,560 Speaker 1: thirteen hundred trades two years ago, and my hedge fund 405 00:21:28,560 --> 00:21:29,480 Speaker 1: didn't have that many trades. 406 00:21:29,520 --> 00:21:31,520 Speaker 4: Do you think it needs to also extend to the 407 00:21:31,520 --> 00:21:34,040 Speaker 4: executive branch and include the president and the vice president? 408 00:21:34,760 --> 00:21:39,159 Speaker 1: I think that they would be fine on the single 409 00:21:39,160 --> 00:21:40,959 Speaker 1: stock and the holding period. 410 00:21:41,200 --> 00:21:43,760 Speaker 2: Maybe they're just great tritus. As the secretary. Do you 411 00:21:43,760 --> 00:21:45,120 Speaker 2: not think they're just great tritus. 412 00:21:46,280 --> 00:21:48,320 Speaker 3: It is a statistical anomaly. 413 00:21:48,400 --> 00:21:51,359 Speaker 1: You know. Warren Buffett wrote an essay once and he 414 00:21:51,440 --> 00:21:53,959 Speaker 1: talked about the zoo and Graham and Dodville, and if 415 00:21:54,000 --> 00:21:55,840 Speaker 1: all the orangutangs. 416 00:21:55,080 --> 00:21:58,800 Speaker 3: In that zoo kept typing the Bible, then there's something 417 00:21:58,840 --> 00:21:59,840 Speaker 3: going on in that zoo. 418 00:22:00,040 --> 00:22:03,200 Speaker 1: There is something going on on Capitol Hill in terms 419 00:22:03,240 --> 00:22:04,479 Speaker 1: of information. 420 00:22:04,119 --> 00:22:10,200 Speaker 3: Leakage that is statistically they are not sound. 421 00:22:10,320 --> 00:22:12,840 Speaker 2: Do you think those restrictions should extend to the executive branch? 422 00:22:13,240 --> 00:22:13,560 Speaker 3: Sorry? 423 00:22:13,720 --> 00:22:15,800 Speaker 2: Do you think those restrictions should extend to the White House? 424 00:22:15,920 --> 00:22:18,800 Speaker 1: Well, I mean they already extend the Treasury. 425 00:22:19,200 --> 00:22:23,480 Speaker 2: Is the president about this? Is he comfortable? 426 00:22:23,480 --> 00:22:27,080 Speaker 1: Well, the presidents come out and favor this, and King 427 00:22:27,160 --> 00:22:29,880 Speaker 1: Jefferies is in favor of this too. And I can 428 00:22:29,920 --> 00:22:32,840 Speaker 1: tell you if if I were Congress and I were 429 00:22:32,920 --> 00:22:36,360 Speaker 1: looking at my ratings with the American people, I would 430 00:22:36,440 --> 00:22:40,560 Speaker 1: be pushing this because again, it's an extractive class. You 431 00:22:40,600 --> 00:22:44,760 Speaker 1: should not come to d C expecting to line your pocket. 432 00:22:44,920 --> 00:22:47,399 Speaker 1: You should come to d C to do the people's business. 433 00:22:47,400 --> 00:22:49,760 Speaker 2: We couldn't agree more. And it's been greatly disappointing to 434 00:22:49,760 --> 00:22:52,679 Speaker 2: see that there's tight restrictions on how journalists trade than 435 00:22:52,720 --> 00:22:54,840 Speaker 2: over some members of Congress in Washington. 436 00:22:54,960 --> 00:22:55,160 Speaker 3: Yeah. 437 00:22:55,560 --> 00:22:59,800 Speaker 1: I mean again, it is one of the things that 438 00:22:59,880 --> 00:23:02,240 Speaker 1: I think we can do to get trust back into 439 00:23:02,280 --> 00:23:02,760 Speaker 1: the system. 440 00:23:03,000 --> 00:23:05,280 Speaker 2: Just wanted to finish on the President's visits to Alaska 441 00:23:05,440 --> 00:23:07,320 Speaker 2: going into weekend. Emory's going to be that what do 442 00:23:07,320 --> 00:23:08,920 Speaker 2: you think we can accomplish this weekend. 443 00:23:09,440 --> 00:23:16,359 Speaker 1: I think the President has been thinking about this a 444 00:23:16,440 --> 00:23:20,800 Speaker 1: long time. He believes, as do I, that this war 445 00:23:20,960 --> 00:23:23,600 Speaker 1: never would have started if he had been president, and 446 00:23:23,640 --> 00:23:26,679 Speaker 1: he is committed to ending the bloodshed, but not in 447 00:23:26,720 --> 00:23:31,040 Speaker 1: any calls, not in any costs. I think everyone has 448 00:23:31,119 --> 00:23:34,919 Speaker 1: been frustrated with President Putin. We expected that he would 449 00:23:35,119 --> 00:23:38,040 Speaker 1: come to the table in a more fulsome way. It 450 00:23:38,119 --> 00:23:41,960 Speaker 1: looks like he may be ready to negotiate. And we've 451 00:23:42,040 --> 00:23:47,560 Speaker 1: put secondary terriffs on an Indian on the Indians for 452 00:23:47,680 --> 00:23:51,240 Speaker 1: buying Russian oil, and I could see if things don't 453 00:23:51,280 --> 00:23:56,000 Speaker 1: go well, then sanctions or secondary terriffs could go up. 454 00:23:56,320 --> 00:23:59,480 Speaker 4: What about China, They're the main purchasers of Russian crude. 455 00:24:00,320 --> 00:24:03,960 Speaker 1: Again, I'm not going to get ahead of the President, 456 00:24:04,080 --> 00:24:07,640 Speaker 1: but the President is the best at creating leverage for 457 00:24:07,760 --> 00:24:11,159 Speaker 1: himself and he will make it clear to President Putin 458 00:24:11,240 --> 00:24:13,439 Speaker 1: that all options are on the table. 459 00:24:13,840 --> 00:24:16,680 Speaker 4: So sanctions can go up, or they can also be loosened. 460 00:24:17,960 --> 00:24:21,840 Speaker 1: Sanctions can go up, they can be loosened, they can 461 00:24:22,520 --> 00:24:27,920 Speaker 1: have a definitive life, they can go on indefinitely. There's 462 00:24:27,960 --> 00:24:32,080 Speaker 1: this Russian shadow fleet of ships around the world that 463 00:24:32,280 --> 00:24:35,280 Speaker 1: I think we could crack down in them. But a 464 00:24:35,400 --> 00:24:37,960 Speaker 1: Marie and Jonathan, the one message I would leave you 465 00:24:38,000 --> 00:24:42,520 Speaker 1: with the President Trump is meeting with President Putin, and 466 00:24:42,119 --> 00:24:46,440 Speaker 1: the Europeans are in the wings, carping about how he 467 00:24:46,480 --> 00:24:48,439 Speaker 1: should do it, what he should do it. But the 468 00:24:48,480 --> 00:24:52,440 Speaker 1: Europeans need to join us in these sanctions. They need 469 00:24:52,480 --> 00:24:55,040 Speaker 1: to The Europeans need to be willing to put on 470 00:24:55,119 --> 00:24:58,679 Speaker 1: these secondary sanctions. I was at the G seven meeting 471 00:24:58,960 --> 00:25:04,000 Speaker 1: in Canada with President Trump, and the Europeans kept talking 472 00:25:04,000 --> 00:25:08,320 Speaker 1: about Senator Graham's bill to do the secondary tariffs. And 473 00:25:08,520 --> 00:25:11,040 Speaker 1: I looked at all the leaders around the table and 474 00:25:11,080 --> 00:25:15,480 Speaker 1: I said, is everyone at this table willing to put 475 00:25:15,520 --> 00:25:19,680 Speaker 1: a two secondary tariff on China? And you know what, 476 00:25:20,040 --> 00:25:22,439 Speaker 1: everybody wanted to see what kind of shoes they were wearing. 477 00:25:22,800 --> 00:25:25,000 Speaker 2: I imagine the Germans went very quiet, and that's been 478 00:25:25,040 --> 00:25:26,080 Speaker 2: a problem for a long time. 479 00:25:26,800 --> 00:25:29,880 Speaker 1: Yeah, it's put up her, shut up time. The president 480 00:25:29,920 --> 00:25:33,199 Speaker 1: is creating his own leverage. We need the Europeans to 481 00:25:33,320 --> 00:25:35,359 Speaker 1: come in and help create more leverage. 482 00:25:35,440 --> 00:25:37,720 Speaker 2: Mister secretary. I'm appreciate your time. Good to see if 483 00:25:37,720 --> 00:25:39,639 Speaker 2: you're enjoying this. I get the fill that you're enjoying this. 484 00:25:39,760 --> 00:25:41,960 Speaker 2: All right, it's good to see it. You seem happy. 485 00:25:42,680 --> 00:25:44,400 Speaker 3: I think things are going well. 486 00:25:54,480 --> 00:25:56,440 Speaker 2: Janette Love, I should take us at bad Company. The 487 00:25:56,440 --> 00:25:58,159 Speaker 2: team I've had rights in the following to bank. Now 488 00:25:58,160 --> 00:26:00,000 Speaker 2: it's not about whether it's a count rights in September, 489 00:26:00,400 --> 00:26:02,680 Speaker 2: but by how much. Jeannette joined us now from more Jenet, 490 00:26:02,720 --> 00:26:04,800 Speaker 2: welcome to the program. Also a big question about who's 491 00:26:04,800 --> 00:26:06,240 Speaker 2: going to be on the committee by the time we 492 00:26:06,240 --> 00:26:07,919 Speaker 2: get to the middle of September, and whether step and 493 00:26:07,960 --> 00:26:10,200 Speaker 2: Myron can be confirmed by then. What are you telling 494 00:26:10,200 --> 00:26:11,760 Speaker 2: clients about the prospects of that happening. 495 00:26:12,760 --> 00:26:13,360 Speaker 5: Yeah, I mean, so. 496 00:26:13,359 --> 00:26:15,440 Speaker 6: This is something that's kind of interesting because we think 497 00:26:15,440 --> 00:26:18,000 Speaker 6: that the Trump administration would definitely like him to be 498 00:26:18,240 --> 00:26:21,800 Speaker 6: on the FED Board before the September meeting. And the 499 00:26:21,880 --> 00:26:24,160 Speaker 6: question also is do they want him on the board 500 00:26:24,200 --> 00:26:27,040 Speaker 6: before September twelfth, when the dot plots and the forecast 501 00:26:27,080 --> 00:26:29,679 Speaker 6: have to be submitted. So if the Senate's not coming 502 00:26:29,720 --> 00:26:34,720 Speaker 6: back until September second, We've looked at prior cabinet appointees 503 00:26:34,800 --> 00:26:38,560 Speaker 6: early on in this Trump administration, as well as Murn's 504 00:26:39,080 --> 00:26:42,800 Speaker 6: appointment earlier this year to the Council of Economic Advisors, 505 00:26:42,960 --> 00:26:45,040 Speaker 6: and in general it takes about thirteen. 506 00:26:44,720 --> 00:26:47,040 Speaker 5: Days for a cabinet member to be appointed. 507 00:26:47,400 --> 00:26:50,199 Speaker 6: So if the Senate comes back on September second, that 508 00:26:50,280 --> 00:26:52,119 Speaker 6: does give enough time for him to be on the 509 00:26:52,160 --> 00:26:55,719 Speaker 6: FED Board by the September sixteen, seventeenth meeting, but it 510 00:26:55,760 --> 00:26:58,280 Speaker 6: may not give him enough time to be in time 511 00:26:58,320 --> 00:27:01,600 Speaker 6: for September twelfth, might mean that the Senate Banking Committee 512 00:27:01,600 --> 00:27:05,159 Speaker 6: has to come in earlier to get this confirmation process moving, 513 00:27:05,200 --> 00:27:07,280 Speaker 6: to at least hold the hearing in advance, so then 514 00:27:07,280 --> 00:27:09,040 Speaker 6: they can start moving to a committee vote when they 515 00:27:09,040 --> 00:27:11,439 Speaker 6: come back officially from recess, and then move to the 516 00:27:11,440 --> 00:27:12,080 Speaker 6: Senate floor. 517 00:27:12,359 --> 00:27:14,719 Speaker 4: Jendan, how likely is that they're going to move this quickly? 518 00:27:15,760 --> 00:27:15,959 Speaker 3: You know? 519 00:27:16,000 --> 00:27:17,760 Speaker 6: I think it's might depend on whether or not there's 520 00:27:17,800 --> 00:27:20,560 Speaker 6: pressure coming from the Trump administration if he asks them 521 00:27:20,600 --> 00:27:24,119 Speaker 6: to treat this like a early cabinet member early on 522 00:27:24,160 --> 00:27:27,680 Speaker 6: in the administration. Obviously, Marco Rubio was confirmed quite quickly 523 00:27:27,760 --> 00:27:30,119 Speaker 6: with only I think five days. So if it's going 524 00:27:30,160 --> 00:27:32,560 Speaker 6: to depend if there's some pressure there to actually get 525 00:27:32,560 --> 00:27:36,520 Speaker 6: this moving, since obviously that's not usual for members to 526 00:27:36,560 --> 00:27:39,600 Speaker 6: be called back into recess called back from recess early. 527 00:27:39,920 --> 00:27:41,439 Speaker 6: But I think that's where there's going to have to 528 00:27:41,440 --> 00:27:44,320 Speaker 6: be that pressure point is whether or not that occurs 529 00:27:44,359 --> 00:27:46,159 Speaker 6: to get the Senate to actually move and try to 530 00:27:46,160 --> 00:27:47,680 Speaker 6: advance this a little bit more quickly. 531 00:27:47,800 --> 00:27:49,240 Speaker 4: And when it comes to Steve Meyron, he has the 532 00:27:49,280 --> 00:27:52,520 Speaker 4: benefit of already going through this process. What's the likelihood 533 00:27:52,520 --> 00:27:55,360 Speaker 4: of EJ and TONI getting confirmed to run BLS? 534 00:27:56,640 --> 00:27:58,639 Speaker 6: Yeah, I mean, I think that there's probably going to 535 00:27:58,680 --> 00:28:03,200 Speaker 6: be deference to the administration about getting his appointees in place. 536 00:28:03,240 --> 00:28:08,120 Speaker 6: We haven't really seen any major pushback significantly from. 537 00:28:08,080 --> 00:28:10,159 Speaker 5: A few Trump nominees overall. 538 00:28:10,840 --> 00:28:12,520 Speaker 6: And I think the other thing to kind of watch 539 00:28:12,560 --> 00:28:15,840 Speaker 6: too with the Fed appointment is watch a Senator like 540 00:28:16,040 --> 00:28:19,119 Speaker 6: Tim Tillis, Tom Tillis and see if he might actually 541 00:28:19,119 --> 00:28:22,720 Speaker 6: start to raise some questions. Does he also have a 542 00:28:23,520 --> 00:28:26,280 Speaker 6: no vote in committee that could slow down the process. 543 00:28:26,320 --> 00:28:28,280 Speaker 5: I think that's something else to kind of watch out for. 544 00:28:28,760 --> 00:28:31,680 Speaker 6: But I think if in terms of the BLS appointee, 545 00:28:31,760 --> 00:28:33,520 Speaker 6: there's going to be an effort to try to get 546 00:28:33,560 --> 00:28:37,240 Speaker 6: his appointees to the positions. That's obviously been a fight 547 00:28:37,440 --> 00:28:40,280 Speaker 6: within the Republicans and the Democrats in the Senate and 548 00:28:40,320 --> 00:28:42,320 Speaker 6: whether or not they should have abandoned recess in the 549 00:28:42,320 --> 00:28:45,240 Speaker 6: first place, because there's been such a lag in getting 550 00:28:45,240 --> 00:28:46,840 Speaker 6: some of these nominees confirmed. 551 00:28:47,120 --> 00:28:49,000 Speaker 4: When it comes to Antony, though, there's been a lot 552 00:28:49,040 --> 00:28:52,800 Speaker 4: of pushback in conservative economic circles about his nomination, and 553 00:28:52,840 --> 00:28:56,160 Speaker 4: when you look at who's on the Senate Committee on Health, Education, Labor, 554 00:28:56,200 --> 00:28:59,080 Speaker 4: and Pensions, it's some Republicans where he cannot lose a 555 00:28:59,080 --> 00:29:03,120 Speaker 4: single vote that hasn't had a problem with voicing their 556 00:29:03,200 --> 00:29:06,160 Speaker 4: concerns with the Trump administration. They gave Bill Cassidy, Ron 557 00:29:06,200 --> 00:29:09,480 Speaker 4: Paul Susan Collins, Lisa Murkowski. Do you think he really 558 00:29:09,520 --> 00:29:10,600 Speaker 4: can get out of committee? 559 00:29:11,640 --> 00:29:14,000 Speaker 6: Well, I think, obviously, as we've seen in the past, 560 00:29:14,160 --> 00:29:16,120 Speaker 6: what happens in the hearing is most important. 561 00:29:16,400 --> 00:29:18,560 Speaker 5: So if there's information. 562 00:29:18,160 --> 00:29:20,440 Speaker 6: That comes up with the hearing, that could change how 563 00:29:20,480 --> 00:29:23,800 Speaker 6: those senators view the nominee and their ultimate vote. 564 00:29:23,520 --> 00:29:24,160 Speaker 5: On the decision. 565 00:29:24,400 --> 00:29:26,440 Speaker 6: But as we've seen in the past, some of these 566 00:29:26,440 --> 00:29:29,480 Speaker 6: same senators have had to issues with prior Trump nominees, 567 00:29:29,640 --> 00:29:31,640 Speaker 6: but then when push comes to shove, they actually do 568 00:29:31,800 --> 00:29:33,880 Speaker 6: vote them through committee, and they do vote them through 569 00:29:33,920 --> 00:29:35,560 Speaker 6: on the floor. So I think the hearing will be 570 00:29:35,640 --> 00:29:38,400 Speaker 6: quite instructive, but it's always something to kind of keep in. 571 00:29:38,360 --> 00:29:43,480 Speaker 4: Mind, given even conservative economists think this individual's highly bias 572 00:29:43,640 --> 00:29:48,360 Speaker 4: and politicized. Our clients telling you that they're concerned about 573 00:29:48,360 --> 00:29:51,120 Speaker 4: the accuracy of the data going forward. 574 00:29:52,120 --> 00:29:54,760 Speaker 6: I think this is starting to become a conversation. We're 575 00:29:54,800 --> 00:29:57,160 Speaker 6: starting to hear some questions about whether or not there 576 00:29:57,160 --> 00:30:00,440 Speaker 6: could be some politicization coming now with a number and 577 00:30:00,480 --> 00:30:02,440 Speaker 6: whether or not people can feel like they can trust 578 00:30:02,440 --> 00:30:03,400 Speaker 6: the numbers as much. 579 00:30:03,640 --> 00:30:05,040 Speaker 5: It's not an overt. 580 00:30:04,680 --> 00:30:07,080 Speaker 6: Concern at this point, but I think that that's obviously 581 00:30:07,120 --> 00:30:08,760 Speaker 6: going to be something that's going to be in the 582 00:30:08,800 --> 00:30:11,800 Speaker 6: back of investors' minds just thinking about whether or not 583 00:30:12,160 --> 00:30:15,520 Speaker 6: there is some option going down the road, and now 584 00:30:15,520 --> 00:30:18,160 Speaker 6: that we've had this argument come up with the past 585 00:30:18,720 --> 00:30:22,040 Speaker 6: BLS commissioner and with a past jobs data, whether or 586 00:30:22,080 --> 00:30:25,400 Speaker 6: not there could be some sort of either manipulation or 587 00:30:25,560 --> 00:30:27,720 Speaker 6: the ability to put someone in there who could have 588 00:30:28,000 --> 00:30:29,120 Speaker 6: a sway on the data. 589 00:30:29,680 --> 00:30:30,800 Speaker 5: Janie, I would think that that's what you. 590 00:30:30,920 --> 00:30:33,120 Speaker 2: Ask if I got to jump in forgive me when 591 00:30:33,160 --> 00:30:35,520 Speaker 2: you engage with clients, are they worried about this? Is 592 00:30:35,520 --> 00:30:38,240 Speaker 2: there something that comes up repeatedly or something the comfortable 593 00:30:38,240 --> 00:30:38,840 Speaker 2: with at the moment. 594 00:30:39,520 --> 00:30:42,560 Speaker 6: At the moment, I think it's not a significant concern. 595 00:30:42,640 --> 00:30:44,920 Speaker 6: I think obviously how things play out over the next 596 00:30:44,920 --> 00:30:48,040 Speaker 6: couple of months will make will have a bigger impact. 597 00:30:48,360 --> 00:30:50,640 Speaker 6: But of course you are hearing questions just about whether 598 00:30:50,720 --> 00:30:54,080 Speaker 6: the process might have a change now that we're seeing 599 00:30:54,160 --> 00:30:56,880 Speaker 6: some movement, we're seeing a shake up at the BLS, 600 00:30:56,960 --> 00:30:59,960 Speaker 6: things of that nature. Obviously, there are also some client 601 00:31:00,120 --> 00:31:02,400 Speaker 6: who think that, you know, some reform is necessary. So 602 00:31:02,440 --> 00:31:04,120 Speaker 6: I think that there's also kind of like let's do 603 00:31:04,160 --> 00:31:05,840 Speaker 6: a little bit of a wait and see approach to 604 00:31:05,960 --> 00:31:08,920 Speaker 6: this and see what might happen as this new individual 605 00:31:08,960 --> 00:31:09,360 Speaker 6: comes in. 606 00:31:09,560 --> 00:31:12,040 Speaker 2: Jennet, thank you, appreciate your time as always, Jennet Low there, 607 00:31:12,120 --> 00:31:24,680 Speaker 2: Ohstatiga is a bad company. Braz An Selder is a 608 00:31:24,760 --> 00:31:27,760 Speaker 2: child swap right of the following, slightly harder services inflation 609 00:31:27,800 --> 00:31:31,040 Speaker 2: suggests the possibility the core PC prints will be a 610 00:31:31,040 --> 00:31:34,440 Speaker 2: little higher, though September is still clearly on the table 611 00:31:34,640 --> 00:31:36,840 Speaker 2: for a federal reserve. Ray Cup Lizenne joins us right 612 00:31:36,840 --> 00:31:39,480 Speaker 2: now for more. Lizane, welcome to the program. Some confidence 613 00:31:39,560 --> 00:31:43,040 Speaker 2: maybe that we're seeing limited tariff pass through, but maybe 614 00:31:43,080 --> 00:31:46,520 Speaker 2: I think recently some nerves emerging that perhaps we're starting 615 00:31:46,520 --> 00:31:49,560 Speaker 2: to see evidence of demand destruction. How concerned list are 616 00:31:49,560 --> 00:31:50,160 Speaker 2: you about that? 617 00:31:51,080 --> 00:31:53,120 Speaker 7: Well, you know, one thing that I think needs to 618 00:31:53,120 --> 00:31:55,560 Speaker 7: be pointed out when you look at what was perceived 619 00:31:55,560 --> 00:31:59,880 Speaker 7: to be fairly benign core goods inflation up only about 620 00:32:00,040 --> 00:32:02,000 Speaker 7: on and a quarter percent on a year of year basis, 621 00:32:02,160 --> 00:32:06,120 Speaker 7: is what the direction has been. So many people forget 622 00:32:06,120 --> 00:32:08,280 Speaker 7: that we were actually with core goods. We were in 623 00:32:08,360 --> 00:32:12,080 Speaker 7: deflation territory as recently as the second half of last year, 624 00:32:12,160 --> 00:32:16,440 Speaker 7: So that's a full three percentage point more than increase 625 00:32:16,520 --> 00:32:19,040 Speaker 7: from where we were at the latter part of last year, 626 00:32:19,120 --> 00:32:22,200 Speaker 7: where you had core goods in deflation to the tune 627 00:32:22,240 --> 00:32:24,680 Speaker 7: of negative two percent. So you've gone from negative two 628 00:32:24,720 --> 00:32:27,160 Speaker 7: percent to one and change, and now you've got this 629 00:32:27,200 --> 00:32:30,440 Speaker 7: hook higher on the services side. So I think this 630 00:32:30,640 --> 00:32:33,880 Speaker 7: kind of data, inflation data, labor market data, you really 631 00:32:33,920 --> 00:32:35,960 Speaker 7: need to dig under the surface to get a true 632 00:32:36,000 --> 00:32:39,600 Speaker 7: sense of what the impact is as to whether the 633 00:32:39,600 --> 00:32:43,400 Speaker 7: FED will cut it depends on the next set of reports. 634 00:32:43,440 --> 00:32:47,040 Speaker 7: I think the mapping to PCE suggests you could see 635 00:32:47,080 --> 00:32:49,280 Speaker 7: a little bit of a hotter move that doesn't tend 636 00:32:49,320 --> 00:32:53,320 Speaker 7: to be as market moving as CPI and PPI, But 637 00:32:54,080 --> 00:32:55,360 Speaker 7: that's what I'd be keeping an eye on. 638 00:32:55,400 --> 00:32:57,360 Speaker 2: As Honess. You know, the range of outcomes is still 639 00:32:57,400 --> 00:33:00,120 Speaker 2: really really wide. The way things out right now now, 640 00:33:00,440 --> 00:33:02,800 Speaker 2: they might change in several months time. We talked a 641 00:33:02,840 --> 00:33:04,800 Speaker 2: lot Michael mckeby's on the program earlier, and we were 642 00:33:04,840 --> 00:33:07,600 Speaker 2: talking about how much companies were absorbing at the moment 643 00:33:07,680 --> 00:33:09,680 Speaker 2: and whether they pass it on in the months to 644 00:33:09,680 --> 00:33:12,600 Speaker 2: come or whether they cut costs. Do you think September 645 00:33:12,640 --> 00:33:14,920 Speaker 2: is still too early to draw any firm conclusions. 646 00:33:16,160 --> 00:33:18,360 Speaker 7: I think it is too early. But what I will say, 647 00:33:18,880 --> 00:33:20,560 Speaker 7: and this has already been under way, and I think 648 00:33:20,560 --> 00:33:22,760 Speaker 7: it will continue in the September and thereafter as it 649 00:33:22,800 --> 00:33:25,560 Speaker 7: relates to the FED, I think you're likely to continue 650 00:33:25,600 --> 00:33:29,080 Speaker 7: to see a wider dispersion of perspectives from members of 651 00:33:29,080 --> 00:33:32,640 Speaker 7: the FED, certainly when they're in the federal open mouth 652 00:33:32,640 --> 00:33:35,800 Speaker 7: committee mode out there speaking, but even in things like 653 00:33:35,840 --> 00:33:39,320 Speaker 7: the Summary of Economic projections and particularly the dots plot, 654 00:33:39,480 --> 00:33:43,560 Speaker 7: you're seeing a wider array. We had two descents with 655 00:33:43,640 --> 00:33:46,120 Speaker 7: the most recent meeting of the July meeting. I think 656 00:33:46,160 --> 00:33:50,400 Speaker 7: that that sort of dissent probability stays relatively high, with 657 00:33:50,520 --> 00:33:54,440 Speaker 7: a wider range depending on who the individual is on 658 00:33:54,520 --> 00:33:57,640 Speaker 7: that committee expressing their views going forward. So I think 659 00:33:57,680 --> 00:33:59,320 Speaker 7: that's kind of the name of the game, at least 660 00:33:59,320 --> 00:33:59,960 Speaker 7: in the near term. 661 00:34:00,040 --> 00:34:02,960 Speaker 4: Well, if the tariff impact is mixed under the surface, 662 00:34:03,120 --> 00:34:05,840 Speaker 4: when do you think we'll actually see it fully priced in? 663 00:34:07,400 --> 00:34:10,160 Speaker 7: Well, the problem is that this was not you know 664 00:34:10,239 --> 00:34:13,279 Speaker 7: a lot of people talked about the inflation impact being 665 00:34:13,360 --> 00:34:16,360 Speaker 7: one time in nature, one time price level reset. The 666 00:34:16,360 --> 00:34:18,960 Speaker 7: problem is there's no one time as it relates to 667 00:34:19,160 --> 00:34:22,640 Speaker 7: the implementation of tariffs. It has been such rifle shot 668 00:34:22,760 --> 00:34:28,160 Speaker 7: on off delays terraffs being used as a tool beyond 669 00:34:28,600 --> 00:34:33,160 Speaker 7: just raising revenues or improving the trade deficit. So I 670 00:34:33,200 --> 00:34:35,799 Speaker 7: think we've got the rolling nature of this. You know, 671 00:34:36,200 --> 00:34:39,200 Speaker 7: several years ago we talked a lot about rolling recessions, 672 00:34:39,200 --> 00:34:40,520 Speaker 7: so we didn't think you were going to see an 673 00:34:40,520 --> 00:34:44,040 Speaker 7: actual economic recession, but pockets of weakness at different times. 674 00:34:44,160 --> 00:34:47,200 Speaker 7: I think that's manifesting itself in the inflation data too, 675 00:34:47,320 --> 00:34:50,760 Speaker 7: meaning the rolling nature of it, where you see pockets 676 00:34:50,800 --> 00:34:54,040 Speaker 7: of impact on the upside, you maybe get some pockets 677 00:34:54,080 --> 00:34:57,400 Speaker 7: of offset on the downside, as opposed to anything that 678 00:34:57,520 --> 00:34:59,719 Speaker 7: is one time in nature. And I think that will 679 00:34:59,719 --> 00:35:01,840 Speaker 7: also continue to be the name of the game because 680 00:35:02,120 --> 00:35:06,520 Speaker 7: there isn't anything one time about how we're getting information 681 00:35:06,640 --> 00:35:10,000 Speaker 7: on tariffs, and that increasingly makes it more difficult for 682 00:35:10,080 --> 00:35:13,360 Speaker 7: companies to map out a longer term pricing strategy. 683 00:35:13,480 --> 00:35:14,879 Speaker 4: Well when it comes to the FED, do they even 684 00:35:14,880 --> 00:35:17,280 Speaker 4: have the luxury of waiting to see the full impact. 685 00:35:17,360 --> 00:35:19,800 Speaker 4: If the labor market Lausanne is weakening. 686 00:35:20,840 --> 00:35:23,239 Speaker 7: That would be the primary reason why September is on 687 00:35:23,239 --> 00:35:25,520 Speaker 7: the table. The FED is essentially inferred, not that they're 688 00:35:25,560 --> 00:35:28,360 Speaker 7: ignoring the inflation side of their mandate, but the trigger 689 00:35:28,360 --> 00:35:30,919 Speaker 7: to move back to easier policy, per what they did 690 00:35:31,000 --> 00:35:34,400 Speaker 7: last fall, is probably more on the labor market side 691 00:35:34,719 --> 00:35:37,200 Speaker 7: versus the inflation side, unless you have a major, major 692 00:35:37,200 --> 00:35:40,360 Speaker 7: spike in inflation from here. That's precisely what happened last 693 00:35:40,360 --> 00:35:43,520 Speaker 7: fall when the Fed did launch what became only three 694 00:35:43,600 --> 00:35:46,040 Speaker 7: rate cuts, but they launched it with a fifty and 695 00:35:46,080 --> 00:35:49,040 Speaker 7: that was because of pretty significant concerns turned out to 696 00:35:49,040 --> 00:35:52,920 Speaker 7: be somewhat unfounded, but significant concerns about the labor market. 697 00:35:53,040 --> 00:35:55,400 Speaker 7: So the inflation data is going to be parsed like 698 00:35:55,440 --> 00:35:57,840 Speaker 7: it always is, but I think it's the labor market 699 00:35:57,880 --> 00:36:01,000 Speaker 7: side of their mandate that will ultimately be the trigger 700 00:36:01,040 --> 00:36:01,759 Speaker 7: for what they do. 701 00:36:02,040 --> 00:36:04,200 Speaker 2: And by how much. Listen, let's push some of this 702 00:36:04,280 --> 00:36:08,200 Speaker 2: conversation into the equity market record, Hon, the SMP record. Hon. 703 00:36:08,239 --> 00:36:10,480 Speaker 2: Then that's that one hundred as we kick off Wednesday morning. 704 00:36:10,640 --> 00:36:13,600 Speaker 2: Beneath the index. How much adjustment are you seeing in 705 00:36:13,680 --> 00:36:16,520 Speaker 2: individual equities to the prospect of so called demand destruction? 706 00:36:16,560 --> 00:36:19,080 Speaker 2: When you hear about companies like Kava, like Sweet Green 707 00:36:19,160 --> 00:36:20,960 Speaker 2: facing a bit of a consumer slowed down. 708 00:36:21,600 --> 00:36:24,720 Speaker 7: Yeah, there's a lot of consolidation happening under the surface, 709 00:36:24,760 --> 00:36:27,040 Speaker 7: which if you're only looking at at what the indexers 710 00:36:27,040 --> 00:36:29,080 Speaker 7: are doing, I think you don't pick up on that. 711 00:36:29,680 --> 00:36:31,440 Speaker 7: I've talked to a lot of people who say, oh, 712 00:36:31,480 --> 00:36:34,359 Speaker 7: TeX's the best performing sector. It's actually the second best 713 00:36:34,360 --> 00:36:37,320 Speaker 7: performing sector on a year to day basis, comm services 714 00:36:37,320 --> 00:36:40,959 Speaker 7: being the other. But they're often lumped together. But each 715 00:36:41,000 --> 00:36:44,760 Speaker 7: of those sectors only has about a rounding sixty percent 716 00:36:44,760 --> 00:36:48,200 Speaker 7: of their stocks in the same kind of breadth pattern 717 00:36:48,320 --> 00:36:50,520 Speaker 7: as the index overall. In the case of the Nasdaq 718 00:36:50,600 --> 00:36:53,680 Speaker 7: one hundred all time highs, but less than fifty percent 719 00:36:53,680 --> 00:36:56,640 Speaker 7: of the stocks are at all time highs. You've got 720 00:36:56,680 --> 00:36:59,799 Speaker 7: only actually, I think it's less than thirty percent of 721 00:37:00,320 --> 00:37:03,799 Speaker 7: stocks within the S and P five hundred have outperformed 722 00:37:03,800 --> 00:37:06,160 Speaker 7: the index itself over the past month, and you don't 723 00:37:06,200 --> 00:37:09,359 Speaker 7: get much above a third of the index over any 724 00:37:09,400 --> 00:37:12,680 Speaker 7: trailing period one year, one month, three months, six months. 725 00:37:12,680 --> 00:37:16,560 Speaker 7: So there's a bit more weakness and rotation and churn 726 00:37:17,040 --> 00:37:20,920 Speaker 7: happening under the surface. It's somewhat similar to what we 727 00:37:21,000 --> 00:37:23,320 Speaker 7: have seen in periods in the past, both in twenty 728 00:37:23,360 --> 00:37:25,960 Speaker 7: twenty three and twenty twenty four, and I think the 729 00:37:26,080 --> 00:37:29,120 Speaker 7: fuller story, not the real story, but the fuller story 730 00:37:29,680 --> 00:37:33,719 Speaker 7: maybe getting told under the surface of these cap weighted indexes. 731 00:37:33,840 --> 00:37:36,200 Speaker 2: Do you think that narrow breadth and high current centration 732 00:37:36,320 --> 00:37:39,160 Speaker 2: is necessarily something to be concerned about? Zan Then that's 733 00:37:39,160 --> 00:37:40,879 Speaker 2: the ultimate question for a lot of people. I hear 734 00:37:40,920 --> 00:37:43,239 Speaker 2: people point it out all the time, and then we 735 00:37:43,320 --> 00:37:45,160 Speaker 2: just keep grinding out new old time highs. Is it 736 00:37:45,280 --> 00:37:46,440 Speaker 2: necessarily problematic? 737 00:37:47,200 --> 00:37:49,640 Speaker 7: Note if the market continues to do well, But if 738 00:37:49,680 --> 00:37:51,400 Speaker 7: you look at the early part of this year, the 739 00:37:51,440 --> 00:37:55,319 Speaker 7: period between February nineteenth, which at that time was an 740 00:37:55,320 --> 00:37:59,080 Speaker 7: all time high and the intra day low on April ninth, 741 00:37:59,520 --> 00:38:03,080 Speaker 7: those areas of the market, the megacap, tech, tech related 742 00:38:03,200 --> 00:38:06,520 Speaker 7: mag seven, whatever categorization you wanted to use, those were 743 00:38:06,560 --> 00:38:09,440 Speaker 7: the areas that had the bigger draw downs relative to 744 00:38:09,480 --> 00:38:12,719 Speaker 7: the index. So that that period between mid February and 745 00:38:12,760 --> 00:38:17,040 Speaker 7: early April was one where the indexes were dragged down 746 00:38:17,080 --> 00:38:21,319 Speaker 7: even more. But you did have some ballasts within the 747 00:38:21,360 --> 00:38:24,399 Speaker 7: market in areas that had not done well. So yeah, 748 00:38:24,400 --> 00:38:27,359 Speaker 7: you're absolutely right. If the market continues to do well 749 00:38:27,400 --> 00:38:29,239 Speaker 7: and momentum is on the market side. I think the 750 00:38:29,280 --> 00:38:33,200 Speaker 7: pain trade is still probably higher, but that could be 751 00:38:33,280 --> 00:38:36,120 Speaker 7: a situation that unfolds fairly quickly and akin to what 752 00:38:36,160 --> 00:38:38,400 Speaker 7: we saw in that mid February to mid April period. 753 00:38:38,560 --> 00:38:40,759 Speaker 2: That sound I appreciate it. Time As always, this sounds 754 00:38:40,760 --> 00:38:52,719 Speaker 2: some us that a child swamp. I think what joined 755 00:38:52,719 --> 00:38:55,080 Speaker 2: around the time boat by another Yankees fan? Is that right? 756 00:38:56,480 --> 00:38:58,160 Speaker 8: As soon as I saw the mug, I said, why 757 00:38:58,160 --> 00:38:58,719 Speaker 8: aren't you disc. 758 00:38:58,760 --> 00:38:59,360 Speaker 3: I was trying HIDEX. 759 00:38:59,400 --> 00:39:01,440 Speaker 4: I'm pretty sure it's our best at treasure secretaries are 760 00:39:01,440 --> 00:39:02,399 Speaker 4: red SOX fans, so. 761 00:39:02,360 --> 00:39:02,880 Speaker 2: I don't want to. 762 00:39:03,480 --> 00:39:05,279 Speaker 4: I don't want to antagonize him, you know. 763 00:39:05,360 --> 00:39:08,040 Speaker 2: On during this entire interview, Tom force Selli of PGM 764 00:39:08,120 --> 00:39:09,279 Speaker 2: Joints is around the table with Tomking. 765 00:39:09,320 --> 00:39:10,080 Speaker 3: Morning, get good to see you. 766 00:39:10,120 --> 00:39:11,520 Speaker 2: It's going to see it. Let's talk about the state 767 00:39:11,520 --> 00:39:13,720 Speaker 2: of this economy. Let's start with the labor market first. 768 00:39:13,880 --> 00:39:14,480 Speaker 2: Where are we? 769 00:39:15,200 --> 00:39:17,799 Speaker 8: I mean, you know, I've been on this program many 770 00:39:17,800 --> 00:39:19,960 Speaker 8: times for many months saying there are all these cracks forming, 771 00:39:20,040 --> 00:39:23,000 Speaker 8: and that is as true today as it was, you know, 772 00:39:23,040 --> 00:39:24,640 Speaker 8: sort of six months ago when we were driving that 773 00:39:24,680 --> 00:39:25,160 Speaker 8: point home. 774 00:39:25,239 --> 00:39:27,359 Speaker 3: So nothing has changed for us in that regard. 775 00:39:27,400 --> 00:39:29,320 Speaker 8: In fact, what I would say, is the payroll report, 776 00:39:29,360 --> 00:39:32,560 Speaker 8: the much maligned recent pay roll report. To me, that 777 00:39:32,640 --> 00:39:34,640 Speaker 8: was just a manifestation of all the other things that 778 00:39:34,640 --> 00:39:37,120 Speaker 8: had been going on prior. So I don't, I wouldn't. 779 00:39:37,320 --> 00:39:40,040 Speaker 8: We weren't all shocked and bothered by it. I think 780 00:39:40,040 --> 00:39:41,960 Speaker 8: it was just sort of revealing what was already in place. 781 00:39:42,000 --> 00:39:45,320 Speaker 2: So let's stay on payrolls. Yeah, step down, clearly, very obvious. 782 00:39:45,360 --> 00:39:47,160 Speaker 2: We've gone from a decent clip of gains to something 783 00:39:47,200 --> 00:39:49,480 Speaker 2: closer to stall speed. I want to understand from your 784 00:39:49,520 --> 00:39:51,759 Speaker 2: perspective whether you think that cements this idea that we've 785 00:39:51,760 --> 00:39:54,040 Speaker 2: seen a technical turn, whether it's more evidence for a 786 00:39:54,040 --> 00:39:56,440 Speaker 2: structural shift, something developing on the supply side. 787 00:39:56,520 --> 00:39:58,680 Speaker 8: Yeah, so we think that things are slowing down, right, 788 00:39:58,719 --> 00:40:00,200 Speaker 8: I mean I think that's an important idea. Like, we 789 00:40:00,239 --> 00:40:02,319 Speaker 8: don't think we're like cyclically, we're about to slip into 790 00:40:02,320 --> 00:40:04,920 Speaker 8: a recession. Instead, what we've been saying is we're in 791 00:40:04,960 --> 00:40:06,919 Speaker 8: the sort of muddle through backdrops, and we would define 792 00:40:06,920 --> 00:40:08,440 Speaker 8: that as sort of, like you a one percent ish 793 00:40:08,560 --> 00:40:10,440 Speaker 8: kind of growth, one to one and a half percent growth, 794 00:40:10,920 --> 00:40:13,520 Speaker 8: And so that report is actually very consistent with our 795 00:40:13,600 --> 00:40:15,640 Speaker 8: view in that regard. So when I think about FED 796 00:40:15,719 --> 00:40:18,840 Speaker 8: response function. We actually think the Fed they are supposed 797 00:40:18,840 --> 00:40:21,160 Speaker 8: to cut. I mean, I don't think that's for us. 798 00:40:21,200 --> 00:40:22,960 Speaker 8: That's been our long standing call that they would start 799 00:40:23,000 --> 00:40:26,359 Speaker 8: cutting again in September, and so we feel good about 800 00:40:26,360 --> 00:40:29,239 Speaker 8: that overall. So well, sorry, we feel good about the 801 00:40:29,239 --> 00:40:31,520 Speaker 8: call overall. I mean, being slowing down is never obviously 802 00:40:31,520 --> 00:40:32,760 Speaker 8: agree to state you feel. 803 00:40:32,520 --> 00:40:34,360 Speaker 4: Good about the call of the FED cutting in September. 804 00:40:34,680 --> 00:40:37,200 Speaker 4: The Trager secretary is calling for fifty basis point. 805 00:40:37,840 --> 00:40:40,680 Speaker 2: Yeah, So look, do I have sympathy for that idea? 806 00:40:40,920 --> 00:40:42,480 Speaker 3: The answer to that is, tell me. 807 00:40:42,400 --> 00:40:44,040 Speaker 8: What the payroll report is going to look like, you know, 808 00:40:44,080 --> 00:40:45,560 Speaker 8: in a month from now or whatever it is, a 809 00:40:45,560 --> 00:40:47,000 Speaker 8: couple of weeks from now, because I think you're gonna 810 00:40:47,040 --> 00:40:48,600 Speaker 8: need evidence for that. If it's just a sort of 811 00:40:48,600 --> 00:40:51,439 Speaker 8: another another really soft report like we saw, I don't 812 00:40:51,440 --> 00:40:53,960 Speaker 8: know if that's the evidence enough to go fifty. But 813 00:40:54,680 --> 00:40:56,440 Speaker 8: you know, to me, it's it's sort of semantics in 814 00:40:56,480 --> 00:40:59,239 Speaker 8: some way, because whether they go fifty or twenty five, 815 00:40:59,360 --> 00:41:01,680 Speaker 8: I think they're pulling forward a lot of the cuts 816 00:41:01,719 --> 00:41:03,680 Speaker 8: that they sort of were prt that the FED was 817 00:41:03,719 --> 00:41:05,360 Speaker 8: pricing in over the balance of the next year and 818 00:41:05,400 --> 00:41:05,680 Speaker 8: a half. 819 00:41:05,760 --> 00:41:07,879 Speaker 4: If they go fifty though, what signal does that mean 820 00:41:07,920 --> 00:41:10,200 Speaker 4: for how the Fed thinks of the economy right now? 821 00:41:10,280 --> 00:41:12,799 Speaker 8: Yeah, I think it really drives home that, look, the 822 00:41:12,840 --> 00:41:15,120 Speaker 8: Fed already and I feel like a lot of us, 823 00:41:15,640 --> 00:41:18,200 Speaker 8: me included, I feel like a lot of us forget this. 824 00:41:18,440 --> 00:41:20,880 Speaker 8: The Fed already had cuts teed up, right, They already 825 00:41:20,920 --> 00:41:23,359 Speaker 8: were expecting two cuts this year, so they were expecting 826 00:41:23,560 --> 00:41:26,640 Speaker 8: a softer economic backdrop. And so I think in that context, 827 00:41:26,680 --> 00:41:29,680 Speaker 8: it's just very in keeping with what they're viewing. Show 828 00:41:29,719 --> 00:41:31,840 Speaker 8: me another really poor payroll report it I'll give you 829 00:41:31,880 --> 00:41:33,560 Speaker 8: the evidence for Hey, maybe they need to do more, 830 00:41:33,680 --> 00:41:35,640 Speaker 8: but I think for right now it's pretty consistent. 831 00:41:35,719 --> 00:41:37,560 Speaker 2: We get one more papers report. I've got no idea 832 00:41:37,600 --> 00:41:39,759 Speaker 2: what Senate. We'll get that on September fifth. A week later, 833 00:41:39,880 --> 00:41:41,839 Speaker 2: they don't tell you, absolutely cluarless to be a less 834 00:41:41,880 --> 00:41:44,200 Speaker 2: it share nothing with me. A week later we'll get 835 00:41:44,239 --> 00:41:46,440 Speaker 2: the CPI report. I want to finish on inflation, and 836 00:41:46,440 --> 00:41:49,480 Speaker 2: turns to that side of the dual mandate. Limited tariff 837 00:41:49,480 --> 00:41:52,279 Speaker 2: passed through relative to what was expected? Do you think 838 00:41:52,280 --> 00:41:53,880 Speaker 2: it remains that when the months to count? 839 00:41:53,960 --> 00:41:56,680 Speaker 8: No, Actually, I think you're seeing limited passed through now 840 00:41:56,719 --> 00:41:59,240 Speaker 8: because companies did a really smart thing. They built inventories 841 00:41:59,239 --> 00:42:01,759 Speaker 8: in a really meaningful So that's sort of buffering the 842 00:42:02,000 --> 00:42:06,120 Speaker 8: sort of the flow of the tariff inflationary impulse into inflation. 843 00:42:06,480 --> 00:42:08,640 Speaker 8: But I'll give you one really interesting thing to think about. 844 00:42:09,440 --> 00:42:12,000 Speaker 8: You know, it's funny we're having this conversation about our 845 00:42:12,040 --> 00:42:14,720 Speaker 8: payrolls calculator, right, Obviously we can have the same conversation 846 00:42:14,719 --> 00:42:18,160 Speaker 8: about inflation inflation. There are so many flaws in the 847 00:42:18,160 --> 00:42:21,000 Speaker 8: calculation of inflation. So if I look at if I 848 00:42:21,040 --> 00:42:23,040 Speaker 8: swap out something as simple it's not that it's so 849 00:42:23,040 --> 00:42:24,680 Speaker 8: simple because it's a big component. 850 00:42:24,880 --> 00:42:25,880 Speaker 3: But if I swap out. 851 00:42:25,719 --> 00:42:29,880 Speaker 8: Oeer for you know, sort of a market measure of 852 00:42:29,960 --> 00:42:32,040 Speaker 8: rents like apartment list. 853 00:42:32,120 --> 00:42:34,279 Speaker 3: Inflation is running at a one percent pace right now. 854 00:42:35,760 --> 00:42:38,359 Speaker 8: I mean, I think all of this sort I think 855 00:42:38,400 --> 00:42:40,000 Speaker 8: that to me is the right way of thinking about 856 00:42:40,040 --> 00:42:41,879 Speaker 8: what the starting point for. 857 00:42:41,840 --> 00:42:43,560 Speaker 2: It Isn't that giving you a lead on what you 858 00:42:43,600 --> 00:42:45,879 Speaker 2: think ultimately is going to happen with service inflation down 859 00:42:45,880 --> 00:42:46,200 Speaker 2: the road? 860 00:42:46,360 --> 00:42:46,600 Speaker 3: Yeah? 861 00:42:46,640 --> 00:42:49,319 Speaker 8: So I think from our perspective, what it means is 862 00:42:49,320 --> 00:42:51,360 Speaker 8: that you are going to get this lift higher in inflation. 863 00:42:51,680 --> 00:42:53,680 Speaker 8: But you know you so what so you lift sort 864 00:42:53,760 --> 00:42:56,120 Speaker 8: toward the target as opposed to being above target now 865 00:42:56,120 --> 00:42:58,080 Speaker 8: and going even further above target. I mean, I think 866 00:42:58,160 --> 00:43:00,439 Speaker 8: if you look at inflation with just making some very 867 00:43:00,480 --> 00:43:02,960 Speaker 8: modest and I think very reasonable adjustments, you probably want 868 00:43:03,000 --> 00:43:04,319 Speaker 8: to getting back to target. 869 00:43:04,040 --> 00:43:06,080 Speaker 2: This situation that is not something that you think will 870 00:43:06,080 --> 00:43:09,680 Speaker 2: constrain the fensibility to reduce right and respect to softness 871 00:43:09,680 --> 00:43:09,920 Speaker 2: in the light. 872 00:43:10,080 --> 00:43:12,239 Speaker 8: Yeah, I don't. I mean, I think the FED has 873 00:43:12,239 --> 00:43:13,480 Speaker 8: the right line on this. I think it is going 874 00:43:13,520 --> 00:43:15,319 Speaker 8: to be a temporary sort of one time shift time 875 00:43:15,480 --> 00:43:15,840 Speaker 8: you say. 876 00:43:15,719 --> 00:43:18,759 Speaker 2: The fedesi right line, some fedid vigils at the FED, Yes, 877 00:43:18,800 --> 00:43:20,239 Speaker 2: have the right line. Yes, I don't know where the 878 00:43:20,239 --> 00:43:21,879 Speaker 2: whole committee is. Where's the whole comittee on this? 879 00:43:21,960 --> 00:43:23,680 Speaker 8: Yeah, I mean, and as you would expect, there's just 880 00:43:23,719 --> 00:43:26,000 Speaker 8: a divergence of views, I think, seemingly at this point. 881 00:43:26,040 --> 00:43:28,920 Speaker 8: But it does seem that the sort of the momentum 882 00:43:29,000 --> 00:43:31,239 Speaker 8: is drifting toward people having the right line, which is 883 00:43:31,280 --> 00:43:32,200 Speaker 8: to say, cutting in September. 884 00:43:32,280 --> 00:43:33,840 Speaker 4: If we're not going to see the full tariff impact, 885 00:43:33,920 --> 00:43:36,520 Speaker 4: say till twenty twenty six. Can you see a scenario 886 00:43:36,520 --> 00:43:38,719 Speaker 4: with a FED is cutting at the end of this year, 887 00:43:38,760 --> 00:43:41,120 Speaker 4: maybe starting in September and then having to think about 888 00:43:41,200 --> 00:43:42,040 Speaker 4: hikes next year. 889 00:43:42,480 --> 00:43:45,160 Speaker 8: Yeah, so this is a really important idea in the 890 00:43:45,160 --> 00:43:47,160 Speaker 8: context of this is not COVID, right. I mean, I 891 00:43:47,160 --> 00:43:48,799 Speaker 8: think people are looking at this sort of this this 892 00:43:48,880 --> 00:43:51,880 Speaker 8: drift that we're going to see higher in inflation, and 893 00:43:51,920 --> 00:43:54,400 Speaker 8: I think that, you know, they're scarred. I think including 894 00:43:54,440 --> 00:43:57,600 Speaker 8: FED officials is specifically pell I think right called the 895 00:43:57,640 --> 00:44:00,480 Speaker 8: transitory So I think they're scarred because of the whole 896 00:44:00,520 --> 00:44:04,120 Speaker 8: you know, let's call it transitory mistique. But it's this 897 00:44:04,160 --> 00:44:07,040 Speaker 8: is not that you know, we imply people with mountains 898 00:44:07,040 --> 00:44:09,160 Speaker 8: of cash through a helicopter drop of money. We didn't 899 00:44:09,160 --> 00:44:11,560 Speaker 8: create a pent up demand scenario by shutting down an 900 00:44:11,600 --> 00:44:13,480 Speaker 8: otherwise really healthy economy and then turning back on. 901 00:44:13,560 --> 00:44:16,920 Speaker 2: So I think the setup is so different, right to 902 00:44:17,239 --> 00:44:19,040 Speaker 2: see it's going to see you, sir, good same time. 903 00:44:19,120 --> 00:44:21,040 Speaker 2: Thank you for being here. Tom por Sei of PGM 904 00:44:21,200 --> 00:44:25,560 Speaker 2: Fixed Income. This is the Bloomberg Sevenants podcast, bringing you 905 00:44:25,880 --> 00:44:29,239 Speaker 2: the best in markets, economics, antient politics. You can watch 906 00:44:29,280 --> 00:44:32,040 Speaker 2: the show live on bloomblog TV weekday mornings from six 907 00:44:32,080 --> 00:44:36,480 Speaker 2: am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 908 00:44:36,640 --> 00:44:38,840 Speaker 2: or anywhere else you listen, and, as always on the 909 00:44:38,840 --> 00:44:41,279 Speaker 2: bloom blog, terminal and the Bloomberg Business app.