WEBVTT - Single Best Idea with Tom Keene: Torsten Slok & Jeffrey Rosenberg

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

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<v Speaker 2>The single best idea on a really really strange Tuesday

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<v Speaker 2>before FED meeting. Of course, we'll do the FED meeting tomorrow,

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<v Speaker 2>the FED decize we do that at one thirty Wall

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<v Speaker 2>Street time, looking forward to that. And my phrase for

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<v Speaker 2>this coming off the reading I've done is x post

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<v Speaker 2>is after the fact, So the FED takes in the

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<v Speaker 2>data and then only x after the fact x post.

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<v Speaker 2>But I'm calling it x post squared because not only

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<v Speaker 2>are the ex post worried about inflation and what's going

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<v Speaker 2>to happen there, the ex post worried about jobs, jobs,

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<v Speaker 2>jobs as well, and a squared function means more than

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<v Speaker 2>just adding them together. And I think that shows the

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<v Speaker 2>bizarreness the uncertainty of this FED meeting. As someone who's

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<v Speaker 2>really focused on this is Tursten's Slock of Apollo Global Management.

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<v Speaker 2>Let's listen.

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<v Speaker 1>We are absolutely in staflation. If you look at the

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<v Speaker 1>quantifications from the Yald budget lab from the pin Waton

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<v Speaker 1>budget model from the Tax Foundation, from the Pierson Institute,

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<v Speaker 1>they find that inflation over the next twelve months will

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<v Speaker 1>go up by one percent is point. So if we

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<v Speaker 1>have inflation going up, they fetch would be hiking. But

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<v Speaker 1>if at the same time we have less economic activity,

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<v Speaker 1>the fetch would be cutting. So executary point which one

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<v Speaker 1>is what's really most interesting also about this discussion is

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<v Speaker 1>that the dot plot is actually revealing that they're leaning

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<v Speaker 1>towards looking at growth, because the dot plot is saying

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<v Speaker 1>that the next move is a cut. So if that's

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<v Speaker 1>the case, we have our answer right there that they're

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<v Speaker 1>fed things that in a stacklation scenario the focus should

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<v Speaker 1>be on growth. And that's of course where the Arthur

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<v Speaker 1>Burns and the pul Volca discussions will come in, because

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<v Speaker 1>is that a mistake If inflation is about to go

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<v Speaker 1>remember COPC today's two point eight, and if we add

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<v Speaker 1>one percent to then we get to three point eight.

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<v Speaker 1>Can you be cutting? If inflationans move up to t

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<v Speaker 1>pot two to three point eight. That gets a really

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<v Speaker 1>really complex decision.

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<v Speaker 2>Three point eight and that's a much smaller number than

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<v Speaker 2>four point zero. I can't imagine a bundled in three

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<v Speaker 2>month moving average or four point zero. I don't hear

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<v Speaker 2>many people modeling that yet, So it's not get in

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<v Speaker 2>front of ourselves. One of the secrets of Bloomberg's surveillance

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<v Speaker 2>and we learned this ages ago. We are so humbled

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<v Speaker 2>that our guests tune into the show before they're on

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<v Speaker 2>the linkage here of the guest guest to guest to

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<v Speaker 2>guests can really be valuable. From Blackrock listening to Torsten

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<v Speaker 2>Slock at Apollo Global Management, here's Jeffrey Rosenberg.

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<v Speaker 3>I'm not sure Torsten wrote about this or certainly people

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<v Speaker 3>are talking about the kind of typical pattern when you

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<v Speaker 3>get a shock to the system like the one that

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<v Speaker 3>we had, is the soft survey based data starts to

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<v Speaker 3>erode reflective of that shock on more of a forward

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<v Speaker 3>looking basis, because you're asking people in real time, what

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<v Speaker 3>are your expectations going forward? That erodes before the hard

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<v Speaker 3>data does. Now, what we're coming off of here, of course,

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<v Speaker 3>is that following the soft data in the most last

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<v Speaker 3>in the most recent decline in soft data was a

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<v Speaker 3>really bad strategy because the soft data ended up not

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<v Speaker 3>being validated in the hard data. So we have this

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<v Speaker 3>period in time. It's typical where you have the break

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<v Speaker 3>between soft data and hard data. And now what we're

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<v Speaker 3>going to look for and what the FED we'll talk

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<v Speaker 3>about is does it show up in the hard data?

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<v Speaker 3>What's critical for FED policy is they're not going to

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<v Speaker 3>be forecast depending here. They're not going to forecast and

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<v Speaker 3>move policy based on the soft data. They're going to wait,

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<v Speaker 3>and by waiting, they will be late, and they're going

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<v Speaker 3>to be happy to be late. Well, whether financial markets

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<v Speaker 3>are happy that they're late, that'll be a different question.

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<v Speaker 2>Jeffrey Rosenberg fired up there Black Rock as well. I

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<v Speaker 2>hope we have them on the FED meeting off to

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<v Speaker 2>see what the agenda is. He does their thematic investing

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<v Speaker 2>with a particular focus on fixed income. We're focused on

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<v Speaker 2>your interest in US on your commute. Thank you so much,

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<v Speaker 2>major shout out to ninety two ninety We had a

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<v Speaker 2>lot of fun today with a met gala and to

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<v Speaker 2>see Clario there, a singer songwriter out of Conquered Carlisle

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<v Speaker 2>High School out in the burbs by Blue Jay Recording

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<v Speaker 2>out in Conquered in Carlisle, Massachusetts. Very cool, Lincoln there.

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<v Speaker 2>Good morning to ninety two nine FM and you're met

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<v Speaker 2>Gala on your commune across the nation and of course

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<v Speaker 2>on YouTube, subscribe to Bloomberg Podcasts and on YouTube podcast

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