Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
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Speaker 1: Definitive on our international relations, Ian Bremmer, he is with
Speaker 1: Erasi Group. His top risks every year are beyond sobering,
Speaker 1: one because they make you think, and two he's really
Speaker 1: right a fair amount of the time, Ian Bremer. Should
Speaker 1: we be stressed that this is a different Republican Party
Speaker 1: than the report publican party of young John Bolton with
Speaker 1: Ronald Reagan.
Speaker 3: I'm not sure that that by itself is what drives
Speaker 3: my concern. I think the fact that Trump owns the
Speaker 3: Republican Party and so is a consequence he can put
Speaker 3: a thumb on the scale on major.
Speaker 4: Foreign policy issues.
Speaker 3: That's a pretty big deal, but also just generally the
Speaker 3: illegitimacy in perception of US institutions, the executive, the judiciary,
Speaker 3: the Congress, but also the public school system, the church,
Speaker 3: I mean, the media. When you look at how Americans
Speaker 3: feel about their institutions over the last twenty thirty years,
Speaker 3: it's just been getting.
Speaker 4: Worse and worse and worse. And that, to me is
Speaker 4: the structural underpinning here.
Speaker 1: The getting worse and worse and worse seems to be
Speaker 1: the heart of the matter, what anybody's politics is. Governor
Speaker 1: Haley cited out the statistics showing the pole tilt Ian Bremmer,
Speaker 1: who is forget about Spiro Agno, who is the American
Speaker 1: silent majority.
Speaker 3: I think they're people that feel like they're leaders have
Speaker 3: left them. They're people that no longer believe in the
Speaker 3: American dream. When you and I were kids, the United
Speaker 3: States had the greatest class mobility of any of the
Speaker 3: OECD nations.
Speaker 4: Today it has the least.
Speaker 3: And no matter how optimistic and individualistic you might be
Speaker 3: as a nation, eventually you get hit in the face
Speaker 3: enough and and you change your view. And I think
Speaker 3: that that's a big piece of I mean, the US
Speaker 3: still has incredible wealth and has all of this entrepreneurship,
Speaker 3: and you'd rather be the United States than any other
Speaker 3: country in the world in the aggregate.
Speaker 4: But people don't live in the aggregate, and that's what
Speaker 4: we're experiencing.
Speaker 5: So Ian, I'd love to get your views on how
Speaker 5: perhaps the US is viewed by I don't know, our allies,
Speaker 5: our foes. I mean, it seems like it's been an
Speaker 5: up and down, whether you know, with the Trump administration,
Speaker 5: their policy for NATO and just kind of foreign policy
Speaker 5: versus Biden trying to maybe get back to normalcy. How
Speaker 5: do you think the folks outside the US view.
Speaker 6: US incredibly inconsistent? I mean, not a country that you
Speaker 6: can as easily count on, and therefore a lot of
Speaker 6: hedging behavior going on, even though there aren't necessarily any
Speaker 6: good options.
Speaker 4: Look, I mean, I take the point that we should not.
Speaker 3: Be blackmailing our allies to pay or else we won't
Speaker 3: defend them. But on the other side of that argument,
Speaker 3: what are we if, for decades they refuse to actually
Speaker 3: make good on their defense commitments?
Speaker 4: Should there be no consequences at all?
Speaker 3: Because that appears to be the ex ante position, and
Speaker 3: that's not okay either.
Speaker 7: Right.
Speaker 3: That it's true that if Trump tells you we won't
Speaker 3: defend you, we'd like Russia to attack you. If you
Speaker 3: don't pay your two percent into GDP of defense, if
Speaker 3: you're not doing an adequate job defending yourself, that undermines NATO.
Speaker 4: And we've heard that from the Secretary General.
Speaker 3: But it's also true that if Canada and Germany and
Speaker 3: France and Italy and Spain, I mean, the biggest economies
Speaker 3: all consistently refuse to invest in their own defense.
Speaker 4: That also emboldens Putin. Right, That emboldens Putin too.
Speaker 3: So how is it that neither none of our leaders
Speaker 3: seem to get it right?
Speaker 7: We just bounce back and forth between these populist extremes
Speaker 7: and don't think long term about what makes for a
Speaker 7: strong alliance.
Speaker 5: So what do you believe is the realistic future of NATO,
Speaker 5: because boy, that is front and center now with what's
Speaker 5: going on in Ukraine.
Speaker 4: I think that peak NATO was last year. Putin made
Speaker 4: a huge mistake.
Speaker 3: You should never never ever interrupt your adversary when they're
Speaker 3: screwing up, and NATO was getting more divided and becoming
Speaker 3: less relevant. For many years, the Europeans just were I
Speaker 3: wouldn't say they were giving up on it, but they
Speaker 3: were certainly taking advantage of it. And that led to
Speaker 3: a backlash that you saw reflected with Trump's America first,
Speaker 3: and then Putin.
Speaker 4: Did the stupidest possible thing.
Speaker 8: He made NATO as desirable and relevant as humanly possible
Speaker 8: by trying to overthrow Zelenski and sends his troops storming
Speaker 8: toward Kiev. And not only did that make the Germans
Speaker 8: start spending money on their defense, but it also expanded NATO,
Speaker 8: made the Finns, made the Swedes wanted to join, made
Speaker 8: everybody realize that NATO was an indispensable alliance. Unfortunately, Putin
Speaker 8: understands that he cares a lot more about this issue
Speaker 8: than anybody else does, and he's willing to wait everybody out,
Speaker 8: and that now appears to be working in his favor
Speaker 8: after two years of it.
Speaker 2: Not Ian Bremer.
Speaker 1: One of my favorite people is a hockey player from
Speaker 1: Finland named Alex Stubb. He's young, he's vigorous. I'm not
Speaker 1: sure that politics in a closely contested Finnish election explain
Speaker 1: to our American audience the importance of Finland and that
Speaker 1: heritage with Russia.
Speaker 3: Well it does have, of now, of all of our
Speaker 3: NATO allies, the longest border with Russia. And while they
Speaker 3: had had a comparatively independent policy and were very unwilling,
Speaker 3: very controversial join NATO, that flipped the entire population overnight
Speaker 3: when the Russians invaded Ukraine in February twenty twenty two. Interestingly,
Speaker 3: that wasn't the position despite the invasion in southeast Ukraine
Speaker 3: with the Little Green Men and the illegal annexation of Crimea,
Speaker 3: but all the Tanks after the denials the ball face
Speaker 3: lies from Putin to the Germans, the French, the Americans
Speaker 3: over the months and then willing to try to engage
Speaker 3: in full regime change of a country of over fifty
Speaker 3: million people. That that proved enough. And Steube, who's a
Speaker 3: good friend, I've known him for a long time.
Speaker 4: I mean, he is.
Speaker 3: A very very staunch opponent of mister Putin.
Speaker 4: And there's no question that.
Speaker 3: The election was not determined by how you view NATO
Speaker 3: or Russia. In fact, both of the both of the
Speaker 3: opponents of each other, were very consistent in terms of policy.
Speaker 3: There's very different personalities, but there wasn't a lot of
Speaker 3: substance in this.
Speaker 2: There is substance in Jakarta.
Speaker 1: It is on the other side, as Patrick O'Brien said,
Speaker 1: the far side.
Speaker 6: Of the world.
Speaker 1: You feature the Indonesian election briefest quickly on that, doctor Bremmer.
Speaker 3: It's another large country after India, big democracy, no one
Speaker 3: questioning the legitimacy of the process. Joco the existing president,
Speaker 3: has been quite popular, and his preferred successor, mister Praboo,
Speaker 3: a former military general, is likely to win, though probably
Speaker 3: not in the first round, and his vice presidential running
Speaker 3: mate is Jocobe. The president his son, so I mean
Speaker 3: definitely will be more state enterprise oriented, will probably be
Speaker 3: a little more populist in policy, but very consistent in
Speaker 3: international orientation, including very good relations with the US in Japan.
Speaker 5: Rightfully, so, most folks attention is focused on Ukraine, has
Speaker 5: focused on the Middle East, but of course we can't
Speaker 5: forget about what's happening with China, with Taiwan, that.
Speaker 2: Whole part of the world.
Speaker 5: How do you view China's view of the world over
Speaker 5: the next year or two.
Speaker 3: Their geopolitical position has been really undermined by an economy
Speaker 3: that's not doing well and then overly assertive sort of
Speaker 3: political footprint, and so you look at them. Of course,
Speaker 3: India has a much much stronger relationship with the US
Speaker 3: and much more contentious and combative engagement with the Chinese,
Speaker 3: including over their contested border. The Quad has been a
Speaker 3: strong effort of US architecture building that is a counterbalance
Speaker 3: to China's Belt and Road. You've got the South Korea
Speaker 3: Japan break through, probably the most important diplomatic success that
Speaker 3: Biden has had over his three plus years. Also problematic
Speaker 3: for the Chinese. We just mentioned Indonesia they're till, but
Speaker 3: also the Philippines now offering the US eight military bases
Speaker 3: after what had been a close up policy with China.
Speaker 3: If you're China going forward right now, part of the
Speaker 3: reason for this charm offensive, it's not just that the
Speaker 3: economy is going badly. It's that they recognize that they've
Speaker 3: bitten off more than they can chew, and they need
Speaker 3: countries to not feel like China is a big, bad
Speaker 3: boogeyman in their backyard. So this has been a better
Speaker 3: managed policy by the Americans than what we're seeing right
Speaker 3: now in Ukraine and what we're seeing right now in Gaza.
Speaker 5: All right, so I guess let's just start with Ukraine,
Speaker 5: where do we go from here. I mean, we're getting
Speaker 5: into year three here, and I think both sides are
Speaker 5: probably getting a little tired.
Speaker 3: The Russians are much are waiting them out. I would
Speaker 3: say the troops are tired. But Putin feels emboldened. And
Speaker 3: you saw that with his two hours plus a history
Speaker 3: lesson with Tucker Carlson a few days.
Speaker 1: Should Tucker Carlson have done that interview?
Speaker 3: Someone should have done that interview. But I mean, I'd
Speaker 3: rather be a real journalist, you know. I mean, Tucker
Speaker 3: is not that, and the fact that he is a
Speaker 3: fabulous who supports Putin's position has been publicly sympathetic to it.
Speaker 4: I don't think does this any.
Speaker 3: Favors, but it's useful for the Americans to hear directly
Speaker 3: from Putin what he has to say.
Speaker 4: I didn't mind the fact that the interview happened.
Speaker 3: I do think that the ability of the United States,
Speaker 3: the willingness to continue to provide military support is utterly
Speaker 3: essential for Ukrainians to hold their defensive lines. That's getting
Speaker 3: a lot harder to count on going forward, and we
Speaker 3: could easily see Ukraine start falling apart.
Speaker 1: Doctor Bremer in ninety seconds, and this has just been
Speaker 1: fabulous to go from Governor Haley to doctor Bolton that
Speaker 1: Ian Bremer is the way to do this, folks Ian Bremer.
Speaker 1: There seems to be a new Pacific Rim after the
Speaker 1: TPP blow up and everybody anti China and all that,
Speaker 1: And that is a projection of the United States across
Speaker 1: four military bases, not up to Taiwan, but across the
Speaker 1: arc of the western Philippines. Right now you got Marco
Speaker 1: and do Terte going at it again. People talk in
Speaker 1: Manila about a coup. Are we more in the Pacific
Speaker 1: Rim than we were two three years ago? Is there
Speaker 1: a new US projection?
Speaker 4: There's no coup coming.
Speaker 7: This is a former President du Terte losing influence and
Speaker 7: lashing out as a consequence. But the United States remains
Speaker 7: the only country in the world that can project its
Speaker 7: military power globally. And China's a regional power militarily, and
Speaker 7: their economy is not doing so well right now. And
Speaker 7: that makes the US much more relevant for every country
Speaker 7: who's in Asia or may have China as their lead
Speaker 7: trade partner but doesn't want to become a supplicant from Besia.
Speaker 1: It is a g Bremmer world. It's a new she's
Speaker 1: zero or Chief Bremmer. We'll get a new book out
Speaker 1: of him at some point here Ian Bremmer, and just fabulous,
Speaker 1: And thank you doctor Bremmer for the top risks from
Speaker 1: your Rasier.
Speaker 2: Group that we see.
Speaker 1: We continue strong with another former UN ambassador. He is
Speaker 1: John Bolton, of course, united States National Security advisor with
Speaker 1: the Trump administration, a critic of President Trump, and Ambassador
Speaker 1: Bolton joins us this morning. Ambassador Bolton, you wrote an
Speaker 1: essay in the FT a year or so ago.
Speaker 2: What happened to the.
Speaker 1: Party of your Ronald Reagan? Is Nicky Hayley the last
Speaker 1: Ronald Reagan acolyte standing.
Speaker 9: Well, she's the last one still running for the presidential nomination.
Speaker 9: But I think the party at its roots is still Reagan.
Speaker 9: I think Trump as an aberration. Obviously he's been able
Speaker 9: to capture a significant part of the party, but I
Speaker 9: think that you know, one day he will pass, hopefully
Speaker 9: without doing too much more damage, and we can get
Speaker 9: back to where we should be. His comments about NATO
Speaker 9: and allowing Russia to attack countries not spending enough on
Speaker 9: their defense really ought to be a wake up call.
Speaker 1: Yeah. Paul Sweeney emailed me this weekend, and he said,
Speaker 1: gets Trevitas, And of course they get James Travitas, the
Speaker 1: Supreme Commander of NATO would be lovely. We don't have
Speaker 1: them today, folks, but we do have John Bolton. What
Speaker 1: are the ramifications to Europe to Alex Stubb winning that
Speaker 1: election in Finland? What's the ramifications to Europe if we
Speaker 1: get a Trump foreign policy.
Speaker 9: Well, it would be disasters. It'd be disastrous for the
Speaker 9: United States, but it would be worse for Europe. You know,
Speaker 9: the Europeans can talk about an EU style defense all
Speaker 9: they want. Really, they're going to be led by Germany
Speaker 9: and France. You know, good luck with that. The problem
Speaker 9: is in the United States, for too long, political leaders
Speaker 9: have failed to make the case that we're in alliances
Speaker 9: like NATO and bilateral alliances with Japan and South Korea
Speaker 9: around the world, not out as an active charity. We're
Speaker 9: just not being nice to the Europeans by being in NATO.
Speaker 9: We're protecting vital American interest, we're protecting European interest too,
Speaker 9: but we're doing it for ourselves primarily. And the Europeans
Speaker 9: have not done what they should have done in terms
Speaker 9: of their own defense expenditures. You know, maybe this will
Speaker 9: a further wake up call to increase, but nobody should
Speaker 9: be under operate under any illusions here. Trump is not
Speaker 9: trying to strengthen NATO. Trump is beginning the case if
Speaker 9: he's elected, why he's going to withdraw from NATO.
Speaker 5: And Ambassador Bolton, I mean, obviously front lines there in
Speaker 5: today's news is just you know, Ukraine, Russia. What is
Speaker 5: your latest thinking on how this is developing here and
Speaker 5: continues to develop in I guess the second year well, I.
Speaker 9: Think Putin, taking advantage of his conversation with Tucker Carlson,
Speaker 9: made it plain he's ready to negotiate, and I've been
Speaker 9: worried about that for a long time. I think Biden
Speaker 9: wants to put the wars that are going on now
Speaker 9: behind him for purposes of the November election. He's in deep,
Speaker 9: deep trouble, and stopping the war in Ukraine, I think
Speaker 9: he will see that his political advantage. Unfortunately, and there
Speaker 9: are plenty of countries in Europe that would like to
Speaker 9: turn the page on Russia's invasion in twenty twenty two
Speaker 9: and before that in twenty fourteen and go back to
Speaker 9: business as usual. So I think Putin is playing to
Speaker 9: a weakness in the Western Alliance here transatlantically to get
Speaker 9: a ceasefire.
Speaker 2: John Bolden.
Speaker 1: Just because of time here I have to turn to
Speaker 1: the Eastern Mediterranean. And over the weekend, the entire zeitgeist
Speaker 1: to me of Democrats, of those uncommitted of Republicans, has
Speaker 1: been wither net in Yahoo trued on domestic Israeli politics
Speaker 1: or is that something distant and remote that the Israelis
Speaker 1: have to solve?
Speaker 9: Well, look, I agree with net Yahu's view that he
Speaker 9: should he should be allowed to pursue the objective of
Speaker 9: destroying hamas he calls a total victory. And in World
Speaker 9: War Two, Franklin Roosevelt set the terms for German and
Speaker 9: Japan to end World War Two? Is unconditional surrender? Get
Speaker 9: given the October seven attack? Why isn't Israel entitled to
Speaker 9: do that? I tell you, if Biden breaks with Netan Yahu,
Speaker 9: he can kiss the twenty twenty four elections goodbye.
Speaker 5: So I mean, to what end, Ambassador, do you think
Speaker 5: that Netnahu and the Israeli objectives which a lot of
Speaker 5: folks feel like, I'm not even sure how you even
Speaker 5: measure whether they're achieved? How can you destroy a terrorist organization.
Speaker 5: From your perspective, what would you recommend to mister net Yahu.
Speaker 9: Well, how did we destroy Nazism in Germany? We killed
Speaker 9: an awful lot of Nazis. You're not going to kill everyone.
Speaker 9: And it's true, you don't kill the idea. But if
Speaker 9: enough of its adherents are killed, and the Israelis claim
Speaker 9: they've destroyed eight of the twelve Hamas fighting battalions, you
Speaker 9: can go a long way toward that goal.
Speaker 2: But I think John Bolton, this is so important.
Speaker 1: There's a huge body of Americans, including Democrats, who do
Speaker 1: not agree that we should support mister Netanyahu. Given that
Speaker 1: American domestic tension, how do we prosecute a foreign policy
Speaker 1: in the Eastern Mediterranean.
Speaker 9: By having leaders who can articulate the reasons why it's
Speaker 9: of an American interest that these terrorists be defeated. This
Speaker 9: is not an Israeli war against Hamas. This is not
Speaker 9: an Arab Israeli war. This is an Iranian war against Israel.
Speaker 9: Through its terrorist proxies. They are aiming to destroy the
Speaker 9: little Satan Israel. They're aiming to gain hegemony in the
Speaker 9: Middle East as a whole over the city Arab. Their
Speaker 9: Sony Arab adversaries, and ultimately their sites are in the
Speaker 9: Great Satan and we're sitting.
Speaker 2: In the John.
Speaker 1: Thank you, Ambassador Bolton. Priam Misery joins us now with
Speaker 1: JP Morgan. She's a portfolio manager, which barely describes her
Speaker 1: arch call, which is lower rates and particularly the inflation
Speaker 1: adjusted yield.
Speaker 2: It's a residual.
Speaker 1: You take the nominal yield, you subtract some measurement of inflation.
Speaker 1: Only Bob Michael.
Speaker 2: Knows that measure it's a secret sauce, and.
Speaker 1: You end up with a residual, which is the real yield.
Speaker 1: Priam Misery, you suggest the real yield will plunge lower.
Speaker 1: What will be the catalyst?
Speaker 10: So I think the catalyst is either the economy slowing
Speaker 10: down much more than what's priced in, or the Fed
Speaker 10: now some combination of the two, or the Fed that's
Speaker 10: actually trying to lower rates to you know, keep that
Speaker 10: softly life. I mean, I think the big debate is
Speaker 10: what is neutral interest rate, real interest rate, our star
Speaker 10: what economists call our star. The FED thinks it's fifty
Speaker 10: basis points. There's some debate, you know. President Kashkari suggested
Speaker 10: maybe it's a little higher. Maybe it's one percent and
Speaker 10: ten year real rates, and I would look at the
Speaker 10: ten year part of the curve that most of us
Speaker 10: borrow households, corporates grow. In that five to ten year
Speaker 10: part of the curve, it's running close to two percent.
Speaker 10: So I would think as inflation comes down, the FED
Speaker 10: gets more confidence, as Jail said that they can start
Speaker 10: to normalize those real rates start to come down, and
Speaker 10: at least they can get to one percent, which is
Speaker 10: I think closer to neutral.
Speaker 1: The gentleman from Yale, edjar Denny, suggests productivity started in
Speaker 1: two thousand and five. Paul Sweeney pointed out to me,
Speaker 1: there's a giant pause during COVID of our more productive,
Speaker 1: more efficient America, and then we've reinvigorated productivity.
Speaker 2: Here.
Speaker 1: Priya Misra does a new American productivity that Michael Faroli
Speaker 1: and Bruce Casmin see. Does that change your call on
Speaker 1: interest rates?
Speaker 3: So?
Speaker 10: I think that would be it will go back to
Speaker 10: what is real equilibrium interest rates, and I think the
Speaker 10: Fed's been in the zero to fifty basis point range.
Speaker 10: If there is an increase in productivity, maybe that gets
Speaker 10: us closer to one percent. But here's the offset to
Speaker 10: productivity you know, there's a lot of talk about generative
Speaker 10: AI and technology and how that's improving productivity. It takes
Speaker 10: a while for that to get adopted within the business sector,
Speaker 10: within the labor market, it takes a while. So I
Speaker 10: would say it's not clear to us that we're there yet. Secondly,
Speaker 10: we've got demographics that go the other way. We have
Speaker 10: an aging population, and so I would say it's productivity
Speaker 10: and demographics or and population growth that would imply you know,
Speaker 10: that would have implications for real neutral rate, and you know,
Speaker 10: at least the demographics site is going the other way.
Speaker 10: So maybe there's a move a little bit higher. And
Speaker 10: that's why I'm arguing could as high as one percent
Speaker 10: real rate, but I struggle to see much higher than that,
Speaker 10: given how much time it takes and the fact that
Speaker 10: demographics are going the other way.
Speaker 5: All I a free We're going to have. The question,
Speaker 5: I think for the marketplace right now is what is
Speaker 5: the FED going to do? Not so much what are
Speaker 5: they going to do, but when are they going to
Speaker 5: do it in terms of maybe pulling back on rates?
Speaker 5: And obviously the FED was pretty consistent with our language
Speaker 5: that it's not going to be in March now there's
Speaker 5: some question in the marketplace will they cut in May
Speaker 5: or perhaps.
Speaker 4: Way to June.
Speaker 5: What do you think they will do? What do you
Speaker 5: think that maybe they should do?
Speaker 10: So I like that question because we have to constantly
Speaker 10: think about what they should do, which is driving the
Speaker 10: economic outlook and asset prices, and then what we think
Speaker 10: they will do. I think in terms of they want
Speaker 10: more confidence, which is why they took March off the table.
Speaker 10: I think they want to see at least three four
Speaker 10: months off inflation, and we have another inflation report this
Speaker 10: week that inflation is continuing to come down, and not
Speaker 10: just the headline number I think o core. I think
Speaker 10: they want to see that the service side of the
Speaker 10: inflation picture is heading lower because the goods side has
Speaker 10: done its big goods inflation is in negative territory, we're
Speaker 10: in deflation. I think they want to see that service
Speaker 10: inflation continue to come down, you know, May or June.
Speaker 10: I think it's somewhere in that time frame that we
Speaker 10: think they'll cut what they should be doing. I think
Speaker 10: they should be starting to normalize right here. I mean
Speaker 10: the earlier conversation where we're talking about what is neutral
Speaker 10: FET funds is at five and a half. So you know,
Speaker 10: even if our star is higher and neutral rate is
Speaker 10: closer to three percent, we're really far from three percent.
Speaker 10: So I would have said start early, then you can
Speaker 10: go gradual and figure out where that neutral rate is.
Speaker 10: But realistically, March May June, what's a few months between friends.
Speaker 10: I think they're likely to start to cut rate sometime
Speaker 10: in the first half or early in the second half
Speaker 10: of this year.
Speaker 5: Well, you're right the goods inflation, as that's a thing
Speaker 5: of the past for most people. But boy, the services side,
Speaker 5: I mean, we have the consumer pretty strong here. The
Speaker 5: consumer has a job, consumers wages are going up, the
Speaker 5: consumer is spending. Maybe they're putting a little bit more
Speaker 5: on the credit card. But the consumer seems in pretty
Speaker 5: good stead right now. How do you see that?
Speaker 10: So I think the economic data has been very strong,
Speaker 10: and that explains why we've had this scenario of risk
Speaker 10: acts doing extremely well. The market's pricing in this soft landing,
Speaker 10: and I think rightly. So for now, I'm a little
Speaker 10: more cautious because I think it's a fragile soft landing.
Speaker 10: It requires inflation to continue to decline, it requires the
Speaker 10: FAT to start to normalize policy for the soft landing
Speaker 10: to last. So I'm a little nervous further down for
Speaker 10: the consumer. But to your point on inflation, I think
Speaker 10: rent inflation or housing inflation is a big component of
Speaker 10: that service inflation that is heading lower. I mean, we've
Speaker 10: seen new rents starting to not come down, but the
Speaker 10: rate of increase of new rents is absolutely slowing down,
Speaker 10: and so I think that housing inflation, the trend is clear,
Speaker 10: it's going to come down. To your point, the consumer
Speaker 10: is strong, but some of that is also so you know,
Speaker 10: service inflation is not rising at the same rate. So
Speaker 10: I think what the thread is likely to do is
Speaker 10: not wait for two percent on service inflation. But if
Speaker 10: the trend looks like it's heading closer to two percent,
Speaker 10: especially with goods in deflation, they can start to get
Speaker 10: that confidence, so at least start an organization.
Speaker 1: I can't stand preor the phrase soft landing. I just
Speaker 1: think it's like V shaped bottom and the rest of it.
Speaker 1: Let's start with a guy named m Faroli. You've got
Speaker 1: to put up with his literature every single day as
Speaker 1: a portfolio manager. Michael Ferroli PRIA codified under two percent
Speaker 1: potential GDP is our new definitions struggle with soft landing
Speaker 1: that because of technology, because of productivity, we need to
Speaker 1: lift the Ferroley one point x percent potential GDP up.
Speaker 1: I mean, is that really what we're talking about.
Speaker 10: I think if productivity is sustained higher, and this is
Speaker 10: not just still residual impacts of the reopening or the
Speaker 10: fact that we lived through COVID, I think it's still early.
Speaker 10: I would also say a lot of the data we're
Speaker 10: seeing in the last two months can be distorted by
Speaker 10: seasonal seasons are always difficult to make sense of the
Speaker 10: December numbers and then the January numbers, weather effects. I
Speaker 10: think we need a little bit more data to have
Speaker 10: confidence that productivity is higher, that that potential GDP is higher.
Speaker 10: But then to your point, how does that feed into
Speaker 10: soft landing. Soft landing implies below potential growth. So if
Speaker 10: growth is one and a half or two percent and
Speaker 10: inflation is a little over two percent, that would be
Speaker 10: a soft landing. I think the reason this is so
Speaker 10: important is does the FED take cuts off the table.
Speaker 10: I think that has to be a reacceleration. We have
Speaker 10: to be seeing growth three four percent, inflation progress stalling.
Speaker 10: That's when those cuts start to get taken out, and
Speaker 10: I think we're far from that. We think monetary policy
Speaker 10: is still restrictive. We don't see fiscal easing at least
Speaker 10: still the election, and so it's a question of when
Speaker 10: do they start to normalize is what's the past, But
Speaker 10: we're keeping an eye out for kind of your point,
Speaker 10: what is potential growth and right is that.
Speaker 1: That's almost a terminal value of the discussion your premser,
Speaker 1: Thank you so much. And I can't say enough about
Speaker 1: a careful read of the JP Morgan combine and research
Speaker 1: with Joyce Chang and Bruce chasm and have done over there.
Speaker 1: It's just absolutely extoring you. Today's front page headline super
Speaker 1: Bowl affected, Lisa, I'm sorry you're not at the front.
Speaker 4: To blow hotel and we fail.
Speaker 11: My kids might have a snow day tomorrow, all right,
Speaker 11: So we're starting with, of course super Bowl, right, super
Speaker 11: Bowl commercials, that's what we're talking about. It's across all
Speaker 11: the headlines, right, marketers. They didn't want to offend anyone,
Speaker 11: so they stayed kind of safe. They use a lot
Speaker 11: of humor, not controversial humor. You had a couple of
Speaker 11: newcomers in there. You had Etsy PepsiCo's story was in there,
Speaker 11: celebrities everywhere. Arnold Schwarzenegger was there. His commercial was hilarious,
Speaker 11: trying to say neighbor, but he kept saying State Farm,
Speaker 11: my neighbor, and they kept joking out. Tom Brady was everywhere.
Speaker 3: Right.
Speaker 11: They leaned on the female audience. They had Dove Elf Cosmetics,
Speaker 11: but The New York Times ranked a couple of them.
Speaker 11: I want to play a commercial from Duncan. This is
Speaker 11: when Ben Affleck visits Jennifer Lopez at the recording studio.
Speaker 11: Usher was another one. His halftime performance. Everybody was talking
Speaker 11: about that too. Think about it, thirty years of his career, right,
Speaker 11: He's forty five years old. He was dancing and moving across.
Speaker 2: The st to be quickly here because we got to
Speaker 2: go on to the others. But I'm going to be
Speaker 2: able to see all these on YouTube, right, Yeah?
Speaker 11: Yes you can. Yeah, we can see most definitely.
Speaker 2: Like YouTube highlights. Let's become my whole next you.
Speaker 3: Gotta do it, you can.
Speaker 5: But Usher, all right, So the Usher halftime show, it
Speaker 5: got like from people who know this stuff, got thumbs up. Yeah,
Speaker 5: definitely thumbs up.
Speaker 11: But I know you're getting to a void. Get here, No, no, no,
Speaker 11: I think I thought it was good too, but for
Speaker 11: people who it didn't kind of tap on their you know.
Speaker 3: He kind of said.
Speaker 11: Everybody sing along, and some people weren't singing because they
Speaker 11: didn't know, and it was awkward.
Speaker 4: A little bit.
Speaker 5: I'm not the usher demo, but I recognized that it
Speaker 5: was an event and it was people were fired up
Speaker 5: about it.
Speaker 11: Yeah, and it just it ended great. Will I am
Speaker 11: Lil John. I mean, you can't, Alicia keys Her. I
Speaker 11: mean it was it was just he had a lot
Speaker 11: of people on the red piano.
Speaker 4: Okay, next story.
Speaker 11: I did this because both of you are romantic.
Speaker 4: Surely you can see what I got.
Speaker 1: Fourteenth pictures and catchers.
Speaker 11: This is about Valentine's Day. This study from McAfee, it
Speaker 11: says that AI is going to be playing hard in
Speaker 11: these love letters for Valentine's Day. For adults are at
Speaker 11: least considering and using AI to come up with these
Speaker 11: love letters for Valentine's Day. But when it comes to men,
Speaker 11: that number rises to forty five.
Speaker 5: Forty five percent of men will turn to AI to
Speaker 5: write love messages this Valentine's Day. I mean they're doing
Speaker 5: it just to get the stock up. That's it's like
Speaker 5: every other company, a piece of news.
Speaker 11: The bonus points in there, happy wife, happy life, What's today?
Speaker 5: Today's at twelfth I got to get on this.
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