1 00:00:00,080 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,159 Speaker 2: Terminal and the Bloomberg Business app. Turning back to the 10 00:00:37,200 --> 00:00:39,880 Speaker 2: Federal Reserve sources telling us our colleagues here at Bloomberg 11 00:00:40,120 --> 00:00:43,519 Speaker 2: that a driving force behind the DOJ's decision subpoena the 12 00:00:43,520 --> 00:00:47,600 Speaker 2: Central Bank is the Federal Housing Finance Agency Director Bill Pulty. 13 00:00:47,840 --> 00:00:50,040 Speaker 2: Director Porty has been busy over the last week, some 14 00:00:50,080 --> 00:00:52,960 Speaker 2: purchases of MBS and Focus as well. Director Poruty. Welcome 15 00:00:52,960 --> 00:00:55,240 Speaker 2: to the program sir. You are cited in our story 16 00:00:55,240 --> 00:00:57,640 Speaker 2: this morning. Just wanted to give the opportunity to respond 17 00:00:57,640 --> 00:01:00,360 Speaker 2: to it. But what was your role in the developside 18 00:01:00,320 --> 00:01:01,320 Speaker 2: of a weekend. 19 00:01:02,240 --> 00:01:04,760 Speaker 3: The DOJ's outside of my purview, This is out of 20 00:01:04,760 --> 00:01:06,840 Speaker 3: my purview. I don't know anything about it, and I 21 00:01:06,840 --> 00:01:08,800 Speaker 3: would refer you to the DOJ bill. 22 00:01:08,959 --> 00:01:10,760 Speaker 2: You haven't been shy of sharing your thoughts on the 23 00:01:10,800 --> 00:01:13,640 Speaker 2: Federal Reserve before, particularly over the last twelve months. You 24 00:01:13,840 --> 00:01:17,440 Speaker 2: thought that the chairman would ultimately resign. He's standing firm. 25 00:01:17,520 --> 00:01:19,800 Speaker 2: Do you think this push against the Federal Reserve is 26 00:01:19,840 --> 00:01:23,039 Speaker 2: actually leading to unintended consequences and leading this fed to 27 00:01:23,120 --> 00:01:23,520 Speaker 2: dig in. 28 00:01:24,600 --> 00:01:27,720 Speaker 3: My main focus, John has been on reducing mortgage rates 29 00:01:27,720 --> 00:01:29,760 Speaker 3: to the extent that we can do it and increasing 30 00:01:29,800 --> 00:01:33,520 Speaker 3: housing affordability. President Trump announced a huge thing last week 31 00:01:33,680 --> 00:01:36,360 Speaker 3: when he decided that he was going to ban institutions 32 00:01:36,520 --> 00:01:40,160 Speaker 3: from buying homes. Basically, the concept is that people should 33 00:01:40,200 --> 00:01:42,720 Speaker 3: be living in homes, not corporations. You know, we have 34 00:01:42,760 --> 00:01:45,520 Speaker 3: a supply problem in this country, and obviously we're working 35 00:01:45,520 --> 00:01:48,000 Speaker 3: on the demand side of things, because in some cases, 36 00:01:48,080 --> 00:01:50,880 Speaker 3: affordability has gotten so tough that people don't even want 37 00:01:50,880 --> 00:01:52,800 Speaker 3: to buy a home because of what Joe Biden did, 38 00:01:53,000 --> 00:01:55,640 Speaker 3: and so we're reversing that. That's what we're focused on. 39 00:01:55,760 --> 00:01:57,600 Speaker 3: We had a huge one to two punch last week. 40 00:01:57,640 --> 00:02:00,920 Speaker 3: You saw mortgage rates moved twenty five base points lower 41 00:02:01,120 --> 00:02:03,320 Speaker 3: on the news that Fanny and Freddie have started to 42 00:02:03,440 --> 00:02:07,720 Speaker 3: undergo a two hundred billion dollar mortgage bond buy. And 43 00:02:08,160 --> 00:02:09,880 Speaker 3: I think you're going to see some very exciting things 44 00:02:09,880 --> 00:02:12,640 Speaker 3: come out of Davos. With regard to the President on housing, 45 00:02:12,840 --> 00:02:13,960 Speaker 3: in a couple in a week. 46 00:02:13,960 --> 00:02:16,480 Speaker 4: Director BOLDI, you were with the President this weekend, I believe, 47 00:02:16,560 --> 00:02:19,200 Speaker 4: traveling with him on Air Force one from Washington to 48 00:02:19,280 --> 00:02:21,639 Speaker 4: Palm Beach. Did you talk about the Federal Reserve with 49 00:02:21,720 --> 00:02:22,440 Speaker 4: him this weekend? 50 00:02:23,320 --> 00:02:25,680 Speaker 3: Obviously I would never talk about anything that the President 51 00:02:25,880 --> 00:02:27,920 Speaker 3: and I talk about. I would say this that the 52 00:02:27,919 --> 00:02:32,720 Speaker 3: President is laser focused on housing affordability and reversing what 53 00:02:32,800 --> 00:02:35,280 Speaker 3: has happened these last four years. You look at the 54 00:02:35,320 --> 00:02:38,920 Speaker 3: average mortgage payment under Joe Biden, it's skyrocketed compared to 55 00:02:38,960 --> 00:02:41,800 Speaker 3: what it was under President Trump's first term. We are 56 00:02:41,840 --> 00:02:45,000 Speaker 3: focused on bringing down not only the mortgage rates, but 57 00:02:45,080 --> 00:02:49,400 Speaker 3: also the day to day cost in upkeeping homes, which 58 00:02:49,440 --> 00:02:51,520 Speaker 3: has to do with you know, whether it be your 59 00:02:51,560 --> 00:02:55,880 Speaker 3: ongoing expenses, mortgage insurance, etc. There are so many pieces 60 00:02:55,880 --> 00:02:59,040 Speaker 3: to the cost puzzle that at the FHFA US Federal 61 00:02:59,080 --> 00:03:02,400 Speaker 3: Housing we are working to reduce the costs bird and 62 00:03:02,440 --> 00:03:03,440 Speaker 3: that Americans have. 63 00:03:03,800 --> 00:03:05,880 Speaker 4: I know that you've seen the report from our colleagues. 64 00:03:05,919 --> 00:03:09,240 Speaker 4: I've also got calls last night about the subpoena handed 65 00:03:09,280 --> 00:03:11,880 Speaker 4: to the FED and was told that you were part 66 00:03:11,919 --> 00:03:14,200 Speaker 4: of it, pulling together a report that then went to 67 00:03:14,240 --> 00:03:16,960 Speaker 4: the DOJ. I just wanted to go since from you, 68 00:03:17,760 --> 00:03:20,919 Speaker 4: did the President know this was coming? The Treasury Secretary 69 00:03:20,960 --> 00:03:22,799 Speaker 4: know this was coming? Have you had any of these 70 00:03:22,840 --> 00:03:25,240 Speaker 4: conversations again. 71 00:03:25,000 --> 00:03:27,600 Speaker 3: On that matter, I'd refer you to the Department of Justice. 72 00:03:27,800 --> 00:03:29,919 Speaker 4: Okay, well, we'll wait to hear from the Department of Justice. 73 00:03:30,080 --> 00:03:32,200 Speaker 4: When it goes back to the mortgage backed securities that 74 00:03:32,240 --> 00:03:36,240 Speaker 4: you have been talking about. You already been purchasing about 75 00:03:36,360 --> 00:03:38,800 Speaker 4: north of two hundred and thirty billion dollars of them 76 00:03:38,920 --> 00:03:41,880 Speaker 4: last year. There is a cap. Do you expect to 77 00:03:41,920 --> 00:03:43,280 Speaker 4: reach that cap this year? 78 00:03:44,160 --> 00:03:46,280 Speaker 3: I think all options are on the table. President Trump 79 00:03:46,320 --> 00:03:48,560 Speaker 3: is a president who keeps all options on the table. 80 00:03:48,840 --> 00:03:52,000 Speaker 3: We announced this historic two hundred billion dollar buyback of 81 00:03:52,120 --> 00:03:55,480 Speaker 3: mortgage bonds. This is a huge deal, and you know 82 00:03:55,560 --> 00:03:57,520 Speaker 3: we'll keep all options on the table. Look, we're doing 83 00:03:57,520 --> 00:03:59,880 Speaker 3: our part of Fannie and Freddy. Most presidents didn't even 84 00:03:59,880 --> 00:04:03,080 Speaker 3: know Fanny and Freddie existed. Obviously, your community in Bloomberg 85 00:04:03,160 --> 00:04:04,920 Speaker 3: and all of us in the private sector. We know 86 00:04:05,000 --> 00:04:07,120 Speaker 3: the importance of Fanny and Freddy, but for the average 87 00:04:07,200 --> 00:04:10,320 Speaker 3: day American, they don't understand because the presidents haven't made 88 00:04:10,360 --> 00:04:14,640 Speaker 3: it a priority. Average Americans haven't understood that presidents had 89 00:04:14,720 --> 00:04:17,960 Speaker 3: this authority until President Trump found this authority, which is 90 00:04:18,000 --> 00:04:21,680 Speaker 3: basically to utilize these companies to be companies. Imagine that 91 00:04:21,960 --> 00:04:23,800 Speaker 3: get people to show up back to work. You know, 92 00:04:23,880 --> 00:04:26,520 Speaker 3: we had sixteen thousand people. We have sixteen thousand people 93 00:04:26,720 --> 00:04:29,120 Speaker 3: at the two companies. When I showed up on the 94 00:04:29,120 --> 00:04:31,280 Speaker 3: scene and President Trump came into office, they were all 95 00:04:31,279 --> 00:04:34,480 Speaker 3: working from home. We'd go to these big buildings, air conditioning, 96 00:04:34,520 --> 00:04:37,760 Speaker 3: spewing everywhere, spending fifty million dollars a year on leases. 97 00:04:37,920 --> 00:04:40,320 Speaker 3: Nobody was in these buildings. So we have turned around 98 00:04:40,360 --> 00:04:43,000 Speaker 3: Fanny and Freddy. They tried to get President Trump to 99 00:04:43,040 --> 00:04:45,800 Speaker 3: sell the companies, for the two companies together for one 100 00:04:45,839 --> 00:04:48,560 Speaker 3: hundred billion dollars. I think the valuation of the companies 101 00:04:48,560 --> 00:04:51,760 Speaker 3: is anywhere between five hundred billion and some say up 102 00:04:51,800 --> 00:04:52,800 Speaker 3: to a trillion dollars. 103 00:04:53,279 --> 00:04:54,719 Speaker 5: A lot of people are hoping that there is some 104 00:04:54,760 --> 00:04:57,520 Speaker 5: sort of initial public offering O those companies are you 105 00:04:57,560 --> 00:04:59,840 Speaker 5: preparing them for that at some point later this year 106 00:05:00,080 --> 00:05:00,520 Speaker 5: next year. 107 00:05:01,320 --> 00:05:03,479 Speaker 3: We are fully prepared to do whatever the President would 108 00:05:03,560 --> 00:05:04,640 Speaker 3: like us to do on that matter. 109 00:05:05,200 --> 00:05:06,520 Speaker 1: We have been getting prepared. 110 00:05:06,600 --> 00:05:09,279 Speaker 3: We are prepared, just like we are with the institutional 111 00:05:09,320 --> 00:05:12,120 Speaker 3: home buying ban, just like we are with home builders. 112 00:05:12,320 --> 00:05:14,560 Speaker 3: We have a full set of things to do, and 113 00:05:14,640 --> 00:05:16,799 Speaker 3: once the President decides what to do, we go about 114 00:05:16,839 --> 00:05:17,560 Speaker 3: executing them. 115 00:05:17,680 --> 00:05:19,680 Speaker 5: Director Pulty, A lot of people on Wall Street were 116 00:05:19,680 --> 00:05:23,000 Speaker 5: pretty excited actually about your purchases of mbs of mortgage 117 00:05:23,000 --> 00:05:25,240 Speaker 5: backed securities and saying that this should like it should 118 00:05:25,279 --> 00:05:28,360 Speaker 5: be something that would bring down spreads. They were less 119 00:05:28,360 --> 00:05:30,880 Speaker 5: excited about the idea of preventing institutions from buying single 120 00:05:30,880 --> 00:05:34,839 Speaker 5: family homes, saying that it really do wasn't based in economics, 121 00:05:34,880 --> 00:05:38,279 Speaker 5: considering that in certain regions in the country there's actually 122 00:05:38,279 --> 00:05:41,080 Speaker 5: a glut of houses that this is not because of 123 00:05:41,200 --> 00:05:45,160 Speaker 5: institutions that account for a relatively small portion of overall buyers. 124 00:05:45,560 --> 00:05:47,320 Speaker 3: What do you say back about. 125 00:05:47,040 --> 00:05:50,280 Speaker 5: The economic fundamentals behind this type of proposal and why 126 00:05:50,320 --> 00:05:53,720 Speaker 5: it would bring down fordability and an increase the supply 127 00:05:53,800 --> 00:05:55,640 Speaker 5: of houses, which is the ultimate issue that a lot 128 00:05:55,680 --> 00:05:56,280 Speaker 5: of people. 129 00:05:56,040 --> 00:05:58,280 Speaker 2: Say, Well, it just makes economic sense. 130 00:05:58,279 --> 00:05:59,920 Speaker 3: You talk about supply, I mean, you kind of gave 131 00:06:00,240 --> 00:06:02,120 Speaker 3: narrative there, but if you look at the economic supply 132 00:06:02,200 --> 00:06:04,520 Speaker 3: of things, the fact is you have you know, big 133 00:06:04,560 --> 00:06:08,359 Speaker 3: corporations buying using long term paper, using their balance sheets 134 00:06:08,600 --> 00:06:11,400 Speaker 3: to scoop up homes in a supply shortage as we 135 00:06:11,480 --> 00:06:14,080 Speaker 3: call it, and they're in some cases buying these homes 136 00:06:14,080 --> 00:06:18,280 Speaker 3: for twenty thirty forty percent less than Americans are doing it. 137 00:06:18,400 --> 00:06:20,880 Speaker 3: You know, President Trump was elected with a very very 138 00:06:20,920 --> 00:06:23,640 Speaker 3: popular mandate. You know, sometimes people don't remember because it 139 00:06:23,640 --> 00:06:25,640 Speaker 3: was a year ago, but it was a landslide victory, 140 00:06:25,880 --> 00:06:28,159 Speaker 3: and he was given a mandate to reverse these last 141 00:06:28,160 --> 00:06:31,440 Speaker 3: four years of crazy inflation that happened under Joe Biden. 142 00:06:31,760 --> 00:06:33,120 Speaker 1: And so I think it's very. 143 00:06:33,040 --> 00:06:35,360 Speaker 3: Appropriate that we're doing everything that we can to reduce 144 00:06:35,400 --> 00:06:37,560 Speaker 3: housing costs, and we're going to keep doing it, whether 145 00:06:37,600 --> 00:06:40,880 Speaker 3: it's the institutional ban on buying, looking at all of 146 00:06:40,920 --> 00:06:43,080 Speaker 3: the things that go into a home and owning a home. 147 00:06:43,320 --> 00:06:46,000 Speaker 3: Americans need to own homes in this country, and we're 148 00:06:46,000 --> 00:06:47,080 Speaker 3: committed to restoring that. 149 00:06:47,400 --> 00:06:49,599 Speaker 5: Director Bulty, did you study this in terms of this 150 00:06:49,640 --> 00:06:53,320 Speaker 5: apply demand dynamic and whether it actually would reduce the 151 00:06:53,800 --> 00:06:57,200 Speaker 5: cost of houses for individuals. Should there be a ban 152 00:06:57,440 --> 00:07:01,400 Speaker 5: on single family housing, on instation's buying single family homeless 153 00:07:01,400 --> 00:07:03,400 Speaker 5: because a lot of people in the markets who have 154 00:07:03,480 --> 00:07:06,560 Speaker 5: supported President Trump's policies and thinking of Neildunna in particular, 155 00:07:06,600 --> 00:07:08,839 Speaker 5: came out and said, this is faulty economics. 156 00:07:09,680 --> 00:07:11,520 Speaker 3: Well, of course, I've studied it. I've studied it my 157 00:07:11,560 --> 00:07:13,600 Speaker 3: whole life. I mean, I grew up in the housing business. 158 00:07:13,880 --> 00:07:15,360 Speaker 3: I grew up in the building business. I was on 159 00:07:15,400 --> 00:07:17,800 Speaker 3: the board of Pulti Homes for four years. I understand 160 00:07:17,840 --> 00:07:20,920 Speaker 3: what institutional buying does. It's very powerful. I understand why 161 00:07:20,920 --> 00:07:23,040 Speaker 3: Wall Street might not like it, but we serve the 162 00:07:23,040 --> 00:07:23,679 Speaker 3: American people. 163 00:07:23,720 --> 00:07:24,720 Speaker 1: We don't serve Wall Street. 164 00:07:24,880 --> 00:07:27,160 Speaker 3: And President Trump is laser focused on doing the right 165 00:07:27,200 --> 00:07:30,360 Speaker 3: thing no matter who it affects in terms of their pocketbooks. 166 00:07:30,520 --> 00:07:32,880 Speaker 3: At the Wall Street level, he has focused, laser focused 167 00:07:33,200 --> 00:07:36,400 Speaker 3: on action, not talk like so many of these Democrats, 168 00:07:36,440 --> 00:07:38,560 Speaker 3: like Elizabeth Warren. You know, for years she would talk 169 00:07:38,560 --> 00:07:41,440 Speaker 3: about all institutional buying. She didn't do anything. Joe Biden 170 00:07:41,480 --> 00:07:44,080 Speaker 3: didn't do anything about it. President Trump is doing something 171 00:07:44,120 --> 00:07:44,520 Speaker 3: about it. 172 00:07:44,880 --> 00:07:48,160 Speaker 4: Elizabeth Warren wanted to see an effort like this. Do 173 00:07:48,200 --> 00:07:50,440 Speaker 4: you think the president is taking cues from some of 174 00:07:50,480 --> 00:07:54,480 Speaker 4: the more populist wings of the Democratic Party. 175 00:07:55,280 --> 00:07:57,040 Speaker 3: No, I think Elizabeth Warren's going to have to take 176 00:07:57,080 --> 00:07:59,280 Speaker 3: cues from us or she's going to continue to look 177 00:07:59,360 --> 00:08:01,480 Speaker 3: like a fraud because she says all these things and 178 00:08:01,520 --> 00:08:03,720 Speaker 3: then she does nothing about it. You know, President Trump, 179 00:08:03,880 --> 00:08:06,040 Speaker 3: he gets things done. He said, look, we're going to 180 00:08:06,040 --> 00:08:08,960 Speaker 3: ban institutional buying, and then we're going about both on 181 00:08:09,040 --> 00:08:12,200 Speaker 3: an executive action front as well as codifying and a legislation. 182 00:08:12,440 --> 00:08:14,200 Speaker 3: I mean, the amount of momentum that we've had at 183 00:08:14,240 --> 00:08:17,440 Speaker 3: the legislative level from you know, different Congress people. I 184 00:08:17,520 --> 00:08:20,240 Speaker 3: was at the Financial Services Committee the other night. People 185 00:08:20,320 --> 00:08:23,720 Speaker 3: were ecstatic about this. I also talked with multiple US Senators, 186 00:08:24,000 --> 00:08:27,760 Speaker 3: many who are vying to sponsor the legislation. So this 187 00:08:27,800 --> 00:08:29,840 Speaker 3: is a very big deal, and I think it's going 188 00:08:29,880 --> 00:08:30,360 Speaker 3: to happen. 189 00:08:30,640 --> 00:08:33,240 Speaker 4: Is the President going to declare a housing emergency in 190 00:08:33,240 --> 00:08:34,120 Speaker 4: the United States? 191 00:08:34,960 --> 00:08:37,320 Speaker 3: That's entirely up to the president. I can tell you this. 192 00:08:37,400 --> 00:08:40,000 Speaker 3: He is treating it with great urgency. He understands real 193 00:08:40,080 --> 00:08:42,800 Speaker 3: estate very well. He understands the importance of keeping home 194 00:08:42,840 --> 00:08:45,600 Speaker 3: prices up. He understands this issue very well. And we're 195 00:08:45,600 --> 00:08:49,600 Speaker 3: working very well together, Secretary Turner, Secretary Best and Secretary Lutnik, 196 00:08:49,840 --> 00:08:53,240 Speaker 3: the Vice President Susie Wiles. This is an all hands effort, 197 00:08:53,440 --> 00:08:55,040 Speaker 3: James Blair in the White House. I mean, this is 198 00:08:55,080 --> 00:08:57,959 Speaker 3: an all hands effort to reduce the cost of home 199 00:08:58,000 --> 00:09:01,840 Speaker 3: ownership and get people, not corporations, back in homes. 200 00:09:02,240 --> 00:09:05,760 Speaker 2: Stay with US, mul Bloomberg surveillance coming up after this, 201 00:09:15,120 --> 00:09:17,560 Speaker 2: let's tent and at least a running officials saying they've 202 00:09:17,559 --> 00:09:20,679 Speaker 2: secured full control over the country after mass protests lane 203 00:09:20,720 --> 00:09:23,600 Speaker 2: to two weeks of upheoval and one hundreds reported killed. 204 00:09:23,760 --> 00:09:26,280 Speaker 2: President Trump set for a key briefing on potential US 205 00:09:26,320 --> 00:09:29,240 Speaker 2: involvement as soon as tomorrow. Joining us now is former 206 00:09:29,280 --> 00:09:32,320 Speaker 2: City of US Intelligence official Nomen Rule. Now, I'm welcome 207 00:09:32,360 --> 00:09:35,040 Speaker 2: to the program, sir. We've seen this in this country 208 00:09:35,320 --> 00:09:38,440 Speaker 2: many times over the last ten years. This felt different 209 00:09:38,720 --> 00:09:41,720 Speaker 2: over the last week. How different is it? 210 00:09:41,720 --> 00:09:43,839 Speaker 1: It's quite different, and good morning. 211 00:09:43,880 --> 00:09:47,280 Speaker 6: The current nationwide protest in Ron continue to have reached 212 00:09:47,320 --> 00:09:50,959 Speaker 6: a scaleon intensity that is unprecedented in the history of 213 00:09:50,960 --> 00:09:54,760 Speaker 6: the Islamic Republic. Virtually every major city in town is 214 00:09:54,800 --> 00:09:58,840 Speaker 6: experiencing some form of political protests against the government calling 215 00:09:58,920 --> 00:10:03,640 Speaker 6: for regime change, not just complaints against the specific economic policy. 216 00:10:03,960 --> 00:10:07,960 Speaker 6: And what you have is the tactical government efforts to 217 00:10:08,000 --> 00:10:11,880 Speaker 6: contain these protests through promises of economic reform have not 218 00:10:12,000 --> 00:10:17,079 Speaker 6: satisfied the protesters, and increasingly coercive and violent responses by 219 00:10:17,080 --> 00:10:21,320 Speaker 6: the government have not ended the protests thus far. And 220 00:10:21,480 --> 00:10:24,720 Speaker 6: the result is that we've seen deaths. We've seen hundreds 221 00:10:24,760 --> 00:10:27,520 Speaker 6: of protest or deaths. We've seen as many as forty 222 00:10:27,520 --> 00:10:31,240 Speaker 6: to fifty to one hundred security force personnel be killed, 223 00:10:31,440 --> 00:10:34,720 Speaker 6: and we've seen thousands of arrests. So we're watching a 224 00:10:34,840 --> 00:10:39,320 Speaker 6: very intensive, turbulent situation in Iran. 225 00:10:40,040 --> 00:10:43,720 Speaker 4: Nor absolutely horrific these images coming out of Iran. What 226 00:10:43,840 --> 00:10:47,800 Speaker 4: makes this protest though, different than prior protests we saw. 227 00:10:48,920 --> 00:10:52,800 Speaker 6: We're watching basically a very compressed situation. So in the 228 00:10:53,559 --> 00:10:57,080 Speaker 6: twenty twenty two to twenty twenty three situation, for example, 229 00:10:57,480 --> 00:11:01,400 Speaker 6: the number of the tragic number of deaths, for example, 230 00:11:01,480 --> 00:11:03,520 Speaker 6: that took place where it took place over a much 231 00:11:03,559 --> 00:11:06,000 Speaker 6: longer period of time. The number of arrests took place 232 00:11:06,040 --> 00:11:07,480 Speaker 6: over a much longer period of time. 233 00:11:07,520 --> 00:11:09,520 Speaker 1: So we're watching a compression of this. 234 00:11:09,600 --> 00:11:12,520 Speaker 6: And this is happening because the inflation, the collapse of 235 00:11:12,559 --> 00:11:15,960 Speaker 6: the currency, the dissolution with the government, the failed policy, 236 00:11:16,000 --> 00:11:19,840 Speaker 6: the impression it's built upon itself since twenty seventeen. So 237 00:11:19,880 --> 00:11:24,000 Speaker 6: you've got an extraordinarily unhappy population that fills the government 238 00:11:24,240 --> 00:11:28,720 Speaker 6: correctly so, feeling that the government is just unable to deliver. 239 00:11:28,880 --> 00:11:30,640 Speaker 6: And at the same time you have a government that 240 00:11:30,760 --> 00:11:34,480 Speaker 6: is broken, it's trying to it's trying to satisfy a 241 00:11:34,520 --> 00:11:37,640 Speaker 6: military that's taking a large portion of the budget, missiles, 242 00:11:38,160 --> 00:11:42,640 Speaker 6: regional militias, a nuclear program that's brought it sanctions upon 243 00:11:42,640 --> 00:11:46,120 Speaker 6: the government well at the same time trying to promise 244 00:11:46,880 --> 00:11:51,200 Speaker 6: economic relief to a population and in the end it 245 00:11:51,280 --> 00:11:51,920 Speaker 6: can't deliver. 246 00:11:52,280 --> 00:11:56,160 Speaker 1: And just the currency problem alone is extraordinary. 247 00:11:56,240 --> 00:11:58,000 Speaker 6: So when the time of the nuclear deal of the 248 00:11:58,000 --> 00:12:01,600 Speaker 6: Iranian rio was twenty nine thousand, five hundred to the dollar. 249 00:12:02,280 --> 00:12:05,559 Speaker 1: When the recently fired central Bank. 250 00:12:05,400 --> 00:12:09,200 Speaker 6: Governor took office, it was about nine hundred and twenty thousand. 251 00:12:09,000 --> 00:12:09,640 Speaker 1: To the dollar. 252 00:12:10,040 --> 00:12:13,000 Speaker 6: In December, when the protests began, it was one point 253 00:12:13,120 --> 00:12:13,840 Speaker 6: four to two. 254 00:12:13,760 --> 00:12:14,800 Speaker 1: Million to the dollar. 255 00:12:15,080 --> 00:12:17,440 Speaker 6: There's no reason to believe that this collapse will not 256 00:12:17,760 --> 00:12:20,920 Speaker 6: continue further because the government is broken. 257 00:12:21,480 --> 00:12:25,800 Speaker 4: Norman Overnight, the Ron's foreign Ministry said that there is 258 00:12:25,840 --> 00:12:29,200 Speaker 4: a communication channel between their foreign minister and mister Wickoff 259 00:12:29,280 --> 00:12:32,839 Speaker 4: now open. The President told reporters that the Iranian leaders 260 00:12:32,880 --> 00:12:35,920 Speaker 4: have reached out. He also went on to say a 261 00:12:36,000 --> 00:12:38,720 Speaker 4: meeting is being set up, but we may have to 262 00:12:38,800 --> 00:12:42,000 Speaker 4: act because of what's happening before the meeting. How should 263 00:12:42,000 --> 00:12:45,000 Speaker 4: we read the president's comments seriously? 264 00:12:45,480 --> 00:12:47,360 Speaker 6: So let's take a look first of what is the 265 00:12:47,480 --> 00:12:50,800 Speaker 6: likelihood that the president will conduct a military strike. If 266 00:12:50,840 --> 00:12:55,680 Speaker 6: you look at us behavior and the President's actions, there 267 00:12:55,760 --> 00:12:58,560 Speaker 6: is a high likelihood of a military strike. The President 268 00:12:58,559 --> 00:13:03,280 Speaker 6: has conducted surge limited military action following a series of 269 00:13:03,800 --> 00:13:07,920 Speaker 6: social media statements, a series of promises of action if 270 00:13:07,960 --> 00:13:12,920 Speaker 6: specific behavior is not undertaken, diplomatic outreach, and military moves. 271 00:13:13,200 --> 00:13:15,880 Speaker 6: A lot of this has happened thus far, and the 272 00:13:15,960 --> 00:13:19,079 Speaker 6: social media and the intensity that President's social media statements 273 00:13:19,120 --> 00:13:22,079 Speaker 6: have increased. We've seen a visit of the Omani foreign 274 00:13:22,160 --> 00:13:25,120 Speaker 6: minister to Iran which looked like a message one way 275 00:13:25,200 --> 00:13:27,960 Speaker 6: or the other. Now we have the Iranian outreach, so 276 00:13:28,080 --> 00:13:32,439 Speaker 6: why is that happening? Well, that offers the Iranian several advantages. First, 277 00:13:32,520 --> 00:13:35,079 Speaker 6: gives them a chance to tell their own population. Maybe 278 00:13:35,120 --> 00:13:40,079 Speaker 6: sanctions are being lifted, so that might break the unrest unlikely, 279 00:13:40,320 --> 00:13:43,240 Speaker 6: but it also might allow the United Tests, the United 280 00:13:43,280 --> 00:13:48,040 Speaker 6: States of delay the United States attack. I don't think 281 00:13:48,080 --> 00:13:51,040 Speaker 6: that's going to buy the much patience with the President 282 00:13:51,440 --> 00:13:51,959 Speaker 6: normal What. 283 00:13:51,920 --> 00:13:54,439 Speaker 5: Could the US do with respect to military strikes that 284 00:13:54,440 --> 00:13:56,840 Speaker 5: would be effective? I mean, how risky is this at 285 00:13:56,840 --> 00:14:00,840 Speaker 5: a time we're already there as an incredibly explosive feeling 286 00:14:01,000 --> 00:14:04,600 Speaker 5: in the region, and previous incursions have led to mixed results. 287 00:14:06,920 --> 00:14:08,400 Speaker 1: Frankly, I think it'd be unwise. 288 00:14:08,480 --> 00:14:11,160 Speaker 6: Do you give a lot of detail because the Iranians 289 00:14:11,160 --> 00:14:13,440 Speaker 6: are going to be interested in that question as well. 290 00:14:13,480 --> 00:14:17,520 Speaker 6: But US military power is vast. The Iranians have no 291 00:14:17,679 --> 00:14:20,680 Speaker 6: capability to really defend against it, as we've seen in June. 292 00:14:21,520 --> 00:14:25,760 Speaker 6: The press reports have talked about aerial attacks, other tools 293 00:14:25,760 --> 00:14:29,040 Speaker 6: are available, and the Iranians are very susceptible to this. 294 00:14:29,400 --> 00:14:34,160 Speaker 6: The US has the means to deliver an extraordinary punishing 295 00:14:34,200 --> 00:14:37,880 Speaker 6: blow against those units and personnel that would be involved 296 00:14:37,880 --> 00:14:40,560 Speaker 6: in violence against protesters, and that's what the President has 297 00:14:40,600 --> 00:14:46,360 Speaker 6: talked about, responding to those who have committed of violence 298 00:14:46,480 --> 00:14:51,880 Speaker 6: and against peaceful protesters, deaths against peaceful protesters, and We've 299 00:14:51,920 --> 00:14:55,640 Speaker 6: seen an extraordinary number of deaths in the last weekend. 300 00:14:55,880 --> 00:14:59,320 Speaker 5: Norman, we already have Venezuela with questions around who's going 301 00:14:59,400 --> 00:15:01,320 Speaker 5: to lead it if there is some sort of strike 302 00:15:01,400 --> 00:15:04,000 Speaker 5: that does imperil the Iranian leadership, Do we have a 303 00:15:04,040 --> 00:15:05,720 Speaker 5: sense of who is going to take over and how 304 00:15:05,760 --> 00:15:07,520 Speaker 5: intimately involved the US will be with that. 305 00:15:08,920 --> 00:15:10,560 Speaker 1: I've been working. 306 00:15:12,280 --> 00:15:15,840 Speaker 6: The Middle East other issues too long to make predictions 307 00:15:15,880 --> 00:15:19,560 Speaker 6: on who will lead governments in the future, predicting elections 308 00:15:19,600 --> 00:15:22,960 Speaker 6: of the Iranian people will no doubt choose their own leadership. 309 00:15:23,080 --> 00:15:25,960 Speaker 1: I would say that there is a deep. 310 00:15:28,000 --> 00:15:32,840 Speaker 6: Revolutionary guard network within the country and corporations and all 311 00:15:32,880 --> 00:15:34,200 Speaker 6: aspects of the leadership. 312 00:15:34,240 --> 00:15:35,680 Speaker 1: If you were to draw upon the. 313 00:15:36,120 --> 00:15:41,040 Speaker 6: Existing system of society of who might follow, if the 314 00:15:41,120 --> 00:15:44,320 Speaker 6: existing system remains in place, it's probably going to be 315 00:15:44,400 --> 00:15:47,600 Speaker 6: drawn from that DNA. And that's the sort of DNA 316 00:15:47,680 --> 00:15:51,680 Speaker 6: that would likely be willing to engage with the West 317 00:15:51,760 --> 00:15:57,320 Speaker 6: and with the region in a circuit manner protecting Iranian equities, 318 00:15:57,320 --> 00:16:00,560 Speaker 6: but it would engage with the West with US. 319 00:16:00,720 --> 00:16:12,840 Speaker 2: More Blindberg surveillance coming up after this. Towson Stock for 320 00:16:12,880 --> 00:16:15,440 Speaker 2: Apollo writes the following the market reaction, this morning is 321 00:16:15,520 --> 00:16:18,000 Speaker 2: very muted, which is talent investors that the key issue 322 00:16:18,080 --> 00:16:21,360 Speaker 2: continues to be the incoming data. Tolson joins us now 323 00:16:21,440 --> 00:16:23,480 Speaker 2: for more Torston, good morning, any nice tries is still 324 00:16:23,480 --> 00:16:25,560 Speaker 2: going to ask you to have this tell me your 325 00:16:25,560 --> 00:16:28,000 Speaker 2: thoughts this morning and your response response to what took 326 00:16:28,000 --> 00:16:28,800 Speaker 2: place yesterday. 327 00:16:28,800 --> 00:16:31,600 Speaker 7: Eve nick I do think the market reaction is absolutely critical, 328 00:16:31,720 --> 00:16:34,720 Speaker 7: especially the market reaction in long rates, the dollar, and 329 00:16:34,800 --> 00:16:38,000 Speaker 7: also inflation expectations, and on all three fronts we've had 330 00:16:38,000 --> 00:16:40,920 Speaker 7: a relatively muted reaction. So one conclusion is that the 331 00:16:40,960 --> 00:16:43,560 Speaker 7: market obviously is looking at this and the reaction has 332 00:16:43,600 --> 00:16:46,160 Speaker 7: been as you would have expected. That rates up a bit, 333 00:16:46,200 --> 00:16:48,760 Speaker 7: the dollar is down. We'll see inflation expectations if they 334 00:16:48,800 --> 00:16:50,800 Speaker 7: go up a bit more throughout the day, but it's 335 00:16:50,800 --> 00:16:54,400 Speaker 7: still relatively small compared to how much drama has been 336 00:16:54,440 --> 00:16:56,280 Speaker 7: made of this over the last twenty four hours. 337 00:16:56,360 --> 00:16:58,600 Speaker 5: Is that a huge by signal essentially that this is 338 00:16:58,640 --> 00:17:00,840 Speaker 5: a market that really believes in the institution of the 339 00:17:00,840 --> 00:17:03,400 Speaker 5: Federal Reserve in the United States checks and balances in 340 00:17:03,440 --> 00:17:06,680 Speaker 5: a way that encourages you to invest in the United States. 341 00:17:06,920 --> 00:17:09,439 Speaker 7: Because investors come to the US for two reasons. They 342 00:17:09,480 --> 00:17:12,080 Speaker 7: come for AI, and they come for higher yield. And 343 00:17:12,119 --> 00:17:14,040 Speaker 7: when they come for higher yield, of course it's because 344 00:17:14,080 --> 00:17:15,639 Speaker 7: the rest of the world doesn't have great growth at 345 00:17:15,680 --> 00:17:17,680 Speaker 7: the moment, and the level of uals for the FED 346 00:17:17,760 --> 00:17:19,240 Speaker 7: is of course higher than what it is for the 347 00:17:19,240 --> 00:17:21,120 Speaker 7: easy b and for a number of central banks around 348 00:17:21,160 --> 00:17:23,800 Speaker 7: the world. So for that reason, foreigners come to clip 349 00:17:23,800 --> 00:17:26,520 Speaker 7: a higher coupoon in bonds, and foreigners also come to 350 00:17:26,600 --> 00:17:29,919 Speaker 7: get AI exposure. So for that reason, this is not 351 00:17:30,119 --> 00:17:32,480 Speaker 7: directly linked as such to the AI story, But what 352 00:17:32,560 --> 00:17:34,919 Speaker 7: this could be linked to is of course the yield story. 353 00:17:34,960 --> 00:17:37,320 Speaker 7: If you begin to see the FED lower interest rates 354 00:17:37,359 --> 00:17:39,919 Speaker 7: not for economic reasons, then the big question becomes with 355 00:17:39,960 --> 00:17:41,640 Speaker 7: what would that mean for the steepness of yeal curve 356 00:17:41,920 --> 00:17:43,960 Speaker 7: where is it foreign investors are investing, And if foreign 357 00:17:43,960 --> 00:17:46,280 Speaker 7: investors are further out, then the risk is of course 358 00:17:46,320 --> 00:17:48,439 Speaker 7: that the yeald curve preb be even steeper, and therefore 359 00:17:48,480 --> 00:17:50,920 Speaker 7: foreigners would be getting an even higher level of yield 360 00:17:51,080 --> 00:17:52,960 Speaker 7: further out the curve. So there's a lot of issues 361 00:17:53,000 --> 00:17:55,560 Speaker 7: around this question of why is it allar not weaker, 362 00:17:55,920 --> 00:17:58,800 Speaker 7: namely because foreigners actually still like the AI story and 363 00:17:58,840 --> 00:18:00,480 Speaker 7: they still like the higher coupong that they get in 364 00:18:00,480 --> 00:18:00,879 Speaker 7: the US. 365 00:18:00,920 --> 00:18:03,159 Speaker 5: What would you have to see to suggest that the 366 00:18:03,200 --> 00:18:06,119 Speaker 5: Cell America trade truly is starting to take off. The 367 00:18:06,160 --> 00:18:07,880 Speaker 5: people are starting to take this seriously. 368 00:18:08,720 --> 00:18:11,920 Speaker 7: The dollar going down, because that, of course is ultimately 369 00:18:11,960 --> 00:18:14,080 Speaker 7: the risk that foreigners will begin to say, well, we 370 00:18:14,119 --> 00:18:16,679 Speaker 7: have less appetite for buying US assets. But the key 371 00:18:16,760 --> 00:18:19,199 Speaker 7: issue continues to be that the US growth outlook continues 372 00:18:19,240 --> 00:18:21,320 Speaker 7: to be much better than the growth outlook in Europe, 373 00:18:21,440 --> 00:18:23,919 Speaker 7: much better than the growth outlook in Canada, Australia, Japan, 374 00:18:24,240 --> 00:18:26,680 Speaker 7: because we have the AI Data center boom and energy 375 00:18:26,720 --> 00:18:29,639 Speaker 7: boom of course expanding everything over the next level quarters. 376 00:18:29,680 --> 00:18:31,280 Speaker 7: We have the one big boot of a bill. We 377 00:18:31,320 --> 00:18:33,480 Speaker 7: also have all prices lower. We also have the dollar 378 00:18:33,520 --> 00:18:37,119 Speaker 7: now marginally lower. All those tailwinds continue to support GDP 379 00:18:37,200 --> 00:18:38,919 Speaker 7: growth throughout this year. Let's not forget that the one 380 00:18:38,920 --> 00:18:40,960 Speaker 7: big bit of a bill is going to add zero 381 00:18:41,000 --> 00:18:43,720 Speaker 7: point nine percent to GDP growth according to the Congressional 382 00:18:43,720 --> 00:18:46,399 Speaker 7: Budget Office in twenty twenty six. That's a very meaningful 383 00:18:46,480 --> 00:18:48,720 Speaker 7: boost to GDP over the coming quarter. So that's why 384 00:18:48,760 --> 00:18:51,200 Speaker 7: the CONTENTUS expects. If I look at ECF, you go 385 00:18:51,280 --> 00:18:53,840 Speaker 7: on my Bloomberg that the unemployment rate will peak just 386 00:18:53,880 --> 00:18:56,080 Speaker 7: about now, and the tourment rate is about to go 387 00:18:56,160 --> 00:18:58,760 Speaker 7: down over the coming quarters. That's a very important point 388 00:18:58,880 --> 00:19:00,960 Speaker 7: when you think about the background for this story about 389 00:19:01,080 --> 00:19:03,200 Speaker 7: what's going on with the Federal Reserve mose days. 390 00:19:03,240 --> 00:19:05,720 Speaker 4: When it comes to sell America, what about instead of 391 00:19:05,760 --> 00:19:08,760 Speaker 4: the dollar depreciating, what about the fact that gold continues 392 00:19:08,800 --> 00:19:11,080 Speaker 4: to hit a new record highs almost on a daily basis. 393 00:19:11,280 --> 00:19:13,280 Speaker 7: I do think that this is also a reflection of 394 00:19:13,359 --> 00:19:15,720 Speaker 7: a broader thing, namely that there's also the issue, of 395 00:19:15,760 --> 00:19:18,800 Speaker 7: course that central banks that are imposed with sanctions are 396 00:19:18,840 --> 00:19:21,480 Speaker 7: now shifting away from dollars towards gold. You also have 397 00:19:21,640 --> 00:19:24,359 Speaker 7: that many Chinese investors have been buying gold. They've been 398 00:19:24,359 --> 00:19:27,040 Speaker 7: buying ETFs in China in a very significant way over 399 00:19:27,040 --> 00:19:29,040 Speaker 7: the last several quarters that we haven't seen before. So 400 00:19:29,160 --> 00:19:31,720 Speaker 7: retail demand is very strong, and you also have because 401 00:19:31,720 --> 00:19:33,879 Speaker 7: of sanctions, very strong demand, and of course inflation in 402 00:19:33,880 --> 00:19:36,120 Speaker 7: the US. Let's not forget, which we normally, of course 403 00:19:36,160 --> 00:19:38,080 Speaker 7: talk about, is that it's still not a two percent. 404 00:19:38,119 --> 00:19:40,120 Speaker 7: It's still closer to three than it is to two, 405 00:19:40,440 --> 00:19:43,000 Speaker 7: and that of course is the number one issue driving gold. 406 00:19:43,000 --> 00:19:45,159 Speaker 7: Most frequently named that if inflation is higher for longer 407 00:19:45,240 --> 00:19:46,840 Speaker 7: and we have an economy that's about to get better 408 00:19:46,880 --> 00:19:48,600 Speaker 7: because of the one big beautiful bill the AI and 409 00:19:48,680 --> 00:19:51,040 Speaker 7: Data Center spend well, that raises the risk that there's 410 00:19:51,080 --> 00:19:54,280 Speaker 7: also more upside risk to inflation over the next seven months. 411 00:19:54,320 --> 00:19:56,520 Speaker 2: Tolston GDP right now is tracking at world four to 412 00:19:56,600 --> 00:19:57,080 Speaker 2: five percent. 413 00:19:57,160 --> 00:19:58,840 Speaker 7: Well, their land of at GDP now, as you know, 414 00:19:59,000 --> 00:20:00,040 Speaker 7: is a very very high. 415 00:20:00,000 --> 00:20:01,960 Speaker 2: Pretty fantastic, and the last rate we had was pretty 416 00:20:02,000 --> 00:20:04,880 Speaker 2: decent too, four to five percent. And the president's going 417 00:20:04,920 --> 00:20:08,080 Speaker 2: after the Federal Reserve, the President's looking the camp interest rates, 418 00:20:08,080 --> 00:20:10,920 Speaker 2: the credit card companies. The President's going after things that 419 00:20:11,240 --> 00:20:13,080 Speaker 2: are one on the one hand, in home builders on 420 00:20:13,119 --> 00:20:14,840 Speaker 2: the other hand, might help them. These are things we 421 00:20:14,920 --> 00:20:17,560 Speaker 2: typically associated with GDP tracking closer to one or maybe 422 00:20:17,560 --> 00:20:19,520 Speaker 2: a negative territory. What's gone wrong? 423 00:20:19,720 --> 00:20:21,760 Speaker 7: Well, I think a very important part of this discussion 424 00:20:21,880 --> 00:20:24,920 Speaker 7: is that equity investors care about corporate earnings, and a 425 00:20:25,000 --> 00:20:27,439 Speaker 7: few earning seasons have actually been pretty good, and corporate 426 00:20:27,480 --> 00:20:29,640 Speaker 7: earnings still look pretty good if you look ahead. Contentious 427 00:20:29,680 --> 00:20:32,879 Speaker 7: expectations are that earnings throughout this year will continue to rise. 428 00:20:33,119 --> 00:20:34,280 Speaker 1: So if corporate earnings. 429 00:20:34,040 --> 00:20:36,639 Speaker 7: Are still good, well, then equities likely to say, you 430 00:20:36,640 --> 00:20:38,440 Speaker 7: know what, if earnings are still good and these things 431 00:20:38,480 --> 00:20:41,080 Speaker 7: are not impacting the bottom line, well, then we should still, 432 00:20:41,119 --> 00:20:43,520 Speaker 7: of course expect that equities could continue to do well. 433 00:20:43,680 --> 00:20:46,280 Speaker 2: Is really strang what's gone wrong for mainstream. 434 00:20:45,800 --> 00:20:48,639 Speaker 7: Well, credit and bond in bursters of course have a 435 00:20:48,640 --> 00:20:50,800 Speaker 7: lot of these things, certainly because this begins to matter 436 00:20:50,800 --> 00:20:52,520 Speaker 7: in a number of ten ways, especially of course when 437 00:20:52,520 --> 00:20:54,320 Speaker 7: it comes to rates. So that's why it's more the 438 00:20:54,359 --> 00:20:56,719 Speaker 7: bunt market that's paying more attention to these risks. But 439 00:20:56,800 --> 00:20:59,000 Speaker 7: even the bunt market, the reactions today has had a 440 00:20:59,080 --> 00:21:01,680 Speaker 7: very very muted reaction. So that's why the conclusion here 441 00:21:01,760 --> 00:21:03,880 Speaker 7: is as long as bunt markets and in credit markets 442 00:21:04,000 --> 00:21:08,200 Speaker 7: continue to view this from a relatively complacent and benign perspective, 443 00:21:08,400 --> 00:21:10,600 Speaker 7: then we should still be looking at this from the 444 00:21:10,600 --> 00:21:11,399 Speaker 7: fundamental perspects. 445 00:21:11,440 --> 00:21:13,280 Speaker 2: Can we just partner markets for a moment, just throw 446 00:21:13,359 --> 00:21:15,399 Speaker 2: markets over there. I just want to talk about the 447 00:21:15,400 --> 00:21:17,879 Speaker 2: fact that we're generating four to five percent GDP growth 448 00:21:18,400 --> 00:21:21,119 Speaker 2: and yet everyone seems to be terribly unhappy. What is 449 00:21:21,160 --> 00:21:23,240 Speaker 2: so bad about this kind of growth? What is the 450 00:21:23,320 --> 00:21:25,479 Speaker 2: character of this GDP growth compared to what it used 451 00:21:25,520 --> 00:21:27,720 Speaker 2: to be? Like the jobless growth this time around, What 452 00:21:27,760 --> 00:21:29,880 Speaker 2: has changed? What has gone wrong? Well under the growth 453 00:21:29,880 --> 00:21:30,600 Speaker 2: that we're producing. 454 00:21:30,680 --> 00:21:32,480 Speaker 7: Yeah, So the key issue to that is, of course, 455 00:21:32,600 --> 00:21:34,879 Speaker 7: is a key shaped outlook. Both for consumers we have 456 00:21:34,920 --> 00:21:37,560 Speaker 7: high end versus low, and we also have for corporates 457 00:21:37,560 --> 00:21:40,320 Speaker 7: are you in AI or not in AI? Those differences 458 00:21:40,359 --> 00:21:42,960 Speaker 7: continue to drive that high end consumers spend continues to 459 00:21:43,000 --> 00:21:45,720 Speaker 7: be strong, and AI, of course data center energy build 460 00:21:45,720 --> 00:21:48,560 Speaker 7: out continues to be strong. Those things dominate the negative 461 00:21:48,560 --> 00:21:50,240 Speaker 7: effect that might be coming from the lower leg of 462 00:21:50,280 --> 00:21:52,399 Speaker 7: the key, and the label market is really mainly a 463 00:21:52,480 --> 00:21:55,760 Speaker 7: reflection of immigration. Remember in the last several years, twenty 464 00:21:55,880 --> 00:21:58,720 Speaker 7: twenty two to twenty four, net immigration was about three million. 465 00:21:58,960 --> 00:22:01,040 Speaker 7: The congressional budget of this is now predicting will be 466 00:22:01,040 --> 00:22:04,120 Speaker 7: about five hundred thousand. That's why the Funeral Reserve produces 467 00:22:04,160 --> 00:22:07,000 Speaker 7: a lot of papers saying that the equilibrium rate for 468 00:22:07,080 --> 00:22:09,160 Speaker 7: non found pay rolls is no longer two hundred thousand 469 00:22:09,240 --> 00:22:11,160 Speaker 7: like it was for several years now. 470 00:22:10,960 --> 00:22:11,920 Speaker 2: It's thirty thousand. 471 00:22:12,119 --> 00:22:15,000 Speaker 7: So that's why last Friday is number on non found payrolls. 472 00:22:15,080 --> 00:22:16,440 Speaker 1: It's actually a pretty good number. 473 00:22:16,240 --> 00:22:18,320 Speaker 7: When you take that into account that we actually. 474 00:22:18,080 --> 00:22:19,520 Speaker 1: Have had such a dramatic. 475 00:22:19,080 --> 00:22:20,959 Speaker 2: Declient so in behind you with fifty k. 476 00:22:21,160 --> 00:22:23,240 Speaker 7: Yeah, so fifty k is actually better than this Saint 477 00:22:23,320 --> 00:22:26,000 Speaker 7: Louis estimate of equilibrium for non founday rolls, which is 478 00:22:26,000 --> 00:22:26,560 Speaker 7: thirty thousand. 479 00:22:26,680 --> 00:22:28,320 Speaker 2: Again, so why is everyone so miserable? 480 00:22:28,760 --> 00:22:31,120 Speaker 7: Well, the stock market doesn't seem too miserable. 481 00:22:31,200 --> 00:22:33,520 Speaker 2: Cricket break against those people in the stockma understood. 482 00:22:33,680 --> 00:22:35,800 Speaker 7: So, but this is right if you think about, of course, 483 00:22:35,800 --> 00:22:39,199 Speaker 7: consumer sentiment that's also been driven very differently according to 484 00:22:39,240 --> 00:22:41,840 Speaker 7: where people are in the income distribution. But overall it's 485 00:22:41,840 --> 00:22:43,760 Speaker 7: still very clear that the economy is actually still in 486 00:22:43,800 --> 00:22:45,520 Speaker 7: decent shape. And if you now have the tail who's 487 00:22:45,520 --> 00:22:47,800 Speaker 7: coming from the one big beautiful bill again one percent 488 00:22:47,840 --> 00:22:50,200 Speaker 7: according to the CBO in growth being added this year, 489 00:22:50,359 --> 00:22:52,119 Speaker 7: you have still had data, say under spend out and 490 00:22:52,160 --> 00:22:54,119 Speaker 7: you'll still have also, of course everything going on with 491 00:22:54,160 --> 00:22:56,720 Speaker 7: lower dollar, lower oil prices, all that a really strong 492 00:22:56,760 --> 00:22:58,919 Speaker 7: tail when the growth outlook for the next sevel quarters. 493 00:22:58,960 --> 00:23:01,400 Speaker 2: The American people filled the same way. Because the president's 494 00:23:01,400 --> 00:23:04,320 Speaker 2: claim responding to something when it goes to downa Switzerland 495 00:23:04,359 --> 00:23:06,639 Speaker 2: in a week and talks about this great affordability person 496 00:23:07,600 --> 00:23:11,000 Speaker 2: Obviously he doesn't believe that the consumers in America see 497 00:23:11,040 --> 00:23:11,920 Speaker 2: things the same way. 498 00:23:12,480 --> 00:23:15,360 Speaker 7: Well, of course, affordability is a little bit different discussion 499 00:23:15,480 --> 00:23:17,800 Speaker 7: because it is correct and a number of differferends. Of course, 500 00:23:17,840 --> 00:23:20,880 Speaker 7: home prices have not done particularly well. That's also of course, 501 00:23:20,880 --> 00:23:23,720 Speaker 7: other areas with tuition, healthcare, cetera, where the discussion has 502 00:23:23,720 --> 00:23:26,960 Speaker 7: been very important. But nevertheless, the wealth effect for consumers 503 00:23:26,960 --> 00:23:29,560 Speaker 7: has been strong. Job growth has still been relatively decent. 504 00:23:29,760 --> 00:23:31,720 Speaker 7: At the same time, you know, actually saw wages go 505 00:23:31,800 --> 00:23:34,320 Speaker 7: up on Friday, you still have a number of till 506 00:23:34,359 --> 00:23:36,679 Speaker 7: wins that mean that on average, the US consumer the 507 00:23:36,680 --> 00:23:40,159 Speaker 7: weekly data from red Book, Sametoor retail sales impressively strong, 508 00:23:40,400 --> 00:23:42,680 Speaker 7: still telling you that in aggregate, the net effect of 509 00:23:42,720 --> 00:23:45,080 Speaker 7: the key is still that the higher end of the 510 00:23:45,119 --> 00:23:48,040 Speaker 7: key is dominating the oral picture for where the macro 511 00:23:48,119 --> 00:23:48,480 Speaker 7: data is. 512 00:23:49,400 --> 00:23:52,960 Speaker 2: This is the Bloomberg Survendans podcast, bringing you the best 513 00:23:52,960 --> 00:23:56,040 Speaker 2: in market economics, an giet politics. You can watch the 514 00:23:56,080 --> 00:23:59,080 Speaker 2: show live on Bloomberg TV weekday mornings from six am 515 00:23:59,200 --> 00:24:02,359 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 516 00:24:02,640 --> 00:24:05,480 Speaker 2: Spotify or anywhere else you listen, and as always on 517 00:24:05,520 --> 00:24:08,000 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app,