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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along

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Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jaily. We bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg Terminal. It is amazing

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Speaker 1: in the housing economy to think of the housing dynamics

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Speaker 1: and the prediction that the moon shot and housing will end.

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Speaker 1: That was where I first met Janahats is now chief

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Speaker 1: economists at Goldman Sachs. He on the high ground on

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Speaker 1: the last housing boom. Events are so important. We're not

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Speaker 1: going to talk about that on this Friday morning with Janatis.

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Speaker 1: We're gonna talk about the Golden sax call, the gloom

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Speaker 1: of recession, and the global and American labor economy. Drs,

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Speaker 1: thank you so much for joining us again. I've got

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Speaker 1: to go to Labe. I want to go Dudley mclvey

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Speaker 1: from years ago when you were a young upstart at

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Speaker 1: Goldban Sex and go back further. Your analysis on where

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Speaker 1: we are now with this strange labor economy goes back

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Speaker 1: to the late forties in the early fifties, that's right.

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Speaker 1: So if you look at the gap between the total

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Speaker 1: number of jobs and the total number of workers were

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Speaker 1: we've got the most overheated labor market going back all

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Speaker 1: the way to the early nineteen fifties. Best way to

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Speaker 1: see it, eleven million open positions, six million unemployed workers.

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Speaker 1: That five million gap is a record both in absolute

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Speaker 1: terms and relative to the size of the economy. So

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Speaker 1: I think that's really what the head's going to be

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Speaker 1: focused on. Politicians want un employed America. If I'm elected,

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Speaker 1: free beer, if I'm elected, a job for all. What's

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Speaker 1: wrong with an overheated labor economy. Well, if it generates

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Speaker 1: wage growth that's more than what you can sustain with

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Speaker 1: maybe one and a half to two percent productivity growth

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Speaker 1: and a two percent inflation target, then ultimately you get

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Speaker 1: higher inflation that erodes the real wage of of workers.

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Speaker 1: So that's ultimately not really in anybody's interests. And right now,

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Speaker 1: you know wages are growing in the five to six

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Speaker 1: percent range, and that is too fast. And you're not

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Speaker 1: a recession easter. You say, we think a recession is

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Speaker 1: far from inevitable, but you are looking for some severe

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Speaker 1: deceleration in this economy. Just laying out the forecast for

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Speaker 1: US GDP a year end where you think we're gonna

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Speaker 1: land and why you think the Fed will still be

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Speaker 1: pushing on even with those numbers. We're expecting slow down

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Speaker 1: from five and a half percent growth last year to

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Speaker 1: just under two percent this year if we look at

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Speaker 1: it on a fourth quarter to fourth quarter basis. So

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Speaker 1: basically from very far above trend, very strong V shaped

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Speaker 1: recovery to something around the economy's trend pace, and the

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Speaker 1: FED will be pushing on because the labor market is

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Speaker 1: overheated and inflation is too high. So I would say

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Speaker 1: that the reason, one very important part of the reason

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Speaker 1: why growth is going to be slower is that the

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Speaker 1: FED is trying to slow things down. So yeah, and

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Speaker 1: you'll have GDP with the one handle by year end

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Speaker 1: where cp I at that point, I just want to

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Speaker 1: understand the mix inflation to growth. I think CPI around

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Speaker 1: five pent for you know, core PC we have a

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Speaker 1: little over four four and a quarter percent, so you know,

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Speaker 1: still well above the two percent target, though lower than

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Speaker 1: now because I do think that some of the inflation

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Speaker 1: is going to come off in the in the good

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Speaker 1: sector as we go forward. That's just mechanically we should

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Speaker 1: say a mechanical peak later this year. Yeah, and I

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Speaker 1: think most people are looking for that. I'm trying to

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Speaker 1: work out next year just in terms of where this

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Speaker 1: FED funds would peak. What would influence that call for you?

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Speaker 1: What would you be looking for through the next six

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Speaker 1: to nine months. Well, I think if the economy does

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Speaker 1: not slow, and if we in particular don't get a

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Speaker 1: pretty substantial slowdown in employment growth, then you'd be looking

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Speaker 1: at something, you know, that could go significantly higher to

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Speaker 1: the four percent plus range. Our baseline is pretty close

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Speaker 1: to market pricing a little over three percent, but it

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Speaker 1: could be significantly higher than that if we see continued

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Speaker 1: increases in this overheating. Hold on a second, Yeah, I

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Speaker 1: want to sit on that for a second. Four percent

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Speaker 1: terminal FED funds rate. When do you see that being

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Speaker 1: a possibility if we continue to see strength in the

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Speaker 1: labor market. I think in two thousand and twenty twenty

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Speaker 1: three it's a possibility. Uh. You know, again, our baseline

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Speaker 1: is that by the middle of two thousand and twenty

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Speaker 1: three will be at a little over three percent, but

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Speaker 1: you know, there obviously risks around that. On the downside

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Speaker 1: if we get a you know, much sharper tightening in

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Speaker 1: financial conditions than they want. On the upside, if the

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Speaker 1: economy stays stronger, or you fail to get additional tightening

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Speaker 1: and financial conditions. I mean, the goal for the FED

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Speaker 1: is to bring about a gradual tightening in financial conditions.

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Speaker 1: Otherwise they're not going to achieve the goals that they have,

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Speaker 1: which is to stabilize the economy near full employment but

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Speaker 1: not in an overheated state. So do you agree with

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Speaker 1: Bill Dudley that the Fed has to essentially cause stock

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Speaker 1: prices to decline. It doesn't have to be declining stock prices,

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Speaker 1: but it has to be some combination of weaker stock prices,

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Speaker 1: higher interest rates, a stronger currency, and wider credit spreads,

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Speaker 1: and these things, you know, can be substitute able for

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Speaker 1: one another. We look at our Goldman Sachs Financial Conditions Index,

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Speaker 1: and those are the different components in there. I was

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Speaker 1: looking at the rates cold over a government just in

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Speaker 1: terms of where treasuries will be inversion year end in

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Speaker 1: version year and next year and again the year after that. Yeah,

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Speaker 1: and what would that mean from an economics perspective. Just

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Speaker 1: your relationship with the race team, their co year end

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Speaker 1: this year, the year after, the year after. What does

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Speaker 1: that mean, Well, they build in the economy, the call

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Speaker 1: from the economics team on the real economy and on

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Speaker 1: monetary policy. And we have the funds rate a little

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Speaker 1: over three percent and ten year yields a little under

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Speaker 1: three percent. So yes, mild inversion. I would also say

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Speaker 1: that if you look at market pricing for the federal

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Speaker 1: funds rate, of course that's already that already shows an inversion.

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Speaker 1: Market pricing goes up to a little over three and

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Speaker 1: then it comes down to about two in sort of

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Speaker 1: starting in late two thousand and twenty three. So the

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Speaker 1: market is saying there's a meaningful risk of renewed rate

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Speaker 1: cuts because the market sees a meaningful risk of a recession.

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Speaker 1: There's a missing ingredient in this conversation, and it's the

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Speaker 1: labor markets. Where you started with Tom three point five

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Speaker 1: percent is where the federcent year end. Again, he around three.

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Speaker 1: Given what you expect, the kind of deceleration you're looking

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Speaker 1: for in the economy, the persistence of inflation as well,

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Speaker 1: the work the FED needs to do. What do you

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Speaker 1: see happening and how out of sync with that gene

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Speaker 1: is that unemployment target with what you're looking for, Well,

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Speaker 1: we actually have the unemployment rate fall a little bit

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Speaker 1: further to three and a quarter percent, despite the weaker

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Speaker 1: growth forecast. I mean, I think the three point five

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Speaker 1: percent forecast from the Fed is already a little bit stale,

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Speaker 1: probably just given that we're already down to three point

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Speaker 1: six percent, since the summary of economic projections was this

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Speaker 1: is really important though, everything you're expecting and you still

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Speaker 1: expect unemployment to keep fooling. Doesn't that just tell you

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Speaker 1: that actually they've got to go high with interest rates. Well,

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Speaker 1: I think they do have to go higher with interest rates,

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Speaker 1: and I think you're anticipating, but possibly possibly, although it's

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Speaker 1: not just about the unemployment rate. I mean, this overheating

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Speaker 1: in the labor market is you know, on the demand side,

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Speaker 1: it's unemployment, but it's also it's also open possessions or jobs,

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Speaker 1: but also open possessions. We do expect that open possess

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Speaker 1: probably will come down somewhat. So in an ideal world,

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Speaker 1: what the FED would do is slow the economy to

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Speaker 1: a degree that leads companies to you know, delay or

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Speaker 1: or or shelves some of their expansion. Expansion plans thereby

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Speaker 1: bring down these extremely high open possessions without slowing it

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Speaker 1: so much that you get substantial layoffs. And that's what

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Speaker 1: that's what you're shooting for. Is that going to be

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Speaker 1: you know available? Is that? Is that what actually happens?

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Speaker 1: We're going to have to see it's going to I

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Speaker 1: think requires some fancy footwork from the Fed. Yeah, I

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Speaker 1: see why it's a narrow path to this soft landing.

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Speaker 1: How high do rates go before there's a recession? Can

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Speaker 1: we handle a four percent FED funds rate without a

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Speaker 1: recession occurring in the United States? Well, I think the

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Speaker 1: higher rates have to go, and especially if rates have

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Speaker 1: to go significantly higher because you see even clearer signs

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Speaker 1: of overheating, the higher the recession risk goals or if

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Speaker 1: you go if you go up to for the risk

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Speaker 1: is higher than if you're if you're in the sort

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Speaker 1: of lultimate threes. Yeah, and the Twitter's lighten up here.

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Speaker 1: The emails are coming in the pandemics over One of

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Speaker 1: the glimmers of joy within the pandemic was you and

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Speaker 1: fair on me going back and forth with no tie on.

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Speaker 1: You're coming in to day tie We need to know

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Speaker 1: does Solomon force you to wear a tie today? Is

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Speaker 1: this the new Solomon regime? I just wanted to celebrate

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Speaker 1: that I'm coming back into this office. That's just for us.

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Speaker 1: We wanted David had nothing to do with this, right,

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Speaker 1: you did not have anything. Okay, there's your there's your

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Speaker 1: personal celebration. There's your bre exclusive today with Yeah, and

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Speaker 1: that was a clinic. Just fantastic to get your thoughts

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Speaker 1: and the hold of the table for a government tom

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Speaker 1: and what they're looking at at the moment. Christina Kevin,

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Speaker 1: who is what America is about? When you come out

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Speaker 1: of school and you joined this strange thing called the

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Speaker 1: Foreign Service. Her for tour of duty was in Paris, France,

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Speaker 1: which is heavy lifting. But for that she has spanned

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Speaker 1: the world for the United States of America being a diplomat.

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Speaker 1: She's US charged affairs to Ukraine. Right now, Christina, what

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Speaker 1: are the ramifications to all of this? If Russia not

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Speaker 1: so much takes eastern Ukraine but takes the shores of

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Speaker 1: the Black Sea, what will be our diplomatic response to

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Speaker 1: something as shocking as they're taking of Odessa. Well, first

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Speaker 1: of all, I would say, um, obviously, Russia's attack in

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Speaker 1: the south of Ukraine and also their blockage of the

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Speaker 1: Black Sea is a significant barrier to trade, not just

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Speaker 1: with Ukraine but with other countries that are literal states

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Speaker 1: of the Black Sea. So the economic costs are significant.

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Speaker 1: Right now, the Russians have not their Their invasion of

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Speaker 1: Ukraine has not gone according to plan. I think they

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Speaker 1: thought they might be able to take Odessa easily within

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Speaker 1: a matter of weeks, and clearly that hasn't happened. In fact,

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Speaker 1: Russia has had to pull back from uh its central

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Speaker 1: position and in its approach on Keith, and so far

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Speaker 1: they have not been able to get They have not

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Speaker 1: been able to take Mikoliev, which is to the east

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Speaker 1: of Odessa and would have to be taken before they

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Speaker 1: could take Odessa. So I would say that it's a

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Speaker 1: little early to suggest that Rachel would be able to

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Speaker 1: take Odessa, given the fact that they have not succeeded

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Speaker 1: so far in in most of their plans. I agree

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Speaker 1: that's a that's a fair statement. I'm gonna call you

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Speaker 1: Ambassador because of your years of public service to the country, Ambassador.

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Speaker 1: My colleague Jonathan Pharaoh ass of Turkey, the Black Sea,

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Speaker 1: the boss First Straits as well. What is the present

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Speaker 1: relationship of Mr Biden and Mr er to Wan. Mr Biden,

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Speaker 1: President Biden and President are er to Wan have a

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Speaker 1: good relationship. They talked frequently and they talk about the

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Speaker 1: many important issues that Turkey is a part of. I

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Speaker 1: would say to that Turkey has been quite supportive of Ukraine.

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Speaker 1: President z Lnsky also has a good relationship with President Erdowan,

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Speaker 1: and Turkey has actually been hosting some of the negotiations

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Speaker 1: between Ukraine and Russia. So I think Turkey has been

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Speaker 1: playing a positive role in this. And finally, as a

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Speaker 1: NATO ally of course and part of a unified NATO

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Speaker 1: that stands against Russian aggression. UM, Turkey has been supportive. Christina.

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Speaker 1: There's been an ongoing conversation about the potential for a

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Speaker 1: no fly zone or more aggressive offensive weapons given to Ukraine.

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Speaker 1: There has been a shift in the type of military

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Speaker 1: weapons that are being given to Ukraine. How much do

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Speaker 1: you consider this an escalation or do you think that

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Speaker 1: the line that determines escalation has shifted with what we

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Speaker 1: saw out of Buccha. Well, I would say, first of all, uh,

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Speaker 1: it's Russia that's causing the escalation. So what we're trying

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Speaker 1: to do is help you Braine defend itself, UH, And honestly,

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Speaker 1: the Ukrainian Foreign Minister has said to me more than

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Speaker 1: once that any weapon that's used in Ukraine to defend

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Speaker 1: Ukrainian territory is by UH its nature a defensive weapon.

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Speaker 1: So what we're doing now is taking all of Ukraine's

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Speaker 1: requests for various weapons systems and UH seeing how we

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Speaker 1: can match them with what we have in stock and

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Speaker 1: what we think Ukraine could best use right now if

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Speaker 1: we give it to them immediately. And we've already given

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Speaker 1: them a very large supply of both anti air, anti

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Speaker 1: tank ammunition, defensive things like body armor and other material,

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Speaker 1: but we are looking at at further systems that they

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Speaker 1: will be able to use to help UH not just

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Speaker 1: defend against Russia, but repel them from the areas of

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Speaker 1: Ukraine that they still continue to occupy. Christinue you talked

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Speaker 1: about trying to do it quickly, immediately and certainly for

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Speaker 1: a Minister Khalva of Ukraine has been emphasizing the need

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Speaker 1: for speed as Russia regroups. How big is this window

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Speaker 1: of time? Well, we are concerned as Ukrainians have said

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Speaker 1: that President Putin is UH not withdrawing but regrouping, and

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Speaker 1: when he regroups UH it is believed that he may

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Speaker 1: be making an offensive, a heavy offensive in the east,

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Speaker 1: perhaps in the Don Boss. So it is a relatively

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Speaker 1: short period of time that Ukraine has to make sure

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Speaker 1: that they're ready for that. But we since since before

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Speaker 1: the war, actually we have been flowing weapons into Ukraine.

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Speaker 1: In fact, several months before the war started, we had

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Speaker 1: seen what Russia was starting to UH do and we

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Speaker 1: started to flow weapons in before the war started, and

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Speaker 1: then after the war started, of course we flow we

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Speaker 1: have flowed in even more. So we're getting weapons to

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Speaker 1: Ukraine every single day. However, of course, Ukraine needs as

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Speaker 1: many as they can possibly get, and we're doing our

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Speaker 1: utmost to try to get them as much as we

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Speaker 1: can as soon as we can. Christina, just briefly, what

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Speaker 1: is the difference between defensive and offensive weaponry? What is

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Speaker 1: the difference? Well, again, I would go back to US

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Speaker 1: Foreign Minister Kuleba's view that any weapon that is in

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Speaker 1: Ukrainian territory defending against attacks against Ukraine is by nature

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Speaker 1: a defensive weapon. Seems to be some disagreement that on

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Speaker 1: that on the International SNICE though, Christina, thank you for

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Speaker 1: your heart work throughout all of this. Christina Kavina Anastasia

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Speaker 1: Amrosa joins his chief investment strategist at I Capital and

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Speaker 1: a stage. I want to talk to you about international

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Speaker 1: RELATIONSHS will save that for later in the conversation. How

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Speaker 1: has your outlook changed if we begin the second quarter, Well,

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Speaker 1: thom has changed quite a bit. But one thing that

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Speaker 1: actually hasn't changed is the view that I've had on

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Speaker 1: cyclicals for a while, and it was not the time

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Speaker 1: to chase performance on cyclicals or performance on value. So

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Speaker 1: we've actually been talking to investors about rotating out of

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Speaker 1: those cyclical spots, and for reasons exactly what John just

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Speaker 1: talked about, which is this is not a set of

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Speaker 1: bullish rate hikes. This is not a set of bullish

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Speaker 1: development that the fet is pulling back on liquidity. So

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Speaker 1: I think there's a real concern right now about a

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Speaker 1: slow down that is consumer lead, because things are getting

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Speaker 1: too expensive and consumers may potentially be in a double wham,

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Speaker 1: a situation where prices are high and the fetish hiking rates,

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Speaker 1: which is making all the interest rate sensitive parts of

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Speaker 1: the economy really prohibitive as well. So I think that's

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Speaker 1: a big part that's been a big part of the outlook.

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Speaker 1: And now the other thing Tom that I would say

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Speaker 1: we have a little bit of breathing group near term.

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Speaker 1: I think given how much valuation reset that we've had

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Speaker 1: in Q one, and given how much positioning reset lower

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Speaker 1: that we've had in Q one, and I think we're

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Speaker 1: now in the stalemate situation, whether it's inflation, whether it's

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Speaker 1: your gray So barring adverse developments, I think we have

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Speaker 1: a little bit of breathing room for the equity markets.

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Speaker 1: But having said that, we can't ignore the longer term

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Speaker 1: risks of this consumer lead recession or slow down, whatever

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Speaker 1: it may be, that are building. So now I think

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Speaker 1: is the time to right size the risk in the portfolios.

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Speaker 1: And so when we have those rallies, when we have

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Speaker 1: the research lower and volatility, I would be using that

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Speaker 1: to actually de risk parts of the portfolio. And it says, yeah,

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Speaker 1: what do you expect to start seeing a consumer lead

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Speaker 1: recession or signs of it if that really does come

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Speaker 1: to pass, Well, I think we're going to see in

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Speaker 1: the coming quarters, probably this quarter and next at least

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Speaker 1: as slow down. I mean, if you look at consumer confidence,

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Speaker 1: for example, it is already at a ten year low

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Speaker 1: and a one year recession probability. From this point of

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Speaker 1: consumer confidences about so, I think we have some of

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Speaker 1: the indications there. We also have expectations for consumers for

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Speaker 1: their own personal finances that have fallen sharply. The buying

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Speaker 1: conditions for horrible goods have slumped, I want to say,

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Speaker 1: to the lowest level on record. So again, I'm not

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Speaker 1: surprised to see that the transportation sector is starting to

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Speaker 1: feel that. So I really think we're going to start

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Speaker 1: to see a slowdown in the next quarter or two.

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Speaker 1: But to have this really be a recession, I do

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Speaker 1: think that the Fed has to commit a policy error

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Speaker 1: and has to overtien too much into a slowing economy.

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Speaker 1: It's not the base case at the moment, but I

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Speaker 1: think that's definitely a risk worth watching and a risk

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Speaker 1: worth hedging. Right now, what's the ballast of the portfolio?

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Speaker 1: Is it the commodity sector? Is it long bonds after

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Speaker 1: they've risen the yields have risen so high, price down. Well,

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Speaker 1: first we should talk about the core of the portfolio,

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Speaker 1: which for most people is some sort of SMP exposure

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Speaker 1: for the NASTAC exposure, and if you step back over

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Speaker 1: the last two years, since January or February, the sn

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Speaker 1: P is up plus and since March of we're lucky

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Speaker 1: to put money to work. At that particular moment, you're

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Speaker 1: a percent So that's a huge return already over the

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Speaker 1: last couple of years. So it's right sizing and reducing

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Speaker 1: the risk in that. And I think one way to

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Speaker 1: do that there was a time and a place to

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Speaker 1: be long equities that be long only and have this

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Speaker 1: one directional exposure. But now we're talking about layering some

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Speaker 1: hedges and maybe you sell away some of the upside

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Speaker 1: by selling a call option and you buy and use

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Speaker 1: that premium to buy a put option, so you do

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Speaker 1: have some sort of protection on the downside. So I

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Speaker 1: think that right there is one of the more important

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Speaker 1: things that investors can do. And then it's about sectors,

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Speaker 1: and then it's about where else can you get yield? Tom,

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Speaker 1: what's the price to hedge right now? Is it outrageous?

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Speaker 1: Is everybody on board and that they knocked up the

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Speaker 1: price to hedge? No, it's not outrageous, And that's exactly

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Speaker 1: why I'm talking about it today versus let's say a

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Speaker 1: month ago when you had the VOCs that spiked to

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Speaker 1: thirty five. That was definitely not the time to be

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Speaker 1: talking about putting on this downside protection. But now it

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Speaker 1: vics you know twenty as your Oh uh, now is

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Speaker 1: the time to be looking at some of those put options.

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Speaker 1: I mean it gets very nuanced and very dynamic very quickly.

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Speaker 1: But you want to find the points on the volatility

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Speaker 1: curve where you can sell rich call premium and you

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Speaker 1: can get put option that's reasonably Priced's definitely not outrageous.

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Speaker 1: Right now, we've caught on you over the years for

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Speaker 1: the perspective of your heritage in the travelers you've made,

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Speaker 1: particularly to the Black Sea. This is a weekend where

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Speaker 1: Odessa is under unique threat to you. What is the

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Speaker 1: Odessa distinction? Now? What does it mean for Ukraine? For

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Speaker 1: that matter, what does it mean for Russia? Well, uh,

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Speaker 1: it is uh, it is a dire situation, needless to say,

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Speaker 1: um in Ukraine. And you know, unfortunately there's been almost

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Speaker 1: an international concession right now that Russia is not likely

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Speaker 1: to succeed broadly in Ukraine. But it's is like Russia

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Speaker 1: has a pretty good chance of succeeding in the don

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Speaker 1: Bass region, in the Black Sea region, and really connecting that.

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Speaker 1: So perhaps Russia is not going to get Ukraine has

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Speaker 1: the buffer zone that they were really hoping for, but

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Speaker 1: it seems like it's pretty likely that they might succeed

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Speaker 1: in reuniting the southeastern part of Ukraine and carving that

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Speaker 1: out as the buffer zone they so desperately wanted. And

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Speaker 1: I you're just awesome as always in fantastic thank you,

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Speaker 1: and samros there of I capital on a situation in

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Speaker 1: Ukraine and of course on the broader market as well.

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Speaker 1: Let's kick things off with Abrahim rach Bowery Globe ahead

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Speaker 1: of FX analysis is City and Ebrahim, let's start right

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Speaker 1: here and we price to get a slow down or

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Speaker 1: something worse than that in this market. It's great to

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Speaker 1: be joining you again. I think for now we're only

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Speaker 1: placing in a slow down. I don't think the market

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Speaker 1: is quite made up its mind whether it's going to

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Speaker 1: be a recession or Josh quote unquote a growth recession.

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Speaker 1: But as we've heard from Bill Dudley among others, we

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Speaker 1: do need unemployment to go up probably to contain these

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Speaker 1: extremely unusual levels of in place. So for now I

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Speaker 1: would say slowdown rather than a recession. But as you know,

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Speaker 1: fine tuning that slowdown is going to be in incredibly

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Speaker 1: difficult Abram, I want to talk about the barbell that

390
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Speaker 1: everyone in economics is talking about, which is a hole

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Speaker 1: and horse Leguard barbell. You've got Andrew hole and horse

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Speaker 1: up up up on rates, You've got Laguard trying to

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Speaker 1: keep up with Powell. How do you balance the city

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Speaker 1: call on rates with all of the challenges la Guard

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Speaker 1: has for Euros stability? Well, I would say that as

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Speaker 1: as clear as the direction of that, the the intention

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Speaker 1: to tighten in the US is now and and and

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Speaker 1: and Andrew has really been at the banguard for anticipating it.

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Speaker 1: I think the minutes the Easy Minutes yesterday were remarkable

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Speaker 1: because I think a little less noticed has been the

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Speaker 1: wocus shift by the e c D, and I think

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Speaker 1: the CV has been looking at what has been happening

403
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Speaker 1: in the West, and the minutes yesterday projected very clearly

404
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Speaker 1: that many people at d c D things that the

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Speaker 1: policy is very much in the wrong place and very

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Speaker 1: much behind the curve, and they frankly have a hard

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Speaker 1: time understanding themselves why d c D is still carrying

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Speaker 1: out QUEI at the time when inflation in in in

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Speaker 1: the euro Zone is also north of seven percent, and

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Speaker 1: unemployment is below seven percent, which by by Eurozone standards,

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Speaker 1: is extremely low. So I could see lag are trying

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Speaker 1: to catch up, not quite with Andrews called for the FED,

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Speaker 1: but by by a longer way than markets are currently anticipated.

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Speaker 1: You serted out him by saying, it's not clear whether

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Speaker 1: we're to see a slowdown or a recession. When you

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Speaker 1: take a look at where the euro and where the

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Speaker 1: dollar are price relative to each other, what are we

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Speaker 1: pricing in versus what is going to be the slowdown

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Speaker 1: and what is going to be the recession. So your

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Speaker 1: euro dollar isn't in fact very directional in recessions, and

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Speaker 1: whether that's global recessions or USTRA sessions, it's really only

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Speaker 1: to European recessions that it reacts very sharply. And that's

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Speaker 1: what we saw in the euros and crisis in in

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Speaker 1: in two thousand and ten, two thousand twelve, and and

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Speaker 1: and markets are pricing in a risk of back and

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Speaker 1: that's obviously linked to what's happening in energy prices and

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Speaker 1: with with Ukraine Russia. So global recession isn't really the

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Speaker 1: main risk for your dollar what we are looking at

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Speaker 1: for for your daughter specifically, is in fact maybe more

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Speaker 1: related to the French election or a Eurocentric shock. That's

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Speaker 1: what could get your dollar down to the parity type levels.

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Speaker 1: If it is quote unquote just a global recession or

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Speaker 1: US slowdown, there's a good chance your dollar actually will

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Speaker 1: go up rather than down from the low levels that

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Speaker 1: we are at. President Abraham, great to catch um body.

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Speaker 1: As always, Abraham, rom Marry that have city. This is

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Speaker 1: the Bloomberg Surveillance Podcast. Thanks for listening. Join us live

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Speaker 1: weekdays from seven to ten am Eastern and Bloomberg Radio

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Speaker 1: and Bloomberg Television each day from to nine am for

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Speaker 1: And subscribe to the Surveillance podcast on Apple, podcast, SoundCloud,

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Speaker 1: Bloomberg dot com, and of course on the terminal. I'm

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Speaker 1: Tom Keene and this is Bloomberg