1 00:00:02,400 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:11,920 --> 00:00:16,320 Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays 3 00:00:16,320 --> 00:00:19,640 Speaker 2: at seven am Eastern on Apple car Player, Android Auto 4 00:00:19,720 --> 00:00:23,080 Speaker 2: with the Bloomberg Business App. Listen on demand wherever you 5 00:00:23,120 --> 00:00:26,079 Speaker 2: get your podcasts, or watch us live on YouTube. 6 00:00:26,239 --> 00:00:27,240 Speaker 3: Francis Donald joins is. 7 00:00:27,320 --> 00:00:32,320 Speaker 4: She's a chief economist at RBC, that's Royal Bank of Canada. Francis, 8 00:00:32,360 --> 00:00:36,280 Speaker 4: what did you make of the FED statement yesterday, maybe 9 00:00:36,479 --> 00:00:39,000 Speaker 4: the chairman's comments and then the market's reaction. 10 00:00:39,120 --> 00:00:40,159 Speaker 3: What did you take away from them? 11 00:00:40,159 --> 00:00:40,319 Speaker 5: Well? 12 00:00:40,360 --> 00:00:43,519 Speaker 6: Interesting, almost no change to the statement and actually not 13 00:00:43,640 --> 00:00:47,280 Speaker 6: a material change to the forecasts for growth and for 14 00:00:47,360 --> 00:00:49,760 Speaker 6: the unemployment rate. But of course the big focus now 15 00:00:49,800 --> 00:00:53,040 Speaker 6: moving towards inflation, and it just struck me as very 16 00:00:53,080 --> 00:00:55,920 Speaker 6: interesting that, yes, we've had some minor surprises to the 17 00:00:56,000 --> 00:00:59,160 Speaker 6: upside with inflation in the past few months, but that was. 18 00:00:59,120 --> 00:01:01,280 Speaker 7: A really big move and a big. 19 00:01:01,080 --> 00:01:04,600 Speaker 6: Change in policy outlook off of the data that we've seen. 20 00:01:04,680 --> 00:01:07,240 Speaker 6: I could have maybe seen a slight change in tone 21 00:01:07,360 --> 00:01:09,920 Speaker 6: or maybe taking out one of those cuts for next year, 22 00:01:10,319 --> 00:01:12,720 Speaker 6: but this is really a federal reserve that, even though 23 00:01:12,760 --> 00:01:16,360 Speaker 6: they say they're not incorporating the effect of Trump policies, 24 00:01:16,520 --> 00:01:18,000 Speaker 6: or some of them are, but some of them are not. 25 00:01:18,480 --> 00:01:22,640 Speaker 6: Is absolutely internalizing what they expect to come next. It 26 00:01:22,720 --> 00:01:25,920 Speaker 6: is in their psyche, in their biases. They are afraid 27 00:01:25,959 --> 00:01:28,880 Speaker 6: of inflation. And Powell, while trying to speak out of 28 00:01:28,920 --> 00:01:31,800 Speaker 6: both sides of his mouth, really gave the impression that 29 00:01:31,840 --> 00:01:35,040 Speaker 6: the Fed is focused on what those CPI PC numbers 30 00:01:35,080 --> 00:01:36,720 Speaker 6: are going to look like, and therefore that's what the 31 00:01:36,720 --> 00:01:37,720 Speaker 6: market will be focused on. 32 00:01:37,840 --> 00:01:40,280 Speaker 5: And you're hinting at how Powell was talking about during 33 00:01:40,319 --> 00:01:43,360 Speaker 5: the press conference, how there were some officials, not all 34 00:01:43,400 --> 00:01:46,120 Speaker 5: of them would identify that, but that there was policy uncertainty, 35 00:01:46,160 --> 00:01:48,560 Speaker 5: especially when they're thinking about the trajectory of when it 36 00:01:48,600 --> 00:01:51,800 Speaker 5: came to inflation, starting to incorporate that in their dots 37 00:01:51,800 --> 00:01:54,960 Speaker 5: and their outlooks for twenty twenty five in the years ahead. 38 00:01:55,160 --> 00:01:58,360 Speaker 5: And obviously pal isn't going to address kind of the 39 00:01:58,400 --> 00:02:01,200 Speaker 5: elephant in the room when you're thinking about the plans 40 00:02:01,240 --> 00:02:03,080 Speaker 5: for fiscal side of that, but they're going to focus 41 00:02:03,120 --> 00:02:05,760 Speaker 5: on what's going on with the economy and inflation. So 42 00:02:05,800 --> 00:02:08,160 Speaker 5: how do you think the FED moves forward? Because when 43 00:02:08,200 --> 00:02:11,400 Speaker 5: you think back to even the last minute time Trump 44 00:02:11,480 --> 00:02:13,600 Speaker 5: was in an office, it's not really the same type 45 00:02:13,600 --> 00:02:16,200 Speaker 5: of playbook because the Fed's trajectory with rates was in 46 00:02:16,240 --> 00:02:18,120 Speaker 5: a very different spot as the economy was, and that 47 00:02:18,160 --> 00:02:19,680 Speaker 5: was well ahead of what happened with COVID. 48 00:02:19,760 --> 00:02:23,399 Speaker 6: Well back in twenty eighteen, a scary inflation would be 49 00:02:23,600 --> 00:02:26,760 Speaker 6: like three percent. That would have been for many folks. 50 00:02:26,760 --> 00:02:28,400 Speaker 6: That would have been some of the highest inflation that 51 00:02:28,440 --> 00:02:31,160 Speaker 6: they had seen. That would be enough to spook bond markets. Now, 52 00:02:31,200 --> 00:02:33,320 Speaker 6: of course we're old had a three percent it's not 53 00:02:33,400 --> 00:02:36,080 Speaker 6: so terrifying. But the American people have gone through, for 54 00:02:36,200 --> 00:02:38,839 Speaker 6: many of them, the largest price level shock that they've 55 00:02:38,880 --> 00:02:42,280 Speaker 6: experienced in their entire lives, and prices are over thirty 56 00:02:42,320 --> 00:02:45,000 Speaker 6: percent higher than they were when Trump first took office, 57 00:02:45,040 --> 00:02:48,760 Speaker 6: so that the ability to withstand and take higher prices 58 00:02:49,000 --> 00:02:51,520 Speaker 6: is going to be much lower for households, for businesses, 59 00:02:51,520 --> 00:02:54,160 Speaker 6: and also for the federal Reserve. You mentioned fiscal I 60 00:02:54,200 --> 00:02:56,799 Speaker 6: think this is really key, you know, I think we're 61 00:02:56,880 --> 00:03:02,360 Speaker 6: still consensus economists and Marcus underappreciated how massive fiscal spending 62 00:03:02,360 --> 00:03:03,960 Speaker 6: has been in the United States and how much it 63 00:03:03,960 --> 00:03:08,280 Speaker 6: has complicated the federal reserves job. So they talked a 64 00:03:08,280 --> 00:03:11,400 Speaker 6: lot about what neutral is Yesterday but then they talked 65 00:03:11,400 --> 00:03:12,600 Speaker 6: about maybe short. 66 00:03:12,440 --> 00:03:14,560 Speaker 5: Term neutral and long term neutral. 67 00:03:14,160 --> 00:03:16,639 Speaker 6: And to me that was a nod to just how 68 00:03:16,639 --> 00:03:19,360 Speaker 6: big fiscal spending has supported growth, and we've seen it 69 00:03:19,400 --> 00:03:22,560 Speaker 6: today in some upward revisions. If we get a pullback 70 00:03:22,600 --> 00:03:25,920 Speaker 6: in fiscal spending or an acceleration in fiscal spending, that 71 00:03:26,080 --> 00:03:29,280 Speaker 6: is a huge input into the federal reserve, probably more 72 00:03:29,320 --> 00:03:32,160 Speaker 6: important than just tariffs alone, which they've said they can 73 00:03:32,200 --> 00:03:33,400 Speaker 6: look through to a certain extent. 74 00:03:33,680 --> 00:03:36,440 Speaker 4: So can you just define for me how you define 75 00:03:36,480 --> 00:03:39,880 Speaker 4: neutral rate and how do you think how's that changing 76 00:03:39,960 --> 00:03:40,520 Speaker 4: over time? 77 00:03:40,960 --> 00:03:44,360 Speaker 6: So generally, you know, the textbook definition is the rate 78 00:03:44,400 --> 00:03:47,320 Speaker 6: that is neither tightening nor easing on the economy. We 79 00:03:47,400 --> 00:03:50,600 Speaker 6: don't know what it is, and actually we have even 80 00:03:50,680 --> 00:03:53,840 Speaker 6: less visibility into it right now because of a few factors. 81 00:03:54,080 --> 00:03:57,080 Speaker 6: One of course, is how big government spending is and 82 00:03:57,160 --> 00:04:00,000 Speaker 6: countercyclical government spending. The other is that we know there's 83 00:04:00,200 --> 00:04:03,960 Speaker 6: tremendous unevenness that exists underlying this economy. So even though 84 00:04:04,160 --> 00:04:06,960 Speaker 6: on the surface the economy looks good, it's actually doing 85 00:04:07,320 --> 00:04:11,160 Speaker 6: real bad for manufacturers, housing is really struggling in low 86 00:04:11,200 --> 00:04:14,000 Speaker 6: income Americans, so their neutral rate is going to be 87 00:04:14,080 --> 00:04:17,039 Speaker 6: different than the neutral rate for the whole economy, and 88 00:04:17,040 --> 00:04:20,120 Speaker 6: then underlying the surface, we have this AI and productivity boom, 89 00:04:20,160 --> 00:04:22,960 Speaker 6: which is probably meaning that the economy can grow sustainably 90 00:04:23,040 --> 00:04:24,000 Speaker 6: higher from where it was. 91 00:04:24,279 --> 00:04:25,000 Speaker 3: So there's short. 92 00:04:24,839 --> 00:04:27,640 Speaker 6: Term factors and long term factors. How has my thinking 93 00:04:27,720 --> 00:04:31,640 Speaker 6: changed on that, Well, the uncertainty around neutral is much larger, 94 00:04:32,000 --> 00:04:34,839 Speaker 6: and what that effectively means is that if you can't 95 00:04:34,920 --> 00:04:37,200 Speaker 6: see in front of you, you don't know where the 96 00:04:37,240 --> 00:04:39,560 Speaker 6: cliff is, the odds that you fall off of it 97 00:04:39,680 --> 00:04:41,720 Speaker 6: are much larger than if all the lights are on 98 00:04:41,720 --> 00:04:44,640 Speaker 6: our it's sunny outside. So my concern with neutral is 99 00:04:44,640 --> 00:04:46,400 Speaker 6: that this is a FED that's very wetted to the 100 00:04:46,440 --> 00:04:48,960 Speaker 6: idea of getting to neutral and then staying at neutral. 101 00:04:49,200 --> 00:04:51,400 Speaker 6: But given that we have very little understanding of what 102 00:04:51,440 --> 00:04:53,760 Speaker 6: it is, the odds of a policy mistake on either 103 00:04:53,839 --> 00:04:55,920 Speaker 6: side of it is much higher now than it would 104 00:04:55,920 --> 00:04:57,120 Speaker 6: have been even two years ago. 105 00:04:57,800 --> 00:04:59,960 Speaker 5: And you were bringing up sort of the dynamic BG 106 00:05:00,000 --> 00:05:02,280 Speaker 5: because when we're looking at say data that's coming out, 107 00:05:02,320 --> 00:05:04,440 Speaker 5: I mean, we just got an update on third quarter 108 00:05:04,480 --> 00:05:07,440 Speaker 5: GDP coming in revised hire at three point one percent. 109 00:05:07,440 --> 00:05:10,240 Speaker 5: Obviously we'll have another update on the Fed's preferred gage 110 00:05:10,240 --> 00:05:12,400 Speaker 5: for inflation tomorrow with PCE. But we think a lot 111 00:05:12,440 --> 00:05:14,520 Speaker 5: about the rate of change when you're looking at the 112 00:05:14,520 --> 00:05:16,080 Speaker 5: month of a month or year of a year figures. 113 00:05:16,080 --> 00:05:17,520 Speaker 5: But when you're going to the grocery store, a lot 114 00:05:17,520 --> 00:05:19,400 Speaker 5: of people obviously you're thinking about price levels, what they 115 00:05:19,440 --> 00:05:23,120 Speaker 5: were spending and paying for things before COVID obviously versus 116 00:05:23,160 --> 00:05:25,640 Speaker 5: now those kind of psychological impacts. How long do you 117 00:05:25,640 --> 00:05:28,000 Speaker 5: think it'll take before How many years could it take 118 00:05:28,040 --> 00:05:30,279 Speaker 5: before that kind of shakes out because there's a very 119 00:05:30,279 --> 00:05:31,440 Speaker 5: disconnect there for people. 120 00:05:32,000 --> 00:05:35,159 Speaker 6: I think this is generational inflation trauma. I think when 121 00:05:35,200 --> 00:05:37,800 Speaker 6: we hear, you know, when I work with folks who 122 00:05:37,880 --> 00:05:39,920 Speaker 6: talked to me about the nineteen seventies and how that 123 00:05:40,080 --> 00:05:43,280 Speaker 6: framed their entire perspective on markets. I mean, prices are 124 00:05:43,400 --> 00:05:48,160 Speaker 6: up twenty percent in just four years. It is phenomenal 125 00:05:48,160 --> 00:05:50,840 Speaker 6: inflation that we never expected to see and many didn't 126 00:05:50,880 --> 00:05:54,560 Speaker 6: believe could occur. But more problematically, it's coming from sources 127 00:05:54,560 --> 00:05:57,160 Speaker 6: that are not interesst rate sensitive to the same extent, 128 00:05:57,440 --> 00:06:00,240 Speaker 6: and that complicates the Fed's job because they can hike 129 00:06:00,360 --> 00:06:02,360 Speaker 6: interest rates all they want, it's not going to solve 130 00:06:02,400 --> 00:06:05,359 Speaker 6: geopolitical fragility. It's not going to make it Rain and 131 00:06:05,400 --> 00:06:08,920 Speaker 6: Brazil when there's droughts that occur. So it isn't just inflation. 132 00:06:09,080 --> 00:06:11,320 Speaker 6: It isn't just the price level shock. It's the nature 133 00:06:11,360 --> 00:06:14,440 Speaker 6: of how inflation is changing that I think is particularly problematic. 134 00:06:14,760 --> 00:06:16,800 Speaker 6: But share Powell did mention this, and I think this 135 00:06:16,839 --> 00:06:19,800 Speaker 6: is really important, that there's a difference between high prices 136 00:06:20,120 --> 00:06:23,039 Speaker 6: and high inflation. The side point to that too, is 137 00:06:23,160 --> 00:06:26,080 Speaker 6: inflation is problematic when it doesn't come with wage growth. 138 00:06:26,440 --> 00:06:28,800 Speaker 6: So if prices are more, if things cost more, but 139 00:06:28,839 --> 00:06:30,360 Speaker 6: you're making a lot more money, it's not going to 140 00:06:30,440 --> 00:06:33,200 Speaker 6: bother you as much. So inflation really started to be 141 00:06:33,240 --> 00:06:35,480 Speaker 6: something we're talking about a lot more, really much more 142 00:06:35,480 --> 00:06:37,400 Speaker 6: in the last twelve to twenty four months when wage 143 00:06:37,400 --> 00:06:40,040 Speaker 6: growth started to decline versus in the first stage, when 144 00:06:40,080 --> 00:06:42,440 Speaker 6: we had checks going out and wage growth was accelerating, 145 00:06:42,520 --> 00:06:45,000 Speaker 6: the labor market was tight. So when I think about inflation, 146 00:06:45,040 --> 00:06:47,080 Speaker 6: when I think about the neutral rates, I'm also also 147 00:06:47,160 --> 00:06:50,000 Speaker 6: bringing into the perspective of what is wage growth doing 148 00:06:50,040 --> 00:06:50,719 Speaker 6: in this environment. 149 00:06:50,839 --> 00:06:52,679 Speaker 5: Well, I want to ask you too, because the incoming 150 00:06:52,720 --> 00:06:55,719 Speaker 5: administration has made promises to lower prices, But when were 151 00:06:55,760 --> 00:06:58,679 Speaker 5: thinking about the fiscal side, of things versus the monetary side. 152 00:06:58,760 --> 00:07:01,520 Speaker 5: I mean, what real are options does an administration have 153 00:07:01,760 --> 00:07:03,560 Speaker 5: in order to do that? And is that even possible? 154 00:07:03,640 --> 00:07:07,600 Speaker 6: Well, lower prices would mean deflation, that means CPI, that's negative, 155 00:07:07,600 --> 00:07:09,880 Speaker 6: and we're struggling to get there right now. That might 156 00:07:09,880 --> 00:07:12,600 Speaker 6: be something that can be achieved in pockets, but just 157 00:07:12,640 --> 00:07:15,520 Speaker 6: getting down to two percent is really the challenge. Fiscal 158 00:07:15,600 --> 00:07:18,400 Speaker 6: is going to be such an important component to this story. 159 00:07:18,640 --> 00:07:20,240 Speaker 6: I've been on this show I think it's here last 160 00:07:20,240 --> 00:07:23,280 Speaker 6: month and talking about how important immigration will be, how 161 00:07:23,280 --> 00:07:26,240 Speaker 6: immigration actually weighs on our outlook and our concerns about 162 00:07:26,280 --> 00:07:28,600 Speaker 6: the US economy more than teriffs, which tend to be 163 00:07:28,600 --> 00:07:30,360 Speaker 6: one off shocks and we know how to use them. 164 00:07:31,000 --> 00:07:34,040 Speaker 6: But this is a government, the US government. If they 165 00:07:34,040 --> 00:07:37,880 Speaker 6: pull back on spending, they'll be able to create disinflation 166 00:07:37,960 --> 00:07:39,640 Speaker 6: and help bring it back and allow the FED to 167 00:07:39,680 --> 00:07:42,120 Speaker 6: ease more. But it's also going to pull back on growth. 168 00:07:42,440 --> 00:07:44,640 Speaker 6: So in my mind, it's going to be difficult for 169 00:07:44,680 --> 00:07:49,080 Speaker 6: the fiscal arm to create disinflation or deflation without also 170 00:07:49,160 --> 00:07:50,680 Speaker 6: materially raining in GDP. 171 00:07:50,960 --> 00:07:52,560 Speaker 8: So pick your poison, yep, exactly. 172 00:07:52,640 --> 00:07:54,640 Speaker 4: Francis, Thank you so much for joining US Francis Donald. 173 00:07:54,680 --> 00:08:03,600 Speaker 4: She's a chief economist at RBC based in Montreal, Canada. 174 00:08:04,680 --> 00:08:08,520 Speaker 2: You're listening to the Bloomberg Surveillance Podcast. Catch us live 175 00:08:08,640 --> 00:08:11,960 Speaker 2: weekday afternoons from seven to ten am. Easter Listen on 176 00:08:12,000 --> 00:08:15,239 Speaker 2: Apple car Play and Android Auto with a Bloomberg Business app, 177 00:08:15,360 --> 00:08:17,000 Speaker 2: or watch US live on YouTube. 178 00:08:17,200 --> 00:08:20,360 Speaker 4: Daniel d Martino Booth. She's a CEO on Chief Strategiste 179 00:08:20,400 --> 00:08:23,600 Speaker 4: QI Research. Danielle, what did you take from yesterday's meeting, 180 00:08:24,680 --> 00:08:25,600 Speaker 4: press conference, all. 181 00:08:25,560 --> 00:08:26,200 Speaker 3: That kind of stuff. 182 00:08:26,760 --> 00:08:30,160 Speaker 9: I don't think the market likes surprises, and I think 183 00:08:30,160 --> 00:08:36,200 Speaker 9: you should stay past noon today right for the greater good? Okay, please, no, 184 00:08:36,920 --> 00:08:39,920 Speaker 9: you know, I don't know if yesterday was about legacy. 185 00:08:40,360 --> 00:08:42,760 Speaker 9: You know, we've got sixteen seventeen months left in J. 186 00:08:42,920 --> 00:08:43,640 Speaker 3: Powell's term. 187 00:08:44,480 --> 00:08:45,240 Speaker 8: I think he. 188 00:08:45,840 --> 00:08:49,959 Speaker 9: Is going to be one hundred percent about optionality. If 189 00:08:49,960 --> 00:08:52,120 Speaker 9: he was an economist yesterday, he was an economist with 190 00:08:52,160 --> 00:08:54,400 Speaker 9: three arms on the one hand, on the other hand, 191 00:08:54,400 --> 00:08:57,040 Speaker 9: and on the other other hand. You know, when you 192 00:08:57,080 --> 00:09:01,520 Speaker 9: look at the largest input to inflation, it's running about 193 00:09:01,520 --> 00:09:04,200 Speaker 9: two point six percent on an annualized basis the lowest 194 00:09:04,920 --> 00:09:11,560 Speaker 9: twenty twenty one, So that large, huge driver of inflation 195 00:09:11,679 --> 00:09:14,880 Speaker 9: these last few years is coming down. Ivy Zellman just 196 00:09:14,880 --> 00:09:18,280 Speaker 9: came out with her apartment operators surveyed this morning. She's 197 00:09:18,320 --> 00:09:21,439 Speaker 9: showing the same kinds of downside because occupancy right now 198 00:09:22,280 --> 00:09:26,520 Speaker 9: is at the lowest in records that she's got back 199 00:09:26,520 --> 00:09:29,400 Speaker 9: to two thousand and one. So there's a supply overhang 200 00:09:29,800 --> 00:09:31,880 Speaker 9: that's going to continue to be kind of an anchor 201 00:09:32,000 --> 00:09:37,760 Speaker 9: on rental inflation. That's ironically something that Beth Haddock might 202 00:09:37,800 --> 00:09:41,240 Speaker 9: have communicated from the Cleveland Fed, since they're running the 203 00:09:41,240 --> 00:09:44,120 Speaker 9: Fed's only real time rent index. And yet there she 204 00:09:44,280 --> 00:09:45,440 Speaker 9: was the dissenter she was. 205 00:09:45,640 --> 00:09:48,280 Speaker 5: And obviously there's two crucial debates when it comes to 206 00:09:48,320 --> 00:09:50,360 Speaker 5: the direction of federals or policy. And we've talked so 207 00:09:50,440 --> 00:09:52,440 Speaker 5: much about this what's the neutral rate for the post 208 00:09:52,480 --> 00:09:55,400 Speaker 5: pandemic economy? And then also when you're thinking about policy changes, 209 00:09:55,440 --> 00:10:00,040 Speaker 5: whether it's tax, immigration, regulation, trade, tariffs, and obviously the 210 00:10:00,080 --> 00:10:03,640 Speaker 5: inflation forecast. So how do you view those two issues 211 00:10:03,679 --> 00:10:04,960 Speaker 5: going into twenty twenty five. 212 00:10:05,160 --> 00:10:07,240 Speaker 9: Well, and you know, I mean there's a huge unknown. 213 00:10:07,280 --> 00:10:10,480 Speaker 9: Let's just say that the tariffs have double the effect 214 00:10:10,559 --> 00:10:14,560 Speaker 9: that they had in twenty eighteen, twenty nineteen, You're starting 215 00:10:14,559 --> 00:10:17,760 Speaker 9: off with goods at negative zero point six goods, you're 216 00:10:17,760 --> 00:10:19,720 Speaker 9: starting off at a point of goods deflation. 217 00:10:20,440 --> 00:10:21,760 Speaker 3: Even if you get double. 218 00:10:21,480 --> 00:10:24,360 Speaker 9: The effect of twenty eighteen twenty nineteen, because of the 219 00:10:24,400 --> 00:10:26,960 Speaker 9: anchor that I just mentioned to you, which is rent 220 00:10:27,400 --> 00:10:31,400 Speaker 9: disinflationary pressures, the Fed's still going to come in below 221 00:10:31,679 --> 00:10:36,280 Speaker 9: where their end of the year inflation forecast is. So again, 222 00:10:36,440 --> 00:10:40,000 Speaker 9: I think right now that they are there, they're playing 223 00:10:40,000 --> 00:10:43,640 Speaker 9: out scenarios, and they're playing out what ifs, and they're saying, 224 00:10:43,960 --> 00:10:47,040 Speaker 9: if the peanut butter hits the fan, we want to 225 00:10:47,040 --> 00:10:51,640 Speaker 9: be ready to be in less of an aggressive easing stance. 226 00:10:51,720 --> 00:10:55,000 Speaker 9: I don't see much beyond that. January tends to be 227 00:10:55,040 --> 00:10:57,280 Speaker 9: a throw the baby out with the bathwater type of month. 228 00:10:57,360 --> 00:11:00,400 Speaker 9: You tend to see layoff announcements spike, you tend to 229 00:11:00,400 --> 00:11:03,280 Speaker 9: see bankruptcies lift off of where their current run rate is, 230 00:11:03,360 --> 00:11:07,680 Speaker 9: which according to bcy GO, you're at about twenty for 231 00:11:07,800 --> 00:11:10,559 Speaker 9: the month for the month of December on a run 232 00:11:10,640 --> 00:11:14,080 Speaker 9: rate basis. You hit twenty two in the month of November. 233 00:11:14,120 --> 00:11:17,440 Speaker 9: That was the second highest in post pandemic era. So 234 00:11:17,559 --> 00:11:20,280 Speaker 9: if we continued to just see more of the same 235 00:11:20,360 --> 00:11:23,120 Speaker 9: and again January tends to be a very ugly seasonal 236 00:11:23,160 --> 00:11:26,400 Speaker 9: month because anything that you've been holding off of, if 237 00:11:26,480 --> 00:11:28,920 Speaker 9: the holidays didn't lift you up and pull you through, 238 00:11:29,280 --> 00:11:31,600 Speaker 9: then whether you're at the container store or big lots, 239 00:11:32,160 --> 00:11:35,840 Speaker 9: you're going to liquidation pretty soon here. So I appreciate 240 00:11:35,880 --> 00:11:41,320 Speaker 9: the optionality. I was surprised at the magnitude of the 241 00:11:41,360 --> 00:11:45,200 Speaker 9: surprise to the markets. But maybe he's saying, I'm not 242 00:11:45,200 --> 00:11:46,920 Speaker 9: going to be the next Arthur Burns. 243 00:11:46,760 --> 00:11:47,400 Speaker 5: Come with May. 244 00:11:47,679 --> 00:11:48,000 Speaker 3: Yeah. 245 00:11:48,080 --> 00:11:50,520 Speaker 4: Well, you always remind us of this bcy go function, 246 00:11:50,600 --> 00:11:52,800 Speaker 4: the turbol, and I always forget it. But it's a 247 00:11:52,840 --> 00:11:55,320 Speaker 4: great function to show you bankruptcies and the companies and 248 00:11:55,360 --> 00:11:58,520 Speaker 4: the industries they're in the assets the liabilities, a great, 249 00:11:58,559 --> 00:12:02,360 Speaker 4: great function. So the dots and dots another cool function 250 00:12:02,400 --> 00:12:04,760 Speaker 4: on the blood of terminist I guess we're kind of 251 00:12:04,800 --> 00:12:07,440 Speaker 4: going from fourish to two in terms of rake. 252 00:12:07,400 --> 00:12:10,840 Speaker 3: Cuts for next year. Yeah, is that reasonable from your. 253 00:12:10,720 --> 00:12:14,400 Speaker 9: Perspective according to the terminal end of the dot plot, 254 00:12:14,400 --> 00:12:16,160 Speaker 9: which you could have driven a mac truck through. No, 255 00:12:16,320 --> 00:12:20,160 Speaker 9: I mean the disparity two point four percent to three 256 00:12:20,200 --> 00:12:23,480 Speaker 9: point nine percent, one hundred and fifty basis points of disagreement. 257 00:12:24,120 --> 00:12:26,240 Speaker 9: Let me tell you I was inside for nine years. 258 00:12:26,280 --> 00:12:28,360 Speaker 3: That's a lot of Dallas fed at the Dallas, Yes. 259 00:12:28,880 --> 00:12:29,680 Speaker 8: But we would were. 260 00:12:29,800 --> 00:12:31,160 Speaker 9: I was there for the pre briefs, I was there 261 00:12:31,160 --> 00:12:33,840 Speaker 9: for the debriefs. One hundred and fifty basis points of 262 00:12:33,840 --> 00:12:37,240 Speaker 9: disparity with seventeen members of the Federal up Market Committee 263 00:12:37,280 --> 00:12:41,360 Speaker 9: is a lot. And that's that's how far apart views 264 00:12:41,360 --> 00:12:43,680 Speaker 9: are on what the terminal rate's going to be. 265 00:12:44,480 --> 00:12:47,079 Speaker 5: And we saw another descent obviously at this meeting. How 266 00:12:47,080 --> 00:12:49,880 Speaker 5: do you view the debate amongst officials at the FED 267 00:12:49,960 --> 00:12:52,200 Speaker 5: as they get closer to where they think the neutral 268 00:12:52,240 --> 00:12:52,520 Speaker 5: rate is. 269 00:12:52,600 --> 00:12:54,760 Speaker 9: I think they're wondering about this new kid on the block, 270 00:12:55,480 --> 00:12:56,800 Speaker 9: Bell Hammock Can Company. 271 00:12:57,280 --> 00:12:59,160 Speaker 5: Usually you get your sea legs. 272 00:12:58,960 --> 00:13:03,600 Speaker 9: As as a district president. But she came out swinging 273 00:13:03,679 --> 00:13:07,600 Speaker 9: and swinging hard. And what was curious to me, though, 274 00:13:07,800 --> 00:13:11,960 Speaker 9: was if there was one person among the seventeen who 275 00:13:12,320 --> 00:13:15,559 Speaker 9: was saying, no, I'm voting for a pause, why wasn't 276 00:13:15,600 --> 00:13:20,920 Speaker 9: she joined by Michelle Bowman, who was equally hawkish. A 277 00:13:20,960 --> 00:13:24,719 Speaker 9: few meetings ago from her, we saw the first federserve 278 00:13:24,840 --> 00:13:27,679 Speaker 9: governor descent since Mark Olsen had done that in two 279 00:13:27,720 --> 00:13:31,000 Speaker 9: thousand and five. So I was surprised if there was 280 00:13:31,040 --> 00:13:34,400 Speaker 9: that robust of a debate that there weren't two Hawks 281 00:13:34,440 --> 00:13:36,960 Speaker 9: and a double descent yesterday, because usually. 282 00:13:36,720 --> 00:13:39,240 Speaker 5: Think Chris Waller cho's kind of on the Hawks spectrum 283 00:13:39,280 --> 00:13:41,080 Speaker 5: as well, in addition to Mickey Bowman. 284 00:13:41,559 --> 00:13:45,640 Speaker 9: Well, but but Chris Waller is also Jay Powell's first lieutenant, 285 00:13:45,679 --> 00:13:49,680 Speaker 9: closest confidante, never going to vote against the boss man. 286 00:13:49,800 --> 00:13:51,880 Speaker 5: I said it out loud, Yeah, Beth had Mica. 287 00:13:52,080 --> 00:13:54,000 Speaker 4: I was just looking up her bio in the Bloomberg triminal. 288 00:13:54,160 --> 00:13:56,200 Speaker 4: I forgot she's the Goldman Sachs person. 289 00:13:56,280 --> 00:13:58,760 Speaker 3: So indeed, no surprise. I guess that she would feel 290 00:13:58,800 --> 00:14:03,040 Speaker 3: comfortable outside the loop a little bit, and there's nothing 291 00:14:03,080 --> 00:14:06,000 Speaker 3: wrong with that. No, No, we have to have descent 292 00:14:06,120 --> 00:14:06,680 Speaker 3: on the board. 293 00:14:07,000 --> 00:14:09,360 Speaker 9: And I think the public, I think the investing public 294 00:14:09,440 --> 00:14:12,480 Speaker 9: needs to know that it's not just one great, big 295 00:14:12,520 --> 00:14:15,400 Speaker 9: oval table in the Echos buildings surrounded by yes men 296 00:14:15,400 --> 00:14:16,040 Speaker 9: and yes women. 297 00:14:16,280 --> 00:14:16,520 Speaker 5: Yep. 298 00:14:16,600 --> 00:14:20,080 Speaker 4: So, I mean, where do we go in next year? 299 00:14:20,120 --> 00:14:21,720 Speaker 4: What are you telling your clients about twenty twenty five? 300 00:14:21,840 --> 00:14:23,640 Speaker 3: Is there a theme you're talking about. 301 00:14:24,040 --> 00:14:29,040 Speaker 9: I'm telling my clients that either Trump lands in office 302 00:14:29,240 --> 00:14:32,440 Speaker 9: and the private sector wakes up and says we're finished 303 00:14:32,440 --> 00:14:36,600 Speaker 9: firing people, We're finished cutting costs, despite the fact that 304 00:14:36,720 --> 00:14:39,080 Speaker 9: in earning season we've been hearing one company after and 305 00:14:39,120 --> 00:14:41,240 Speaker 9: they're not miss on their bottom line, but miss on 306 00:14:41,280 --> 00:14:45,200 Speaker 9: their top line. So ConAgra again, we're not seeing the 307 00:14:45,240 --> 00:14:49,160 Speaker 9: consumer consume. Yesterday that General Mills that Knagor was echoing 308 00:14:49,200 --> 00:14:51,760 Speaker 9: General Mills yesterday saying, thank Heavens, we sell food that 309 00:14:51,760 --> 00:14:53,840 Speaker 9: people eat at home because they ain't eating out, which 310 00:14:53,880 --> 00:14:55,480 Speaker 9: is something we saw in the retail sales right with 311 00:14:55,520 --> 00:14:56,800 Speaker 9: a negative print for restaurants. 312 00:14:57,000 --> 00:14:58,200 Speaker 3: So we're going to have to. 313 00:14:58,120 --> 00:15:00,960 Speaker 9: See a turnaround in the consumer. I'm not so sure 314 00:15:00,960 --> 00:15:03,160 Speaker 9: that that's going to be the case, because the credit 315 00:15:03,160 --> 00:15:07,600 Speaker 9: reporting bureaus in January they get to hear about fifty 316 00:15:07,600 --> 00:15:09,920 Speaker 9: percent or so over the forty two million Americans who 317 00:15:09,960 --> 00:15:12,600 Speaker 9: still have student loans who haven't made a payment since 318 00:15:12,640 --> 00:15:15,480 Speaker 9: March of twenty twenty. That to me signals that there's 319 00:15:15,480 --> 00:15:18,200 Speaker 9: going to be a little bit more underwriting strictness going 320 00:15:18,240 --> 00:15:20,440 Speaker 9: in to the new year, because you're going to see 321 00:15:20,760 --> 00:15:24,360 Speaker 9: the consumer finally take their lumps after not having paid 322 00:15:24,400 --> 00:15:27,160 Speaker 9: for nearly four years on these student loans. Nothing's been 323 00:15:27,200 --> 00:15:30,560 Speaker 9: reported since then January if you were not paying as 324 00:15:30,600 --> 00:15:33,160 Speaker 9: of October the first, twenty twenty four, you finally get 325 00:15:33,160 --> 00:15:35,600 Speaker 9: reported to the experience and trans unions of the world. 326 00:15:35,760 --> 00:15:37,840 Speaker 4: All right, Danielle, thank you so much for joining us again. 327 00:15:38,200 --> 00:15:40,800 Speaker 4: Daniel Dee Martinezroll. She's based on in Dallas, but we 328 00:15:40,800 --> 00:15:42,680 Speaker 4: appreciate when she comes to New York she gives usumm 329 00:15:42,680 --> 00:15:43,760 Speaker 4: of her time here in our studio. 330 00:15:43,800 --> 00:15:44,640 Speaker 3: We really appreciate that. 331 00:15:44,800 --> 00:15:49,040 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 332 00:15:49,120 --> 00:15:52,320 Speaker 2: starting at seven am Eastern on applecar Play and Android 333 00:15:52,320 --> 00:15:55,200 Speaker 2: Auto with the Bloomberg Business app. You can also listen 334 00:15:55,320 --> 00:15:58,400 Speaker 2: live on Amazon Alexa from our flagship New York station, 335 00:15:58,800 --> 00:16:01,120 Speaker 2: Just say Alexa Bloomberg eleven. 336 00:16:01,600 --> 00:16:05,800 Speaker 4: Wendy Schuller joins us right now, Professor Brown University. Just 337 00:16:05,840 --> 00:16:08,280 Speaker 4: get some thoughts here on what's happening to you political Wendy. 338 00:16:08,440 --> 00:16:08,880 Speaker 3: I know you. 339 00:16:08,920 --> 00:16:12,960 Speaker 4: Listened to that interview as we did. Secretary of Blincoln 340 00:16:13,040 --> 00:16:16,160 Speaker 4: again voicing some optimism that maybe some progress can be 341 00:16:16,200 --> 00:16:18,600 Speaker 4: made there in the Middle East over the coming weeks. 342 00:16:19,960 --> 00:16:21,000 Speaker 7: Well, I'm good morning. 343 00:16:21,240 --> 00:16:24,440 Speaker 10: I'm sure that the Biden administration, particularly Sectary of Lincoln, 344 00:16:24,480 --> 00:16:27,040 Speaker 10: would like to see the release of the hostages and 345 00:16:27,120 --> 00:16:31,520 Speaker 10: some sort of more permanent ceasefire reached in Gaza before 346 00:16:31,640 --> 00:16:34,920 Speaker 10: January twentieth. You know, Biden's had a pretty rough ending 347 00:16:34,920 --> 00:16:37,200 Speaker 10: to his presidency, and I think the world would like 348 00:16:37,280 --> 00:16:39,840 Speaker 10: to see this conflict come to a close and have 349 00:16:40,600 --> 00:16:44,080 Speaker 10: the hostages released. It's a little reminiscent, although many of 350 00:16:44,120 --> 00:16:45,840 Speaker 10: us might have been quite young at the time, but 351 00:16:46,320 --> 00:16:49,800 Speaker 10: for the hostage release in Iran and Ronald Reagan's presidency 352 00:16:49,800 --> 00:16:52,520 Speaker 10: in nineteen eighty one. But you have to think this 353 00:16:52,600 --> 00:16:55,760 Speaker 10: is a complex world, and what Blincoln's trying to say 354 00:16:55,840 --> 00:16:58,440 Speaker 10: is we are leaving it in the best shape we can, 355 00:16:58,960 --> 00:17:02,720 Speaker 10: and we are communicating with incoming Secretary of State Marc 356 00:17:02,800 --> 00:17:06,040 Speaker 10: or Rubio's team, and that there is stability in US 357 00:17:06,080 --> 00:17:08,959 Speaker 10: foreign policy. And I think that's something very important that 358 00:17:09,119 --> 00:17:11,600 Speaker 10: at least the Biden administration wants to project for the 359 00:17:11,600 --> 00:17:13,000 Speaker 10: incoming Trump administration. 360 00:17:13,520 --> 00:17:15,840 Speaker 5: In speaking of the Trump administration, Wendy, I wanted to 361 00:17:15,880 --> 00:17:17,800 Speaker 5: point out a flash that we have on the terminal. 362 00:17:17,840 --> 00:17:20,720 Speaker 5: Here is Trump talking actually to Fox News here seeing 363 00:17:20,760 --> 00:17:23,840 Speaker 5: that Johnson to remain speaker if he acts tough enough. Here. 364 00:17:23,880 --> 00:17:25,840 Speaker 5: What's your reaction to this as far as when you 365 00:17:25,840 --> 00:17:29,080 Speaker 5: have the president, like, obviously we still have less than 366 00:17:29,080 --> 00:17:32,200 Speaker 5: a month before the inauguration. We actually have actually just 367 00:17:32,240 --> 00:17:34,359 Speaker 5: a little bit because it'll be on January twentieth. But 368 00:17:34,600 --> 00:17:37,120 Speaker 5: your expectations here where he's talking tough ahead of this. 369 00:17:38,200 --> 00:17:40,520 Speaker 10: Well, I mean, I think this is a really I 370 00:17:40,520 --> 00:17:42,760 Speaker 10: don't think it's a well advised strategy on part of 371 00:17:42,800 --> 00:17:45,040 Speaker 10: the Trump administration and coming Trump administration. 372 00:17:45,119 --> 00:17:46,000 Speaker 7: This is Elon Musk. 373 00:17:46,080 --> 00:17:49,200 Speaker 10: This is people who really want to not just roll 374 00:17:49,280 --> 00:17:50,880 Speaker 10: back the federal government. 375 00:17:50,680 --> 00:17:53,040 Speaker 7: But completely undermine its foundations. 376 00:17:53,080 --> 00:17:55,639 Speaker 10: We have seen in this movie before, not only in 377 00:17:55,640 --> 00:17:59,600 Speaker 10: the Trump administration, way back to Gagrich and Clinton Gangbridge 378 00:17:59,600 --> 00:18:02,280 Speaker 10: shut the gu government down going into Christmas also, by 379 00:18:02,280 --> 00:18:04,919 Speaker 10: the way, and Clinton ended up winning the election in 380 00:18:04,960 --> 00:18:07,719 Speaker 10: ninety six quite easily and may ging Ridge the scapegoat. 381 00:18:08,040 --> 00:18:10,919 Speaker 10: So it's really just it's not a winning strategy in 382 00:18:10,960 --> 00:18:14,240 Speaker 10: the longer term. It doesn't set the right tone for Trump, 383 00:18:14,240 --> 00:18:16,679 Speaker 10: who said he would come in and fix things, and 384 00:18:16,720 --> 00:18:19,800 Speaker 10: then he's sort of encouraging the Congress to break it 385 00:18:20,480 --> 00:18:22,640 Speaker 10: because he thinks he wants the dead ceiling. I think 386 00:18:22,680 --> 00:18:25,320 Speaker 10: this is all about getting the debt ceiling because he 387 00:18:25,359 --> 00:18:27,760 Speaker 10: doesn't want to deal with his braakmanship six months from 388 00:18:27,760 --> 00:18:29,560 Speaker 10: now when he's president of the United States. 389 00:18:29,720 --> 00:18:32,240 Speaker 7: So I think that if he got assurance, they would. 390 00:18:32,040 --> 00:18:34,960 Speaker 10: Do the dead ceiling now, which the Democrats probably have 391 00:18:35,040 --> 00:18:37,960 Speaker 10: no interest in making easy for incoming President Trump. 392 00:18:38,240 --> 00:18:39,320 Speaker 7: He would relent. 393 00:18:39,720 --> 00:18:42,720 Speaker 10: So this could be just one big gambuting opening a 394 00:18:42,760 --> 00:18:45,639 Speaker 10: gambling bit, just to get the dead ceiling off the 395 00:18:45,720 --> 00:18:48,240 Speaker 10: table so it doesn't interfere with his first year of 396 00:18:48,280 --> 00:18:48,879 Speaker 10: the presidency. 397 00:18:49,119 --> 00:18:53,480 Speaker 4: Can you explain, Wendy, for our listeners, our viewers and me, 398 00:18:53,840 --> 00:18:55,240 Speaker 4: what the death ceialing issue is. 399 00:18:56,640 --> 00:18:59,000 Speaker 7: Well, basically, I mean this is just the amount of money. 400 00:18:59,040 --> 00:19:01,480 Speaker 10: As many of your listeners already know that the government 401 00:19:01,480 --> 00:19:05,440 Speaker 10: can quote unquote borrow That's a complicated set of activities 402 00:19:05,480 --> 00:19:08,199 Speaker 10: that borrowing, but one of them is to issue treasury bonds, 403 00:19:08,480 --> 00:19:11,080 Speaker 10: right so, and interest rates are falling, so it's a 404 00:19:11,160 --> 00:19:14,760 Speaker 10: little bit cheaper, although treasury rates obviously vary in some 405 00:19:14,800 --> 00:19:17,200 Speaker 10: ways that are separate from this, a little bit cheaper 406 00:19:17,280 --> 00:19:19,040 Speaker 10: to do that if the interest rates are coming down, 407 00:19:19,160 --> 00:19:21,800 Speaker 10: so it's easier to borrow money, and that's what the 408 00:19:21,800 --> 00:19:24,359 Speaker 10: government would be doing. The problem is, when the government 409 00:19:24,440 --> 00:19:27,760 Speaker 10: runs out of money, it literally cannot operate, so it's 410 00:19:27,760 --> 00:19:30,959 Speaker 10: similar to a shutdown, but the legal implications are quite different. 411 00:19:31,000 --> 00:19:33,639 Speaker 7: So it's really something you don't want to deal with. 412 00:19:33,720 --> 00:19:38,520 Speaker 10: And the renegade Republicans have made this a difficult task. 413 00:19:38,560 --> 00:19:39,520 Speaker 7: Even under Trump. 414 00:19:39,560 --> 00:19:42,000 Speaker 10: They sort of grumbled a lot for a long time, 415 00:19:42,080 --> 00:19:45,679 Speaker 10: and the debt is growing and Trump is somehow we're 416 00:19:45,680 --> 00:19:48,200 Speaker 10: going to have to face that. So you know, it's 417 00:19:48,359 --> 00:19:50,399 Speaker 10: just that he doesn't want to deal with it in 418 00:19:50,440 --> 00:19:53,520 Speaker 10: the first year because it empowers some of his members. 419 00:19:53,560 --> 00:19:55,440 Speaker 7: With a very slim majority. 420 00:19:55,000 --> 00:19:58,080 Speaker 10: In the House, if Mike Johnson has to shut the 421 00:19:58,119 --> 00:20:02,120 Speaker 10: government down, then that's sits on Trump, not Biden. 422 00:20:02,400 --> 00:20:03,040 Speaker 7: And that's why I. 423 00:20:02,960 --> 00:20:05,480 Speaker 10: Feel like this is a very curious strategy going into 424 00:20:05,520 --> 00:20:09,080 Speaker 10: an inauguration and the start of the second term of Trump. 425 00:20:09,760 --> 00:20:11,440 Speaker 5: So what do you think are the scenarios that could 426 00:20:11,480 --> 00:20:13,679 Speaker 5: avoid as shut down this week? And based on what 427 00:20:13,680 --> 00:20:16,360 Speaker 5: we've seen in the past, well. 428 00:20:16,200 --> 00:20:18,000 Speaker 10: In some ways, I mean, you know, there is a 429 00:20:18,000 --> 00:20:20,880 Speaker 10: lot of spending in this bill that, as there always is, 430 00:20:20,920 --> 00:20:24,359 Speaker 10: that you could argue is not vital or necessary. And 431 00:20:24,400 --> 00:20:27,560 Speaker 10: I think if there's some concession on some of that spending, 432 00:20:27,880 --> 00:20:30,280 Speaker 10: that gives Trump the opportunity to say he was influential 433 00:20:30,320 --> 00:20:34,440 Speaker 10: in save face, but ideally he liked the debt ceiling extended, 434 00:20:34,560 --> 00:20:35,960 Speaker 10: so he doesn't want to deal with it. So I 435 00:20:36,000 --> 00:20:37,840 Speaker 10: don't know if they're willing to do that in twenty 436 00:20:37,880 --> 00:20:41,720 Speaker 10: four hours, but going into the holiday, you know, as 437 00:20:42,119 --> 00:20:45,520 Speaker 10: it goes along, unless they exempt things, which sometimes they do, 438 00:20:45,600 --> 00:20:48,399 Speaker 10: like fundamental services the FAA for example, for all these 439 00:20:48,400 --> 00:20:51,600 Speaker 10: people going on vacation national parks where people might be 440 00:20:51,600 --> 00:20:54,479 Speaker 10: planning trips to. We've seen this movie, as I said before, 441 00:20:54,800 --> 00:20:57,120 Speaker 10: and it doesn't end well for the party that's blamed 442 00:20:57,119 --> 00:21:00,199 Speaker 10: for the shutdown. So I think that's the negotiation. And 443 00:21:00,440 --> 00:21:03,080 Speaker 10: Trump has put himself out there and maybe now he 444 00:21:03,119 --> 00:21:05,960 Speaker 10: feels like, oh now I have to backtrack, or maybe 445 00:21:06,040 --> 00:21:08,479 Speaker 10: things people go on Christmas break and they won't even notice, 446 00:21:08,640 --> 00:21:10,320 Speaker 10: and I'll get it done for the new year. But 447 00:21:10,760 --> 00:21:12,879 Speaker 10: this is, you know, this is not the way you 448 00:21:12,920 --> 00:21:14,840 Speaker 10: want to start your new administration. 449 00:21:15,440 --> 00:21:19,440 Speaker 4: When are you surprised that we have two civilians here, 450 00:21:19,480 --> 00:21:22,440 Speaker 4: Donald Trump and Elon Musk having such an influence over 451 00:21:23,520 --> 00:21:26,320 Speaker 4: these types of matters, And quite frankly, I have not 452 00:21:26,400 --> 00:21:28,439 Speaker 4: really heard, or I don't think we've really heard from 453 00:21:29,280 --> 00:21:32,760 Speaker 4: our President Biden about how he viewsed this negotiation is 454 00:21:32,760 --> 00:21:34,800 Speaker 4: this How odd is this scenario here? 455 00:21:35,520 --> 00:21:37,560 Speaker 7: Well, I mean it's actually Trump did this before with 456 00:21:37,600 --> 00:21:38,360 Speaker 7: the immigration bill. 457 00:21:38,440 --> 00:21:41,240 Speaker 10: The conference is ready to pass a border security with 458 00:21:41,280 --> 00:21:43,960 Speaker 10: some immigration reform, and he killed it. He killed it 459 00:21:44,040 --> 00:21:46,000 Speaker 10: by saying I don't want it, and I'm going to 460 00:21:46,080 --> 00:21:47,800 Speaker 10: primary you. I'm going to get people to run against 461 00:21:47,840 --> 00:21:50,920 Speaker 10: you in primaries, and the Republicans folded the last minute. 462 00:21:51,040 --> 00:21:54,440 Speaker 10: This is just wholesale the capture of the Congressional Republican 463 00:21:54,480 --> 00:21:56,000 Speaker 10: Party by Donald Trump. 464 00:21:56,160 --> 00:21:57,320 Speaker 7: The key is it's. 465 00:21:57,200 --> 00:21:59,440 Speaker 10: Captured in the House, but it may not be as 466 00:21:59,480 --> 00:22:03,520 Speaker 10: holy capped in the Senate. So if Republican senators don't 467 00:22:03,520 --> 00:22:05,800 Speaker 10: want to shut the government down, they'll go to Donald 468 00:22:05,800 --> 00:22:08,840 Speaker 10: Trump and say, well, we're reconsidering your nominees. I mean, 469 00:22:08,880 --> 00:22:10,640 Speaker 10: I don't know who in the party will do that 470 00:22:11,240 --> 00:22:14,680 Speaker 10: for an incoming president who's so popular, but that popularity 471 00:22:14,720 --> 00:22:18,879 Speaker 10: could be fleeting if people find their inconvenience by Donald 472 00:22:18,880 --> 00:22:20,199 Speaker 10: Trump and Elon Musk. 473 00:22:20,440 --> 00:22:23,760 Speaker 7: So this again is a gamble by the incoming president. 474 00:22:24,040 --> 00:22:26,439 Speaker 10: And like we've seen before with Donald Trump, it's not 475 00:22:26,600 --> 00:22:28,560 Speaker 10: always a rational explanation for it. 476 00:22:28,600 --> 00:22:30,160 Speaker 7: But if they come to the table with the. 477 00:22:30,080 --> 00:22:33,280 Speaker 10: Debt ceiling extension, you can see Donald Trump flipping the 478 00:22:33,280 --> 00:22:36,560 Speaker 10: script and saying, Okay, you know, don't shut the government down, 479 00:22:36,560 --> 00:22:39,320 Speaker 10: and Congress can stay in session on Monday and Tuesday 480 00:22:39,359 --> 00:22:41,119 Speaker 10: next week. It's not a popular thing to do for 481 00:22:41,160 --> 00:22:44,040 Speaker 10: the members, but they could certainly be in session Monday 482 00:22:44,040 --> 00:22:47,000 Speaker 10: and Tuesday to work this out right before Christmas. 483 00:22:47,200 --> 00:22:49,720 Speaker 5: Talk to us about Elon Musk and how he's starting 484 00:22:49,720 --> 00:22:52,600 Speaker 5: to staff up his Department of Government efficiency, because there's 485 00:22:52,640 --> 00:22:55,480 Speaker 5: still a question of how exactly it would operate. Because 486 00:22:55,600 --> 00:22:58,159 Speaker 5: leading a commission outside of government, Elon Musk doesn't have 487 00:22:58,200 --> 00:23:01,879 Speaker 5: to divest his personal financial heals when making recommendations to 488 00:23:01,920 --> 00:23:02,480 Speaker 5: the White House. 489 00:23:03,400 --> 00:23:05,840 Speaker 10: Well, this is not a cabinet department, right, we have 490 00:23:05,880 --> 00:23:06,680 Speaker 10: cabinet departments. 491 00:23:06,720 --> 00:23:08,320 Speaker 7: They're created by Acts of Congress. 492 00:23:08,600 --> 00:23:10,840 Speaker 10: So I don't know what the legal authority would be, 493 00:23:10,880 --> 00:23:14,320 Speaker 10: as you suggest us, like what actual legal authority would 494 00:23:14,320 --> 00:23:14,520 Speaker 10: they have? 495 00:23:14,800 --> 00:23:16,000 Speaker 7: So it'll be a commission. 496 00:23:16,040 --> 00:23:18,520 Speaker 10: Remember when Trump came in the first time, he formed 497 00:23:18,520 --> 00:23:21,000 Speaker 10: a voting commission. He put Chris Kobac in charge of 498 00:23:21,000 --> 00:23:24,879 Speaker 10: that and demanded information from states about voting records, and 499 00:23:24,960 --> 00:23:26,600 Speaker 10: state said, yeah, no, we're not going to do that. 500 00:23:26,920 --> 00:23:29,960 Speaker 10: So it's unclear how effected these recommendations will be without 501 00:23:30,000 --> 00:23:31,879 Speaker 10: any legal implementation authority. 502 00:23:32,119 --> 00:23:34,960 Speaker 7: And how long will Donald Trump share the spotlight with 503 00:23:35,040 --> 00:23:37,760 Speaker 7: Elon Musk. We all have to ask ourselves that it's 504 00:23:37,840 --> 00:23:40,240 Speaker 7: Musk Musk Musk. You know, Trump likes it to be 505 00:23:40,280 --> 00:23:41,159 Speaker 7: Trump Trump, Trump. 506 00:23:41,400 --> 00:23:44,720 Speaker 10: So it's unclear how long this friendship lasts and how 507 00:23:44,840 --> 00:23:47,280 Speaker 10: far and how far reaching Elon Musk can be. 508 00:23:47,840 --> 00:23:50,440 Speaker 7: It is hard to move the needle in the federal government. 509 00:23:50,640 --> 00:23:53,919 Speaker 10: It's hard to change things and cut people, and it 510 00:23:53,960 --> 00:23:56,280 Speaker 10: will take a while for anything to come to fruition. 511 00:23:56,680 --> 00:23:58,600 Speaker 10: And we just have to figure out whether the relationship 512 00:23:58,600 --> 00:24:01,320 Speaker 10: between Trump and Musk with stands that timeline. 513 00:24:01,520 --> 00:24:02,919 Speaker 3: Wennie, thank you so much for joining us. 514 00:24:02,920 --> 00:24:06,480 Speaker 4: We always appreciate getting your perspective when you Schuller, Professor 515 00:24:06,520 --> 00:24:12,920 Speaker 4: at Brown University. 516 00:24:15,119 --> 00:24:19,400 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 517 00:24:19,480 --> 00:24:22,680 Speaker 2: starting at seven am Eastern on applecar Play and Android 518 00:24:22,720 --> 00:24:25,639 Speaker 2: Auto with the Bloomberg Business app. You can also watch 519 00:24:25,720 --> 00:24:28,960 Speaker 2: us live every weekday on YouTube and always on the 520 00:24:29,000 --> 00:24:29,959 Speaker 2: Bloomberg terminal. 521 00:24:30,080 --> 00:24:31,800 Speaker 4: All right, folks, you're daily look at the front pages 522 00:24:31,840 --> 00:24:33,880 Speaker 4: around the world with our newspapers in New York City. 523 00:24:33,920 --> 00:24:35,400 Speaker 3: Lisa Matey, Lisa, what do you got for us. 524 00:24:35,280 --> 00:24:39,320 Speaker 1: All right, since you love drones so much, Polems, I'm 525 00:24:39,359 --> 00:24:40,080 Speaker 1: starting there. 526 00:24:40,400 --> 00:24:41,760 Speaker 8: This is in Business Insider. 527 00:24:41,960 --> 00:24:44,760 Speaker 1: You know, with all these mysterious sightings, Wing and Door 528 00:24:44,840 --> 00:24:49,359 Speaker 1: Dasher actually launching delivery drones. Boy, drum mall, this is 529 00:24:49,400 --> 00:24:55,640 Speaker 1: happening over in Texas. Wing He's here we go because 530 00:24:55,640 --> 00:24:58,679 Speaker 1: they are actually sightings in Texas too. So now with 531 00:24:58,760 --> 00:25:01,480 Speaker 1: this whole launch, deliveries can be made in those little 532 00:25:01,560 --> 00:25:04,440 Speaker 1: fifteen minutes from some of your store favorite stores. 533 00:25:04,119 --> 00:25:04,920 Speaker 8: In the malls there. 534 00:25:05,560 --> 00:25:07,440 Speaker 1: This is in the I think it's the Dallas Fort 535 00:25:07,440 --> 00:25:11,120 Speaker 1: Worth area, but it's making these commercial deliveries worldwide since 536 00:25:11,160 --> 00:25:13,840 Speaker 1: twenty nineteen. But now with everything going on, it's kind 537 00:25:13,840 --> 00:25:15,840 Speaker 1: of like, wow, is this like bad timing? 538 00:25:16,640 --> 00:25:17,520 Speaker 8: But they can fly. 539 00:25:17,680 --> 00:25:19,960 Speaker 1: They're pretty quick, sixty five miles an hour, about one 540 00:25:20,040 --> 00:25:22,720 Speaker 1: hundred and fifty feet up in the air. But yeah, 541 00:25:22,760 --> 00:25:24,960 Speaker 1: the reports keep coming in about all the drones. 542 00:25:25,000 --> 00:25:27,040 Speaker 8: We hear John Tucker talking about it all the time. 543 00:25:27,119 --> 00:25:29,320 Speaker 3: Won't there be more and more and more drones? 544 00:25:29,400 --> 00:25:29,560 Speaker 6: Right? 545 00:25:29,640 --> 00:25:30,840 Speaker 3: I mean, are we going to see more and more 546 00:25:30,840 --> 00:25:32,320 Speaker 3: of these things? If Amazon? 547 00:25:32,600 --> 00:25:34,879 Speaker 8: Amazon's right in air? 548 00:25:34,960 --> 00:25:36,960 Speaker 5: I mean it kind of makes sense. So, but are 549 00:25:37,040 --> 00:25:39,520 Speaker 5: y'all big on the wing or in door dash at all. 550 00:25:40,119 --> 00:25:41,960 Speaker 8: No, I don't have to wait the DoorDash yet. 551 00:25:42,520 --> 00:25:46,119 Speaker 4: Space and again we've already had discussion. But my youngest 552 00:25:46,160 --> 00:25:48,600 Speaker 4: actually put a like a door dash or something on 553 00:25:48,640 --> 00:25:51,240 Speaker 4: my credit card and that stopped right away. 554 00:25:51,320 --> 00:25:54,120 Speaker 8: Oh no, shut it down, get out of. 555 00:25:54,040 --> 00:25:55,880 Speaker 3: Your get off your bed, and go ahead and kick 556 00:25:55,920 --> 00:25:56,520 Speaker 3: up your mconde. 557 00:25:56,720 --> 00:25:59,440 Speaker 5: Sweet offspring though cut off, although. 558 00:25:59,200 --> 00:26:02,920 Speaker 3: Its power right now, so that's another whole thing. I 559 00:26:02,920 --> 00:26:04,840 Speaker 3: should live his life. 560 00:26:04,320 --> 00:26:07,080 Speaker 8: But it's still pretty good. Do you guys have those 561 00:26:07,119 --> 00:26:10,480 Speaker 8: rewards cards? Right? Do you use the rewards? 562 00:26:10,520 --> 00:26:10,880 Speaker 3: I do? 563 00:26:10,880 --> 00:26:12,960 Speaker 1: Do you'd use them for hotels or use them for 564 00:26:13,040 --> 00:26:14,359 Speaker 1: cash back and gift cards? 565 00:26:14,800 --> 00:26:16,760 Speaker 3: Hotels and air Fair? 566 00:26:16,880 --> 00:26:19,840 Speaker 5: Yeah? So you do, yes, I definitely, especially Airfair. 567 00:26:19,840 --> 00:26:20,399 Speaker 8: I used it a lot. 568 00:26:21,040 --> 00:26:22,680 Speaker 5: I was actually in New Orleans last week, so I 569 00:26:22,800 --> 00:26:25,040 Speaker 5: definitely use some of that for that series I did see. 570 00:26:25,119 --> 00:26:27,240 Speaker 1: Okay, So that's the thing. So this is interesting because 571 00:26:27,240 --> 00:26:29,720 Speaker 1: this is a bank great study. It says almost one 572 00:26:29,800 --> 00:26:33,399 Speaker 1: in four rewards card holders don't redeem their rewards and 573 00:26:33,440 --> 00:26:36,399 Speaker 1: they by the year they say they're missing out on 574 00:26:36,440 --> 00:26:36,960 Speaker 1: the free money. 575 00:26:37,119 --> 00:26:39,280 Speaker 8: That's if you pay, you know, in full, every mind. 576 00:26:40,200 --> 00:26:41,919 Speaker 1: But the problem is that if you don't use them, 577 00:26:41,920 --> 00:26:45,800 Speaker 1: they lose value because if inflation program changes things like that, 578 00:26:46,520 --> 00:26:47,960 Speaker 1: and then you have on the flip side, three and 579 00:26:48,080 --> 00:26:51,200 Speaker 1: five sixty one percent use their rewards for cash back, 580 00:26:51,280 --> 00:26:53,400 Speaker 1: so they like the cash back better. 581 00:26:53,480 --> 00:26:55,119 Speaker 3: You get it. You can get cash back from your 582 00:26:55,240 --> 00:26:56,600 Speaker 3: redem points for cash. 583 00:26:56,480 --> 00:26:58,800 Speaker 1: Yeah, cash back or gift cards give Okay, I do 584 00:26:58,840 --> 00:27:01,520 Speaker 1: have cash back on one of my cards, so that's uh. 585 00:27:01,600 --> 00:27:03,520 Speaker 5: I feel like that money into some of my retirements. 586 00:27:03,560 --> 00:27:06,400 Speaker 4: I listened to my kids and they're very aggressively managed 587 00:27:06,440 --> 00:27:08,240 Speaker 4: their points, which I never did. 588 00:27:08,480 --> 00:27:08,760 Speaker 8: Yeah. 589 00:27:08,920 --> 00:27:10,960 Speaker 5: Well, also, I feel like it's because of the way 590 00:27:11,000 --> 00:27:12,920 Speaker 5: I can see it in the apps for the baking 591 00:27:12,920 --> 00:27:14,560 Speaker 5: apps and the credit card apps, so I can just 592 00:27:14,880 --> 00:27:16,160 Speaker 5: every day I'm like, all right, this is what I'm 593 00:27:16,160 --> 00:27:17,840 Speaker 5: gonna do with that money. 594 00:27:18,080 --> 00:27:19,959 Speaker 1: But a lot of my friends use it, especially at 595 00:27:20,000 --> 00:27:24,000 Speaker 1: holiday time, to get all gift cards for everybody. Yes, 596 00:27:24,320 --> 00:27:25,720 Speaker 1: you got to think about that next year. 597 00:27:27,680 --> 00:27:30,800 Speaker 5: His kids, he knows what he's getting his stuck and stuffers. 598 00:27:31,520 --> 00:27:34,239 Speaker 4: They get a pat on the back for Christmas, all 599 00:27:34,320 --> 00:27:35,200 Speaker 4: right near your post. 600 00:27:35,640 --> 00:27:38,040 Speaker 8: Yeah, this was in the post. So a retail thefts. 601 00:27:38,040 --> 00:27:40,600 Speaker 1: They're continuing to climb, but the problem is that they're 602 00:27:40,600 --> 00:27:41,919 Speaker 1: getting a little bit more violent. 603 00:27:42,640 --> 00:27:43,359 Speaker 8: This study was out. 604 00:27:43,440 --> 00:27:45,719 Speaker 1: Yeah, the National Retail Federation came out with their Impact 605 00:27:45,800 --> 00:27:47,560 Speaker 1: of Retail Theft and Violence. 606 00:27:47,200 --> 00:27:48,040 Speaker 8: Twenty twenty four. 607 00:27:48,560 --> 00:27:52,000 Speaker 1: The average number of shoplifting incidents jumped ninety three percent 608 00:27:52,040 --> 00:27:54,080 Speaker 1: in twenty twenty three. That was compared to a pre 609 00:27:54,160 --> 00:27:58,600 Speaker 1: pandemic monetary losses for retailers where's in ninety percent? And 610 00:27:58,640 --> 00:28:00,640 Speaker 1: this is despite different efforts, right, you heard of them 611 00:28:00,680 --> 00:28:03,320 Speaker 1: locking up their different items. You've heard of a number 612 00:28:03,359 --> 00:28:06,760 Speaker 1: of states kind of updating laws to prosecute organize retail 613 00:28:06,760 --> 00:28:11,280 Speaker 1: crime as felonies. But the NRF vice president telling Fox 614 00:28:11,320 --> 00:28:12,520 Speaker 1: that a big part of it is because of the 615 00:28:12,680 --> 00:28:15,439 Speaker 1: organized retail crime groups and that's why it's getting bigger. 616 00:28:15,600 --> 00:28:18,040 Speaker 8: But also it's getting more violent aggressive. 617 00:28:18,080 --> 00:28:21,560 Speaker 1: Stores are trying to increase protection for their workers. 618 00:28:21,080 --> 00:28:22,080 Speaker 8: For customers too. 619 00:28:22,160 --> 00:28:24,560 Speaker 1: On the same time, remember we heard the bodycam story 620 00:28:24,600 --> 00:28:29,639 Speaker 1: about Walmart workers body cams even TJ Max, you know, 621 00:28:29,720 --> 00:28:33,000 Speaker 1: workers having to wear body cams. So it's it's an 622 00:28:33,000 --> 00:28:34,840 Speaker 1: interesting topic, but it's starting to get a little bit 623 00:28:34,840 --> 00:28:35,280 Speaker 1: worse now. 624 00:28:35,760 --> 00:28:36,320 Speaker 3: Yeah, I don't know. 625 00:28:36,359 --> 00:28:38,320 Speaker 4: I mean, it's just I just noted from the local 626 00:28:38,320 --> 00:28:41,280 Speaker 4: retailers here around our office, like the CBS or. 627 00:28:43,120 --> 00:28:45,160 Speaker 3: Everything like tooth So I. 628 00:28:45,080 --> 00:28:47,600 Speaker 5: Found myself having to order a lot more things online 629 00:28:47,680 --> 00:28:49,840 Speaker 5: because then I know, even just trying to track somebody 630 00:28:49,880 --> 00:28:51,400 Speaker 5: down to try to open it up, I'm like, Okay, 631 00:28:51,400 --> 00:28:52,400 Speaker 5: it's going to take me a half hours. 632 00:28:52,440 --> 00:28:54,480 Speaker 1: So that's a good point that I push more people 633 00:28:54,480 --> 00:28:55,160 Speaker 1: to shop online. 634 00:28:55,480 --> 00:28:56,880 Speaker 3: Yeah, I think about that, but I guess I have 635 00:28:56,880 --> 00:28:57,640 Speaker 3: to high security. 636 00:28:57,680 --> 00:28:59,720 Speaker 8: I guess I don't know, right and had security. 637 00:28:59,760 --> 00:29:02,240 Speaker 1: So they're besting even employee training, teaching them how to 638 00:29:02,400 --> 00:29:03,680 Speaker 1: handle workplace violence. 639 00:29:03,720 --> 00:29:06,600 Speaker 8: It's crazy how things are getting. So here's a new 640 00:29:06,680 --> 00:29:07,640 Speaker 8: side hustle for you. 641 00:29:07,800 --> 00:29:09,720 Speaker 1: If you live in Utah and you happen to look 642 00:29:09,760 --> 00:29:12,240 Speaker 1: like Jesus. 643 00:29:15,920 --> 00:29:17,120 Speaker 8: Is this from the journal. 644 00:29:17,440 --> 00:29:21,000 Speaker 1: Apparently a growing number of people in the state want 645 00:29:21,080 --> 00:29:24,800 Speaker 1: Jesus in their pictures, so hiring lookalikes. They're doing it 646 00:29:24,840 --> 00:29:28,520 Speaker 1: for family portraits, for wedding announcements, for yes, the Christmas 647 00:29:28,520 --> 00:29:32,560 Speaker 1: cards of course, but how much do they charge. You 648 00:29:32,640 --> 00:29:36,000 Speaker 1: can make one hundred to two hundred dollars an hour 649 00:29:36,640 --> 00:29:39,040 Speaker 1: if you look the part and families and couples. 650 00:29:39,080 --> 00:29:39,760 Speaker 8: They're doing it. 651 00:29:39,800 --> 00:29:43,200 Speaker 1: They're they're going throughout different locations Utah taking these pictures. 652 00:29:43,880 --> 00:29:45,880 Speaker 1: The funny part is that there are some tips from 653 00:29:45,920 --> 00:29:49,760 Speaker 1: professional photographers who say, if you're doing this with your kids, 654 00:29:49,880 --> 00:29:51,920 Speaker 1: just keep in mind if they don't like taking pictures 655 00:29:51,920 --> 00:29:54,080 Speaker 1: on Santa's lap, but they're not going to like any 656 00:29:54,200 --> 00:29:58,080 Speaker 1: on Jesus's lap. And just the interesting one that I 657 00:29:58,160 --> 00:30:00,640 Speaker 1: found is that finding a model can be tough in 658 00:30:00,760 --> 00:30:04,240 Speaker 1: Utah because they have high concentrations of Mormons where the 659 00:30:04,280 --> 00:30:07,000 Speaker 1: men actually have to keep their hair short and they 660 00:30:07,000 --> 00:30:09,520 Speaker 1: have to shave all the time. So finding someone with 661 00:30:09,560 --> 00:30:11,560 Speaker 1: the long hair and the beard is kind of tough. 662 00:30:12,320 --> 00:30:14,080 Speaker 1: But if you do have it, you can make some 663 00:30:14,160 --> 00:30:15,000 Speaker 1: ex Okay. 664 00:30:15,000 --> 00:30:16,480 Speaker 3: So if you're part of if you're part of the 665 00:30:16,560 --> 00:30:17,320 Speaker 3: Church of Latter. 666 00:30:17,200 --> 00:30:20,600 Speaker 4: Day Saints, which is one of the state's largest employers, 667 00:30:20,920 --> 00:30:23,640 Speaker 4: you're required to shave every day and keep their hair short. 668 00:30:23,720 --> 00:30:26,960 Speaker 3: Okay. I didn't know that. So that's tough for the 669 00:30:27,040 --> 00:30:27,960 Speaker 3: Jesus look right. 670 00:30:31,280 --> 00:30:33,560 Speaker 1: Okay, But apparently it's going to be a thing, and 671 00:30:33,560 --> 00:30:36,120 Speaker 1: people are saying, like when they post pictures, people are always. 672 00:30:35,760 --> 00:30:37,400 Speaker 8: Asking, hey, where did you get this guy? 673 00:30:37,560 --> 00:30:37,640 Speaker 5: Like? 674 00:30:37,680 --> 00:30:40,320 Speaker 8: And so then there that's world word of mauclage. 675 00:30:40,360 --> 00:30:42,720 Speaker 5: I could see the blowing up on Instagram and social media. 676 00:30:42,840 --> 00:30:44,200 Speaker 1: This one guy said, he's been doing it for like 677 00:30:44,240 --> 00:30:45,760 Speaker 1: a couple of years now. It's just how we make it. 678 00:30:47,440 --> 00:30:50,200 Speaker 5: Every year ago, when I was a freshading weddings. Yes, 679 00:30:50,240 --> 00:30:52,440 Speaker 5: hard time about that. Y'all thought it was a side hustle. 680 00:30:52,480 --> 00:30:55,440 Speaker 5: I was just doing different friends. But here's another option for. 681 00:30:56,760 --> 00:30:58,520 Speaker 3: People can do it all right, very good. That is 682 00:30:58,560 --> 00:31:01,400 Speaker 3: our newspaper segment with Lisa Miteo. Thank you so much. 683 00:31:01,400 --> 00:31:02,240 Speaker 3: We appreciate that. 684 00:31:02,720 --> 00:31:07,200 Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 685 00:31:07,360 --> 00:31:11,440 Speaker 2: and anywhere else you get your podcasts. Listen live each weekday, 686 00:31:11,560 --> 00:31:14,640 Speaker 2: seven to ten am Eastern on Bloomberg dot com, the 687 00:31:14,720 --> 00:31:18,520 Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You 688 00:31:18,560 --> 00:31:21,840 Speaker 2: can also watch us live every weekday on YouTube and 689 00:31:22,000 --> 00:31:23,560 Speaker 2: always on the Bloomberg terminal