1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,320 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,000 Speaker 1: us live on YouTube. 6 00:00:27,160 --> 00:00:30,520 Speaker 2: It's unfair to David Seefe. It's a chief economist for 7 00:00:30,600 --> 00:00:32,760 Speaker 2: all developed markets at number and we're just to go, 8 00:00:33,240 --> 00:00:37,200 Speaker 2: what's nominal GDP look like? What is the first derivative 9 00:00:37,280 --> 00:00:40,120 Speaker 2: of consumption? No, we got to talk to him about 10 00:00:40,360 --> 00:00:43,760 Speaker 2: he was at Harvard with Governor Myron and today a 11 00:00:43,920 --> 00:00:49,440 Speaker 2: blistering article by Wonderful Time orlack or like at Bloomberg 12 00:00:49,560 --> 00:00:53,040 Speaker 2: about our start, Professor Sief, Let's start with what is 13 00:00:53,360 --> 00:00:53,920 Speaker 2: our start? 14 00:00:54,360 --> 00:00:58,520 Speaker 3: Well, good morning, So our star is the real rate? 15 00:00:58,640 --> 00:01:03,160 Speaker 4: So not counting inflation that would be neither expansionary or 16 00:01:03,200 --> 00:01:04,440 Speaker 4: contractionary to the economy. 17 00:01:04,520 --> 00:01:07,920 Speaker 2: How many plugins are in your calculation of our start? 18 00:01:08,000 --> 00:01:08,959 Speaker 2: How many guesses? 19 00:01:09,560 --> 00:01:10,480 Speaker 3: How many guesses? 20 00:01:11,160 --> 00:01:12,960 Speaker 4: There are a lot of things that would go into it, 21 00:01:13,000 --> 00:01:14,760 Speaker 4: but there are a couple of things that are by 22 00:01:14,800 --> 00:01:18,720 Speaker 4: far the most important, please population growth being one of them, 23 00:01:19,319 --> 00:01:22,280 Speaker 4: and rates of national savings being another. 24 00:01:22,400 --> 00:01:23,640 Speaker 3: Very important aspect of it. 25 00:01:23,720 --> 00:01:27,160 Speaker 2: There's a huge disagreement on this discuss how you approach 26 00:01:27,240 --> 00:01:30,640 Speaker 2: it at Nimura. Is our start coming down back to 27 00:01:30,720 --> 00:01:33,880 Speaker 2: what we remember pre COVID, or do we establish a 28 00:01:33,959 --> 00:01:36,760 Speaker 2: new ur start at a higher interest rate. 29 00:01:37,000 --> 00:01:39,120 Speaker 4: Well, so, I think the biggest thing when it comes 30 00:01:39,120 --> 00:01:41,120 Speaker 4: to our star has really been a forty to forty 31 00:01:41,120 --> 00:01:42,600 Speaker 4: five year trend, which has been. 32 00:01:42,600 --> 00:01:44,040 Speaker 3: A slow and steady decline. 33 00:01:44,080 --> 00:01:47,400 Speaker 4: Great moderation, yes, and that's more than anything else, I 34 00:01:47,400 --> 00:01:50,840 Speaker 4: would say due to slowing population growth. It's been happening 35 00:01:50,840 --> 00:01:53,840 Speaker 4: around the world, and the places where the neutral rate 36 00:01:53,920 --> 00:01:57,520 Speaker 4: is the lowest and has been for decades are places 37 00:01:57,560 --> 00:01:58,520 Speaker 4: like Japan. 38 00:01:58,440 --> 00:02:00,880 Speaker 3: Where the population growth has been the way. So that 39 00:02:01,000 --> 00:02:02,000 Speaker 3: is a very. 40 00:02:01,720 --> 00:02:05,280 Speaker 4: Slow moving force, but one that probably over the course 41 00:02:05,320 --> 00:02:08,200 Speaker 4: of decades is the single most important one out there. 42 00:02:08,520 --> 00:02:13,320 Speaker 4: And so I think that what happened after Lehman in 43 00:02:13,360 --> 00:02:17,200 Speaker 4: the Great Recession was that we, because of the overhang 44 00:02:17,240 --> 00:02:19,920 Speaker 4: from that, our star really fell below what was the 45 00:02:19,960 --> 00:02:23,360 Speaker 4: declining trend. And then COVID happened, and it was, for 46 00:02:23,480 --> 00:02:26,920 Speaker 4: various reasons the opposite. It jumped up to above what 47 00:02:27,080 --> 00:02:29,960 Speaker 4: was its longer run trend. And now I think we 48 00:02:30,000 --> 00:02:34,560 Speaker 4: are certainly heading back towards that longer run trend. Now, 49 00:02:34,560 --> 00:02:38,760 Speaker 4: what Governor Myron has proposed certainly is controversial in terms 50 00:02:38,800 --> 00:02:40,680 Speaker 4: of some of the inputs he's put in and therefore 51 00:02:40,680 --> 00:02:43,320 Speaker 4: the conclusions he's come out with. But I think that 52 00:02:44,440 --> 00:02:47,840 Speaker 4: it's probably more people than not would agree that it 53 00:02:47,880 --> 00:02:50,840 Speaker 4: has fallen or is falling in the post COVID era 54 00:02:51,240 --> 00:02:52,840 Speaker 4: and may continue to fall further. 55 00:02:53,600 --> 00:02:55,840 Speaker 2: So what did you cadge that? Well, I was like 56 00:02:55,880 --> 00:02:57,639 Speaker 2: a lawyer, basically, he knows what he's doing. 57 00:02:58,960 --> 00:03:02,320 Speaker 5: So, David, the Fed has cut twenty five basis points, 58 00:03:02,320 --> 00:03:03,400 Speaker 5: and do you think they're going to proceed? What do 59 00:03:03,440 --> 00:03:04,799 Speaker 5: you think the cadence is going to be of their 60 00:03:05,240 --> 00:03:06,639 Speaker 5: kind of rate moves going forward? 61 00:03:06,720 --> 00:03:09,000 Speaker 4: Yeah, you know, we have no reason to doubt the 62 00:03:09,320 --> 00:03:12,920 Speaker 4: dot plot for the rest of the Powell's time in office, 63 00:03:12,960 --> 00:03:15,640 Speaker 4: so especially for the rest of this year. So we 64 00:03:15,680 --> 00:03:19,240 Speaker 4: think that they'll cut in October, and frankly, how could 65 00:03:19,240 --> 00:03:21,040 Speaker 4: they not given that it looks like they're not going 66 00:03:21,080 --> 00:03:24,560 Speaker 4: to necessarily have all the data they would December, we 67 00:03:24,600 --> 00:03:29,480 Speaker 4: also think they will cut again, so it's not necessarily 68 00:03:30,000 --> 00:03:32,400 Speaker 4: something we think is completely necessary to do, but they've 69 00:03:32,400 --> 00:03:34,280 Speaker 4: put it out there that that's what they're going to do, 70 00:03:34,920 --> 00:03:38,480 Speaker 4: despite the fact that they upgraded economic projections, and so 71 00:03:39,360 --> 00:03:43,320 Speaker 4: hard to see them being knocked off of that, especially 72 00:03:43,320 --> 00:03:46,320 Speaker 4: with the probably less data than normal or maybe no 73 00:03:46,440 --> 00:03:50,080 Speaker 4: data coming out. And then we expect they'll cut once 74 00:03:50,160 --> 00:03:54,520 Speaker 4: more under Powell in March. Then we think that post 75 00:03:54,520 --> 00:03:57,040 Speaker 4: Powell there are probably another couple cuts coming, and that's 76 00:03:57,120 --> 00:03:59,480 Speaker 4: really more of a matter of the next Fed chair, 77 00:03:59,520 --> 00:04:01,840 Speaker 4: whoever it is, is probably going to be much more 78 00:04:01,880 --> 00:04:05,800 Speaker 4: dubbish than Powell and at least receive some deference from 79 00:04:05,800 --> 00:04:06,960 Speaker 4: the rest of the committee. 80 00:04:07,320 --> 00:04:09,680 Speaker 5: All Right, it looks like our government may shut down 81 00:04:09,720 --> 00:04:11,800 Speaker 5: at midnight tonight. As an economist, do you. 82 00:04:11,760 --> 00:04:15,400 Speaker 4: Care, well, we certainly, we certainly care for doing our jobs. 83 00:04:15,440 --> 00:04:17,520 Speaker 4: I mean, this is this is where we is. What 84 00:04:17,560 --> 00:04:20,080 Speaker 4: we do is we analyze government data. So it's going 85 00:04:20,120 --> 00:04:22,039 Speaker 4: to be a little bit of a famine at first 86 00:04:22,080 --> 00:04:25,160 Speaker 4: and then feast as the data eventually come out later 87 00:04:25,200 --> 00:04:26,000 Speaker 4: and there's catch up. 88 00:04:26,800 --> 00:04:27,960 Speaker 3: But in terms of the real. 89 00:04:27,800 --> 00:04:31,279 Speaker 4: Economy, probably not so much. There will probably be a 90 00:04:31,320 --> 00:04:36,120 Speaker 4: small hit to GDP from the lack of work going 91 00:04:36,120 --> 00:04:39,200 Speaker 4: on in Q three or Q four A Q four 92 00:04:39,240 --> 00:04:41,560 Speaker 4: I guess, because we're starting Q four tomorrow. But then 93 00:04:42,160 --> 00:04:44,600 Speaker 4: we would expect there to be almost one for one 94 00:04:44,680 --> 00:04:47,320 Speaker 4: catch up growth once the government reopened so Q one 95 00:04:47,440 --> 00:04:51,000 Speaker 4: Q two of next year. I think that it's particularly 96 00:04:51,040 --> 00:04:54,240 Speaker 4: important in that the lack of data coming out right 97 00:04:54,279 --> 00:04:58,440 Speaker 4: as the FED is has tacked dubvishly does make it, 98 00:04:58,480 --> 00:05:00,800 Speaker 4: as I said, more difficult for the to deviate from 99 00:05:00,839 --> 00:05:04,240 Speaker 4: that because what would be the justification for doing so. 100 00:05:04,240 --> 00:05:07,960 Speaker 4: So it may lead to monetary policy outcomes that once 101 00:05:08,000 --> 00:05:09,920 Speaker 4: we then get the data, we're like, oh, well, maybe 102 00:05:09,960 --> 00:05:12,920 Speaker 4: they shouldn't have done that. But for the real economy 103 00:05:12,960 --> 00:05:15,520 Speaker 4: as a whole, it's hard to see this being such 104 00:05:15,520 --> 00:05:16,120 Speaker 4: a huge deal. 105 00:05:17,200 --> 00:05:19,920 Speaker 5: It seems like the consumer out there is in pretty 106 00:05:20,000 --> 00:05:22,640 Speaker 5: solid shape here. How do you think about the US 107 00:05:22,680 --> 00:05:24,400 Speaker 5: consumer in seventy percent of this economy. 108 00:05:24,480 --> 00:05:26,760 Speaker 3: Yeah, we see the consumer as pretty strong, and we 109 00:05:26,800 --> 00:05:27,080 Speaker 3: had an. 110 00:05:27,080 --> 00:05:29,400 Speaker 4: Upside surprise a couple of weeks ago to retail sales, 111 00:05:30,000 --> 00:05:33,599 Speaker 4: and generally speaking we've seen over a year of strength 112 00:05:33,720 --> 00:05:37,680 Speaker 4: in retail sales, and that really we think reflects the 113 00:05:37,720 --> 00:05:40,280 Speaker 4: fact that although there aren't a lot of hires going on, 114 00:05:41,040 --> 00:05:44,120 Speaker 4: there really are very very low levels of layoffs. 115 00:05:43,680 --> 00:05:44,720 Speaker 3: Going on in the economy. 116 00:05:44,760 --> 00:05:48,080 Speaker 4: So the vibe may be one that the economy isn't 117 00:05:48,120 --> 00:05:50,279 Speaker 4: that great, although even that is starting to change. 118 00:05:50,320 --> 00:05:51,880 Speaker 3: But the hard data are pretty clear. 119 00:05:51,960 --> 00:05:56,120 Speaker 2: But isn't it k shaped where the vibe is half 120 00:05:56,160 --> 00:05:59,880 Speaker 2: the nation's flat in our backs, farmers screening for aid 121 00:06:00,040 --> 00:06:03,200 Speaker 2: from the president, soybeans Brazil, all that we know the drill, 122 00:06:03,640 --> 00:06:06,839 Speaker 2: any other people are packed in restaurants. Paul goes to that, 123 00:06:06,880 --> 00:06:08,440 Speaker 2: Lisa and I can't afford. 124 00:06:10,560 --> 00:06:14,159 Speaker 4: It's not necessarily an unfair characterization. The key thing, though, 125 00:06:14,200 --> 00:06:15,880 Speaker 4: is that as long as the people who are currently 126 00:06:15,960 --> 00:06:18,839 Speaker 4: spending money continue to feel good, they're going to continue 127 00:06:18,839 --> 00:06:23,040 Speaker 4: to spend money. If people who are new entrants into 128 00:06:23,040 --> 00:06:25,480 Speaker 4: the labor market are having more trouble than normal finding 129 00:06:25,480 --> 00:06:27,760 Speaker 4: a job, and there is some of that, that's a 130 00:06:27,800 --> 00:06:30,760 Speaker 4: real social issue, but it's not necessarily going to hurt 131 00:06:30,800 --> 00:06:33,440 Speaker 4: the economic data over the short run, and that's what 132 00:06:33,440 --> 00:06:34,320 Speaker 4: we're seeing. 133 00:06:34,320 --> 00:06:36,400 Speaker 2: Data ce for this with the Murrow. We continue the 134 00:06:36,480 --> 00:06:40,760 Speaker 2: chief economis for developed markets at the Murrow. Stay with us. 135 00:06:41,000 --> 00:06:44,240 Speaker 2: More from Bloomberg Surveillance coming up after this. 136 00:06:51,480 --> 00:06:55,080 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 137 00:06:55,120 --> 00:06:58,279 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 138 00:06:58,360 --> 00:07:01,760 Speaker 1: Apple Karplay and Android out with the Bloomberg Business Up 139 00:07:01,960 --> 00:07:03,640 Speaker 1: or watch US live on YouTube. 140 00:07:03,680 --> 00:07:07,240 Speaker 2: Monica Garra joins US right Now US Policy Mortgage, seeingly 141 00:07:07,560 --> 00:07:12,400 Speaker 2: wealth Management. What are the ramifications to someone in Illinois 142 00:07:13,320 --> 00:07:17,680 Speaker 2: or Arizona of a government shutdown? I get Washington. What's 143 00:07:17,720 --> 00:07:18,920 Speaker 2: it mean for the rest of the nation. 144 00:07:19,440 --> 00:07:22,680 Speaker 6: It means jobs, Like you know, post office for example, could. 145 00:07:22,560 --> 00:07:23,760 Speaker 2: You don't get your mail delivered? 146 00:07:24,120 --> 00:07:26,520 Speaker 6: It can get delayed, right. It depends on how long 147 00:07:26,560 --> 00:07:29,280 Speaker 6: this goes. You know, they start to shut down parts 148 00:07:29,320 --> 00:07:31,960 Speaker 6: of the you know, non essential workers. If you're thinking 149 00:07:31,960 --> 00:07:35,400 Speaker 6: about your local offices, et cetera, that could have an 150 00:07:35,400 --> 00:07:37,480 Speaker 6: impact across different you know states. 151 00:07:37,680 --> 00:07:42,960 Speaker 2: Well, twelve years ago, sixteen days shutdown. The jobs day 152 00:07:43,080 --> 00:07:46,160 Speaker 2: was October fourth. It came out October twenty seconds. 153 00:07:46,200 --> 00:07:47,760 Speaker 3: So we get it just delayed, I guess. 154 00:07:47,920 --> 00:07:52,640 Speaker 5: I mean, so is there what does that mean for markets? 155 00:07:52,640 --> 00:07:54,520 Speaker 5: What are you telling your clients about a government shutdown? 156 00:07:54,600 --> 00:07:56,320 Speaker 5: I kind of feel like it's we kind of do 157 00:07:56,400 --> 00:07:58,840 Speaker 5: this somewhat frequently. It's not that big a deal. What 158 00:07:59,200 --> 00:07:59,960 Speaker 5: are you telling your clients? 159 00:08:00,120 --> 00:08:03,000 Speaker 6: I mean, on average you get markets s five hundred 160 00:08:03,080 --> 00:08:05,760 Speaker 6: rallying four point four percent during times of government shutdown 161 00:08:05,760 --> 00:08:06,960 Speaker 6: regardless of life. 162 00:08:07,040 --> 00:08:09,280 Speaker 5: Market's rallied during a shutdown. 163 00:08:09,040 --> 00:08:12,240 Speaker 6: Rally during through the shutdown, so essentially they see through it. 164 00:08:12,600 --> 00:08:15,760 Speaker 6: They stay exuberant. But the where you see any sort 165 00:08:15,760 --> 00:08:18,920 Speaker 6: of pullback or correction, it's around those industries and sectors 166 00:08:19,280 --> 00:08:23,600 Speaker 6: that have heavy reliance on contracts, right, like defense, like 167 00:08:23,680 --> 00:08:27,880 Speaker 6: healthcare in certain instances, and we think, especially on defense, 168 00:08:28,200 --> 00:08:30,520 Speaker 6: right that that could be a nice buy opportunity. 169 00:08:31,520 --> 00:08:34,160 Speaker 5: So what are we doing here as it relates to 170 00:08:35,280 --> 00:08:37,600 Speaker 5: do you care who gets blamed for this? Do we 171 00:08:37,640 --> 00:08:41,000 Speaker 5: care if it's the Democrats or the Republicans, the Trump administration? 172 00:08:41,080 --> 00:08:42,120 Speaker 3: Do we care about that stuff? 173 00:08:42,640 --> 00:08:44,040 Speaker 5: We just want the market that I mean, we want 174 00:08:44,080 --> 00:08:45,480 Speaker 5: the government to kind of do what it has to 175 00:08:45,520 --> 00:08:47,760 Speaker 5: do and maybe get open at some point. 176 00:08:47,960 --> 00:08:52,960 Speaker 6: I mean, do we care? I would say writ large, No, 177 00:08:53,080 --> 00:08:57,120 Speaker 6: the blame piece is not as critical, right, It's about 178 00:08:57,280 --> 00:09:00,360 Speaker 6: what actually happens through the cycle, how long it goes. Now, 179 00:09:00,440 --> 00:09:04,200 Speaker 6: what's important for us politically, though, is to understand those dynamics, 180 00:09:04,240 --> 00:09:07,600 Speaker 6: right that the Democrats want that ACA subsidy extension, the 181 00:09:07,679 --> 00:09:11,000 Speaker 6: GOP is you know, against it. But then there's this 182 00:09:11,200 --> 00:09:13,920 Speaker 6: additional element that could be thrown in where the White 183 00:09:13,920 --> 00:09:16,640 Speaker 6: House could come in trying to use this as a 184 00:09:16,679 --> 00:09:19,560 Speaker 6: catalyst for impoundments or enforcement control, meaning right that they're 185 00:09:19,559 --> 00:09:23,640 Speaker 6: going to withhold potential funding for certain non ideologically aligned 186 00:09:23,679 --> 00:09:26,920 Speaker 6: you know, programs and agency act takes. 187 00:09:26,960 --> 00:09:29,200 Speaker 2: Let's talk about the job we're gonna Nathan Dean againhos 188 00:09:29,200 --> 00:09:32,440 Speaker 2: expert on this, But Monica, do you assume it? Morgan Stanley, 189 00:09:32,480 --> 00:09:35,680 Speaker 2: the president will handle this differently than any other president 190 00:09:36,400 --> 00:09:38,920 Speaker 2: has ever handled a shutdown. That's that's the heart of 191 00:09:38,920 --> 00:09:39,840 Speaker 2: the matter, right. 192 00:09:40,280 --> 00:09:43,439 Speaker 6: Right, I mean that's where the impoundment piece comes into play. 193 00:09:43,679 --> 00:09:43,880 Speaker 5: Right. 194 00:09:44,200 --> 00:09:46,880 Speaker 6: We saw him do that with Ukraine funding, so there 195 00:09:46,920 --> 00:09:49,120 Speaker 6: is a precedent. And so while they're not going to 196 00:09:49,160 --> 00:09:51,360 Speaker 6: get these mass layoffs, right, we've seen that that's not 197 00:09:51,440 --> 00:09:52,040 Speaker 6: going to happen. 198 00:09:52,440 --> 00:09:53,640 Speaker 3: You could get. 199 00:09:53,600 --> 00:09:56,679 Speaker 6: A this essentially this as an excuse or a catalyst 200 00:09:56,720 --> 00:09:58,640 Speaker 6: to then come in and say, well, you know, we 201 00:09:58,760 --> 00:10:01,439 Speaker 6: want to go harder on these c energy components. Right 202 00:10:01,440 --> 00:10:03,640 Speaker 6: at the EPA, we're going to stop funding for that. 203 00:10:03,960 --> 00:10:06,800 Speaker 6: And if you get that dynamic, that's the sort of 204 00:10:06,920 --> 00:10:09,880 Speaker 6: stick off ramp that gets the Democrats to the table. 205 00:10:10,120 --> 00:10:13,400 Speaker 6: The carrot off ramp is do you get those rural 206 00:10:13,520 --> 00:10:18,120 Speaker 6: state GOP members allowed enough voice to then come together 207 00:10:18,200 --> 00:10:20,640 Speaker 6: with Democrats to get those ACA subsidy extensions. 208 00:10:20,960 --> 00:10:22,920 Speaker 5: I look at President Trump, but I think he's hitting 209 00:10:22,920 --> 00:10:25,840 Speaker 5: it out of the ballpark every day, it seems like. 210 00:10:26,400 --> 00:10:29,280 Speaker 5: Yet people tell me these approval ratings aren't very good. 211 00:10:30,000 --> 00:10:31,040 Speaker 2: How do you guys square that? 212 00:10:31,880 --> 00:10:33,920 Speaker 6: And I think you have to take it. You have 213 00:10:33,960 --> 00:10:37,320 Speaker 6: to take too These two things separately. Markets are separate. 214 00:10:37,600 --> 00:10:41,360 Speaker 6: Then social issues and things that might be potentially driving 215 00:10:41,880 --> 00:10:44,560 Speaker 6: fears with voters, and those two things are very different. 216 00:10:44,640 --> 00:10:48,440 Speaker 2: There's percolating a zeitgeist that the fiscal bill that the 217 00:10:48,480 --> 00:10:53,400 Speaker 2: President spearheaded through will not bring in more Texas. There's 218 00:10:53,440 --> 00:10:56,839 Speaker 2: a huge assumption text revenue will go up. What does 219 00:10:56,920 --> 00:10:57,920 Speaker 2: Morgan Stanley say? 220 00:10:58,920 --> 00:11:01,280 Speaker 6: And our view we think, I think that if you're 221 00:11:01,280 --> 00:11:04,800 Speaker 6: looking at earnings, if you're looking at the markets, tax 222 00:11:04,880 --> 00:11:08,920 Speaker 6: revenues are likely to increase right more in this next pull. 223 00:11:09,080 --> 00:11:11,320 Speaker 6: That doesn't mean it's going to be for the long run, 224 00:11:11,520 --> 00:11:13,520 Speaker 6: right And so we think short term we could get 225 00:11:13,520 --> 00:11:15,559 Speaker 6: some nice tax receipts here towards the end of the year, 226 00:11:15,880 --> 00:11:18,520 Speaker 6: but then into twenty twenty five, we still do expect 227 00:11:18,559 --> 00:11:22,680 Speaker 6: a slow down. And that's because you're looking at positive 228 00:11:22,679 --> 00:11:26,280 Speaker 6: GDP numbers right nominal six point eight percent. Where do 229 00:11:26,320 --> 00:11:26,880 Speaker 6: you go from there? 230 00:11:27,080 --> 00:11:27,240 Speaker 5: Right? 231 00:11:27,440 --> 00:11:30,520 Speaker 2: Twenty seconds? Nobody cares. All we care about is TSA. 232 00:11:30,760 --> 00:11:33,640 Speaker 2: If there's a government shut down, what happens to TSA? 233 00:11:33,920 --> 00:11:36,400 Speaker 6: TSA I believe is going to be deemed essential. 234 00:11:36,720 --> 00:11:38,960 Speaker 2: So just just rocks. 235 00:11:39,080 --> 00:11:40,120 Speaker 3: You don't have to have to worry about that. 236 00:11:40,120 --> 00:11:41,360 Speaker 5: With the Gulf Stream just going out. 237 00:11:41,600 --> 00:11:44,200 Speaker 2: No, no, that's true. I just no, I'm not. I'm 238 00:11:44,240 --> 00:11:47,480 Speaker 2: going to Middletown further out. Okay, yeah, further out it's 239 00:11:47,520 --> 00:11:48,160 Speaker 2: too congested. 240 00:11:48,280 --> 00:11:48,480 Speaker 5: Yep. 241 00:11:48,720 --> 00:11:51,559 Speaker 2: Monica Grera, thank you so much, Executive director, head of 242 00:11:51,679 --> 00:11:55,920 Speaker 2: US Policy at Morgan Stanley Wealth Management. Stay with us. 243 00:11:56,160 --> 00:12:06,440 Speaker 2: More from Bloomberg Surveillance coming up after this. 244 00:12:06,440 --> 00:12:10,360 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 245 00:12:10,400 --> 00:12:13,800 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 246 00:12:13,840 --> 00:12:16,800 Speaker 1: with the Bloomberg Business app. You can also listen live 247 00:12:16,880 --> 00:12:20,440 Speaker 1: on Amazon Alexa from our flagship New York station, Just 248 00:12:20,480 --> 00:12:23,000 Speaker 1: say Alexa play Bloomberg eleven thirty. 249 00:12:23,120 --> 00:12:26,520 Speaker 2: We have in studio. We've spent weeks trying to get 250 00:12:26,520 --> 00:12:29,920 Speaker 2: her in here. Suki Cooper joins us. What's it like 251 00:12:30,040 --> 00:12:34,000 Speaker 2: working with Steven Englander at Standard Charter amazing English. 252 00:12:34,120 --> 00:12:35,960 Speaker 7: I'm inspired every day. It's fantastic. 253 00:12:36,600 --> 00:12:42,280 Speaker 2: Inspire us with a broader commodity trend. Rishue Sherman would say, 254 00:12:42,360 --> 00:12:45,840 Speaker 2: we're waiting for a super commodity trend. Is it upon us, 255 00:12:45,880 --> 00:12:46,680 Speaker 2: Suki Cooper? 256 00:12:47,280 --> 00:12:50,400 Speaker 7: We still see further highs for the gold markets. We've 257 00:12:50,440 --> 00:12:53,600 Speaker 7: seen a number of factors driving the market and it's changed. 258 00:12:53,840 --> 00:12:55,720 Speaker 7: At the start of this year we saw a shift 259 00:12:55,720 --> 00:13:00,200 Speaker 7: away from central bank flows driving the market to ETFs 260 00:13:00,240 --> 00:13:03,200 Speaker 7: becoming much more important, and now we've seen the correlation 261 00:13:03,280 --> 00:13:06,600 Speaker 7: between real yields and gold coming back. The macro environment 262 00:13:06,720 --> 00:13:11,240 Speaker 7: is increasingly important to ranging from concerns around the US 263 00:13:11,240 --> 00:13:14,880 Speaker 7: potential shutdown government shutdown, to the scope for FED to 264 00:13:14,880 --> 00:13:19,040 Speaker 7: cut rates, further ranging to tariff concerns as well. All 265 00:13:19,080 --> 00:13:21,880 Speaker 7: of these factors are playing into safe have and demand 266 00:13:21,920 --> 00:13:22,800 Speaker 7: for gold. 267 00:13:23,000 --> 00:13:26,720 Speaker 5: Is there a valuation called ever for gold and other 268 00:13:26,840 --> 00:13:29,560 Speaker 5: precious metals or is it just people are buying them? 269 00:13:29,559 --> 00:13:32,079 Speaker 5: They're buying them. I just never know how to value gold, 270 00:13:32,360 --> 00:13:34,640 Speaker 5: get a sense when it's expensive gold. 271 00:13:34,760 --> 00:13:36,400 Speaker 7: I think you need to view it as a commodity 272 00:13:36,520 --> 00:13:40,000 Speaker 7: and a currency. So when when investor appetite is lacking. 273 00:13:40,040 --> 00:13:42,800 Speaker 7: That's when the jewelry market, the physical market becomes important. 274 00:13:42,800 --> 00:13:45,280 Speaker 7: So like the nineteen nineties, that's when the jewelry markets 275 00:13:45,280 --> 00:13:47,440 Speaker 7: set the floor for gold. And that's what was happening 276 00:13:47,480 --> 00:13:49,040 Speaker 7: over the last couple of years. It was really that 277 00:13:49,160 --> 00:13:52,000 Speaker 7: central bank demand that was not just seting the floor 278 00:13:52,040 --> 00:13:54,560 Speaker 7: but driving it higher. But now we're seeing it behave 279 00:13:54,600 --> 00:13:57,559 Speaker 7: as a currency, and that's when these external factors like 280 00:13:57,600 --> 00:13:59,679 Speaker 7: the dollar become much more important. 281 00:14:00,000 --> 00:14:02,320 Speaker 2: Would say to me, hey, stupid, ask her about the 282 00:14:02,360 --> 00:14:06,440 Speaker 2: Pacific Rim Indonesia freeport. They had a terrible accident there 283 00:14:06,440 --> 00:14:10,200 Speaker 2: and I did a lot with FCX years ago. Where 284 00:14:10,320 --> 00:14:14,679 Speaker 2: is Suki Cooper and the given supply of stuff in 285 00:14:14,679 --> 00:14:17,840 Speaker 2: the commodity space, are we running out of iron ore? 286 00:14:17,960 --> 00:14:21,040 Speaker 2: Are we running out of gold? Its new supply and 287 00:14:21,080 --> 00:14:22,520 Speaker 2: Frankie the softs as well. 288 00:14:23,160 --> 00:14:25,360 Speaker 7: When we look at the gold markets, the supply has 289 00:14:25,400 --> 00:14:29,120 Speaker 7: been very easily absorbed. And yes, this Grasburg force majeure 290 00:14:29,360 --> 00:14:31,840 Speaker 7: has meant that we've seen supply coming offline. We're going 291 00:14:31,880 --> 00:14:32,920 Speaker 7: to see quite a sharp run. 292 00:14:33,160 --> 00:14:35,720 Speaker 2: Force masure is French. If you go to the University 293 00:14:35,720 --> 00:14:39,160 Speaker 2: of Birmingham, yep, I have no idea what it means continue. 294 00:14:39,640 --> 00:14:41,840 Speaker 7: But next year they're looking for a decline in a 295 00:14:42,000 --> 00:14:43,960 Speaker 7: put around about thirty five percent, so that means around 296 00:14:43,960 --> 00:14:47,600 Speaker 7: about seventeen tons, and we'll be offline. And yes, it 297 00:14:47,720 --> 00:14:50,440 Speaker 7: tightens the market, but these are the sort of flows 298 00:14:50,480 --> 00:14:52,600 Speaker 7: we can see in the ETFs on a daily basis, 299 00:14:52,800 --> 00:14:55,120 Speaker 7: so the market can absorb such a last but it 300 00:14:55,200 --> 00:14:56,760 Speaker 7: just tightens our underlying balance. 301 00:14:57,440 --> 00:14:59,600 Speaker 5: I mean, we all talk about gold rightfully, so up 302 00:14:59,600 --> 00:15:03,080 Speaker 5: forty five percent year to date, but spots silver and 303 00:15:03,080 --> 00:15:06,160 Speaker 5: that's up like sixty sixty percent this year. What's driving that? 304 00:15:06,720 --> 00:15:09,480 Speaker 7: Silver to me is a fascinating market given its vast 305 00:15:09,640 --> 00:15:12,800 Speaker 7: array of and usage. But until this year, silver had 306 00:15:12,800 --> 00:15:15,920 Speaker 7: been lacking golds at performance, and that was partially because 307 00:15:15,960 --> 00:15:18,680 Speaker 7: central bank demand was driving gold and silver didn't have 308 00:15:18,760 --> 00:15:21,320 Speaker 7: that kicker, even though it's deeply undersupplied for the past 309 00:15:21,360 --> 00:15:24,520 Speaker 7: three years. But this year, because we've seen gold now 310 00:15:24,560 --> 00:15:27,960 Speaker 7: pivoting to driving FOLLO on those macro factors, silver's now 311 00:15:27,960 --> 00:15:31,880 Speaker 7: started to ride on its coattails and relatively is underinvested. 312 00:15:31,920 --> 00:15:34,760 Speaker 7: So those ETF flows in silver are picking up at 313 00:15:34,840 --> 00:15:37,479 Speaker 7: even faster pace. And almost three thousand tons. 314 00:15:37,800 --> 00:15:39,880 Speaker 2: Tell us about the things off division. I mean with 315 00:15:40,000 --> 00:15:43,080 Speaker 2: standard Charter bank to look to Australia in iron ore, 316 00:15:43,520 --> 00:15:46,600 Speaker 2: is the dynamic of iron ore into Shanghai iron ore? 317 00:15:46,960 --> 00:15:49,840 Speaker 2: Is it normal? The flows to China. 318 00:15:49,600 --> 00:15:52,000 Speaker 7: And all iron is not a market that I look 319 00:15:52,040 --> 00:15:57,080 Speaker 7: at in detail, so I can't take it up. But 320 00:15:57,200 --> 00:15:59,640 Speaker 7: looking at the gold flows into China, that's something that 321 00:15:59,640 --> 00:16:01,720 Speaker 7: we can and kind of want to and we see 322 00:16:01,720 --> 00:16:05,440 Speaker 7: that China's appetite for goals app type for commodities remain strong. 323 00:16:05,760 --> 00:16:07,520 Speaker 7: Whether we're looking at copper markets. 324 00:16:08,160 --> 00:16:11,320 Speaker 2: Copper and people used to like the copper inventories. Do 325 00:16:11,400 --> 00:16:14,080 Speaker 2: they have like a strategic copper reserve? They have like 326 00:16:14,200 --> 00:16:16,920 Speaker 2: seven fort knoxes of copper out there. 327 00:16:17,880 --> 00:16:20,080 Speaker 7: There's some commodities where we're starting to see a build. 328 00:16:20,080 --> 00:16:24,160 Speaker 7: We haven't got visible data on how much strategic stockware 329 00:16:24,280 --> 00:16:28,040 Speaker 7: it might be, but markets like platinum, we've seeing imports 330 00:16:28,120 --> 00:16:29,440 Speaker 7: far outpacing consumption. 331 00:16:29,560 --> 00:16:33,320 Speaker 2: Shukie Cooper with she is with the Standard Charter bank 332 00:16:33,360 --> 00:16:36,240 Speaker 2: and just definitive and come odities stay with us. More 333 00:16:36,360 --> 00:16:46,680 Speaker 2: from Bloomberg Surveillance coming up after this. 334 00:16:46,680 --> 00:16:50,600 Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday 335 00:16:50,640 --> 00:16:53,920 Speaker 1: starting at seven am Eastern on Applecarplay and Android otto 336 00:16:54,080 --> 00:16:56,880 Speaker 1: with the Bloomberg Business app. You can also watch us 337 00:16:56,920 --> 00:16:59,960 Speaker 1: live every weekday on YouTube and always on the bloom 338 00:17:00,040 --> 00:17:00,640 Speaker 1: Burg terminal. 339 00:17:00,720 --> 00:17:02,200 Speaker 2: To the newspapers, Lisa, what do you have? 340 00:17:02,400 --> 00:17:05,320 Speaker 8: Okay, So yesterday we talked about the NFL announcing Bad 341 00:17:05,359 --> 00:17:09,840 Speaker 8: Bunny the super Bowl halftime performer. Okay, now there's a controversy. 342 00:17:09,880 --> 00:17:12,439 Speaker 8: The stories are starting to come out. So he's basically, 343 00:17:12,560 --> 00:17:15,440 Speaker 8: you know Grammy Award winning artist Fresh Office residency in 344 00:17:15,480 --> 00:17:18,960 Speaker 8: Puerto Rico, And that's kind of what's sparking the backlash 345 00:17:18,960 --> 00:17:19,440 Speaker 8: a little bit. 346 00:17:20,200 --> 00:17:21,040 Speaker 3: He decided on the. 347 00:17:20,960 --> 00:17:23,520 Speaker 8: Residency instead of performing in the US because he said 348 00:17:23,560 --> 00:17:26,000 Speaker 8: he was worried about ice agents using it as an 349 00:17:26,000 --> 00:17:29,879 Speaker 8: opportunity to scoop up migrants. So that's sparking some online 350 00:17:29,920 --> 00:17:34,280 Speaker 8: protests from you know, MAGA influencers, conservative social media accounts. 351 00:17:34,560 --> 00:17:36,879 Speaker 8: And then not only that, but the Wall Street Journal 352 00:17:36,920 --> 00:17:39,919 Speaker 8: actually has an article too how how Swifties are upset 353 00:17:40,000 --> 00:17:41,840 Speaker 8: because they thought that she. 354 00:17:41,960 --> 00:17:44,840 Speaker 3: Would be performing at the super Bowl. Remember that was 355 00:17:44,840 --> 00:17:45,320 Speaker 3: the whole thing. 356 00:17:45,359 --> 00:17:48,000 Speaker 8: After they got engaged, and all the Swifties are like, yes, 357 00:17:48,040 --> 00:17:49,600 Speaker 8: She's going to be in the half time, you know, 358 00:17:49,920 --> 00:17:52,560 Speaker 8: performing at the super Bowl. It's not going to happen, 359 00:17:53,000 --> 00:17:56,200 Speaker 8: but it's not the first time. Sometimes there's controversy behind 360 00:17:56,240 --> 00:17:59,520 Speaker 8: some of the performers that they picked, like Kendricks Blomar, Beyonce. 361 00:17:59,600 --> 00:18:03,199 Speaker 8: There were some controversy Shakira j Lo's halftime performances. There 362 00:18:03,200 --> 00:18:04,080 Speaker 8: were some controversy. 363 00:18:04,320 --> 00:18:09,120 Speaker 2: Shakira killed it. I Kira killed it. 364 00:18:10,080 --> 00:18:13,240 Speaker 8: They did all right, but you can't please everyone, I guess. 365 00:18:13,680 --> 00:18:16,520 Speaker 8: But those are kind of the backlash that's starting to commit. 366 00:18:16,600 --> 00:18:17,800 Speaker 3: But he's still set. 367 00:18:17,880 --> 00:18:20,400 Speaker 8: I mean, his residency was phenomenal. 368 00:18:20,640 --> 00:18:21,479 Speaker 3: Loved it, loved it. 369 00:18:21,520 --> 00:18:22,440 Speaker 8: Watch it on Amazon. 370 00:18:23,080 --> 00:18:25,440 Speaker 2: A little bias there, like a home bias. 371 00:18:25,280 --> 00:18:26,720 Speaker 3: On Puerto Rico. 372 00:18:26,960 --> 00:18:30,320 Speaker 8: Yes, okay, this is on the back of yesterday story 373 00:18:30,359 --> 00:18:33,239 Speaker 8: from Bloomberg News. The Financial Times has a little bit 374 00:18:33,240 --> 00:18:35,080 Speaker 8: more on the record number of mega deals in the 375 00:18:35,119 --> 00:18:35,640 Speaker 8: third quarter. 376 00:18:36,040 --> 00:18:38,120 Speaker 3: So we kind of talked about this yesterday. 377 00:18:37,800 --> 00:18:40,000 Speaker 8: When you had that fifty five billion leverage by out 378 00:18:40,040 --> 00:18:43,280 Speaker 8: of Electronic Arts. So they crunch the numbers they put 379 00:18:43,320 --> 00:18:47,040 Speaker 8: together from London Stock Exchange Group, Global mergers acquisitions activity 380 00:18:47,080 --> 00:18:51,840 Speaker 8: passed one trillion dollars in the third quarter. Fourteen deals 381 00:18:51,880 --> 00:18:55,000 Speaker 8: valued in excess of ten billion dollars announced globally, and 382 00:18:55,040 --> 00:18:57,560 Speaker 8: it's kind of like this. It's turnaround from you know, 383 00:18:57,680 --> 00:19:00,400 Speaker 8: uncertainty over tariff. So things are starting to change, People 384 00:19:00,440 --> 00:19:02,159 Speaker 8: starting to do some deals. The biggest one you know 385 00:19:02,200 --> 00:19:05,080 Speaker 8: remember Union Pacific, that eighty five billion dollar takeover of 386 00:19:05,160 --> 00:19:09,440 Speaker 8: Northern so Northern, Norfolk Southern. But the big breakups too, 387 00:19:09,600 --> 00:19:11,840 Speaker 8: like remember Craft Hines carried doctor Pepper. 388 00:19:12,560 --> 00:19:14,639 Speaker 5: So it's kind of all this where people kind of 389 00:19:14,640 --> 00:19:16,919 Speaker 5: thought in President Trump was elected that maybe there'd be 390 00:19:17,240 --> 00:19:20,760 Speaker 5: more deal activity low, you know, less regulatory scrutiny, more 391 00:19:20,800 --> 00:19:23,479 Speaker 5: deals happenings. Maybe this is this is what we're getting. 392 00:19:23,760 --> 00:19:25,679 Speaker 8: Yeah, because I remember they were they were also you 393 00:19:25,720 --> 00:19:28,359 Speaker 8: know it put it like a pause on IPO's for 394 00:19:28,400 --> 00:19:30,520 Speaker 8: a bit, you know, with the Arabs and all that uncertainty. 395 00:19:30,560 --> 00:19:31,400 Speaker 7: But things are. 396 00:19:31,280 --> 00:19:34,719 Speaker 8: Picking up back. Maybe, yes, I know you love that. Okay, 397 00:19:34,760 --> 00:19:38,080 Speaker 8: this is some advice from Bill ny the science guy. Okay, 398 00:19:38,400 --> 00:19:40,520 Speaker 8: who doesn't love Bill Moore the science guy. Okay, how 399 00:19:40,560 --> 00:19:43,439 Speaker 8: to keep your brain healthy. Okay, here's what you have 400 00:19:43,480 --> 00:19:46,240 Speaker 8: to do, because this is what he does. He's sixty 401 00:19:46,320 --> 00:19:49,080 Speaker 8: nine years old. He talked about it. Crossword puzzles. There 402 00:19:49,080 --> 00:19:51,080 Speaker 8: you go every day, you do you see, you do 403 00:19:51,119 --> 00:19:53,320 Speaker 8: your No, what's the word did I do it all? 404 00:19:54,840 --> 00:19:56,600 Speaker 2: Crossrood puzzles like helpful. 405 00:19:56,720 --> 00:19:58,480 Speaker 3: I've been doing it since I was like ten years old. 406 00:19:58,720 --> 00:19:59,240 Speaker 4: Are you good? 407 00:19:59,359 --> 00:20:02,120 Speaker 2: I've never come plead I'm useless. Every day you get 408 00:20:02,240 --> 00:20:02,880 Speaker 2: better at it? 409 00:20:03,200 --> 00:20:07,879 Speaker 3: Yes, yes you do? Okay, Yeah, Mom's until Friday. 410 00:20:07,880 --> 00:20:08,960 Speaker 5: Then I hit him a walk Friday. 411 00:20:10,720 --> 00:20:11,000 Speaker 3: Okay. 412 00:20:11,040 --> 00:20:13,600 Speaker 8: So he also does like little things to keep his brain, 413 00:20:13,720 --> 00:20:16,760 Speaker 8: like designing, making model trains, physical activity. Do you know 414 00:20:16,800 --> 00:20:20,080 Speaker 8: he bikes three times a week and he swing dances. 415 00:20:20,560 --> 00:20:23,080 Speaker 8: He says that is a big thing that keeps him 416 00:20:23,119 --> 00:20:25,800 Speaker 8: kind of active and learning new things. You know, that's 417 00:20:25,840 --> 00:20:27,840 Speaker 8: all about keeping that, you know, the brain in check. 418 00:20:28,000 --> 00:20:29,040 Speaker 8: But he is busy. 419 00:20:29,160 --> 00:20:31,000 Speaker 5: Bill Nida science guy. I love him. 420 00:20:31,040 --> 00:20:31,640 Speaker 3: I love that guy. 421 00:20:31,880 --> 00:20:34,639 Speaker 2: Very good at Lisa Manteo, thank you so much, us 422 00:20:34,640 --> 00:20:35,400 Speaker 2: the newspapers. 423 00:20:35,680 --> 00:20:40,520 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 424 00:20:40,640 --> 00:20:44,920 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 425 00:20:45,040 --> 00:20:48,280 Speaker 1: seven to ten am Easter and on Bloomberg dot Com, 426 00:20:48,400 --> 00:20:52,200 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 427 00:20:52,520 --> 00:20:55,640 Speaker 1: You can also watch us live every weekday on YouTube 428 00:20:55,920 --> 00:20:57,960 Speaker 1: and always on the Bloomberg terminal