WEBVTT - Bloomberg Surveillance TV: June 26, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify, 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.320 Bloomberg Terminal and the Bloomberg Business app. Joining us now 0:00:37.440 --> 0:00:39.519 for a long discussion. Jim's out to the president of 0:00:39.560 --> 0:00:42.280 Apollo Global Management. Jim, good morning, Good morning driving, and 0:00:42.320 --> 0:00:44.080 happy birthday. Sarah's good time very much. 0:00:44.120 --> 0:00:44.720 I appreciate it. 0:00:44.720 --> 0:00:47.040 We spend too much time on the Federal Reserve. But 0:00:47.080 --> 0:00:49.519 I do want your reaction to this journal piece overnight. 0:00:50.000 --> 0:00:52.440 Well, I think I think that the President's already won. 0:00:53.159 --> 0:00:56.720 It's a great distraction of headlines. I personally don't think 0:00:56.760 --> 0:01:01.160 he's going to name anybody too early because right now 0:01:01.200 --> 0:01:05.440 he's in the catbird seat of blaming without accountability, which 0:01:05.480 --> 0:01:08.319 is classic Trump playbook. So I think the fact that 0:01:08.319 --> 0:01:11.400 we're talking about. It is interesting. It's a great diversion 0:01:11.440 --> 0:01:14.160 from the reality I think he does. There's no doubt 0:01:14.200 --> 0:01:16.559 he wants rates lower. That's what's part of his plan 0:01:16.640 --> 0:01:18.440 for many, many years, and that's how he doesn't like 0:01:18.440 --> 0:01:20.560 to pay debt and he likes to pay low coupons 0:01:20.560 --> 0:01:22.840 on it. But the fact that you know, I just 0:01:22.880 --> 0:01:25.640 don't think that if you're Trump right now and you 0:01:26.240 --> 0:01:29.840 take his playbook, he'll make this a conversation. But I 0:01:29.840 --> 0:01:33.280 don't suspect he's going to do anything premature because he's 0:01:33.360 --> 0:01:37.120 able to put blame on the current resident of the Fed, 0:01:37.280 --> 0:01:39.160 and he likes to be in that position. 0:01:39.319 --> 0:01:42.679 Your word's blaming with accountability without accountability. Is this something 0:01:42.720 --> 0:01:43.960 you think he should be accountable for. 0:01:44.800 --> 0:01:46.680 Well, certainly, I think if you think about what's going 0:01:46.680 --> 0:01:49.680 on in the last three or four months, the issues 0:01:49.760 --> 0:01:52.800 of tariffs, it feels like that's a little bit on 0:01:52.840 --> 0:01:55.240 the sidelines right now. I know we haven't resolved, but 0:01:55.520 --> 0:01:58.240 the marketplace has absorbed the idea of a ten percent 0:01:58.280 --> 0:02:01.240 plus or minus tariff, maybe a little bit higher, but 0:02:01.480 --> 0:02:05.160 to Trump's benefit, in the administration's benefit, the market has 0:02:05.200 --> 0:02:08.760 absorbed that, moved on the issues about the Middle East 0:02:08.800 --> 0:02:11.959 and all the challenges of foreign policy. There was a 0:02:12.000 --> 0:02:14.200 lot of action last ten days ago and a week 0:02:14.240 --> 0:02:16.799 and a half ago, and now that has been sort 0:02:16.800 --> 0:02:20.200 of absorbed in the marketplace. The big elephant in the 0:02:20.320 --> 0:02:23.600 room is still our deficit issue. You guys have talked 0:02:23.600 --> 0:02:26.160 about it quite a bit. It's obviously the topic of 0:02:26.240 --> 0:02:30.880 appropriate conversation, and so I think that is an important 0:02:30.919 --> 0:02:35.320 topic that still remains. But we talked earlier in this 0:02:35.400 --> 0:02:39.519 year about the decline of US exceptionalism. I think Mark 0:02:39.560 --> 0:02:42.400 Twain was right that the PREMI that my death is 0:02:42.480 --> 0:02:46.040 a bit premature, and certainly the market has moved on. 0:02:46.200 --> 0:02:48.360 So I think the tariffs are a little bit off 0:02:48.400 --> 0:02:50.960 on the side, the foreign policy issues are a little 0:02:50.960 --> 0:02:53.440 bit off the side. Right now. The deficit issue is 0:02:53.480 --> 0:02:56.080 a real issue. We can talk a little bit about 0:02:56.120 --> 0:02:58.200 what's going on with the dollar. I personally think what's 0:02:58.200 --> 0:03:00.800 going on with the dollar. I think there was a 0:03:00.840 --> 0:03:03.520 lot of investors around the globe that invested in US 0:03:03.560 --> 0:03:06.880 assets and they made money both ways on the currency 0:03:06.919 --> 0:03:09.680 and on the underlying assets for almost ten years. And 0:03:09.720 --> 0:03:13.200 they turned around and they found themselves really unhedged. And 0:03:13.240 --> 0:03:14.959 I think you're going to see some pretty good numbers 0:03:14.960 --> 0:03:17.800 out of the big banks this quarter because investors around 0:03:17.800 --> 0:03:21.040 the globe have been rushing to hedge their dollar exposure. 0:03:22.000 --> 0:03:24.840 But I think it's a ten year catchup that people 0:03:24.960 --> 0:03:29.760 just didn't hedge their portfolios in massive scale. So I 0:03:29.800 --> 0:03:32.400 don't look at this dollar decline is I look at 0:03:32.440 --> 0:03:35.080 it as more of a technical factor than a long 0:03:35.120 --> 0:03:38.360 long run impact on the health of the US economy. 0:03:38.400 --> 0:03:40.800 There's a lot to impact there, including the breakout of 0:03:40.800 --> 0:03:43.120 the hedging profits at some of the big banks, which 0:03:43.120 --> 0:03:45.360 we'll all be now looking for. To build on what 0:03:45.440 --> 0:03:48.280 John is asking about is the FED on the brink. 0:03:48.440 --> 0:03:49.839 I don't want to say I have a policy error, 0:03:49.840 --> 0:03:51.480 but it being too late kind of to build on 0:03:51.560 --> 0:03:54.640 what President Trump is accusing him, because you are seeing 0:03:54.680 --> 0:03:58.880 the weakening and the dollar accompanied by the biggest negativity, 0:03:58.920 --> 0:04:02.720 the biggest in in downside economic surprises that we've seen 0:04:03.400 --> 0:04:04.080 in a year. 0:04:04.760 --> 0:04:07.440 If you look at the Bloomberg page on rates of 0:04:07.480 --> 0:04:10.680 the G seven economies other than the UK, where the 0:04:10.840 --> 0:04:14.280 outlier in terms of where our ten year yields are 0:04:14.400 --> 0:04:17.960 and our yield curve is. You know, I sit in 0:04:17.960 --> 0:04:21.680 my seat and I see a variety of inputs that. 0:04:22.520 --> 0:04:24.719 Some tell me the economy is slowing down a little 0:04:24.760 --> 0:04:28.560 bit with consumers. Some tell me inflation is still a 0:04:28.560 --> 0:04:32.680 little bit more represented in the economy. I see, we 0:04:32.720 --> 0:04:35.839 see inflation around three percent, three three and a half percent. 0:04:36.560 --> 0:04:39.400 And I don't think it's obvious that the FED should 0:04:39.440 --> 0:04:42.320 be cutting right now. I think it is a very 0:04:42.400 --> 0:04:45.159 legitimate question to be asking what's the trajectory of the 0:04:45.160 --> 0:04:48.839 FED activity? And so I don't think it's a slam 0:04:48.880 --> 0:04:51.680 dunk decision. I know the market that the futures would 0:04:51.680 --> 0:04:53.560 tell you three cuts in the next the rest of 0:04:53.600 --> 0:04:56.440 the year, three three and f cuts, you know, Tors 0:04:56.520 --> 0:04:58.080 and I are a bit skeptical on that. We see 0:04:58.120 --> 0:05:00.960 what's going on, and I think there's maybe one cut. 0:05:02.000 --> 0:05:05.200 Your basic question, is the FED conversation a really important 0:05:05.200 --> 0:05:09.000 one right now? It is. I have a view that 0:05:09.080 --> 0:05:10.919 rates are going to be a little bit stickier and 0:05:11.000 --> 0:05:13.520 higher in the US than people think. We've had that 0:05:13.600 --> 0:05:17.000 view for quite some time. But so it is a 0:05:17.000 --> 0:05:19.640 good question for the administration to have right now. But 0:05:20.320 --> 0:05:22.360 I'm not sure that's the primary question for the market. 0:05:22.400 --> 0:05:24.800 One of the reasons why people keep asking this question 0:05:25.040 --> 0:05:27.080 is would the FED be considering cutting for. 0:05:27.000 --> 0:05:28.400 The right reasons for the wrong reasons. 0:05:28.640 --> 0:05:32.200 The right reasons being disinflation, which you reject, but the 0:05:32.200 --> 0:05:34.080 wrong reasons being because we are seeing a weakening in 0:05:34.120 --> 0:05:35.880 the labor market as we see as an increase in 0:05:35.960 --> 0:05:38.919 jobless claims. What's your sense of that based on what 0:05:38.960 --> 0:05:41.720 you've seen with portfolio companies, what you've seen with your investments, 0:05:41.760 --> 0:05:42.560 is that valid? 0:05:42.760 --> 0:05:46.120 Yes, I think long term you can't argue with the 0:05:46.279 --> 0:05:52.640 long term deflationary impact of technology and AI that is 0:05:52.800 --> 0:05:57.360 out there now, whether that's six twelve, eighteen, twenty four months, 0:05:57.560 --> 0:06:02.000 there's a massive deflationary impact from that activity. I just 0:06:02.000 --> 0:06:04.160 don't think it's on the center of the plate right 0:06:04.200 --> 0:06:07.679 now in the markets. It's out there, and I think 0:06:07.720 --> 0:06:13.960 that you're fighting with short term still supply interruptions, hiring interruptions, 0:06:14.040 --> 0:06:17.800 and some short term challenges that are inflationary versus a 0:06:17.960 --> 0:06:23.080 long term backdrop of deflationary trends because of AI around 0:06:23.120 --> 0:06:25.599 the globe. I think that's sort of the center converge. 0:06:25.839 --> 0:06:27.960 When I'm back here in twenty twenty six and twenty 0:06:28.000 --> 0:06:30.960 twenty seven, I think rates will probably be a bit 0:06:31.040 --> 0:06:36.039 lower because of the technology impact. But I think in 0:06:36.080 --> 0:06:38.760 the next six to nine months. I don't think rates 0:06:38.760 --> 0:06:40.000 are going to be dramatically lower. 0:06:40.080 --> 0:06:41.880 If you'd taken six months OFLF and came back to 0:06:41.920 --> 0:06:43.360 work and look where the market was, I don't think 0:06:43.360 --> 0:06:44.760 you'd have a clue when I think it happened here. 0:06:45.000 --> 0:06:47.880 Equity's close to all time highs, credit spreads are very tight. 0:06:47.920 --> 0:06:50.360 It's not a market is screaming count for rate cuts. 0:06:50.400 --> 0:06:54.800 From your standpoint at Apollo, when you look at valuation, underwriting, 0:06:55.120 --> 0:06:57.679 any red flags getting your attention, that's all at the moment. 0:06:58.920 --> 0:07:02.000 You know, the me is amazingly resilient in the US. 0:07:02.080 --> 0:07:04.240 When I was here three or four months ago, there 0:07:04.320 --> 0:07:07.640 was concern, handeringing about the trajectory of the economy. There 0:07:07.680 --> 0:07:11.800 was handeringing about non US investors, global investors investing in 0:07:11.840 --> 0:07:14.080 the US. I've been all around the world the last 0:07:14.120 --> 0:07:19.160 twelve weeks. American exceptionalism is front and center. Back you 0:07:19.280 --> 0:07:24.840 talk about where valuations are and levels of equities and raids, 0:07:24.880 --> 0:07:28.640 they're back. Global investors want to invest in the US. 0:07:28.880 --> 0:07:31.240 They made a lot of noise. They thought they were 0:07:31.280 --> 0:07:34.920 going to diversify themselves away, and they realized that breadth 0:07:35.000 --> 0:07:37.840 and depth and the strength of the US economy and 0:07:37.880 --> 0:07:40.280 the scale of what they need to invest, and the 0:07:40.480 --> 0:07:44.200 US is the primary place to invest. It still is, 0:07:44.240 --> 0:07:46.280 so you know, it's sharing as I was in Europe 0:07:46.320 --> 0:07:48.200 a few weeks ago as well, your folks, I want 0:07:48.200 --> 0:07:50.320 to talk about that. Amazingly is going on in Germany 0:07:50.360 --> 0:07:54.080 right now. The reality is public markets are the narrative, 0:07:54.480 --> 0:07:57.680 but private capital drives the economy and we're seeing it. 0:07:57.720 --> 0:08:01.160 We've been amazingly active. Edm F last week a louto 0:08:01.200 --> 0:08:05.080 matica what's going on in a variety of financing. So 0:08:05.560 --> 0:08:07.480 it's been a very very busy time, but I'm not 0:08:07.520 --> 0:08:10.760 seeing any red flags going off, and I really I 0:08:10.800 --> 0:08:13.760 want to make sure we talk today about this concern 0:08:13.840 --> 0:08:18.040 about the private capital private credit bubble versus just an 0:08:18.080 --> 0:08:21.800 economic cycle. We're due for a credit cycle, but that 0:08:21.840 --> 0:08:24.200 does not mean it's a bubble and private capital is 0:08:24.200 --> 0:08:26.600 playing a bigger and bigger role. Look what we did 0:08:26.720 --> 0:08:28.440 last week for ED and F in the UK and 0:08:28.520 --> 0:08:32.240 Germany four and a f billion dollars strowing private capital 0:08:32.240 --> 0:08:35.800 financing long duration debt to finish out their nuclear power 0:08:35.840 --> 0:08:39.040 plant build. Really really important that we're playing that role. 0:08:39.080 --> 0:08:40.920 Well, sit in Europe, let's just stay there. Off the 0:08:40.920 --> 0:08:42.640 back of your travel. So you mentioned AD and F 0:08:42.679 --> 0:08:45.280 big staling transaction. Also big target from you and the 0:08:45.320 --> 0:08:47.560 team to invest was it one hundred billion in Germany 0:08:47.600 --> 0:08:48.600 over the next ch title set. 0:08:48.920 --> 0:08:50.720 If you're a leadership of journey right now, your goal 0:08:50.760 --> 0:08:52.959 is to get a four trillion economy to a six 0:08:53.080 --> 0:08:56.439 trillion economy, and you are I was with the administration. 0:08:56.600 --> 0:08:59.880 You can talk to Murz. You know, they really are 0:09:00.400 --> 0:09:04.280 the role of private capital along with government spending over 0:09:04.280 --> 0:09:05.440 the next five or ten years. 0:09:05.760 --> 0:09:08.040 They've been so dependent on the banking system in Europe 0:09:08.240 --> 0:09:10.720 for such a long time. Can they get away from that? 0:09:10.760 --> 0:09:12.280 Because I feel like I've been talking about this for 0:09:12.320 --> 0:09:13.000 more than a decade. 0:09:13.080 --> 0:09:15.199 Well, I think the evidence is hereto if you look 0:09:15.200 --> 0:09:17.160 at the last twenty four months and what's going on 0:09:17.200 --> 0:09:20.119 with the leading Italian banks. Look what's going on with HSBC, 0:09:21.440 --> 0:09:24.439 what's going on with Barkley's and Deutsche Bank. They're operating 0:09:24.480 --> 0:09:27.840 in a much different capital regime, with a focus on 0:09:27.920 --> 0:09:32.120 shareholder value, with a focus on roe and they're really, 0:09:32.559 --> 0:09:35.839 you know, not taking all the policy lending on their 0:09:35.920 --> 0:09:38.560 balance sheet like they had in the past. So they're 0:09:38.600 --> 0:09:41.600 actually operating the right way. What you didn't really see before. 0:09:41.679 --> 0:09:46.800 Is the government really embracing in Germany, in France, in 0:09:46.840 --> 0:09:49.959 the UK they want private capital to be part of 0:09:49.960 --> 0:09:53.560 the solution because they know the government balance sheets cannot 0:09:53.640 --> 0:09:56.920 do all that's needed in terms of the massive cappex 0:09:57.240 --> 0:10:01.840 of transmission, line of transportation, of AI, of data centers. 0:10:01.880 --> 0:10:05.800 They know they're behind. So if anything, this administration in 0:10:05.800 --> 0:10:08.920 the US, the memo they sent out about what's going 0:10:08.920 --> 0:10:13.040 on in the US and Europe stepping forward, European leadership 0:10:13.160 --> 0:10:16.680 has taken notice. Let there be no doubt. I go 0:10:16.760 --> 0:10:19.960 to Europe three four times a year. I've never been 0:10:20.080 --> 0:10:22.920 so embraced as we were three weeks ago in Germany 0:10:22.920 --> 0:10:25.680 and France about the role of private capital in this 0:10:25.760 --> 0:10:26.199 build out. 0:10:26.400 --> 0:10:28.960 How much is that driven by this US administration? 0:10:29.240 --> 0:10:32.760 A lot? I mean, it's clear that they know that. 0:10:33.640 --> 0:10:37.199 The European leadership has even if you look this morning 0:10:37.240 --> 0:10:40.559 about how they're stepping up on defense spending with NATO. 0:10:40.720 --> 0:10:43.559 So I think, you know, when I think about the 0:10:43.600 --> 0:10:45.959 globe right now, again, taros are a little bit off 0:10:45.960 --> 0:10:49.480 on the sidelines. They're part of the conversation. It's a 0:10:49.559 --> 0:10:52.720 question of how much, not if or when. And I 0:10:52.760 --> 0:10:55.360 do think they feel like there's a responsibility that they 0:10:55.400 --> 0:10:57.679 have for their citizens, because when you look at the 0:10:57.760 --> 0:11:00.920 last fifteen years and where the US has grown versus 0:11:00.920 --> 0:11:03.640 europe growth, it's startling. You know, when I got out 0:11:03.640 --> 0:11:06.960 a college a few decades ago, it was all about Japan. 0:11:07.360 --> 0:11:09.199 Japan was going to take over the world. It was 0:11:09.240 --> 0:11:12.680 all about Germany industrial taking over the world. That did 0:11:12.720 --> 0:11:14.920 not come to play. And I know they have a 0:11:14.920 --> 0:11:17.360 lot of catching up to do, and I just think 0:11:17.360 --> 0:11:19.760 it's a very very power now. You know, if you watch, 0:11:19.840 --> 0:11:22.480 if you listen, if you read the Draggy letter and 0:11:22.480 --> 0:11:26.280 what he put forth eighteen months ago, Now if they 0:11:26.400 --> 0:11:28.840 followed that all one hundred and fifty six pages in 0:11:28.880 --> 0:11:33.440 great detail, it would be a watershed economic opportunity. And 0:11:33.480 --> 0:11:36.320 I think parts of that will to come forth. But 0:11:36.400 --> 0:11:40.320 they're already making moves on securitization other activities. And to 0:11:40.400 --> 0:11:44.480 Jonathan's point, the European banks are a bit behind the 0:11:44.640 --> 0:11:48.560 US in terms of the fundamental focus on roe and 0:11:48.600 --> 0:11:52.480 shareholder return and capital efficiency, but I think they're I 0:11:52.520 --> 0:11:54.559 don't want to say they're catching up, but they're getting 0:11:54.600 --> 0:11:55.440 in line. Clearly. 0:11:55.679 --> 0:11:58.440 You've talked about macro paralysis in the past. I don't 0:11:58.440 --> 0:12:00.959 see any sign of paralysis when I urt site high 0:12:01.040 --> 0:12:03.640 yield issuance, when I look at activity, do you see 0:12:03.640 --> 0:12:04.520 paralysis at all? 0:12:05.360 --> 0:12:07.559 I don't. And back to this last topic. I mean, 0:12:07.920 --> 0:12:10.560 as you point out, at least a pointing out, the 0:12:10.600 --> 0:12:12.400 two big topics that they need to really deal with 0:12:12.480 --> 0:12:15.040 right now is the tariff on July ninth and the 0:12:15.040 --> 0:12:17.560 big beautiful bill. But we're not talking about that this point. 0:12:17.600 --> 0:12:21.400 We're talking about a FED chairman in nine months. And 0:12:21.720 --> 0:12:25.120 I look at everything through. What this president has been 0:12:25.160 --> 0:12:27.400 in the past is a real estate developer. It's all 0:12:27.440 --> 0:12:32.160 about location, location, location. The FED pick will be about loyalty, loyalty, loyalty. 0:12:32.240 --> 0:12:36.880 Let's not get confused. There isn't paralysis in the market. 0:12:36.920 --> 0:12:39.280 As I mentioned before, you know the public markets in 0:12:39.320 --> 0:12:41.679 the narrative, the private capital is really the driver of 0:12:41.720 --> 0:12:45.400 the economy. A lot of activity going on in the 0:12:45.559 --> 0:12:50.280 US on refinancing, in Europe, on the global industrial renaissance. 0:12:50.400 --> 0:12:54.080 So we are on pace to have our busiest quarter 0:12:54.200 --> 0:12:57.520 in origination we've had in a number of years, a 0:12:57.559 --> 0:13:02.640 tremendous amount of activity across our equity platform, our infrastructure platform, 0:13:02.679 --> 0:13:05.880 our credit platform. So I do think there was a 0:13:05.880 --> 0:13:08.360 lot of handeringing, as I said six six or three 0:13:08.360 --> 0:13:11.080 four months ago, and I think that's now on the sidelines, 0:13:11.200 --> 0:13:13.280 maybe not on the narrative, but certainly on activity. 0:13:13.360 --> 0:13:15.760 Is that activity in lieu of some of the deals 0:13:15.800 --> 0:13:18.319 activity that we were expecting. Was it sort of expected 0:13:18.360 --> 0:13:20.240 to be the deals and the IPOs and the big 0:13:20.280 --> 0:13:22.880 boom for the banks, and instead it's a Powell coming 0:13:22.880 --> 0:13:24.480 in and doing a lot of financing deals in the. 0:13:24.440 --> 0:13:26.840 Back Well, I think too. I think the beginning of 0:13:26.840 --> 0:13:30.400 the year, people projected that the busiest folks on Wall 0:13:30.400 --> 0:13:33.160 Street would have been the ECM equity capital markets teams 0:13:33.520 --> 0:13:35.800 and the M and A teams, And while they've both 0:13:35.800 --> 0:13:40.000 been busy, the busiest folks have been their rate hedging 0:13:40.000 --> 0:13:42.839 and derivative teams because of what's going on in the 0:13:42.920 --> 0:13:46.600 dollar and concern about tariffs and such. But it's an 0:13:46.640 --> 0:13:49.720 interesting back up. Even listening to your program this morning, 0:13:50.120 --> 0:13:53.520 the fundamental economy is doing fine. It's doing well, maybe 0:13:53.600 --> 0:13:56.240 not to the growth expectations that people had earlier this year, 0:13:56.840 --> 0:13:59.040 and will come out somewhere around a two percent growth 0:13:59.400 --> 0:14:02.360 with about three percent inflation. But whether it was Nvidia, 0:14:02.400 --> 0:14:04.920 whether it was Micron. You know, a lot of cappec 0:14:05.040 --> 0:14:08.840 still going, a lot of companies in the AI space 0:14:08.920 --> 0:14:13.319 raising tremendous amounts of capital at high valuations with long 0:14:13.360 --> 0:14:16.800 list of investors coming in, and the activity. As I 0:14:16.840 --> 0:14:18.959 said earlier, what's going on in Europe right now about 0:14:18.960 --> 0:14:23.000 that industrial renaissance. It's still going on. So again, I 0:14:23.040 --> 0:14:25.400 think there's the headlines and then there's the reality of 0:14:25.440 --> 0:14:28.960 the underlying economy and the role of private capital, which 0:14:29.000 --> 0:14:31.280 is a much much bigger, longer term story. 0:14:31.440 --> 0:14:33.360 How do you think you're going to decipher the reality 0:14:33.480 --> 0:14:35.720 versus the headlines? When it comes to New York City. 0:14:36.000 --> 0:14:37.760 You have a huge company here in New York and 0:14:37.800 --> 0:14:39.960 a lot of people are concerned about a democratic socialist 0:14:40.000 --> 0:14:41.720 becoming the mayor of the city. 0:14:41.840 --> 0:14:44.000 You know, it's probably one of the most complicated jobs 0:14:44.000 --> 0:14:45.920 in the world on the political stage in terms of 0:14:45.960 --> 0:14:50.840 bringing a variety of the five boroughs together, the business, 0:14:50.920 --> 0:14:56.160 the community, the unions, all the folks that make New 0:14:56.200 --> 0:14:58.520 York the special place it is. As I've mentioned before, 0:14:59.000 --> 0:15:01.360 three out of every hundred college graduates a year come 0:15:01.400 --> 0:15:04.200 to New York. In the US, it's still the magnet 0:15:04.280 --> 0:15:07.800 of talent and ambition. Uh So when you see somebody 0:15:07.840 --> 0:15:10.680 that on the surface does not appear to have a 0:15:10.800 --> 0:15:17.240 long resume of leadership and making tough decisions, really concerning. 0:15:17.960 --> 0:15:21.359 And I think that we'll see now just winning the primary. 0:15:21.400 --> 0:15:23.280 While in the past it might have been the litmus 0:15:23.320 --> 0:15:25.720 test for being the mayor, I think there's still a 0:15:25.720 --> 0:15:27.200 long time coming until November. 0:15:27.240 --> 0:15:29.720 Build down the office in Florida. You're hearing. 0:15:30.960 --> 0:15:32.600 There was a diplomatic response. 0:15:33.280 --> 0:15:36.400 We are resid we we are, we are, we are 0:15:36.560 --> 0:15:39.200 a New York company, got we we are. We are 0:15:39.240 --> 0:15:41.200 determined to be here. I'm determined to be here. Our 0:15:41.280 --> 0:15:43.840 leadership is determined to be here. We have people in 0:15:43.880 --> 0:15:47.240 the office five days a week, is running. You know. 0:15:47.320 --> 0:15:51.040 It's uh, Jim, It's good to see you. Happy birthday, 0:15:51.120 --> 0:16:02.480 Jim Jelpless. 0:16:02.520 --> 0:16:07.000 Claims initial claims lower that expected, continuing claims higher than expected, 0:16:07.080 --> 0:16:09.600 and creeping higher over the past few months. From your 0:16:09.640 --> 0:16:12.160 advantage point, President Dadi, how much weight would you put 0:16:12.200 --> 0:16:14.640 on one versus the other and what's the labor market 0:16:14.640 --> 0:16:18.920 picture look like in your point of view your opinion, Well. 0:16:18.800 --> 0:16:21.640 The labor market shaping up to be solid, and the 0:16:21.840 --> 0:16:24.760 data today confirmed that now continuing claims are going up 0:16:24.760 --> 0:16:26.760 because it takes a little longer to find a job. 0:16:26.800 --> 0:16:30.440 That's consistent with the hiring numbers just being slower as 0:16:30.480 --> 0:16:33.520 the economy comes to a more sustainable pace. But when 0:16:33.520 --> 0:16:35.520 I look at the labor market, there are really no 0:16:35.720 --> 0:16:37.400 warning signs that it's weakening. 0:16:37.560 --> 0:16:38.360 Will continue to. 0:16:38.320 --> 0:16:42.360 Watch that, but right now it's progressing solidly, although more 0:16:42.400 --> 0:16:43.480 slowly than before. 0:16:43.960 --> 0:16:46.240 President Daily A lot of people have said that it 0:16:46.280 --> 0:16:49.600 is a data dependent federal reserve, and yet we haven't 0:16:49.600 --> 0:16:53.040 seen enough data to really understand or whether inflation is 0:16:53.040 --> 0:16:56.080 the primary objective or whether it really is some of 0:16:56.120 --> 0:16:58.160 the weakening that we've seen the labor market, albeit from 0:16:58.200 --> 0:17:01.080 a strong place. When will you have enough data to 0:17:01.120 --> 0:17:02.239 really make that determination. 0:17:03.280 --> 0:17:05.359 Well, one of the challenges of central banking that you 0:17:05.440 --> 0:17:07.960 just have to accept is that we never have perfect data, 0:17:07.960 --> 0:17:11.480 So you're always making judgments, and you want sufficient data 0:17:11.520 --> 0:17:13.920 to make a judgment that is really going to be 0:17:13.920 --> 0:17:16.840 best for the American people. So right now we have 0:17:17.200 --> 0:17:20.320 incoming information on the labor market which does not signal 0:17:20.560 --> 0:17:22.640 real weakness, It just signals slowing. 0:17:22.880 --> 0:17:24.600 So we'll continue to watch that, and. 0:17:24.560 --> 0:17:27.040 Then on inflation, the data have been good so far 0:17:27.119 --> 0:17:30.440 coming in If we were only backward looking, we would say, oh, 0:17:30.520 --> 0:17:32.720 it's time to adjust the interest rate. But we have 0:17:32.760 --> 0:17:34.439 to be forward looking, and then you have to make 0:17:34.520 --> 0:17:38.199 judgments about how you think inflation will shape up going forward. 0:17:38.200 --> 0:17:41.160 And they always really see three scenarios, and I'm leaning 0:17:41.240 --> 0:17:43.720 towards one, and I'll tell you more and more. But 0:17:44.240 --> 0:17:46.840 the one scenario, of course, is that it's just delayed. 0:17:46.880 --> 0:17:49.680 The tariffs are going to have some impact on inflation. 0:17:49.800 --> 0:17:52.639 It is after all, increasing costs, and that will be 0:17:52.720 --> 0:17:57.479 a more persistent effect. The second opportunity or possibility is 0:17:57.520 --> 0:17:59.480 that it's delayed but it will be a one off. 0:17:59.680 --> 0:18:03.879 And a third, of course, which I think is increasingly possible. 0:18:04.240 --> 0:18:06.719 It's not my modal, but it's increasingly possible, is that 0:18:06.760 --> 0:18:09.360 this just doesn't amount to as much as the models 0:18:09.400 --> 0:18:12.320 in history would tell us, because businesses find ways to 0:18:12.400 --> 0:18:15.440 absorb the costs and they split it down the production 0:18:15.600 --> 0:18:18.080 chain and ultimately consumers pay less of that. So I 0:18:18.119 --> 0:18:21.199 think those last two scenarios, it's delayed, but it's a 0:18:21.240 --> 0:18:24.359 one off, or it doesn't materialize to the extent that 0:18:24.600 --> 0:18:27.320 the models would suggest. Those are where you know, I'm 0:18:27.359 --> 0:18:30.480 putting increasing probabilities it will just have to collect some 0:18:30.520 --> 0:18:33.639 more information to make a decision. But you know, ultimately 0:18:33.880 --> 0:18:36.560 we can't wait for perfect information or we'll be behind 0:18:37.040 --> 0:18:39.040 and we can't do that to the American people. 0:18:39.119 --> 0:18:41.720 It sounds like President Dailier leaning toward a sooner rate 0:18:41.800 --> 0:18:45.920 cut if it is confirmed that this tariff impulse isn't 0:18:45.960 --> 0:18:47.440 as inflationary as people expected. 0:18:47.520 --> 0:18:48.040 Is that correct? 0:18:48.800 --> 0:18:49.560 Well, sooner than what? 0:18:49.760 --> 0:18:52.240 I mean, my modal outlook has been for some time 0:18:52.400 --> 0:18:55.320 that we would you begin to be able to adjust 0:18:55.320 --> 0:18:58.639 the rates in the fall, and I haven't really changed 0:18:58.640 --> 0:19:01.240 that view. It does seem like that. Of course, if 0:19:01.280 --> 0:19:03.600 the tariffs are one off, you can look through them, 0:19:03.880 --> 0:19:06.560 and if they're just not going to materialize, and you 0:19:06.560 --> 0:19:08.679 have to watch both sides of the mandate. And I 0:19:08.680 --> 0:19:11.400 think that's really important. It's not one or the other. 0:19:11.680 --> 0:19:14.000 It's both sides of our mandate that have really come 0:19:14.040 --> 0:19:17.280 into frame since we brought inflation down from the really 0:19:17.320 --> 0:19:20.879 high levels to something that's closer to our target. Ultimately, 0:19:20.920 --> 0:19:22.879 we have to watch both sides, and that's what I'm doing. 0:19:23.200 --> 0:19:25.520 And then the fall looks promising for a rate cut, 0:19:25.680 --> 0:19:27.280 I don't know for sure. I mean, we have to 0:19:27.280 --> 0:19:29.760 be open about what we don't know. Humble is I 0:19:29.760 --> 0:19:32.200 think the word that comes out of the inflation run 0:19:32.280 --> 0:19:34.440 up and so, but we will. You know, there's a 0:19:34.480 --> 0:19:37.120 lot of differences of views on the committee. I see 0:19:37.119 --> 0:19:39.840 that as real positive right now because people bring their 0:19:39.880 --> 0:19:42.760 perspectives and the data will guide us to what is 0:19:42.800 --> 0:19:44.840 the one that ultimately looks like reality. 0:19:45.080 --> 0:19:48.280 President Daily John was talking about the Palace intrigue, and 0:19:48.320 --> 0:19:52.320 I do wonder about how the increasingly political overlay to 0:19:52.440 --> 0:19:55.359 the FED has complicated your messaging, given that there is 0:19:55.400 --> 0:19:57.080 this debate about the dual mandate, etc. 0:19:57.800 --> 0:19:59.919 How much has it affected the way that you communicate? 0:20:01.119 --> 0:20:02.080 You know, not really. 0:20:02.520 --> 0:20:04.840 One of the things that I recognize on a regular 0:20:04.880 --> 0:20:07.600