Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
Speaker 2: with Paul Sweeney. Join us each day for insight from
Speaker 2: the best in economics, finance, investment, and international relations. You
Speaker 2: can also watch the show live on YouTube. Visit the
Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday
Speaker 2: mornings from seven to ten am Eastern from our global
Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,
Speaker 2: or anywhere else you listen, and always I'm Bloomberg Radio,
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app. The Day
Speaker 2: Never ends in Bruce Kasmin and Michael FERRELLI ruined it
Speaker 2: at JP Morgan because they publish their must read weekly Prospects.
Speaker 3: It's seven o five pm Friday night.
Speaker 4: Yeah, thank you.
Speaker 2: I've read about eighty five percent of Faroli that I've read.
Speaker 2: I've read in a bar, right, you know. It's the
Speaker 2: way it is. And they're making multiple further progress towards
Speaker 2: his Friday where they'll publish the weekly Progress. Joining us
Speaker 2: now from JP Morgan, Michael Faroli, Michael, what in God's
Speaker 2: name is multiple further progress? And what do you write
Speaker 2: about Friday in your weekly Prospects?
Speaker 1: Well, it's hard to say. I think you're referring to
Speaker 1: the FMC statement yesterday, and I think that was probably
Speaker 1: influenced in part by what we saw yesterday morning with
Speaker 1: the CPI report, and that's probably going to be a
Speaker 1: big part of what we write about tomorrow.
Speaker 5: So I tell me, does Michael FAROLEI did you get
Speaker 5: an office at the new JP Morgan building on.
Speaker 3: They're above the Gold Vault, though, you know the Diamond Vault.
Speaker 5: The vault exactly, Michael, What did you take from FED
Speaker 5: Chairman Jay Pal's comments yesterday? It kind of feels like
Speaker 5: he feels like he's in a pretty good position. He
Speaker 5: doesn't need the Russian anything. What'd you take away from it?
Speaker 1: Yeah, you know, I do think he's pretty satisfied with
Speaker 1: where things are going. And I think he's probably satisfied
Speaker 1: that he's taken a pretty calm approach both to the
Speaker 1: you know, favorable inflation surprises we got in the second
Speaker 1: half of last year the less favorable surprises we got
Speaker 1: in the first quarter of this year. And I think
Speaker 1: he's kept a pretty you know, good eye on the
Speaker 1: horizon rather than getting to you know, swung around here.
Speaker 1: But you know, I think he's happy with the progress
Speaker 1: on inflation, labor market. I think, you know, Look, I
Speaker 1: think over the last several press conferences he has in
Speaker 1: the market, I think agrees came out quite dubbish.
Speaker 3: Yesterday.
Speaker 1: I thought he had struck the same tone that you
Speaker 1: kind of picked up in the statement and in the
Speaker 1: and in the Dotson's Hill coorts. I thought he was
Speaker 1: much more balanced yesterday. But the one area where he
Speaker 1: sounded dubbish was I think on the labor market.
Speaker 2: Right now, folks for Global Wall Street, the single question
Speaker 2: to Michael Frowley of the Booth School Chicago and JP Morgan, Michael,
Speaker 2: you stop time a long time ago with a potential
Speaker 2: GDP of America that was sub two percent. If we
Speaker 2: impute a higher our start, if we settle for something
Speaker 2: of a two point x percent, as Richard claredon, others
Speaker 2: talk about if we model in a new inflation, what
Speaker 2: does that do to your potential GDP estimate?
Speaker 3: Does it lift?
Speaker 1: So I'm not really yet on the higher trend growth
Speaker 1: story I do see obviously. So first of all, I
Speaker 1: guess we can divide trend growth and a trend labor
Speaker 1: force growth and trend productivity growth. I think clearly labor
Speaker 1: force growth has been stronger in recent years given the
Speaker 1: immigration story. How much of that is sustained after now,
Speaker 1: after the election and on into next year, I think
Speaker 1: is more of a question. I think on productivity, it's
Speaker 1: still hard for me to be a big believer that
Speaker 1: in part because when you look at the capital deepening numbers,
Speaker 1: which is essentially investment after depreciation, they really haven't changed
Speaker 1: much since slow growth decade we had last decade. So
Speaker 1: once that you know, that changes, I'll be more of
Speaker 1: a believer. But I think, you know, what we saw
Speaker 1: in the first quarter, uh was kind of to me
Speaker 1: a return to earth after what was a pretty good
Speaker 1: second half last year of our activity. But without those
Speaker 1: investment numbers, I'm still kind of thinking we're in the
Speaker 1: slow growth trend here.
Speaker 4: Michael, what's your view on inflation here?
Speaker 5: We've you know, we had the beginning in the first quarter,
Speaker 5: the first three months kind of a you know pick
Speaker 5: up and inflation activity kind of caused some people to
Speaker 5: really step back here and think about the moderation call
Speaker 5: and inflation. How do you think about it here? As
Speaker 5: we as this FED tries to get to its two
Speaker 5: percent target.
Speaker 1: I still think the moderation is in place. And you know,
Speaker 1: when I look at I think, in particular, when you
Speaker 1: look at nominal wage growth, wage inflation, and I know
Speaker 1: the links between wage and price inflation are very contentious,
Speaker 1: but I think in the long run, no one disputes
Speaker 1: that there's got to be some linkage there, right, And
Speaker 1: what you've seen, for you know, for production workers, is
Speaker 1: that wage inflation, after peaking around seven percent, has come
Speaker 1: down to around four percent.
Speaker 3: Now.
Speaker 1: I know May was a little stronger for average ality inflation,
Speaker 1: but I think when you look at you know, you
Speaker 1: kind of look impressionistically at average hourly earnings, Atlanta FED,
Speaker 1: wage tractor, e C, I E C, e C. All
Speaker 1: these things kind of suggest moderation in wage inflation, which
Speaker 1: is ongoing. And I think as long as that is
Speaker 1: in place, I think the price inflation story to me
Speaker 1: looks like it's in place. But again, these are stories
Speaker 1: I think you have to kind of zoom back at
Speaker 1: and look at a quarterly frequency. But I think the
Speaker 1: story to me looks, you know, pretty intact.
Speaker 2: Driver Michael, thank you so much, particularly those discussions of
Speaker 2: potential GDP, a key part of JP Morgan research. Doctor
Speaker 2: Feroli working at Versus Chasman.
Speaker 5: Stuart Kaiser, us equity trading strategy A City Global Markets
Speaker 5: three ninety Greenwich Street in Lower Manhattan, the worst elevators
Speaker 5: on Global Wall Street, Stuart, What did you think yesterday
Speaker 5: from the CPI print from Federal Reserve in the afternoon,
Speaker 5: What did you guys on a trading desk at City
Speaker 5: think about all that?
Speaker 4: Yeah, good morning guys. You know, I would say, look,
Speaker 4: the the CPI print was on equickally positive news, right,
Speaker 4: I mean, the print was low, the mix, the mix
Speaker 4: within the CPI data was positive. Markets responded. I think
Speaker 4: as you might have expected, lower quality stocks did well.
Speaker 4: Stuff that had been sort of under pressure from a
Speaker 4: higher for longer narrative, you know, rallied pretty well. And
Speaker 4: then you got the FED. You know, I think the
Speaker 4: FED is sort of the mirror image of what they
Speaker 4: did back in March, which was back in March, you
Speaker 4: would have expected them to have a slightly more hawkish
Speaker 4: narrative just based on the incoming data, and they sort
Speaker 4: of tacked a little bit duvish, particularly pow in the
Speaker 4: press conference. And I think the effort back then was
Speaker 4: to keep the market centered and not let it drift
Speaker 4: kind of too far in either direction from the base case.
Speaker 4: And I think that's really what we got yesterday. In
Speaker 4: the opposite direction, you would have thought, with the strong
Speaker 4: payrolls and then the friendly CPI, the FED would have,
Speaker 4: you know, maybe been a little bit more positive in
Speaker 4: message and a little more dubbish and pale. I think
Speaker 4: sounded a little hawkish, and I think that was an
Speaker 4: intentional effort to keep the market kind of centered on
Speaker 4: the base case outlook.
Speaker 5: Does just feel like a market that just wants to
Speaker 5: move higher given everything else that's out there, just wants
Speaker 5: to move I'm quoting Alex Steel Tom she came up with,
Speaker 5: I think the best call I've ever heard, which is
Speaker 5: a market feels like it just wants to go higher.
Speaker 4: Yeah, I think it does. I think, look, you have,
Speaker 4: you know, an economy that for now is holding in solidly.
Speaker 4: You've got double digit EPs growth, and I think those
Speaker 4: two things, generally speaking, you'd want high or you would
Speaker 4: expect higher equity markets in that environment. And I think
Speaker 4: that's just sort of the situation we're in, and that's
Speaker 4: our view, I mean, our base case view. Is higher
Speaker 4: until and unless the labor market really comes under significant pressure.
Speaker 4: So you know, we're gonna remain constructive.
Speaker 3: And honor you. It's so intimidating when Stuart Kaiser walks in.
Speaker 3: I mean, Lisa, we gotta go mathe here, we gotta
Speaker 3: go log Euclidean math Okay, run semi log mavstack the
Speaker 3: Stuart Kaiser chart. I ran it back to November of
Speaker 3: twenty eighteen.
Speaker 2: Ben Ladler shingles out at HSBC at the time, and
Speaker 2: he says, there's something going on, shut up and buy.
Speaker 3: And what's important here, folks log regression. We're barely out
Speaker 3: over one standard deviation on the trend. We're not extended
Speaker 3: in this bull market. I don't think a lot of
Speaker 3: people know that.
Speaker 4: Yeah, I think I think to your point toppy, especially
Speaker 4: if you look at the Erniees growth re generating. You know,
Speaker 4: I know a lot of people are concerned with the
Speaker 4: large cap tech and growth rally, but you know why
Speaker 4: are those stocks out performing Because they're the unique companies
Speaker 4: that are generating this massive, you know, kind of EPs growth,
Speaker 4: both realized and in the forecast. So you know, when
Speaker 4: folks push back about us being more positive, you know,
Speaker 4: we're just sort of anchoring back to fundamentally.
Speaker 3: People think they're extended. I mean, I get it, Nton Navidia,
Speaker 3: and you know Lisa owns it. We don't. Fine, but
Speaker 3: the answer is the Nasdaq one hundred. The math doesn't
Speaker 3: show Robert Schiller exuberance, like you know what he wrote
Speaker 3: about Eel years ago. It's not there. Do you see
Speaker 3: Do you see exuberance in the Nastack?
Speaker 4: I'm sure there's a stock here there. Yes, But you know,
Speaker 4: if you look to your point big picture, this is
Speaker 4: not tech bubble type valuations, right, This is not you know,
Speaker 4: tech bubble type over your skis. This is a small
Speaker 4: number of companies generating a massive amount of earnings growth
Speaker 4: that are getting rewarded for it. So, you know, are
Speaker 4: we above average valuation? Yes? I think if you looked
Speaker 4: at the S and P five hundred, you'd say you're
Speaker 4: probably maybe even upper cortile, upper decyle. But but you know,
Speaker 4: there's still room to expand. I think if the economy
Speaker 4: holds in and we continue to put the type erning
Speaker 4: growth we are.
Speaker 5: Stuart, I just got in my inbox, you know, from
Speaker 5: Torsten Slock, our good friend over at Apollo Global management.
Speaker 5: He's just basically calling out kind of what we know,
Speaker 5: but he's putting some numbers on it, which is Boy,
Speaker 5: the big cap stocks are just really richly valued. Small
Speaker 5: cap stocks relatively cheap here. But I'm not sure I ever,
Speaker 5: I'm not sure I rotate out of the big caps
Speaker 5: and try to look for value here. How do you
Speaker 5: guys think of when you talk to your clients. I mean,
Speaker 5: I think I just kind of owned the big caps
Speaker 5: and go to the Jersey shore and wait for September.
Speaker 4: Look, you know, we we like the broadening theme to
Speaker 4: start off the year because we actually thought Ernie growth
Speaker 4: is going to broaden out. I think that's worked probably
Speaker 4: for a total of four weeks this year. You know
Speaker 4: where the broadening trade has kind of worked. You know
Speaker 4: why a small cap not working? I think it's because
Speaker 4: that's the part of the market that's most susceptible if
Speaker 4: you get a recession, and is most susceptible to kind
Speaker 4: of hire for long. But so people have been very cautious,
Speaker 4: you know, to get into that space and look, large
Speaker 4: cap is big earnings, introducing dividends, et cetera.
Speaker 2: This strange word profit Megnum decided LC it is his
Speaker 2: most important word.
Speaker 3: Profit.
Speaker 2: Let's bring it over to something bow tie like free
Speaker 2: cash flow? Do you see margin compression or the gloom
Speaker 2: of a lesser free cash flow out there for say
Speaker 2: thirty percent of the universe well run companies.
Speaker 4: No, not yet. And I think if you were to
Speaker 4: identify the one fundamental risk equities this year, it was
Speaker 4: going to be what does the margin out look look like?
Speaker 3: Right?
Speaker 4: You know, if you look at the past four to
Speaker 4: six quarters, you've had very high nominal GDP growth and
Speaker 4: companies were able to So what are your.
Speaker 3: Security analysts not you? What are your security analysts and
Speaker 3: city groups say to that?
Speaker 4: I think for now they're they're comfortable with the margin outlook.
Speaker 4: You know Scott Kroner, who's are us equity strategist about
Speaker 4: two hundred and forty five bucks.
Speaker 5: I know when he had a real job, Yeah, big
Speaker 5: sales manager for the West Coast.
Speaker 4: Now he's got three real jobs. Yeah, that's even more popular.
Speaker 4: But he was he was high end of the street
Speaker 4: for a while on EPs, you know, basically on this
Speaker 4: logic Tom and he remains there. So they're of the
Speaker 4: view that it is still a relatively robust fundamental environment
Speaker 4: for US corporates.
Speaker 5: What is owning twenty five delta calls on either the
Speaker 5: SPX or IWM.
Speaker 4: What does that mean? It just me jo and some
Speaker 4: out of the money upside in US equities. And you know,
Speaker 4: basically we don't have very many rules of thumb. But
Speaker 4: but for a while you could pay less than the
Speaker 4: ten implied volatility on that. That s and p FUF option,
Speaker 4: which is just a really attractive entry to kind of
Speaker 4: rent rented.
Speaker 3: Okay, so is that like betting on the Edmonton Oilers.
Speaker 4: Yeah, I guess, I guess it is like equivalent.
Speaker 3: To saying the Oilers can win one?
Speaker 4: Yeah, yeah, yeah, well I mean I mean win one, yes,
Speaker 4: win one, maybe not the whole series. Folks, get a game,
Speaker 4: go to.
Speaker 2: Bloomberg, type in your stock MVDA or NANCEDAC index whatever
Speaker 2: OVDV and that will give you the delta in the gamma.
Speaker 3: And it's got all the volatilty there x y Z,
Speaker 3: good morning, Bruno to peer in the late Peter Carr.
Speaker 2: Who put that together for us, it's yeah, you can
Speaker 2: sell terminals with OVD You're done, right, you can? Yeah,
Speaker 2: I mean you you just you know, I have no
Speaker 2: idea what I'm looking at I'm looking at a swissy
Speaker 2: Hungarian for it, and you throw up an OVD volatility surface.
Speaker 3: And it's like, whoa very cool Stuart kais are on
Speaker 3: and come come back with the market goes down. He's
Speaker 3: your city group.
Speaker 2: I should say, ahead of US equity trading strategy.
Speaker 3: That was Eddie.
Speaker 2: I don't have a revision yet on weekly claims. We'll
Speaker 2: get it here in a moment. I'll interrupt when we
Speaker 2: get there. But come on, the disinflation vector is in place.
Speaker 2: We saw it yesterday at eight thirty, We see it
Speaker 2: this morning at eight thirty.
Speaker 4: Yeah, I would high both data points.
Speaker 6: You know, initial jobless claims jumping up to two hundred
Speaker 6: and forty thousand is an important data point. Now there's
Speaker 6: volatility in the week to week data. But if that
Speaker 6: were to stick, what's.
Speaker 3: Your four week moving average on claims? Where it's a
Speaker 3: whole new world after all.
Speaker 6: I think if you're if you are two forty to
Speaker 6: two fifty, really that tight. That is usually the numbers.
Speaker 4: That you might begin to think about.
Speaker 6: I mean an initial job as claims, when they move
Speaker 6: up in a sustainable way, typically stick there. Now there's
Speaker 6: volatility in the week to week data. We had to
Speaker 6: jump a few weeks back up to two hundred and
Speaker 6: thirty thousand. You have to look at what's going on
Speaker 6: in the state level data. So I don't want to
Speaker 6: seeing all the details. It's hard to know. But if
Speaker 6: that sticks, that's an important data point because the labor
Speaker 6: market has been strong because layoffs have been low. If
Speaker 6: that changes, it changes the picture of the labor market.
Speaker 6: I'm not saying this this morning data point did that,
Speaker 6: but it certainly could be important if it's sticks.
Speaker 5: Well, the Sweeney offspring are employed, so you know, we're
Speaker 5: doing our part here. What'd you take out of the
Speaker 5: Federal Reserves comments at Chairman's comments yesterday and just kind
Speaker 5: of the data we saw.
Speaker 6: Yeah, so yesterday's morning CPI was a great data point
Speaker 6: from their perspective. It showed a softening, you know, sixteen
Speaker 6: basis points a month a month. It was good and
Speaker 6: a lot of the areas that they would want it
Speaker 6: to be good. Services inflation was softer, you know, renton
Speaker 6: O we are was a little bit disappointing. I was
Speaker 6: surprised that they only showed one rate cut for this year.
Speaker 6: Now now it is our baseline that they only cut
Speaker 6: rates once, so you think that only once in December?
Speaker 6: Okay in December, but I was still surprised that they
Speaker 6: signaled that yesterday. I thought that they would want to
Speaker 6: maintain more actively optionality to cut rates before meeting.
Speaker 3: Now.
Speaker 6: Chair Pale downplayed the signal from that dotlets as he
Speaker 6: typically does, but at the same time, I don't think
Speaker 6: he was as dubbish as he could have been. He
Speaker 6: talked very strongly about the economy, about the labor market,
Speaker 6: about wage growth being high.
Speaker 2: Come on, you're you're at uc LA with a wonderful
Speaker 2: faculty there and all the prig of Allen Meltzer being there,
Speaker 2: and come on, no textbook, Obsfeld, Rogue Off all the
Speaker 2: rest of them has multiple further progress in it. What
Speaker 2: a bunch of malarkey. I mean, I'm sorry, there's like
Speaker 2: three adverbs back to back. Who invented multiple further progress?
Speaker 6: Look, the reality is we had four stronger prints to
Speaker 6: start this year. We did get one much better print.
Speaker 6: But the FED, looking at the economy, the labor market
Speaker 6: report that we got on for Atlanta, FED GDP tracking
Speaker 6: above three percent in Q two is looking at an
Speaker 6: economy that does not urgently need so then.
Speaker 3: Why doesn't he come out like in the old days
Speaker 3: and say, we don't know, we're data dependent.
Speaker 2: The market's gotta pop, the economy's gotta pop, the stock
Speaker 2: market's gotta pop.
Speaker 3: We're gonna wait instead of all this mumbo jumps.
Speaker 6: So I think he did the problem is that they
Speaker 6: have the dot plot now, and so if you if
Speaker 6: you just think the press conference in isolation, he essentially
Speaker 6: said that we are data dependent. We're making decisions on
Speaker 6: a meeting by meeting basis. We have to see how
Speaker 6: the inflation and labor market data come in. We think
Speaker 6: the economy is strong right now, so we don't urgently
Speaker 6: need to cut rates now. The issues they have the
Speaker 6: dop plot. Greenspan did not have the dot plot, and
Speaker 6: so it's harder to get away from any calendar based guidance.
Speaker 3: Can you can you imagine Luzzetti and Folkartz, Landau and
Speaker 3: Hooper in a room together talking about the dot plot.
Speaker 3: They probably have to switch to German.
Speaker 4: They get so upset rividly.
Speaker 5: All right, initial jobs claims today, again, as Tom mentioned,
Speaker 5: they came into two hundred and forty two thousand. Consensus
Speaker 5: was for two and twenty five thousand, so a little
Speaker 5: bit higher than what we've typically seen. Here was two
Speaker 5: hundred and twenty nine thousand last period.
Speaker 4: But I don't know.
Speaker 5: It seems like the consumer is in good shape. The
Speaker 5: consumer has a job, they're getting wage increases, they're spending money.
Speaker 5: How do you feel about the consumer these days?
Speaker 6: So there's been a lot of questions about the consumer.
Speaker 6: You have kind of idiosyncratic reports from companies. You did
Speaker 6: have a week consumer spending report. If you look two
Speaker 6: weeks back now, it comes off of consumer strength.
Speaker 4: But I would agree with you.
Speaker 6: You know, there's this circularity between thinking about the labor
Speaker 6: market and the consumer. You know, as long as the
Speaker 6: labor market remains resilient and strong, and job gains are
Speaker 6: solid and wage growth is there, there's very little reason
Speaker 6: to think that the aggregate consumer weakens. Now there is
Speaker 6: greater heterogeneity. You do have at the lower end of
Speaker 6: the income distribution. There does seem to be some evidence
Speaker 6: of stress strains that are there. From my perspective, that's
Speaker 6: a little bit more returning to what the pre COVID
Speaker 6: economy looked like than something that signaling a worrying slowdown
Speaker 6: on behalf of the consumer is inflation.
Speaker 5: You know, we think about inflation, because the FED thinks
Speaker 5: about an inflation here when we think about a two
Speaker 5: percent inflation rate is kind of a target. Is that
Speaker 5: something this economy can get down to, or it just
Speaker 5: feels like we're kind of stuck here at this I
Speaker 5: don't know, a high twos or a three percent kind
Speaker 5: of inflation rate.
Speaker 4: Are we stuck there for a while? Do you think?
Speaker 4: I don't think so.
Speaker 6: I mean this year, from a year of year rate,
Speaker 6: we will be stuck there. I mean you have base
Speaker 6: effects that are difficult. Are inflation for core PC at
Speaker 6: the end of the year's two point seven a little
Speaker 6: bit below what the FED was, But as you look
Speaker 6: ahead to next year, I would expect shelter inflation is
Speaker 6: coming off. It does lag a bit, but that we
Speaker 6: can get closer to two percent. It's probably difficult to
Speaker 6: get into the low twos without shelter inflation coming off
Speaker 6: more materially. But I think importantly for the Fed, they've
Speaker 6: been clear they don't need to get down to two
Speaker 6: percent to begin to cut rates. They just need to
Speaker 6: have confidence that they are on the path to get there.
Speaker 3: For our listeners are viewers on YouTube what impacts their
Speaker 3: life with the first or even the second rate cut.
Speaker 3: What changes.
Speaker 6: Look, the reality is these rate cuts are priced, so
Speaker 6: they are there into your yields. They are there in
Speaker 6: tenyure yields, they are there in mortgage.
Speaker 3: Right.
Speaker 4: What about and so you need.
Speaker 3: Surprise to mateo at Costco? Yes? What's it? I'm serious?
Speaker 3: What's it mean? So?
Speaker 6: I think in terms of Costco, it's actually the reverse causality,
Speaker 6: meaning if Costco is cutting prices, then the Fed can
Speaker 6: cut rates.
Speaker 3: We go, we go to economous Right at Lisa, is
Speaker 3: Costco cutting prices?
Speaker 2: They are not.
Speaker 7: They do have some good sale items, but no, the prices,
Speaker 7: this is.
Speaker 3: Important sale items. There's gonna be a lot more sale items.
Speaker 4: Yeah.
Speaker 6: And I think if you look at the CPI report yesterday,
Speaker 6: there was reasonably broad based deceleration. Look at the trim
Speaker 6: mean was weaker. You know, the median has come down
Speaker 6: pretty materially, so so you did have broad based softening
Speaker 6: in yesterday's inflation.
Speaker 2: We're getting So we're gonna run the studio conversations when
Speaker 2: we're on break for all of you worldwide and nationwide.
Speaker 3: Some people say they're smarter than what we actually talk about.
Speaker 3: I walk in and all Ozetti and Sweeney are talking about,
Speaker 3: is UCLA gets seventy two million dollars for playing Rutgers
Speaker 3: in field hockey. It's gonna be crazy.
Speaker 5: So I mean, Matt, I know you're Villanova undergrad, but
Speaker 5: you got your PhD at UCLA. But now your UCLA
Speaker 5: is going to have to come all the way to
Speaker 5: the East coast to play Big ten.
Speaker 6: It is wild. I mean thinking about that the back
Speaker 6: ten A PAC twelve and that that disbanding and the.
Speaker 3: Old Stanford UCLA thing's gone.
Speaker 6: Right, it is you know, it's disappointing to see that
Speaker 6: that that lost kind of that history and that legacy.
Speaker 5: Problem for the NCAA long term. That's just my opinion
Speaker 5: because I think the only not the only thing, but
Speaker 5: one of the big things that college athletics had going forward.
Speaker 3: Was the rivalry.
Speaker 2: So what's it mean for March badness? I mean, that's
Speaker 2: what counts. I mean, Ozetti, you know he's got six
Speaker 2: thousand square.
Speaker 4: Villanova Duke will be there. We'll be fine, Brack Vilanovan Duke.
Speaker 4: But for everybody else, No.
Speaker 3: But what's it mean if the Big ten is seed
Speaker 3: to shining seat, that's what we're talking about.
Speaker 5: I don't know it's gonna be I mean, I think
Speaker 5: a CEC the same way ACC has Stanford doll in it.
Speaker 3: What's it mean for U C L A U s C.
Speaker 3: I mean that kind of rival.
Speaker 6: I think that very close rivalry does not change. But
Speaker 6: when you think about, you know, the other rivalry within
Speaker 6: the back ten per twelve, they'll certainly become weakened.
Speaker 3: Thing focused Landos listening to this in Frankfort going what
Speaker 3: kind of.
Speaker 5: What is my chief US economist talking about?
Speaker 3: Matt Lozzetti? Thank you so much to Deutsche Bank.
Speaker 2: I really want to resell her the idea that Mattlizzetti
Speaker 2: was out there and said, you know what, we're going
Speaker 2: to see a slower economy. We did, but he had
Speaker 2: the courage and literally his first essay to say, stop
Speaker 2: guessing when the recession's coming. It's a fool's game. I
Speaker 2: am happy, happy, happy. I get to talk to Wendy
Speaker 2: Schiller with Paul Sweetey. She's at Brown University because she
Speaker 2: owns the high ground on the linkage of our history
Speaker 2: into where we are.
Speaker 3: As I walked into the building this morning, got Officer
Speaker 3: Korski came down the elevator as they walked into the building.
Speaker 3: I stared at the G seven photo shoot and Ed
Speaker 3: Duffner said, Tom, it's the Potsdam conference. Wendy Schiller, what
Speaker 3: a train wreck of a photo shoot at the G
Speaker 3: seven nineteen forty five Potsdam, Roosevelt dies, Truman shows up,
Speaker 3: different guy. While they're there, Churchill's.
Speaker 2: Thrown out of office, Clement Atley becomes a prime minister,
Speaker 2: and Stalin's Faden's smiling all the way. Wendy Schiller, I
Speaker 2: saw the guy from Germany going, I think I'm still
Speaker 2: in power. Mccrom hasn't slept in a week. The president
Speaker 2: has his own challenges. Trudeau. I don't know what Trudeau's doing.
Speaker 2: It's a disaster and that's what Trump would say.
Speaker 3: That's a dasher in Canada. And on the back end
Speaker 3: of it is a Ruschie Schunach who's still dday. What
Speaker 3: a mess. Have you ever seen a G seven like this,
Speaker 3: Wendy Schiller?
Speaker 7: I have not.
Speaker 8: And the irony is that we're not facing a global
Speaker 8: economic crisis. So, you know, a lot of these leaders,
Speaker 8: a lot of the parties, whether the conservative or more moderate,
Speaker 8: you know, business friendly, they're facing populist.
Speaker 7: Sort of anger and gains.
Speaker 8: I mean, really in the EU elections, and certainly look
Speaker 8: at Italy, look at Hungary, look all over the place,
Speaker 8: and you see that it's not connected as much to
Speaker 8: economic discontent as it was as we might have expected
Speaker 8: it to be ten years ago.
Speaker 7: So then that's a bigger puzzle, and that's what brings
Speaker 7: back World War Two.
Speaker 8: So what are these deep strains or trends in Europe.
Speaker 8: Certainly anti migrant is one of them. But if the
Speaker 8: economy is getting better, and clearly the United States is
Speaker 8: leading there but nonetheless getting better, yet all these sort
Speaker 8: of moderate quote unquote liberal democracy, these leaders are fading.
Speaker 7: Right, that's a big puzzle for us.
Speaker 2: Off of the debate at Chicago, at Milwaukee after Labor Day,
Speaker 2: are we going to see the same populist angst in America?
Speaker 8: Well so, I think the trends are actually working against
Speaker 8: that to some extent. In terms of the economy, Right,
Speaker 8: so we have a little bit of a tick of unemployment,
Speaker 8: but we had a really good job support and inflation,
Speaker 8: depending on who you.
Speaker 7: Talk to, seems to be at least calming down.
Speaker 8: So if consumer sentiments starts to rise just a little
Speaker 8: bit over the summer, folks can take a vacation, they
Speaker 8: feel comfortable about that, they have a good summer, they're
Speaker 8: feeling better about the economy.
Speaker 7: Then I think things kind of.
Speaker 8: Moderate a little bit on these big pushbacks in terms
Speaker 8: of the far right. But Trump is courting big business.
Speaker 8: He's being very strategic about it. He said, listen, don't
Speaker 8: worry about me. I'm just going to do taxes lower
Speaker 8: and keep them low, and I'm going to get rid
Speaker 8: of regulation. I'm not gonna make you happy. I'm not
Speaker 8: going to do anything scary. And that's going to be
Speaker 8: his message today in Washington. And that's the big problem
Speaker 8: for the Biden administration is what.
Speaker 7: Do you do with that messaging?
Speaker 8: And how does Trump keep that far right wing of
Speaker 8: his party common enough not to scare a lot of
Speaker 8: the independent voters away again in twenty twenty four.
Speaker 5: What do we know about those independent voters, those centrist
Speaker 5: type of voters. I guess, by and large they broke
Speaker 5: for President Biden last time around, they broke for the
Speaker 5: Democratic Party some of the congressional election cycles. What do
Speaker 5: we know about that group here, which will be critical
Speaker 5: for the presidential election coming up later this year.
Speaker 8: The only recent information we have is after the Trump
Speaker 8: thirty four fel Any convictions. Some palling indicated that some
Speaker 8: percentage of those independents were less likely to vote for Trump,
Speaker 8: but you're looking at a body that's probably not likely
Speaker 8: to vote for Trump anyway.
Speaker 7: What's interesting is the polling coming.
Speaker 8: Out of Senate Democratic incumbents in swing states. They're actually
Speaker 8: doing better than Biden, and they're doing better than the
Speaker 8: Republican opponents or you know, supposed Republican opponents. So how
Speaker 8: are the Democratic incomment senators holding on in swing states
Speaker 8: and Biden is behind Trump or tied with Trump. So
Speaker 8: that's suggest some independence maybe recalibrating thinking, hey, we'll vote
Speaker 8: for Trump keep our low taxes at but we'll vote
Speaker 8: for Senate Democrats to control Donald Trump and not give
Speaker 8: the Republicans a trifecta. It seems like there could be
Speaker 8: more split ticket voting this summer around.
Speaker 2: Okay, let's talk about that, because it's not really the
Speaker 2: zech ace. Yes, but you just mentioned it. Could we
Speaker 2: see a Gope trifecta?
Speaker 8: Well, that's the thing that I'm watching in terms of
Speaker 8: these Senate races, particularly Wisconsin, Arizona, Pennsylvania's a little bit dodgy.
Speaker 7: There's an open seat in Michigan.
Speaker 8: But thinking about those races and thinking even shared Brown
Speaker 8: in Ohio is up by four or five points against
Speaker 8: Bernie Moreno Trump will win Ohio, I think. So that's
Speaker 8: going to be an interesting thing. I mean, I think
Speaker 8: the House is totally up for grabs. Right it's an
Speaker 8: eight seat race. There may be thirty competitive seats and
Speaker 8: eight can switch and then one party can take over
Speaker 8: with a narrow majority.
Speaker 7: So we don't know about the House.
Speaker 8: But the Senate is supposed to be for the in
Speaker 8: Republican's favor doing the map, But right now it looks
Speaker 8: like the Democrats are holding their own and that's going
Speaker 8: to be what I'm watching going forward.
Speaker 3: Wendy, this isn't why we booked you.
Speaker 2: There's Route one forty six, which comes out of Providence,
Speaker 2: the land of Decent Pizza, up to a suburb called Boston,
Speaker 2: and in between he is Foxborough. Did you attend the
Speaker 2: Tom Brady Hall of Fame soiree at Gillette Stadium, Professor.
Speaker 7: Schiller, I did not.
Speaker 8: I harkened from the New York Long Island area and
Speaker 8: I am a Giants fan.
Speaker 3: Well, you could have worn your Giants jersey. I mean,
Speaker 3: you know, you know, no, I did.
Speaker 8: That at a Super Bowl party when the Giants beat
Speaker 8: the Patriots and it wasn't possable.
Speaker 3: There we go. Got that in Professor Schuller, go away.
Speaker 3: Thank you.
Speaker 2: At Brown University surely were their leadership in international relations.
Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best
Speaker 2: in economics, finance, investment, and international relations. You can also
Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast
Speaker 2: channel on YouTube to see the show weekday mornings from
Speaker 2: seven to ten am Eastern from our global headquarters in
Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify,
Speaker 2: or anywhere else you listen and always on Bloomberg Radio,
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app