1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Daily we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,440 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We 5 00:00:33,520 --> 00:00:37,800 Speaker 1: thought we'd bring in someone truly expert on that short 6 00:00:37,960 --> 00:00:41,760 Speaker 1: term area and it's linkage is to behavior and particularly 7 00:00:41,760 --> 00:00:45,320 Speaker 1: to corporate trust. He is Anthony Krisnsi, a penco working 8 00:00:45,320 --> 00:00:49,400 Speaker 1: with Jerome Schneider. How is Jerome Schneider's week, Ben? I mean, 9 00:00:49,440 --> 00:00:51,839 Speaker 1: you guys are in the short term space. Are you 10 00:00:51,880 --> 00:00:55,240 Speaker 1: guys just watching the long duration guys lather up? Or 11 00:00:55,560 --> 00:01:00,000 Speaker 1: or is a guy like Jerome Schneider had that invests 12 00:01:00,120 --> 00:01:03,640 Speaker 1: and PIMCO broadly invest in short term instruments. Is still 13 00:01:03,680 --> 00:01:07,360 Speaker 1: finding value there because it's still yields to be had. 14 00:01:07,959 --> 00:01:10,400 Speaker 1: Three month librar is still in the twos. It will 15 00:01:10,440 --> 00:01:13,400 Speaker 1: go lower, but it's still higher than these longer term 16 00:01:13,440 --> 00:01:15,640 Speaker 1: interest rates. That's what an inversion is, and so there's 17 00:01:15,680 --> 00:01:18,000 Speaker 1: some value there, especially if you think that the federal 18 00:01:18,000 --> 00:01:20,360 Speaker 1: deserved will deliver a fewer indust rate cuts than the 19 00:01:20,400 --> 00:01:23,480 Speaker 1: market is priced for the markets thinking there's a fifty 20 00:01:23,600 --> 00:01:26,200 Speaker 1: chance of a half point cut in September, and the 21 00:01:26,240 --> 00:01:28,959 Speaker 1: market is priced for one percent policy rate by the 22 00:01:29,040 --> 00:01:32,880 Speaker 1: end of that's down from the current level of two 23 00:01:32,920 --> 00:01:35,160 Speaker 1: and a quarter. And so if you think that these 24 00:01:35,760 --> 00:01:39,679 Speaker 1: these rates will won't be realized, then there's still some boundy. Okay, well, 25 00:01:39,680 --> 00:01:41,800 Speaker 1: what's the value now a little bit away from the 26 00:01:41,840 --> 00:01:45,679 Speaker 1: frenzy of Tuesday, Wednesday, Thursday to an emergency FED cut. 27 00:01:45,760 --> 00:01:49,360 Speaker 1: I mean, what's the so what of waiting for the meeting, 28 00:01:49,720 --> 00:01:52,640 Speaker 1: are actually just saying Okay, we're gonna move this thing 29 00:01:52,720 --> 00:01:55,800 Speaker 1: forward and coming in cut? Tom? But did you look 30 00:01:55,840 --> 00:01:59,920 Speaker 1: at yesterday's retail sales report and the figures in there 31 00:02:00,080 --> 00:02:03,040 Speaker 1: within it, which was so robust and indicating that the 32 00:02:03,360 --> 00:02:06,680 Speaker 1: economy has reasonable momentum going into the third cord. The 33 00:02:06,680 --> 00:02:09,800 Speaker 1: way GDP is calculated, it's looks it looks at the 34 00:02:09,800 --> 00:02:13,280 Speaker 1: the average of one courts activity versus the average of another. 35 00:02:13,400 --> 00:02:16,760 Speaker 1: And so if activity ended a quarter strongly, and it 36 00:02:16,800 --> 00:02:19,640 Speaker 1: did in the second court of June, that means it 37 00:02:19,680 --> 00:02:22,880 Speaker 1: begins the third quarter at a level that's above the 38 00:02:22,919 --> 00:02:25,120 Speaker 1: previous court is average, and so it looks like growth 39 00:02:25,160 --> 00:02:28,040 Speaker 1: will be reasonably good nearly the Fed wants it, which 40 00:02:28,040 --> 00:02:30,680 Speaker 1: is around two percent or so in the third quarter. 41 00:02:30,760 --> 00:02:33,840 Speaker 1: That's not a reason to panic financial conditions. Perhaps if 42 00:02:33,880 --> 00:02:37,360 Speaker 1: they would dire, they would it would be But with 43 00:02:37,440 --> 00:02:39,920 Speaker 1: the SMP five up in the low teens and NASTACK 44 00:02:40,000 --> 00:02:41,680 Speaker 1: up in the high teens, is that a reason to 45 00:02:41,800 --> 00:02:44,320 Speaker 1: put press the panic button, especially when policy related issues 46 00:02:44,360 --> 00:02:47,680 Speaker 1: that can't control are causing the nervousness The panic buttons 47 00:02:47,800 --> 00:02:49,840 Speaker 1: setting plenty of cash into money markets, right, I mean, 48 00:02:49,840 --> 00:02:52,440 Speaker 1: we saw one of the biggest inflows in the week 49 00:02:52,520 --> 00:02:56,280 Speaker 1: and in Wednesday eighteen billion dollars of inflows, so the 50 00:02:56,360 --> 00:02:59,320 Speaker 1: ten year high we're currently at that when it comes 51 00:02:59,320 --> 00:03:01,480 Speaker 1: to money market funds, I want to switch gears a 52 00:03:01,520 --> 00:03:04,000 Speaker 1: little bit. There was a white paper out of black 53 00:03:04,080 --> 00:03:07,359 Speaker 1: Rock basically arguing for helicopter money in the next downturn 54 00:03:07,840 --> 00:03:09,920 Speaker 1: that came out yesterday, and I want to talk about 55 00:03:09,960 --> 00:03:13,040 Speaker 1: this because it's sort of goes to the zeitgeist of today, 56 00:03:13,320 --> 00:03:15,800 Speaker 1: which is this fear that the Federal Reserve is out 57 00:03:15,840 --> 00:03:17,919 Speaker 1: of ammunition, which is what we're seeing in the yield curve, 58 00:03:18,120 --> 00:03:19,960 Speaker 1: and that the next go around is going to have 59 00:03:20,040 --> 00:03:23,280 Speaker 1: to be extreme and very different. Do you buy into 60 00:03:23,360 --> 00:03:27,520 Speaker 1: the idea of some sort of helicopters policy. In fact, 61 00:03:28,280 --> 00:03:34,600 Speaker 1: Marina Eckles echals there's the FED chief. The FED building 62 00:03:34,639 --> 00:03:38,120 Speaker 1: today is named after Echo's called the Echos Building. He 63 00:03:38,280 --> 00:03:41,400 Speaker 1: talked about the FED pushing on a string. One could 64 00:03:41,400 --> 00:03:43,520 Speaker 1: say that the FED is today in other central banks 65 00:03:43,560 --> 00:03:46,200 Speaker 1: pushing on a string, and no matter what they do 66 00:03:46,280 --> 00:03:48,400 Speaker 1: in terms of putting money in the system, it will 67 00:03:48,440 --> 00:03:51,560 Speaker 1: not have impact. One could say that this, this helicopter 68 00:03:51,640 --> 00:03:54,280 Speaker 1: idea was attempted in two thousand nine in the American 69 00:03:54,760 --> 00:03:59,920 Speaker 1: Recovery and Reinvestment Act. How well, it's a different form. Well, 70 00:04:00,040 --> 00:04:02,080 Speaker 1: it was one form. Perhaps it was the first salvo 71 00:04:02,640 --> 00:04:05,440 Speaker 1: um the The US deficit was about ten percent of 72 00:04:05,480 --> 00:04:07,880 Speaker 1: g d P. In that deficit, there was a spending 73 00:04:08,640 --> 00:04:13,520 Speaker 1: agreement to to distribute fifty million checks too Americans, or 74 00:04:13,520 --> 00:04:16,240 Speaker 1: about two fifty dollars. We've forgotten about it because it's 75 00:04:16,279 --> 00:04:18,400 Speaker 1: such a tiny amount of money. So where where is 76 00:04:18,440 --> 00:04:20,440 Speaker 1: that money today? Or in other words, where would that 77 00:04:20,440 --> 00:04:22,840 Speaker 1: money go in the future if they were given. Did 78 00:04:22,880 --> 00:04:26,560 Speaker 1: it go towards maybe a nice movie, dinner, clothing? Who 79 00:04:26,600 --> 00:04:29,800 Speaker 1: knows what it's all gone? It didn't get invested, so 80 00:04:29,839 --> 00:04:32,400 Speaker 1: how could it have any meaningful long term impact. If 81 00:04:32,440 --> 00:04:35,599 Speaker 1: it's meaning if it simply goes towards consumption, letting people 82 00:04:35,600 --> 00:04:37,640 Speaker 1: have some a little bit extra to spend. You're not 83 00:04:37,720 --> 00:04:39,760 Speaker 1: trying helicopter money. I can tell but here, but but 84 00:04:39,839 --> 00:04:43,240 Speaker 1: here's my question. I mean, how important are these questions? Uh? 85 00:04:43,320 --> 00:04:46,479 Speaker 1: In terms of where people's minds are, They're very important, 86 00:04:46,560 --> 00:04:49,559 Speaker 1: But they're moved there. They're they're the wrong questions because 87 00:04:49,600 --> 00:04:51,919 Speaker 1: the too too often, and the President is doing this 88 00:04:51,960 --> 00:04:54,279 Speaker 1: as well as the fingers appointed at the Fed and 89 00:04:54,279 --> 00:04:56,760 Speaker 1: should be at the fiscal Authority, not the monetary authority, 90 00:04:56,760 --> 00:04:59,200 Speaker 1: because they are the ones in control of of the 91 00:04:59,200 --> 00:05:03,680 Speaker 1: way growth is um conducted or produced, not the central Bank. 92 00:05:03,720 --> 00:05:05,600 Speaker 1: They produced one thing money. I want to go back 93 00:05:05,600 --> 00:05:08,400 Speaker 1: to your wheelhouse, which is the short term paper market 94 00:05:08,440 --> 00:05:11,479 Speaker 1: in the indications of trust. The old days, it used 95 00:05:11,480 --> 00:05:14,520 Speaker 1: to be the commercial paper market. That's gone. What do 96 00:05:14,600 --> 00:05:18,520 Speaker 1: you look at now is a measurement of trust, particularly 97 00:05:18,600 --> 00:05:22,360 Speaker 1: in European banking and finance. What's the indicator you look 98 00:05:22,400 --> 00:05:26,320 Speaker 1: at and what does it say? Well? One one of 99 00:05:26,360 --> 00:05:31,360 Speaker 1: pimco's high investor, high conviction investments is to invest in 100 00:05:31,960 --> 00:05:36,200 Speaker 1: European bank capital, not all banks, but many banks. It's 101 00:05:36,520 --> 00:05:39,080 Speaker 1: and this is it's not too complicates. Understand, there's different 102 00:05:39,120 --> 00:05:41,680 Speaker 1: levels of what's called the capital structure. The equity investor 103 00:05:41,760 --> 00:05:44,400 Speaker 1: is the one that gets hurt most because they've directly 104 00:05:44,440 --> 00:05:49,400 Speaker 1: involved in them. But a senior bond holder is senior 105 00:05:49,480 --> 00:05:51,800 Speaker 1: and the first in line if something goes wrong, The 106 00:05:51,839 --> 00:05:55,520 Speaker 1: equity holders last in line, the the bank capital owners 107 00:05:55,640 --> 00:05:58,840 Speaker 1: second in line. One could say it's sliver above equity 108 00:05:59,000 --> 00:06:02,680 Speaker 1: in the bank buddle structure. But we like those securities 109 00:06:02,760 --> 00:06:05,960 Speaker 1: and that's a statement in itself because we wouldn't go there. 110 00:06:06,000 --> 00:06:08,560 Speaker 1: We wouldn't invest in the security we thought the system 111 00:06:08,720 --> 00:06:12,680 Speaker 1: were in in dire Do we go into the weekend 112 00:06:13,080 --> 00:06:16,760 Speaker 1: and end of September frankly with the trust measures that 113 00:06:16,839 --> 00:06:20,640 Speaker 1: you and Jerome Schneider look at intact? Is the system 114 00:06:21,080 --> 00:06:25,240 Speaker 1: functioning in terms of liquidity? No, it SolV Yes, it's intact, 115 00:06:25,960 --> 00:06:29,279 Speaker 1: but there is fragility. The biggest worry of all is 116 00:06:29,320 --> 00:06:31,920 Speaker 1: that the and it's not trade, but that the U. S. 117 00:06:31,960 --> 00:06:35,240 Speaker 1: And China are entering a cold started the starting this 118 00:06:35,360 --> 00:06:38,159 Speaker 1: this start of a new Cold War that could have 119 00:06:38,279 --> 00:06:42,159 Speaker 1: a longer period of implication because the trade story is 120 00:06:42,600 --> 00:06:46,039 Speaker 1: a short term one. But the geopolitical tension, that the 121 00:06:46,040 --> 00:06:51,800 Speaker 1: acidities trapped the named uh for the Graham Alison idea. 122 00:06:51,800 --> 00:06:54,760 Speaker 1: I was going to Graham else that the rising power 123 00:06:54,800 --> 00:06:57,880 Speaker 1: threatens an existing one at least to warfe and you've 124 00:06:57,920 --> 00:07:01,440 Speaker 1: seen Great Dahlia talking about this on a linked video 125 00:07:01,520 --> 00:07:05,240 Speaker 1: this week. In five years have been sixteen changes in 126 00:07:05,360 --> 00:07:09,080 Speaker 1: leaders hedgemons as they're called. Twelve of those changes led 127 00:07:09,120 --> 00:07:12,040 Speaker 1: to actual war. No one is calling for that, but 128 00:07:13,280 --> 00:07:19,680 Speaker 1: we are traversing away from cooperation and short term paper 129 00:07:19,760 --> 00:07:21,520 Speaker 1: to the Greek wars. Well, I mean, but this is 130 00:07:21,520 --> 00:07:24,239 Speaker 1: actually where we're at right this sort of existential question 131 00:07:24,520 --> 00:07:28,160 Speaker 1: of whether growth ever again and whether the state of 132 00:07:28,160 --> 00:07:32,240 Speaker 1: geopolitical uh, geopolitical relations. But I do have to wonder 133 00:07:32,840 --> 00:07:35,400 Speaker 1: going forward, because it does feel like there has been 134 00:07:35,640 --> 00:07:40,080 Speaker 1: a change this week, last week we have tipped a corner. 135 00:07:40,720 --> 00:07:42,960 Speaker 1: Is that an accurate characterists? Let me tell you what 136 00:07:43,000 --> 00:07:46,080 Speaker 1: hasn't changed. Let's go back. Let's think Adam Smith in 137 00:07:46,080 --> 00:07:49,880 Speaker 1: the Sevres the Wealth of Nations. He talked about this. 138 00:07:49,920 --> 00:07:52,480 Speaker 1: I heard him on your show and the radio is listening. 139 00:07:53,760 --> 00:07:56,880 Speaker 1: How is wealth created in the nations by individuals, companies 140 00:07:56,960 --> 00:08:00,800 Speaker 1: all striving to fair bet and full themselves for their companies. 141 00:08:01,000 --> 00:08:05,000 Speaker 1: Has this passion ending because of political uncertainty? No, we 142 00:08:05,040 --> 00:08:06,800 Speaker 1: still will work week up every day. We're here on 143 00:08:06,840 --> 00:08:09,960 Speaker 1: the radio all trying to help others to make money. 144 00:08:10,840 --> 00:08:13,760 Speaker 1: Seven eight am in the morning. I'm done with the esoteric. 145 00:08:14,040 --> 00:08:16,720 Speaker 1: Are we going to revisit an inverted yield curve? Or 146 00:08:16,800 --> 00:08:18,520 Speaker 1: was that a scare? And we've come back to some 147 00:08:18,640 --> 00:08:22,160 Speaker 1: normalcy set at a lower rate. DIO curve is not 148 00:08:22,280 --> 00:08:25,400 Speaker 1: like that would be a lasting condition because the conditions 149 00:08:25,440 --> 00:08:28,840 Speaker 1: that cause it the type that the Central Bank would 150 00:08:28,880 --> 00:08:33,679 Speaker 1: generally respond to and cause it to disinvert. Anthony Cosenzi 151 00:08:33,800 --> 00:08:36,600 Speaker 1: And what's great about Tony Cosenzi is there's a real 152 00:08:36,600 --> 00:08:42,240 Speaker 1: palaty history and society across his discussion of finance. You 153 00:08:42,360 --> 00:08:47,000 Speaker 1: mentioned the Chicago Cubs fan from from Chicago, Richard Taylor, 154 00:08:47,360 --> 00:08:51,480 Speaker 1: the laureate on Behavioral Economic Did you, Lisa, did you 155 00:08:51,520 --> 00:08:53,840 Speaker 1: ever do a course with Taylor? I would not like 156 00:08:53,840 --> 00:08:57,160 Speaker 1: to do a seminar dark of the door with him. 157 00:08:57,200 --> 00:08:59,920 Speaker 1: He's like huge. And of course Taylor talks to pimp 158 00:09:00,120 --> 00:09:03,000 Speaker 1: all the time. And you mentioned Tony that this crazy 159 00:09:03,120 --> 00:09:06,559 Speaker 1: week we've seen old people, which you know, Lisa doesn't 160 00:09:06,640 --> 00:09:11,280 Speaker 1: understand this conversation old people look at the screening, go really, 161 00:09:11,800 --> 00:09:14,120 Speaker 1: I mean there's a lot of that going on, right, Yes, 162 00:09:14,160 --> 00:09:16,559 Speaker 1: And it's this bias that we have to remove. And Richard, 163 00:09:17,080 --> 00:09:20,040 Speaker 1: by the way, I feel like, look at the screen 164 00:09:20,080 --> 00:09:22,599 Speaker 1: not just race, but inflation and growth in the relationship 165 00:09:22,679 --> 00:09:27,719 Speaker 1: to interest rates and economies. M. Richard Taylor's has is 166 00:09:27,720 --> 00:09:31,360 Speaker 1: a Nobel laureate and behavioral economics, and PIMCO employs him. 167 00:09:31,360 --> 00:09:35,079 Speaker 1: And we had one of his former students, Rique Mamendia, 168 00:09:35,320 --> 00:09:37,720 Speaker 1: in attendance at one of our forums in May, and 169 00:09:37,720 --> 00:09:40,000 Speaker 1: we discussed this idea of age having an impact on 170 00:09:40,040 --> 00:09:44,160 Speaker 1: how people think about things, including inflation. And she even 171 00:09:44,200 --> 00:09:46,920 Speaker 1: studied the Federal Reserve and how different members of the 172 00:09:46,920 --> 00:09:50,760 Speaker 1: Fed because of their ages, might think differently about whether 173 00:09:50,800 --> 00:09:53,600 Speaker 1: inflation will pick up. And that's important to investors because 174 00:09:54,040 --> 00:09:56,480 Speaker 1: what the Fed thinks about the future from inflation effects 175 00:09:56,559 --> 00:09:59,000 Speaker 1: when it decides to move on interest rates and how 176 00:09:59,040 --> 00:10:03,679 Speaker 1: by how much stuck in our past? Me fifty plus 177 00:10:03,720 --> 00:10:06,959 Speaker 1: says uh, Well, I saw a CPI at six percent 178 00:10:07,000 --> 00:10:10,600 Speaker 1: in eight nine, so inflation could pick up when growth 179 00:10:10,600 --> 00:10:17,200 Speaker 1: picks up, but it hasn't. It's son and three kids 180 00:10:17,240 --> 00:10:20,520 Speaker 1: will do that preserve you or they'll take you down. 181 00:10:20,600 --> 00:10:23,559 Speaker 1: Let me tell you it's the other way around. I 182 00:10:23,600 --> 00:10:26,320 Speaker 1: don't know. I'm a tony with hair like on Saturday 183 00:10:26,360 --> 00:10:30,000 Speaker 1: night fever. That's that's that's what's causing. But we think 184 00:10:30,080 --> 00:10:32,840 Speaker 1: differently about We think inflation will pick up because we 185 00:10:32,920 --> 00:10:36,520 Speaker 1: observed it, we experienced it, But unfortunately a baby boomer 186 00:10:37,559 --> 00:10:40,680 Speaker 1: like me will ultimately come out of the equation. In surveys, 187 00:10:40,679 --> 00:10:45,400 Speaker 1: you'll see inflation expectations fall over time because at least 188 00:10:45,400 --> 00:10:48,240 Speaker 1: of people like you and other younger individuals will be 189 00:10:48,280 --> 00:10:51,000 Speaker 1: part of that survey more and more and their experiences 190 00:10:51,040 --> 00:10:54,480 Speaker 1: will be biased by their low inflation experience. This is 191 00:10:54,520 --> 00:10:56,520 Speaker 1: this is really tremendous. You guys both are you know 192 00:10:56,600 --> 00:11:01,920 Speaker 1: you're you're younger than I. Therefore care for your towards 193 00:11:01,960 --> 00:11:11,240 Speaker 1: not understanding the I'm the new it's the new crop. 194 00:11:12,000 --> 00:11:13,880 Speaker 1: At least of the new crop of PhDs are the 195 00:11:13,880 --> 00:11:15,240 Speaker 1: ones that are gonna that are going to have the 196 00:11:15,320 --> 00:11:19,120 Speaker 1: future so called Phillips curve models. The most exciting material 197 00:11:19,160 --> 00:11:21,240 Speaker 1: will probably come out in the next decade because I'll 198 00:11:21,240 --> 00:11:25,439 Speaker 1: have experienced things that that that we haven't created these 199 00:11:25,440 --> 00:11:28,000 Speaker 1: other things. You know, I hear both sides of this. Number. One, 200 00:11:28,040 --> 00:11:30,200 Speaker 1: I hear people kind of are are stuck in the 201 00:11:30,200 --> 00:11:32,640 Speaker 1: past and are looking for inflation models that are different. 202 00:11:32,840 --> 00:11:34,600 Speaker 1: And then I hear the other side of the equation, 203 00:11:34,600 --> 00:11:36,520 Speaker 1: which is, if you look at the trading desks on 204 00:11:36,559 --> 00:11:39,000 Speaker 1: Wall Street, they're all under the age of thirty and 205 00:11:39,040 --> 00:11:41,120 Speaker 1: they've never seen a cycle and they don't know how 206 00:11:41,120 --> 00:11:43,400 Speaker 1: to operate. So which is it? Good points, So it's 207 00:11:43,440 --> 00:11:46,960 Speaker 1: it's possible then with their bias towards inflation being low, 208 00:11:47,840 --> 00:11:50,800 Speaker 1: policymakers will come up with an idea that creates more 209 00:11:50,840 --> 00:11:53,800 Speaker 1: inflation and they'll be blindsided. So there's the other side 210 00:11:53,800 --> 00:11:57,320 Speaker 1: of that equation. Good point. I'm not big on like 211 00:11:57,480 --> 00:12:02,319 Speaker 1: viewer questions and all that, but this woman is absolutely brilliant. 212 00:12:02,840 --> 00:12:05,160 Speaker 1: This is some Julius and he's got it in trump 213 00:12:05,240 --> 00:12:09,640 Speaker 1: like all caps. Ask Tony what savers are to do 214 00:12:10,480 --> 00:12:14,760 Speaker 1: in new lower low rate environment? All the blatherer we're 215 00:12:14,800 --> 00:12:17,480 Speaker 1: doing sailor all the rest of it. The fact that 216 00:12:17,520 --> 00:12:21,560 Speaker 1: I mane should forget about it. What do savers? Well, 217 00:12:21,760 --> 00:12:26,560 Speaker 1: we think what to deploy that financial capital? It's it's electronic, 218 00:12:26,640 --> 00:12:30,120 Speaker 1: it's paper. Why not make it something physical? As you know, 219 00:12:30,240 --> 00:12:34,560 Speaker 1: there is a bias toward investments, private equity and real assets, 220 00:12:34,559 --> 00:12:38,800 Speaker 1: including real estate. Owning businesses is also a good idea. Yes, 221 00:12:39,840 --> 00:12:42,439 Speaker 1: we have too few in the amount of savings to 222 00:12:42,840 --> 00:12:45,440 Speaker 1: do all of that, so it is. It is a 223 00:12:45,440 --> 00:12:48,600 Speaker 1: difficult situation, but it depends on one's age. And if Julius, 224 00:12:48,640 --> 00:12:52,640 Speaker 1: you're young enough, don't bet against America. Warren Buffett would 225 00:12:52,640 --> 00:12:56,359 Speaker 1: tell you that, don't bet against capitalists. People worry about populist, 226 00:12:56,400 --> 00:12:59,000 Speaker 1: but what about the capitalist. Isn't it the business owner, 227 00:12:59,240 --> 00:13:03,040 Speaker 1: the individual worthy of some attention, because aren't they the 228 00:13:03,080 --> 00:13:06,120 Speaker 1: true disruptors? That phone you're carrying and perhaps sent tom 229 00:13:06,160 --> 00:13:08,160 Speaker 1: the message on? Do you think that that was made 230 00:13:08,160 --> 00:13:11,160 Speaker 1: by a populist? Some capitalists decided to make it and 231 00:13:11,160 --> 00:13:12,960 Speaker 1: then making a profit, and you could have made a 232 00:13:12,960 --> 00:13:15,880 Speaker 1: profit investing in that individual who made those I wonder 233 00:13:15,880 --> 00:13:19,080 Speaker 1: if he's always as philosophical or if this era unfortunately 234 00:13:19,120 --> 00:13:23,160 Speaker 1: negative yields towards things that I shouldn't be philosophical about. 235 00:13:23,360 --> 00:13:26,360 Speaker 1: Is negatively very quickly, we're gonna run out of time, 236 00:13:26,440 --> 00:13:29,720 Speaker 1: Mr Cosenzi, but our negative yields here to stay. Or 237 00:13:29,760 --> 00:13:31,439 Speaker 1: do you still look at him as a one off? 238 00:13:31,840 --> 00:13:38,200 Speaker 1: Two admiration, negad Adventistrates destroy money, so it is unlikely 239 00:13:38,320 --> 00:13:40,960 Speaker 1: they will be sustained over the long run. They also 240 00:13:41,000 --> 00:13:43,560 Speaker 1: siphon money from the private sector to the government, which 241 00:13:43,600 --> 00:13:46,480 Speaker 1: is an inefficient use of money. So it's improbable that 242 00:13:46,480 --> 00:13:48,160 Speaker 1: the last and it's a bad idea and something that 243 00:13:48,200 --> 00:13:51,200 Speaker 1: federal is unlikely to want to avoid. That's good. It's 244 00:13:51,200 --> 00:13:54,280 Speaker 1: a perfect time, Tony Coni. Thank you so much, Thanks 245 00:13:54,280 --> 00:14:08,679 Speaker 1: so much. Absolutely one thing. This is one of the 246 00:14:08,760 --> 00:14:12,080 Speaker 1: quietest notes of the week, and it's from City Group. 247 00:14:12,080 --> 00:14:15,400 Speaker 1: It's one, two, three, four, five, six paragraphs. Big deal. 248 00:14:15,840 --> 00:14:18,840 Speaker 1: Dana Peterson worked us up in the car going to work. 249 00:14:19,320 --> 00:14:22,520 Speaker 1: Uh this morning, she joins us. Now, Dana, it's a 250 00:14:22,680 --> 00:14:26,359 Speaker 1: it's a note of optimism. I mean, there's a consumption 251 00:14:26,480 --> 00:14:31,120 Speaker 1: driven optimism to the American economy. Does that EBB or 252 00:14:31,200 --> 00:14:36,320 Speaker 1: does that sustain us in the next year? Well, I 253 00:14:36,360 --> 00:14:40,280 Speaker 1: think that. You know, we're definitely seeing this theme of 254 00:14:40,280 --> 00:14:44,880 Speaker 1: of domestic resilience driven by households and government uh and 255 00:14:45,000 --> 00:14:48,240 Speaker 1: external weakness. And certainly when we saw the retail sales, 256 00:14:48,440 --> 00:14:51,360 Speaker 1: with the exception of autos, we saw across the broad strength, 257 00:14:51,600 --> 00:14:54,480 Speaker 1: a board strength and even department stores, which is posted 258 00:14:54,480 --> 00:15:00,240 Speaker 1: a negative string of negative prints were up, Dana. Key 259 00:15:00,320 --> 00:15:04,640 Speaker 1: question for me this month this year, who leads the 260 00:15:04,680 --> 00:15:08,400 Speaker 1: consumer our businesses when it comes to the cycle. Well, 261 00:15:08,440 --> 00:15:10,120 Speaker 1: I think it's going to be It's definitely going to 262 00:15:10,160 --> 00:15:12,960 Speaker 1: be consumers, because what we're seeing is that the US 263 00:15:13,160 --> 00:15:17,240 Speaker 1: is participating in this global trade and manufacturing slump, but 264 00:15:17,520 --> 00:15:20,240 Speaker 1: we're it's still expressing resilience and other sectors and that's 265 00:15:20,280 --> 00:15:23,800 Speaker 1: being certainly helped by the consumer as well as the 266 00:15:23,840 --> 00:15:28,080 Speaker 1: massive amounts of discal stimulus that was implemented last year 267 00:15:28,080 --> 00:15:32,680 Speaker 1: and then will be implemented yet again. So what's your 268 00:15:32,720 --> 00:15:35,520 Speaker 1: GDP called twelve months out? Just to frame the conversation 269 00:15:36,000 --> 00:15:38,720 Speaker 1: is City Group and Dana Peterson and two percent plus? 270 00:15:39,040 --> 00:15:42,760 Speaker 1: Are you below two percent? We still have two percent 271 00:15:42,840 --> 00:15:46,280 Speaker 1: and that's because you have two different drivers going on. 272 00:15:46,280 --> 00:15:48,960 Speaker 1: On the one hand, the downward revisions from the benchmark 273 00:15:49,000 --> 00:15:54,240 Speaker 1: GDP release placed downward pressure on on growth for next year, 274 00:15:54,640 --> 00:15:57,720 Speaker 1: so we might see below two percent. But on the 275 00:15:57,760 --> 00:16:00,080 Speaker 1: other hand, you have upward pressure from the bipart are 276 00:16:00,120 --> 00:16:02,640 Speaker 1: some budgets aft between nineteen So together that's keeping you 277 00:16:02,720 --> 00:16:05,800 Speaker 1: right around supercent Danta. What will be the effect of 278 00:16:05,840 --> 00:16:08,160 Speaker 1: the FED cutting fifty basis points in September, and some 279 00:16:08,160 --> 00:16:11,400 Speaker 1: people are hoping, well, that's a great question. We asked 280 00:16:11,440 --> 00:16:14,600 Speaker 1: our our investors who read our research, and they said, 281 00:16:14,600 --> 00:16:17,560 Speaker 1: it's probably just going to inflate asset prices. That's not 282 00:16:17,640 --> 00:16:21,720 Speaker 1: really going to drive additional consumption or even urge businesses 283 00:16:21,760 --> 00:16:25,080 Speaker 1: to invest. And indeed, businesses are on the sidelines because 284 00:16:25,080 --> 00:16:28,120 Speaker 1: they're concerned about the external environment. They're concerned. They're very 285 00:16:28,200 --> 00:16:31,280 Speaker 1: uncertain with respect to the trade wars between US and China, 286 00:16:31,760 --> 00:16:35,400 Speaker 1: and in that environment, the said, it seems like it's 287 00:16:35,480 --> 00:16:39,600 Speaker 1: more willing to cut clearly, but will it upset all 288 00:16:39,720 --> 00:16:43,640 Speaker 1: the weakness from abroad? Probably not. Yeah, data, I guess 289 00:16:43,640 --> 00:16:47,560 Speaker 1: there's also a sort of angst over markets. Have we shifted? 290 00:16:47,800 --> 00:16:51,840 Speaker 1: Has something materially changed over the past few weeks when 291 00:16:51,880 --> 00:16:54,920 Speaker 1: it comes to sentiment and the direction of markets given 292 00:16:54,920 --> 00:16:57,520 Speaker 1: the fact that businesses aren't spending as much in the 293 00:16:57,560 --> 00:17:00,440 Speaker 1: wake of uncertainty, etcetera. I mean, have we entered a 294 00:17:00,480 --> 00:17:05,800 Speaker 1: new regime, a new paradigm. Well, I think we've been. 295 00:17:05,840 --> 00:17:08,600 Speaker 1: We've been moving in that direction since it earlier this year. 296 00:17:08,680 --> 00:17:10,800 Speaker 1: We've seen that and the FED speak, you know, the 297 00:17:10,880 --> 00:17:14,520 Speaker 1: FED went from being pretty hawkish in December of last 298 00:17:14,600 --> 00:17:19,520 Speaker 1: year to putious native watching and then shifting to an 299 00:17:19,520 --> 00:17:22,960 Speaker 1: actual rate cut and signaling that there could be more. Okay, 300 00:17:23,000 --> 00:17:24,879 Speaker 1: but this is really critical at Lisa brought up as 301 00:17:24,920 --> 00:17:26,960 Speaker 1: the arch theme of the week in the Central Bank, 302 00:17:27,320 --> 00:17:30,360 Speaker 1: and it is we've had a regime shift in bonds inversion, 303 00:17:30,440 --> 00:17:34,080 Speaker 1: distant version, but clearly a lower set on yield. Has 304 00:17:34,119 --> 00:17:37,560 Speaker 1: it been a Bullard like regime shift or is it 305 00:17:37,640 --> 00:17:43,080 Speaker 1: business as usual for Philip's curve structured fed Well, I 306 00:17:43,320 --> 00:17:46,359 Speaker 1: think there has been a regime ship in terms of 307 00:17:46,680 --> 00:17:50,800 Speaker 1: markets viewing this in version of the yield curve psychologically, 308 00:17:50,840 --> 00:17:52,479 Speaker 1: and I think it us have fed a little bit 309 00:17:52,480 --> 00:17:55,600 Speaker 1: more ammunition to go ahead. This is critical, Lisa. I mean, 310 00:17:55,640 --> 00:17:57,520 Speaker 1: I'm glad you brought this up because it really goes 311 00:17:57,600 --> 00:18:00,399 Speaker 1: to the heart of the communication the FEDS speak. We're 312 00:18:00,440 --> 00:18:03,240 Speaker 1: going to get is do they come over to build 313 00:18:03,280 --> 00:18:07,359 Speaker 1: Bullard's important short paper. I'm going to guess three years 314 00:18:07,359 --> 00:18:11,399 Speaker 1: ago where they've got a shift to regimes study versus 315 00:18:11,480 --> 00:18:14,919 Speaker 1: a more theoretical construction. Yeah, and Dana, I do have 316 00:18:15,000 --> 00:18:17,639 Speaker 1: to wonder also we're talking about the Federal Reserve and 317 00:18:17,680 --> 00:18:20,800 Speaker 1: their reaction function. But I do have to wonder whether 318 00:18:20,840 --> 00:18:23,359 Speaker 1: we're past the point of the U. S And China 319 00:18:23,440 --> 00:18:26,240 Speaker 1: coming to some agreement and making this all better. Whether 320 00:18:26,320 --> 00:18:28,919 Speaker 1: we've sort of passed that point at the at a 321 00:18:28,960 --> 00:18:32,240 Speaker 1: time when businesses aren't investing and we've already gotten that 322 00:18:32,320 --> 00:18:36,879 Speaker 1: sort of baked into the economy. Well, I don't know 323 00:18:37,000 --> 00:18:40,960 Speaker 1: that we're past the point for any change, um, meaning 324 00:18:40,960 --> 00:18:43,920 Speaker 1: things can get better. Certainly, President Trump said that he's 325 00:18:43,960 --> 00:18:46,840 Speaker 1: waiting for a phone call from President She and the 326 00:18:46,920 --> 00:18:51,160 Speaker 1: Chinese have been willing to deal with the US on 327 00:18:51,240 --> 00:18:54,119 Speaker 1: the point by point basis, meaning China is not willing 328 00:18:54,160 --> 00:18:56,040 Speaker 1: to go further than the US is. So I think 329 00:18:56,080 --> 00:19:01,160 Speaker 1: there is some time to reverse on this course. Um. 330 00:19:01,200 --> 00:19:03,280 Speaker 1: I mean, are we, you know, headed for a regime 331 00:19:03,320 --> 00:19:06,720 Speaker 1: where there's going to be perpetually weak growth. Probably not. 332 00:19:06,880 --> 00:19:09,560 Speaker 1: I mean, this is just part of the what happens 333 00:19:09,560 --> 00:19:11,680 Speaker 1: when you have a trade war. You know, it's global 334 00:19:12,080 --> 00:19:15,879 Speaker 1: and unless you have some change, it's going to be weak. Dana, 335 00:19:16,080 --> 00:19:18,280 Speaker 1: we've been talking about the yield curve and version the 336 00:19:18,320 --> 00:19:22,320 Speaker 1: gap between twos and tens uh throughout the week. I'm wondering, 337 00:19:22,320 --> 00:19:24,560 Speaker 1: do you think that is an indicator of recession in 338 00:19:24,600 --> 00:19:28,080 Speaker 1: the next six or twelve months in the United States. Well, 339 00:19:28,119 --> 00:19:30,840 Speaker 1: I would suggest that you should never place all your 340 00:19:30,840 --> 00:19:33,120 Speaker 1: ships on one measure um, and we know that there's 341 00:19:33,160 --> 00:19:35,720 Speaker 1: been different activity at both ends of the curve. At 342 00:19:35,720 --> 00:19:38,159 Speaker 1: the shorter end, you do have market signaling that the 343 00:19:38,240 --> 00:19:40,720 Speaker 1: said policies are too tight, the FED needs to cut. 344 00:19:40,880 --> 00:19:42,960 Speaker 1: At the longer end, some of that related to the 345 00:19:42,960 --> 00:19:45,920 Speaker 1: equity market. People are also nervous about second half earnings 346 00:19:46,320 --> 00:19:49,200 Speaker 1: and so they're buying treasuries as a you know, search 347 00:19:49,280 --> 00:19:52,879 Speaker 1: for for equality. Right um, So I would suggest that 348 00:19:52,920 --> 00:19:55,760 Speaker 1: it's not as strong as an indication. And plus you 349 00:19:55,800 --> 00:19:58,520 Speaker 1: have quantitative easing which kind of dampens back into the 350 00:19:58,560 --> 00:20:01,399 Speaker 1: Yolk curve as well. So would look at a multitude 351 00:20:01,400 --> 00:20:04,280 Speaker 1: of indicators. And right now the labor markets doing fine 352 00:20:04,880 --> 00:20:08,800 Speaker 1: um and growth outlook is still healthy. We still have 353 00:20:08,840 --> 00:20:11,840 Speaker 1: another round the fiscal stimulus in the US. I'm not 354 00:20:11,880 --> 00:20:15,040 Speaker 1: sure if at all signals right now, if anything signaling 355 00:20:15,080 --> 00:20:17,800 Speaker 1: a recession in the US. We are seeing signals of 356 00:20:17,840 --> 00:20:20,959 Speaker 1: a potential flowdown or even a recession globally led by 357 00:20:21,040 --> 00:20:25,520 Speaker 1: China and Germany, fueled by the trade wars. Dana, thank 358 00:20:25,560 --> 00:20:28,080 Speaker 1: you so much. Dana Peterson with US with City Group 359 00:20:28,119 --> 00:20:31,640 Speaker 1: this morning on a two percent economy. Two point zero 360 00:20:31,640 --> 00:20:44,560 Speaker 1: percent economy, I believe is where she is. We are 361 00:20:44,600 --> 00:20:47,840 Speaker 1: thrilled to bring in now for two sections, Michael Darta. 362 00:20:48,560 --> 00:20:50,840 Speaker 1: He is at a profound impact on Bloomberg on the 363 00:20:50,880 --> 00:20:56,080 Speaker 1: economy and Bloomberg surveillance synthesizing economics into markets. No one 364 00:20:56,200 --> 00:20:59,959 Speaker 1: on the street uses Bloomberg charts like Michael dart is. Mike, 365 00:21:00,160 --> 00:21:02,880 Speaker 1: what's the most important chart for you on the Bloomberg 366 00:21:03,000 --> 00:21:06,280 Speaker 1: right now? What matters? And the zillions of charts you construct. 367 00:21:07,680 --> 00:21:10,720 Speaker 1: Thanks for having me on, Tom. You know, I'm watching 368 00:21:10,760 --> 00:21:14,320 Speaker 1: these various measures of the of the yield curve, both 369 00:21:14,359 --> 00:21:18,600 Speaker 1: here and overseas, and you know, one thing that's really 370 00:21:18,680 --> 00:21:20,840 Speaker 1: jumped out in the last week. I know, you know 371 00:21:20,880 --> 00:21:23,640 Speaker 1: a lot of journalists have been focusing on the very 372 00:21:23,760 --> 00:21:26,840 Speaker 1: brief inversion in the ten year to two years spread 373 00:21:27,480 --> 00:21:30,000 Speaker 1: uh this week, but we've had other measures of the 374 00:21:30,080 --> 00:21:34,560 Speaker 1: yield curve that certainly have some prominence in the academic literature, 375 00:21:34,640 --> 00:21:36,720 Speaker 1: like the tenure to the T bill rate that have 376 00:21:36,800 --> 00:21:40,320 Speaker 1: been inverted since May uh. And we're even you know, 377 00:21:40,320 --> 00:21:43,840 Speaker 1: we're seeing that inversion intensify. And I think one reason 378 00:21:43,920 --> 00:21:47,359 Speaker 1: for that was this hot CPI inflation report, which sounds 379 00:21:47,359 --> 00:21:50,960 Speaker 1: pretty counterintuitive. If inflation comes in above expectations, why the 380 00:21:51,000 --> 00:21:54,560 Speaker 1: heck would investors you want to buy bonds and invert 381 00:21:54,600 --> 00:21:59,280 Speaker 1: the yield curve. Well, if that hot inflation report creates 382 00:21:59,280 --> 00:22:02,040 Speaker 1: some more of a luctance for the Fed to to 383 00:22:02,240 --> 00:22:06,840 Speaker 1: move in it gingerly fashioned, it could actually increase risks 384 00:22:06,840 --> 00:22:09,320 Speaker 1: of a downturn. And I think that's, you know, part 385 00:22:09,359 --> 00:22:12,159 Speaker 1: of what happened this week, even though it didn't get 386 00:22:12,160 --> 00:22:14,840 Speaker 1: a lot of attention. So, Mike, here's the thing. I'm 387 00:22:14,840 --> 00:22:18,199 Speaker 1: trying to square the sort of concern about recession that 388 00:22:18,240 --> 00:22:21,639 Speaker 1: we saw pervasive throughout the week with the retail sales 389 00:22:21,680 --> 00:22:24,240 Speaker 1: that we saw which were really good, and the fact 390 00:22:24,320 --> 00:22:27,600 Speaker 1: that we saw retailers like Walmart post really good returns 391 00:22:27,600 --> 00:22:31,240 Speaker 1: and results. How do you square those two realities. Yeah, 392 00:22:31,280 --> 00:22:34,439 Speaker 1: that's a great question. So there there's I think been 393 00:22:34,480 --> 00:22:37,639 Speaker 1: a lot of confusion in looking at some of these 394 00:22:37,720 --> 00:22:40,359 Speaker 1: long leading indicators, like the yield curve is a is 395 00:22:40,400 --> 00:22:44,160 Speaker 1: a very long leading indicator with quite a bit of variation. Historically, 396 00:22:44,200 --> 00:22:48,159 Speaker 1: typically an inversion will occur anywhere between seven to twenty 397 00:22:48,200 --> 00:22:50,600 Speaker 1: one months before a recession. So if we were just 398 00:22:50,680 --> 00:22:54,480 Speaker 1: starting to see incipient and versions back in May and June. 399 00:22:55,040 --> 00:22:58,000 Speaker 1: It would likely be way too early to see the 400 00:22:58,080 --> 00:23:02,760 Speaker 1: coincident indicators meaning reach, hail, sales, production, jobs, incomes. Those 401 00:23:02,800 --> 00:23:05,320 Speaker 1: are all coincident. They tell us how the economy did 402 00:23:05,440 --> 00:23:08,480 Speaker 1: last month, but not necessarily how it will do a 403 00:23:08,560 --> 00:23:11,040 Speaker 1: year from now. And all that data looks really strong. 404 00:23:11,480 --> 00:23:14,840 Speaker 1: And that's one reason that historically when the curve inverts, 405 00:23:15,520 --> 00:23:18,639 Speaker 1: the narrative about it being different this time and actually 406 00:23:18,720 --> 00:23:22,080 Speaker 1: quite compelling because it looks different if you're looking to 407 00:23:22,200 --> 00:23:25,480 Speaker 1: the coincident data, which is still healthy. Mike Michael, you 408 00:23:25,560 --> 00:23:28,000 Speaker 1: lead your note with a demand side analysis of what 409 00:23:28,040 --> 00:23:31,920 Speaker 1: the federal do cut rates help demand, etcetera, etcetera. How 410 00:23:31,960 --> 00:23:35,240 Speaker 1: do you take the idea of central bank efficacy at 411 00:23:35,280 --> 00:23:38,200 Speaker 1: the zero bound or even at the negative interest rate bound? 412 00:23:38,680 --> 00:23:40,760 Speaker 1: Can can we have a can we have a trust 413 00:23:40,880 --> 00:23:46,720 Speaker 1: and the outcomes that are traditional? Well, Tom, I think 414 00:23:46,720 --> 00:23:50,560 Speaker 1: it's a question of if the central banks are behind 415 00:23:50,560 --> 00:23:54,080 Speaker 1: the curve or not. So, you know, these falling interest 416 00:23:54,160 --> 00:23:58,480 Speaker 1: rate levels are are one sign of central banks being 417 00:23:58,560 --> 00:24:01,520 Speaker 1: less effective in the sense that you have growth momentum 418 00:24:01,560 --> 00:24:06,640 Speaker 1: slowing and with that weaker momentum the whole structure of equilibrium, 419 00:24:06,680 --> 00:24:10,040 Speaker 1: interest rates comes down, and and so you know, you 420 00:24:10,080 --> 00:24:12,359 Speaker 1: could see a situation, you know, with the Fed, I 421 00:24:12,359 --> 00:24:14,840 Speaker 1: think we're already seeing it where even though they've started 422 00:24:14,840 --> 00:24:16,960 Speaker 1: to cut rates and they're expected to cut rates in 423 00:24:17,000 --> 00:24:21,119 Speaker 1: the future, it may not revive growth because they're simply 424 00:24:21,640 --> 00:24:25,360 Speaker 1: the curve. So we need the central banks to get 425 00:24:25,359 --> 00:24:28,720 Speaker 1: ahead of the curve. What I be looking for is 426 00:24:28,800 --> 00:24:30,760 Speaker 1: the bonds to sell off. I mean, I think if 427 00:24:30,800 --> 00:24:34,000 Speaker 1: you continue to see the long bond yield making new loads, 428 00:24:34,040 --> 00:24:35,760 Speaker 1: I mean, that is not a healthy sign for the 429 00:24:35,800 --> 00:24:38,840 Speaker 1: business cycle. That's not what you would see if growth 430 00:24:38,880 --> 00:24:42,240 Speaker 1: and inflation expectations for the future we're reviving in a 431 00:24:42,320 --> 00:24:45,440 Speaker 1: sufficient fashion, we're gonna come back. But Michael, we got 432 00:24:45,440 --> 00:24:48,879 Speaker 1: to talk about the major, major recession indicator, which is 433 00:24:48,920 --> 00:24:52,560 Speaker 1: a line out the door. It Backdoor Donuts in Oak 434 00:24:52,600 --> 00:24:55,120 Speaker 1: Bluffs and Martha's Vineyard. I mean, what are you seeing 435 00:24:55,160 --> 00:24:57,040 Speaker 1: on the vineyard this year? I mean, you're a regular. 436 00:24:57,240 --> 00:25:00,680 Speaker 1: Everybody knows you spend like six months out there every year. 437 00:25:00,720 --> 00:25:03,560 Speaker 1: I mean at the Artcliff Diner, at Backdoor Donuts. What 438 00:25:03,640 --> 00:25:07,760 Speaker 1: do you indicate you know? I mean, you know, the 439 00:25:07,800 --> 00:25:12,160 Speaker 1: restaurants are full and things are always pretty chipper out here, Tom, 440 00:25:12,200 --> 00:25:15,000 Speaker 1: but this may not be a good reflection of reality. 441 00:25:15,080 --> 00:25:18,159 Speaker 1: Let's put it that way. Really, you think with this, 442 00:25:18,320 --> 00:25:20,960 Speaker 1: Michael Darta of m Camp Partners are thrilled he could 443 00:25:20,960 --> 00:25:23,600 Speaker 1: be with us today, Michael, to fold into the equity 444 00:25:23,640 --> 00:25:27,240 Speaker 1: markets in the long term ramifications for our listeners worldwide. 445 00:25:27,920 --> 00:25:32,000 Speaker 1: James Bevan was just on with a tangible optimism about 446 00:25:32,040 --> 00:25:35,480 Speaker 1: cash flow generation and the ability to buy here in 447 00:25:35,520 --> 00:25:40,280 Speaker 1: the vicinity of here. Do you share that optimism or 448 00:25:40,359 --> 00:25:44,560 Speaker 1: do you link equity performance into the angst of the 449 00:25:44,560 --> 00:25:49,320 Speaker 1: bond market? Tom, I I don't share that optimism at 450 00:25:49,320 --> 00:25:53,800 Speaker 1: the moment, simply because business cycle risks, meaning recession risks, 451 00:25:53,840 --> 00:25:57,119 Speaker 1: I think, have been amplified to the highest level that 452 00:25:57,160 --> 00:26:00,399 Speaker 1: we've seen so far during this economic expansion. And that 453 00:26:00,440 --> 00:26:02,760 Speaker 1: doesn't mean the equity market is going to go straight down. 454 00:26:02,840 --> 00:26:05,439 Speaker 1: But I do think the risk of a recession and 455 00:26:05,560 --> 00:26:10,600 Speaker 1: typically what accompanies it a bear market, is elevated here 456 00:26:10,640 --> 00:26:13,000 Speaker 1: if we think back to where we ended last year, 457 00:26:13,080 --> 00:26:16,920 Speaker 1: where the market fell almost yet we didn't have these 458 00:26:17,320 --> 00:26:21,000 Speaker 1: long leading indicators of recession flashing red at that point. 459 00:26:21,560 --> 00:26:24,639 Speaker 1: My view, as you want to be bullish there now, 460 00:26:24,640 --> 00:26:28,080 Speaker 1: with the equity market just off all time highs, in 461 00:26:28,200 --> 00:26:31,920 Speaker 1: some real concerns coming out of credit markets, I would 462 00:26:32,280 --> 00:26:34,440 Speaker 1: I would have a you know, a much more cautious 463 00:26:34,520 --> 00:26:38,640 Speaker 1: posture here. Now go ahead, Sorry, Well, I just want 464 00:26:38,680 --> 00:26:41,760 Speaker 1: to know, is a trade deal something that could save 465 00:26:42,200 --> 00:26:47,879 Speaker 1: this economic cycle? You know, it's it's certainly possible if 466 00:26:47,920 --> 00:26:53,160 Speaker 1: it boosted optimism, optimism enough to disinvert the yield curve 467 00:26:53,200 --> 00:26:56,360 Speaker 1: and you know, sort of indirectly put the FED into 468 00:26:56,440 --> 00:26:59,480 Speaker 1: a more accommodative stance. We've been seeing just the opposite 469 00:26:59,520 --> 00:27:03,760 Speaker 1: on Fortunately, it seems like a deal is almost wishful 470 00:27:03,880 --> 00:27:05,520 Speaker 1: thinking now. I mean, if we look at how the 471 00:27:05,560 --> 00:27:10,000 Speaker 1: administration has has acted, UM, it's not clear to me 472 00:27:10,040 --> 00:27:12,280 Speaker 1: at all that there's even a desire for a deal, 473 00:27:12,320 --> 00:27:15,560 Speaker 1: at least one that would you know, completely reverse the tariffs. 474 00:27:15,560 --> 00:27:17,960 Speaker 1: I think the best we can hope for is sort of, 475 00:27:18,640 --> 00:27:20,879 Speaker 1: you know, in an environment where the trade war doesn't 476 00:27:20,880 --> 00:27:24,840 Speaker 1: continue to escalate. Um, And that's probably not going to 477 00:27:24,960 --> 00:27:27,760 Speaker 1: cut it in terms of a big turnaround and the look, 478 00:27:27,960 --> 00:27:29,639 Speaker 1: so let's say that's the base case. When do we 479 00:27:29,640 --> 00:27:33,879 Speaker 1: get recession in the US, I would say, you know, 480 00:27:33,960 --> 00:27:37,600 Speaker 1: we'd probably be looking at you know, business cycle peaks 481 00:27:37,680 --> 00:27:41,280 Speaker 1: sometime around next summer, you know, through the through the winner. 482 00:27:41,280 --> 00:27:45,040 Speaker 1: It's really looking ahead a year, maybe a little bit longer. 483 00:27:45,359 --> 00:27:47,280 Speaker 1: The key here will be to watch some of these 484 00:27:47,359 --> 00:27:51,400 Speaker 1: intermediate and shorter term leading indicators for confirmation. And it's 485 00:27:51,400 --> 00:27:53,760 Speaker 1: probably still too soon to expect to see much, but 486 00:27:54,359 --> 00:27:56,640 Speaker 1: even we can look at high yield spreads for example. 487 00:27:56,760 --> 00:28:00,760 Speaker 1: So far no recession indicated by you know, by credit spreads, 488 00:28:00,800 --> 00:28:04,440 Speaker 1: but they do suggest that growth is slowing, and certainly 489 00:28:04,480 --> 00:28:06,760 Speaker 1: we could see more pressure they're going into next year. 490 00:28:07,200 --> 00:28:09,520 Speaker 1: And then for listeners, I would watch, if you want one, 491 00:28:09,840 --> 00:28:12,920 Speaker 1: watch jobless claims, you know, claims on a year over 492 00:28:13,040 --> 00:28:17,440 Speaker 1: year basis of phenomenally important recession indicator, only leaning by 493 00:28:17,440 --> 00:28:21,320 Speaker 1: a few months, but still if you're rising or more 494 00:28:21,480 --> 00:28:24,040 Speaker 1: year to year on that four week moving average, then 495 00:28:24,160 --> 00:28:26,920 Speaker 1: you know, go into the bunker because business cycle is 496 00:28:26,960 --> 00:28:30,719 Speaker 1: probably coming down. Mica. One final question, and that is 497 00:28:30,760 --> 00:28:34,679 Speaker 1: that there's an understanding of goods disinflation and deflation and 498 00:28:34,720 --> 00:28:38,400 Speaker 1: the angst of the gloom crew that service sector inflation 499 00:28:39,080 --> 00:28:42,880 Speaker 1: will begin to disinflate. Is that feasible that all the 500 00:28:42,920 --> 00:28:47,719 Speaker 1: goods manufacturing trade challenge rolls right over and actually affects 501 00:28:48,440 --> 00:28:54,160 Speaker 1: service sector inflation. Tom It depends on, you know, on 502 00:28:54,160 --> 00:28:58,160 Speaker 1: on how the Fed manages. So if if overall aggregate 503 00:28:58,200 --> 00:29:01,719 Speaker 1: demand growth is allowed to slump, then that's exactly what 504 00:29:01,800 --> 00:29:04,560 Speaker 1: you'll see. If not, then prices will be going up 505 00:29:04,680 --> 00:29:07,560 Speaker 1: in some sectors and down in others. One thing I 506 00:29:07,560 --> 00:29:10,320 Speaker 1: think it's important to point out is many people look 507 00:29:10,360 --> 00:29:13,120 Speaker 1: at the almost one and a half percent ten year 508 00:29:13,200 --> 00:29:15,920 Speaker 1: yield and they think this is being driven by central banks. 509 00:29:16,320 --> 00:29:18,960 Speaker 1: But what's missed is the fact that year over year 510 00:29:19,080 --> 00:29:22,880 Speaker 1: nominal GDP aggregate demand growth has slowed from a six 511 00:29:22,960 --> 00:29:26,120 Speaker 1: percent year to year growth rate in you two of 512 00:29:26,240 --> 00:29:29,480 Speaker 1: last year to four percent growth. That's two hundred basis 513 00:29:29,520 --> 00:29:33,280 Speaker 1: points that any wonder that the tenure yield has fallen 514 00:29:33,320 --> 00:29:35,840 Speaker 1: almost as much. It isn't to me, but it seems 515 00:29:35,920 --> 00:29:37,840 Speaker 1: like that's, you know, a bit overlooked out there in 516 00:29:37,880 --> 00:29:40,560 Speaker 1: the commentation. We leave Michael Darter with What made his 517 00:29:40,760 --> 00:29:43,840 Speaker 1: claim was just as the dynamics of nominal GDP top 518 00:29:43,880 --> 00:29:47,480 Speaker 1: line animal spirit into what we see in bonds and equities. 519 00:29:47,800 --> 00:29:51,280 Speaker 1: Michael Darter, thank you so much for this extensive conversation. 520 00:29:51,960 --> 00:30:05,440 Speaker 1: I'm an important Friday Kevin Carey has been one of 521 00:30:05,440 --> 00:30:09,120 Speaker 1: the few people who has actually said when everybody calmed 522 00:30:09,160 --> 00:30:14,680 Speaker 1: down and actually look at what's available, the programs, and 523 00:30:14,720 --> 00:30:18,000 Speaker 1: the desire to fix this train wreck. He is with 524 00:30:18,240 --> 00:30:21,440 Speaker 1: education policy. He has written on this for the Chronicle 525 00:30:21,480 --> 00:30:25,800 Speaker 1: of Higher Education. Most importantly, he's worked at the Center 526 00:30:25,800 --> 00:30:29,120 Speaker 1: on Budget and Policy Priorities, which is not only something 527 00:30:29,160 --> 00:30:32,479 Speaker 1: liberals read, it's something conservatives read as well. He's out 528 00:30:32,520 --> 00:30:35,800 Speaker 1: of Binghamton and Ohio State University. Kevin, We're honored to 529 00:30:35,800 --> 00:30:38,520 Speaker 1: have you on the program. Uh, let's get to the 530 00:30:38,560 --> 00:30:43,280 Speaker 1: crisis part of it. Everybody lathers hysterical about student debt. 531 00:30:44,000 --> 00:30:48,880 Speaker 1: Is the is the hysteria warranted? Well, there's a couple 532 00:30:48,920 --> 00:30:51,320 Speaker 1: of different ways to talk about a crisis. Some people 533 00:30:51,680 --> 00:30:55,800 Speaker 1: analogize the student debt amount of student debt, which is 534 00:30:55,800 --> 00:30:58,040 Speaker 1: grown and grown and grown to the two thousand eight 535 00:30:58,040 --> 00:31:00,520 Speaker 1: housing crisis. That's about analogy. It's not the same thing. 536 00:31:00,560 --> 00:31:04,680 Speaker 1: There's not a there's not a frothy securitization of student 537 00:31:04,680 --> 00:31:08,560 Speaker 1: loans out there. People aren't speculating on other people's loans. Um. 538 00:31:08,600 --> 00:31:10,920 Speaker 1: I think it is an enormous problem for a lot 539 00:31:10,960 --> 00:31:13,880 Speaker 1: of people. And I think, uh, if you step way 540 00:31:13,920 --> 00:31:16,320 Speaker 1: back and say, over the last thirty or forty years, 541 00:31:16,320 --> 00:31:20,600 Speaker 1: we essentially decided to convert our higher education system to 542 00:31:20,840 --> 00:31:25,120 Speaker 1: UH in many ways predominantly debt financed or substantially debt 543 00:31:25,200 --> 00:31:28,480 Speaker 1: finance system. Um. I think it's it's that has not 544 00:31:28,560 --> 00:31:31,720 Speaker 1: worked out well and it's hurting a lot of people. Okay, 545 00:31:31,880 --> 00:31:35,000 Speaker 1: so let's look at the finance first. The quickest solution, 546 00:31:35,040 --> 00:31:36,920 Speaker 1: of course, this comes up with the keyen household does 547 00:31:36,960 --> 00:31:40,720 Speaker 1: any other household? Is the quickest solution to get over 548 00:31:40,720 --> 00:31:44,280 Speaker 1: this ten year or fifteen year payback and extended out 549 00:31:44,320 --> 00:31:47,280 Speaker 1: over a lifetime of employment. I'm going to guess thirty 550 00:31:47,360 --> 00:31:51,720 Speaker 1: or forty years. Well, I mean, you can extend a 551 00:31:51,760 --> 00:31:54,160 Speaker 1: loan out to thirty years, um, but really there's no 552 00:31:54,200 --> 00:31:56,840 Speaker 1: reason to do that because we have a system of 553 00:31:57,240 --> 00:32:00,160 Speaker 1: UM income based for payment and loan forgiveness now out 554 00:32:00,240 --> 00:32:04,360 Speaker 1: the federal government runs. So you can UM at most 555 00:32:04,920 --> 00:32:09,240 Speaker 1: make your monthly payments, say fixed percentage of your disposable income, 556 00:32:09,680 --> 00:32:13,160 Speaker 1: and then any UM remaining data is forgiven after twenty 557 00:32:13,240 --> 00:32:15,600 Speaker 1: years or if you're in a public service job, ten years, 558 00:32:15,600 --> 00:32:18,200 Speaker 1: which is actually a really good deal. Although we're having 559 00:32:18,240 --> 00:32:20,880 Speaker 1: a lot of problems now with the initial implementation of 560 00:32:20,880 --> 00:32:24,680 Speaker 1: that program. I mean, I mean my point here is, 561 00:32:24,840 --> 00:32:28,320 Speaker 1: people like you and others are making all these well 562 00:32:28,400 --> 00:32:33,520 Speaker 1: meaning efforts to write this program, and I would suggest 563 00:32:33,640 --> 00:32:37,720 Speaker 1: families aren't aware of all these efforts. Am I right 564 00:32:37,840 --> 00:32:41,520 Speaker 1: or wrong on that? I don't think people realize that 565 00:32:41,560 --> 00:32:46,360 Speaker 1: we have a a income based repayment and loan forgiveness program. 566 00:32:46,400 --> 00:32:48,120 Speaker 1: I mean then, and we've had it since two thousand 567 00:32:48,160 --> 00:32:51,720 Speaker 1: and seven. The reason they don't realize how why don't 568 00:32:51,800 --> 00:32:56,440 Speaker 1: we know this? Um? The programs are too complicated. There 569 00:32:56,440 --> 00:32:59,280 Speaker 1: are too many options for repaying your loans. Every Congress 570 00:32:59,520 --> 00:33:01,960 Speaker 1: never he's away old options for repaying loans. They just 571 00:33:02,040 --> 00:33:03,920 Speaker 1: keep adding new ones. So we're at the point now 572 00:33:03,920 --> 00:33:05,440 Speaker 1: where if you try to figure it out, it's like 573 00:33:05,480 --> 00:33:10,800 Speaker 1: looking at a huge spreadsheet. There are dozens of possible combinations. UM. 574 00:33:10,840 --> 00:33:13,800 Speaker 1: The loan servicing companies. These are private companies that the U. S. 575 00:33:13,840 --> 00:33:18,120 Speaker 1: Department of Education contracts with to help people make these decisions. UM. 576 00:33:18,200 --> 00:33:20,880 Speaker 1: They often don't do a good job. They're paid on 577 00:33:20,880 --> 00:33:24,080 Speaker 1: a per capita basis UH for servicing these loans, which 578 00:33:24,080 --> 00:33:26,120 Speaker 1: means the more complicated your loan and the more advice 579 00:33:26,400 --> 00:33:30,160 Speaker 1: you need, the less money you make for them, exactly. 580 00:33:30,200 --> 00:33:34,760 Speaker 1: They're not. The system is not incentivized to sit the 581 00:33:34,880 --> 00:33:37,920 Speaker 1: kid down. He's twenties, four years old, he's got a 582 00:33:37,920 --> 00:33:40,800 Speaker 1: big fat loan, he's got a payoff, and they don't 583 00:33:40,800 --> 00:33:45,080 Speaker 1: make it simple. They're not incentivized to make it simple, right, No, 584 00:33:45,240 --> 00:33:47,040 Speaker 1: they're not at all. I mean, in some ways they're 585 00:33:47,320 --> 00:33:52,080 Speaker 1: incentivized just push people into certain kinds of repayment that 586 00:33:52,400 --> 00:33:55,120 Speaker 1: actually make you ineligible for loan forgiveness and in the 587 00:33:55,160 --> 00:33:59,440 Speaker 1: long term, absolutely bizarre. What's the politics of this? Is 588 00:33:59,600 --> 00:34:04,600 Speaker 1: Democrat and against Republican, Republican against Democrat, or is everybody 589 00:34:04,680 --> 00:34:07,840 Speaker 1: just appalled by what we've worked at, what we've worked 590 00:34:07,880 --> 00:34:10,080 Speaker 1: our way into. I mean, I don't think there's a 591 00:34:10,080 --> 00:34:12,880 Speaker 1: member of Congress that doesn't have a lot of constituents 592 00:34:12,920 --> 00:34:14,680 Speaker 1: who are super worried about this. So and that I 593 00:34:14,719 --> 00:34:18,359 Speaker 1: think it is a bipartisan issue. On the specific issue 594 00:34:18,400 --> 00:34:21,319 Speaker 1: of loan forgiveness, I think that is pretty partisan. I mean, 595 00:34:21,360 --> 00:34:25,600 Speaker 1: we have these um enormous policy proposals from some of 596 00:34:25,640 --> 00:34:29,240 Speaker 1: the Democrats running for president, including Elizabeth Warren and Bernie Sanders, 597 00:34:29,239 --> 00:34:32,360 Speaker 1: to have essentially massed that forgiveness for the loans that 598 00:34:32,400 --> 00:34:35,319 Speaker 1: are out there got combined with U kind of a 599 00:34:35,320 --> 00:34:39,880 Speaker 1: free college plan. UM. Republicans have proposed to eliminate public 600 00:34:39,880 --> 00:34:44,240 Speaker 1: service loan forgiveness. UM. That hasn't gone anywhere and won't 601 00:34:44,280 --> 00:34:47,239 Speaker 1: as long as the Democrats control the House. But I 602 00:34:47,239 --> 00:34:49,640 Speaker 1: think on the forgiveness question, it is a partisan issue. 603 00:34:49,760 --> 00:34:52,560 Speaker 1: Which country does this? Right? I mean, is there a 604 00:34:52,680 --> 00:34:54,920 Speaker 1: Kevin care you just joining us? So it's Kevin Carey 605 00:34:55,040 --> 00:34:59,960 Speaker 1: with education policy? Which which country gets the Kevin care 606 00:35:00,120 --> 00:35:06,319 Speaker 1: re prize for common sense and educating our our kids? Well? 607 00:35:06,360 --> 00:35:08,600 Speaker 1: I mean, you know, people often point to Australia and 608 00:35:08,600 --> 00:35:13,520 Speaker 1: New Zealand is having UM income based loan repayment programs 609 00:35:13,560 --> 00:35:15,960 Speaker 1: that work. UM. But what's important to know is that 610 00:35:15,960 --> 00:35:19,840 Speaker 1: that's accompanied by UM a pretty low cost system to 611 00:35:19,880 --> 00:35:21,920 Speaker 1: start with. You know, so we we have a very 612 00:35:22,040 --> 00:35:27,239 Speaker 1: high cost really education system. UM. Uh, that we have 613 00:35:27,280 --> 00:35:30,880 Speaker 1: an unusual number of students going to private nonprofit and 614 00:35:31,160 --> 00:35:34,440 Speaker 1: private for profit colleges, where in a lot of countries 615 00:35:34,520 --> 00:35:38,279 Speaker 1: it's basically just the public university system. UM. That that's 616 00:35:38,320 --> 00:35:41,000 Speaker 1: out there in terms of publicavities, we're at the prime 617 00:35:41,080 --> 00:35:44,120 Speaker 1: time of write and checks on this. Is there any 618 00:35:44,320 --> 00:35:49,120 Speaker 1: outrage that forty has become sixty, and that's sixty is 619 00:35:49,200 --> 00:35:53,760 Speaker 1: becoming seventy. I mean, you know, it's it's a market, 620 00:35:53,880 --> 00:35:57,200 Speaker 1: and I know that look what it's done to us, right. 621 00:35:57,360 --> 00:36:00,759 Speaker 1: I mean, I think part of the denied dynamic here 622 00:36:00,760 --> 00:36:05,239 Speaker 1: too is that you have institutions. Um that I mean 623 00:36:05,280 --> 00:36:07,640 Speaker 1: every you know, every one of the one point six 624 00:36:07,719 --> 00:36:10,440 Speaker 1: trillion dollars in outstanding loans went into the pocket of 625 00:36:10,440 --> 00:36:13,600 Speaker 1: a college somewhere, right. So so we talked about reforming 626 00:36:13,600 --> 00:36:16,120 Speaker 1: the system to bring those numbers down. I'm not sure 627 00:36:16,160 --> 00:36:19,000 Speaker 1: colleges have an incentive to do that because that means 628 00:36:19,040 --> 00:36:22,400 Speaker 1: they're gonna get paid less. Um. But people default on loans, 629 00:36:22,480 --> 00:36:24,359 Speaker 1: it's no skin off of the college. They get paid 630 00:36:24,400 --> 00:36:26,520 Speaker 1: up front. They have no financial risk in this system 631 00:36:26,560 --> 00:36:30,880 Speaker 1: at all. Uh. And UM, I think they've been chasing 632 00:36:30,960 --> 00:36:34,120 Speaker 1: dollars in status and in some cases, um, looking to 633 00:36:34,160 --> 00:36:35,680 Speaker 1: make money. UM. In A lot of I mean a 634 00:36:35,680 --> 00:36:38,839 Speaker 1: lot of of those loans are for graduate school. And 635 00:36:38,880 --> 00:36:40,840 Speaker 1: I think that gets lost sometimes when we talk about 636 00:36:41,280 --> 00:36:44,759 Speaker 1: loan burdens and opportunity, but just proportionately, this money is 637 00:36:44,760 --> 00:36:46,920 Speaker 1: being taken out to go to graduate school. That's where 638 00:36:46,960 --> 00:36:48,239 Speaker 1: a lot of growth is in the market, and that's 639 00:36:48,239 --> 00:36:50,560 Speaker 1: where frankly, a lot of the profits are the profits 640 00:36:50,560 --> 00:36:52,800 Speaker 1: of their the growth is their discuss For us what 641 00:36:53,000 --> 00:36:56,400 Speaker 1: comes up constantly, which is and particularly for critics of 642 00:36:56,440 --> 00:37:02,120 Speaker 1: America's effort here, which is kids through loans, taking degrees 643 00:37:02,440 --> 00:37:06,640 Speaker 1: that have a history of not implying employment, having degrees 644 00:37:06,719 --> 00:37:11,000 Speaker 1: that do not apply the ability to repay back those loans. 645 00:37:11,160 --> 00:37:15,759 Speaker 1: Is that a valid criticism? Absolutely. You know, there's a 646 00:37:16,000 --> 00:37:19,400 Speaker 1: there's a remarkably little regulation of our higher education system. 647 00:37:19,440 --> 00:37:22,040 Speaker 1: There's a baseline assumption that the market will work, um, 648 00:37:22,040 --> 00:37:24,440 Speaker 1: and that people won't borrow too much money in order 649 00:37:24,480 --> 00:37:27,000 Speaker 1: to get a degree. Um. But that's simply I mean, 650 00:37:27,040 --> 00:37:28,239 Speaker 1: if you look at the fact that we have a 651 00:37:28,280 --> 00:37:31,360 Speaker 1: million students defaulting on their loans every year, that's obviously 652 00:37:31,360 --> 00:37:33,840 Speaker 1: not true. It's actually a very complicated market market. It 653 00:37:33,880 --> 00:37:36,640 Speaker 1: needs to be regulated. Um. You can't just it's not 654 00:37:36,680 --> 00:37:38,319 Speaker 1: like going out to buy a cup of coffee. It's 655 00:37:38,320 --> 00:37:42,200 Speaker 1: a very complicated thing to to purchase. Now, the Obama 656 00:37:42,200 --> 00:37:45,719 Speaker 1: administration tried to fix this by essentially making a regulation 657 00:37:45,760 --> 00:37:47,960 Speaker 1: based on exactly what you said. They would look at 658 00:37:48,000 --> 00:37:52,000 Speaker 1: every program and every for profit college, um, and say 659 00:37:52,080 --> 00:37:55,120 Speaker 1: and some in some nonprofit colleges. Um look at how 660 00:37:55,200 --> 00:37:57,520 Speaker 1: much money students were borrowing, look at how much money 661 00:37:57,560 --> 00:38:01,239 Speaker 1: they were earning. And if the ratio was way off, 662 00:38:01,840 --> 00:38:04,080 Speaker 1: if people were borrowing a lot of money for degrees 663 00:38:04,160 --> 00:38:06,879 Speaker 1: the produced very little earnings, they would say, you're out, 664 00:38:06,920 --> 00:38:08,600 Speaker 1: You're out of the program. We're not going to support 665 00:38:08,600 --> 00:38:12,560 Speaker 1: that financially. Where did that go? The Trump administration is 666 00:38:12,560 --> 00:38:15,720 Speaker 1: in the process of dismantling those regulations. So, you know, Kevin, 667 00:38:15,760 --> 00:38:18,279 Speaker 1: just you know, to give you an anecdote, here, the 668 00:38:18,320 --> 00:38:20,360 Speaker 1: middle child calls up and says, I want to go 669 00:38:20,400 --> 00:38:22,680 Speaker 1: to graduate school. I'm like, great, pharmacy. I think it 670 00:38:22,719 --> 00:38:27,000 Speaker 1: looks great. She said, No, something more stable, screenwriting. I mean, 671 00:38:27,320 --> 00:38:29,520 Speaker 1: that's I mean, Kevin, that's the heart of the matter, 672 00:38:29,640 --> 00:38:31,919 Speaker 1: isn't it. Well. And the thing is that you can 673 00:38:31,960 --> 00:38:35,239 Speaker 1: invent a master's degree in anything, people, I mean, there's 674 00:38:35,680 --> 00:38:38,839 Speaker 1: if you're accredited college, you can just say master's degree 675 00:38:38,880 --> 00:38:43,359 Speaker 1: in screenwriting, and really you can go off and borrow 676 00:38:43,440 --> 00:38:45,200 Speaker 1: they sure, there's no there's no one that will tell 677 00:38:45,239 --> 00:38:48,759 Speaker 1: you not to do that. There's really approval for that. 678 00:38:49,239 --> 00:38:51,360 Speaker 1: I'm sure there are master's degrees in screenwriting and the 679 00:38:51,400 --> 00:38:54,160 Speaker 1: whole really general government. If it's a graduate degree, if 680 00:38:54,200 --> 00:38:57,680 Speaker 1: it's an undergraduate degree, there are vary how much money 681 00:38:57,680 --> 00:38:59,600 Speaker 1: you can Keevin, we're out of time. We're gonna have 682 00:38:59,600 --> 00:39:02,840 Speaker 1: to have you back when someday they pay all those bills. 683 00:39:02,920 --> 00:39:08,440 Speaker 1: Kevin Carey Education policy on our nation's debt. Major Team 684 00:39:08,480 --> 00:39:12,239 Speaker 1: Surveillance Shout out to a tumultuous week. We are produced 685 00:39:12,280 --> 00:39:15,719 Speaker 1: some days of the week by Richard Truman. This is Bloomberg. 686 00:39:19,040 --> 00:39:34,759 Speaker 1: I'm thanks for listening to the Bloomberg Surveillance Podcast. Subscribe 687 00:39:34,880 --> 00:39:39,719 Speaker 1: and listen to interviews on Apple Podcasts, SoundCloud, or whichever 688 00:39:39,880 --> 00:39:43,840 Speaker 1: podcast platform you prefer. I'm on Twitter at Tom Keane 689 00:39:44,400 --> 00:39:48,040 Speaker 1: before the podcast. You can always catch us worldwide. I'm 690 00:39:48,080 --> 00:40:00,239 Speaker 1: Bloomberg Radio two.