WEBVTT - Bloomberg Surveillance TV: April 17th, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.400 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.040 Terminal and the Bloomberg Business app. So here's the latist 0:00:37.080 --> 0:00:40.320 this morning. Kevin Walsh's confirmation hearing set for Tuesday, the 0:00:40.440 --> 0:00:44.560 DOJA investigation into the Fed's renovation project, threatening to stand 0:00:44.560 --> 0:00:46.360 in his way. We've got a perfect guest to have 0:00:46.400 --> 0:00:49.920 this conversation. The Republican Congressman French Hill joins us around 0:00:49.920 --> 0:00:52.800 the table, also the chair of the House Financial Services Committee. 0:00:52.840 --> 0:00:54.000 Mister chairman, it's going to see you. 0:00:54.120 --> 0:00:56.360 Great to be with you and great to have view 0:00:56.680 --> 0:00:57.480 all three. 0:00:57.320 --> 0:00:59.880 And thank you for hosting us. Thank you for hosting us. Sir, 0:01:00.040 --> 0:01:02.200 Let's talk about this. I've asked so many people this question. 0:01:02.280 --> 0:01:04.759 I'll ask you why isn't the President taking the off 0:01:04.800 --> 0:01:07.679 ramp and getting his man confirmed at the Federal's. 0:01:08.200 --> 0:01:09.760 Well, it's what I recommend. I mean. 0:01:09.800 --> 0:01:12.080 I said back in January that I didn't think Jay 0:01:12.120 --> 0:01:15.000 Pal had done anything criminal and that it was a 0:01:15.040 --> 0:01:19.360 distraction to have the DOJ dew that investigation, which is, 0:01:19.440 --> 0:01:23.400 as I've said many times, doesn't exempt the FED from criticism. 0:01:23.800 --> 0:01:25.959 I've had plenty of things that I think that Jay 0:01:26.040 --> 0:01:28.759 Power the FED Board should have done differently over the years. 0:01:29.360 --> 0:01:30.160 But it's time to. 0:01:30.120 --> 0:01:33.640 Move on from this. The petitions to the court have 0:01:33.760 --> 0:01:36.560 been rejected, and I think it's time to move on 0:01:36.640 --> 0:01:38.920 from the case and put our attention around getting Kevin 0:01:38.959 --> 0:01:40.800 Warsh confirmed by the United States Senate. 0:01:40.880 --> 0:01:42.280 Do you think it's enough pressure right now in the 0:01:42.280 --> 0:01:44.440 White House for the President to take the off ramp. 0:01:45.120 --> 0:01:45.679 Well, I would hope. 0:01:45.760 --> 0:01:47.560 So you see this letter that you just had the 0:01:47.640 --> 0:01:50.000 reporting on from the Democrats, and Senator tell Us is 0:01:50.040 --> 0:01:54.600 still very committed to holding his support of the nomination 0:01:54.800 --> 0:01:58.040 until this is behind us. The House Committee or the 0:01:58.040 --> 0:02:02.240 Senate Committee continue to work look at the investigation of 0:02:02.280 --> 0:02:04.080 the building if they want to, and that kind of thing. 0:02:04.120 --> 0:02:05.440 But when it comes to. 0:02:05.440 --> 0:02:08.520 Our oversight, of monetary policy, our overside of the treasury 0:02:08.560 --> 0:02:13.880 market structure, the face of just doing our routine work 0:02:13.880 --> 0:02:15.680 and overseeing the FED. I'd like to see the new 0:02:15.840 --> 0:02:19.080 chair confirmed and let President Trump have a new partner 0:02:19.120 --> 0:02:22.200 at the FED. Let Treasury Secretary Bessett have a new 0:02:22.440 --> 0:02:25.519 partner in bank supervision and monetary policy. It's time and 0:02:25.600 --> 0:02:26.760 I think it's important to move. 0:02:26.880 --> 0:02:28.880 It feels like the president's doubling down. Maybe he doesn't 0:02:28.880 --> 0:02:31.920 want to lose face. So what could potentially be an offer? 0:02:32.080 --> 0:02:33.919 I mean, he likes deals, is potentially I'm going to 0:02:34.000 --> 0:02:36.600 drop the DOJ case. But J Powell, you're not staying 0:02:36.600 --> 0:02:38.160 on till twenty twenty eight. 0:02:38.720 --> 0:02:43.760 Well, I think Chairman Powell is interested in seeing his 0:02:43.880 --> 0:02:46.720 replacement confirmed, and I think Chairman pal is probably interested 0:02:46.760 --> 0:02:49.280 in going on to the next phase of his career 0:02:49.320 --> 0:02:51.120 in his life quite frankly, So. 0:02:51.360 --> 0:02:53.959 You don't think he's staying on as governor, Well. 0:02:53.800 --> 0:02:56.640 I think that depends on According to J. Powell, that's 0:02:57.040 --> 0:03:00.360 how he's inclined to stay on. According to J. Pal, 0:03:01.160 --> 0:03:04.639 if Kevin's not confirmed and if this case is not dropped. 0:03:05.360 --> 0:03:07.480 So this is why I think it's if you're. 0:03:08.120 --> 0:03:11.239 For the Trump administration and the Treasury moving on having 0:03:11.760 --> 0:03:15.200 an economic policy that's in alignment. Then I think it's 0:03:15.240 --> 0:03:19.000 in the president's interest to see the case move on 0:03:19.200 --> 0:03:23.960 and let's go forward with the Trump administration's appointees at 0:03:24.000 --> 0:03:24.360 the FED. 0:03:24.840 --> 0:03:26.760 In the meantime, Rick Reader of black Croft was just 0:03:26.840 --> 0:03:28.880 on and he was talking about how he would like 0:03:28.960 --> 0:03:31.480 to see whoever comes into the FED next work with 0:03:31.520 --> 0:03:34.120 the federal government on initiatives to try to get mortgage 0:03:34.160 --> 0:03:36.680 rates lower, try to get benchmark rates lower on the 0:03:36.680 --> 0:03:40.080 long end as well, in order to keep affordability under check. 0:03:40.640 --> 0:03:44.040 What currently is a discussion on the House Financial Committee, 0:03:44.040 --> 0:03:46.600 given the fact that this has got a fiscal overtone 0:03:46.640 --> 0:03:51.160 as well as potentially a broad based different agency initiative. 0:03:51.360 --> 0:03:53.560 Well, I think the best way to make sure that 0:03:53.640 --> 0:03:56.840 takes place is to make sure inflation is well anchored. 0:03:57.440 --> 0:04:00.560 And I think we do that by taking steps to 0:04:00.920 --> 0:04:03.560 on the supply side to see that the big beautiful 0:04:03.600 --> 0:04:06.000 bill from last year on the tax side is fully implemented. 0:04:06.080 --> 0:04:08.520 Let the Americans, both in business and home and their 0:04:08.520 --> 0:04:12.840 households reap the benefits of those important supply side tax changes, 0:04:13.080 --> 0:04:16.120 and let's continue our work to right size regulation. Those 0:04:16.120 --> 0:04:20.560 things would free up more capital to the housing sector. 0:04:20.600 --> 0:04:25.240 Particularly six out of ten on home construction loans are 0:04:25.240 --> 0:04:27.120 not made by the biggest banks in the country. They're 0:04:27.120 --> 0:04:30.400 made by banks under ten billion dollars. And that's what 0:04:30.440 --> 0:04:32.680 I've had as a focus of the committee. Let's have 0:04:32.760 --> 0:04:35.800 a regulatory supply side housing bill, which the House has 0:04:35.839 --> 0:04:39.640 passed and we're negotiating with the Senate on. Let's continue 0:04:39.640 --> 0:04:43.560 our effort to put in law these tailored regulatory issues 0:04:43.600 --> 0:04:46.960 that allow our regional banks and community banks to thrive 0:04:47.760 --> 0:04:51.160 because they're under the burden in a lot more significant 0:04:51.200 --> 0:04:54.120 way when it comes to capital levels, return on investment 0:04:54.240 --> 0:04:56.960 than the biggest banks in the country are putting that 0:04:57.000 --> 0:05:00.480 into law, I think does exactly that. It helps anchor inflation, 0:05:00.680 --> 0:05:04.960 moves capital into the economy, and I think that allows 0:05:05.040 --> 0:05:08.400 what short term rates to fall, and that in turn 0:05:08.480 --> 0:05:11.720 has a modest impact on pulling down that tenure rate, 0:05:11.760 --> 0:05:13.280 which is so important as a benchmark. 0:05:13.360 --> 0:05:16.240 Let's finish on financial services. What are you hearing about, 0:05:16.279 --> 0:05:19.600 mythos and how dangerous this might be? We sho you 0:05:19.720 --> 0:05:20.880 understanding of things right now? 0:05:21.040 --> 0:05:23.720 Well, the Committee has both ranking Member Waters and I 0:05:23.720 --> 0:05:27.200 are concerned about that. We've actually asked the Treasury for 0:05:27.240 --> 0:05:32.240 a brief there we have noted the treasure Secretary's engagement 0:05:32.320 --> 0:05:35.160 and the FED with the largest financial institutions in the country. 0:05:35.600 --> 0:05:38.080 When I meet with the private sector, I hear from 0:05:38.080 --> 0:05:41.240 them that Claude is a very effective AI partner and 0:05:41.279 --> 0:05:44.080 that they've been most impressed with it, and that they 0:05:44.120 --> 0:05:45.920 want to get into a mode where they can see 0:05:45.920 --> 0:05:51.479 and determine any risks associated with the Mythos product. And 0:05:51.560 --> 0:05:54.360 that speaks to my philosophy about AI. To begin with, 0:05:54.440 --> 0:05:58.839 we aughto let the compliance sector meaning the supervisors, the regulators, 0:05:58.960 --> 0:06:02.160 and the private sector work in a sandbox type environment 0:06:02.960 --> 0:06:06.760 sheltered from someone's network to see what the impact of 0:06:06.800 --> 0:06:10.800 these large language models are. Because they bring tremendous benefits 0:06:11.240 --> 0:06:14.839 to consumers to business ahead of us, but they also 0:06:14.920 --> 0:06:18.000 have these risks, and we should make sure that all 0:06:18.040 --> 0:06:20.440 of our network operators have full understanding that. 0:06:20.560 --> 0:06:23.680 Making some bold claims ahead of IPOs, they've got an 0:06:23.720 --> 0:06:26.360 interest to really hype this up over the next twelve months. 0:06:26.360 --> 0:06:28.159 It's hot to understand what's random, what is in and 0:06:28.160 --> 0:06:30.320 the thirty seconds we have left, do you foresee any 0:06:30.320 --> 0:06:33.039 hearings to get some of these CEOs in front of 0:06:33.080 --> 0:06:35.960 you guys, for the public to have what's random, what is. 0:06:35.920 --> 0:06:40.240 In Well, we've started our hearings on AI, both from 0:06:40.240 --> 0:06:43.839 a regulatory compliance point of view, and we have done roundtables, 0:06:43.920 --> 0:06:47.880 meaning not public hearings yet with the business sector, both 0:06:47.880 --> 0:06:50.279 the tech sector and the users. And I think you'll 0:06:50.320 --> 0:06:52.000 see us continue that work this year. 0:06:52.480 --> 0:06:55.919 Stay with us multile impex Savan's coming up off to this. 0:07:05.200 --> 0:07:07.919 We begin this hour with stelf sitting of record highs 0:07:07.920 --> 0:07:11.040 as investors are potential us around Truce Rick, Reader of 0:07:11.040 --> 0:07:13.520 Black Rock, writing, the immense disruption of trade and global 0:07:13.520 --> 0:07:17.120 supply conditions will be what truly influences market price sick. 0:07:17.400 --> 0:07:20.000 Rick joins us now for more. Rick, welcome to the program, buddy. 0:07:20.000 --> 0:07:22.240 Always a privilege, a pleasure to catch up with you, sir. 0:07:22.640 --> 0:07:25.520 This move that we've seen in this equity market, we've 0:07:25.520 --> 0:07:27.720 thrown so much of the stock market over the last 0:07:27.760 --> 0:07:31.240 several months. AI disruption, private market jitters and now the 0:07:31.280 --> 0:07:34.760 straight andform most remaining closed for almost two months now, Rick, 0:07:34.800 --> 0:07:36.800 and here we are at all time highs. Does that 0:07:36.840 --> 0:07:38.880 bring you comfort or make you nervous? 0:07:41.680 --> 0:07:44.960 Good question, so I'd I'd say a couple of things. 0:07:45.000 --> 0:07:47.000 First of all, I think what it tells you is 0:07:47.000 --> 0:07:50.560 the technicals in the equity market are extraordinary, and the 0:07:50.600 --> 0:07:53.440 earnings numbers that are coming through are pretty powerful. And so, 0:07:53.920 --> 0:07:55.760 you know, you look at the US economy and you 0:07:55.800 --> 0:07:57.520 look at what's you know, I heard the beginning of 0:07:57.520 --> 0:08:00.280 the showtime about the economies week. Economies is strong. Actually 0:08:00.320 --> 0:08:02.680 the parts of the economy and the primary drivers are 0:08:02.720 --> 0:08:03.400 doing quite well. 0:08:03.440 --> 0:08:04.120 You look at tech. 0:08:04.160 --> 0:08:05.800 I mean, you look at some of the numbers yesterday 0:08:05.800 --> 0:08:08.160 that you cited, and you look at these earnings growth 0:08:08.160 --> 0:08:09.360 and I was looking at some of the semies. 0:08:09.360 --> 0:08:11.520 You took about ninety seven percent earnings. 0:08:11.160 --> 0:08:13.920 Growth year on here. I mean, like unbelievably powerful numbers. 0:08:14.360 --> 0:08:16.680 And then you look at you know, the high end consumer, 0:08:16.800 --> 0:08:19.320 that consumption, You look at retail sales when you break it. 0:08:19.280 --> 0:08:20.800 Down, pretty darn good. 0:08:21.080 --> 0:08:23.120 So you've got an economy and by the way, you've 0:08:23.120 --> 0:08:26.000 got housing's not in good shape, lower income's not in 0:08:26.040 --> 0:08:26.480 good shape. 0:08:26.520 --> 0:08:27.720 So that is is what it is. 0:08:27.800 --> 0:08:30.480 But what drives the equity market is in pretty good shape. 0:08:30.600 --> 0:08:32.760 And the technicals. So you had this period of time 0:08:32.800 --> 0:08:36.080 that nobody wanted to buy stocks, and then you realize, 0:08:36.280 --> 0:08:37.559 you know, I've said it before. You you know you're 0:08:37.559 --> 0:08:39.439 gonna have an IPO calendar this year that maybe's a 0:08:39.480 --> 0:08:43.080 couple hundred billion. Maybe we're going to buy back a 0:08:43.200 --> 0:08:46.079 trillion of stock this year, so we're actually there's not 0:08:46.200 --> 0:08:47.080 enough stock to buy. 0:08:47.480 --> 0:08:49.600 So it's just a pretty You talk about how explosive 0:08:49.640 --> 0:08:49.880 this is. 0:08:49.920 --> 0:08:51.520 You realize people sit on their hands, I don't want 0:08:51.520 --> 0:08:53.640 to do anything, particularly in tech, and then all of 0:08:53.679 --> 0:08:55.680 a sudden, you know, maybe a little bit of better news, 0:08:55.720 --> 0:08:58.120 the earnings come in, and then then you create this 0:08:58.240 --> 0:09:00.600 the technicals and equities, by the way, it's complete different. 0:09:00.960 --> 0:09:02.800 And when you think about the treasury market, et cetera, 0:09:02.880 --> 0:09:05.080 because we're getting we get five hundred and twenty billion 0:09:05.120 --> 0:09:08.480 a week of supply, it's I mean, it's amazing. In 0:09:08.520 --> 0:09:11.120 the equity market, how good the technicals are. 0:09:12.200 --> 0:09:14.360 Rick, Is there a contradiction in the fact that we're 0:09:14.400 --> 0:09:18.280 seeing such explosive confidence in equities? 0:09:18.320 --> 0:09:19.960 You're seeing so much cash. 0:09:19.679 --> 0:09:22.320 Out there that are looking for places to go, and 0:09:22.320 --> 0:09:24.760 at the same time people are expecting inflation to come 0:09:24.760 --> 0:09:26.600 back down to two percent over the next five to 0:09:26.640 --> 0:09:27.160 ten years. 0:09:27.360 --> 0:09:28.640 Does that seem contradictory? 0:09:31.040 --> 0:09:33.320 No, man, Listen, I think I think, and I've been 0:09:33.360 --> 0:09:37.520 doing this for many, many few decades. I've never seen 0:09:37.520 --> 0:09:40.320 a productivity revolution like this before. I mean, so you 0:09:40.400 --> 0:09:42.280 go through I mean almost every company I look at, 0:09:42.320 --> 0:09:45.839 you see a similar dynamic. I grow my top line revenue, 0:09:46.320 --> 0:09:48.960 let's say it's four to ten percent. Obviously techt's significantly 0:09:48.960 --> 0:09:51.520 more significant that. But then if I keep my labor 0:09:51.559 --> 0:09:53.640 static to down, and then if I can get my 0:09:53.679 --> 0:09:55.160 costs of good soul and you see this in M 0:09:55.160 --> 0:09:57.880 and I, if I can create synergies, I can run 0:09:57.920 --> 0:10:00.000 a higher operating margin. If you could run a higher 0:09:59.840 --> 0:10:04.440 op operating margin, then my roees is significantly higher. And 0:10:04.520 --> 0:10:07.199 so then it just keeps striving this dynamic. So thinking 0:10:07.200 --> 0:10:08.840 about what and by the way, we haven't really seen 0:10:08.920 --> 0:10:12.760 automation AI really kick in yet, So I think, you know, 0:10:12.800 --> 0:10:14.920 there's this transmission. Part of why I think big cap 0:10:15.040 --> 0:10:17.640 stocks are so powerful is you're building a mode because 0:10:17.679 --> 0:10:21.760 you utilize data so effectively. We're seeing productivity take place 0:10:22.200 --> 0:10:23.280 in Buoye's earnings. 0:10:23.280 --> 0:10:24.080 Companies do great. 0:10:24.080 --> 0:10:26.320 By the way, the counter of that, it's not great 0:10:26.360 --> 0:10:28.720 from an employee point of view. You're seeing that playout, 0:10:29.040 --> 0:10:30.480 which you know is part of what you know what 0:10:30.520 --> 0:10:33.360 affects the interest rate transmission. So it's a really good 0:10:33.400 --> 0:10:36.440 story from a productivity and a corporate earnings point of view, 0:10:36.840 --> 0:10:39.559 not so much for the broad world population. 0:10:41.080 --> 0:10:42.920 So Rackel bullish are you right now? It sounds like 0:10:42.960 --> 0:10:45.040 you're incredibly bullish on big colaps. I mean, are you 0:10:45.200 --> 0:10:47.400 essentially going all in? Do you think it is a 0:10:47.440 --> 0:10:49.840 time to go into equities over bonds, to go into 0:10:49.880 --> 0:10:52.400 equities over cash, to go into equities over commodities. 0:10:54.920 --> 0:10:58.000 I'm not that bullish, but I listen, I think, listen. 0:10:58.200 --> 0:11:00.559 You know we are long the equity market. 0:11:00.800 --> 0:11:00.960 You know. 0:11:01.000 --> 0:11:02.960 One of the things that happens when you know you 0:11:03.080 --> 0:11:05.960 had what happened a few weeks ago, when volatility spikes, 0:11:06.240 --> 0:11:08.080 you can't really it's hard to have a very long 0:11:08.120 --> 0:11:10.480 equity position because you can't manage your risk using the 0:11:10.520 --> 0:11:11.560 volatility markets. 0:11:11.640 --> 0:11:12.800 Now vall has come. 0:11:12.679 --> 0:11:16.319 Down, it allows you to run a bit longer equity disposition. 0:11:16.800 --> 0:11:18.080 And so, yeah, I like equities. 0:11:18.080 --> 0:11:20.080 If you said to me, let's look at the credit markets, 0:11:20.080 --> 0:11:22.760 he say, gosh, where is high yield? Where's investment grade credit? 0:11:23.080 --> 0:11:24.719 And I say, okay, I've got some beta that I 0:11:24.720 --> 0:11:26.600 could put in the portfolio. Look at where spreads are 0:11:26.640 --> 0:11:28.679 investment grade credit not interesting? 0:11:28.800 --> 0:11:31.360 High yield you know it carries well. Spreads are not 0:11:31.400 --> 0:11:32.800 that interesting. So I said, gosh, I'm going to. 0:11:32.800 --> 0:11:35.320 Take my beta and orient it a bit more towards 0:11:35.320 --> 0:11:37.719 the equity market, or more towards the equity market where 0:11:37.720 --> 0:11:40.079 the earnings growth is explosive. I got convexity of the 0:11:40.160 --> 0:11:42.800 upside and I can manage the risk. That's a better 0:11:42.840 --> 0:11:45.360 in a portfolio construct. That's a better disposition than I 0:11:45.360 --> 0:11:48.120 think than you know, parts of the credit market are today. 0:11:49.200 --> 0:11:50.720 We're how do I think the Federal Reserve is thinking 0:11:50.760 --> 0:11:52.520 about all of this, especially given the fact that we 0:11:52.559 --> 0:11:54.880 are seeing higher energy costs in the United States, not 0:11:54.880 --> 0:11:57.520 as high as Asian Europe, but they are still sticking higher. 0:11:59.400 --> 0:12:01.920 You know, I tell you there's a pretty extraordinary point 0:12:01.960 --> 0:12:03.400 in time, and you know part of what I'm talking 0:12:03.400 --> 0:12:05.440 about productivity and the employment dynamic. 0:12:05.679 --> 0:12:05.959 Listen. 0:12:06.000 --> 0:12:08.240 I think the Fed you will be on hold and 0:12:08.280 --> 0:12:10.400 watch the data and you'll see it by the way 0:12:10.440 --> 0:12:12.200 you're going to see and we are seeing some what 0:12:12.280 --> 0:12:16.120 will be some particularly headline inflation, some heavier numbers on inflation. 0:12:16.640 --> 0:12:18.280 I think what the FED has to do and the 0:12:18.280 --> 0:12:20.400 ECB has to do is think about you having a 0:12:20.440 --> 0:12:23.640 supply shock. This is not a demand driven inflation. By 0:12:23.640 --> 0:12:25.520 the way you think about what's happening to lower income, 0:12:25.559 --> 0:12:28.680 middle income people. You're getting hurt on food costs, fuel costs. 0:12:28.800 --> 0:12:30.520 You know, why do we raise interest rates to raise 0:12:30.559 --> 0:12:33.160 your mortgage? It doesn't make any any sense. So I 0:12:33.160 --> 0:12:36.480 think what what your synopsis is around that is, gosh, 0:12:36.840 --> 0:12:37.720 I'll stay on hold for a. 0:12:37.720 --> 0:12:39.800 Bit, I'll watch the data. I think the ECB should 0:12:39.800 --> 0:12:40.280 do the same. 0:12:40.720 --> 0:12:42.400 Maybe they get ahead of it and hike a couple 0:12:42.480 --> 0:12:44.920 of times, but I listen, I think you know when 0:12:45.000 --> 0:12:47.200 we talked about before, how's it. Look at the housing 0:12:47.320 --> 0:12:49.360 numbers this week. You look at existing home sales. When 0:12:49.360 --> 0:12:52.000 the mortgage race shifts up, home sales come down, and 0:12:52.000 --> 0:12:54.960 then you look at the breakdown of retail sales. You 0:12:55.000 --> 0:12:57.720 know what's happening. And I mean, is the dispersion keeps growing? 0:12:57.880 --> 0:13:00.840 Lower income, middle income having a hard time. That's where 0:13:00.840 --> 0:13:03.760 the interest sensitivity is. So listen, I think they still 0:13:03.840 --> 0:13:05.240 the FED has to get the rate down. 0:13:05.280 --> 0:13:06.880 I still think you'll get a couple of cuts. Do 0:13:06.920 --> 0:13:08.160 you push it back a little bit? 0:13:08.640 --> 0:13:08.880 Yeah? 0:13:08.880 --> 0:13:11.480 Maybe, but you're talking about a very two speed economy 0:13:11.760 --> 0:13:16.560 where interest rates really affects things housing, small business, lower income, 0:13:16.600 --> 0:13:17.959 and it's part of what I think the rate can 0:13:17.960 --> 0:13:18.400 come down. 0:13:19.520 --> 0:13:21.840 So reck, let's look across the curve right now. If 0:13:21.840 --> 0:13:23.600 the Fed's going to stand hold, that's going to anchor 0:13:23.600 --> 0:13:25.040 the front end. We've seen a lot of that in 0:13:25.080 --> 0:13:28.160 the performance of fixed incoming treasurey yields over the past 0:13:28.200 --> 0:13:30.280 few weeks. If you go further out along the curve, 0:13:30.320 --> 0:13:32.880 it just feels like the ten year is anchored around 0:13:32.920 --> 0:13:35.240 four thirty, which was the upper end of the pre 0:13:35.360 --> 0:13:38.439 wall range. How does your thinking sort of a just 0:13:38.559 --> 0:13:40.920 when you talk about what's going to happen with FED 0:13:41.000 --> 0:13:44.199 funds and the relationship between that and how it informs 0:13:44.240 --> 0:13:46.200 your view of how we'll get some performance further out 0:13:46.200 --> 0:13:46.800 along the curve. 0:13:48.559 --> 0:13:50.480 You know, I had to tell you, Jonathan a minute 0:13:50.520 --> 0:13:52.319 when you know, I hear people come on and say 0:13:52.320 --> 0:13:54.079 I think rates are going to higher things, I think 0:13:54.160 --> 0:13:56.360 rates are going lower. I actually find the turn year 0:13:56.400 --> 0:13:59.240 part of the curve from an acid allocation point of view, 0:13:59.280 --> 0:14:01.000 not interesting, as you said. But by the way, my 0:14:01.080 --> 0:14:03.080 colleague Rus Brownback talks about your show all the time. 0:14:03.240 --> 0:14:05.000 If you go back over the last year or so, 0:14:05.480 --> 0:14:07.079 and you look at the end of every quarter, you 0:14:07.120 --> 0:14:08.520 look at the end of the year, we've made pretty 0:14:08.559 --> 0:14:11.320 much hover around four twenty five, maybe maybe four thirty, 0:14:11.600 --> 0:14:14.640 but it's pretty unbelievably stable. There's a lot of discussion 0:14:14.679 --> 0:14:16.520 about what do you do with the with the with 0:14:16.520 --> 0:14:19.080 a ten yure point. I do think there'll be initiatives, 0:14:19.080 --> 0:14:21.240 and I do think what you know, when Kevin Wursh 0:14:21.320 --> 0:14:23.880 is confirmed, I do think you'll see a dynamic where 0:14:23.920 --> 0:14:26.840 can you contain the ten year point of the curve? 0:14:27.000 --> 0:14:29.920 Can you keep mortgage rates down? Are there initiatives to. 0:14:29.880 --> 0:14:31.880 Actually pull that mortgage rate down that you can have 0:14:31.920 --> 0:14:33.120 through fiscal stimulus? 0:14:33.320 --> 0:14:34.400 That's really powerful. 0:14:34.840 --> 0:14:37.880 My sense is that ten year note will drift lower 0:14:38.440 --> 0:14:41.320 over the you know, through this year as you get 0:14:41.360 --> 0:14:43.360 maybe you get the funds rate down a bit. Can 0:14:43.440 --> 0:14:45.720 you keep the ten year alongside of it? But I 0:14:45.760 --> 0:14:48.120 will tell you, Donathan, in our portfolios, I say, look, 0:14:48.280 --> 0:14:51.200 you know, particularly the back end not interesting. I just 0:14:51.240 --> 0:14:52.840 want to, you know, try and do is keep my 0:14:53.000 --> 0:14:56.000 front to the belly yield curve exposure and I just 0:14:56.080 --> 0:14:58.160 clip coupon like this is a year, like if we 0:14:58.200 --> 0:15:01.240 can just keep giving clients six in a quarter type 0:15:01.240 --> 0:15:05.280 of coupon type of yield, which you could do without 0:15:05.400 --> 0:15:08.320 without compromising rating. I'm just going to keep staying there 0:15:08.360 --> 0:15:11.440 and then, you know, let people get excited about where 0:15:11.440 --> 0:15:12.880 we're going in the back end of the curve. 0:15:14.120 --> 0:15:16.080 Rick, We've got to ask you what kind of initiatives 0:15:16.320 --> 0:15:19.160 would bring down rights yields at the long end of 0:15:19.160 --> 0:15:19.520 the curve. 0:15:21.760 --> 0:15:23.840 So, by, by the way, a bunch of things from 0:15:23.840 --> 0:15:25.400 the FED. From the FED point of view, you can 0:15:25.480 --> 0:15:27.920 use your balance sheet effectively. We have eighty nine percent 0:15:27.920 --> 0:15:30.360 of the debt of the treasury markets in the zero 0:15:30.360 --> 0:15:32.120 to two year part of the yield curve. It's actually 0:15:32.160 --> 0:15:34.000 not that much out in the back end. The FED 0:15:34.040 --> 0:15:38.000 can actually be very very effective. And how you manage 0:15:38.000 --> 0:15:40.360 the back end of the yield curve. Second thing you do, 0:15:40.400 --> 0:15:43.720 you see the administration through the GSC program is actually 0:15:43.720 --> 0:15:46.680 buying a huge amount of mortgages, a couple hundred billion mortgages. 0:15:46.800 --> 0:15:49.520 You can actually do a bit more with regard to that. 0:15:49.680 --> 0:15:52.240 There are things you can do in terms of creating 0:15:52.320 --> 0:15:57.160 initiatives to stimulate housing, home builder incentives, etc. That pull 0:15:57.200 --> 0:16:00.000 that mortgage rate down. There's a whole series of things. 0:16:00.480 --> 0:16:02.320 Listen I mean you look at existing home sales. 0:16:02.160 --> 0:16:03.080 We should talk about. 0:16:03.400 --> 0:16:07.160 You look at how there's not enough inventory of houses today. 0:16:07.360 --> 0:16:10.400 It influences labor mobility to the negative. Because we don't 0:16:10.400 --> 0:16:13.280 have enough inventory, people can't move. It influences we don't 0:16:13.280 --> 0:16:14.880 build enough houses. We don't put enough people to. 0:16:14.920 --> 0:16:15.760 Work in shelter. 0:16:16.200 --> 0:16:17.960 And by the way, you can't bring down shelter inflation 0:16:18.000 --> 0:16:22.360 because we don't have enough houses. There's tremendous motivation and 0:16:22.440 --> 0:16:25.800 quite frankly, the initiative to actually bring down housing costs 0:16:26.240 --> 0:16:28.480 and a brainer to build more inventory to bring down 0:16:28.520 --> 0:16:31.320 that mortgage rate. You know, I think it has much more, 0:16:31.560 --> 0:16:34.160 much more benefit than people give credit. 0:16:34.040 --> 0:16:35.200 To stay with us. 0:16:35.520 --> 0:16:47.840 More Bloomberg surveillance coming up after this, and Stephen Kirk 0:16:47.840 --> 0:16:50.480 of the Council on Foreign Relations writing, the Iranians will 0:16:50.520 --> 0:16:52.760 demand a role in whatever is planned and will not 0:16:52.840 --> 0:16:55.880 give up whatever leverage they have. Steven joins us now 0:16:55.920 --> 0:16:58.160 for more. Stephen, good morning, good to see. Let's talk 0:16:58.160 --> 0:17:00.200 about some of the claims coming from the president. I mean, 0:17:00.240 --> 0:17:03.960 they've made some concessions. Can you just outline your understanding 0:17:04.000 --> 0:17:06.359 of what the demands are and what the concessions might be. 0:17:06.920 --> 0:17:09.680 Well, the demands have been pretty consistent that the Iranians 0:17:09.720 --> 0:17:11.320 have to give up their nuclear program, they have to 0:17:11.320 --> 0:17:14.639 give up their missile program, and stop arming and supporting 0:17:14.640 --> 0:17:18.520 their proxies. I don't see any real movement on the 0:17:18.560 --> 0:17:19.679 part of the Iranians. 0:17:19.760 --> 0:17:20.959 There may be a negotiation. 0:17:21.119 --> 0:17:25.280 The Iranians may demonstrate some tactical flexibility in order to 0:17:25.280 --> 0:17:27.639 get themselves out from under the problem that they've now 0:17:27.680 --> 0:17:30.879 found themselves with an economy that's teetering on the edge. 0:17:31.000 --> 0:17:33.800 But they want to live to fight another day. And 0:17:33.840 --> 0:17:36.520 the people in charge in Iran right now are the 0:17:36.600 --> 0:17:38.680 hardest of the hard line. I mean, the President keeps 0:17:38.680 --> 0:17:42.040 talking about this new pragmatic regime. These are people with 0:17:42.119 --> 0:17:45.480 a history of waging war against the United States and 0:17:45.520 --> 0:17:47.520 its partners for the last forty seven years. 0:17:47.720 --> 0:17:50.480 Is the President just basically insinuating their pragmatic because they 0:17:50.480 --> 0:17:51.320 showed up to talks. 0:17:51.400 --> 0:17:52.120 Is that it is that. 0:17:52.080 --> 0:17:54.160 The only step we've seen from Iran to be willing 0:17:54.200 --> 0:17:56.080 to negotiate with the United States is that they actually 0:17:56.119 --> 0:17:57.119 showed up in Islamabad. 0:17:57.480 --> 0:18:02.240 Yeah, that's precisely willing to talk. So essentially the President 0:18:02.320 --> 0:18:05.719 is roy cohening this. He's saying something that he wants 0:18:05.800 --> 0:18:08.640