WEBVTT - Surveillance: Inflation Outlook With Fed's George 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.440 Bloomberg dot Com, and of course, on the Bloomberg. We've 0:00:27.440 --> 0:00:29.800 been telling all of you this week on Bloomberg Radio 0:00:29.800 --> 0:00:33.040 and television the anticipation for the speech by Chairman Paul 0:00:33.440 --> 0:00:37.520 at Jackson Hall. We need to stop and explain Jackson Hall. 0:00:37.960 --> 0:00:41.040 It is a beautiful place with mountains that only Michael 0:00:41.080 --> 0:00:44.199 McKee has climbed across the lake with a moose in 0:00:44.240 --> 0:00:46.960 the background in the lodge. I've had the privilege of 0:00:46.960 --> 0:00:51.479 being there for some very important meetings during the financial crisis, 0:00:51.720 --> 0:00:54.800 but this year is absolutely unique, run by the Kansas 0:00:54.800 --> 0:00:59.320 City Fed and they're wonderful and interesting. Esther George Jackson 0:00:59.360 --> 0:01:02.760 Hall will be virtual meeting to begin our coverage are 0:01:02.840 --> 0:01:06.520 Michael McKee spoke with Esther George and they began on 0:01:06.600 --> 0:01:11.119 the framework at hand. Let's listen. I will just offer 0:01:11.160 --> 0:01:14.720 you from my perspective that this has been I think 0:01:14.840 --> 0:01:19.320 a useful process. It's been a process that really asked 0:01:19.840 --> 0:01:22.520 of ourselves to look at what we've learned over the 0:01:22.560 --> 0:01:25.240 past decade, to try to think about how the economy 0:01:25.280 --> 0:01:28.319 may have changed, and importantly, to think about how we 0:01:28.400 --> 0:01:32.240 communicate to the public. So the process in and of itself, 0:01:32.280 --> 0:01:35.000 I think has been a useful one, and I will 0:01:35.040 --> 0:01:37.199 leave to the Chairman to talk about what we've learned 0:01:37.200 --> 0:01:41.760 from that. Well, you've been considered an inflation hawk. Where 0:01:41.800 --> 0:01:46.720 are you on this idea of average inflation targeting? So 0:01:46.760 --> 0:01:49.360 my focus on inflation, Mike, as you known, is to 0:01:49.440 --> 0:01:53.720 be true to our price stability mandate. UH that are 0:01:53.800 --> 0:01:58.360 two percent target UM really has to represent what's happening 0:01:58.520 --> 0:02:01.760 in the real economy. And so as we think about 0:02:01.840 --> 0:02:05.240 ways to better communicate to the public, UM, I've never 0:02:05.280 --> 0:02:08.639 thought of two as a ceiling, but to really stay 0:02:08.720 --> 0:02:13.120 focused on what anchors inflation expectations in the economy. So 0:02:13.200 --> 0:02:17.440 from a communication standpoint, UM, I think we will be 0:02:17.480 --> 0:02:21.040 talking about the kinds of things that help us do 0:02:21.080 --> 0:02:25.519 a better job of achieving our objectives. Wall Streets betting, 0:02:25.680 --> 0:02:27.680 or at least many of people on Wall Street are 0:02:27.720 --> 0:02:31.360 betting that the FED will change its forward guidance in September. 0:02:31.680 --> 0:02:33.880 Some of your colleagues say, don't need to do that. 0:02:34.000 --> 0:02:38.160 Yet where are you so? I would agree when I 0:02:38.200 --> 0:02:40.919 look at what the Fellow Reserve has done since March 0:02:41.400 --> 0:02:44.800 UM in terms of interest rate policy, in terms of 0:02:44.840 --> 0:02:49.080 asset purchases and the credit facilities we've had, I think 0:02:49.200 --> 0:02:52.360 trying to gauge what else does the economy need is 0:02:52.360 --> 0:02:55.280 probably premature. I think we are beginning to see signs 0:02:55.320 --> 0:02:59.880 of a recovery. We're beginning to see where the economy 0:03:00.040 --> 0:03:03.680 may have shortfalls, where it may be doing okay, but 0:03:03.800 --> 0:03:07.720 that is going to take some time. So thinking about 0:03:08.000 --> 0:03:10.760 what those other things are I think has been a 0:03:10.840 --> 0:03:15.040 useful discussion. Whether it's time to activate those things is 0:03:15.160 --> 0:03:18.919 something we'll be debating leading and run up to your 0:03:18.960 --> 0:03:22.280 conference and GEIRMYN. Powell's speech, there's an awful lot of 0:03:22.280 --> 0:03:26.240 discussion about inflation going on on Wall Street and in 0:03:26.280 --> 0:03:30.480 the financial community. Um, do you think that the all 0:03:30.480 --> 0:03:34.280 the stimulus that's been pumped into the economy is perhaps 0:03:34.320 --> 0:03:39.520 an inflation danger down the road? Well, As a central banker, 0:03:39.680 --> 0:03:43.280 I think we always keep our eyes on inflation and 0:03:43.480 --> 0:03:47.160 what impetus may come to that. I think importantly what 0:03:47.200 --> 0:03:51.680 we see today are really generally deflationary kinds of forces. 0:03:51.720 --> 0:03:55.240 So until demand comes back, until we see the economy 0:03:55.360 --> 0:03:58.840 regain its footing, it's hard to see in the near term. 0:03:58.880 --> 0:04:01.240 But as you point out, there is a lot of 0:04:01.360 --> 0:04:04.240 stimulus that may be out there at the point that 0:04:04.320 --> 0:04:07.600 the economy regains its footing, and we'll have to look 0:04:07.640 --> 0:04:11.640 and see what impact we see through prices at that point, 0:04:11.680 --> 0:04:15.760 but today is probably not that day. Well, let's focus 0:04:15.800 --> 0:04:19.120 on your district. The district, how would you describe the 0:04:19.200 --> 0:04:24.440 economy there right now? So I think we see some 0:04:24.680 --> 0:04:29.520 encouraging signs. Uh. This region, of course, has experienced the 0:04:29.640 --> 0:04:34.359 virus in different time frames, in different levels of spread 0:04:34.440 --> 0:04:38.680 over the last five months, and what we see overall 0:04:38.800 --> 0:04:42.320 is there has been some improvement in the job market. 0:04:42.440 --> 0:04:45.239 We have seen some businesses that are beginning to come back, 0:04:45.680 --> 0:04:49.080 but of course that's coming back from a very low level. 0:04:50.000 --> 0:04:54.320 Particular to this region, of course, things like agriculture and 0:04:54.480 --> 0:04:58.880 energy are very prominent. We know the farm sector has 0:04:58.880 --> 0:05:02.760 been under some stress for some time with low farm incomes, 0:05:03.400 --> 0:05:08.000 and this episode puts further stress on that, causing the 0:05:08.040 --> 0:05:10.800 farm sector to have to rely more heavily, for example, 0:05:10.839 --> 0:05:15.320 on government supports. Energy too, with the rapid decline in 0:05:15.400 --> 0:05:20.040 oil prices um productivity and the producers had to lay 0:05:20.080 --> 0:05:24.640 down their rigs. Uh. So those two sectors in particular 0:05:24.680 --> 0:05:28.600 in our region already under some stress. It will take 0:05:28.640 --> 0:05:33.040 some time, I think for them to come back. I 0:05:33.279 --> 0:05:36.080 can ask you to expand on the labor market. What 0:05:36.080 --> 0:05:38.760 are employers telling you right now? Do they need more people? 0:05:38.800 --> 0:05:41.840 Can they find more people? Or are they just sitting 0:05:41.920 --> 0:05:44.080 back at this point and saying we have to wait 0:05:44.120 --> 0:05:47.359 and see where the economy goes. So we hear a 0:05:47.440 --> 0:05:51.120 variety of things that won't surprise you, but very important. 0:05:51.120 --> 0:05:54.200 As we've talked to our contacts in the region. Again, 0:05:54.800 --> 0:05:57.280 it is often a function of the sector Therein if 0:05:57.279 --> 0:06:01.120 they're in a part of the economy where they're dependent 0:06:01.160 --> 0:06:06.320 on air travel, dependent on entertainment or dining, Uh, they 0:06:06.360 --> 0:06:10.520 are struggling and having a harder time and bringing people 0:06:10.600 --> 0:06:14.719 back in those sectors looks to be uh some time away. 0:06:14.920 --> 0:06:18.080 We also hear that some are having a hard time 0:06:18.080 --> 0:06:20.839 bringing people back because they felt like they were competing 0:06:20.880 --> 0:06:24.279 with some of the jobless benefits. Whether that's true today 0:06:24.520 --> 0:06:27.200 UM is less clear. So there are a number of 0:06:27.279 --> 0:06:30.880 dynamics that are affecting that labor market and that of course, 0:06:31.040 --> 0:06:33.159 is why it will take us some time to see 0:06:33.200 --> 0:06:36.240 where does all this shake out in terms of how 0:06:36.279 --> 0:06:39.200 that labor market heals and how we begin to see 0:06:39.240 --> 0:06:42.320 growth resume in the economy, as you George of the 0:06:42.400 --> 0:06:47.320 Kansas City Federal right now, as we look to Jackson 0:06:47.440 --> 0:06:49.640 Hall right now, as we look to the American economy. 0:06:49.680 --> 0:06:53.880 Peter Hooper has provided extraordinary leadership at Deutsche Bank to 0:06:53.960 --> 0:06:56.520 do the harnessing and economics, which is to put a 0:06:56.600 --> 0:07:00.000 team together where you lean forward and it's anything from 0:06:59.800 --> 0:07:02.880 the words Seravellos in London and Ellen Ruskin of course 0:07:02.920 --> 0:07:06.680 over to Matt Lozetti and the US economic team as well. Peter, 0:07:06.880 --> 0:07:10.080 how is your team adjusted in the last number of days? 0:07:10.120 --> 0:07:15.760 Are you marking down Q three in Q four economic growth? Well, Tim, 0:07:15.840 --> 0:07:19.480 we have not yet marked down growth. The numbers have actually, 0:07:19.560 --> 0:07:24.320 until yesterday's UH confidence slip numbers have been coming in 0:07:24.360 --> 0:07:29.040 a bit stronger UH and despite the setbacks on on 0:07:29.080 --> 0:07:33.400 the virus side, we we were inclined to mark up 0:07:33.400 --> 0:07:36.160 our second half numbers just a bit in light of 0:07:36.240 --> 0:07:40.640 data coming in now had an interested in discussion on 0:07:40.680 --> 0:07:43.520 the fiscal side. Obviously, if we don't get a resolution, 0:07:44.320 --> 0:07:47.560 we're assuming one and a half trillion in in fiscal 0:07:47.640 --> 0:07:52.560 support coming along here soon. If that doesn't materialize, and 0:07:52.600 --> 0:07:54.960 it's it's a very different picture. But assuming we get 0:07:55.000 --> 0:07:59.760 the phisical support, the numbers so far say that are 0:08:00.000 --> 0:08:03.600 are five and a half percent growth number declined for 0:08:03.640 --> 0:08:07.080 the year, maybe a little bit too weak. Things looking 0:08:07.120 --> 0:08:10.440 just a little stronger, and and today's durable goods report 0:08:11.560 --> 0:08:14.600 sort of shaded slightly on that side as well. When 0:08:14.600 --> 0:08:17.000 you talk about the fiscal support, it comes ahead of 0:08:17.040 --> 0:08:19.560 that jobless claims number tomorrow that is expecting to be 0:08:19.680 --> 0:08:23.440 expected to be the twenty third reading UH one million 0:08:23.600 --> 0:08:26.600 or more out of this past twenty four weeks. Where 0:08:26.640 --> 0:08:29.520 are you seeing unemployment ending the year at this point, 0:08:29.560 --> 0:08:32.520 given the ongoing announcements of layoffs that we keep hearing 0:08:32.559 --> 0:08:36.080 from major companies, Lisa, we we think it'll slip, it'll 0:08:36.120 --> 0:08:39.320 get below ten percent, but not by much where some 0:08:39.320 --> 0:08:42.200 somewhere in the nine percent range. This this is going 0:08:42.280 --> 0:08:46.479 to be a slow process of getting unemployment down UH. 0:08:47.040 --> 0:08:53.400 Certainly UH GDP growth, the level of GDP not getting 0:08:53.440 --> 0:08:57.920 back to pre UH pre virus levels until early two. 0:08:58.040 --> 0:09:00.800 So it's it's gonna be it's gonna be a long 0:09:00.880 --> 0:09:05.000 slow slog on on improving this labor market substantially. I 0:09:05.040 --> 0:09:07.400 will say that the quote of the year possibly came 0:09:07.440 --> 0:09:10.079 from Vincent de Laard in a story a boy Bloomberg's 0:09:10.320 --> 0:09:13.760 Sarah ponzac He said, I would summarize as the bear 0:09:13.840 --> 0:09:17.000 market for humans, where companies that had the fewest humans 0:09:17.040 --> 0:09:19.720 relative to the market value to the best and you 0:09:19.760 --> 0:09:23.200 saw humans cut in droves. What does this say in 0:09:23.280 --> 0:09:28.440 terms of wage deflation? Well, you know, it depends on 0:09:28.559 --> 0:09:30.440 depends on a sector you're looking at. There are some 0:09:30.480 --> 0:09:33.080 shortages in some areas, you are seeing some increasement, but 0:09:33.280 --> 0:09:37.440 over overall, I think in the service sector, the sectors 0:09:37.440 --> 0:09:40.520 where you've seen a sharp cutback and demand is likely 0:09:40.600 --> 0:09:43.600 to persist for some time until we get the vaccine, 0:09:43.679 --> 0:09:46.160 until that's widely available, and we're not assuming we'll be 0:09:46.240 --> 0:09:48.920 there until probably in the middle of next year. Uh. 0:09:49.040 --> 0:09:53.000 With something that's widely available and effective. Um, it's going 0:09:53.040 --> 0:09:58.560 to be it's gonna be a negative for for for wage, 0:09:59.480 --> 0:10:05.440 wage and alation. Uh. Certainly households have obviously household income 0:10:05.440 --> 0:10:07.760 has gotten a huge boost. On the fiscal side, You've 0:10:07.800 --> 0:10:12.199 seen incomes rise substantially. UM that that points to the 0:10:12.400 --> 0:10:16.520 critical importance of getting something done here, uh and in 0:10:16.559 --> 0:10:20.520 the weeks ahead getting a resolution on on this, uh 0:10:20.640 --> 0:10:24.280 the support package. If we don't get it, we're looking 0:10:24.280 --> 0:10:26.920 at the possibility of a double dip procession Q four 0:10:27.000 --> 0:10:32.199 Q one and uh, further negatives on wage inflation. Certainly, 0:10:32.559 --> 0:10:35.800 this is an incredibly important statement by Dr Hooper. Folks, 0:10:35.880 --> 0:10:38.719 let me explain this again on the standard nb er 0:10:39.120 --> 0:10:42.240 discussion of negative GDP two quarters in a real Q 0:10:42.440 --> 0:10:44.800 four Q one. And I know it's squishy and Dr 0:10:44.840 --> 0:10:47.800 Hooper is not like getting out a calculator to figure 0:10:47.800 --> 0:10:51.559 that out. But the idea of going back into recession, Peter, 0:10:52.679 --> 0:10:57.680 is across a country of immense inequalities. How have our 0:10:57.720 --> 0:11:02.199 politicians not acted so far? Are we see action in Germany, 0:11:02.520 --> 0:11:05.640 action in the United Kingdom and we can't seem to 0:11:05.679 --> 0:11:11.120 get it done to avoid the Hooper recession? Yeah, well 0:11:11.640 --> 0:11:17.079 that's uh Hooper recession if if we get no further 0:11:17.160 --> 0:11:21.880 fiscal support, if the vaccine doesn't materialize until well into 0:11:21.960 --> 0:11:24.720 next year. I mean we're looking at some some clear 0:11:24.760 --> 0:11:27.000 negatives here. As I said, the data to now have 0:11:27.080 --> 0:11:30.440 been a little bit more positive. But Slippage, John slippag 0:11:30.520 --> 0:11:36.040 John consumer confidence UH, and the possibility of further setbacks 0:11:36.360 --> 0:11:41.239 on on COVID nineteen as we go into the winter months. UM. 0:11:41.440 --> 0:11:45.520 These these these all UH say we're we're looking at 0:11:46.320 --> 0:11:50.080 the potential for a more negative picture than certainly built 0:11:50.080 --> 0:11:54.240 into the market at this point. I will just say, Peter, 0:11:54.400 --> 0:11:56.760 one of the big confusing points for me is that 0:11:56.840 --> 0:11:59.360 as we talk about the potential for a double depercession 0:11:59.360 --> 0:12:01.320 and yet the work that we've seen from the Federal 0:12:01.360 --> 0:12:05.480 Reserve from easing of credit standards, we are seeing an 0:12:05.520 --> 0:12:09.320 actual tightening in lending standards by banks. And this comes 0:12:09.360 --> 0:12:11.360 from Goldman Sacks. They put out a report showing the 0:12:11.440 --> 0:12:17.320 fastest pace of tightening in in loans to businesses over 0:12:17.360 --> 0:12:20.520 the past couple of months, going back to the last recession. 0:12:20.880 --> 0:12:23.840 Does this concern you? Is this the banks seeing something 0:12:23.880 --> 0:12:28.320 that the rest of the market isn't well, Lisa, It's interesting, Yes, 0:12:28.360 --> 0:12:32.920 those lending standards have been tightening impressively, as as you 0:12:32.960 --> 0:12:37.719 would expect when economic situation de jurates significantly. At the 0:12:37.760 --> 0:12:41.560 same time, the default rate, which normally catches up to 0:12:41.800 --> 0:12:46.040 these kinds of tightening, has not really moved that much. 0:12:46.080 --> 0:12:50.400 I think. I think the aggressiveness of the fiscal response 0:12:50.440 --> 0:12:55.200 that we saw initially, the and the support through p PP, 0:12:55.559 --> 0:12:59.920 the and the feds UH main street lending facility waiting 0:13:00.080 --> 0:13:02.200 the wings. That hasn't been a factor yet, but we 0:13:02.320 --> 0:13:05.560 do expect it will become more important. All of these 0:13:05.559 --> 0:13:07.880 are leading to a little bit of a disconnect between 0:13:08.400 --> 0:13:14.600 this tightening of standards and the eventual fallout in terms 0:13:14.640 --> 0:13:19.960 of what's gonna happen. Has credit crunch, ships, businesses. Peter Hooper, 0:13:20.000 --> 0:13:22.400 thank you so much with Deutsche Bay greatly appreciate it 0:13:22.440 --> 0:13:25.480 and look forward to your thoughts after Jacksonhole as ahead 0:13:25.480 --> 0:13:32.760 of their economic research right now and arguably the interview 0:13:32.800 --> 0:13:35.480 of the day on what doesn't matter at the conventions. 0:13:35.520 --> 0:13:39.000 Libby Cantrill joins us now with PIMCO Head of Public Policy. 0:13:39.360 --> 0:13:42.480 Libby I spoke with Westernman of Arkansas yesterday. He says 0:13:42.520 --> 0:13:46.680 Hot Springs and Southern Arkansas, Western Arkansas are doing well. 0:13:46.760 --> 0:13:49.720 They're removed from all of his trauma. And then you 0:13:49.800 --> 0:13:53.440 go to Kenosha, Wisconsin. In the uproar of the last 0:13:53.440 --> 0:13:57.520 three days, including death last night, and in between, there's 0:13:57.520 --> 0:14:01.760 a huge part of the country desperate for stimulus. Can 0:14:01.800 --> 0:14:07.439 we get stimulus once it's conventions over. Yeah, well, good morning, Tom. Yeah. 0:14:07.440 --> 0:14:10.560 I mean we've we have, PIMCO have and I specifically 0:14:10.559 --> 0:14:13.840 have been talking about the additional stimulus was a question 0:14:13.920 --> 0:14:16.680 of of win, not if. Now that win has definitely 0:14:16.720 --> 0:14:20.240 taken longer, certainly than I thought it was going to. Um. 0:14:20.280 --> 0:14:24.040 The the sort of the perennial stumbling blocks around the 0:14:24.160 --> 0:14:28.600 level of benefit, and specifically as it relates to unemployment insurance, 0:14:29.320 --> 0:14:33.160 Local and state funding a big issue for Democrats. They 0:14:33.200 --> 0:14:36.200 got very little in the Cares Act. Uh, you know, 0:14:36.280 --> 0:14:39.560 hundred fifty billion dollars for states and cities. Democrats want 0:14:39.600 --> 0:14:42.040 more in this next round. And then you know, funding 0:14:42.080 --> 0:14:45.680 for usps UM. These are the obstacles really to getting 0:14:45.720 --> 0:14:48.040 a deal. I continue to think there is a framework 0:14:48.080 --> 0:14:51.080 for a deal. I think that the inflection point will 0:14:51.120 --> 0:14:53.160 likely be the end of September though, that is when 0:14:53.200 --> 0:14:56.360 Congress has to come together to pass a funding bill 0:14:56.400 --> 0:14:59.320 to avoid a government shutdown, So we may have to 0:14:59.360 --> 0:15:02.360 wait until then. Um. And again we thought it was 0:15:02.400 --> 0:15:05.080 gonna happen sooner, but some of these partisan issues just 0:15:05.080 --> 0:15:07.880 gotta have gotten in the way. Let me Lisa bram 0:15:07.920 --> 0:15:11.640 Wants mentioned brilliantly American Airlines nineteen thousand. They're taking a 0:15:11.680 --> 0:15:15.000 forty thousand down with early retirement, best buy out with 0:15:16.560 --> 0:15:20.960 whatever the number is. Our politicians in your world moved 0:15:20.960 --> 0:15:25.280 by actual firings. Yeah, I mean, look, I think that 0:15:25.400 --> 0:15:27.000 I think if you, if you talk to folks on 0:15:27.000 --> 0:15:31.200 the hill, there there is an acknowledgement that, certainly, um, 0:15:31.280 --> 0:15:34.080 the the economy needs another shot in the arm. I 0:15:34.080 --> 0:15:38.960 think these headlines certainly underscore that. Um So again, I 0:15:38.960 --> 0:15:42.160 think that the there's a broader acknowledgement that the political 0:15:42.280 --> 0:15:47.360 risk in particular going into the election without having additional stimulus, 0:15:47.680 --> 0:15:50.520 sort of speaking to your point, just the headline risk 0:15:50.640 --> 0:15:54.520 of going into the election companies announcing more firings is 0:15:54.600 --> 0:15:57.320 just too great for politicians. So again, I think they 0:15:57.320 --> 0:16:00.840 will come together to pass something, just taking taking longer 0:16:00.880 --> 0:16:03.200 than certainly what we expected. So we're not hearing much 0:16:03.240 --> 0:16:05.720 noise out of Washington right now other than the r 0:16:05.800 --> 0:16:08.240 n C and the d n C. And yet every 0:16:08.280 --> 0:16:12.320 week that goes on, economists say hurts the economy based 0:16:12.400 --> 0:16:15.680 on lack of extension of this program. When you talk 0:16:15.720 --> 0:16:18.960 to portfolio managers within PIMCO, how do you help them 0:16:19.120 --> 0:16:23.480 gauge the risk of a prolonged negotiation process. When can 0:16:23.520 --> 0:16:26.160 they expect some sort of deal to get done and 0:16:26.160 --> 0:16:29.800 what are the consequences of the delay. Yeah, I mean 0:16:29.800 --> 0:16:32.680 the earliest at this point, given that you know, folks 0:16:32.680 --> 0:16:36.480 are on the hill are out for their their usual 0:16:36.480 --> 0:16:39.720 August recess, really is going to be the middle of 0:16:39.760 --> 0:16:42.480 September at the very earliest. But that's when they come back. 0:16:42.640 --> 0:16:46.040 So that would be predicated on a deal being struck 0:16:46.080 --> 0:16:49.920 before then, but probably, as I said, late September again, 0:16:49.960 --> 0:16:52.880 that is when Congress has to come together to pass 0:16:52.920 --> 0:16:55.120 a funding bill to avoid a government shutdown, And it 0:16:55.160 --> 0:17:00.200 looks very likely that these two things are combined. From 0:17:00.200 --> 0:17:04.320 an economic perspective, we are seeing some states apply for 0:17:04.600 --> 0:17:10.000 that added benefit that the President authorized under his executive order. 0:17:10.040 --> 0:17:12.080 There's some issues with that, and of course that benefit 0:17:12.200 --> 0:17:15.439 is about half of what we saw under the Cares 0:17:15.480 --> 0:17:19.520 Actum and only lasts for sort of four to five weeks, 0:17:19.520 --> 0:17:22.399 so there is a risk obviously, And we're seeing some 0:17:22.440 --> 0:17:27.680 of the preliminary data consumer confidence is lagging. You're seeing 0:17:27.680 --> 0:17:32.000 some other data metrics that the economy is once again slowing. 0:17:32.040 --> 0:17:33.639 So again I think there's a broad acknowledgement of the 0:17:33.680 --> 0:17:36.000 Hill that something needs to be done. Um, just a 0:17:36.119 --> 0:17:39.000 question of how they get there. Is it an under 0:17:39.040 --> 0:17:42.560 priced risk that it's going to take a while? Yeah, 0:17:42.560 --> 0:17:44.000 I mean I think at this point the market does 0:17:44.000 --> 0:17:46.959 seem to be priced in in uh surprising in some 0:17:47.000 --> 0:17:49.720 additional stimulus, and so certainly that is a tail risk. 0:17:49.760 --> 0:17:53.040 If everything falls apart in October, we don't have a deal, 0:17:53.480 --> 0:17:56.520 folks will be back in their districts campaigning for the election, 0:17:56.880 --> 0:17:58.800 and then it does look very unlikely that you get 0:17:58.840 --> 0:18:02.439 something until after the election. So that certainly is you know, 0:18:02.640 --> 0:18:04.359 is a tail risk. It doesn't seem that markets are 0:18:04.400 --> 0:18:08.280 necessarily focused on that Libby in your world? Is there 0:18:08.320 --> 0:18:11.600 a middle ground? Is there a middle Democrat, a middle 0:18:11.640 --> 0:18:16.159 Republican and they have political power a political voice now 0:18:16.560 --> 0:18:20.879 and after November? Yeah, I mean, Tom, it's it's a 0:18:20.880 --> 0:18:25.240 great question. Um. There there are certain constituencies on Capitol Hill. 0:18:25.320 --> 0:18:29.360 There's the problem Solvers Caucus that is a bipartisan caucus 0:18:29.400 --> 0:18:33.440 that is um sort of aimed at that center demographic 0:18:33.520 --> 0:18:36.560 that you that you talk about, Um, and we'll see. 0:18:36.560 --> 0:18:40.320 I mean, this will obviously be predicated on the election outcome, 0:18:40.400 --> 0:18:42.800 but something I think it's sort of important especially for 0:18:42.840 --> 0:18:44.919 the markets. To keep in mind if there is a 0:18:44.960 --> 0:18:48.160 Democratic suite, So if Joe Biden is elected to president, 0:18:48.400 --> 0:18:52.280 Democrats control the Senate and win back control of the Senate, 0:18:52.520 --> 0:18:55.359 you have to remember that who are those Democrats that 0:18:55.359 --> 0:18:58.000 are making those majorities in both the House and the Senate. 0:18:58.000 --> 0:19:02.240 They're actually from either purple districts or even red districts 0:19:02.280 --> 0:19:04.840 or red states. Um, so there will be kind of 0:19:04.880 --> 0:19:08.840 a more moderating force within the Democratic Party who are 0:19:08.840 --> 0:19:11.760 probably going to be more inclined as reaching across the aisle. 0:19:11.880 --> 0:19:16.040 So I don't think, you know, centrism is totally dead, 0:19:16.560 --> 0:19:19.680 but obviously, over the last decade or so, our politics 0:19:19.680 --> 0:19:22.840 have become so polarized Jerry Mandarin I think is exacerbated. 0:19:23.640 --> 0:19:27.199 Lack of earmarks have exacerbated this. So they're certainly the demographic, 0:19:27.240 --> 0:19:30.520 but it is it is sort of a smaller one, unfortunately, 0:19:30.720 --> 0:19:36.320 Lett me cancel, thank you so much. With PIMCO, I 0:19:36.320 --> 0:19:39.240 think there's a lot of dat opportunities that are available 0:19:39.280 --> 0:19:42.320 to people who who are creative, who have a vision 0:19:42.359 --> 0:19:45.800 for the future. I think you know, in ten years 0:19:45.800 --> 0:19:49.960 will look back and there'll be ten world class companies 0:19:50.000 --> 0:19:52.880 that were created by people who we probably think are 0:19:52.920 --> 0:20:00.680 thinking are crazy right about now a gentleman from Pittsburgh Cuban, 0:20:00.760 --> 0:20:03.920 What an interesting life at University of Pittsburgh and on 0:20:04.080 --> 0:20:09.280 he went to huge prosperity, including invigorating many would say enthusiasm, 0:20:09.960 --> 0:20:13.240 literally how owners should be within sports with his Dallas 0:20:13.320 --> 0:20:16.919 Mavericks as well. Always an eventful interview, made more so 0:20:17.040 --> 0:20:21.280 by David Rubinstein appeared appear, uh, the gentleman from Carlisle Group, 0:20:21.320 --> 0:20:23.840 and of course we've been thrilled with his wonderful interviews. Well, 0:20:23.880 --> 0:20:26.960 how do you prepare for a Mark Cuban interviewed David 0:20:27.040 --> 0:20:32.920 Rubinstein book. I read that, Um, he's got lots of press, 0:20:33.000 --> 0:20:35.000 so he's read all the articles about him over the 0:20:35.080 --> 0:20:37.440 last two years or so. But he is a person 0:20:37.560 --> 0:20:40.959 that's very smart. I mean, if you don't know him, 0:20:40.960 --> 0:20:44.440 you might think he's just a bombastic person who spouts 0:20:44.480 --> 0:20:47.320 out things at basketball games. But he's a very, very 0:20:47.359 --> 0:20:50.040 smart person. He built a company way ahead of the 0:20:50.720 --> 0:20:54.479 technology revolution, sold at a big price, and he managed 0:20:54.520 --> 0:20:57.280 to uh make certain that the profits didn't go away 0:20:57.280 --> 0:21:00.359 when the tech bubble burst occurred. And he's made a 0:21:00.400 --> 0:21:02.720 lot of money over the years. But he's actually very thoughtful, 0:21:02.800 --> 0:21:05.720 and I think the interview was much more impressive than 0:21:05.760 --> 0:21:07.880 I thought it might have been. You have been good 0:21:07.920 --> 0:21:11.400 engaging politicians to be It is the discussion of Mark 0:21:11.440 --> 0:21:16.879 Cuban entering American politics, any inclination of that. Well, like 0:21:17.000 --> 0:21:18.840 a lot of people who make a lot of money 0:21:19.040 --> 0:21:21.480 and don't know what to do with themselves afterwards, because 0:21:21.520 --> 0:21:23.199 they got all the material things they want, they say, 0:21:23.240 --> 0:21:25.280 why not run for president? Nited states This idea has 0:21:25.280 --> 0:21:29.879 occurred to a couple of people obviously, and Mark Cuban 0:21:29.920 --> 0:21:33.879 actually was a friend of of Donald Trump and Donald 0:21:33.880 --> 0:21:36.480 Trump and when he was running for president initially talked 0:21:36.520 --> 0:21:38.359 to Mark because he thought Mark was supporting and then 0:21:38.440 --> 0:21:41.320 ultimately Mark decided not to Mark looked at running for 0:21:41.359 --> 0:21:44.879 president this time and concluded after doing some polling that 0:21:45.119 --> 0:21:47.000 he wouldn't get very far and didn't want to do it. 0:21:47.119 --> 0:21:49.440 His family also wasn't in favor of it. But he's 0:21:49.440 --> 0:21:52.120 still only sixty two years old and he could run again. 0:21:52.680 --> 0:21:56.679 So do you expect Mark Cuban? You know, I think 0:21:56.720 --> 0:21:58.680 there'll be a lot of people in four But I 0:21:58.720 --> 0:22:01.280 would say the idea of that a wealthy business person 0:22:01.600 --> 0:22:03.800 who has a lot of money to spend, could run 0:22:03.880 --> 0:22:06.040 for president United States and actually win. It's not as 0:22:06.160 --> 0:22:09.480 ridiculous as it once was. So I wouldn't rule anything out. 0:22:09.520 --> 0:22:12.320 But Mark is actually very creative and what he's done 0:22:12.359 --> 0:22:14.440 with the Mavericks is pretty impressive. He bought it for 0:22:14.440 --> 0:22:17.080 about two eight million dollars is probably worth two and 0:22:17.119 --> 0:22:20.160 a half to three billion now. Um, and he's would 0:22:20.200 --> 0:22:22.560 say the biggest problem he has in his life. I said, Mark, 0:22:22.840 --> 0:22:24.920 you know, everything seems to work perfectly for you. What 0:22:25.080 --> 0:22:26.800 the problems do you have in like? He said, Well, 0:22:26.800 --> 0:22:29.520 I have a teenage daughter, and managing a teenage daughter 0:22:29.720 --> 0:22:32.639 is more problem than anything else I've ever had. That 0:22:32.760 --> 0:22:36.840 would be That would be true as well, Um, you 0:22:36.880 --> 0:22:39.760 know the time for surveillance correction, folks. I did mention 0:22:39.840 --> 0:22:43.440 the Pittsburgh affiliation of Mr Cuban, but Lucas from Bloomington 0:22:43.560 --> 0:22:46.200 emails in and says, hey, stupid. He went to Indiana 0:22:46.640 --> 0:22:50.360 University at Lisa pick it up from there from he's 0:22:50.400 --> 0:22:53.560 from Pittsburgh. He grew up in Pittsburgh, but Indiana University 0:22:53.600 --> 0:22:55.320 had a business school which we could afford. He didn't 0:22:55.320 --> 0:22:58.520 have any money, and so he's from a Jewish family. 0:22:58.760 --> 0:23:01.639 His name was changed, like somewhere in Ellis Island. Uh 0:23:01.720 --> 0:23:04.960 and Uh. He went to Indiana, made a fair amount 0:23:05.000 --> 0:23:07.480 of money as a bartender and so forth, then moved 0:23:07.480 --> 0:23:09.680 to Dallas because the weather was good. He said that 0:23:09.840 --> 0:23:12.040 women were beautiful and he wanted to just have a 0:23:12.160 --> 0:23:14.320 nice lifestyle and there were some jobs there. But he 0:23:14.600 --> 0:23:16.600 started a number of businesses and he's done quite well 0:23:16.720 --> 0:23:19.560 over over many years at time. Almost everything he's touch 0:23:19.600 --> 0:23:21.840 has worked out well. Yeah, And when he was talking 0:23:22.000 --> 0:23:24.399 about the NBA, he was saying he would welcome a 0:23:24.480 --> 0:23:28.439 Jewish player, frankly, any player, uh, even from Mars if 0:23:28.520 --> 0:23:31.640 they could win. I am wondering, David, talking about all 0:23:31.680 --> 0:23:36.159 of that money that Mark Cuban has, what's he buying? Well, Interestingly, 0:23:36.320 --> 0:23:39.280 he's been a long term owner of Netflix shares and 0:23:39.480 --> 0:23:42.119 Amazon shares, and he would say a large point of 0:23:42.200 --> 0:23:44.800 his net worth is actually the money he's invested in 0:23:44.880 --> 0:23:47.959 those companies. He has been in the past a stock trader, 0:23:48.160 --> 0:23:50.480 and he knows a lot about tech stocks. But he says, 0:23:50.640 --> 0:23:52.679 right now, there aren't that many tech stocks to buy, 0:23:52.760 --> 0:23:54.399