1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,080 Speaker 2: Terminal and the Bloomberg Business app. We begin this out 10 00:00:37,080 --> 00:00:39,720 Speaker 2: with stockslower after snapping a six day winning streak in 11 00:00:39,800 --> 00:00:42,839 Speaker 2: yesterday's session. Sarah Maleck of Neuvine writing markets face a 12 00:00:42,880 --> 00:00:46,199 Speaker 2: reality check due to two macro drivers, Moodies Downgroad of 13 00:00:46,280 --> 00:00:50,440 Speaker 2: US dead and continued tariff negotiations. Sarah joins Ustaff for more. 14 00:00:50,479 --> 00:00:52,920 Speaker 2: Sarah and Mornig, good morning. How important is that tax 15 00:00:52,960 --> 00:00:54,400 Speaker 2: bill to this bond market? 16 00:00:54,680 --> 00:00:56,520 Speaker 3: I think it's very important to this spawn market. What 17 00:00:56,560 --> 00:00:59,080 Speaker 3: the bond market is worried about is that over the 18 00:00:59,160 --> 00:01:01,640 Speaker 3: longer term it will increase the deficit, and the bond 19 00:01:01,640 --> 00:01:04,280 Speaker 3: market doesn't like that. And that's where we're seeing yields 20 00:01:04,280 --> 00:01:06,240 Speaker 3: continue to back up, so we'll see where we end 21 00:01:06,319 --> 00:01:08,480 Speaker 3: up on that and the shorter term though the tax bill, 22 00:01:08,520 --> 00:01:11,000 Speaker 3: of course, will be stimulative for the economy, so it's 23 00:01:11,000 --> 00:01:13,200 Speaker 3: positive for the short term, not so positive for the 24 00:01:13,240 --> 00:01:13,680 Speaker 3: long term. 25 00:01:13,720 --> 00:01:16,640 Speaker 2: Bonios at these levels and not constraining the discussion that 26 00:01:16,680 --> 00:01:19,119 Speaker 2: about down in Washington, when does it start to constrain 27 00:01:19,160 --> 00:01:20,000 Speaker 2: the sanquity market. 28 00:01:20,480 --> 00:01:22,160 Speaker 3: I think at about five percent on the ten year, 29 00:01:22,200 --> 00:01:24,600 Speaker 3: equities will begin to get more nervous. Also, beyond the 30 00:01:24,600 --> 00:01:27,240 Speaker 3: tariff issues and the Moody's downgrade and downgrades of US 31 00:01:27,280 --> 00:01:29,840 Speaker 3: credit has generally not been positive for the markets. We 32 00:01:29,880 --> 00:01:33,080 Speaker 3: have bubbling up geopolitical issues between Iran and Israel, so 33 00:01:33,120 --> 00:01:35,280 Speaker 3: there's a lot of things for the markets to contend with, 34 00:01:35,360 --> 00:01:38,080 Speaker 3: and I think that's why equities are experiencing a hangover 35 00:01:38,120 --> 00:01:38,480 Speaker 3: this week. 36 00:01:38,600 --> 00:01:40,280 Speaker 4: Was there any signal in the fact that you got 37 00:01:40,280 --> 00:01:43,160 Speaker 4: those bubbling up of tensions, the CNN report of Israel 38 00:01:43,200 --> 00:01:45,640 Speaker 4: looking at a strike in Iran, and the only movement 39 00:01:45,680 --> 00:01:47,600 Speaker 4: and change you really saw was in the oil price. 40 00:01:47,640 --> 00:01:50,600 Speaker 4: We were still selling treasuries, we were still selling the dollar. 41 00:01:50,840 --> 00:01:53,280 Speaker 4: Typically you'd expect those types of assets to rally. What 42 00:01:53,320 --> 00:01:53,960 Speaker 4: does that tell you. 43 00:01:54,120 --> 00:01:55,680 Speaker 3: I think it's telling me there is a little bit 44 00:01:55,680 --> 00:01:58,040 Speaker 3: of this nervousness around the US as a safe haven 45 00:01:58,120 --> 00:02:00,640 Speaker 3: because of the tariff issues and the macro folatility that 46 00:02:00,680 --> 00:02:02,920 Speaker 3: we've seen this year. So I think the dollar continues 47 00:02:02,960 --> 00:02:05,520 Speaker 3: to be bearish in the longer term, not only because 48 00:02:05,720 --> 00:02:09,280 Speaker 3: the US economy is slowing, but because foreign investors are 49 00:02:09,320 --> 00:02:12,000 Speaker 3: a little bit concerned about the strength of the dollar 50 00:02:12,080 --> 00:02:14,119 Speaker 3: and the safe haven status, and they're seeing the same 51 00:02:14,120 --> 00:02:16,680 Speaker 3: thing with treasuries in terms of foreign buyers there, and 52 00:02:16,680 --> 00:02:18,799 Speaker 3: that is becoming somewhat of an issue that's been going 53 00:02:18,800 --> 00:02:19,359 Speaker 3: on all year. 54 00:02:19,520 --> 00:02:21,680 Speaker 4: Can that ex sense to the equity market? Serena tang 55 00:02:21,760 --> 00:02:24,080 Speaker 4: Over at Morgan Stanley wrote a note just moments ago 56 00:02:24,480 --> 00:02:28,200 Speaker 4: overweight on US stock saying, still, Tina, there is still 57 00:02:28,240 --> 00:02:31,519 Speaker 4: no alternative? Is there an alternative to American stock markets? 58 00:02:31,560 --> 00:02:33,840 Speaker 3: Well, if you look at US stocks, stocks will trade 59 00:02:33,840 --> 00:02:36,680 Speaker 3: on the fundamentals. First quarter earnings very strong, coming in 60 00:02:36,720 --> 00:02:39,560 Speaker 3: at about double the rate of expectations, twelve percent year 61 00:02:39,600 --> 00:02:42,840 Speaker 3: over your earnings growth, about three quarters of companies beating earnings, 62 00:02:42,840 --> 00:02:45,360 Speaker 3: so earning even then positive. And if you look at markets, 63 00:02:45,360 --> 00:02:47,800 Speaker 3: since they were covered off the bottom, you've seen a 64 00:02:47,800 --> 00:02:49,560 Speaker 3: lot of FOMO, a lot of inter a day buying, 65 00:02:49,639 --> 00:02:52,640 Speaker 3: so when you see these dips, retail investors are stepping 66 00:02:52,680 --> 00:02:54,920 Speaker 3: back in to buy. Also a lot of cash on 67 00:02:54,960 --> 00:02:57,680 Speaker 3: the sidelines. People do tend to unfortunately sell at the 68 00:02:57,680 --> 00:03:00,480 Speaker 3: wrong time and then chase their way back into the market. 69 00:03:00,560 --> 00:03:02,560 Speaker 3: So I think there is still more buys to the 70 00:03:02,639 --> 00:03:05,239 Speaker 3: upside for the US led by technology. 71 00:03:04,680 --> 00:03:07,560 Speaker 4: Sucks more buys even though we are back at really 72 00:03:07,639 --> 00:03:09,760 Speaker 4: lofty multiples. Sarah, I thought this was part of the 73 00:03:09,760 --> 00:03:12,200 Speaker 4: problem to start the year, that we were just over exposed. 74 00:03:12,240 --> 00:03:13,919 Speaker 4: The US has not magically gone away. 75 00:03:14,160 --> 00:03:16,760 Speaker 3: I think the US has fundamentally strong reasons for people 76 00:03:16,800 --> 00:03:19,000 Speaker 3: wanting to be exposed to it. It's a thirty percent 77 00:03:19,000 --> 00:03:20,960 Speaker 3: of the S and P five hundred, actually over thirty 78 00:03:21,000 --> 00:03:24,680 Speaker 3: percent is technology related. If you look at historical earnings growth, 79 00:03:24,760 --> 00:03:26,760 Speaker 3: about two thirds of that has been driven by those 80 00:03:26,800 --> 00:03:29,480 Speaker 3: tech earnings. We saw a very strong first quarter. The 81 00:03:29,560 --> 00:03:31,679 Speaker 3: AI boom is alive and well. We heard that from 82 00:03:31,720 --> 00:03:34,560 Speaker 3: companies like Microsoft this quarter, So I think the growth 83 00:03:34,639 --> 00:03:37,280 Speaker 3: legs for the US are still intact in place. I 84 00:03:37,320 --> 00:03:39,560 Speaker 3: totally agree with you. Markets are trading at a premium, 85 00:03:39,560 --> 00:03:41,200 Speaker 3: but a lot of people want to get back into 86 00:03:41,240 --> 00:03:43,640 Speaker 3: this US market, and I think that plus the earnings 87 00:03:43,640 --> 00:03:44,480 Speaker 3: growth gives it legs. 88 00:03:44,480 --> 00:03:46,440 Speaker 2: From here, you'll line you just said it. The II 89 00:03:46,480 --> 00:03:48,520 Speaker 2: boom is alive and well, several months ago, it didn't 90 00:03:48,520 --> 00:03:51,120 Speaker 2: feel that way the original disruption in twenty twenty five 91 00:03:51,520 --> 00:03:52,920 Speaker 2: DAP's sake. Have we ever come that? 92 00:03:53,520 --> 00:03:55,839 Speaker 3: I think we did. I think Deepsek was the big 93 00:03:55,880 --> 00:03:57,840 Speaker 3: story of the year for about a month and then 94 00:03:57,880 --> 00:04:00,480 Speaker 3: we got into tariffs and everybody forgot about Deep Seek. 95 00:04:00,640 --> 00:04:03,520 Speaker 3: It is something to watch. So the incremental spending on 96 00:04:03,640 --> 00:04:06,600 Speaker 3: artificial intelligence and what's going to be the ROI on that, 97 00:04:06,880 --> 00:04:10,440 Speaker 3: and also competing cheaper technologies like deep seak need to 98 00:04:10,440 --> 00:04:12,320 Speaker 3: be watched. But what we see with these companies is 99 00:04:12,360 --> 00:04:16,320 Speaker 3: demand for artificial intelligence. The productivity it can add to 100 00:04:16,320 --> 00:04:19,680 Speaker 3: companies is very strong. And these dominant players like Microsoft 101 00:04:19,839 --> 00:04:22,320 Speaker 3: that have spent tens of billions to get a leadership position, 102 00:04:22,480 --> 00:04:24,359 Speaker 3: they're going to remain in place as a leader. 103 00:04:24,560 --> 00:04:26,039 Speaker 2: Have the win has changed? I think that is the 104 00:04:26,080 --> 00:04:28,839 Speaker 2: ultimate question. Has anything changed post Deepseek? 105 00:04:29,160 --> 00:04:31,280 Speaker 3: I think that the winners are going to continue to win, 106 00:04:31,400 --> 00:04:34,120 Speaker 3: Like Microsoft. Other areas that we like are software companies 107 00:04:34,120 --> 00:04:36,400 Speaker 3: which I think people wondered, what is AI going to 108 00:04:36,400 --> 00:04:39,360 Speaker 3: do to software companies? I think for software it makes 109 00:04:39,360 --> 00:04:42,440 Speaker 3: them more productive. Also, it's showing traction in terms of 110 00:04:42,480 --> 00:04:44,919 Speaker 3: capturing clients and crossling with clients. So that's why we 111 00:04:45,040 --> 00:04:47,880 Speaker 3: like not only Microsoft, but companies like Viva, which is 112 00:04:47,920 --> 00:04:51,000 Speaker 3: a vertical industry software play in the life sciences industry. 113 00:04:51,040 --> 00:04:52,640 Speaker 3: I think these are some of the winners over time. 114 00:04:52,839 --> 00:04:55,520 Speaker 3: You need to be selective, but AI and the ones 115 00:04:55,520 --> 00:04:57,320 Speaker 3: that have dominated it for many years are going to 116 00:04:57,360 --> 00:04:58,920 Speaker 3: stay the leaders in the space. 117 00:04:58,960 --> 00:05:01,479 Speaker 4: Honestly, it's remarkable looking at what's improved since the April 118 00:05:01,560 --> 00:05:03,840 Speaker 4: nay dear. First you get the communication services again, those 119 00:05:03,920 --> 00:05:06,320 Speaker 4: kind of big AI names number two and even before 120 00:05:06,360 --> 00:05:10,960 Speaker 4: the infotech sector is utilities again, a very AI exposed 121 00:05:11,040 --> 00:05:14,359 Speaker 4: kind of sector. Is that still the play again? Post 122 00:05:14,360 --> 00:05:16,200 Speaker 4: deep Seek? The thought was is that we won't need 123 00:05:16,240 --> 00:05:18,960 Speaker 4: as much energy that things have become more efficient. Can 124 00:05:19,000 --> 00:05:20,719 Speaker 4: you still bet on the utility players? 125 00:05:20,800 --> 00:05:23,880 Speaker 3: I think you can, especially live in the infrastructure space, 126 00:05:23,920 --> 00:05:27,520 Speaker 3: which a big component of infrastructure is utility, So upgrading 127 00:05:27,560 --> 00:05:30,520 Speaker 3: your grids because of the electrification of the economy, supply 128 00:05:30,640 --> 00:05:33,040 Speaker 3: chains coming back down, coming back to the United States 129 00:05:33,080 --> 00:05:35,359 Speaker 3: and the infrastructure that we need to build. Their utilities 130 00:05:35,440 --> 00:05:38,120 Speaker 3: are going to be very necessary. There the energy needed 131 00:05:38,160 --> 00:05:40,599 Speaker 3: for data centers, which will be more proliferate in the 132 00:05:40,640 --> 00:05:42,440 Speaker 3: in the United States. All of that I think makes 133 00:05:42,520 --> 00:05:44,920 Speaker 3: utilities continue to be a strong play and a nice 134 00:05:44,920 --> 00:05:45,960 Speaker 3: AI derivative play. 135 00:05:46,040 --> 00:05:48,160 Speaker 4: So these are the sectors that haven't been downgrading their 136 00:05:48,200 --> 00:05:50,760 Speaker 4: earnings as much. Where you have seen the downgrades comes 137 00:05:50,960 --> 00:05:54,280 Speaker 4: from the more consumer oriented sectors. You saw from Target 138 00:05:54,279 --> 00:05:57,160 Speaker 4: earnings this morning, some concern there in terms of demand. 139 00:05:57,279 --> 00:06:00,599 Speaker 4: You hear Walmart talking about raising prices. Can you buy 140 00:06:00,640 --> 00:06:03,719 Speaker 4: consumer oriented stocks right now? Or are things just too uncertain? 141 00:06:03,880 --> 00:06:06,200 Speaker 3: Which consumer's in a tough space that it did lead 142 00:06:06,279 --> 00:06:08,640 Speaker 3: us out of the v shape or covery post the 143 00:06:08,720 --> 00:06:11,640 Speaker 3: Liberation Day malaise that we saw soft data on the 144 00:06:11,640 --> 00:06:15,200 Speaker 3: consumer is not strong. Outlooks from companies about the consumer 145 00:06:15,400 --> 00:06:18,400 Speaker 3: we're weak. We have not seen the impact of tariffs yet. 146 00:06:18,560 --> 00:06:20,400 Speaker 3: History tells us we will see that about three to 147 00:06:20,400 --> 00:06:23,880 Speaker 3: four months after tariff implementation. So it's very unclear, not 148 00:06:23,920 --> 00:06:25,920 Speaker 3: only in terms of tariffs, who's going to eat them? 149 00:06:25,960 --> 00:06:28,360 Speaker 3: Is it the consumer? Is it the producers. I think 150 00:06:28,360 --> 00:06:31,159 Speaker 3: it's a combination of both. Margin expansion has been what 151 00:06:31,200 --> 00:06:33,440 Speaker 3: has driven a lot of companies' earnings growth though, So 152 00:06:33,480 --> 00:06:35,480 Speaker 3: if companies are going to eat that cost of tariffs 153 00:06:35,560 --> 00:06:37,839 Speaker 3: and margins get at risk, it is probably some downside 154 00:06:37,839 --> 00:06:40,160 Speaker 3: for earnings growth going forward. Good news, we're at a 155 00:06:40,240 --> 00:06:42,560 Speaker 3: high level, growing at twelve percent year over year. I 156 00:06:42,560 --> 00:06:44,599 Speaker 3: think consumer is going to be challenged from here though, 157 00:06:45,320 --> 00:06:48,480 Speaker 3: high end consumer, low end consumer. Both areas could be challenged. 158 00:06:48,480 --> 00:06:51,440 Speaker 3: But the tax cuts in that bill could be somewhat 159 00:06:51,480 --> 00:06:53,479 Speaker 3: of a support form. But it's not our top pick 160 00:06:53,480 --> 00:06:54,320 Speaker 3: for a sector this year. 161 00:06:54,440 --> 00:06:56,800 Speaker 2: You mentioned the self data, typically considered to be a 162 00:06:56,880 --> 00:06:59,440 Speaker 2: leading indicator. Do you believe it's a leading indicator or 163 00:06:59,480 --> 00:07:02,040 Speaker 2: a mislead in the kits at the moment, I think. 164 00:07:01,880 --> 00:07:04,560 Speaker 3: It's mixed because it's tough with the consumer. Consumers tend 165 00:07:04,560 --> 00:07:07,360 Speaker 3: to be grumpy spenders, so when you see consumer spending 166 00:07:07,440 --> 00:07:11,120 Speaker 3: consumer sentiment weak, that's not necessarily a sign that consumers 167 00:07:11,120 --> 00:07:13,160 Speaker 3: are going to pull back on their spending. We've seen 168 00:07:13,160 --> 00:07:16,160 Speaker 3: a very resilient consumer during this cycle already in a 169 00:07:16,160 --> 00:07:19,080 Speaker 3: period of high inflation and high interstates, and remember pre 170 00:07:19,200 --> 00:07:22,200 Speaker 3: the tariffs, inflation has been trending in the right direction. 171 00:07:22,360 --> 00:07:24,840 Speaker 3: So if you add in about a ten percent based 172 00:07:24,880 --> 00:07:27,960 Speaker 3: tariff rate that adds about one percent to inflation, takes 173 00:07:28,000 --> 00:07:30,320 Speaker 3: you back to about that three percent level. If the 174 00:07:30,360 --> 00:07:33,520 Speaker 3: Fed sticks to their commitment to view tariff driven inflation 175 00:07:33,640 --> 00:07:36,240 Speaker 3: as transitory, and they get the couple of rate custs 176 00:07:36,280 --> 00:07:38,680 Speaker 3: this year, we think we'll see two, then maybe we 177 00:07:38,720 --> 00:07:41,040 Speaker 3: can get through this and consumer remains okay. 178 00:07:41,440 --> 00:07:43,600 Speaker 2: If if the Fed sticks on a lot of if there 179 00:07:43,720 --> 00:07:45,640 Speaker 2: any resents belief they won't stick to that view. 180 00:07:46,240 --> 00:07:48,560 Speaker 3: I think it really depends if the tariffs and inflation 181 00:07:48,640 --> 00:07:51,680 Speaker 3: driven by tariffs is really transitory, and if the underlying 182 00:07:51,760 --> 00:07:55,320 Speaker 3: base rate of tear of inflation continues to moderate as 183 00:07:55,320 --> 00:07:57,640 Speaker 3: we've been seeing. So that's really you know. I think 184 00:07:57,680 --> 00:07:59,680 Speaker 3: it's hard to say because all of this data from 185 00:07:59,760 --> 00:08:01,440 Speaker 3: Terra so we're not seeing it in the hard data. 186 00:08:01,520 --> 00:08:04,520 Speaker 3: Yet the economy looks pretty strong, earnings have been strong. 187 00:08:04,520 --> 00:08:06,080 Speaker 2: I can I match this question. How will they know? 188 00:08:06,440 --> 00:08:08,200 Speaker 2: How are they not a difference between what's short lift 189 00:08:08,240 --> 00:08:09,960 Speaker 2: and most persistent? And how long is that going to 190 00:08:10,000 --> 00:08:10,640 Speaker 2: take to find out? 191 00:08:11,000 --> 00:08:13,920 Speaker 4: Presumably it'll take a while to find out if inflation 192 00:08:14,080 --> 00:08:16,720 Speaker 4: is transitory. When do you see that? Do not see 193 00:08:16,720 --> 00:08:18,680 Speaker 4: it until next year? And then do you risk the 194 00:08:18,720 --> 00:08:21,760 Speaker 4: scenario where the FED is very reactionary and then they 195 00:08:21,800 --> 00:08:23,880 Speaker 4: only start cutting when you actually look at the whites 196 00:08:23,880 --> 00:08:25,880 Speaker 4: of the eyes of a labor market that's deteriorating. 197 00:08:25,920 --> 00:08:27,800 Speaker 2: Are they too late that you mentioned Mike Key Pinalia 198 00:08:27,840 --> 00:08:31,440 Speaker 2: from Mulke and Stanley. No cuts for twenty twenty five, hey, places, 199 00:08:31,440 --> 00:08:32,840 Speaker 2: They're going to have to wipe that long get to 200 00:08:32,880 --> 00:08:33,440 Speaker 2: twenty six. 201 00:08:33,679 --> 00:08:35,400 Speaker 3: I think the FED would run the risk of falling 202 00:08:35,440 --> 00:08:37,800 Speaker 3: behind the curve if they wait for the employment market 203 00:08:37,840 --> 00:08:40,880 Speaker 3: to crack. Looking at history, employment markets tend to crack 204 00:08:40,960 --> 00:08:43,080 Speaker 3: at the beginning of a recession. That's going to be 205 00:08:43,120 --> 00:08:45,319 Speaker 3: too late. I think they need to step in. If 206 00:08:45,320 --> 00:08:48,520 Speaker 3: inflation is trending in the right direction outside of teriff, 207 00:08:48,559 --> 00:08:49,959 Speaker 3: I think the FED needs to step in and get 208 00:08:50,000 --> 00:08:52,319 Speaker 3: that first cut going sometime this summer or in the 209 00:08:52,400 --> 00:08:52,960 Speaker 3: latest fall. 210 00:08:53,080 --> 00:08:56,200 Speaker 2: Sarah, fiscal stamulus is good for mal kits, fiscal recklessness 211 00:08:56,280 --> 00:08:58,440 Speaker 2: is not. We've been asking this question or way on 212 00:08:58,480 --> 00:09:01,240 Speaker 2: this program. Do you think this is fisk stimulus or 213 00:09:01,280 --> 00:09:02,479 Speaker 2: fiscal recklessness. 214 00:09:02,760 --> 00:09:04,520 Speaker 3: Well, the answer is it could be both, depending on 215 00:09:04,559 --> 00:09:08,920 Speaker 3: your timeframe. Shorter term fiscal stimulus longer term. Your risk 216 00:09:09,000 --> 00:09:11,640 Speaker 3: is that if you can continue to increase this deficit, 217 00:09:11,920 --> 00:09:14,360 Speaker 3: and we go into a recession, the deficit as a 218 00:09:14,400 --> 00:09:17,880 Speaker 3: percent of GDP will basically blow out because tax rects 219 00:09:17,920 --> 00:09:20,360 Speaker 3: will be down significantly when you're in a recession. So 220 00:09:20,600 --> 00:09:22,199 Speaker 3: that's the question for the markets. Do you want to 221 00:09:22,200 --> 00:09:24,160 Speaker 3: focus on the shorter term or the longer term. I 222 00:09:24,160 --> 00:09:26,160 Speaker 3: think right now markets are focused on the shorter term. 223 00:09:26,160 --> 00:09:28,600 Speaker 3: They're saying earning's growth is in the double digits. Hard 224 00:09:28,679 --> 00:09:31,680 Speaker 3: economic data looks fine. We like the stimulus that's coming 225 00:09:31,720 --> 00:09:33,240 Speaker 3: to the markets. Equities like that. 226 00:09:33,600 --> 00:09:36,360 Speaker 4: What is the mechanism for us to concentrate on the 227 00:09:36,400 --> 00:09:38,640 Speaker 4: longer term? What changes need to happen, What do we 228 00:09:38,679 --> 00:09:41,800 Speaker 4: need to see that makes us concerned about rising deficits 229 00:09:41,840 --> 00:09:43,400 Speaker 4: and the potential recklessness of it. 230 00:09:43,640 --> 00:09:45,440 Speaker 3: I think bond markets are the ones that are giving 231 00:09:45,480 --> 00:09:48,360 Speaker 3: you the yellow flag and saying, you know, something perhaps 232 00:09:48,400 --> 00:09:50,520 Speaker 3: isn't right here. Over the longer term, I think the 233 00:09:50,559 --> 00:09:53,920 Speaker 3: equity markets will pay attention. If yield to continue to rise, 234 00:09:54,240 --> 00:09:57,000 Speaker 3: if borrowing becomes even much more expensive, we're living in 235 00:09:57,040 --> 00:10:00,000 Speaker 3: a period of higher for longer inflation and interest rates, 236 00:10:00,040 --> 00:10:03,240 Speaker 3: equities will become more nervous. So it's the degree of 237 00:10:03,440 --> 00:10:05,360 Speaker 3: the rate of change in yields that's going to impact 238 00:10:05,400 --> 00:10:07,680 Speaker 3: equity markets, but we're not seeing that yet at this point. 239 00:10:07,720 --> 00:10:09,480 Speaker 3: I mean, this deficit has been something I feel like 240 00:10:09,480 --> 00:10:12,440 Speaker 3: we've discussed for so long. It's been an issue for years, 241 00:10:12,520 --> 00:10:15,240 Speaker 3: and really equities have somewhat ignored it, and I don't 242 00:10:15,240 --> 00:10:17,400 Speaker 3: think that can go on forever. But at this point, 243 00:10:17,440 --> 00:10:18,960 Speaker 3: I think we need to see a little more damage 244 00:10:19,000 --> 00:10:21,200 Speaker 3: done by the bond markets before it becomes front center 245 00:10:21,280 --> 00:10:21,880 Speaker 3: for equities. 246 00:10:22,000 --> 00:10:24,840 Speaker 4: Is it also then distracting for what has been the 247 00:10:25,040 --> 00:10:28,679 Speaker 4: concern for the equity market until very recently, which is terras. 248 00:10:28,920 --> 00:10:31,640 Speaker 4: Sure you have ninety day pauses going on all around, 249 00:10:32,000 --> 00:10:34,160 Speaker 4: but teriff freights are still set to be much higher. 250 00:10:34,400 --> 00:10:36,599 Speaker 4: Are we getting distracted by taxes right now? Does the 251 00:10:36,640 --> 00:10:39,200 Speaker 4: equity market at some point come around to the concerns 252 00:10:39,200 --> 00:10:42,160 Speaker 4: of the damage done by higher prices coming in for importers. 253 00:10:42,480 --> 00:10:45,320 Speaker 3: I mean, taxes are definitely the story of right now. 254 00:10:45,360 --> 00:10:46,880 Speaker 3: But in a couple of months we're going to see 255 00:10:46,920 --> 00:10:49,719 Speaker 3: the impacts on the economy from terras. If you look 256 00:10:49,760 --> 00:10:52,080 Speaker 3: at that baseline of about ten percent terrists for the 257 00:10:52,080 --> 00:10:54,960 Speaker 3: rest of the world, you actually skirt a recession. It 258 00:10:55,000 --> 00:10:57,440 Speaker 3: impacts GDP by about one and a half percent, and 259 00:10:57,480 --> 00:10:59,679 Speaker 3: you don't go into a deepercession. Of course, a lot 260 00:10:59,679 --> 00:11:02,079 Speaker 3: of their reability around these numbers and the level of 261 00:11:02,160 --> 00:11:03,880 Speaker 3: terrorists that we eventually end up with. But I think 262 00:11:03,920 --> 00:11:05,920 Speaker 3: the markets right now we're seeing we have a little 263 00:11:05,960 --> 00:11:08,400 Speaker 3: bit of visibility on where terrass fed end up and 264 00:11:08,440 --> 00:11:10,240 Speaker 3: what that might do for the economy. And we have 265 00:11:10,320 --> 00:11:12,440 Speaker 3: some reassurances from the Fed in terms of how they're 266 00:11:12,480 --> 00:11:14,200 Speaker 3: going to think about terrorists. And that's what I mean 267 00:11:14,280 --> 00:11:16,320 Speaker 3: markets are counting on. It's a fine line. It's a 268 00:11:16,320 --> 00:11:19,559 Speaker 3: tightrope that they're walking in this sense with premium multiples. 269 00:11:19,679 --> 00:11:20,439 Speaker 5: But I do think that. 270 00:11:20,480 --> 00:11:22,880 Speaker 3: US tech is where the earnings growth is. That's what 271 00:11:22,960 --> 00:11:25,080 Speaker 3: can continue to lead. But let's not forget the other 272 00:11:25,160 --> 00:11:27,719 Speaker 3: surprise of the year, which is international markets. I don't 273 00:11:27,760 --> 00:11:30,640 Speaker 3: think anyone expected them to outperform US markets to the 274 00:11:30,679 --> 00:11:31,600 Speaker 3: degree that they have. 275 00:11:31,600 --> 00:11:35,200 Speaker 2: European banks to stand. The year just absolutely phenomenal ceremonic 276 00:11:35,200 --> 00:11:37,040 Speaker 2: ofneving Sarah go to see you ye decide. I always 277 00:11:37,040 --> 00:11:37,679 Speaker 2: appreciate it. 278 00:11:47,520 --> 00:11:50,480 Speaker 6: Lawmakers on Capitol Hill, they're working through the night through 279 00:11:50,520 --> 00:11:53,600 Speaker 6: this Rules Committee, this hearing, the first panel. This hearing 280 00:11:53,640 --> 00:11:56,200 Speaker 6: wrapped up at four point thirty in the morning, so 281 00:11:56,280 --> 00:11:59,000 Speaker 6: you can just expect how long this may drag out 282 00:11:59,080 --> 00:12:00,880 Speaker 6: is going to be a slog But we do know 283 00:12:01,000 --> 00:12:03,400 Speaker 6: behind the scenes there were some deals cut and for 284 00:12:03,440 --> 00:12:04,800 Speaker 6: some more insight on that, we want to bring in 285 00:12:04,880 --> 00:12:08,320 Speaker 6: Terry Haynes and Penji a policy. Terry, you've seen the reporting, 286 00:12:08,320 --> 00:12:09,480 Speaker 6: I'm sure, and I'm sure you have a little bit 287 00:12:09,480 --> 00:12:12,080 Speaker 6: more insight. What do you make of the deal cut 288 00:12:12,080 --> 00:12:15,600 Speaker 6: when it comes to salt as well as pulling back 289 00:12:15,960 --> 00:12:20,160 Speaker 6: some of those clean energy investment? Is that going to 290 00:12:20,160 --> 00:12:23,079 Speaker 6: be enough to satisfy some of the naysayers? 291 00:12:24,280 --> 00:12:26,920 Speaker 7: Good morning, and I think I think it probably is. Yeah. 292 00:12:27,000 --> 00:12:29,560 Speaker 7: The you know, the salt deduction, of course, has been 293 00:12:30,160 --> 00:12:32,800 Speaker 7: has been talked about quite a bit, so I won't reiterate, 294 00:12:33,320 --> 00:12:35,839 Speaker 7: but it sounds like that deal is going to be enough, 295 00:12:36,000 --> 00:12:38,960 Speaker 7: and as you pointed out earlier, we haven't seen it 296 00:12:39,000 --> 00:12:42,120 Speaker 7: papered yet, so so that may take a little bit 297 00:12:42,160 --> 00:12:42,559 Speaker 7: of time. 298 00:12:42,960 --> 00:12:43,360 Speaker 3: And the. 299 00:12:45,120 --> 00:12:49,000 Speaker 7: Green energy phase outs also are things that Republicans have 300 00:12:49,040 --> 00:12:52,239 Speaker 7: been interested in for quite some time, and so I imagine 301 00:12:52,120 --> 00:12:54,400 Speaker 7: the combination of that is going to be is going 302 00:12:54,440 --> 00:12:59,480 Speaker 7: to be enough. But Johnson will use the Memorial Day recess. 303 00:13:00,120 --> 00:13:03,199 Speaker 7: Kind of a hard backstop. This is kind of standard 304 00:13:03,200 --> 00:13:06,400 Speaker 7: procedure on the Hill and in the House particularly, a 305 00:13:06,440 --> 00:13:09,640 Speaker 7: hard backstop to get people to put up or shut up. 306 00:13:09,679 --> 00:13:11,960 Speaker 7: And I expect he'll have enough votes at the end 307 00:13:12,000 --> 00:13:12,400 Speaker 7: of the day. 308 00:13:13,559 --> 00:13:16,360 Speaker 6: Of course, Congress needs a deadline in order to really 309 00:13:16,400 --> 00:13:19,840 Speaker 6: get something done. Terry, But even if Johnson is able 310 00:13:19,880 --> 00:13:22,840 Speaker 6: to get this through the House floor, give our audience 311 00:13:22,840 --> 00:13:25,360 Speaker 6: a sense of how difficult this is going to be. 312 00:13:25,760 --> 00:13:27,839 Speaker 6: When this bill goes to the Senate. Does it even 313 00:13:28,000 --> 00:13:29,400 Speaker 6: look recognizable when it. 314 00:13:29,360 --> 00:13:32,199 Speaker 7: Comes back to the House, Well, it's going to look 315 00:13:32,480 --> 00:13:33,520 Speaker 7: different than the House. 316 00:13:33,559 --> 00:13:34,040 Speaker 1: Certainly. 317 00:13:34,400 --> 00:13:37,920 Speaker 7: Speaker Johnson went to the Senate yesterday and begged them 318 00:13:37,920 --> 00:13:40,280 Speaker 7: to keep it as close to the House version as possible, 319 00:13:40,320 --> 00:13:43,480 Speaker 7: and I'm sure that fell on deaf ears. The thing 320 00:13:43,480 --> 00:13:46,080 Speaker 7: you got to understand is that the Senate is the 321 00:13:46,120 --> 00:13:49,959 Speaker 7: House is a kind of a very majoritarian sort of body. 322 00:13:50,240 --> 00:13:53,640 Speaker 7: The Senate is much more collaborative. Think of these folks 323 00:13:53,679 --> 00:13:57,200 Speaker 7: since they only need Republican votes. Think of those fifty 324 00:13:57,240 --> 00:14:00,880 Speaker 7: three CEOs all negotiating with each other. That's what you're 325 00:14:00,920 --> 00:14:03,000 Speaker 7: going to get. You're going to see a very different 326 00:14:03,080 --> 00:14:05,680 Speaker 7: Senate bill. It's going to take weeks, and at the 327 00:14:05,760 --> 00:14:08,319 Speaker 7: end of that process, I think what you see is, 328 00:14:08,760 --> 00:14:12,079 Speaker 7: in capital pill parlance, you see the Senate trying to 329 00:14:12,160 --> 00:14:14,920 Speaker 7: jam the House. In other words, the Senate will do 330 00:14:15,080 --> 00:14:18,640 Speaker 7: its bill, say take it or leave it, and then 331 00:14:18,720 --> 00:14:21,240 Speaker 7: what's going to happen is the House is going to 332 00:14:21,280 --> 00:14:25,320 Speaker 7: have to be herded again in order to in order 333 00:14:25,360 --> 00:14:27,720 Speaker 7: to make this happen more on the Senate's terms than 334 00:14:27,760 --> 00:14:30,440 Speaker 7: the House. That's really where Trump comes in right at 335 00:14:30,440 --> 00:14:30,800 Speaker 7: the end. 336 00:14:32,040 --> 00:14:34,000 Speaker 6: So what happens on the Senate terms when it comes 337 00:14:34,040 --> 00:14:38,840 Speaker 6: to salt, medicaid, and the clean energy tax cuts, I. 338 00:14:38,760 --> 00:14:42,280 Speaker 7: Think I imagine that salt will be will still be 339 00:14:42,320 --> 00:14:46,160 Speaker 7: fairly generous. I imagine Medicaid gets softened at the edges. 340 00:14:46,200 --> 00:14:49,400 Speaker 7: You know, they're hardening up work requirements and some other 341 00:14:49,440 --> 00:14:52,160 Speaker 7: things in order to get House conservative votes. On Medicaid, 342 00:14:52,400 --> 00:14:56,280 Speaker 7: I imagine that gets softened again. And on green energy, 343 00:14:56,360 --> 00:15:00,720 Speaker 7: I imagine again it probably gets extend that a little bit. 344 00:15:00,760 --> 00:15:03,160 Speaker 7: The net effect of all three of those, frankly is, 345 00:15:04,480 --> 00:15:08,640 Speaker 7: are things that are politically more palatable but may have 346 00:15:08,720 --> 00:15:12,440 Speaker 7: the effect of, you know, nudging around the debt and 347 00:15:12,480 --> 00:15:14,280 Speaker 7: deficit problem even further. 348 00:15:15,920 --> 00:15:18,440 Speaker 6: And you think this can get done by July fourth. 349 00:15:18,920 --> 00:15:24,480 Speaker 7: How I think it's certainly possible. Firstly, you need you 350 00:15:24,560 --> 00:15:27,200 Speaker 7: need a political imperative, which is a fancy way of 351 00:15:27,240 --> 00:15:31,840 Speaker 7: saying that you need you need Trump the executive branch 352 00:15:31,920 --> 00:15:34,160 Speaker 7: to kind of light a fire under the Senate, not 353 00:15:34,320 --> 00:15:38,160 Speaker 7: let the momentum that's been built up by the House dissipate. Uh. Secondly, 354 00:15:38,200 --> 00:15:40,560 Speaker 7: you need that that to happen in the lead in 355 00:15:40,600 --> 00:15:42,840 Speaker 7: the Senate leadership as well, and I think it probably 356 00:15:42,880 --> 00:15:47,200 Speaker 7: does h Thirdly, Uh, you know now that the now 357 00:15:47,240 --> 00:15:50,440 Speaker 7: that the Senate's got a template from which to work, 358 00:15:51,520 --> 00:15:54,240 Speaker 7: what you will see is you will see senators the 359 00:15:54,320 --> 00:15:57,640 Speaker 7: law stripes on the Republican side, the only side that 360 00:15:57,680 --> 00:16:02,160 Speaker 7: matters in this unique process, coming out and actually you know, 361 00:16:02,240 --> 00:16:04,960 Speaker 7: giving their own red lines. So you begin to assemble 362 00:16:05,000 --> 00:16:12,440 Speaker 7: a coalition of fifty three Republican senatorslike not unlike the 363 00:16:12,760 --> 00:16:14,520 Speaker 7: herding that you've seen in the House. 364 00:16:15,880 --> 00:16:18,280 Speaker 6: Terry, if this doesn't get done, what kind of tax 365 00:16:18,400 --> 00:16:20,760 Speaker 6: increases could we see going into next year? 366 00:16:21,440 --> 00:16:25,280 Speaker 7: Well, if it doesn't get done, then you've got your bumper. 367 00:16:25,560 --> 00:16:28,160 Speaker 7: You got Trump on the bumper. They're saying, you're going 368 00:16:28,200 --> 00:16:30,200 Speaker 7: to have a you know, essentially a snapback to pre 369 00:16:30,360 --> 00:16:34,320 Speaker 7: seventeen tax law. So that's a you know, for people 370 00:16:34,320 --> 00:16:37,480 Speaker 7: that are used to the current situation, that's a huge increase. 371 00:16:37,520 --> 00:16:40,960 Speaker 7: I have sixty eight percent in my head because that's 372 00:16:41,000 --> 00:16:43,880 Speaker 7: what the President said. It may not be exactly that, 373 00:16:44,040 --> 00:16:47,560 Speaker 7: but it'd be something something fairly large. So, you know, 374 00:16:47,640 --> 00:16:51,120 Speaker 7: the kind of the looming economic undertow here is worth 375 00:16:51,480 --> 00:16:54,400 Speaker 7: remembering as well, and that creates its own its own 376 00:16:54,440 --> 00:16:58,840 Speaker 7: sort of urgency. The other thing about the July fourth 377 00:16:58,880 --> 00:17:01,800 Speaker 7: deadline that I want to make is there are basically 378 00:17:01,800 --> 00:17:05,520 Speaker 7: three kinds of things coming together. It's not just the 379 00:17:05,560 --> 00:17:11,040 Speaker 7: tax bill. It's also that reciprocal tariffs are being studied 380 00:17:11,119 --> 00:17:13,240 Speaker 7: and there will be a report out on that, and 381 00:17:13,359 --> 00:17:15,639 Speaker 7: I would look at that as a as a deadline 382 00:17:15,840 --> 00:17:17,680 Speaker 7: for a lot of these trade deals that are being 383 00:17:17,720 --> 00:17:21,000 Speaker 7: negotiated as well. So you have the opportunity to either 384 00:17:21,040 --> 00:17:24,600 Speaker 7: have a substantial lift coming out of Washington economically or 385 00:17:24,640 --> 00:17:29,600 Speaker 7: you know, or substantial downturn either way, frankly politically. 386 00:17:30,680 --> 00:17:30,960 Speaker 4: Terry. 387 00:17:31,000 --> 00:17:32,679 Speaker 6: The bond market this morning, on the long end, we 388 00:17:32,680 --> 00:17:35,800 Speaker 6: do see yields once again higher. You know, interest on 389 00:17:35,840 --> 00:17:38,280 Speaker 6: the debt is currently the fastest growing part of the 390 00:17:38,400 --> 00:17:41,040 Speaker 6: US budget. If they get this deal done, how are 391 00:17:41,040 --> 00:17:42,760 Speaker 6: they going to deal with the deficit after this? 392 00:17:43,480 --> 00:17:45,920 Speaker 7: Well, they're not going to deal with it in this bill, 393 00:17:46,440 --> 00:17:50,879 Speaker 7: as you know. And there's an expectation by some who 394 00:17:51,080 --> 00:17:56,000 Speaker 7: who who don't understand the process, and people shouldn't necessarily 395 00:17:56,040 --> 00:18:00,000 Speaker 7: but that you know, this bill will wrap up all problems, 396 00:18:00,080 --> 00:18:01,359 Speaker 7: that will be the end of it, and that's not 397 00:18:01,480 --> 00:18:04,399 Speaker 7: the case. I think what you'll hear going forward is 398 00:18:04,440 --> 00:18:08,520 Speaker 7: a lot more from Secretary Besson's about his three three 399 00:18:08,640 --> 00:18:12,080 Speaker 7: three idea, the idea that now what we're going to 400 00:18:12,160 --> 00:18:16,280 Speaker 7: do is we've dealt with the taxes, we've dealt with manufacturing, 401 00:18:16,600 --> 00:18:19,200 Speaker 7: we're dealing with trade in a separate track. Now we're 402 00:18:19,200 --> 00:18:22,840 Speaker 7: going to turn our attention to spending discipline. So what 403 00:18:22,880 --> 00:18:25,000 Speaker 7: you're going to see in the first instance, I think 404 00:18:25,080 --> 00:18:27,840 Speaker 7: is you're going to see huge fights, months long fights, frankly, 405 00:18:28,240 --> 00:18:31,280 Speaker 7: over spending in the fall, not just because Republicans want 406 00:18:31,280 --> 00:18:34,560 Speaker 7: to show some fiscal discipline, but because Democrats also want 407 00:18:34,600 --> 00:18:37,360 Speaker 7: to resist a lot of the things that Republicans want 408 00:18:37,400 --> 00:18:41,400 Speaker 7: to prioritize on spending discipline. And then and they look 409 00:18:41,400 --> 00:18:44,159 Speaker 7: at that opportunity for spending in the fall as a 410 00:18:44,200 --> 00:18:47,960 Speaker 7: means of revivifying their brand, frankly, which is not in 411 00:18:47,960 --> 00:18:48,600 Speaker 7: a good place. 412 00:18:50,200 --> 00:18:52,600 Speaker 6: Terry, thanks so much for your insight this morning, Jonathan 413 00:18:52,720 --> 00:19:03,119 Speaker 6: Terry Haynes. There, of course, of penjia policy. 414 00:19:04,359 --> 00:19:06,720 Speaker 2: So here's the like sis this morning. Policy uncertainty leaving 415 00:19:06,720 --> 00:19:09,080 Speaker 2: FED officials in wait and see mode. They form a 416 00:19:09,080 --> 00:19:11,600 Speaker 2: New York Fed President Bill Dudley with this to say, 417 00:19:11,720 --> 00:19:14,080 Speaker 2: the Feed should prepare markets for the unexpected to an 418 00:19:14,160 --> 00:19:17,080 Speaker 2: unusual extent. The world's most powerful central bank leaves the 419 00:19:17,080 --> 00:19:20,320 Speaker 2: public in the dark. It can and should do better, 420 00:19:20,480 --> 00:19:22,480 Speaker 2: build joint Just now for more, Bill, Let's take it 421 00:19:22,520 --> 00:19:24,400 Speaker 2: to the top from the top and welcome to the program. 422 00:19:24,480 --> 00:19:24,640 Speaker 3: Sir. 423 00:19:24,880 --> 00:19:28,200 Speaker 2: What is the importance of a central bank articulating conveying 424 00:19:28,240 --> 00:19:30,879 Speaker 2: its reaction function? And where do you think the SEP 425 00:19:31,560 --> 00:19:32,639 Speaker 2: falls short at the moment? 426 00:19:34,119 --> 00:19:36,919 Speaker 5: The advantage of conveying your reaction functions the markets can 427 00:19:36,960 --> 00:19:39,480 Speaker 5: anticipate in real time as the economic outlook changes, what 428 00:19:39,520 --> 00:19:41,359 Speaker 5: the Fed is going to do in the future, and 429 00:19:41,400 --> 00:19:44,400 Speaker 5: that actually actually speeds up the transmission of mandory policy 430 00:19:44,440 --> 00:19:45,280 Speaker 5: to the real economy. 431 00:19:45,560 --> 00:19:47,000 Speaker 1: So the markets know how the FIT. 432 00:19:47,240 --> 00:19:50,000 Speaker 5: Is going to adjust, market prices adjust immediately, and so 433 00:19:50,080 --> 00:19:53,560 Speaker 5: that makes the FEDS response communicated to the market, to 434 00:19:53,560 --> 00:19:55,000 Speaker 5: the comomy more quickly. 435 00:19:55,359 --> 00:19:56,960 Speaker 1: So that's a really good thing right now. 436 00:19:57,040 --> 00:19:59,440 Speaker 5: The Summary of Economic Projection is very much focused on 437 00:19:59,520 --> 00:20:03,719 Speaker 5: the moral forecasts of the nineteen fom C participants, and 438 00:20:03,760 --> 00:20:05,520 Speaker 5: so it doesn't really tell you much at all about 439 00:20:05,520 --> 00:20:07,920 Speaker 5: what the FED would do if the tariff impact turns 440 00:20:07,960 --> 00:20:10,040 Speaker 5: out to be larger on inflation or it turns out 441 00:20:10,080 --> 00:20:12,600 Speaker 5: to be larger on growth. How will the FED pivot? 442 00:20:12,680 --> 00:20:15,280 Speaker 5: How much will they cut rates? And this is why 443 00:20:15,320 --> 00:20:17,639 Speaker 5: a lot of central banks around the world publish staff 444 00:20:17,680 --> 00:20:22,520 Speaker 5: forecasts with scenarios or publish committee forecasts with scenarios, which 445 00:20:22,560 --> 00:20:25,200 Speaker 5: basically the scenarios give you some sense of what the 446 00:20:25,280 --> 00:20:27,840 Speaker 5: central bank will do if things turn out differently than expected. 447 00:20:28,400 --> 00:20:31,040 Speaker 5: Last week, Bernanki gave a presentation at the Federal Reserve 448 00:20:31,040 --> 00:20:33,720 Speaker 5: of the second annual Thomas Lawback Research Conference. 449 00:20:33,920 --> 00:20:36,719 Speaker 1: He basically outlined why the FED needs to do this. 450 00:20:37,880 --> 00:20:39,680 Speaker 1: The FED is basically an outlier. 451 00:20:39,880 --> 00:20:41,800 Speaker 5: Every other central bank does this in one form or 452 00:20:41,840 --> 00:20:45,200 Speaker 5: another that are peers of the FED, and this would 453 00:20:45,200 --> 00:20:47,919 Speaker 5: actually help the FED to both communicate and also pivot 454 00:20:47,920 --> 00:20:50,560 Speaker 5: when things turn out to be different than they expected. 455 00:20:50,720 --> 00:20:53,240 Speaker 5: If you had that scenario in say twenty twenty one 456 00:20:53,359 --> 00:20:55,480 Speaker 5: twenty two, the inflation might stay. 457 00:20:55,359 --> 00:20:56,200 Speaker 1: Higher for longer. 458 00:20:56,359 --> 00:20:58,960 Speaker 5: That probably made it easier for the Fed to terminate 459 00:21:00,040 --> 00:21:01,880 Speaker 5: skill as a purchase program earlier. 460 00:21:02,320 --> 00:21:04,720 Speaker 2: Well, isn't this something that effective communication in the news 461 00:21:04,760 --> 00:21:06,240 Speaker 2: conference could address? 462 00:21:07,480 --> 00:21:09,119 Speaker 5: Well, I think the problem with the news conference is 463 00:21:09,119 --> 00:21:12,120 Speaker 5: the questions are very much focused on the Central Forecast 464 00:21:12,200 --> 00:21:14,760 Speaker 5: and the Summary of Economic Projections and the DOC lot, 465 00:21:15,320 --> 00:21:17,159 Speaker 5: So we don't we don't we don't get into a 466 00:21:17,200 --> 00:21:20,120 Speaker 5: lot of detailed analysis of what if. 467 00:21:20,680 --> 00:21:20,920 Speaker 3: Uh. 468 00:21:20,960 --> 00:21:22,320 Speaker 1: You know, when Paul is asked. 469 00:21:22,160 --> 00:21:24,399 Speaker 5: Questions about what would you do if this happens, he 470 00:21:24,480 --> 00:21:27,119 Speaker 5: usually says it's data dependent. We'll see if you have 471 00:21:27,240 --> 00:21:29,959 Speaker 5: if you actually sketched out alternative scenarios. That gives you 472 00:21:30,000 --> 00:21:31,960 Speaker 5: a little bit more meat on the bone to sort 473 00:21:31,960 --> 00:21:34,840 Speaker 5: of see how the federalis would react if things are turned. 474 00:21:34,600 --> 00:21:35,560 Speaker 1: Out differently and expected. 475 00:21:35,640 --> 00:21:38,640 Speaker 5: Federalies have already does this as part of the staff 476 00:21:39,960 --> 00:21:43,480 Speaker 5: forecasts that are given to the Federal over Market Committee presumers. 477 00:21:43,520 --> 00:21:46,000 Speaker 5: They do what are called alt sims, which basically our 478 00:21:46,359 --> 00:21:47,280 Speaker 5: simulations of. 479 00:21:47,240 --> 00:21:49,000 Speaker 1: If the world turns out to be different. So this 480 00:21:49,080 --> 00:21:51,840 Speaker 1: is not like it's not being done internally already at 481 00:21:51,840 --> 00:21:52,200 Speaker 1: the FED. 482 00:21:52,800 --> 00:21:54,359 Speaker 5: Just I think sharing a little bit more of this 483 00:21:54,440 --> 00:21:56,240 Speaker 5: information with the public would be very helpful. 484 00:21:56,280 --> 00:21:58,040 Speaker 4: Well, Bill, there is one argument that part of the 485 00:21:58,040 --> 00:22:01,560 Speaker 4: reason market participants concentrate so much on that median outlook 486 00:22:01,640 --> 00:22:04,000 Speaker 4: is because it is anonymous that what we get in 487 00:22:04,040 --> 00:22:06,560 Speaker 4: the SEP, we don't know what each individual member thinks, 488 00:22:06,720 --> 00:22:09,879 Speaker 4: so it forces us to coalesce around that media. Should 489 00:22:09,880 --> 00:22:12,119 Speaker 4: there and could there be a scenario where we do 490 00:22:12,280 --> 00:22:14,480 Speaker 4: know what each individual member thinks, that it is no 491 00:22:14,560 --> 00:22:17,200 Speaker 4: longer an anonymous survey put out to the public. 492 00:22:18,280 --> 00:22:21,159 Speaker 5: Well, another shortcoming of the Summary of Economic productions is 493 00:22:21,160 --> 00:22:23,199 Speaker 5: you can't connect the interest rate dot back to the 494 00:22:23,240 --> 00:22:27,600 Speaker 5: forecast that that person made for unemployment, inflation, and growth, 495 00:22:27,880 --> 00:22:31,159 Speaker 5: so you can't really discern an individual's person's reaction function. 496 00:22:31,400 --> 00:22:33,400 Speaker 5: There have been proposals been made from time to time 497 00:22:33,400 --> 00:22:37,320 Speaker 5: that let's actually publish what each person's forecast is so 498 00:22:37,359 --> 00:22:39,359 Speaker 5: you can actually sort of see that reaction function. 499 00:22:40,119 --> 00:22:42,439 Speaker 1: I think that would be an improvement over what we 500 00:22:42,480 --> 00:22:43,000 Speaker 1: have today. 501 00:22:43,560 --> 00:22:46,120 Speaker 5: But of course then people are going to be trying 502 00:22:46,119 --> 00:22:49,800 Speaker 5: to figure out which dot is the chairman's dot. And 503 00:22:49,880 --> 00:22:53,000 Speaker 5: I think, you know, communicating broadly to financial markets, to 504 00:22:53,000 --> 00:22:56,400 Speaker 5: people are less Fed watchers than me or you. I'm 505 00:22:56,400 --> 00:22:59,280 Speaker 5: not sure that connecting the dots really allows you to 506 00:22:59,320 --> 00:23:00,439 Speaker 5: provide that wants. 507 00:23:00,640 --> 00:23:02,239 Speaker 1: But what will the FED do if things turn out 508 00:23:02,240 --> 00:23:03,280 Speaker 1: differently than expected. 509 00:23:03,600 --> 00:23:05,440 Speaker 4: It does seem like we're an environment though, where Chair 510 00:23:05,480 --> 00:23:07,560 Speaker 4: Powell has been trying his hardest not to make news, 511 00:23:07,600 --> 00:23:09,919 Speaker 4: and part of that bill seems akin to what's happening 512 00:23:10,000 --> 00:23:13,200 Speaker 4: in politics, that President Trump is more likely to say 513 00:23:13,240 --> 00:23:15,840 Speaker 4: something about where the path they're going and his displeasure 514 00:23:15,920 --> 00:23:18,560 Speaker 4: for it. What changes if we do get something to 515 00:23:18,640 --> 00:23:21,960 Speaker 4: what you're proposing, where you get more scenarios, is there 516 00:23:22,000 --> 00:23:24,520 Speaker 4: increased political pressure? Is that a risk that the FED 517 00:23:24,600 --> 00:23:25,320 Speaker 4: should think about? 518 00:23:26,320 --> 00:23:28,879 Speaker 5: Well, I think the political pressure of scenarios is that 519 00:23:28,920 --> 00:23:31,560 Speaker 5: you're writing down things that might be not so good. 520 00:23:31,640 --> 00:23:34,159 Speaker 5: So let's imagine that the FED wrote down a scenario 521 00:23:34,240 --> 00:23:35,920 Speaker 5: where the terrorists are going to turn out to. 522 00:23:35,840 --> 00:23:38,960 Speaker 1: Be higher for longer. That's going to feed more into inflation. 523 00:23:39,359 --> 00:23:41,879 Speaker 5: Now I'm sure President Trump wouldn't like that, but still 524 00:23:42,760 --> 00:23:45,520 Speaker 5: it's a possibility in terms of the economic outlook, and 525 00:23:45,560 --> 00:23:48,040 Speaker 5: the FED really does need to think about things beyond 526 00:23:48,160 --> 00:23:49,520 Speaker 5: the central forecast. 527 00:23:50,359 --> 00:23:51,960 Speaker 2: Can we just wrap it up with something you've touched 528 00:23:51,960 --> 00:23:54,280 Speaker 2: on a few times. Bill, If the dual mandate is 529 00:23:54,320 --> 00:23:56,920 Speaker 2: in conflict at the end of the year, which side 530 00:23:56,960 --> 00:24:00,160 Speaker 2: of the mandate do you think they should prioritize. 531 00:24:00,480 --> 00:24:02,120 Speaker 5: I think it's really difficult to say at this point 532 00:24:02,200 --> 00:24:04,960 Speaker 5: because it depends on what the risks are of making 533 00:24:04,960 --> 00:24:07,560 Speaker 5: a mistake. So let's imagine that you decided, oh, I'm 534 00:24:07,560 --> 00:24:10,040 Speaker 5: really more worried about the growth side, and then as 535 00:24:10,040 --> 00:24:13,680 Speaker 5: a consequence of that, inflation expectations became unanchored. Then you'd 536 00:24:13,680 --> 00:24:15,120 Speaker 5: have a real mess in your hand. You'd be back 537 00:24:15,119 --> 00:24:17,560 Speaker 5: in the nineteen seventies, not a great place to be. 538 00:24:18,000 --> 00:24:20,680 Speaker 5: So I think it's really not just about which factor 539 00:24:20,760 --> 00:24:23,120 Speaker 5: is more off target, but also what are the risks 540 00:24:23,160 --> 00:24:25,159 Speaker 5: of being wrong? And I think why the FED is 541 00:24:25,200 --> 00:24:27,600 Speaker 5: paused right now is because they don't want to be wrong. 542 00:24:27,680 --> 00:24:29,919 Speaker 5: This is a very tricky situation where you don't know 543 00:24:30,200 --> 00:24:32,000 Speaker 5: where the trade policy is going to land, you don't 544 00:24:32,000 --> 00:24:35,040 Speaker 5: know the impact of trade policy the on growth and inflation, 545 00:24:35,400 --> 00:24:37,000 Speaker 5: and you don't know how this is going to affect 546 00:24:37,440 --> 00:24:39,400 Speaker 5: households and businesses in terms of their attitude. 547 00:24:39,480 --> 00:24:41,240 Speaker 1: It's sort of future inflation. BO. 548 00:24:41,359 --> 00:24:43,480 Speaker 2: I appreciate your input, As always said Bill, doupting that 549 00:24:43,560 --> 00:24:45,520 Speaker 2: the former New York Fed President. What then you call them, 550 00:24:45,600 --> 00:24:58,000 Speaker 2: I'm blimbag opinion. So let's heap back to Dallas, Texas 551 00:24:58,000 --> 00:25:01,159 Speaker 2: and catch up with Lisa standing by with a special guest. Hey, Lisa, 552 00:25:01,840 --> 00:25:02,480 Speaker 2: Hey John. 553 00:25:02,560 --> 00:25:02,800 Speaker 4: Yeah. 554 00:25:02,800 --> 00:25:05,280 Speaker 8: One thing that companies don't have is a luxury to 555 00:25:05,359 --> 00:25:08,560 Speaker 8: wait and see, like so many Federal Reserve officials are 556 00:25:08,560 --> 00:25:10,439 Speaker 8: saying that they have to do. I am here with 557 00:25:10,520 --> 00:25:15,720 Speaker 8: someone who is pioneering the shift of investment banking into Dallas, Texas. 558 00:25:15,760 --> 00:25:18,520 Speaker 8: It is Ossium Khalil, who is the head of investment 559 00:25:18,560 --> 00:25:21,400 Speaker 8: banking Client Services at Goldman Sachs. And Goldman Sachs has 560 00:25:21,440 --> 00:25:25,000 Speaker 8: been rapidly expanding in Dallas. It's going to have the 561 00:25:25,040 --> 00:25:27,760 Speaker 8: second biggest office here behind New York. At a time 562 00:25:28,080 --> 00:25:30,280 Speaker 8: when you've seen just a flood of corporations move their 563 00:25:30,280 --> 00:25:33,080 Speaker 8: headquarters to Texas. It has been one of the biggest 564 00:25:33,160 --> 00:25:37,440 Speaker 8: absorbers of new corporate headquarters since the pandemic. Why Texas, 565 00:25:37,520 --> 00:25:39,000 Speaker 8: Why Dallas in particular? 566 00:25:39,040 --> 00:25:39,399 Speaker 4: Awesome? 567 00:25:39,560 --> 00:25:41,240 Speaker 9: Well, Lisa, thanks for having me. It's great to be here. 568 00:25:41,240 --> 00:25:43,000 Speaker 9: I'd say a couple of things. I moved down here 569 00:25:43,000 --> 00:25:45,320 Speaker 9: almost nine years ago at the firm's request, it was 570 00:25:45,320 --> 00:25:47,480 Speaker 9: a little bit of a surprise as a lifelong New Yorker, 571 00:25:47,520 --> 00:25:50,240 Speaker 9: happy surprise. It was a very happy surprise moving to 572 00:25:50,320 --> 00:25:54,200 Speaker 9: Dallas in retrospect. So we relocated here because the firm 573 00:25:54,200 --> 00:25:57,160 Speaker 9: head of view rightly that Dallas is an emerging city 574 00:25:57,280 --> 00:26:00,000 Speaker 9: and that there is an up and coming business population here, 575 00:26:00,080 --> 00:26:02,280 Speaker 9: that there was tons of market cap already located in 576 00:26:02,320 --> 00:26:04,320 Speaker 9: the city, and that more and more companies were going 577 00:26:04,359 --> 00:26:07,479 Speaker 9: to relocate to this region for a handful of reasons. 578 00:26:07,520 --> 00:26:09,600 Speaker 9: One is the centricity of Dallas. It's in the middle 579 00:26:09,600 --> 00:26:11,920 Speaker 9: of the country, so access to either coast is within 580 00:26:11,960 --> 00:26:14,920 Speaker 9: two and a half hours. Number Two, the university pipeline 581 00:26:14,960 --> 00:26:18,720 Speaker 9: here is incredible. You have SMUTCU, rice A and m UT, etc. 582 00:26:19,640 --> 00:26:22,480 Speaker 9: There is just a never ending flow of new talent 583 00:26:22,560 --> 00:26:25,080 Speaker 9: that's coming to the state through the context of universities 584 00:26:25,080 --> 00:26:27,120 Speaker 9: and who are looking for jobs in Dallas. 585 00:26:27,760 --> 00:26:31,160 Speaker 8: At this point, everyone's been talking about taxes and how 586 00:26:31,280 --> 00:26:33,720 Speaker 8: there's certain states that are high tax states. There certain 587 00:26:33,720 --> 00:26:35,520 Speaker 8: states that are low tax states. There's certain that are 588 00:26:35,560 --> 00:26:37,760 Speaker 8: just lower cost. In general, New York City, as we 589 00:26:37,920 --> 00:26:41,440 Speaker 8: all know from having raised children there can be particularly expensive. 590 00:26:41,480 --> 00:26:44,119 Speaker 8: I'm just wondering how much that's really one of the 591 00:26:44,119 --> 00:26:46,160 Speaker 8: biggest drivers for a lot of these corporations. 592 00:26:46,320 --> 00:26:48,120 Speaker 9: I think it's a factor. I'm not sure it's necessarily 593 00:26:48,119 --> 00:26:50,640 Speaker 9: the biggest driver of why people are relocating. Keep in mind, 594 00:26:50,720 --> 00:26:53,720 Speaker 9: DFW Airport is one of the most incredible tools that 595 00:26:53,840 --> 00:26:56,639 Speaker 9: Dallas has, meaning that if you run a global business, 596 00:26:56,680 --> 00:26:58,440 Speaker 9: like a lot of the corporations that are based here do, 597 00:26:58,920 --> 00:27:00,879 Speaker 9: you can access your customers all over the world with 598 00:27:00,960 --> 00:27:03,000 Speaker 9: a direct flight on American Airlines or one of the 599 00:27:03,000 --> 00:27:05,679 Speaker 9: other airlines in the city. It's pretty remarkable when you 600 00:27:05,680 --> 00:27:08,680 Speaker 9: think about how accessible the world is from Dallas. There's 601 00:27:08,720 --> 00:27:11,320 Speaker 9: plenty of space, the schools are good, the quality of 602 00:27:11,359 --> 00:27:13,480 Speaker 9: life is very high, so there are lots of things 603 00:27:13,480 --> 00:27:15,840 Speaker 9: to love about being here in Dallas as opposed to 604 00:27:15,960 --> 00:27:17,920 Speaker 9: just the taxes. But there's no question it's a factor. 605 00:27:17,960 --> 00:27:19,679 Speaker 9: I don't think it's the driving factor. 606 00:27:19,720 --> 00:27:23,280 Speaker 8: I love that you're speaking to yourself from nine years ago. Awesome, 607 00:27:23,280 --> 00:27:25,200 Speaker 8: and it's really all of these advantages true. 608 00:27:25,240 --> 00:27:25,600 Speaker 2: Trust me. 609 00:27:25,840 --> 00:27:28,199 Speaker 8: I am curious about Wall Street South, so a lot 610 00:27:28,240 --> 00:27:30,639 Speaker 8: of people are Southwest. People have been talking about that 611 00:27:30,680 --> 00:27:32,639 Speaker 8: there's a new exchange that's going to be coming out. 612 00:27:33,119 --> 00:27:36,960 Speaker 8: We've seen a twenty seven percent increase in investment, banking, 613 00:27:37,080 --> 00:27:42,199 Speaker 8: and services staff in this city since the pandemic. How 614 00:27:42,280 --> 00:27:44,040 Speaker 8: much is this really going to be It's kind of 615 00:27:44,080 --> 00:27:46,200 Speaker 8: the Wall Street Southwest. How much do you really feel 616 00:27:46,280 --> 00:27:47,320 Speaker 8: that gravitational force? 617 00:27:47,359 --> 00:27:49,760 Speaker 9: So I think this enormous momentum. So I can speak 618 00:27:49,760 --> 00:27:52,000 Speaker 9: for Golden Sachs. We're building a campus right here in 619 00:27:52,000 --> 00:27:53,960 Speaker 9: the heart of the city, which is really important for 620 00:27:54,040 --> 00:27:56,040 Speaker 9: us to be in Dallas proper. So a lot of 621 00:27:56,080 --> 00:27:58,280 Speaker 9: the corporations that have moved here have moved to some 622 00:27:58,320 --> 00:28:02,680 Speaker 9: of out the outlying cities around Dallas, so Plano, Frisco, McKinney, 623 00:28:02,720 --> 00:28:05,080 Speaker 9: these are about twenty thirty minutes outside of Dallas. It 624 00:28:05,119 --> 00:28:07,359 Speaker 9: was really important for Goldman Sachs as an urban firm, 625 00:28:07,600 --> 00:28:09,480 Speaker 9: to have our presence in the heart of the city. 626 00:28:09,560 --> 00:28:11,920 Speaker 9: So we're building our campus here. We have forty five 627 00:28:12,000 --> 00:28:14,120 Speaker 9: hundred people in the city already. When I got here, 628 00:28:14,160 --> 00:28:15,920 Speaker 9: we had less than nine hundred and nine years ago, 629 00:28:16,119 --> 00:28:18,000 Speaker 9: so the growth has been incredible and that's only going 630 00:28:18,040 --> 00:28:20,840 Speaker 9: to continue to happen. A lot of our competitors, I've 631 00:28:20,920 --> 00:28:23,439 Speaker 9: also established a presence in the city. So you have 632 00:28:23,520 --> 00:28:25,359 Speaker 9: people in Plano. There are folks that are in and 633 00:28:25,359 --> 00:28:27,919 Speaker 9: around kind of Wall Street South as you reference. But 634 00:28:27,960 --> 00:28:30,119 Speaker 9: I don't see any slow down. It's too good of 635 00:28:30,160 --> 00:28:31,919 Speaker 9: a place to live and to work and to be 636 00:28:32,080 --> 00:28:34,240 Speaker 9: quite frankly, to not have that kind of growth. 637 00:28:34,320 --> 00:28:36,240 Speaker 8: What thing I'm struck by is that when I talk 638 00:28:36,320 --> 00:28:39,000 Speaker 8: to corporations in different cities, it seems like they have 639 00:28:39,040 --> 00:28:41,400 Speaker 8: a very different view on where the economy's at, on 640 00:28:41,560 --> 00:28:44,280 Speaker 8: kind of how ambitious to be with expansion plans, and 641 00:28:44,320 --> 00:28:46,160 Speaker 8: as we were saying, they don't have a luxury of 642 00:28:46,200 --> 00:28:48,640 Speaker 8: weight and sea like the Federal Reserve does. What are 643 00:28:48,640 --> 00:28:51,000 Speaker 8: you hearing in terms of just how much people are 644 00:28:51,000 --> 00:28:55,760 Speaker 8: putting on hold their mergers or acquisitions, their capital investment plans. 645 00:28:56,120 --> 00:28:57,800 Speaker 9: So I'll give you a Texas perspective, and then I'll 646 00:28:57,800 --> 00:29:00,320 Speaker 9: give you more of a national and global one. Texas 647 00:29:00,360 --> 00:29:02,840 Speaker 9: respective is still one of optimisms. Generally speaking, this is 648 00:29:02,880 --> 00:29:05,920 Speaker 9: a state that's had incredible economic growth and will continue 649 00:29:05,960 --> 00:29:08,080 Speaker 9: to be one of the handful of states that grow 650 00:29:08,120 --> 00:29:10,480 Speaker 9: in the country. So that's great for Texas. When we 651 00:29:10,560 --> 00:29:13,000 Speaker 9: talk to CEOs and corporations in around the state and 652 00:29:13,080 --> 00:29:16,120 Speaker 9: in and around the country, people are cautiously optimistic. Right 653 00:29:16,120 --> 00:29:18,160 Speaker 9: People want to grow, They want to continue to drive 654 00:29:18,200 --> 00:29:20,800 Speaker 9: their businesses to create value over the long term. But 655 00:29:20,880 --> 00:29:24,200 Speaker 9: of course there's some caution given the geopolitical environment, given 656 00:29:24,200 --> 00:29:27,520 Speaker 9: the backdrop, But generally speaking, companies are still making decisions 657 00:29:27,600 --> 00:29:29,800 Speaker 9: that are going to allow them to grow over the 658 00:29:29,840 --> 00:29:31,320 Speaker 9: course of the next several years. So if you look 659 00:29:31,320 --> 00:29:33,640 Speaker 9: at the M and A environment, it's well, again i'd 660 00:29:33,640 --> 00:29:37,400 Speaker 9: phrase it is cautiously optimistic. Deals are still Happeningactions, transactions 661 00:29:37,440 --> 00:29:40,160 Speaker 9: are still being announced. So I'm actually large transactions have 662 00:29:40,160 --> 00:29:42,080 Speaker 9: been announced in the last couple of weeks. But if 663 00:29:42,080 --> 00:29:44,160 Speaker 9: you look at the middle market that call it two 664 00:29:44,200 --> 00:29:46,920 Speaker 9: to five billion dollar range, there's been a tremendous amount 665 00:29:46,920 --> 00:29:49,440 Speaker 9: of activity, double digit growth year over year. 666 00:29:49,360 --> 00:29:52,160 Speaker 8: Which really highlights how there's sort of a disparity between 667 00:29:52,160 --> 00:29:54,080 Speaker 8: Smovori hearing out of the likes of say Target this 668 00:29:54,120 --> 00:29:56,240 Speaker 8: morning came out and talked about how consumers are really 669 00:29:56,240 --> 00:29:58,800 Speaker 8: pulling back and they're getting much more cautious, and then 670 00:29:58,800 --> 00:30:01,480 Speaker 8: you see other companies that are still expanding that don't 671 00:30:01,680 --> 00:30:04,320 Speaker 8: can't wait and see and are optimistic. Is there a 672 00:30:04,480 --> 00:30:07,080 Speaker 8: sense the US economy is just driving that forward? And 673 00:30:07,120 --> 00:30:09,080 Speaker 8: I ask you this not just as the head of 674 00:30:09,160 --> 00:30:12,000 Speaker 8: investment banking client services Goldmen Sacks, but also as someone 675 00:30:12,320 --> 00:30:15,640 Speaker 8: who sits on the corporate Advisory Board at the Dallas 676 00:30:15,680 --> 00:30:18,000 Speaker 8: FED and is very involved in all of these kinds 677 00:30:18,000 --> 00:30:18,840 Speaker 8: of conversations. 678 00:30:19,360 --> 00:30:21,160 Speaker 9: Yeah, So again, I think that there is a view 679 00:30:21,200 --> 00:30:22,760 Speaker 9: that the US is still the best place to be 680 00:30:23,200 --> 00:30:25,320 Speaker 9: right and that they're going to the winds of change. 681 00:30:25,360 --> 00:30:27,800 Speaker 9: You're going to continue to shift back and forth. But still, 682 00:30:27,800 --> 00:30:29,800 Speaker 9: if you think about our economy, you think about what 683 00:30:29,840 --> 00:30:32,280 Speaker 9: the US has to offer, so to speak, particularly relative 684 00:30:32,320 --> 00:30:33,960 Speaker 9: to the rest of the world, this is still where 685 00:30:33,960 --> 00:30:36,040 Speaker 9: companies want to be and where companies want to operate. 686 00:30:36,360 --> 00:30:39,040 Speaker 9: There's no question there's concern about the state of the consumer. 687 00:30:39,280 --> 00:30:41,840 Speaker 9: There's no question there is concern about the forward for 688 00:30:41,880 --> 00:30:44,400 Speaker 9: the economy. Treasury auction as we were talking about earlier, 689 00:30:44,440 --> 00:30:45,760 Speaker 9: that comes into focus. 690 00:30:45,600 --> 00:30:46,000 Speaker 8: Right, John. 691 00:30:47,160 --> 00:30:49,160 Speaker 9: So there's a lot of things that are out there, 692 00:30:49,200 --> 00:30:51,920 Speaker 9: but again this cautious optimism that we will work our 693 00:30:51,920 --> 00:30:54,880 Speaker 9: way through. The fundamentals, of course are quite sound, will 694 00:30:54,880 --> 00:30:56,760 Speaker 9: work our way through some of the noise that's in 695 00:30:56,800 --> 00:30:58,880 Speaker 9: the markets today, and that over the long term. If 696 00:30:58,880 --> 00:31:00,720 Speaker 9: you're running a business and I've got a view that 697 00:31:00,760 --> 00:31:02,360 Speaker 9: this is the right thing for your company, You're going 698 00:31:02,400 --> 00:31:04,000 Speaker 9: to go ahead and execute on that strategy if it's 699 00:31:04,000 --> 00:31:06,400 Speaker 9: available aually the way, I'm sorry to say, financing markets 700 00:31:06,440 --> 00:31:09,120 Speaker 9: are wide open, so companies are not having as difficult 701 00:31:09,120 --> 00:31:11,600 Speaker 9: at time accessing capital to continue to grow. 702 00:31:11,920 --> 00:31:13,560 Speaker 8: I just want to finish up. A lot of people 703 00:31:13,560 --> 00:31:16,000 Speaker 8: have said that Miami is the new Wall Street South, 704 00:31:16,120 --> 00:31:19,120 Speaker 8: Dallas is the new Wall Street Southwest, that New York's 705 00:31:19,120 --> 00:31:21,320 Speaker 8: getting a lot of competition. Do you think that the 706 00:31:21,400 --> 00:31:24,280 Speaker 8: Dallas office could ever be bigger than New York's office 707 00:31:24,320 --> 00:31:27,560 Speaker 8: for Goldman Sachs, or that this presence could really rival 708 00:31:27,600 --> 00:31:28,680 Speaker 8: it in a more material way. 709 00:31:29,080 --> 00:31:31,000 Speaker 9: Well, I would never say never, but I will say 710 00:31:31,040 --> 00:31:33,520 Speaker 9: certainly that our headquarters are in New York. Goldman Sacks 711 00:31:33,520 --> 00:31:35,440 Speaker 9: will always be a New York based firm. But could 712 00:31:35,480 --> 00:31:37,720 Speaker 9: Dallas continue to grow in size? Of course, we're going 713 00:31:37,760 --> 00:31:40,240 Speaker 9: to continue to grow, right That momentum is there and 714 00:31:40,240 --> 00:31:42,560 Speaker 9: that's not going to change. Could be one day be 715 00:31:42,600 --> 00:31:45,360 Speaker 9: bigger than New York, It's certainly possible. We actually have 716 00:31:45,480 --> 00:31:47,560 Speaker 9: Our presence in India is larger than it is in 717 00:31:47,560 --> 00:31:49,000 Speaker 9: New York. Just give it again the size and the 718 00:31:49,000 --> 00:31:51,000 Speaker 9: scope of the firm. But we're quite proud of what 719 00:31:51,000 --> 00:31:52,360 Speaker 9: we've been able to build in Dallas. I think the 720 00:31:52,400 --> 00:31:55,000 Speaker 9: forwards very bright, so would expect more growth here, but 721 00:31:55,160 --> 00:31:56,800 Speaker 9: we don't mistake it. We are a New York based 722 00:31:56,880 --> 00:31:58,600 Speaker 9: firm and Dallas is going to continue to be a 723 00:31:58,720 --> 00:32:00,440 Speaker 9: very important part of the Golden Sacks system. 724 00:32:00,480 --> 00:32:03,240 Speaker 8: Spoken like someone from New York City heading to Dallas 725 00:32:03,440 --> 00:32:05,920 Speaker 8: who has settled here with his family. Awesome, Khalil, thank 726 00:32:05,920 --> 00:32:07,480 Speaker 8: you so much for being with us. Really wonderful to 727 00:32:07,480 --> 00:32:10,400 Speaker 8: speak with you. That was awesome, Khalil of Gordman Sachs, 728 00:32:10,440 --> 00:32:12,680 Speaker 8: head of their own person banking client services and the 729 00:32:12,680 --> 00:32:15,360 Speaker 8: office here in Dallas at Texas, John, I just want 730 00:32:15,360 --> 00:32:18,160 Speaker 8: to thank you again for talking about that twenty year auction. 731 00:32:18,200 --> 00:32:19,840 Speaker 8: I do think it's going to be very important and 732 00:32:19,880 --> 00:32:21,120 Speaker 8: potentially the risk event. 733 00:32:20,920 --> 00:32:23,800 Speaker 2: Of the day for one pm Eastern time must watch TV. 734 00:32:24,120 --> 00:32:28,800 Speaker 2: Thank you, Bramo. This is the Bloomberg Surveillance podcast, bringing 735 00:32:28,840 --> 00:32:32,720 Speaker 2: you the best in markets, economics, angiopolitics. You can watch 736 00:32:32,720 --> 00:32:35,480 Speaker 2: the show live on Bloomberg TV weekday mornings from six 737 00:32:35,520 --> 00:32:39,120 Speaker 2: am to nine am Eastern. Subscribe to the podcast on Apple, 738 00:32:39,400 --> 00:32:42,240 Speaker 2: Spotify or anywhere else you listen, and as always on 739 00:32:42,240 --> 00:32:44,760 Speaker 2: the Bloomberg Terminal and the Bloomberg business app,