WEBVTT - Fed Keeps Zero-Rate Outlook 0:00:01.800 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.240 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.600 plus technology, politics, economics, all furnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.599 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.200 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:34.640 YouTube search Bloomberg Global News. Kathleen Hayes, Global Economics and 0:00:34.680 --> 0:00:36.960 Policy editor at Bloomberg News, with us in our New 0:00:37.040 --> 0:00:39.720 York City bureau. Dave Wilson stocks that at Bloomberg News 0:00:39.760 --> 0:00:42.200 on the remote access from New Jersey. Kathleen, I think, 0:00:42.200 --> 0:00:44.080 heading into the studio, you said there's going to be 0:00:44.120 --> 0:00:46.279 some headlines. Well there are, and there are some very 0:00:46.320 --> 0:00:48.080 important ones, Carol, but you've got to look just a 0:00:48.120 --> 0:00:51.560 little bit deeper to see seven eight of eighteen Fed 0:00:51.560 --> 0:00:56.480 officials see at least one three raid hike. Now a 0:00:56.640 --> 0:00:59.680 change in liftoff. No, it's not a majority yet, But 0:01:00.520 --> 0:01:02.920 at the January excuse me, the December meeting, because you know, 0:01:03.000 --> 0:01:06.600 they changed the dot plots their summary of economic projections 0:01:06.640 --> 0:01:09.360 every three months, there were only five, so you see, 0:01:09.400 --> 0:01:12.520 you're going to get a little more sense that more saying, well, 0:01:12.520 --> 0:01:15.280 the economy is going to be stronger than we thought. 0:01:15.560 --> 0:01:17.720 Listen to this lat you really need more details now 0:01:17.840 --> 0:01:21.880 on on the what they're doing with their forecast real GDP. 0:01:22.480 --> 0:01:24.959 In December they saw four point two percent for the year. 0:01:25.080 --> 0:01:28.800 They boosted that by could amount. It's six point five 0:01:28.880 --> 0:01:32.000 percent on their radio screen. Now in December they thought 0:01:32.000 --> 0:01:34.120 the unemployment rate would fault to five percent. Remember what 0:01:34.200 --> 0:01:36.840 was up around fourteen percent. Now they think unemployment rate 0:01:36.880 --> 0:01:38.880 will end the year at four point five percent and 0:01:39.000 --> 0:01:41.800 next year at three point nine. Some people will say, hey, 0:01:41.959 --> 0:01:45.000 three point now nine sounds very much like full employment. 0:01:45.120 --> 0:01:47.760 The substantial further progress that the feed is hoping to make. 0:01:47.920 --> 0:01:52.040 And you mentioned those COREPC eflation inflation numbers. What's interesting 0:01:52.360 --> 0:01:55.680 so important. In December they thought that the number would 0:01:55.720 --> 0:01:58.320 be one point eight. Now they see it at two 0:01:58.360 --> 0:02:00.840 point two, So they really have changed their outlook on 0:02:00.880 --> 0:02:03.360 the economy. This is all very important. A couple more 0:02:03.400 --> 0:02:06.520 things that you've got to have on the radar screen though, 0:02:06.760 --> 0:02:10.040 because there were some things that they have not done. 0:02:10.080 --> 0:02:13.239 They didn't increase their bond purchases. They want to see 0:02:13.240 --> 0:02:16.839 substantial further progress. As I just said, um, they are 0:02:16.960 --> 0:02:20.360 not increasing the rate the interest on access reserves. That 0:02:20.400 --> 0:02:23.480 ties into some questions about money markets and how they 0:02:23.520 --> 0:02:26.120 could be royaled by some build ups in reserves. But 0:02:26.240 --> 0:02:28.480 really there there's a lot of signals. I think that's 0:02:28.520 --> 0:02:30.840 one of the reasons why we've seen the bond market 0:02:30.880 --> 0:02:35.079 actually gained some ground and now the thirty years back 0:02:35.160 --> 0:02:37.760 even lower than it was the tenure about where it started. 0:02:37.800 --> 0:02:40.480 Because on the one hand, they didn't change anything. But 0:02:40.520 --> 0:02:42.280 at the same time, it looks to me like if 0:02:42.320 --> 0:02:45.359 anything's there a FED that sees higher inflation and stronger 0:02:45.600 --> 0:02:48.040 growth and they thought before maybe they will be on 0:02:48.080 --> 0:02:51.200 the road to a sooner lift off. Not yet, But 0:02:51.280 --> 0:02:52.920 that's the kind of question we're gonna hear put in 0:02:52.919 --> 0:02:55.200 front of j pow. Bottom line, FED turning more hawkish 0:02:55.240 --> 0:02:58.720 are not really I don't think they're hawk as yet. 0:02:58.760 --> 0:03:01.000 I think so far they're just direct ignizing their progress 0:03:01.000 --> 0:03:03.360 in the economy because they say the virus is still 0:03:03.400 --> 0:03:06.040 the biggest issue and it's still out there. He did, Wilson, 0:03:06.040 --> 0:03:07.880 come on in here and give us the equity market reaction. 0:03:07.880 --> 0:03:09.840 What happened when these headlines came out? How our traders 0:03:10.040 --> 0:03:13.160 are responding to this news. Well, you saw the SNP 0:03:13.240 --> 0:03:15.440 five hundred spike up to its highs of the day, 0:03:15.639 --> 0:03:18.200 so clearly it's going over well. And if you want 0:03:18.240 --> 0:03:20.359 to focus on one area of the market to sort 0:03:20.400 --> 0:03:23.560 of tied into the decision, it's the home builders. They 0:03:23.560 --> 0:03:27.080 were up. They immediately moved to their highs of the 0:03:27.160 --> 0:03:31.519 day after the decision came out, you know, and especially 0:03:31.520 --> 0:03:35.120 noteworthy got Lenar with the biggest gain in the SMP 0:03:35.280 --> 0:03:37.720 five hundred right now, it's up more than eleven and 0:03:37.760 --> 0:03:40.840 a half percent. On top of what's happening with FED policy. 0:03:41.160 --> 0:03:43.640 You know, they came out and said they raised capital 0:03:43.680 --> 0:03:46.400 from Center Bridge Partners for a new single family rental 0:03:46.440 --> 0:03:49.560 business and they also plan a spinoff that will include 0:03:49.840 --> 0:03:53.160 uh their technology investment. So there's a company story to 0:03:53.280 --> 0:03:57.080 accompany the bigger story of where rates may be headed here. Yeah, 0:03:57.120 --> 0:03:58.720 good point eight. Two things I want to get you, 0:03:58.720 --> 0:04:01.440 and I know Kathleen mentioned this as well. Fed's forecast 0:04:01.440 --> 0:04:03.720 sharing PC will rise to two point four percent this 0:04:03.840 --> 0:04:07.560 year before backing off to two in two point one 0:04:07.600 --> 0:04:11.880 percent in three Yet the median dots still show no 0:04:12.040 --> 0:04:16.000 rate hike through and this sentence retained from the January 0:04:16.040 --> 0:04:19.719 policy statement quote from the FED, the ongoing public health 0:04:19.720 --> 0:04:23.159 crisis continues to weigh on economic activity, employment, and inflation, 0:04:23.240 --> 0:04:26.919 and poses considerable risks to the economic outlook. Listen, Kathleen, 0:04:27.000 --> 0:04:29.360 this mirrors what Tim and I hear from so many 0:04:29.440 --> 0:04:32.839 folks in the medical communities, the corporate communities, like, until 0:04:32.960 --> 0:04:36.040 we get this vaccine and virus under control, all bets 0:04:36.080 --> 0:04:38.440 are off. But look how much the cases have come down. 0:04:39.000 --> 0:04:42.200 Look how much the viruses we plateau too, And and 0:04:42.360 --> 0:04:44.240 that is troubling to a lot of folks in the 0:04:44.240 --> 0:04:46.360 medical definitely. And I think, and I think it's kind 0:04:46.360 --> 0:04:49.080 of glass half empty, glass half glass have full, because 0:04:49.120 --> 0:04:51.680 if you talk to anybody anecdotally, just oh yeah, I 0:04:51.680 --> 0:04:53.960 didn't couldn't qualify for a vaccine. But I went over 0:04:54.000 --> 0:04:56.280 to Dwayne read to the to the Walgreens, and they 0:04:56.320 --> 0:04:58.039 had a bunch of leftovers at the end of the day. 0:04:58.040 --> 0:05:00.200 And yeah, I'm only twenty eight, but they gave me 0:05:00.200 --> 0:05:03.760 the vaccination. I think what people were very negative about 0:05:03.839 --> 0:05:05.880 this what they called a slow start to a program 0:05:05.920 --> 0:05:08.800 we had never done probably about a hundred years, you know, 0:05:09.160 --> 0:05:13.360 nationwide vaccinations, and now they seem to be gaining some steam. 0:05:13.400 --> 0:05:15.400 So I think that's the thing that's interesting here. Yes, 0:05:15.440 --> 0:05:18.440 it still depends. Yes, there's tons of question marks over 0:05:18.680 --> 0:05:20.800 what happens next, right, because we know things can get 0:05:20.800 --> 0:05:23.359 worse just when you think they're getting better. But it 0:05:23.400 --> 0:05:25.400 seems to me this that's been saying this for the 0:05:25.480 --> 0:05:29.400 last year. What you want to think, what Monterrey policy 0:05:29.440 --> 0:05:31.600 is going to do. Watch the virus. The quicker this 0:05:31.680 --> 0:05:34.719 that gets under control, the more businesses can reopen, the 0:05:34.760 --> 0:05:37.040 more people aren't afraid to go out and shop and 0:05:37.080 --> 0:05:39.839 spend money and fly and go to hotels, the quicker 0:05:39.839 --> 0:05:42.359 the economy will pick up. The longer that lingers, the 0:05:42.440 --> 0:05:45.120 longer it will take. But I see Carroll in and 0:05:45.240 --> 0:05:49.000 Tim in this um, in this particular policy statement, in 0:05:49.120 --> 0:05:53.000 some of the other things they're announcing that uh, this 0:05:53.120 --> 0:05:56.520 is this is asymmetric to me. They're seeing what the 0:05:56.560 --> 0:05:59.240 economy is doing. Some people are saying, maybe we will 0:05:59.320 --> 0:06:01.719 raise rates a little sooner, So watch the economy. If 0:06:01.760 --> 0:06:03.599 it gets a lot stronger, a lot faster, maybe we 0:06:03.640 --> 0:06:05.920 do get lift off sooner. If it doesn't, you know, 0:06:06.040 --> 0:06:10.279 maybe they really can't lift off until So Carol mentioned inflation, 0:06:10.360 --> 0:06:13.720 So I want to ask about that, Kathleen, because the 0:06:14.000 --> 0:06:16.560 medium FED forecast shows that core inflation right around or 0:06:16.600 --> 0:06:19.680 above its target in the next few years. One topic 0:06:19.720 --> 0:06:23.560 that we've heard so much from investors about is inflation. 0:06:23.640 --> 0:06:26.080 So what is the message that the FED is sending 0:06:26.320 --> 0:06:30.200 investors about inflation and how it feels about inflation? Well, 0:06:30.320 --> 0:06:33.680 so far, just looking at the forecast again, because the 0:06:33.720 --> 0:06:37.200 core PCs you note um is two point two percent 0:06:37.279 --> 0:06:39.760 this year. But J Poll and others have made it 0:06:39.800 --> 0:06:42.640 clear we see a temporary kind of spike up in 0:06:42.640 --> 0:06:46.200 inflation as we adjust year after you know, one years, 0:06:46.200 --> 0:06:48.839 hence to the numbers that fell so much last year, 0:06:49.000 --> 0:06:50.600 and so there's been a lot of things and then 0:06:50.640 --> 0:06:53.679 pent up demand after the after not being able to shop. 0:06:54.040 --> 0:06:56.200 But I think the fact that we see in the 0:06:56.920 --> 0:07:01.120 two year two percent two point one percent, the question 0:07:01.120 --> 0:07:03.839 will be J. Powell says, and many of them have 0:07:03.880 --> 0:07:06.640 said they don't mind seeing inflation at two point five percent, 0:07:06.680 --> 0:07:09.960 even higher. They wanted above two percent and staying there 0:07:10.280 --> 0:07:14.720 with two percent in to convince them it's time to 0:07:14.760 --> 0:07:17.280 lift off. Probably not. Yeah, good stuff, guys, Thank you 0:07:17.320 --> 0:07:19.680 so much, Really appreciate it. Kathleen Hayes, Global Economics and 0:07:19.680 --> 0:07:22.720 Policy at at Bloomberg News. Dave Wilson Stocks. This is 0:07:22.760 --> 0:07:26.720 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. 0:07:26.800 --> 0:07:30.640 Tim Stinovich from Bloomberg Radio. Of course, our top story 0:07:30.840 --> 0:07:33.640 on this Fed Wednesday is the FED will reserve keeping 0:07:33.720 --> 0:07:38.280 zero rates as expected, uh and in terms of the outlook, 0:07:38.360 --> 0:07:40.760 also going to keep rates pretty low for a while. 0:07:40.840 --> 0:07:45.000 Still season inflation bump as short lived in the future, 0:07:45.040 --> 0:07:47.080 So just giving us some indications of where they see 0:07:47.080 --> 0:07:49.600 things going. Let's get into it with our round table. Yeah, 0:07:49.640 --> 0:07:51.840 let's do it. Ali Wolf is chief economist at Zanda, 0:07:52.000 --> 0:07:55.280 joining us on the phone from Irvine, California. Jeffrey Cleveland 0:07:55.320 --> 0:07:57.920 is chief economist at paid In and Regal on the 0:07:57.920 --> 0:08:00.559 phone from Los Angeles. They're not too far apart right now. 0:08:00.760 --> 0:08:02.960 Thanks to both of you for for joining us. Um Alie, 0:08:03.000 --> 0:08:04.800 I want to start with you your immediate reaction to 0:08:04.920 --> 0:08:08.960 this news. So this is a fun day for the 0:08:08.960 --> 0:08:13.080 FED followers. What we saw. Obviously a huge revision by 0:08:13.080 --> 0:08:15.440 the Fed, but this was to be expected and it 0:08:15.440 --> 0:08:18.680 basically matches what we've been seeing from the private economists 0:08:18.680 --> 0:08:20.760 who have been putting out their forecast that GDP is 0:08:20.760 --> 0:08:23.680 going to be pretty remarkable this year as the economy 0:08:24.120 --> 0:08:26.760 opens up at at a way more rapid pace. And 0:08:26.800 --> 0:08:29.760 I think a lot of us expected. Well, okay, so 0:08:29.800 --> 0:08:32.680 come on in on good to know, um, jeff Jeffrey, 0:08:32.720 --> 0:08:35.520 come on into In terms of your um reaction to 0:08:35.880 --> 0:08:38.520 the FED decision, well, I was gonna say, the distance 0:08:38.559 --> 0:08:41.400 between Irvine and Los Angeles depends a lot of the traffic, 0:08:41.520 --> 0:08:45.720 so eventually just a lot longer than you think. Yeah, 0:08:45.760 --> 0:08:48.520 the big the big thing here is they have a 0:08:48.559 --> 0:08:53.559 better economic outlook, better GDP growth, they have lower unemployment, 0:08:53.559 --> 0:08:56.160 they have a little bit higher inflation. Yet the media thought, 0:08:56.240 --> 0:09:01.280 the media thought does not move for three is the key. Uh. 0:09:01.400 --> 0:09:03.679 It's this kind of tug of war that's going on 0:09:04.120 --> 0:09:06.480 with the financial market, with the bomb market in particular, 0:09:06.480 --> 0:09:09.840 where the bab market is saying, okay, better growth, higher inflation, 0:09:09.920 --> 0:09:12.559 therefore you need to hike, and the Fed is saying no, no, 0:09:12.679 --> 0:09:16.000 no no. That is the script from perhaps last cycle. 0:09:16.320 --> 0:09:18.720 That is not the script we're going to use. We're 0:09:18.720 --> 0:09:22.160 gonna keep rates at zero for longer. And so that's 0:09:22.160 --> 0:09:25.680 a message they delivered here. Whether the market really believes it, 0:09:25.800 --> 0:09:30.120 Carol and Tim, that's a that's another question itself. Dare 0:09:30.160 --> 0:09:33.839 I say, Goldilocks economy, so unemployment rate gets better, although 0:09:33.920 --> 0:09:36.640 let's not forget there. You know these there are so 0:09:36.640 --> 0:09:40.600 many different measures of unemployment. It doesn't really look at um. 0:09:40.760 --> 0:09:43.520 There are millions who are out of the labor force altogether, 0:09:43.520 --> 0:09:45.920 who just said I'm frustrated, I'm out of it. But 0:09:46.440 --> 0:09:48.880 dare I say, Jeffrey, that we are or could be 0:09:48.960 --> 0:09:51.960 headed for kind of a Goldilocks economy, some growth with 0:09:52.040 --> 0:09:55.840 low inflation. Once again, for investors, this is perfect. You 0:09:55.880 --> 0:09:58.280 have better growth, you have a little bit higher inflation, 0:09:58.320 --> 0:10:01.520 which is fine, and you have an easy fed You 0:10:01.559 --> 0:10:04.560 could mix in their very easy physical conditions as well. 0:10:04.600 --> 0:10:06.240 So I think this is a very good back drop 0:10:06.240 --> 0:10:09.559 for risk assets fort for investors overall. I would ignore 0:10:09.840 --> 0:10:12.520 the unemployment rate, Carol, that four percent figure that gets 0:10:12.559 --> 0:10:15.240 bandied about. I would focus instead on the employment of 0:10:15.280 --> 0:10:19.079 population to fifty four year old, how many of them, 0:10:19.200 --> 0:10:22.360 what percentage of those are folks are employed. That's at 0:10:22.400 --> 0:10:25.359 seventy six right now. It needs to be over eighty 0:10:25.400 --> 0:10:27.720 before I even think we should have another phone call 0:10:27.800 --> 0:10:30.800 about full employment. So that's a ways to go. Hey, Aley, 0:10:30.800 --> 0:10:33.040 come on in here and talk about the reaction among 0:10:33.080 --> 0:10:35.440 homebuilders right now, because this is something that that of 0:10:35.440 --> 0:10:38.400 course you watch closely at Zanda. You heard Dave Wilson 0:10:38.480 --> 0:10:42.319 earlier talk about housing stocks on a tear uh this afternoon. 0:10:42.920 --> 0:10:46.400 What's the reaction there. Yeah, So when you look at 0:10:46.400 --> 0:10:48.400 the housing market and you look at what's happened to 0:10:48.440 --> 0:10:51.080 the economy over the past year, you've basically had people 0:10:51.240 --> 0:10:53.520 that have been forced to save. Now, by the way, 0:10:53.559 --> 0:10:55.760 this isn't just applied to the housing market. This applies 0:10:55.760 --> 0:10:58.079 to the wider economy. Here's people that have been forced 0:10:58.120 --> 0:11:00.480 to save. There has been student loaned forbearing, there has 0:11:00.520 --> 0:11:03.600 been three different rounds coming up of stimulus. And then 0:11:03.640 --> 0:11:05.560 you also have, which I think a lot of people forget, 0:11:05.800 --> 0:11:10.240 the underground economy, the hairdressers and the fitness instructors that 0:11:10.280 --> 0:11:13.439 we're still working under the table and also getting unemployment 0:11:13.480 --> 0:11:16.120 insurance and also getting the stimulus. So when you start 0:11:16.120 --> 0:11:17.920 to add up all of those numbers, you really have 0:11:18.160 --> 0:11:21.920 people that were able to continue to work, flush with cash. 0:11:22.360 --> 0:11:24.920 And when you look at the housing market, well, certainly 0:11:25.000 --> 0:11:27.880 that's a game changer because people need to say, for 0:11:27.880 --> 0:11:30.040 a down payment to purchase a home, and all of 0:11:30.080 --> 0:11:32.640 a sudden because of what happened to the economy. Again, 0:11:32.679 --> 0:11:34.960 as long as you were employed, a lot of people 0:11:35.000 --> 0:11:37.680 are in a really healthy position. That's going to drive growth, 0:11:37.720 --> 0:11:40.680 not only for the homebuilders, but also for the wider economy. 0:11:40.800 --> 0:11:43.120 Let's remind everybody. In just about thirteen minutes, a little 0:11:43.120 --> 0:11:45.080 bit under thirteen minutes time, we will take you to 0:11:45.360 --> 0:11:47.880 the Federal Reserve in Washington, d C. And to FED 0:11:47.960 --> 0:11:50.960 Chief J. Powell. His statement and his press commerce will 0:11:51.080 --> 0:11:52.959 begin at that time, and of course we will cover 0:11:53.000 --> 0:11:55.280 it live right here at Bloomberg. Right now we're talking 0:11:55.320 --> 0:11:59.000 with Ali Wolf, chief economist at Zanda, Jeffrey Cleveland, chief 0:11:59.000 --> 0:12:02.080 economist at Payton and Regals. So Ali, let me ask you, though, 0:12:02.080 --> 0:12:07.040 the housing recovery and strength, how important is it though 0:12:07.559 --> 0:12:11.160 in terms of the upcoming economic recovery and and I'm 0:12:11.200 --> 0:12:13.960 I'm asking to with an eye on in some parts 0:12:14.000 --> 0:12:15.640 of the world, it does feel like we're in some 0:12:15.640 --> 0:12:18.480 parts of the country that we're starting to see, you know, 0:12:18.640 --> 0:12:23.280 a shortage of supply. Yeah. So when we look at 0:12:23.320 --> 0:12:25.720 the housing starts numbers, or you look at how many 0:12:25.720 --> 0:12:28.160 homes are being built. For every single home that's built, 0:12:28.240 --> 0:12:31.480 three different jobs are created. And housing has been able 0:12:31.520 --> 0:12:34.800 to partly lead the recovery this time around because builders 0:12:34.840 --> 0:12:37.959 have been so active and on the new and existing homeside. 0:12:38.240 --> 0:12:41.960 For every home someone purchases, they spend money elsewhere. They 0:12:41.960 --> 0:12:44.120 spend money at home depot, they spend money at target, 0:12:44.200 --> 0:12:46.320 and that helps those different companies along the way to 0:12:47.080 --> 0:12:49.720 the risk though, is as we're looking at the tenure treasury, 0:12:49.760 --> 0:12:52.520 we know that that's closely linked to mortgage rates. Yes, 0:12:52.559 --> 0:12:55.240 mortgage rates are still historically low at three percent, but 0:12:55.320 --> 0:12:57.960 we just have to watch how high those go because 0:12:58.040 --> 0:13:01.600 really even pence fifty basis points starts to price people 0:13:01.640 --> 0:13:04.760 out of the market with how much home prices haven't 0:13:04.760 --> 0:13:07.120 gone up over the past year as well, Jeffrey, what 0:13:07.160 --> 0:13:08.600 do you make of of how the Fed is is 0:13:08.600 --> 0:13:13.320 thinking about growth? The feed is even more optimistic one growth, 0:13:13.360 --> 0:13:15.120 as Chris Ansey points out in our in our live 0:13:15.160 --> 0:13:18.160 blog right now, the median forecast among economists survey by 0:13:18.160 --> 0:13:22.079 Bloomberg um the FED policymakers meeting at six point five. 0:13:22.120 --> 0:13:25.199 The Bloomberg Survey medium medium is six, so the Fed 0:13:25.280 --> 0:13:28.720 clearly optimistic here. Yeah, I don't know what the Bloomberg 0:13:28.920 --> 0:13:31.000 survey there's doing. I mean, I think the paid in 0:13:31.040 --> 0:13:34.600 the regal forecast for six and a half percent, so 0:13:34.960 --> 0:13:37.440 it's right in line with the FMC median. I like that, 0:13:37.559 --> 0:13:39.400 So I would the way I would spin it to 0:13:39.480 --> 0:13:42.080 him is that the FED is finally caught up with 0:13:42.120 --> 0:13:46.360 paidon in regal more economics which actually probably should may 0:13:46.360 --> 0:13:47.959 be a little conserved at this point. I don't know 0:13:48.200 --> 0:13:52.559 why talk, yeah, talk, I mean, I mean, obviously it's 0:13:52.640 --> 0:13:54.880 you're joking there, but but like what why why were 0:13:54.880 --> 0:13:56.920 you guys? Why are you guys so optimistic? I mean, 0:13:57.240 --> 0:14:00.440 and why do you go ahead? The optimist sick tone 0:14:00.480 --> 0:14:03.960 sorry to start the year was due to just the reopening. 0:14:04.280 --> 0:14:06.560 The fact that households do have a lot of pent 0:14:06.640 --> 0:14:09.840 up savings, depending on how you measure it, somewhere between 0:14:09.840 --> 0:14:12.480 one and two trillion, you know, or ten percent of 0:14:12.520 --> 0:14:15.120 GDP roughly, So that's a huge amount of money that 0:14:15.200 --> 0:14:18.240 will be I think unleashed as as the economy reopens. 0:14:18.640 --> 0:14:21.760 And then now another round of fiscal relief coming down. 0:14:21.920 --> 0:14:24.400 So you know, all those things together, I think you 0:14:24.480 --> 0:14:26.720 can very easily get to a six six and a 0:14:26.760 --> 0:14:29.440 half percent GDP growth that you're maybe even some risk 0:14:29.560 --> 0:14:34.600 him to hire growth. That means that the thing is 0:14:34.640 --> 0:14:36.760 looking at a little bit further. I think we'll settle 0:14:36.800 --> 0:14:39.480 back down somewhere closer to two per cent or so. 0:14:39.480 --> 0:14:42.640 So it's not something that will persist beyond beyond one, 0:14:42.680 --> 0:14:44.440 but I think it's a very upbeat view for the 0:14:44.520 --> 0:14:47.560 year ahead. So Ali, you know, I asked Jeffrey about, 0:14:47.640 --> 0:14:50.480 you know, a Goldilocks economy. Uh, you know, it took 0:14:50.480 --> 0:14:52.320 a while to kind of get things going coming off 0:14:52.320 --> 0:14:55.200 of the financial crisis, but we did kind of have 0:14:55.720 --> 0:14:58.160 you know, low and steady for a long long time, 0:14:58.880 --> 0:15:02.880 certainly something that financial market investors made them, you know, 0:15:03.040 --> 0:15:06.440 pretty you know, eager to take on risk in a 0:15:06.480 --> 0:15:08.680 low yield environment. How do you see it? Could we 0:15:08.800 --> 0:15:11.640 be setting up for once again kind of a low 0:15:11.680 --> 0:15:15.840 and steady recovery here? Well, I actually think it's gonna 0:15:15.920 --> 0:15:19.320 be really robust when you look at history. So we've 0:15:19.320 --> 0:15:22.000 now put six trillion dollars into the system over the 0:15:22.040 --> 0:15:25.520 past year from just the Congress and from what they've 0:15:25.560 --> 0:15:28.400 done from the different stimulus packages versus one point eight 0:15:28.400 --> 0:15:32.040 trillion over multiple years last time around. And when a 0:15:32.040 --> 0:15:33.840 lot of US economists look at the data, we say, well, 0:15:33.840 --> 0:15:36.800 that's one of the reasons that it was so long 0:15:36.840 --> 0:15:40.280 and protracted to finally get back. But what we've seen 0:15:40.360 --> 0:15:42.360 from the stimulus checks that have gone out so far, 0:15:42.480 --> 0:15:44.840 we can already learn from what consumers do with it. 0:15:45.320 --> 0:15:47.920 And so right now, this is data from the Chicago SPED. 0:15:47.960 --> 0:15:51.200 You can see fifty of the money gets spent basically 0:15:51.280 --> 0:15:53.640 right away, and then fifty percent of it gets saved. 0:15:53.920 --> 0:15:55.920 And some of that money is getting saved for things 0:15:55.960 --> 0:15:59.240 people can't do today but they can do three or 0:15:59.280 --> 0:16:02.040 four months from now. One vacation, go to restaurants, go 0:16:02.120 --> 0:16:04.960 to bars. And so that's why I also feel really positive, 0:16:05.000 --> 0:16:07.280 I think, I mean, we've seen Goldman's forecasts or even 0:16:07.360 --> 0:16:09.200 higher than that six point five percent that we're seeing 0:16:09.200 --> 0:16:11.720 from the FED. But that's what gives me support about 0:16:11.760 --> 0:16:14.160 the economic recovery. But it's a spike alley, right, and 0:16:14.200 --> 0:16:15.760 then we start to settle down to kind of more 0:16:15.800 --> 0:16:20.440 normal levels. It is, but it depends, it depends on 0:16:20.920 --> 0:16:23.040 is it that one time vacation that you're going on. 0:16:23.040 --> 0:16:24.480 I know a lot of people are talking about they 0:16:24.480 --> 0:16:26.400 want to do their take multiple vacation. I want to 0:16:26.400 --> 0:16:31.560 take ten vacations right now. Yes, so I understand that, 0:16:31.600 --> 0:16:34.120 But we also know that there's additional stimulus that's likely 0:16:34.160 --> 0:16:36.480 going to come on the infrastructure side, which fuels more 0:16:36.600 --> 0:16:41.520 longer terms uh growth too. So Jeffrey, the FED is optimistic, 0:16:41.520 --> 0:16:44.560 painting and Regal is optimistic. How quickly, in your opinion, 0:16:44.640 --> 0:16:46.720 does hirings start to pick up just in the next 0:16:46.760 --> 0:16:49.960 few months. I think we could have three or four 0:16:50.040 --> 0:16:52.800 months ahead to know where you have million, a million 0:16:52.800 --> 0:16:55.280 and a half jobs added each and every month, so 0:16:55.600 --> 0:16:58.720 it can come back very very quickly. I think to me, 0:16:58.800 --> 0:17:00.920 that's the lesson the last night months, not just for 0:17:00.960 --> 0:17:04.080 the FED, but also for forecasters. People were very and 0:17:04.119 --> 0:17:07.400 I think it's justifiable last summer to be very pessimistic 0:17:07.480 --> 0:17:10.080 given the state of the world. It's time, but things 0:17:10.080 --> 0:17:12.720 have changed dramatically, especially in the last six or eight weeks. 0:17:12.720 --> 0:17:16.440 Even so, we we've seen that as soon as things reopened, 0:17:16.640 --> 0:17:18.720 hiring will come back very quickly. We got a little 0:17:18.760 --> 0:17:20.440 taste of that last year, but I think that's what's 0:17:20.480 --> 0:17:22.760 ahead for the next I would say three, three or 0:17:22.760 --> 0:17:25.399 four months. Hey, Alian, Jeffrey, I want to ask you, 0:17:25.520 --> 0:17:27.879 is this kind of how we, fingers crossed, had hoped 0:17:27.920 --> 0:17:31.439 it would would play out after the deep decline and 0:17:31.480 --> 0:17:34.760 the economy shut down shutting down last year? You know, Ali, 0:17:34.920 --> 0:17:36.639 isn't this kind of I know it's a lot of 0:17:36.640 --> 0:17:38.520 money being popped into the system, but isn't this kind 0:17:38.520 --> 0:17:41.320 of what we hope for rather than staying down for 0:17:41.359 --> 0:17:43.680 a longer time, which would have made it more difficult 0:17:43.720 --> 0:17:47.199 to bounce back. I think this is what we hoped for. 0:17:47.320 --> 0:17:49.439 But I would say at least my earliest forecast was 0:17:49.480 --> 0:17:51.560 more like a swouch shape. I thought that there would 0:17:51.600 --> 0:17:53.919 be a little bit of economic pain. And I do 0:17:53.960 --> 0:17:55.679 want to temper what I just said with some of 0:17:55.680 --> 0:17:58.359 the labor statistics, because if you do look at the 0:17:58.840 --> 0:18:01.520 leisure and hospitality after so, that's obviously the sector that's 0:18:01.560 --> 0:18:04.800 been hit the hardest. Let's say tomorrow, because the economy 0:18:04.840 --> 0:18:07.919 opens up, every single one of those jobs comes back. Right, 0:18:08.040 --> 0:18:10.720 we go from nine point five million jobs shy of 0:18:10.760 --> 0:18:13.200 where we where we were last year to now five 0:18:13.280 --> 0:18:16.000 million jobs shy where we are last year. So there's 0:18:16.000 --> 0:18:17.919 a lot of enthusiasm that okay, as we open up, 0:18:17.960 --> 0:18:19.600 and I just that it's you guys do There's a 0:18:19.600 --> 0:18:22.600 lot of enthusiasm on that front. But we still have 0:18:22.720 --> 0:18:25.439 some lingering pain with the long term unemployed, with the 0:18:25.440 --> 0:18:27.760 commercial real estate space that I think, honestly and not 0:18:27.920 --> 0:18:30.320 enough people are are acknowledging that there's a risk on 0:18:30.359 --> 0:18:32.200 that front. Tim and I talked about that all the time, 0:18:32.240 --> 0:18:35.520 Like we're just driving around New York. It's just staggering 0:18:35.600 --> 0:18:39.360 the number of boarded up, shut down you know, retail restaurants, 0:18:39.400 --> 0:18:41.560 you name it, that are no longer there. Tim. Yeah, 0:18:41.520 --> 0:18:44.919 And if companies have employees have proven look to you know, 0:18:45.040 --> 0:18:47.520 mixed reviews from executives who we hear from pretty much 0:18:47.560 --> 0:18:49.800 each and every week about how they feel about employees 0:18:49.800 --> 0:18:52.119 not being in the office. But if employees have proven 0:18:52.160 --> 0:18:55.320 that they can work in a hybrid environment or or 0:18:55.359 --> 0:18:57.960 remotely from home or coming into the office just a 0:18:58.000 --> 0:19:00.280 couple of days a week, that has serious repercussion for 0:19:00.320 --> 0:19:03.040 parts of the economy. So, Jeffrey, commercial real estate, is 0:19:03.080 --> 0:19:05.320 that something that might be another shoe to drop maybe 0:19:05.359 --> 0:19:08.760 this year or into next year. Well, I have to say, 0:19:08.800 --> 0:19:10.960 I think if you go back nine months ago, the 0:19:10.960 --> 0:19:13.920 the outlook was much more pessimistic, like we would never 0:19:14.040 --> 0:19:16.440 return to the office. I think that's changed a lot. 0:19:16.520 --> 0:19:19.359 I think you see that change in price for for 0:19:19.440 --> 0:19:23.520 the commercial real estate sector in various ways, so maybe 0:19:23.560 --> 0:19:25.960 we should be a little bit more upbeat. It was 0:19:26.000 --> 0:19:28.480 like Carol, it was the U, the L, the W 0:19:28.800 --> 0:19:31.800 shaped recovery. It's much more like the U then, I think, 0:19:32.240 --> 0:19:34.199 or even like the V. You know, it's not the 0:19:34.520 --> 0:19:37.040 L or it's not the W, but that beings that. 0:19:37.200 --> 0:19:39.160