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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

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Speaker 2: or anywhere else you listen, and as always on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Tawson's slock of Apollo,

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Speaker 2: writing the consensus expects inflation to rise in the US

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Speaker 2: but fall in the Eurozone. Tawson joins us. Now for more, Towson,

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Speaker 2: Let's focus on the US side of things, and then

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Speaker 2: we can get to a more global dimension. Let's focus

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Speaker 2: on the US with the tariffs in mind. Is it

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Speaker 2: too early, Tawson to expect those tariffs to show up

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Speaker 2: in the day of this morning?

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Speaker 3: No, it's not.

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Speaker 4: What really is the key is you hear is that

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Speaker 4: there is indeed going to view some upside pressure on inflation.

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Speaker 3: And what's most critical.

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Speaker 4: About this is that it's all about the behavior among companies.

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Speaker 3: How do they respond to teriffs.

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Speaker 4: Do they pass on one hundred percent, will they pass

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Speaker 4: on fifty percent, or will they pass on nothing.

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Speaker 3: If they pass on nothing, of course.

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Speaker 4: Then terraffs have to be absorbed by the E and

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Speaker 4: the PE ratio and amy by earnings. So it becomes

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Speaker 4: very important the data prints today and for the coming months,

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Speaker 4: and we should expect to see some upside pressure on

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Speaker 4: inflation coming from terrorists. But it's also the upside pressure

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Speaker 4: we're watching that's coming from what's going on with the dollar.

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Speaker 4: The dollar is down quite significant since the beginning of

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Speaker 4: the year. This is also beginning to creep in as

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Speaker 4: a risk to the upside for inflation. And finally, the

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Speaker 4: other thing that's also beginning to become risk is that

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Speaker 4: the restrictions and immigration we saw last Friday some upweight

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Speaker 4: pressure on wage inflation. This is also something that's an

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Speaker 4: upside risk to inflation over the coming months. So the

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Speaker 4: bottom line to a question Jonathan, is that we should

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Speaker 4: expect to see from a number of different forces upside

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Speaker 4: pressure on inflation for the next several months, including in

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Speaker 4: the data today.

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Speaker 2: Will it be sustained beyond the next several months, tossing

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Speaker 2: as you alluded to. As you indicated, that is the

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Speaker 2: key question right now, the central question for a lot

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Speaker 2: of people in financial markets. What is on your dashboard

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Speaker 2: that guides that view.

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Speaker 4: Well, my dashboard is to type ECFC, go on Bloomberg

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Speaker 4: and look at what the consensus is expecting, and that

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Speaker 4: will tell you that CPI is expected to go up

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Speaker 4: from two point six to three point three by the

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Speaker 4: end of the year. So that's roughly a half a

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Speaker 4: percentage point increase in inflation. And that's the same for

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Speaker 4: core PCE and for headline PCE. So the issue there

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Speaker 4: is that we should expect to see this take quite

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Speaker 4: some time because it all depends on the company's behavior

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Speaker 4: in terms of when do they begin to implement higher

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Speaker 4: prices on the back of inflation going up. And that

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Speaker 4: is something that in the profile of inflation onambiguously pushes

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Speaker 4: us up above three percent. And this is very important

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Speaker 4: because the starting point if we had started with inflation

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Speaker 4: today at one and a half and we had half

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Speaker 4: of percent, then we're going to get much closer to

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Speaker 4: the feeds target. But the problem is that the levels

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Speaker 4: we're at two point eight of inflation today is already

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Speaker 4: at a level that is.

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Speaker 3: Significant above the FED target. Too.

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Speaker 4: If you add a shock of lifting another half of

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Speaker 4: a percentage point to inflation, that really complicates the FED

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Speaker 4: job and therefore makes it very difficult for them to

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Speaker 4: cut breaks in the environment whether there's so much upweight

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Speaker 4: pressure on inflation.

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Speaker 5: So turstin in all other things being equal, world, right,

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Speaker 5: when you slap a tariff on the price of those

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Speaker 5: goods move up.

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Speaker 6: I think that's clear.

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Speaker 5: There are some offsets though, potentially, and I'm interested in

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Speaker 5: your thoughts there. One, right, energy prices have been lower

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Speaker 5: now for a kind of sustained period of time, so

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Speaker 5: there's some disinflationary potential there. Also, the ISM service number

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Speaker 5: last week came in below fifty, and so there's some

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Speaker 5: signs of slowing in the service economy. So how do

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Speaker 5: you think about some of those potential offsets and do

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Speaker 5: you think they're enough to maybe stunt the impact of

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Speaker 5: what you're expecting from a tariff perspective.

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Speaker 4: No, you're right, from a growth perspective, lower energy prices

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Speaker 4: is certainly helpful. But coll PCE and co CPI of

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Speaker 4: course excludes food and energy. So from the fests perspective,

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Speaker 4: they would likely focus on that there is general upweight

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Speaker 4: pressure in the broader measures of inflation excluding food and

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Speaker 4: energy and to your services. It's right, and if I

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Speaker 4: B has been showing some upside pressure also on the

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Speaker 4: expectations to inflation. There's also some measures of course of

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Speaker 4: inflation expectations, both for the University of Michigan and the

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Speaker 4: Conference Board that is also telling you that infaced expectations

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Speaker 4: are way too high red to where the FED would

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Speaker 4: like them to be. So you're right, there are some

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Speaker 4: nuances in terms of yes, that different things going on

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Speaker 4: in some of them, especially survey based data of what's

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Speaker 4: going on with inflation, especially when it comes to household

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Speaker 4: expectations being very very high.

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Speaker 3: So combined, I would.

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Speaker 4: Still come to the conclusion that I worry more about

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Speaker 4: the upside risk. This is also what the FED has

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Speaker 4: in their own forecast, That's what the consensus is forecasting.

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Speaker 4: That's also what we're forecasting. So for what is word,

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Speaker 4: I still think that the overall risks. Yes, surveys may

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Speaker 4: show that ism was a little bit weaker when it

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Speaker 4: came to prices paid, but the bottom line is that

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Speaker 4: the tailwinds coming from tariffs coming from a lower dollar,

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Speaker 4: coming from restrictions and immigration are just pretty strong. And

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Speaker 4: that's combined with at the same time a slowdown in growth,

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Speaker 4: partly because of teriffs of course also weighing on sales

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Speaker 4: for companies, but also slow down in growth because of the.

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Speaker 3: New factor that's emerging.

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Speaker 4: Nearly consumers are beginning to take a hit now because

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Speaker 4: student loan payments are restarting, and people are beginning to

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Speaker 4: take a hit on their credit scores if they don't

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Speaker 4: pay their student loans.

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Speaker 3: So the New York Fad is estimating that's.

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Speaker 4: A much as six seven eight million households that now

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Speaker 4: are at risk of no longer being able to get credit.

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Speaker 4: So that's a hitlint to growth, while we at the

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Speaker 4: same time have some upward push on inflation. So that's

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Speaker 4: taflation in a nutshell. As the baseline scenario that we

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Speaker 4: view as the most likely case at the moment.

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Speaker 2: A Tellston that final point is so important. Our consumers

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Speaker 2: in a position to eat tap and it's the labor

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Speaker 2: market tight enough for them to demand the higher way

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Speaker 2: just to fund it. What's your assessment of that situation now?

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Speaker 4: So one way to assess that is once again to

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Speaker 4: go to you a Bloomberg sho need to look at

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Speaker 4: the red Book same store retail sales that went up

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Speaker 4: a lot just immediately during the Liberation Day weeks when

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Speaker 4: we had, of course a lot of people that were

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Speaker 4: front loading their purchases. But in the last several weeks,

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Speaker 4: the same store retail sales date up on Redbook has

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Speaker 4: started a show and seeping lower. We're now below five

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Speaker 4: percent in numbers growth for same store retail sales.

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Speaker 3: We are watching that trend very very carefully.

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Speaker 4: And this is weekly data that comes out every Tuesday

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Speaker 4: at nine am that will tell us something about is

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Speaker 4: the consumer really in such great shape as the balance

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Speaker 4: sheet would be saying, or are these headwinds, especially headwinds

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Speaker 4: coming from terres headwinds coming across the border, especially from

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Speaker 4: the student owned problems that are beginning to emerge, And

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Speaker 4: they only really.

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Speaker 3: Started emerging here in ME.

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Speaker 4: And we are worried that the US consumer could begin

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Speaker 4: to slow down, and we're beginning to see some signs

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Speaker 4: of that trend downwards in the red Book same store

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Speaker 4: retail sales data.

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Speaker 2: What you're describing is potentially a nightmare for the Federal Reserve.

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Speaker 2: You talked about the dynamics planing out in Europe. The

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Speaker 2: ECP has been reducing interest rates now for a number

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Speaker 2: of months, Tolson, where do you think it leaves the

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Speaker 2: federal reserve at a time when I hear a lot

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Speaker 2: of people saying they should just sit this out, sit

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Speaker 2: this out for the summer, and maybe sit this out

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Speaker 2: for the rest of the year.

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Speaker 4: That's extremely important because this issue is, of course exactly that.

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Speaker 4: If you have higher infletion, the FITCH would be hiking.

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Speaker 4: If you have lower growth, the FITCH would be cutting.

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Speaker 4: So which one is it? Does the fit like apple's

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Speaker 4: like oranges? How much weight do they put on inflation

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Speaker 4: growing up? How much weight do they put on growth

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Speaker 4: slowing down? And the dual mandate is torn in two

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Speaker 4: completely opposite directions. That's why the easy answers to that

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Speaker 4: for their I from SEAM members is to say we're

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Speaker 4: not doing anything but executory. Your point, Jonathan, what if

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Speaker 4: the inflation data does start to move up much more?

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Speaker 4: Or on the other hand, what if growth starts slowing

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Speaker 4: down more. It's a really difficult spot for the vetter

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Speaker 4: to be in because monetary policy works with a lack

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Speaker 4: If I'm sea members will say that's as much as

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Speaker 4: well to eighteen months. So it's almost impossible for them

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Speaker 4: to catch this falling knife because we just don't know

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Speaker 4: at this stage whether the growth slow down will dominate

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Speaker 4: or whether the rise inflation will be dominating it.

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Speaker 2: Tolston provocative stuff. Appreciate the catch up. Tolston slocktair of Apollo.

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Speaker 2: If we can build on the conversation with a perfect guest,

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Speaker 2: Bob Diamond, the founding partner of Atlas Merchant Capital and

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Speaker 2: the former Barclay's CEO. Come on, I got to see you,

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Speaker 2: Marrin Jonathan. I'm good, it's going to see you, sir.

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Speaker 2: Let's just recap things. Where are we right now, big

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Speaker 2: sety thousand foot view of the bank in sector in America?

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Speaker 2: How are thing's shapen up?

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Speaker 5: You know?

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Speaker 7: I think I think just kind of the back and

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Speaker 7: forth and on the one hand and on the other

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Speaker 7: hand from Herman suggests pretty much my view, which is

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Speaker 7: kind of a balance, you know. I think we'll see

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Speaker 7: a turnaround in deal making in advisory in the second

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Speaker 7: half of the year that was a bit slower than

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Speaker 7: people expected in the first half. I don't think Wall

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Speaker 7: Street will repeat the kind of trading performance they had,

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Speaker 7: which was it was kind of like Christmas in the

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Speaker 7: first quarter for trading desks with all the volatility. But

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Speaker 7: I think, you know, I think it's it's a good environment,

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Speaker 7: so no big warning signs. I think the as you said,

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Speaker 7: the report from City that at long lost provisions are

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Speaker 7: a bit higher is not surprising. I would be very

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Speaker 7: surprised if they're more than a bit higher.

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Speaker 2: An okay environment for the big banks or for the

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Speaker 2: smaller banks as well.

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Speaker 7: Well, it's a great environment and for the smaller banks.

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Speaker 7: And as you know, we're very focused on regional and

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Speaker 7: community banks. We've done our first clothes in an investment

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Speaker 7: strategy for that sector. We think that the four and

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Speaker 7: a half thousand regional and community banks one, they're incredibly

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Speaker 7: important to the economy. They do over half of the

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Speaker 7: lending to small businesses and family owned businesses. But four

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Speaker 7: and a half thousands probably the wrong number. In many

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Speaker 7: of the smaller, more private community banks that are so

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Speaker 7: important to their communities are frankly just too small to

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Speaker 7: succeed with higher technology costs, higher regulatory costs, higher compliance costs.

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Speaker 7: And Jonathan, what we're seeing is with a focus of

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Speaker 7: our banking expertise, our integration expertise. The CEOs of these

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Speaker 7: banks want to take part in consolidation. The opportunity to

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Speaker 7: increase ROE through cost synergies, particularly on in state transaction,

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Speaker 7: is terrific. So I think in addition to that, as

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Speaker 7: you look at the go forward business opportunity, we have

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Speaker 7: higher rates, they're probably trending somewhat lower but not too aggressively,

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Speaker 7: and very high demand for credit. So the environment could

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Speaker 7: not be better for a strong regional bank today.

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Speaker 8: We often hear that in tariffs and rates act as

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Speaker 8: overhangs on potential m and A and consolidation. But stepping back,

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Speaker 8: there's also a tremendous amount of disruption going on at

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Speaker 8: an industry level. AI is disrupting many industries. You still

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Speaker 8: have this transition in terms of office in real estate

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Speaker 8: post COVID, you have the energy transition, and we'll see

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Speaker 8: what happens with reshoring.

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Speaker 6: So would you argue that.

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Speaker 8: Disruption in above itself is going to lead to more

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Speaker 8: industry consolidation and M and A across various sectors.

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Speaker 7: Yeah, I don't think that's a bad hypothesis, particularly with AI.

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Speaker 7: I think looking at financial services again, which is kind

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Speaker 7: of our expertise and our focus. It's nothing but positive

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Speaker 7: in terms of in the first stage, greater efficiency and

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Speaker 7: even where there's been that disruption in the US kind

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Speaker 7: of the US economy around uncertainty and tariffs. We have

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Speaker 7: a couple of broker dealers that were invested in overseas

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Speaker 7: Panmore Gordon in the UK and Kepler Chevro and Peraspace,

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Speaker 7: but really focused on Europe for equity sales, trading and research.

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Speaker 7: They both had record earnings in the first quarter for

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Speaker 7: flows from US investors into the UK equity market and

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Speaker 7: into the European equity market. It's incredible to me every

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Speaker 7: time we see these disruptions, it's like the markets are

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Speaker 7: reacting almost before we're ready to do the analysis. So

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Speaker 7: those are first quarter numbers at Paranmore Gordon and Kepler

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Speaker 7: Chevro and their records for the firms in terms of

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Speaker 7: flows from US investors into the UK and into Europe.

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Speaker 7: So it's amazing how agile the investors are.

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Speaker 8: I was going to follow up and ask you about

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Speaker 8: that because I know you have a very global experience

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Speaker 8: throughout your banking career, and it's also just stunning to

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Speaker 8: think about how soon the January American exceptionalism thesis turned

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Speaker 8: into sell America after Liberation Day. Do you see those

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Speaker 8: trends in terms of flows and sentiment moving away from

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Speaker 8: US markets continuing or is it more of a kind

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Speaker 8: of a near term LIP.

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Speaker 6: I think there are reasons to continue.

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Speaker 7: So one of the reasons is it's been a big,

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Speaker 7: big divergence almost since two thousand and eight in the

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Speaker 7: Great Financial Crisis, certainly in banks, but really in equities

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Speaker 7: in general. The outperformance of US equity markets has been very,

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Speaker 7: very clear relative to the UK in Europe, so you

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Speaker 7: had a bounce coming. And I think one of the

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Speaker 7: catalysts for that is this administration's kind of gave a

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Speaker 7: boot in the butt for the European to say, we

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Speaker 7: really have to focus on spending, we really have to

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Speaker 7: focus on private sector, we really have to focus on

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Speaker 7: the economy growing. And I think the attitude change across

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Speaker 7: Europe and the attitude change in the UK toward private

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Speaker 7: sector's success business profitability has been positive for them. So

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Speaker 7: I think the US is still like the leading economy.

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Speaker 7: It's so you know, the financial services industry is so deep,

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Speaker 7: it's just such an impressive machine It's not a negative

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Speaker 7: on the US necessarily. I think once we work through

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Speaker 7: the uncertainty around tariffs, we'll see the strength. But a

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Speaker 7: bounce in Europe and a bounce in the UK was coming.

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Speaker 2: Do you still see the policy makes from this White

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Speaker 2: House's pro risk, pro growth?

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Speaker 7: I think I think, to me, Jonathan, the single thing

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Speaker 7: that investors are looking for right now, well is that

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Speaker 7: one thing. But if I if I picked one out

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Speaker 7: at certainty and I think, you know, calming down the

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Speaker 7: situation with US and China would be a very big

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Speaker 7: part of that. So I think think the announcement today,

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Speaker 7: if if we move forward with solving some of those situations.

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Speaker 7: I mean, keep in mind, if you go back like

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Speaker 7: ten decades then you know, tariffs were like two and

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Speaker 7: a half percent on average, they got up to twenty

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Speaker 7: five or thirty percent with all of the all of

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Speaker 7: the noise. If they settle around five or six percent,

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Speaker 7: you know, I think we have you know, we have

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Speaker 7: confidence again, and we have certainty again. I think we'll

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Speaker 7: bring we'll have deal making comeback. So I think this

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Speaker 7: is a big moment, and I think what's been recognized

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Speaker 7: is that China actually has some pretty strong.

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Speaker 6: Cards rare earths is one of them.

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Speaker 7: But you know, as you look at the latest numbers,

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Speaker 7: China still had a increase in exports. Exports to the

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Speaker 7: US were down thirty percent, but exports to the rest

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Speaker 7: of the world were up eleven percent, So overall their exports.

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Speaker 2: Were up more than twenty percent.

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Speaker 7: Of the Internet right, so less than ten percent of

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Speaker 7: their exports are to the US down.

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Speaker 2: This is something you talked about. The last few months

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Speaker 2: have revealed the leverage that the Chinese have this time around,

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Speaker 2: maybe in a way that wasn't really enforced several years

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Speaker 2: ago in the president's first term.

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Speaker 6: Yeah.

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Speaker 8: Absolutely, and I think there might be some positives that

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Speaker 8: redirect and re order some critical security based industries, technology, pharma,

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Speaker 8: medical supplies, etc. But I think the theme that I'm

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Speaker 8: just hearing from Bob is one we just talked about

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Speaker 8: with Ed earlier, which is.

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Speaker 6: This unintended consequences.

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Speaker 8: We've given a kick to Europe to start spending and

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Speaker 8: maybe in many ways created better growth opportunities for them

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Speaker 8: that they wouldn't have taken on earlier, much like the

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Speaker 8: deepseak analog.

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Speaker 2: Bop, does that mean that you're more focused on the

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Speaker 2: US as everyone starts to look, how swear, But maybe

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Speaker 2: the better opportunities here now.

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Speaker 6: Relative to the last three or four years.

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Speaker 7: I think the opportunities in the UK and Europe are there.

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Speaker 7: But Jonathan, one of the things we felt in Atlas

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Speaker 7: Merchant Capital was one of our real competitive advantages in

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Speaker 7: financial services is we are focused on the UK and

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Speaker 7: Europe in the USA US. Prior to COVID, we had

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Speaker 7: done just as many investments in the UK and Europe

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Speaker 7: as we've done in the US since COVID has been

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Speaker 7: US US US, because that's where the opportunities are.

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Speaker 6: So I would say it differently.

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Speaker 7: I hope we continue to see opportunities here and US

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Speaker 7: regional and community banks writ large, that's a phenomenal opportunity

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Speaker 7: in the US.

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Speaker 6: But if you give us more opportunities.

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Speaker 7: For growth in the UK and Europe than Atlas Merchant

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Speaker 7: Capital is going to be very, very busy, And then

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Speaker 7: that's the direction that looks like we're going on.

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Speaker 2: Just give us the number quickly again, what are we

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Speaker 2: at now regional banks in this country? Four four and

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Speaker 2: a half.

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Speaker 7: Four and a half thousand, and it's probably the wrong number.

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Speaker 2: And you've got just come a down to wall I.

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Speaker 7: Think three years from today market down will be at

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Speaker 7: one to two thousand.

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Speaker 2: It's a punchy go, that's for sure. You could be

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Speaker 2: a big part of it. So you've boways got to

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Speaker 2: see it.

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Speaker 6: Good to see it.

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Speaker 2: Thanks for and I appreciate your time. Pup time in

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Speaker 2: there of Atlans merchis merchant capital. It's with me around

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Speaker 2: the table. Greg Peters a PHM. Seth competer of Morkan

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Speaker 2: Stanley Seth. Just your first take off the back of

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Speaker 2: that data not in line with what you were expecting.

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Speaker 9: Now, that's exactly right. We were expecting roughly with consensustead

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Speaker 9: of be up, you know, two or three tenths on core.

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Speaker 9: I think one thing that's important to remember though, is

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Speaker 9: there are lots of moving parts here. We had already

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Speaker 9: seen lots of swings and things like used cars before.

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Speaker 9: We are coming into this year on a deflationary trend

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Speaker 9: or disinflationary trend, and so you know, I think we

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Speaker 9: got to just take this as one month's worth of noise.

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Speaker 9: The other thing though, is it's still early game. So

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Speaker 9: when we look at what happened before with tariffs, it

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Speaker 9: did take two or three months before you saw any

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Speaker 9: sign of the tariffs and the inflation data, and so

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Speaker 9: I think this is still the beginning of the game,

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Speaker 9: not the end.

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Speaker 2: Of timing and sequencing is really important. I know you've

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Speaker 2: done a research because I've read it. The data this

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Speaker 2: morning you called it noise and not signal. What was

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Speaker 2: the experience of the tariffs in the first term under

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Speaker 2: this president and the timing of the sequencing of things,

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Speaker 2: the hits inflation then the hits of growth, and why

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Speaker 2: should we think it's going to be the same this

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Speaker 2: time around.

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Speaker 9: Yeah, I mean, I think that's what that was. What's

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Speaker 9: really tricky is it does seem like the inflation comes

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Speaker 9: from the tariffs after two or three months, the hit

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Speaker 9: to growth comes after two or three quarters, and so

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Speaker 9: that mismatch in timing I think makes it hard for markets,

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Speaker 9: but very hard in particular for the FED. I think

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Speaker 9: in twenty eighteen, one of the big changes then versus

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Speaker 9: now is that it was mostly focused on China. If

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Speaker 9: you look hard in the core consumer goods data, you

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Speaker 9: can see the effect of inflation, but it was transitory.

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Speaker 9: Then we have every reason to suspect it'll be temporary

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Speaker 9: this time. But the numbers are bigger now. All around

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Speaker 9: the world tariffs, bigger tariffs on China, Modlo, whatever sort

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Speaker 9: of deal comes out from London, and so we think

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Speaker 9: there's a big difference there also mudding the waters though

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Speaker 9: we know how much front running there was before the

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Speaker 9: tariffs coming in, So is that going to change a

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Speaker 9: little bit the pricing dynamic easily could do?

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Speaker 2: Greg, would you fight any excitement this morning around this

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Speaker 2: pro And.

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Speaker 6: I would agree with Seth.

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Speaker 10: I mean, it's way too early to make any kind

404
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Speaker 10: of determination around this particular number. You know, the one

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Speaker 10: question I have for Seth though, is, you know, how

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Speaker 10: do you think about two components, a housing component, which

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Speaker 10: is key because that also feeds into growth, and then

408
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Speaker 10: the service sector, which is basically a measure of wages

409
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Speaker 10: and labor health. So, you know a lot of investors

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Speaker 10: are excited around services disinflating, but that's actually kind of

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Speaker 10: very much a double headed sword. How do you kind

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Speaker 10: of think about that?

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Speaker 9: Completely agree, it's a double edged sword, and I think

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Speaker 9: it's complicated. I think from the housing it's a national

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Speaker 9: phenomenon and it really will reflect the tightness in the

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Speaker 9: labor market there. We've been expecting that to continue to

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Speaker 9: drift down close to pre COVID rates, you know, month

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Speaker 9: on month, maybe not going below it, but getting close

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Speaker 9: to where it was before. For the rest of services, though,

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Speaker 9: I think we have a counter vailing force that needs

421
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Speaker 9: to be more on people's radars when it comes to

422
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Speaker 9: policy effect on the economy, on markets. Everyone's been focused

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Speaker 9: on tariff's, tariffs, tariffs, tariffs, tariffs. Don't forget we've got

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Speaker 9: immigration restriction. Immigration restriction matters a lot. We think prior

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Speaker 9: to COVID, the run rate sort of break even rate

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Speaker 9: for non farm perils was probably one hundred and ten

427
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Speaker 9: hundred and twenty k. Twenty twenty four, twenty twenty three,

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Speaker 9: that run rate went up to two hundred and forty

429
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Speaker 9: two hundred and fifty k. It's going to drop to

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Speaker 9: something closer to seventy five. That's a meaningful restriction and

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Speaker 9: a growth rate of the labor supply. And people here

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Speaker 9: should remember what it was like coming out of COVID

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Speaker 9: when it was hard to find workers. You saw hotel buildings,

434
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Speaker 9: for example, where like the top ten floors, for example,

435
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Speaker 9: were just left vacant because they didn't have staff. I

436
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Speaker 9: think those sorts of staffing shortages are very plausible and

437
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Speaker 9: that could be putting upward pressure over the second half

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Speaker 9: of the year for the services outside of housing.

439
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Speaker 2: Not much pressure right now if you are just joining us.

440
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Speaker 2: A downside surprise on headline and core CPI month over month,

441
00:20:52,400 --> 00:20:54,640
Speaker 2: it came and at zero point one percent the meat

442
00:20:54,680 --> 00:20:56,920
Speaker 2: and estimate, our serve at zero point two on call

443
00:20:57,280 --> 00:20:59,199
Speaker 2: taking out food, taking out energy. It came and at

444
00:20:59,240 --> 00:21:02,120
Speaker 2: zero point one against the meat and estimate zero point three.

445
00:21:02,600 --> 00:21:04,080
Speaker 2: The case standing bhyd Mike, I want to come back

446
00:21:04,119 --> 00:21:05,879
Speaker 2: to you. You've been digging through the details. What's the

447
00:21:05,920 --> 00:21:08,960
Speaker 2: sourceit this downside surprise. Where's the surprise coming from?

448
00:21:09,440 --> 00:21:09,640
Speaker 6: Well?

449
00:21:09,640 --> 00:21:12,280
Speaker 1: Overall, John, it looks like goods prices did not rise.

450
00:21:12,320 --> 00:21:14,880
Speaker 1: They were flat during the month, which is not what

451
00:21:15,040 --> 00:21:19,520
Speaker 1: was expected. Services prices were down. Gasoline prices fell two

452
00:21:19,520 --> 00:21:22,359
Speaker 1: point seven percent, so that had a big weight. The

453
00:21:22,400 --> 00:21:25,520
Speaker 1: thing that did prop up inflation was as you've guys

454
00:21:25,680 --> 00:21:28,560
Speaker 1: been talking about housing, but a couple of other areas

455
00:21:28,640 --> 00:21:32,800
Speaker 1: that did surprise. We saw a slight rise in home

456
00:21:32,840 --> 00:21:36,000
Speaker 1: furnishings about a two tenths of eight percent, but apparel

457
00:21:36,160 --> 00:21:39,560
Speaker 1: is down by four tenths That was expected to rise.

458
00:21:39,880 --> 00:21:42,879
Speaker 1: And here's the real surprise in these numbers. Used cars

459
00:21:42,920 --> 00:21:46,000
Speaker 1: and new cars both fell in price by half a

460
00:21:46,040 --> 00:21:50,800
Speaker 1: percentage point. The expectation was tariffs would drive those higher.

461
00:21:51,200 --> 00:21:56,040
Speaker 1: Airfares were down, as people kind of expected given the

462
00:21:56,240 --> 00:21:59,879
Speaker 1: travel fall off that we've seen, down two point seven percent.

463
00:22:00,440 --> 00:22:04,480
Speaker 1: So there are some surprises some non surprises in here.

464
00:22:05,040 --> 00:22:05,240
Speaker 6: Oh.

465
00:22:05,400 --> 00:22:07,880
Speaker 1: I was going to mention John, you were talking before

466
00:22:07,960 --> 00:22:10,720
Speaker 1: the number came out about the cost of Hulu and

467
00:22:10,800 --> 00:22:14,000
Speaker 1: all those other subscription services. They were up six tens

468
00:22:14,000 --> 00:22:17,120
Speaker 1: of percent, one of the larger rises in the CPI

469
00:22:17,400 --> 00:22:21,440
Speaker 1: this time. I think maybe what we're seeing is companies

470
00:22:21,480 --> 00:22:24,000
Speaker 1: selling out of the inventories that they pulled in. That

471
00:22:24,160 --> 00:22:26,919
Speaker 1: could be one of the explanations for not seeing kind

472
00:22:26,960 --> 00:22:28,560
Speaker 1: of the tariff effect that we thought of.

473
00:22:28,840 --> 00:22:31,560
Speaker 2: Ami McKay, Thank you, sir. We're all faiting that price

474
00:22:31,600 --> 00:22:33,280
Speaker 2: pressure on the hoarly side of things, that's for sure.

475
00:22:33,280 --> 00:22:35,280
Speaker 2: I'll talk about that another time. Note down Seth. What

476
00:22:35,280 --> 00:22:36,320
Speaker 2: did you make of that explanation?

477
00:22:36,600 --> 00:22:38,800
Speaker 9: Yeah, I mean, I think what Mike said was there

478
00:22:38,840 --> 00:22:40,439
Speaker 9: are a lot of different components that are going in

479
00:22:40,480 --> 00:22:43,120
Speaker 9: lots of different directions, and I think that's exactly where

480
00:22:43,119 --> 00:22:45,720
Speaker 9: we've been for the past call a year, where the

481
00:22:45,840 --> 00:22:49,879
Speaker 9: underlying trend before the tariffs hit was a downward trend,

482
00:22:49,880 --> 00:22:52,240
Speaker 9: but boy was it not. Uniform is all over the place.

483
00:22:52,280 --> 00:22:55,920
Speaker 9: I think the car prices point is a really important one.

484
00:22:55,920 --> 00:22:58,159
Speaker 9: If you look at the month on month changes of

485
00:22:58,240 --> 00:23:01,399
Speaker 9: both new autos and used autos over the past call

486
00:23:01,480 --> 00:23:04,600
Speaker 9: it twelve months, you'll see some big swings in both directions,

487
00:23:04,640 --> 00:23:07,000
Speaker 9: and so again the noise versus signal. The noise is

488
00:23:07,080 --> 00:23:07,639
Speaker 9: very high right now.

489
00:23:07,760 --> 00:23:09,679
Speaker 2: See some swings right now in the equity market and

490
00:23:09,680 --> 00:23:12,040
Speaker 2: in bonds to equity futures ness session highs going into

491
00:23:12,080 --> 00:23:15,119
Speaker 2: the up and bow about fifty minutes away. The equity

492
00:23:15,119 --> 00:23:17,119
Speaker 2: market is positive by four tenths of one percent. Just

493
00:23:17,119 --> 00:23:19,320
Speaker 2: move to the bond market. Though, this interesting move here

494
00:23:19,480 --> 00:23:21,480
Speaker 2: compared the two years to what their thirty years doing

495
00:23:21,480 --> 00:23:23,160
Speaker 2: this morning, people like Greg would call this a bull

496
00:23:23,200 --> 00:23:25,240
Speaker 2: steepner running at the front end of the curve. You're

497
00:23:25,280 --> 00:23:28,359
Speaker 2: dropped by six basis points and a thirty year basically

498
00:23:28,440 --> 00:23:30,439
Speaker 2: doing nothing. What does that speak to?

499
00:23:31,119 --> 00:23:33,520
Speaker 10: This speaks to everything we were talking about, which is,

500
00:23:34,280 --> 00:23:36,880
Speaker 10: you know, all the concerns manifest in the thirty year

501
00:23:37,000 --> 00:23:40,080
Speaker 10: right So the front end is driven by fed polsing

502
00:23:40,960 --> 00:23:43,119
Speaker 10: and the back end is driven by a lot of

503
00:23:43,160 --> 00:23:48,600
Speaker 10: other factors, and there is this pesky auction later this week,

504
00:23:48,640 --> 00:23:51,159
Speaker 10: and so I don't really see a skill for that

505
00:23:51,280 --> 00:23:54,480
Speaker 10: to rally into that auction. It normally cheapened up beforehand,

506
00:23:55,040 --> 00:23:57,719
Speaker 10: so I expected to continue to cheapen up beforehand.

507
00:23:57,760 --> 00:24:00,800
Speaker 2: A thirty year supply coming tomorrow afternoon, ten year maturity

508
00:24:01,080 --> 00:24:02,800
Speaker 2: isshumin debt the treasury a little bit later on the

509
00:24:02,800 --> 00:24:04,080
Speaker 2: south of need too, so yield to a lower at

510
00:24:04,080 --> 00:24:05,679
Speaker 2: the front end of the curve. We're down six basis

511
00:24:05,720 --> 00:24:08,600
Speaker 2: points on twos. That unlocks some dollar weakness. You wrote

512
00:24:08,640 --> 00:24:11,879
Speaker 2: dollar right now one fourteen seventy five. Joining us now

513
00:24:11,920 --> 00:24:14,000
Speaker 2: to extend the conversation on places, say it's David Kelly

514
00:24:14,040 --> 00:24:16,520
Speaker 2: of JP Morgan Asset Management. David, it just went your

515
00:24:16,560 --> 00:24:19,360
Speaker 2: initial reaction to the DAYA we got about ten minutes ago.

516
00:24:19,440 --> 00:24:20,560
Speaker 2: Was that a surprise to you, sir?

517
00:24:21,760 --> 00:24:23,800
Speaker 11: And not too much of a surprise. As we were

518
00:24:23,800 --> 00:24:27,199
Speaker 11: going into this, into this print, we were looking at

519
00:24:27,280 --> 00:24:29,919
Speaker 11: a lot of the different industries and there's a sogginess

520
00:24:29,960 --> 00:24:32,880
Speaker 11: in the economy which is really preventing prices from going up.

521
00:24:33,160 --> 00:24:34,520
Speaker 11: I mean, one of the things that I was struck

522
00:24:34,560 --> 00:24:38,719
Speaker 11: by was that both airline fares and hotel lodging were down,

523
00:24:39,119 --> 00:24:41,560
Speaker 11: and that really jives at the fact that, you know,

524
00:24:41,680 --> 00:24:44,520
Speaker 11: people flying and people staying at hotels in terms of

525
00:24:44,520 --> 00:24:48,600
Speaker 11: occupants rates have both been very solidly down for weeks,

526
00:24:48,640 --> 00:24:51,160
Speaker 11: if not months here, and then at the retail level,

527
00:24:51,200 --> 00:24:52,960
Speaker 11: I think, you know, I think it's just like businesses

528
00:24:52,960 --> 00:24:56,760
Speaker 11: and consumers are eyeing each other nervously. Consumers, you know,

529
00:24:56,800 --> 00:24:59,480
Speaker 11: feel badly about the economy, not sure, and retail is

530
00:24:59,520 --> 00:25:01,920
Speaker 11: just out of the nerve to raise the prices they

531
00:25:02,000 --> 00:25:04,760
Speaker 11: absolutely have to, but I think the tariffs will mean

532
00:25:04,920 --> 00:25:07,480
Speaker 11: they absolutely have to in the next few months because

533
00:25:07,520 --> 00:25:09,800
Speaker 11: a lot of these retailers work off tight margins. So

534
00:25:10,560 --> 00:25:11,960
Speaker 11: I think it's I think we are going to have

535
00:25:12,000 --> 00:25:14,600
Speaker 11: a further delayed to the delayed reaction to these tariffs.

536
00:25:14,640 --> 00:25:17,480
Speaker 11: But if the current level of tariffs stick, we do

537
00:25:17,520 --> 00:25:21,479
Speaker 11: still expect this inflation pressure to rise over the months ahead,

538
00:25:21,920 --> 00:25:23,280
Speaker 11: and I think by the end of the year we're

539
00:25:23,280 --> 00:25:25,119
Speaker 11: talking about a CPI about three and a half percent

540
00:25:25,119 --> 00:25:27,400
Speaker 11: a year over year, consumption of later north of three

541
00:25:27,400 --> 00:25:29,720
Speaker 11: percent a year over year, even though it's taking some

542
00:25:29,760 --> 00:25:31,359
Speaker 11: time for this to materialize.

543
00:25:31,640 --> 00:25:33,959
Speaker 2: David, here's a counter point. It comes from no data

544
00:25:34,000 --> 00:25:36,720
Speaker 2: of Runmack this morning, who said, if tariff's rates the

545
00:25:36,880 --> 00:25:39,320
Speaker 2: up and core good prices aren't up by as much

546
00:25:39,359 --> 00:25:42,399
Speaker 2: as the consensus thought, it implies more margin squeeze of

547
00:25:42,440 --> 00:25:46,560
Speaker 2: retailers and less price pass through. Why isn't that just

548
00:25:46,600 --> 00:25:49,359
Speaker 2: going to be the sustainable story for the next several months.

549
00:25:49,440 --> 00:25:51,080
Speaker 2: Why does it have to get worse.

550
00:25:51,800 --> 00:25:53,560
Speaker 11: Because the retailers won't be able to do it. I mean,

551
00:25:53,760 --> 00:25:56,399
Speaker 11: these margins are tight, and what they're doing is, you know,

552
00:25:56,640 --> 00:26:00,240
Speaker 11: further existing margin, existing inventory. They paid a person a

553
00:26:00,240 --> 00:26:02,240
Speaker 11: certain price for it, and they're willing to you know,

554
00:26:02,280 --> 00:26:06,520
Speaker 11: even though inventories are going down, they're willing to accept

555
00:26:06,560 --> 00:26:08,720
Speaker 11: current margins. But as they have to pay for the

556
00:26:08,760 --> 00:26:11,440
Speaker 11: new inventory and mark up on that new inventory, I

557
00:26:11,520 --> 00:26:15,240
Speaker 11: expect that we will see those higher prices. So it's

558
00:26:15,280 --> 00:26:17,680
Speaker 11: because margins are tightened the retail businesses, and I think

559
00:26:17,680 --> 00:26:19,480
Speaker 11: it's just it's going to be very very hard for

560
00:26:21,080 --> 00:26:24,600
Speaker 11: retailers and auto dealers and so forth to actually maintain

561
00:26:24,720 --> 00:26:26,920
Speaker 11: low prices at the prices of the stuff that they're

562
00:26:26,920 --> 00:26:28,040
Speaker 11: buying goes.

563
00:26:27,960 --> 00:26:30,399
Speaker 2: Up, David, if they're not in a position to wait it.

564
00:26:30,440 --> 00:26:33,440
Speaker 2: A consumer is in a position to pay the higher prices.

565
00:26:33,440 --> 00:26:35,280
Speaker 2: Do you see a labor market that's tight enough to

566
00:26:35,320 --> 00:26:37,400
Speaker 2: demand higher wages to fund that move.

567
00:26:38,840 --> 00:26:41,200
Speaker 11: Well, we are seeing a site tightening in the labor

568
00:26:41,240 --> 00:26:43,360
Speaker 11: market because you know, as your previous guests, we're talking

569
00:26:43,359 --> 00:26:45,440
Speaker 11: about that this I think this immigration suite is beginning

570
00:26:45,480 --> 00:26:47,760
Speaker 11: to hit and I think it's very very much below

571
00:26:47,760 --> 00:26:49,800
Speaker 11: the radar because a lot of these people don't really

572
00:26:50,240 --> 00:26:52,560
Speaker 11: admit to being working at all. But there's a shortage

573
00:26:52,560 --> 00:26:56,159
Speaker 11: of labor which is getting worse, and I do think

574
00:26:56,200 --> 00:26:58,760
Speaker 11: that's going to put a floor under wages. And now

575
00:26:58,800 --> 00:27:02,159
Speaker 11: for consumers overall, you know, this is a tax on

576
00:27:02,240 --> 00:27:04,640
Speaker 11: lower middle income consumers. I mean that's what tariffs are.

577
00:27:04,720 --> 00:27:06,640
Speaker 11: There are tax and imports of goods, and that hits

578
00:27:06,880 --> 00:27:09,720
Speaker 11: low middle incum consumers. So it depends on the tax

579
00:27:09,760 --> 00:27:12,000
Speaker 11: bill a bit. But if, assuming the effects of the

580
00:27:12,000 --> 00:27:14,000
Speaker 11: tax bill don't kick in ont later, then I think

581
00:27:14,000 --> 00:27:16,600
Speaker 11: the squeeze is going to get worse over over the

582
00:27:16,600 --> 00:27:18,600
Speaker 11: course of the year and you're going to see weak

583
00:27:18,680 --> 00:27:22,000
Speaker 11: consumer demand and so you're gonna have a combination of

584
00:27:22,000 --> 00:27:25,520
Speaker 11: an economy which seems to be pretty sluggish, say the

585
00:27:25,560 --> 00:27:29,400
Speaker 11: third quarter, but also prices which are registering pretty high

586
00:27:29,440 --> 00:27:30,840
Speaker 11: year of year increases.

587
00:27:30,560 --> 00:27:32,119
Speaker 2: Devid, I've got to ask you where on earth does

588
00:27:32,119 --> 00:27:34,080
Speaker 2: that leaf chairman pal and this fighter reserve.

589
00:27:35,359 --> 00:27:37,359
Speaker 11: I think I think they have to wait and see

590
00:27:37,400 --> 00:27:40,840
Speaker 11: what happens with this this tax bill. You've got tariff

591
00:27:40,840 --> 00:27:44,080
Speaker 11: inflation that's going to be followed by stimulus inflation unless

592
00:27:44,119 --> 00:27:46,680
Speaker 11: they water down this this tax bill. And I think

593
00:27:46,720 --> 00:27:48,639
Speaker 11: he's I think he's right to wait and see him.

594
00:27:49,160 --> 00:27:51,520
Speaker 11: I also think that given how high the stock market is,

595
00:27:52,320 --> 00:27:54,920
Speaker 11: you know, he doesn't want to be responsible for causing

596
00:27:55,080 --> 00:27:57,240
Speaker 11: a further party in the equity market and pushing acid

597
00:27:57,320 --> 00:27:59,679
Speaker 11: prices even higher. So I think the FED is going

598
00:27:59,720 --> 00:28:01,960
Speaker 11: to weigh and wait and wait, although they know what

599
00:28:02,080 --> 00:28:04,719
Speaker 11: the tiff story is and what the tax story is.

600
00:28:04,920 --> 00:28:07,600
Speaker 11: At that point they can assess the economy. But until

601
00:28:07,600 --> 00:28:09,760
Speaker 11: that point, they've really got no reason to ease.

602
00:28:10,040 --> 00:28:12,960
Speaker 2: David Kelly if JP Morgan Asset Management, David, thank you. Seth.

603
00:28:12,960 --> 00:28:15,320
Speaker 2: You were following that conversation. Do you share that opinion

604
00:28:15,359 --> 00:28:16,560
Speaker 2: that Fed's going to sit this out?

605
00:28:16,760 --> 00:28:17,280
Speaker 3: I do think so.

606
00:28:17,320 --> 00:28:20,120
Speaker 9: I think right now there's no urgency for them to move.

607
00:28:20,160 --> 00:28:22,320
Speaker 9: I mean, you saw the year on year number, even

608
00:28:22,359 --> 00:28:24,439
Speaker 9: with this downside surprise, the year on year number was

609
00:28:24,440 --> 00:28:27,320
Speaker 9: two eight. I haven't seen what my team has sort

610
00:28:27,320 --> 00:28:29,400
Speaker 9: of done for the translation to core PCE, but you're

611
00:28:29,400 --> 00:28:32,320
Speaker 9: still probably talking about something like two and a half percent.

612
00:28:32,440 --> 00:28:35,520
Speaker 9: And so, even though that's well below the peaks we

613
00:28:35,560 --> 00:28:37,600
Speaker 9: saw coming out of COVID, two and a half percent

614
00:28:37,640 --> 00:28:39,880
Speaker 9: still a half a percentage point higher inflation than the

615
00:28:39,880 --> 00:28:43,640
Speaker 9: Fed's target, and to date we haven't seen any deterioration

616
00:28:43,720 --> 00:28:46,280
Speaker 9: in the labor market. So I think it's a very

617
00:28:46,280 --> 00:28:49,280
Speaker 9: difficult proposition to argue the FED needs to cut in June.

618
00:28:49,920 --> 00:28:52,840
Speaker 9: Why not take the optionality, sit and wait. They can

619
00:28:52,840 --> 00:28:56,400
Speaker 9: communicate their inclination to have the next move be a

620
00:28:56,440 --> 00:28:58,480
Speaker 9: cut through their dot plot at the upcoming meeting. That

621
00:28:58,520 --> 00:29:00,760
Speaker 9: seems fine, but I don't think that any urgency on

622
00:29:00,800 --> 00:29:02,200
Speaker 9: their part to move if you've got.

623
00:29:02,000 --> 00:29:05,120
Speaker 2: A clean rate on their reaction function the amount of move,

624
00:29:05,360 --> 00:29:07,200
Speaker 2: but you have a decent understanding of how they would

625
00:29:07,240 --> 00:29:10,120
Speaker 2: move based on incoming information, So I think so.

626
00:29:10,320 --> 00:29:13,280
Speaker 9: I think the simplest version of this, and this isn't

627
00:29:13,320 --> 00:29:16,760
Speaker 9: going to be, you know, groundbreaking, is they've got two mandates.

628
00:29:16,800 --> 00:29:18,640
Speaker 9: They have to worry about growth and employment. On the

629
00:29:18,640 --> 00:29:20,440
Speaker 9: one hand, they have to worry about inflation on the

630
00:29:20,480 --> 00:29:23,680
Speaker 9: other at any point in time based on the current

631
00:29:23,720 --> 00:29:25,760
Speaker 9: side of the data, and then your best guess as

632
00:29:25,760 --> 00:29:28,400
Speaker 9: to where things are going, which one's the bigger problem,

633
00:29:28,640 --> 00:29:30,560
Speaker 9: and react to that one. And so right now, the

634
00:29:30,560 --> 00:29:33,240
Speaker 9: bigger problem is very clearly inflation. It's come down, but

635
00:29:33,240 --> 00:29:36,840
Speaker 9: it's still above target. The labor market to date is fine.

636
00:29:37,240 --> 00:29:40,160
Speaker 9: Where things going well, we start to make forecasts, we

637
00:29:40,200 --> 00:29:42,800
Speaker 9: think inflation's going to go up from here. They probably

638
00:29:42,840 --> 00:29:44,560
Speaker 9: think inflation's going to go up from here, but we

639
00:29:44,560 --> 00:29:46,880
Speaker 9: don't know that yet. But until you get that confirmation,

640
00:29:46,960 --> 00:29:49,160
Speaker 9: there's no reason for them to move. If we're right

641
00:29:49,280 --> 00:29:51,840
Speaker 9: and inflation does go up, like I think is the consensus,

642
00:29:52,560 --> 00:29:56,360
Speaker 9: before the labor market starts to slow, before spending the

643
00:29:56,400 --> 00:29:59,560
Speaker 9: economy starts to slow, well, that just reinforces the idea

644
00:29:59,560 --> 00:30:02,880
Speaker 9: that in fl is the bigger problem of their two mandates.

645
00:30:02,920 --> 00:30:05,360
Speaker 9: And so we've been saying for a while, don't count

646
00:30:05,400 --> 00:30:08,600
Speaker 9: on a rate cut at all this year, because if

647
00:30:08,600 --> 00:30:12,640
Speaker 9: inflation keeps drifting up before the economy cracks, makes it

648
00:30:12,680 --> 00:30:14,160
Speaker 9: easy for them to just sit on their hands at

649
00:30:14,160 --> 00:30:15,560
Speaker 9: the current level of policy rates.

650
00:30:15,600 --> 00:30:17,479
Speaker 2: Correct patter is sitting on your hands through the summery

651
00:30:17,520 --> 00:30:20,400
Speaker 2: is one thing. Through the air is another. You've expected

652
00:30:20,440 --> 00:30:21,880
Speaker 2: them to sit on the hand street twenty five.

653
00:30:23,160 --> 00:30:26,240
Speaker 10: You know, it's data driven, of course, that's my out.

654
00:30:25,920 --> 00:30:31,560
Speaker 10: But we've been kind of penciling, penciling into cuts just

655
00:30:31,600 --> 00:30:33,880
Speaker 10: to get to kind of the top end of neutral.

656
00:30:34,760 --> 00:30:37,160
Speaker 10: But it's a complicating factor. I think it's how you

657
00:30:37,920 --> 00:30:42,160
Speaker 10: position the inflation. Clearly they're going to be hesitant to

658
00:30:42,280 --> 00:30:45,280
Speaker 10: use the word transitory, but there is this belief that

659
00:30:45,320 --> 00:30:47,280
Speaker 10: it's a one time shock and you have to look

660
00:30:47,320 --> 00:30:47,680
Speaker 10: through it.

661
00:30:48,360 --> 00:30:49,240
Speaker 3: But you know, my.

662
00:30:49,320 --> 00:30:53,239
Speaker 10: Read is that they will prioritize growth. You know, if

663
00:30:53,280 --> 00:30:55,960
Speaker 10: you just kind of think about it, you know, in

664
00:30:56,040 --> 00:30:59,880
Speaker 10: a matrix, if growth moves down hard, I think we're

665
00:31:00,200 --> 00:31:03,120
Speaker 10: sure inflation is following, all right, So I think they're

666
00:31:03,160 --> 00:31:07,520
Speaker 10: worrying about and prioritizing growth over inflation. But they can't

667
00:31:07,520 --> 00:31:09,480
Speaker 10: tell you that because they need to be credible on

668
00:31:09,520 --> 00:31:12,440
Speaker 10: the inflation. So you have the kind of actions, yeah,

669
00:31:12,480 --> 00:31:15,920
Speaker 10: look through, you know, and kind of read in between,

670
00:31:16,400 --> 00:31:17,440
Speaker 10: which is difficult to do.

671
00:31:17,600 --> 00:31:19,400
Speaker 2: Is that another way saying Governor Willa has a luxury

672
00:31:19,400 --> 00:31:20,360
Speaker 2: that cham and Pound doesn't have.

673
00:31:20,840 --> 00:31:23,600
Speaker 10: Yes, you know, but but you know, but I think

674
00:31:23,600 --> 00:31:25,760
Speaker 10: it's right. And you know there's some politics there too, right,

675
00:31:25,840 --> 00:31:30,240
Speaker 10: so it's but but you know, our belief is inflation

676
00:31:30,400 --> 00:31:30,960
Speaker 10: rolls over.

677
00:31:31,360 --> 00:31:32,640
Speaker 6: I'm sorry, growth rolls over.

678
00:31:33,200 --> 00:31:36,240
Speaker 10: I think they'll respond to that, even though inflation remains,

679
00:31:36,440 --> 00:31:38,000
Speaker 10: you know, well above target.

680
00:31:38,120 --> 00:31:40,080
Speaker 2: Greg, this was smart, It's going to say, as always,

681
00:31:40,080 --> 00:31:42,760
Speaker 2: greigt pity staff. Page'm alongside set company of Morgan Stanley Set.

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00:31:42,760 --> 00:31:43,240
Speaker 11: Thank you, sir.

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00:31:44,040 --> 00:31:47,600
Speaker 2: This is the Bloomberg Seventans podcast, bringing you the best

684
00:31:47,600 --> 00:31:50,920
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00:31:51,000 --> 00:31:53,960
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