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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Ley, we bring

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Speaker 1: you insight from the best and economics, finance, investment, and

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Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg

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Speaker 1: dot Com, and of course, on the Bloomberg Terminal. When

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Speaker 1: you are Deputy Director of Monetary Affairs at the FED,

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Speaker 1: you are known to write short, sharp notes. Seth Carpenter

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Speaker 1: has been acclaimed at doing that across Wall Street for years,

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Speaker 1: and he joins us for his first Bloomberg Conversation his

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Speaker 1: chief global economist at Morgan Stanley. Seth, congratulation on your

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Speaker 1: new position. You gotta go fly fishing with Alan Setner.

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Speaker 1: That's the indoctrination it Morsha Stanley, I love the short

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Speaker 1: sharp note. Everybody calmed down about inflation. Why should we

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Speaker 1: calm down about inflation? I think if you look at

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Speaker 1: the details about what's really driving the inflation, there's lots

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Speaker 1: of reasons to believe the inflation and physical goods really

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Speaker 1: is being driven by supply chain destructions. We've heard about

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Speaker 1: that for a long time. I mean when we talk

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Speaker 1: to our equity analysts. It seems like most of those

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Speaker 1: supply chains are starting to get a little bit better

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Speaker 1: and at best, you know, and at least not get

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Speaker 1: any worse. And so that means that the price level

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Speaker 1: increases for those physical goods should be coming to their

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Speaker 1: end pretty soon. We think we've actually peaked in the

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Speaker 1: US when it comes to inflation now. Maybe a little

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Speaker 1: bit later for Europe. But the point is the price

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Speaker 1: level for those goods effected has probably peaked. They're gonna

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Speaker 1: start to ease off a little bit. That's gonna pull

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Speaker 1: down inflation for the index overall. It's maybe not a

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Speaker 1: global question, but I have to go to America. John

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Speaker 1: Ferroll mentioning this earlier real estate homes rents folds into

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Speaker 1: this call, certainly for G G ten or maybe even

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Speaker 1: G turning to how does housing fold in to a

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Speaker 1: subsiding inflation, it is the force that's pushing in the

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Speaker 1: opposite direction, especially here in the US. The Morgan Stanley

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Speaker 1: team you mentioned, Alan Zentner of the who runs US

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Speaker 1: economics for US for a long time, has pointed to

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Speaker 1: a really bullish attitude we've had on commercial real estate,

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Speaker 1: multi family home sector, so strong rent increases really will

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Speaker 1: help booie uh those inflation measures. So you've got two

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Speaker 1: forces pushing against each other. Rents are gonna be creeping up,

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Speaker 1: but we're gonna essentially be where we were pre COVID

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Speaker 1: on sort of the underlying run rate on on rent inflation,

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Speaker 1: and sort of surged a bit coming out of COVID

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Speaker 1: after some ups and downs. Now we're settling into you know,

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Speaker 1: fairly firm, fairly robust housing market that's gonna lift inflation.

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Speaker 1: The reversion though, when it comes to those consumer goods themselves,

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Speaker 1: that's going to be the things that keeps inflation from

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Speaker 1: rising further from here overall, since said that inflation had paid,

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Speaker 1: can you help me understand where we stipilize? Do we

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Speaker 1: stipilize at a higher level than why we were pre pandemic?

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Speaker 1: So I don't think so. And the one point we've

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Speaker 1: been trying to stress to clients is there's actually two

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Speaker 1: sided risk. I find the the story the narrative to

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Speaker 1: be inflation is high. It's probably transitory, but there's always

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Speaker 1: the upside risk. And to be sure, we are in

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Speaker 1: very different times, and anyone who has a hundred percent

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Speaker 1: conviction on the outlook is either lying to themselves or

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Speaker 1: they're lying to you. Uh. That said, I think there

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Speaker 1: is the chance of downside risk as well. So if

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Speaker 1: you think of supply chain disruptions, if they get fixed

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Speaker 1: sooner than we think, if some businesses have started to

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Speaker 1: add capacity on the hopes of this COVID rebound, then

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Speaker 1: you can actually see those prices fall more than anticipated.

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Speaker 1: And so you've got two way risk of the outlook

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Speaker 1: for inflation. So where does it end. I think for

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Speaker 1: the US middle of next year, on a twelve month

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Speaker 1: change basis, you could be looking at two percent, could

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Speaker 1: be a bit lower that outcome. That post ability was

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Speaker 1: highlighted in the minutes to the last fe C meeting

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Speaker 1: where the staff forecast has their PC measure of inflation

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Speaker 1: going below two percent in the middle of next year.

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Speaker 1: I think that's a realistic possibility. Reminds me that famous quote,

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Speaker 1: what was it? Seth? I forget who said it. If

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Speaker 1: you interrogate the data for long enough, it will confess

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Speaker 1: to anything. It's like the moment we're in right now,

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Speaker 1: doesn't it. If I look at the labor market, I

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Speaker 1: can get this labor market dates to town we thinks

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Speaker 1: are very tight. I can get it to tell me

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Speaker 1: that things are very loose. When you look at it,

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Speaker 1: what does it tell you? Uh So I look at

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Speaker 1: a few things. One, I look at where things happening,

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Speaker 1: so decompose issues. In the shortfall we had in in

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Speaker 1: last week's data, which was pretty surprising for us on

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Speaker 1: the town side. A lot of shortfall in hospitality and

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Speaker 1: leisure not surprising, Delta expost not surprising. The delta variant

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Speaker 1: surging means that a lot of those industries they're just

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Speaker 1: seeing a pullback. We think it's temporary. We think delta

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Speaker 1: will have peaked and will come down in the recovery

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Speaker 1: will continue. But for me, that's one of the key

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Speaker 1: points in terms of thinking about demand on the supply side.

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Speaker 1: I look at UM labor force participation, especially prime major

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Speaker 1: labor force participation. It's been creeping up for the past

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Speaker 1: three months. It's well below pre COVID levels. I think

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Speaker 1: there's every reason to suspect it will continue to rise

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Speaker 1: overcoming quarters and possibly even years if we get continued

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Speaker 1: strong growth. So if we just tie this all together,

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Speaker 1: when you say that inflation has peaked in the US,

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Speaker 1: do you include wage inflation in that or is it

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Speaker 1: entirely a supply chain story. A very good distinction, very

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Speaker 1: important distinction. I was talking about consumer prices there, and

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Speaker 1: that's the part that's going to matter the most for

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Speaker 1: monetary policy. Explicitly. Wage inflation is in fact a different phenomenon.

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Speaker 1: I think one key point that gets lost, and you

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Speaker 1: can look at some of the research coming out of

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Speaker 1: the FED from some of their top economists in the

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Speaker 1: Research and Statistics division, not a huge amount of evidence

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Speaker 1: in the United States of this wage push inflation phenomenon.

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Speaker 1: The link between wage inflation and contin is consumer price

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Speaker 1: inflation in the US has actually been pretty weak over

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Speaker 1: the past couple of decades. Wage inflation is clearly strong.

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Speaker 1: There's been lots of disruptions their businesses having to pay

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Speaker 1: up to hire people back. I think we want to

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Speaker 1: be very very cautious, however, and look at some of

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Speaker 1: the measures that do a better job of adjusting for composition,

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Speaker 1: because again for the last employment report, we saw this

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Speaker 1: big chick up in wage inflation. It was biggest in

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Speaker 1: hospitality and leisure, which is also where we know the

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Speaker 1: under performance was. So when you're not hiring back the

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Speaker 1: people who are at the middle and lower end of

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Speaker 1: the income distribution, that calculated average hourly learning is going

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Speaker 1: to get biased upwards. So I think we want to

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Speaker 1: be super cautious here about any sort of medium and

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Speaker 1: longer term inference about wage inflation. It was Ronald Coast

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Speaker 1: just in case, thanks you, good to catch up, sets

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Speaker 1: really good to hear from you. Seth confidence to Morgan Stanley,

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Speaker 1: chief Global Economists, did you and it's now it's our

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Speaker 1: global market strategist, Ben. I want to start with Bank

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Speaker 1: for America's cool Cevita is going to join us a

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Speaker 1: little bit later this morning. She goes to fully two

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Speaker 1: fifty by year end. That implies six percent downside. It's

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Speaker 1: an upgrade from thirty eight hundred, but let's be clear,

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Speaker 1: the bear is still slightly bearish. Here's the line, euphoric sentiment,

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Speaker 1: margin risk, record duration, pose additional risk. Then as a bull,

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Speaker 1: as an echoy market bull, yourself, what do you say

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Speaker 1: back to that? Yeah, sentiments sentiment is pretty full, right,

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Speaker 1: But I think the fundamentals keep delivering as I think

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Speaker 1: they're going to um and bonds stay reasonably low, which

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Speaker 1: I think they're going to. I think that gives you

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Speaker 1: that clear roadmap two over five thousand for next year.

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Speaker 1: You know, um, I think we're gonna gets growth next year,

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Speaker 1: which is which is double consensus, and I think that's

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Speaker 1: both top line and margins, and we can get into it.

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Speaker 1: But I think you have very good visibility, you know

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Speaker 1: on that, and bondyld's gonna move up a little bit

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Speaker 1: and they're gonna be a fraction of where they were

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Speaker 1: and when we come out of the last couple of recessions,

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Speaker 1: so it's going to stay, you know, reasonably dark is

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Speaker 1: I think to take sort of insurance on that this

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Speaker 1: economy is really recovering and that's going to keep valuation type.

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Speaker 1: Put that together and you know, I know, you know,

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Speaker 1: I'm very comfortable with over five thousand with the next year.

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Speaker 1: Then the narratives that are being written are written of caution,

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Speaker 1: maybe not gloom, but caution. How's a ball market happen

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Speaker 1: given caution and that gloom? Yeah, I I think it

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Speaker 1: happens because of caution, right, I mean, this is this

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Speaker 1: wall of worry that you know, we're now continuing to climb. Right,

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Speaker 1: we have some back to school nerves, you know into

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Speaker 1: the market. We've had this sort of remorseless rally since November,

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Speaker 1: which is sort of worrying people. And we have sort

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Speaker 1: of have this trio of sort of you know, event

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Speaker 1: risk coming out of DC, whether it's you know, the

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Speaker 1: the renomination of Ventcha Powell, or the or the budget

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Speaker 1: limit or sorry, the dead limit, or or this you

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Speaker 1: know three point trillion that the Democrats trying to sort

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Speaker 1: of you know run through Congress. I mean, all that

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Speaker 1: may introduce some noise, introduce some volatility. I think none

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Speaker 1: of that will derail de rail of this market. Um,

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Speaker 1: it's really you know, it's all about the fundamental saying

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Speaker 1: earnings expectations are still rising, companies are getting more visibility

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Speaker 1: back and they're talking about it more. I mean, that's

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Speaker 1: pushing all these earnings numbers up. And at the same time,

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Speaker 1: the Fed is you know, gradually pushing back, um, you know,

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Speaker 1: expectations for the taper and for the increasing interest rates.

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Speaker 1: And I think you know that's that goldie lots combination.

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Speaker 1: Can you say the fundamentals we're talking about the fundamentals

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Speaker 1: of the earnings of specific companies that dominate the SMP

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Speaker 1: five hundred in particular, that actually have perhaps fewer employees

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Speaker 1: relative to their overall business. How much is that a

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Speaker 1: feature that you actually celebrate that you basically want to

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Speaker 1: go into the dominant players in the SMP because perhaps

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Speaker 1: they're a little bit more removed from this stagflationary light

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Speaker 1: environment that we saw out of the bag book and

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Speaker 1: out of a whole host of other data. Yeah. I mean,

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Speaker 1: the stock market is not the economy, and we've certainly

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Speaker 1: saw that a lot last year, and we've enjoyed some

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Speaker 1: of that this year. But I think, you know, look forward,

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Speaker 1: where does the you know, where does the incremental earnings

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Speaker 1: come from. It comes from those reopening stops, It comes

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Speaker 1: from that, you know, it comes from there's a real

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Speaker 1: economy which is under representing the stock market. That's where

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Speaker 1: earnings are, you know, still down from from pre pandemic levels.

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Speaker 1: And I think that's what I think you should be

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Speaker 1: focusing on right now. I mean, the sort of growth

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Speaker 1: nerves now, the sort of backward looking sort of jobs

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Speaker 1: report we had on you know, on on on Friday,

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Speaker 1: I mean that's a reflection of sort of peak virus cases.

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Speaker 1: But virus cases have been coming down for three weeks

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Speaker 1: in a row globally and uh and potentially peaking now

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Speaker 1: in the US. So I'm actually looking forward to that

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Speaker 1: next step. You know, where are we going to start

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Speaker 1: seeing that growth re acceleration. When are we going to

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Speaker 1: start talking about all these companies that are you not

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Speaker 1: making any money now? When are they going to start,

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Speaker 1: you know, making money? And that delta is going to

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Speaker 1: be enormous. I'm seeing the worst of it. Ben Allen

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Speaker 1: Center and Morgan Stanley would agree with you. Andrew sheis

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Speaker 1: and Morgan Stanley underweight us? Could he stough? He's looking

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Speaker 1: at Europe. You're making this call out of London, look

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Speaker 1: across the channel to Europe for us. What's the Europe

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Speaker 1: call now for you? Yeah? I mean I think I

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Speaker 1: think Europe actually leads to all right, I mean you

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Speaker 1: do look at who's recovering from this sort of virus

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Speaker 1: third way best, who has the highest p M eyes um,

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Speaker 1: you know, growth outlook in the world. It's Europe. Who's

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Speaker 1: best prepared to benefit from that with you know, the

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Speaker 1: most typical indices and the cheapest valuations. It's Europe. And

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Speaker 1: who has the policymakers that are basically going to sit

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Speaker 1: on their hands for an extended period of time and

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Speaker 1: let growth run. I think the CB may tap the

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Speaker 1: brakes a little bit today, but you know, I think

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Speaker 1: they're gonna be one of the last central banks to

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Speaker 1: UH to actually increase interest rates, and physical policy is

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Speaker 1: going to remain pretty loose. So acually think the next

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Speaker 1: couple of years. Um, you know, European GDP is could

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Speaker 1: be on par or even outpace that in in the US.

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Speaker 1: And you know, we've just come off an earning season

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Speaker 1: in Europe with a hundred and forty percent earnings growth. Um.

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Speaker 1: You know that tells you. I think the earnings lie

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Speaker 1: Bridge which which you're seeing today, that is quite a

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Speaker 1: cool on GDP in Europe. Ben greater catch up, Sir,

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Speaker 1: Ben labor Uta global markets strategist Cevita superman of Bank America,

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Speaker 1: the head of US equity and quantitative strategy, and she

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Speaker 1: joined us right now. Savita, I'm interested in the process.

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Speaker 1: It goes from thy fifty. Some people might call that capitulation.

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Speaker 1: I'm not sure I'm in that camp. Just walk me

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Speaker 1: through your approach to this market, to your forecast with

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Speaker 1: other people throwing out numbers like five K for next year. Sure, yeah,

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Speaker 1: the process is, it's it's a it's a discipline process.

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Speaker 1: So we have a you know, five five signals that

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Speaker 1: we look at, which range from things like sentiment to

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Speaker 1: fair value valuations, earnings revisions. Here's what's happened over the

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Speaker 1: last month a few months. Earnings have come in much

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Speaker 1: better than expected, and the market has basically doubled off

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Speaker 1: of the COVID loads. So essentially a lot of what

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Speaker 1: we've done in terms of thinking about our target from

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Speaker 1: here is how much good news is priced into the market.

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Speaker 1: How much more can the market rise from these levels

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Speaker 1: or as their downside risk in the months to come.

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Speaker 1: And I think you know, part of what we're looking

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Speaker 1: at is the idea that the market is essentially the

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Speaker 1: valuations of the market right now, we're leaving very little

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Speaker 1: margin for air. Meanwhile, earnings have come in strong, but

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Speaker 1: we're starting to see some harbingers of risk, and you

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Speaker 1: know everybody's talking about supply chain risk and inflation. We're

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Speaker 1: actually starting to see that come in the numbers. So

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Speaker 1: every month we track this guidance ratio, look at the

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Speaker 1: number of companies that are guiding above versus below consensus

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Speaker 1: earnings revisions or a consensus earnings estimates. Over the last

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Speaker 1: let's call it four weeks, we've seen that guidance ratio

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Speaker 1: moved from record highs to a big southward move. We're

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Speaker 1: starting to see companies worn on profits and it's showing

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Speaker 1: up in a broader way across the SMP five hundred. So,

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Speaker 1: first of all, earnings are at risk from just a

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Speaker 1: cyclical pressure of input costs, wages, supply chain dislocation, et cetera.

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Speaker 1: Second of all, when you look at the second their

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Speaker 1: pressures on margins. We've had this great period of time

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Speaker 1: for the SMP five hundred of globalization. The past twenty

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Speaker 1: thirty years have been about US companies getting more global,

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Speaker 1: you know, kind of arbitragey taxes, labor class, etcetera. Now

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Speaker 1: look what's happening. We're at peak globalization. We're starting to

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Speaker 1: see companies on shore. And what that's gonna do is

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Speaker 1: again potentially installed or reverse this kind of long term

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Speaker 1: great theme that we've had for big multinationals. In to me,

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Speaker 1: I want to pin you down in this partition. For me,

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Speaker 1: the earnings dynamic, the nugget that we call earnings growth,

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Speaker 1: a dollar amount of earnings of SMP index versus the

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Speaker 1: partial differentials of price to earnings. Which of those dynamics

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Speaker 1: are you focusing on with such a narrow call. Well,

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Speaker 1: you know, I think it's more the pe that's that's

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Speaker 1: making us think, Okay, there's not a lot of upside

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Speaker 1: from here. And I'll tell you one thing, Tom, So

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Speaker 1: we have a evaluation frame or cuts not very predictive

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Speaker 1: over the near term, but it's kind of all that

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Speaker 1: matters over the long term. The are squared on this

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Speaker 1: framework is eight in terms of you know, this is critical.

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Speaker 1: I don't mean to interrupt this, folks, is math. It's important.

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Speaker 1: Is your are squared valid given the dominance of those

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Speaker 1: giga tech companies. Well, I'll tell you this much. It

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Speaker 1: worked during the tech ball and this is an important point.

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Speaker 1: I'm glad you brought up the giga tech tech companies

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Speaker 1: because the last time this S framework was as negative

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Speaker 1: as it is today was in another period where we

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Speaker 1: were all kind of calling out the primacy of technology.

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Speaker 1: And I think that today the bubble is potentially even

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Speaker 1: more dangerous because it's not about you know, growth stocks

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Speaker 1: which were tech ultimately grew into its multiples. It's about bonds,

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Speaker 1: bonds and interest rates remaining as low as they are

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Speaker 1: for perpetuity. I mean, this is what's scares me, Tom,

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Speaker 1: is that the SMP five hundred has essentially turned into

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Speaker 1: a thirty six year zero coupon bond. If you look

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Speaker 1: at the duration of the market today, it's basically longer

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Speaker 1: duration than it's ever been. So what that means is

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Speaker 1: that any move higher in the cost of capital, the

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Speaker 1: get interest rates, credit spreads, equity risk premia, that's basically

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Speaker 1: going to be a huge knock on the market relative

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Speaker 1: to the sensitivity we've seen in the past. So just

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Speaker 1: real equipment here. You did upgrade your forecast, however, you

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Speaker 1: moved up from thirty eight hundred. Why does this not

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Speaker 1: become the bear case the originally saw? Well, look, I

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Speaker 1: mean I think that the market couldntest could move as

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Speaker 1: low as thirty eight hundred in the near term. But

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Speaker 1: when we look at our frameworks and we think about okay,

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Speaker 1: where do we I mean points in time, forecasts are

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Speaker 1: fraught with peril. But but I think you know, our

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Speaker 1: our view is okay. Earn us have come in a

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Speaker 1: little bit better. Companies have been able to navigate a

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Speaker 1: lot of the margin pressures were actually at peak margins

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Speaker 1: today for for SMP. So it's a pretty remarkable story

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Speaker 1: that corporate America has been able to manage um, you know,

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Speaker 1: the COVID related risks as well as it has. But

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Speaker 1: I think that now we're starting to see some of

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Speaker 1: those areas prey and we're sort of waiting to see

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Speaker 1: how corporate American deals with it. What would make me

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Speaker 1: more embarrassing go back to three hundred is a last

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Speaker 1: the implation persistent and dangerous and companies unable to pass

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Speaker 1: any of it on through prices um And if we

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Speaker 1: saw a more hawkish FED. I think the other thing

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Speaker 1: that we pointed out in our note is that earnings

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Speaker 1: matter for the market, but post crisis, what matters even

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Speaker 1: more is the FED. And I think, you know, it's

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Speaker 1: kind of remarkable. We have a chart in our note

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Speaker 1: that shows that the FED has basically explained half of

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Speaker 1: the market moves outside of earnings UM since the global

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Speaker 1: financial crisis. So you've got this market that it's basically

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Speaker 1: been fed by stimulus. We're now at a point where

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Speaker 1: the FED is talking about tapering. It's hard to imagine

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Speaker 1: they're going to accelerate asset purchases. I mean, what gives

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Speaker 1: And you know, the evaluations don't reflect any of those risks.

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Speaker 1: So basically, yeah, I've only got sixty seconds left on

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Speaker 1: the clock, but I don't want to leave you before

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Speaker 1: asking what do you want to own right now? Within

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Speaker 1: the secondity market away from the index level stuff. There's

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Speaker 1: always a full market somewhere, And what you want to

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Speaker 1: own is the key scares theme today, which is inflation

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Speaker 1: protected yield. So let's say the Fed keeps where it's

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Speaker 1: low forever, but inflation is starting to bubble up. Don't

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Speaker 1: buy bonds, bonds to offer you a fixed coupon that's

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Speaker 1: not going to keep up with inflation. By energy dividend yielders,

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Speaker 1: by financials dividend unders by companies that are tethered to

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Speaker 1: positively tethered to inflation and can pay a growing yield.

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Speaker 1: I think that's the that's the that's the call right

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Speaker 1: now is really focused on income and inflation protections. This

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Speaker 1: was great. Can you promise me one thing next time

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Speaker 1: you come back. Let's get together with John I thank

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Speaker 1: god a credit sweets again and which we can do

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Speaker 1: a repeat. Let's still repeat that. Savada is going to

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Speaker 1: catch up. We appreciate your time as always, send our

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Speaker 1: regards to the team. Savita Subramani of Bank of America.

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Speaker 1: We are thrilled to provide clarity here, maybe Hulger Schmiden

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Speaker 1: joins us with Barenburg their chief economists. Hulger, I want

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Speaker 1: to go to the politics of the moment I'm sure

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Speaker 1: be unspoken within the press conference the Hawks, the traditionalists

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Speaker 1: at the ECB, which you have beautifully enunciated over your career.

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Speaker 1: How does Bundesbank respond to this semantic jumping through hoops

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Speaker 1: on debbish practices. Well, the bank won't quite like it.

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Speaker 1: But what we probably will learn is that two day's

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Speaker 1: statement they press conference, it's only the prelude to the

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Speaker 1: really big decision. The Hawks will now probably try to

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Speaker 1: sum up all the strength to influence the December decision.

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Speaker 1: In December the easy we will probably not be able

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Speaker 1: to duck the issue, namely, when does the emergency end?

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Speaker 1: When does the paper emergency program has to end? And

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Speaker 1: as a result, expect the Hawks to make quite a

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Speaker 1: few noises incoming weeks to prepare for probably a decision

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Speaker 1: in December that will be hotly contested and may give

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Speaker 1: us a better clue about the genuine tapering that will

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Speaker 1: come at some time next year, whether it starts in

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Speaker 1: April or whether it will take longer. Okay, this is

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Speaker 1: really difficult for people to follow because there's two programs

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Speaker 1: running in parallel. This PEP on the one side, there's

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Speaker 1: a p P on the other. If they ENDPAP, because

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Speaker 1: actually say the clue is in the name emergency. If

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Speaker 1: that ends, what does it mean for the asset purchase program.

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Speaker 1: That's another big open question. It probably really will mean

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Speaker 1: that the normal as a purchase program is beamed up,

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Speaker 1: and I expect it to be made moderately more flexible

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Speaker 1: to react to market conditions, but to not be anywhere

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Speaker 1: as flexible as the current emergency program. So the compromise

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Speaker 1: will likely be in my view, and it will be

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Speaker 1: hotly contested that in December the ECB tells us yes

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Speaker 1: the PEB the emergency program will be phased out from

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Speaker 1: April onwards. At the same time, the standard program that

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Speaker 1: is open ended will be raised a bit and made

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Speaker 1: more flexible. So but that's the debate for the next

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Speaker 1: few weeks. With the December decision, rather than anything, we

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Speaker 1: will probably learn the details about today. Today is probably

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Speaker 1: just the day when we may learn, Yes, there is

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Speaker 1: a serious debate going on and they have agreed to

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Speaker 1: disagree until December. On a broader level, however, the message

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Speaker 1: from the e c B is similar to the one

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Speaker 1: from the Fair. They will use all tools to get

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Speaker 1: the average inflation rate at target, even if it exceeds

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Speaker 1: it temporarily, They're not going to be phased by that,

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Speaker 1: and frankly, they talked about potentially even adding accommodation should

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Speaker 1: that become necessary. This was incredibly duvish, and you do

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Speaker 1: see bonds in the euroregion actually rallying to a significant degree.

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Speaker 1: Is this basically the market saying that they don't believe

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Speaker 1: that the ECB could ever reach that goal that they're

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Speaker 1: setting out in inflation. Well, the easy B statement today

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Speaker 1: seems to be almost the same as the previous statements,

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Speaker 1: so there is no change except for this moderation of

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Speaker 1: the pace of asset purchases, which however, was tracked in

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Speaker 1: advance so much so that the bond markets you could say,

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Speaker 1: reacted already to that. Again, the outcome of what we

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Speaker 1: will here in December at the real decision is open

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Speaker 1: and the hawks will probably in coming months get even

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Speaker 1: higher inflacial rates transitory but higher inflacial rates to make

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Speaker 1: their point. So that will be very interesting question in

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Speaker 1: the pressor for President Leguard Hulga. What is it? Sorry?

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Speaker 1: Say it again. Please, if you've got a question for

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Speaker 1: President le Guard and the pressor the news, come it's

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Speaker 1: in about thirty seven minutes time. My key question would,

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Speaker 1: of course be how flexible can the standard asset purchase

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Speaker 1: program be the open ended program once the East finally

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Speaker 1: declares the pandemic emergency over. It's not just the size

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Speaker 1: of asset. Could also this flexibility to react to market conditions,

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Speaker 1: which is if need be helped Italy and the like.

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Speaker 1: It is also that element which really among the Hawks

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Speaker 1: is hotly contested, and that's putting it. We did not

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Speaker 1: discuss that at today's meeting, Mr Smeding. We are committed

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Speaker 1: to financial conditions remaining easy through the projected horizon. Holgus

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Speaker 1: Smedie thank you. You know what's going to happen at

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Speaker 1: eight thirty Eastern. Bloomberg Chief Comust, thank you very much.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

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