WEBVTT - Murdoch, Fed, Cisco, and UAW Strike 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market movin news. 0:00:14.160 --> 0:00:17.279 I'm the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com Slash podcast. 0:00:20.800 --> 0:00:23.680 When the world of media, major piece of news coming 0:00:23.680 --> 0:00:26.280 out this morning, Rupert Murdoch is stepping down as chairman 0:00:26.360 --> 0:00:29.720 of the boards of Fox and News Corp. Following a 0:00:29.800 --> 0:00:33.040 nearly seven decade career, and we'll become chairman emeritus of 0:00:33.080 --> 0:00:36.160 each company. His son, Lachlan Murdock will become sole chairman 0:00:36.200 --> 0:00:39.160 of News Corp and continue as executive chair and chief 0:00:39.200 --> 0:00:42.560 executive officer of Fox. The company succession, big, big, big 0:00:42.600 --> 0:00:45.320 time succession. In the real world, you need perspective on 0:00:45.360 --> 0:00:47.080 a story like this. There's only one person to go 0:00:47.120 --> 0:00:50.000 to in my opinion, and that is Brian Stelter. He 0:00:50.120 --> 0:00:54.520 is a Walter Schorenstein Fellow at Harvard University. Most of 0:00:54.560 --> 0:00:56.720 our audience knows him as a former chief media correspondent 0:00:56.760 --> 0:00:58.960 at CNN. I also know him as a former media 0:00:59.000 --> 0:01:01.120 reporter at the New York Time, so he is the 0:01:01.240 --> 0:01:05.360 voice to go to Brian Rupert Murdoch defines media mogul, 0:01:06.160 --> 0:01:09.160 So a pretty big move here today it is, and. 0:01:09.440 --> 0:01:12.360 In some ways it is surprising because Rupert Murdoch always 0:01:12.400 --> 0:01:15.960 said that he would never retire. That's what son Lachlin 0:01:16.040 --> 0:01:18.720 said about a decade ago as well. Lachlan was clearly 0:01:18.760 --> 0:01:22.040 being groomed to be the successor that's been in place 0:01:22.080 --> 0:01:25.319 for a few years. Today just affirms and confirms that 0:01:25.400 --> 0:01:28.800 Lachlan is the chosen son. But all along Lachlan had 0:01:28.840 --> 0:01:31.480 to share power with his father, and the idea was 0:01:31.520 --> 0:01:34.800 that Rupert would never retire. Well, today is the closest 0:01:34.800 --> 0:01:36.600 thing to a retirement that we're ever going to see 0:01:36.600 --> 0:01:39.080 from Rupert. His allies are calling it more of a 0:01:39.120 --> 0:01:43.200 semi retirement. He is saying he'll be very involved, watching, reading, 0:01:43.360 --> 0:01:48.360 responding and giving feedback. But this is clearly a turning 0:01:48.400 --> 0:01:52.200 point moment for both News Corporation and Fox Corporation to 0:01:52.320 --> 0:01:55.480 have Rupert moving off the board as a chairman, moving 0:01:55.520 --> 0:01:59.760 into an emeris emeritus role. There is obviously no coming 0:01:59.840 --> 0:02:03.440 new turning back from this, and now this cements Lachlan 0:02:03.680 --> 0:02:06.120 as the leader of both companies, for better or worse. 0:02:06.160 --> 0:02:08.200 And I think there's a grand debate to be had 0:02:08.480 --> 0:02:11.960 about Lachlan's leadership, the pros and cons and what it 0:02:11.960 --> 0:02:12.919 means for shareholders. 0:02:13.160 --> 0:02:14.919 You know, there are a lot of businesses in which 0:02:15.520 --> 0:02:17.919 it doesn't really matter who's the CEO or the chairman. 0:02:18.000 --> 0:02:21.240 If you've got somebody holding a big stake in the company, 0:02:21.240 --> 0:02:23.280 he's still the boss or she's still the boss. 0:02:24.600 --> 0:02:25.600 Is that the case here? 0:02:25.840 --> 0:02:29.640 Does Rupert Murdoch have to be chairman and CEO to 0:02:29.680 --> 0:02:31.400 run the business or is he still in charge of 0:02:31.400 --> 0:02:31.880 the family. 0:02:33.320 --> 0:02:35.120 He's still in charge of the family, and he still 0:02:35.120 --> 0:02:37.360 controls the trust. And that is the part of this 0:02:37.440 --> 0:02:41.200 that is very much like HBO's succession. You know, the 0:02:41.240 --> 0:02:43.440 storyline on succession is very much how it works in 0:02:43.760 --> 0:02:46.240 the Murdoch family. There are a bunch of votes of 0:02:46.280 --> 0:02:49.400 the trust. The trust controls both Fox and News Corps, 0:02:49.600 --> 0:02:51.760 and in the event of Ruper Murdoch's death, there will 0:02:51.800 --> 0:02:54.639 be a battle for control of both companies within the 0:02:54.720 --> 0:02:57.920 Murdoch family. People who may know that the outlines of 0:02:57.960 --> 0:03:02.400 this for adult children, two of whom Ruper James and 0:03:02.480 --> 0:03:05.799 Lachlan have been worrying, have been battling for years. Also 0:03:05.840 --> 0:03:09.480 to women Elizabeth and Prudence. In the event of Rupert's death, 0:03:09.720 --> 0:03:12.840 they each get one vote and so there is no tiebreaker. 0:03:13.120 --> 0:03:15.600 There will be some sort of reorganization of the companies 0:03:15.840 --> 0:03:17.760 in the event of Rupert's death. But it's important to 0:03:17.800 --> 0:03:19.960 note in the memo this morning, he says he is 0:03:19.960 --> 0:03:22.960 in robust health and he's been around the Fox studio 0:03:22.960 --> 0:03:25.640 a lot in Los Angeles this week, according to my sources. 0:03:25.840 --> 0:03:28.280 So I think what we're seeing today is a sort 0:03:28.320 --> 0:03:32.079 of confirmation that Lachlan is the chosen one of the father, 0:03:32.560 --> 0:03:35.520 but that does not mean that there could not be 0:03:35.560 --> 0:03:37.520 any number of changes in the years to come. 0:03:38.320 --> 0:03:41.760 Brian, is there any reason to believe that, with this 0:03:41.920 --> 0:03:45.280 news today that there could be any change in editorial 0:03:45.880 --> 0:03:48.680 view strategy at Fox Right. 0:03:48.720 --> 0:03:50.760 I think that's one of the most interesting questions, And 0:03:51.200 --> 0:03:54.480 the initial answer is no. Because Lachlan Murdoch is as 0:03:54.560 --> 0:03:57.560 conservative and in some ways more conservative than his father. 0:03:57.800 --> 0:04:00.560 They have many of the same political views. They both 0:04:00.600 --> 0:04:03.880 have some distaste for Donald Trump. Rupert Murdoch much more 0:04:03.880 --> 0:04:07.600 critical of Trump than Lachlan has been at least as 0:04:07.600 --> 0:04:11.240 far as we know, but both men, although critical of Trump, 0:04:11.480 --> 0:04:14.280 are definitely and defiantly conservative. I don't think we're going 0:04:14.320 --> 0:04:17.159 to see the brands change direction in a dramatic way. 0:04:17.520 --> 0:04:19.720 What we might see, and this is the question mark, 0:04:19.720 --> 0:04:22.400 and what I'm really curious about, is what will Lachlan 0:04:22.480 --> 0:04:26.200 Murdoch may be more free, not entirely freed of his father, 0:04:26.480 --> 0:04:28.880 but perhaps more free than he has been. Does he 0:04:29.000 --> 0:04:30.919 have plans he liked to put in place? Does he 0:04:31.000 --> 0:04:34.880 have business ventures or strategic shifts that he's not been 0:04:34.920 --> 0:04:37.400 able to pull off because of his dad? You know, 0:04:37.640 --> 0:04:41.040 we know the general direction is the same, right towards streaming, 0:04:41.279 --> 0:04:44.520 toward getting Google and Facebook to pay for news corps properties. 0:04:44.680 --> 0:04:47.040 You know, all of that will continue, but you know 0:04:47.440 --> 0:04:49.800 we'll I guess are we going to see Lachlan emerge 0:04:49.839 --> 0:04:50.760 from his dad's shadow? 0:04:50.839 --> 0:04:51.000 Now? 0:04:51.040 --> 0:04:52.159 I think is an open question. 0:04:52.720 --> 0:04:54.920 How do you think when we look back on this, Brian, 0:04:54.960 --> 0:04:57.479 I know you've got so much history and experience with 0:04:57.960 --> 0:05:00.680 the Murdoch family in the news corporation, and how do 0:05:00.680 --> 0:05:04.000 you think Ruppert goes down in history? Certainly when I 0:05:04.040 --> 0:05:06.560 think about you know, the media moguls sum to Redstone, 0:05:06.560 --> 0:05:09.640 Ted Turner, you know, a couple of others, John Malone, 0:05:09.800 --> 0:05:11.719 he's right there at the top of the mountain. 0:05:13.120 --> 0:05:16.080 Yes, in moving us from a broadcast to a cable 0:05:16.120 --> 0:05:19.320 and then a digital world. Absolutely, there are some accomplishments 0:05:19.360 --> 0:05:21.360 that you have to give credit for the creation of 0:05:21.400 --> 0:05:24.400 the Fox broadcast network. You know, we wouldn't have the Simpsons, 0:05:24.720 --> 0:05:26.760 you know, in Family Guy. There's there's a lot that 0:05:26.960 --> 0:05:29.680 is so much that has Ruber Murdock's fingerprints. Of course, 0:05:29.720 --> 0:05:30.640 that'll all rights. 0:05:30.600 --> 0:05:31.120 Fox, Bryan. 0:05:31.240 --> 0:05:34.080 I mean, he's created an entire political movement. Doesn't it 0:05:34.080 --> 0:05:34.480 feel like. 0:05:34.440 --> 0:05:37.000 That it does. We would not have a hat of 0:05:37.040 --> 0:05:40.360 Donald Trump presidency without Ruper Murdoch and Fox News. The 0:05:40.400 --> 0:05:43.320 polarization of Fox News, but also the diversity of voices. 0:05:43.360 --> 0:05:45.600 You know, we could argue in any number of directions, 0:05:45.720 --> 0:05:48.200 but the impact is very clear and spread out all 0:05:48.240 --> 0:05:50.760 around the world, including in Australia, in the UK and 0:05:50.800 --> 0:05:54.039 other markets. You know, there's a satellite network. A lot 0:05:54.080 --> 0:05:56.840 of that is a part of Ruper Murdock's legacy. Now, 0:05:56.920 --> 0:05:59.240 I would say on the business front, he had impeccable 0:05:59.240 --> 0:06:02.640 timing selling most of Fox to Disney about five years ago. 0:06:03.200 --> 0:06:06.000 You know, providing more firepower for Disney in the streaming wars, 0:06:06.080 --> 0:06:08.839 but also getting out of some declining businesses. If you 0:06:08.839 --> 0:06:11.040 look at the stock for Fox Corporation in the five 0:06:11.120 --> 0:06:12.960 years since it was spun out, you know it's down 0:06:13.040 --> 0:06:16.360 twenty three twenty four percent over five years. News Corporation 0:06:16.480 --> 0:06:18.919 has fared somewhat better. But if you're an investor in 0:06:18.960 --> 0:06:22.279 these companies, you are not altogether pleased by Rupert Murdock's 0:06:22.279 --> 0:06:26.360 performance in recent years as these companies have faced headwinds 0:06:26.560 --> 0:06:28.800 of the Apples and the Disney's and the Googles, these 0:06:28.880 --> 0:06:32.760 much bigger giants than now control the media and tech landscape. 0:06:32.320 --> 0:06:34.320 And Brian that kind of calls into question again. A 0:06:34.320 --> 0:06:37.000 lot of folks say, maybe Rupert was the smartest person 0:06:37.000 --> 0:06:39.360 in the room selling to Bob Biger when he did. 0:06:39.600 --> 0:06:42.719 What does Bob Biger and Disney do now? Because they've said, 0:06:43.120 --> 0:06:46.440 unlike Rupert, we're staying we're going to try to evolve 0:06:46.680 --> 0:06:48.400 and compete in this new media world. How do you 0:06:48.440 --> 0:06:49.839 think that plays out for Bob Biger? 0:06:50.680 --> 0:06:50.920 Right? 0:06:50.960 --> 0:06:53.080 And to me, I think about it as a consumer. 0:06:53.120 --> 0:06:55.839 How attached am I to Disney as a consumer? How 0:06:55.960 --> 0:06:58.320 invested am I? How much do I have to spend 0:06:58.360 --> 0:07:00.640 to go to Disney World, Disneyland. How much do I 0:07:00.680 --> 0:07:03.360 have to pay for Disney Plus? And I think Disney 0:07:03.400 --> 0:07:06.200 has its hooks in consumers better than any of these 0:07:06.240 --> 0:07:09.359 other media companies. That's why when I look at this landscape, 0:07:09.440 --> 0:07:12.920 it's Disney and of course Netflix, that would be the 0:07:12.920 --> 0:07:14.920 ones that I would be wanting to bet on. That said, 0:07:15.160 --> 0:07:18.720 the challenges are enormous. He is saddled by assets like 0:07:18.760 --> 0:07:22.320 the ABC television network that are no longer deemed desirable, 0:07:22.560 --> 0:07:25.000 and how he's going to navigate out of that, you know, 0:07:25.040 --> 0:07:27.680 to me, it's a very treacherous one. Two years ahead. 0:07:27.840 --> 0:07:30.239 To me, in ten years, I'd still rather be Disney 0:07:30.440 --> 0:07:32.280 because they're still going to have their hooks in so 0:07:32.400 --> 0:07:35.320 many families that have to go meet Mickey Mouse. But 0:07:35.400 --> 0:07:38.240 in that short term, that short term is so so murky. 0:07:38.520 --> 0:07:40.880 Is there a future? What is the future for cable news? 0:07:40.880 --> 0:07:43.880 Do you think for cable news? Well, Fox News is 0:07:43.920 --> 0:07:46.960 the strongest of the pack. All of these companies are 0:07:47.000 --> 0:07:50.240 facing secular challenges. We know about the headwinds, but you know, 0:07:50.320 --> 0:07:52.800 Fox News, for all of its faults, and I believe 0:07:52.840 --> 0:07:55.600 there are many, it has a captive and loyal audience 0:07:55.640 --> 0:07:58.840 almost like anything else in television or in media, and 0:07:59.120 --> 0:08:02.240 I do see some challenges around the edges. Tucker Carlson's 0:08:02.240 --> 0:08:04.840 firing did calls a ratings drop, but most of those 0:08:04.920 --> 0:08:08.520 viewers actually come back to Fox News. So if you 0:08:08.600 --> 0:08:11.320 were betting on a cable channel out there, you'd probably 0:08:11.320 --> 0:08:13.840 be betting on Fox News again, for better or worse. 0:08:14.280 --> 0:08:16.760 Right now, they're getting ready for their next GOP debate. 0:08:17.120 --> 0:08:21.280 The Republican Party gave Fox the first two debates, not Newsmax, 0:08:21.320 --> 0:08:24.840 not Rumbled, not some far right internet stream. Republican Party 0:08:24.920 --> 0:08:27.640 still went back to Fox, so that alliance is still 0:08:27.760 --> 0:08:30.640 very real and very strong and frankly very profitable for 0:08:30.720 --> 0:08:31.560 Lachlin and Rupert. 0:08:31.920 --> 0:08:34.080 Brian, thanks so much for joining us. Really appreciate you 0:08:34.440 --> 0:08:36.120 giving us a few minutes of your time. Brian Stelter, 0:08:36.200 --> 0:08:39.559 He's a Walter Schorenstein Fellow at Harvard University and a 0:08:39.679 --> 0:08:43.400 former chief media correspondent at CNN, also former media reporter 0:08:43.440 --> 0:08:45.760 with The New York Times, so certainly has the chops 0:08:45.760 --> 0:08:47.559 to give us his perspective. 0:08:49.080 --> 0:08:52.480 You're listening to the team. Ken's a live program Bloomberg 0:08:52.559 --> 0:08:55.920 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:08:56.000 --> 0:08:59.160 the iHeartRadio app, and the Bloomberg Business app, or listen 0:08:59.200 --> 0:09:01.239 on demand where however you get your podcast. 0:09:03.160 --> 0:09:05.840 Had a little bit of economic data today. In addition 0:09:05.880 --> 0:09:09.560 to the job as claims and Philly fed home sales, 0:09:09.600 --> 0:09:14.560 we also the leading index came in at zero negative 0:09:14.720 --> 0:09:18.280 zero point four. Consensus was for negative zero point five, 0:09:18.320 --> 0:09:21.440 so a little bit better than expected there. Dana Peterson 0:09:21.480 --> 0:09:23.960 joints as chief econmis for the Conference board. Dana, what 0:09:24.000 --> 0:09:26.800 did your what did you learn from your index that 0:09:26.840 --> 0:09:27.720 you released this morning? 0:09:29.000 --> 0:09:32.680 Well, still telling us that the leading indicators are suggesting 0:09:32.679 --> 0:09:34.440 that there's going to be a recession at some point 0:09:34.440 --> 0:09:37.200 over the next twelve months. Certainly when we look at 0:09:37.200 --> 0:09:40.720 the details, the financial market indicators as well as the 0:09:40.760 --> 0:09:44.920 expectations gauges for consumers continue to be negative. And also 0:09:45.320 --> 0:09:48.559 jobless claims ticked down a little bit. But all in all, 0:09:48.679 --> 0:09:52.280 this measure has been negative for sixteen seventeen months, and 0:09:52.400 --> 0:09:56.319 it's continuing to tell us the same exact story, is it. 0:09:57.120 --> 0:09:59.320 I mean, it's been telling us the same story. But 0:10:00.000 --> 0:10:02.040 the economy is pretty good shape here. How do we 0:10:02.080 --> 0:10:04.800 kind of put those two together? Sure? 0:10:05.120 --> 0:10:07.800 I think the thing is that within that measure you 0:10:07.840 --> 0:10:11.600 don't really have services embedded and you don't have all 0:10:11.679 --> 0:10:14.160 the labor market indicators in there. We do have labor 0:10:14.200 --> 0:10:17.760 market indicators in the Current Economic Conditions measure, and that 0:10:17.920 --> 0:10:21.360 has continued to say that everything's okay, and that's because 0:10:21.440 --> 0:10:25.200 we continue to see positive payroll gains and real incomes 0:10:25.200 --> 0:10:28.640 are rising year on year, especially as inflation comes off. 0:10:28.679 --> 0:10:32.640 And so that's really the current situation. But again we're 0:10:32.679 --> 0:10:35.360 trying to look ahead, and when we look at what's 0:10:35.440 --> 0:10:39.000 going to be facing the consumer and businesses going forward, 0:10:39.160 --> 0:10:42.840 we're looking at very elevated interest rates for longer. Certainly 0:10:42.840 --> 0:10:45.360 the Fed indicated that it's not going to cut interest 0:10:45.400 --> 0:10:47.800 rates that much next year. Maybe they have one more 0:10:47.840 --> 0:10:50.520 hike this year, but then only two cuts next year. 0:10:51.080 --> 0:10:52.000 And we're also. 0:10:51.920 --> 0:10:54.360 Looking at a situation where consumers are going to have 0:10:54.440 --> 0:10:56.600 to pay down their debts, and those debts are going 0:10:56.640 --> 0:11:01.040 to be much more expensive going forward, including having to 0:11:01.080 --> 0:11:03.680 pay for student loans. So all these things are going 0:11:03.679 --> 0:11:05.959 to coalesce into an economy that we think is going 0:11:06.000 --> 0:11:10.000 to be slower and potentially experiencing a short and shallow recession. 0:11:10.280 --> 0:11:14.080 How is the consumer looking and I know, Tom always 0:11:14.080 --> 0:11:17.720 points out the bifurcation, and that is, you know, definitely 0:11:17.720 --> 0:11:21.280 a thing. You know, if you're the CEO of an automaker, 0:11:21.400 --> 0:11:24.640 you're getting twenty five million dollars a year, so the 0:11:24.679 --> 0:11:27.160 consumer from that, that consumer looks great, but if you're 0:11:27.160 --> 0:11:30.680 one of the UAW workers, not so much. We start 0:11:30.720 --> 0:11:34.480 to see a build up in credit card debt, We 0:11:34.600 --> 0:11:38.600 start to see more and more delinquencies we're hearing in 0:11:38.679 --> 0:11:41.120 terms of credit card and auto loans. As you point out, 0:11:41.160 --> 0:11:44.959 student loans need to be repaid again, so that debt 0:11:44.960 --> 0:11:49.320 pile that's getting more expensive is also growing, right it is. 0:11:49.360 --> 0:11:52.120 When we look at consumer credit card debt, it's back 0:11:52.160 --> 0:11:55.000 to where we were on the trend before the pandemic. 0:11:55.320 --> 0:11:58.240 And you're absolutely right, delinquencies are arising. They're back where 0:11:58.240 --> 0:11:59.400 we were in twenty nineteen. 0:11:59.440 --> 0:12:01.200 So all the have been wiped out. 0:12:01.679 --> 0:12:04.360 And when we look at charge offs, especially by banks 0:12:04.360 --> 0:12:07.640 that are not in the top one hundred ranks, those 0:12:07.720 --> 0:12:10.520 charge offs are very elevated and even above where we 0:12:10.520 --> 0:12:12.960 were back in twenty nineteen. So we're looking at a 0:12:12.960 --> 0:12:16.000 situation where the consumer is coming under pressure. Folks are 0:12:16.600 --> 0:12:20.080 using credit cards to finance their spending and it certainly 0:12:20.120 --> 0:12:22.040 isn't coming into a very good picture. 0:12:22.120 --> 0:12:25.080 We think, how about the labor market here as it 0:12:25.080 --> 0:12:28.080 relates to this economy. We had the initial jobs claims 0:12:28.160 --> 0:12:31.679 once again come in, you know, better than expected, better 0:12:31.720 --> 0:12:34.760 than last month at two hundred and one thousand. It's 0:12:34.800 --> 0:12:37.120 this labor market, despite you know, all the doom and 0:12:37.160 --> 0:12:39.360 loom out there, if to the extent there is is 0:12:39.400 --> 0:12:40.480 still resilient. 0:12:41.880 --> 0:12:43.360 Well, I think you need to look at the labor 0:12:43.360 --> 0:12:46.880 market three different ways. So, yes, you do have some 0:12:47.080 --> 0:12:49.320 companies that are still hiring, and those are mostly the 0:12:49.360 --> 0:12:52.079 companies where they need people to show up to work, 0:12:52.200 --> 0:12:58.400 such as healthcare, restaurants, hotels, even public administration, and so 0:12:58.520 --> 0:13:00.960 we're definitely seeing job gains there, but those gains are 0:13:01.000 --> 0:13:04.160 getting smaller and smaller and smaller. And then on the 0:13:04.200 --> 0:13:06.440 other end of the spectrum, you do have layoffs, and 0:13:06.480 --> 0:13:09.280 those are mainly companies that did very well during the 0:13:09.280 --> 0:13:12.880 pandemic at not so much this now past the pandemic, 0:13:13.000 --> 0:13:16.880 certainly tech, finance, transportation, warehousing. But you still have a 0:13:16.960 --> 0:13:20.040 large group of companies that are hoarding workers and the 0:13:20.120 --> 0:13:22.000 reason why is they don't want to have to let 0:13:22.040 --> 0:13:24.760 everybody go especially if they think that the downturn is 0:13:24.760 --> 0:13:27.800 going to be short, it's going to be mild. But 0:13:27.920 --> 0:13:30.360 we are seeing them cut back on hours. Hours are 0:13:30.400 --> 0:13:32.640 back down to where they were a pre pandemic after 0:13:32.760 --> 0:13:36.080 or surge, and certainly wage growth isn't as aggressive as 0:13:36.080 --> 0:13:38.640 it used to be, and we're seeing companies pull down 0:13:38.760 --> 0:13:41.360 job ads and there's less quitting. So there's definitely cooling 0:13:41.360 --> 0:13:42.600 in the labor market occurring. 0:13:43.320 --> 0:13:48.760 Yeah, it does seem like the strength is a bit deceptive, 0:13:49.240 --> 0:13:51.840 you know, but we but you know, I keep thinking that, 0:13:51.920 --> 0:13:54.640 and then we keep getting these amazing data points so 0:13:55.120 --> 0:13:58.120 or much better than expected data points. 0:13:58.760 --> 0:13:59.880 At what point does that turner? 0:14:02.000 --> 0:14:04.160 Well, I mean the data that I'm looking at seems 0:14:04.200 --> 0:14:07.199 to be mixed. Certainly, when we look at retail sales, 0:14:07.559 --> 0:14:10.440 they were negative in terms of month on month games 0:14:10.440 --> 0:14:14.199 in real terms after adjusting for inflation. When we look 0:14:14.200 --> 0:14:17.480 at payrolls, yes, one to eighty seven was very good, 0:14:17.640 --> 0:14:20.320 and in most years that'd be great, but we saw 0:14:20.400 --> 0:14:23.760 pretty significant downward revisions to prior months. And when you 0:14:23.760 --> 0:14:27.640 start seeing downwards downward revisions to payrolls, it creates a 0:14:27.680 --> 0:14:30.800 trend and you have this downward momentum in general, So 0:14:31.800 --> 0:14:33.760 I think that and also when we look at inflation, 0:14:34.280 --> 0:14:37.040 headline is going in the wrong direction, hence the FED 0:14:37.360 --> 0:14:40.440 signal we're not done with interest rate hikes, and certainly 0:14:40.520 --> 0:14:43.080 there's concerns that the FED will raise interest rates so 0:14:43.240 --> 0:14:46.240 much and that the cumulative tightening is going to weigh 0:14:46.280 --> 0:14:49.080 on the economy and cause the more disastrous situation. So 0:14:49.680 --> 0:14:52.480 I think we need to parse the data very carefully. Yes, 0:14:52.480 --> 0:14:55.000 there's some things that are surprising to the upside or 0:14:55.040 --> 0:14:58.120 slightly better, but even our own leading indicators, even though 0:14:58.120 --> 0:15:00.800 it wasn't minus a half, it was still minas point four. 0:15:00.960 --> 0:15:02.160 That's it's still negative. 0:15:02.240 --> 0:15:04.040 So I think we need to look closely at the 0:15:04.120 --> 0:15:07.040 data and see that, Yes, the US economy is slowing 0:15:07.440 --> 0:15:10.520 in line with what the FED wants regarding its monetary 0:15:10.560 --> 0:15:11.360 policy tightening. 0:15:11.760 --> 0:15:13.880 So again, so just to be clear, Dana, are you 0:15:13.880 --> 0:15:17.320 guys at the conference board saying maybe a shallow recession 0:15:17.720 --> 0:15:19.800 next year is possible likely? 0:15:20.800 --> 0:15:23.200 Yeah, So that's our that's our call. 0:15:23.280 --> 0:15:25.520 Yes, we do expect recession. We keep having to push 0:15:25.560 --> 0:15:28.600 it out because consumers have been spending, but again a 0:15:28.600 --> 0:15:32.080 lot of that's using debt. But yes, we do have 0:15:32.120 --> 0:15:35.200 a recession call. For the first half next year. Again 0:15:35.320 --> 0:15:38.000 not very long, not very deep, and we'll get out 0:15:38.000 --> 0:15:39.200 of it pretty quickly. 0:15:39.240 --> 0:15:41.200 And then we get hopefully we get straight back to 0:15:41.320 --> 0:15:43.920 zero and straight policy as quickly as we can right exactly. 0:15:44.000 --> 0:15:46.520 That's life is good. Dana Peterson, thanks so much for 0:15:46.560 --> 0:15:49.560 joining us. Dana Peterson, Chief Economists for the Conference Board. 0:15:49.880 --> 0:15:52.400 You're listening to the tape Cat's a our live program, 0:15:52.440 --> 0:15:56.400 Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, 0:15:56.560 --> 0:15:59.280 the tune in app, Bloomberg dot Com, and the Bloomberg 0:15:59.320 --> 0:16:02.400 Business App. You can also listen live on Amazon Alexa 0:16:02.480 --> 0:16:05.760 from our flagship New York station, Just say Alexa Play 0:16:05.880 --> 0:16:07.200 Bloomberg eleven thirty. 0:16:08.680 --> 0:16:10.880 Barry Reholtz joined us. He's a host of Masters in 0:16:10.920 --> 0:16:13.640 Business on Bloomberg Radio. Is also the chairman of Chief 0:16:13.680 --> 0:16:18.400 Investment Officer Rehults Wealth Management. Barry, your Federal Reserve stay 0:16:18.480 --> 0:16:21.920 put yesterday. But still talking tough, aren't they? 0:16:23.120 --> 0:16:28.240 Yeah, they have not been afraid to really communicate what 0:16:28.280 --> 0:16:29.520 their intentions are. 0:16:30.240 --> 0:16:32.040 We can disagree with. 0:16:31.920 --> 0:16:34.920 Them, and we can argue with them, but you can 0:16:35.120 --> 0:16:38.280 say they haven't worn the street of their views, and 0:16:38.320 --> 0:16:41.160 they haven't told people this is exactly what we're going 0:16:41.240 --> 0:16:41.480 to do. 0:16:43.280 --> 0:16:47.680 So they still have two cuts priced in next year. 0:16:47.720 --> 0:16:50.240 And I've been asking everybody today about, you know, where 0:16:50.240 --> 0:16:52.920 the Fed ultimately wants to be, because they have a 0:16:52.960 --> 0:16:54.880 forecast for three point nine percent at the end of 0:16:54.920 --> 0:16:56.720 twenty twenty five and two point nine percent at the 0:16:56.800 --> 0:16:59.240 end of twenty twenty six. It feels to me like, 0:16:59.360 --> 0:17:02.200 even though higher for longer is the current mantra, they 0:17:02.280 --> 0:17:04.240 want to be long term? 0:17:04.480 --> 0:17:07.280 Low? Is that is that the right way to be? 0:17:08.440 --> 0:17:11.440 They want to be long term? They've said they want 0:17:11.440 --> 0:17:12.200 to be long term. 0:17:12.359 --> 0:17:15.640 I No, No, they're forecasting two point nine percent at 0:17:15.640 --> 0:17:18.080 the end of twenty twenty six. Like, why if they 0:17:18.119 --> 0:17:20.560 achieve a soft landing and the economy's okay, why would 0:17:20.600 --> 0:17:21.640 you want rates to be. 0:17:22.040 --> 0:17:25.280 Two point nine percent? Isn't it healthy to have a solid. 0:17:24.920 --> 0:17:30.119 Five I'm sorry, did you say twenty twenty six? Yes? 0:17:30.280 --> 0:17:34.080 All right, So let's let's laugh about that for a moment, 0:17:34.520 --> 0:17:37.800 and let me point out that the quarterly dot plot 0:17:38.440 --> 0:17:42.040 has been so wildly wrong for all of the past 0:17:42.080 --> 0:17:46.800 five years, just looking out four quarters, just looking out 0:17:46.800 --> 0:17:50.480 a year ahead, to think that anybody on this Federal 0:17:50.520 --> 0:17:54.879 Reserve or anywhere else has the slightest idea what the 0:17:54.880 --> 0:17:57.000 state of the economy is going to be, what inflation 0:17:57.080 --> 0:17:58.840 is going to be, like, what interest rates are going 0:17:58.880 --> 0:18:03.679 to be like in twenty six. It's not merely laughable. 0:18:03.880 --> 0:18:08.640 I would call it malpractice because you have to know GDP, 0:18:09.119 --> 0:18:11.160 whether or not we're in a recession, what's going on 0:18:11.280 --> 0:18:15.120 with employment, what's going on with inflation. These guys can't 0:18:15.119 --> 0:18:17.720 forecast a quarter ahead three years. 0:18:18.400 --> 0:18:19.160 It's hilarious. 0:18:19.240 --> 0:18:21.600 I get that. I mean, my question is radio here. 0:18:21.720 --> 0:18:26.040 My question is really just you know, is the bias 0:18:26.200 --> 0:18:29.240 right now to try and get back down to ZERP, 0:18:29.440 --> 0:18:31.640 Like is that where we want to be? Because over 0:18:31.680 --> 0:18:34.440 the last fifty years we've averaged like four point six 0:18:34.480 --> 0:18:39.200 percent on the Fed funds rates? So isn't that healthy? 0:18:39.440 --> 0:18:41.920 Or I guess it's you know, it depends on where 0:18:41.920 --> 0:18:44.399 our start is. But isn't it healthy to have the 0:18:44.440 --> 0:18:46.840 real rate of return like around five percent? 0:18:48.359 --> 0:18:51.480 So so Z let's start with ZUP, which is a 0:18:51.480 --> 0:18:52.320 great place to begin. 0:18:52.480 --> 0:18:53.199 What is ZERP? 0:18:53.880 --> 0:18:55.800 What zero interest rate policy? 0:18:55.960 --> 0:18:56.280 Thank you? 0:18:56.640 --> 0:19:00.040 Was a actually traces back to nine to eleven, but 0:19:00.160 --> 0:19:05.240 really it's a post financial crisis emergency footing. 0:19:05.600 --> 0:19:07.960 So if the FED is at zero, your. 0:19:07.840 --> 0:19:13.360 Assumption should be, hey, something is either systematically wrong, systemically 0:19:13.359 --> 0:19:16.119 wrong with the financial system, or we're in the midst 0:19:16.160 --> 0:19:19.879 of a really really bad crisis or recession, so zero 0:19:19.960 --> 0:19:22.480 should be off the table. What we want to do 0:19:22.720 --> 0:19:27.560 is get to neutral, which is the English way of saying, 0:19:28.720 --> 0:19:34.040 our English way of saying, we're not encouraging inflation. We're 0:19:34.040 --> 0:19:37.159 not discouraging inflation. We're at to balance. The problem is 0:19:37.320 --> 0:19:40.639 the economy runs hot and cold. I don't mean recession 0:19:40.680 --> 0:19:44.240 wise or bubble wise, but some quarters are better than others, 0:19:44.240 --> 0:19:47.520 and you kind of have to allow a little bit 0:19:47.720 --> 0:19:51.879 of inflation. You don't want to cause a recession. When 0:19:51.960 --> 0:19:55.040 we look at CPI now, a lot of this all 0:19:55.080 --> 0:20:00.359 comes back to the two percent inflation target, which, as 0:20:00.560 --> 0:20:04.520