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

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Speaker 2: This is the.

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Speaker 1: Bloomberg Surveillance Podcast. Catch us live weekdays at seven am

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Speaker 1: Eastern on Apple CarPlay or Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube the.

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Speaker 3: Concerts Center here at Chief Economists yeaws to get us

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Speaker 3: to the report, Rebecca Patterson's scheduled after its commercial free

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Speaker 3: across the nation in this hour cons there's no whisper number.

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Speaker 3: How do you guess the inflation report? If there's so

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Speaker 3: many subsets, do you have to go down to each

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Speaker 3: subset to try to peace out a guestimate?

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Speaker 2: Yeah.

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Speaker 4: I mean we've always had a granular view of forecasting inflation,

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Speaker 4: but it has gotten more granular given what's happening with tariffs,

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Speaker 4: and of course we're looking at the impact of commodities prices.

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Speaker 4: We have other idiosyncratic factors like what's happening with beef shortages.

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Speaker 4: So there are a lot of cross currents going on

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Speaker 4: in this inflation.

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Speaker 3: It's the biggest weight or like everybody's sucking use cars.

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Speaker 3: Don't tell me use cars as a big weight, is it?

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Speaker 2: It's not a big weight real estate. It's really important.

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Speaker 4: And in fact, we're seeing new tenant rent in the

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Speaker 4: New Tenant Rent Index starting to rise. We're seeing people

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Speaker 4: preferring to rent rather than own, so new households that

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Speaker 4: are forming are renting, and that's pushing up rental prices

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Speaker 4: in the New Tenant Rent Index. We're going to see

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Speaker 4: that feed through to all the components of the CPI

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Speaker 4: in the coming months.

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Speaker 5: If inflation is creeping up, that's kind of a tough

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Speaker 5: environment for the FED to cut rates, isn't it.

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Speaker 4: I mean, creeping or shooting is Both of them are tough, right,

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Speaker 4: But I think what makes it especially tough, right is

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Speaker 4: that services inflation is elevated and sticky. It came down

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Speaker 4: and then it sort of stalled out. Meanwhile, goods prices

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Speaker 4: were close to flat or zero. That's not the case.

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Speaker 4: Goods prices are rising at zero point seven percent a

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Speaker 4: month over month. They're thirty five percent of the index,

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Speaker 4: and they're going to keep rising.

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Speaker 2: And so if.

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Speaker 4: Services prices continue to come down, even slowly, you're still

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Speaker 4: going to see that overall index increased.

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Speaker 3: So what's your blooded number at EIU out twelve months?

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Speaker 3: Are you guys two ish three ish high three.

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Speaker 2: This is a trick.

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Speaker 4: This is a trick question time, because if we look

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Speaker 4: at the you want to look at what the FED

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Speaker 4: is going to look at, They're going to want to

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Speaker 4: look at the three month annualized rate.

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Speaker 2: So we expect that to start.

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Speaker 4: Moditoring in the end of Q two, beginning of Q

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Speaker 4: three next year, and we expect that to come down

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Speaker 4: to like a two point three two point one percent.

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Speaker 3: Did you say next year next year? Three quarters out,

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Speaker 3: four quarters out?

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Speaker 2: Yeah, Yeah, it's going to take some time.

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Speaker 3: Are looking for results September seventeen.

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Speaker 2: Oh if we.

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Speaker 5: So, I mean again that that's inflation here. How about

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Speaker 5: kind of the labor market? I mean, that's another thing

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Speaker 5: that I think people feel comfortable with where kind of

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Speaker 5: we are here.

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Speaker 6: But they say, well, if you look under the hood,

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Speaker 6: some of the trends there might be going the other

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Speaker 6: way here.

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Speaker 4: Well, we've been concerned about the under the hood since

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Speaker 4: the start of the year, and it's the under the

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Speaker 4: hood that has made us have our call that we

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Speaker 4: think the FED is going to cut, and we think

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Speaker 4: they're going to cut in September. We think there's a

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Speaker 4: good chance they get in two more cuts before the

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Speaker 4: end of the year.

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Speaker 2: Yep.

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Speaker 3: Do you think the labor market is going to This

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Speaker 3: is like, I'm I got a textbook. I got Rick

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Speaker 3: Michigan's textbook at CLUBB. You pick a constant, you pick

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Speaker 3: the textbook. You're telling me they're going to cut interest

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Speaker 3: rates with a three point x percent inflation.

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Speaker 4: Well, I'm going to chuse Stan Fisher as you you

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Speaker 4: talked about him earlier this morning.

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Speaker 2: And here's the thing.

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Speaker 4: We know that the tariff inflation impact is going to

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Speaker 4: be dare I say the word transitory. But the but

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Speaker 4: the issue is what is happening with that services inflation?

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Speaker 4: And there are compliments of service in this inflation, like

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Speaker 4: transfer in ortation where we're seeing falling demand.

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Speaker 3: Uh.

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Speaker 4: And the real question is how much can the consumer

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Speaker 4: take in terms of say auto inflation.

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Speaker 3: We go to surveillance transitory correspondent Lisa Matteo. Right now,

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Speaker 3: how's that transitory inflation at Costco?

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Speaker 6: Lisa, it's not doing so well?

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Speaker 3: So well on a day to day constance hunter like

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Speaker 3: in consumption, I just don't see transitory.

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Speaker 4: Well, it's well, it's present, But the question is is

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Speaker 4: it is it?

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Speaker 2: Is it going to last for several years?

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Speaker 4: It seems unlikely it will last for several years because

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Speaker 4: the economy is weakening under the hood.

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Speaker 3: I got, I got a hate letter yesterday. Paul doesn't

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Speaker 3: know this. Folks, Lisa and Paul get the love notes.

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Speaker 3: Michael Byrn, I get all that hate mail constance. It

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Speaker 3: was a hate mail against you and all the others.

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Speaker 3: The audience detests when smart people like you say inflation

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Speaker 3: is a one off and after the lift and inflation

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Speaker 3: will all be okay.

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Speaker 4: I didn't it will We'll be okay. A lot say well,

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Speaker 4: we'll be okay. It is a tax on the consumer.

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Speaker 4: It helps to push growth lower. It is painful for households.

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Speaker 4: It makes it harder for people to afford basic necessities.

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Speaker 2: Let's let alone.

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Speaker 4: Some of the nice to have that they want to

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Speaker 4: spend money on. It's very, very challenging.

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Speaker 3: So you're saying the fetia cut even if we get

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Speaker 3: a rising inflation rate.

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Speaker 4: The fetcha cut if we get a rising inflation rate

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Speaker 4: and continued confirmation the labor market is weaking, weakening. They

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Speaker 4: have to see that labor market weakening cut.

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Speaker 3: I agree, it's back to the labor market.

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Speaker 6: Poll retail sales on Friday, How do you care that

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Speaker 6: the consumer is doing.

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Speaker 2: Out there, Well, it depends on what you're buying.

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Speaker 4: But you're starting to see you're starting to see an

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Speaker 4: impact across the board. You're seeing actually a pullback and

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Speaker 4: in some of the revenge spending out of the pandemic.

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Speaker 4: Right there're still seemingly endless spending on things like leisure

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Speaker 4: and hospitality that is coming down.

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Speaker 2: So we expect.

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Speaker 4: Restaurants to solve, and a little bit. Home furnishings is weak. Obviously,

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Speaker 4: we have a really troubled and problematic housing market, so

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Speaker 4: we're not getting the lift from growth from a from

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Speaker 4: a growing housing market, so we're expecting home furnishings.

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Speaker 2: To be soft.

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Speaker 4: So we are we are looking for that softness under

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Speaker 4: the hood to come through. Now we have to point

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Speaker 4: out the juxtaposition here is everything that's happening in tech

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Speaker 4: and AI. We are seeing continuing to see a boom

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Speaker 4: in spending there and that's where you get the lift

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Speaker 4: in in capital investment.

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Speaker 3: But the other investment out there, I mean, I mean

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Speaker 3: I thought of this earlier, folks, we didn't bring it

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Speaker 3: up on air. Let's do it business investment away from technology,

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Speaker 3: business investment. How do you characterize that grim.

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Speaker 4: Yeah, it's zero, it's negative, negative, it's declining, declining, and

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Speaker 4: we think and we think that's going to continue. And

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Speaker 4: and our forecast at the beginning of the year sort

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Speaker 4: of cast us back to March when we were looking

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Speaker 4: at the rising level of uncertainty, was that this level

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Speaker 4: of uncertainty corresponds to business paralysis. We do not see

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Speaker 4: investment growing strongly when we have this level of uncertainty,

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Speaker 4: because businesses are like, I'll just just wait a quarter,

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Speaker 4: I'll wait till I get more clarity.

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Speaker 2: Right, I'm not going to Why would I.

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Speaker 4: Drive down the road at ninety miles an hour when

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Speaker 4: it's really foggy outside, I'll go forty five instead.

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Speaker 6: Has that eased up a little bit in the last

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Speaker 6: couple of months as well?

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Speaker 4: I recognize that, Well, it's eased up, but we're still

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Speaker 4: significantly above previous spikes and of course above previous stasis levels.

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Speaker 3: So what's your number or in a headline, CPI, are

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Speaker 3: you on survey? Are you disinflating or increased inflation?

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Speaker 4: Well, we're looking at zero point three percent month over

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Speaker 4: month and about two point eight on a year every year.

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Speaker 3: Two point eight year every year that's sort of where

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Speaker 3: we are. Well. CPI month over month is zero point

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Speaker 3: two is a survey, So you're a tick above.

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Speaker 2: I'm a tick above.

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Speaker 3: Every little tick matters right well, and.

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Speaker 2: It matters especially for that annualized rate.

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Speaker 4: And it also matters where if people are feeling prices

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Speaker 4: go up in things that they purchase frequently, it takes

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Speaker 4: it psychologically. That takes a bigger bite out.

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Speaker 3: So what we have here at Bloomberg, just to give

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Speaker 3: you a snapshot of is the constance one Hunter twelve

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Speaker 3: seconds to adjust to this. But what we have here

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Speaker 3: is the data that we all talk about in the media.

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Speaker 3: And then Michael McDonough and our team develop off the

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Speaker 3: Bureau of Labor Statistics a wonderfully colored chart which tells

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Speaker 3: a story. And I have core goods instantly here from

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Speaker 3: the report. It is zero point one point five to one.

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Speaker 3: I have no idea what that number means other than

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Speaker 3: constance hunter. I think I'm seeing a continuing trend of

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Speaker 3: core goods inflation.

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Speaker 4: Ron yep, and we're seeing it in autos. So if

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Speaker 4: we look down in the detail, use cars and trucks

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Speaker 4: are now row zero point five percent month of a

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Speaker 4: month four point eight percent year over year. And like

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Speaker 4: I said, services is sticky, right, we have services less

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Speaker 4: energy services at zero point four percent month over month,

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Speaker 4: three point six percent year over year. And with those

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Speaker 4: sticky services, I will have to say it's going to

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Speaker 4: be challenging for the FED cut. We're going to have

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Speaker 4: to see really weak other data in the form of

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Speaker 4: jobs and retail sales.

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Speaker 3: Should we say what the market's doing? Paul Sure? I

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Speaker 3: think we should five basis points in a lower yield

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Speaker 3: on a two year yield, the ten year yield and

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Speaker 3: three basis points the equity markets lived from flat up

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Speaker 3: to futures up twenty eight and the vicks in almost

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Speaker 3: to stick fifteen point four eight punk.

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Speaker 7: Yeah.

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Speaker 5: The three point one percent annual increase in the core

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Speaker 5: CPI takes that measure back to the height since February.

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Speaker 5: I'm looking at the Bloomberg Live top.

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Speaker 3: Live can to list them there stand right on.

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Speaker 6: Top of that, I mean the top like these blogs.

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Speaker 6: These guys are all over it.

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Speaker 3: It's awesome now Chris and the entered team.

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Speaker 7: Yeah, veryxy so.

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Speaker 5: Wh sp fiatures up twenty four, Dow up one ninety,

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Speaker 5: and NASHTAC up one hundred and five points, it's four

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Speaker 5: tens to one percent.

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Speaker 6: So certainly a move there constance.

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Speaker 5: I mean, you know, it's calling into question that two

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Speaker 5: percent ish kind of target that the FED has for inflation,

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Speaker 5: whether it's core PCE or however you want to define it.

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Speaker 5: Is that a realistic goal these days in this economy.

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Speaker 6: I just don't. A.

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Speaker 5: I'm not sure whether they're fixated on the number. B.

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Speaker 5: I'm not sure how we get there.

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Speaker 2: Well, should I answer the easier questions?

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Speaker 7: First?

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Speaker 4: The reason they're the reason that it's two percent is

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Speaker 4: because you need to have some inflation to grease the

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Speaker 4: wheels of growth, right, you don't you don't want to

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Speaker 4: tip into disinflation or deflation. On the other hand, you

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Speaker 4: don't want inflation to be a factor in businesses making

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Speaker 4: their decisions. And the problem with the level we have

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Speaker 4: now is it is a factor in businesses making their decisions,

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Speaker 4: and it's a factor in consumers making their decisions. And

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Speaker 4: so that's where it becomes really challenging for the FED.

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Speaker 4: On the other hand, we see this as attacks on

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Speaker 4: the economy. It in itself is going to slow growth

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Speaker 4: in addition to the slowness that we see under the hood,

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Speaker 4: and so It really just depends on the timing of

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Speaker 4: how quickly the labor market deteriorates and whether or not

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Speaker 4: the FED has space to act.

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Speaker 5: Yeah, just an extraordinary here so again kind of the CPI, Right, Yeah,

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Speaker 5: I gave you your point two percent, Tom, I kind

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Speaker 5: of spot on line. I mean that core that ex

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Speaker 5: food and energy you're on your one percent is kind

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Speaker 5: of getting some play, folks.

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Speaker 3: Here's here's the core CPI three monthly annualized is published

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Speaker 3: by bl S. This is from April two point one.

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Speaker 3: It went down to one point seven, it went up

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Speaker 3: to two point four, and now the three month annualized

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Speaker 3: is up to two point eight. Every textbook I have,

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Speaker 3: Constance Hunder tells me it's really hard to cut rates

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Speaker 3: given a three month trend of the three month annualized statistic.

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Speaker 4: Right, And if you look at the Fed's work on this,

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Speaker 4: going back to the previous time that we raised traffs

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Speaker 4: admittedly by substantially less, right, it was that they should

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Speaker 4: look through this. Now the question is does a larger

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Speaker 4: teriff rate warrant the same look through. I think the

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Speaker 4: FED has telegraphed to us that they think it doesn't,

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Speaker 4: But does it.

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Speaker 2: Warrant zero look through that also.

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Speaker 4: They have they have seem to have telegraphed that they

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Speaker 4: think it doesn't warrant zero look through. If you look

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Speaker 4: at the dot plot, if you look at some of

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Speaker 4: the things that different FED governors have been saying, whether

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Speaker 4: it's Mary Daily, whether it's Neil Kashkari, right, Fed governors

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Speaker 4: that FED presidents have been saying, look, we see weakening

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Speaker 4: under the hood. And remember the FED funds, tart run

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Speaker 4: funds right right now is restrictive? Does it need to

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Speaker 4: be this restrictive? If they were to cut twice, it's

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Speaker 4: still restrictive.

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Speaker 3: And this this headline here from Mark Niquet, Thank you

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Speaker 3: Mark for this. Just it's amazing. Our Bloomberg team gets

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Speaker 3: us out us core CPI picks up fastest pay since

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Speaker 3: January on services. Constance Hunter, thank you so much. Just

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Speaker 3: brilliant with the EIU. This morning, Rebecca Patterson said time

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Speaker 3: you really need to wear makeup? And I said no,

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Speaker 3: All our handlers are saying YouTube is We're makeup free

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Speaker 3: on YouTube at least I am, So we'll go with that.

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Speaker 3: Joining us now is Rebecca Patterson with a Council on

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Speaker 3: Foreign Relations and all over our service to best of

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Speaker 3: our trust JP Morgan and of course Bridgewater over the years. Rebecca,

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Speaker 3: this is the oddest place to be. I'm looking for

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Speaker 3: the revisions. I guess if I don't trust BLS, I

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Speaker 3: guess I trust the data. I don't have revisions yet

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Speaker 3: up on the screen. Let's just start with that. Okay,

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Speaker 3: the unemployment, right, there's an uproar. We got a new

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Speaker 3: guy in a hugely controversial Does Rebecca Patterson trust the

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Speaker 3: inflation statistics? Yes, that's where you gotta talk more, Lisa,

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Speaker 3: tellers talk more over.

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Speaker 8: No, I mean, the United States has the best government

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Speaker 8: data in the world by a lot, and there are

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Speaker 8: dedicated civil servants who literally go around the country checking

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Speaker 8: prices in every community, of every variable and making sure

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Speaker 8: the data is as clean and reflective of what's really

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Speaker 8: happening as they can.

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Speaker 3: My textbooks say, you got to be nuts. You can

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Speaker 3: cut rates given a two ish three ish three month

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Speaker 3: annualize inflation. Do you see any sense of transitory in

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Speaker 3: these statistics.

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Speaker 8: I think we're in a new regime for inflation. I

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Speaker 8: think we're in a new regime for bond yields. So

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Speaker 8: if the economy slows a lot which Constant Constance was

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Speaker 8: talking about right before me. If the economy slows enough,

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Speaker 8: that's going to help pull inflation down. But that's not

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Speaker 8: a situation anyone wants, right. Usually you get deflation when

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Speaker 8: you have.

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Speaker 3: A deep recession. We don't want that.

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Speaker 8: But I think for the Federal Reserve, I was trying

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Speaker 8: to look at when is the last time we got

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Speaker 8: this rate cuts with inflation above target and the job

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Speaker 8: market softening? But okay, okay, nineteen ninety five. So at

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Speaker 8: the time they did three twenty five basis point insurance cuts,

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Speaker 8: inflation was running about two point three, so lower than where.

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Speaker 3: We are now.

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Speaker 8: The job market was okay, but the economy broadly was softening,

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Speaker 8: and so they said we're going to try to massage

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Speaker 8: this a little bit, and the stock market obviously loved it.

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Speaker 8: It was up about fifteen percent over the three cut

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Speaker 8: period the SMP, and I think that's probably what we're

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Speaker 8: going to get this time. I don't know if it's

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Speaker 8: one cut, two three. I lean towards less frankly because

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Speaker 8: of the inflation risk, and I think they'll they'll do

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Speaker 8: a cut in September. It's so priced in it would

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Speaker 8: be very difficult for the FED to argue against that,

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Speaker 8: but Jackson hole later this month. I believe it's August

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Speaker 8: twenty first, twenty third. That'll give us some more color,

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Speaker 8: I think on the sidelines of where they're leaning.

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Speaker 5: Bloomberg Intelligence US rate strategist Are Jersey out with the

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Speaker 5: first take, saying, basically, the CPI print with the CPI

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Speaker 5: running at zero point two percent on the headline, suggests

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Speaker 5: that the pc print will allow the FED to ease

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Speaker 5: in September. So that's the first take from Ira Jersey here.

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Speaker 6: What do you make?

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Speaker 5: What did you make, Rebecca last week of the labor

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Speaker 5: data and then the president firing the BLS head and

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Speaker 5: all that kind of stuff, What did you make of

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Speaker 5: all that?

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Speaker 8: I mean, is there an opportunity for the government to

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Speaker 8: modernize its data collection? Absolutely? But this is not easy,

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Speaker 8: right if you think about people do analysis of data

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Speaker 8: looking back ten twenty fifty in some organizations one hundred years.

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Speaker 8: If I suddenly change how I collect the data, I

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Speaker 8: have to make sure that new methodology doesn't screw up

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Speaker 8: how I look at the old data. Right, we don't

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Speaker 8: want apples and oranges. So it's actually a very difficult

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Speaker 8: process to make these changes, and you.

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Speaker 6: Need resources to do that.

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Speaker 8: The government has cut the budget for the BLS the

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Speaker 8: Bureau of Labor Statistics, so they have fewer resources, not

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Speaker 8: more to this modernization. But I do think they would

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Speaker 8: agree that this is the direction they should go. Try

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Speaker 8: to see what tools are out there they can use

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Speaker 8: to include in this process to make sure the data

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Speaker 8: is as relevant and reflective of the economy as possible.

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Speaker 8: Firing the head of the BLS I think was performative

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Speaker 8: and really a shame. I think at the margin, it's

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Speaker 8: one more small nail in the coffin of credibility of

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Speaker 8: US institutions.

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Speaker 3: Mckey's going to be with a cerin a bit, but

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Speaker 3: let's start with you, Rebecca. My biggest problem with us.

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Speaker 3: You and I've talked about this before as we set up,

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Speaker 3: and I'm not going to blame ail in green Span.

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Speaker 3: I'm going to think it's going to come on behind

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Speaker 3: green Span. This idea that if we cut rates, once

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Speaker 3: we've established a new vector, a new trend of cutting rates,

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Speaker 3: why can't they come out, given the mess we're in,

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Speaker 3: whatever anybody's politics, and say we're going to do a

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Speaker 3: one off, twenty five beep cut. Why can't we do that.

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Speaker 8: I think that's what they'll try to condition the market

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Speaker 8: towards that we felt there was room to make this

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Speaker 8: one insurance cut, and then we're going to continue to

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Speaker 8: be data dependent and see what's needed. The job data

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Speaker 8: is really tough. I was just looking before I came

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Speaker 8: in this morning. On one hand, you have the small

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Speaker 8: business sentiment survey this morning. Small business is a huge

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Speaker 8: part of the labor market. Confidence improved in July after

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Speaker 8: the big, beautiful fiscal stimulus bill was passed, but uncertainties high.

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Speaker 8: You get Challenger in Gray showing layoffs year on year

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Speaker 8: the oh sorry, year to date, the highest since twenty twenty.

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Speaker 8: But we know a lot of layoffs are very specific

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Speaker 8: federal government technology. So you can easily paint bullish and

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Speaker 8: not bullish, but okay pictures of the labor market and bearish,

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Speaker 8: and I feel like right now, depending on where you

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Speaker 8: sit in the FED, you can select data to have

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Speaker 8: a reasonable argument for your view.

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Speaker 3: Are the separations in America? I mean, I think ludite

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Speaker 3: nineteenth century, I mean book where we are is a

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Speaker 3: nation and we're almost needing to prescribe rather two or

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Speaker 3: three FED policies. How can they do an aggregate FED policy, Paul,

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Speaker 3: to help the users of chat GBT exactly and perplexity

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Speaker 3: and people flat on their back and des moines, I

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Speaker 3: still get it.

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Speaker 8: Think about Europe, right, you have a central bank governor

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Speaker 8: from Italy who's going to have a very different view

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Speaker 8: than the central bank governor from Are we.

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Speaker 3: Different, brilliant, Are we any different on that?

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Speaker 7: No, we're not.

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Speaker 8: And that's part of the reason the FED was set

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Speaker 8: up the way it was to have a representative from

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Speaker 8: Kansas City and one from Texas and one from San Francisco,

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Speaker 8: so we represent the different economies within the US and

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Speaker 8: ideally they can debate and come up to an aggregate

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Speaker 8: view that's not perfect for any given region, but is

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Speaker 8: optimal for the economy. That's that's the goal, and that's

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Speaker 8: why they're set up that way, and honestly, I don't

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Speaker 8: know a better way to do it.

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Speaker 6: A surprised at the stock market keeps seeing all time

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Speaker 6: hunts every day.

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Speaker 8: No, it's oh concentrated in tech, and my perception is

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Speaker 8: that there is a lot of belief that in the

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Speaker 8: next whatever one to three years, we're going to break

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Speaker 8: into superintelligence and you're going to have a hockey stick

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Speaker 8: moment for those stocks, similar to what we saw after

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Speaker 8: GPT was launched two years ago, two and a half

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Speaker 8: years ago, and no one wants to miss that return.

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Speaker 8: So everyone's, as they say, holding on for dear life.

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Speaker 3: Just so you know. This surveillance on August twelfth, the

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Speaker 3: break and super intelligence. It's surveillance is have your offspring

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Speaker 3: done their summer reading list? That's what we call super intelligence.

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Speaker 3: Right now, Lisa, how are we doing over there? I mean,

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Speaker 3: there's their second book, second book out of what eight?

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Speaker 7: That's awesome.

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Speaker 8: You're there, You're there, success, check the box.

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Speaker 3: Kuse me, Rebecca. I got to switch here and apply

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Speaker 3: this economics and this inflation. The market's loving in futures.

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Speaker 3: I'm thirty three right now. Over to the oddity of

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Speaker 3: this market. You have handled really serious family high net

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Speaker 3: worth work at Bessemer just as one example, how do

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Speaker 3: you invest in this chaos? If you want to be measured,

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Speaker 3: want to be prudent, but must participate in the growth,

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Speaker 3: do you buy more? Nvidia is at the solution.

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Speaker 8: No, I wouldn't hear at these levels, but if I

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Speaker 8: owned it, I also wouldn't be rushing to disinvest I

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Speaker 8: mean my approach has been for most of this year

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Speaker 8: to have be invested in equities, have a Barbelle approach,

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Speaker 8: so the tech sector, which is a structural theme despite

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Speaker 8: the valuations, but then to protect your downside with some

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Speaker 8: defensive sectors like utilities or consumer staples. And you know,

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Speaker 8: we've been talking about this for well over a year

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Speaker 8: as part of my diversifiers, to protect my downside. I

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Speaker 8: like gold, even with the tariff removed by President Trump

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Speaker 8: earlier this week, Gold's up twenty seven percent year to date,

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Speaker 8: more last year. And I think as long as the

441
00:21:58,400 --> 00:22:01,520
Speaker 8: world is uncertain and inflation and risks are to the upside,

442
00:22:01,760 --> 00:22:03,919
Speaker 8: that's going to be an asset that can benefit you.

443
00:22:05,240 --> 00:22:08,120
Speaker 6: So evaluation here. You mentioned the concentration risk.

444
00:22:08,320 --> 00:22:12,159
Speaker 5: Yeah, we haven't seen that really since the late nineties.

445
00:22:12,200 --> 00:22:14,480
Speaker 5: Now this is a different environment from the late nineties.

446
00:22:14,480 --> 00:22:18,159
Speaker 5: These companies have real earnings, real cash flow, but still

447
00:22:18,240 --> 00:22:19,760
Speaker 5: that concentration risk.

448
00:22:19,960 --> 00:22:21,600
Speaker 6: It certainly makes me concerned.

449
00:22:21,680 --> 00:22:23,720
Speaker 8: Yeah, I agree with that, and again that's part of

450
00:22:23,760 --> 00:22:26,440
Speaker 8: the reason I want to have this Barbell strategy. When

451
00:22:26,480 --> 00:22:29,520
Speaker 8: you talk to the CEOs of these large language models,

452
00:22:29,560 --> 00:22:33,320
Speaker 8: these megacap companies, megacap tech companies.

453
00:22:33,600 --> 00:22:34,240
Speaker 2: They don't know.

454
00:22:34,560 --> 00:22:35,320
Speaker 3: They don't know.

455
00:22:35,280 --> 00:22:37,480
Speaker 8: How this story ends, and they'll admit that, and I

456
00:22:37,480 --> 00:22:40,359
Speaker 8: think they do publicly. So you're taking a risk with this.

457
00:22:40,480 --> 00:22:44,399
Speaker 8: You're counting on this inflection point moment for technology and

458
00:22:44,440 --> 00:22:47,040
Speaker 8: that over time it spreads through the economy. I think

459
00:22:47,080 --> 00:22:51,399
Speaker 8: looking for AI beneficiaries, not just the KEAI companies, is

460
00:22:51,440 --> 00:22:54,400
Speaker 8: a smart play. I think there's other thematics and they're

461
00:22:54,400 --> 00:22:57,040
Speaker 8: getting priced in, but I think they still have runway

462
00:22:57,400 --> 00:23:02,359
Speaker 8: things like infrastructure, things like global defense. Those are ways

463
00:23:02,359 --> 00:23:04,960
Speaker 8: that get an indirect play on AI, but at slightly

464
00:23:05,040 --> 00:23:08,080
Speaker 8: less crazy value. Not crazy crazy is the only word

465
00:23:08,119 --> 00:23:09,280
Speaker 8: to use high valuations.

466
00:23:09,480 --> 00:23:11,520
Speaker 3: I got to call at Kansas City Fed today and

467
00:23:11,600 --> 00:23:14,399
Speaker 3: beg for a chair at the Pioneer Grill for breakfast.

468
00:23:14,640 --> 00:23:17,720
Speaker 3: Sounds good. I think it's on Friday when I'm there.

469
00:23:17,800 --> 00:23:19,320
Speaker 3: Are you going to be a checkson a hole?

470
00:23:19,560 --> 00:23:20,320
Speaker 8: Sadly, I'm not.

471
00:23:20,440 --> 00:23:22,320
Speaker 3: I'm going to Are you not going to be there?

472
00:23:22,480 --> 00:23:24,879
Speaker 8: Because I'm also a mom and I'm going to make

473
00:23:24,920 --> 00:23:27,040
Speaker 8: sure my daughter is set up for a great school year?

474
00:23:27,400 --> 00:23:30,760
Speaker 6: There you go, fun, It is time the.

475
00:23:30,720 --> 00:23:34,040
Speaker 3: Door you do a dorm room like with the TV

476
00:23:34,200 --> 00:23:36,600
Speaker 3: in the Nine Yards. No, no, no, No, this was

477
00:23:36,640 --> 00:23:38,800
Speaker 3: a major debate a couple of nights ago. We're not

478
00:23:38,840 --> 00:23:40,280
Speaker 3: doing this. I don't judge.

479
00:23:40,320 --> 00:23:42,879
Speaker 8: If someone wants to deck out their kids dorm Lisa,

480
00:23:43,040 --> 00:23:46,160
Speaker 8: help have fun, but no, I'm more of a I'm

481
00:23:46,160 --> 00:23:47,879
Speaker 8: going to get you there, make sure you have the

482
00:23:47,920 --> 00:23:50,439
Speaker 8: basics you need. Thank you, you're a grown up. You

483
00:23:50,480 --> 00:23:51,640
Speaker 8: can do this, go for it.

484
00:23:51,760 --> 00:23:54,960
Speaker 3: Yeah, but my kids are perfectly Some of these kids

485
00:23:55,000 --> 00:23:57,119
Speaker 3: go to school today and it's like moving a house.

486
00:23:57,400 --> 00:23:59,560
Speaker 9: There's a thing as a bed party.

487
00:23:59,640 --> 00:24:01,080
Speaker 2: You have a bed party so.

488
00:24:01,000 --> 00:24:03,080
Speaker 9: That the kids come to the house and they decorate

489
00:24:03,080 --> 00:24:07,280
Speaker 9: your child's bed in all the whole you know, merchandise

490
00:24:07,320 --> 00:24:07,879
Speaker 9: of the school.

491
00:24:08,280 --> 00:24:09,040
Speaker 2: It's a thing now.

492
00:24:09,080 --> 00:24:10,960
Speaker 8: I mean, God bless America.

493
00:24:11,080 --> 00:24:11,920
Speaker 3: I guess we are.

494
00:24:12,080 --> 00:24:14,560
Speaker 8: I mean there's a reason sixty eight percent of GDP

495
00:24:14,760 --> 00:24:18,040
Speaker 8: is consumption because people can be convinced they quote unquote

496
00:24:18,040 --> 00:24:20,159
Speaker 8: need to spend on this. And again, no judgment. If

497
00:24:20,200 --> 00:24:22,240
Speaker 8: they want, if that's how they want to spend their money, fine,

498
00:24:22,280 --> 00:24:24,080
Speaker 8: as long as they can afford it, As long as

499
00:24:24,080 --> 00:24:25,600
Speaker 8: these people are financially literate.

500
00:24:25,840 --> 00:24:28,000
Speaker 3: I talked to McKeith, tough it out, tell your daughter,

501
00:24:28,119 --> 00:24:31,440
Speaker 3: kick her out the door. We'll see in JACKSONA Rebecca Patterson,

502
00:24:31,520 --> 00:24:34,920
Speaker 3: thank you so much with the counsul on Ford relations,

503
00:24:34,960 --> 00:24:42,959
Speaker 3: some important essays recently in the media. Just brilliant. There.

504
00:24:45,040 --> 00:24:48,640
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live

505
00:24:48,720 --> 00:24:51,879
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

506
00:24:51,960 --> 00:24:55,600
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

507
00:24:55,760 --> 00:24:57,280
Speaker 1: watch US Live on YouTube.

508
00:24:57,560 --> 00:25:01,320
Speaker 3: Joining us now for Bloomberg Intelligence and fixing Irid Jersey

509
00:25:01,359 --> 00:25:03,960
Speaker 3: as well. Ira. As you set up to write to

510
00:25:04,000 --> 00:25:06,840
Speaker 3: the end of the week, are you looking at bills, notes,

511
00:25:07,040 --> 00:25:09,800
Speaker 3: bonds or are you looking even more short term than that?

512
00:25:11,359 --> 00:25:13,840
Speaker 10: Well, actually medium term, but we're looking at we're looking

513
00:25:13,880 --> 00:25:16,159
Speaker 10: at real yields and what tips are doing and what

514
00:25:16,200 --> 00:25:20,400
Speaker 10: they're suggesting for inflation going forward, because obviously the market

515
00:25:20,600 --> 00:25:23,119
Speaker 10: and how it prices for inflation going forward is going

516
00:25:23,200 --> 00:25:25,480
Speaker 10: to be one of the determinants that the Federal Reserve

517
00:25:25,600 --> 00:25:28,800
Speaker 10: is going to use for determining whether or not, right

518
00:25:28,840 --> 00:25:33,119
Speaker 10: it's close enough to its target of two percent to

519
00:25:33,720 --> 00:25:36,160
Speaker 10: cut rates maybe as early as September.

520
00:25:36,440 --> 00:25:38,560
Speaker 3: Okay, but I'm seeing in a real yield, Am I right?

521
00:25:38,640 --> 00:25:41,720
Speaker 3: The real yield as a general statements within range has

522
00:25:41,760 --> 00:25:43,120
Speaker 3: it broken out up or down?

523
00:25:44,119 --> 00:25:46,480
Speaker 10: Yeah, it's been in this range for the better part

524
00:25:46,520 --> 00:25:50,080
Speaker 10: of this year. You know, call it on the tenure

525
00:25:50,080 --> 00:25:52,880
Speaker 10: about one and a half percent to two percent, and

526
00:25:53,160 --> 00:25:55,080
Speaker 10: you know we're towards the top of that right now.

527
00:25:55,280 --> 00:25:58,439
Speaker 10: And I suspect that over time as the Federal Reserve

528
00:25:58,560 --> 00:26:01,480
Speaker 10: cuts interest rates. Whether or not that's warranted is one thing,

529
00:26:02,119 --> 00:26:05,440
Speaker 10: but you will see probably really yields move a little

530
00:26:05,480 --> 00:26:09,080
Speaker 10: bit lower, but it will be move lower in a

531
00:26:09,400 --> 00:26:11,400
Speaker 10: what we call a bull steepening. So you'll see short

532
00:26:11,480 --> 00:26:14,240
Speaker 10: term like five year and two year tips yields probably

533
00:26:14,320 --> 00:26:18,080
Speaker 10: fall much more quickly than ten yure yields because the

534
00:26:18,320 --> 00:26:23,240
Speaker 10: longer term real yields are affected not only by monetary policy,

535
00:26:23,240 --> 00:26:27,239
Speaker 10: but also by expectations of supply. Right, what is the

536
00:26:27,240 --> 00:26:29,560
Speaker 10: deficit going to be at? And you know, so far

537
00:26:29,680 --> 00:26:32,600
Speaker 10: we haven't seriously addressed deficits, and we're still going to

538
00:26:32,640 --> 00:26:35,240
Speaker 10: have two trillion dollars more of treasuries a year from

539
00:26:35,280 --> 00:26:37,960
Speaker 10: now than we have today, and that's going to continue

540
00:26:38,040 --> 00:26:40,480
Speaker 10: to prop up long term real yields.

541
00:26:40,920 --> 00:26:43,240
Speaker 5: Neil dudd It just out with a note from Renaissance Macro.

542
00:26:43,359 --> 00:26:46,240
Speaker 5: He says, you know, for the Fed July CPI data

543
00:26:46,280 --> 00:26:50,240
Speaker 5: lately cements a September rate cut. You think that's how

544
00:26:50,240 --> 00:26:51,600
Speaker 5: the market's interpreting IRA.

545
00:26:52,840 --> 00:26:55,720
Speaker 10: Yeah, so the market's almost fully priced for a September

546
00:26:55,800 --> 00:26:58,240
Speaker 10: rate cut. What's interesting is that we're priced now for

547
00:26:58,320 --> 00:27:00,720
Speaker 10: a September rate cut and a December rate cut. My

548
00:27:00,840 --> 00:27:02,960
Speaker 10: feeling is is that once the Fed starts to move,

549
00:27:03,000 --> 00:27:05,879
Speaker 10: they're going to move and keep going. They're not going

550
00:27:05,920 --> 00:27:08,520
Speaker 10: to skip a meeting just at random. So I think

551
00:27:08,520 --> 00:27:11,399
Speaker 10: that if they do cut in September, they'll also go

552
00:27:11,440 --> 00:27:14,320
Speaker 10: in October and then December. Now will they go more

553
00:27:14,359 --> 00:27:17,840
Speaker 10: than say, another you know, four cuts and cut one

554
00:27:17,880 --> 00:27:19,760
Speaker 10: hundred basis points or will they cut more than that?

555
00:27:20,160 --> 00:27:22,960
Speaker 10: Still an open question. I suspect that ultimately they will

556
00:27:22,960 --> 00:27:25,879
Speaker 10: cut to below three percent. So you're talking about one

557
00:27:25,920 --> 00:27:27,959
Speaker 10: hundred and fifty basis points one hundred and seventy five

558
00:27:28,000 --> 00:27:32,119
Speaker 10: basis points of rate cuts this cycle. Well, keep in mind, Tom,

559
00:27:32,160 --> 00:27:34,120
Speaker 10: like you know, the way that they're thinking about this. Look,

560
00:27:34,240 --> 00:27:37,120
Speaker 10: inflation right now is two and a half percent. FED

561
00:27:37,160 --> 00:27:39,439
Speaker 10: funds is over four percent, So that means you have

562
00:27:39,880 --> 00:27:42,440
Speaker 10: a one and a half percent or more than one

563
00:27:42,440 --> 00:27:45,840
Speaker 10: and a half percent a real funds rate so to

564
00:27:45,880 --> 00:27:49,919
Speaker 10: get the neutral under be kind of there a simplistic

565
00:27:50,000 --> 00:27:52,359
Speaker 10: view of the world, they should could be able to

566
00:27:52,400 --> 00:27:54,760
Speaker 10: cut one hundred and seventy five base points and just

567
00:27:54,840 --> 00:27:58,359
Speaker 10: be at neutral as opposed to being at.

568
00:27:57,840 --> 00:28:03,280
Speaker 3: Then why why well cut? Yeah?

569
00:28:03,320 --> 00:28:06,080
Speaker 10: I think they haven't cut because they are worried about inflation, right,

570
00:28:06,119 --> 00:28:10,080
Speaker 10: They're worried about another another spike of inflation, and seeing

571
00:28:11,280 --> 00:28:13,880
Speaker 10: with with all the tariffs and the like, they are

572
00:28:13,880 --> 00:28:16,960
Speaker 10: concerned about about that. And also until recently, remember the

573
00:28:17,040 --> 00:28:20,000
Speaker 10: job market seemed to be holding up reasonably well and

574
00:28:20,080 --> 00:28:22,760
Speaker 10: even the wages continue to grow close to four percent.

575
00:28:23,119 --> 00:28:26,919
Speaker 10: When you have when you have job growth that is

576
00:28:26,960 --> 00:28:31,120
Speaker 10: barely at the replacement rate, there is a concern that

577
00:28:31,160 --> 00:28:34,119
Speaker 10: the job market might be the catalyst during this cycle

578
00:28:34,560 --> 00:28:37,879
Speaker 10: to actually slow the economy a lot more. And the

579
00:28:37,960 --> 00:28:39,720
Speaker 10: you know, the Federal Reserve does have a dual mandate.

580
00:28:39,760 --> 00:28:43,160
Speaker 10: And if we get another really weak data print for

581
00:28:43,400 --> 00:28:46,360
Speaker 10: the job market in September, you know, that opens up

582
00:28:46,360 --> 00:28:49,840
Speaker 10: the side open for the market to price in a

583
00:28:49,880 --> 00:28:50,520
Speaker 10: lot more cuts.

584
00:28:50,560 --> 00:28:52,720
Speaker 3: And that's where I'm looking at the labor economy more

585
00:28:52,760 --> 00:28:56,960
Speaker 3: than the inflation focus is the focus to your Avery Jersey,

586
00:28:57,000 --> 00:28:59,720
Speaker 3: thank you so much. With Bloomberg Intelligence.

587
00:29:00,160 --> 00:29:04,040
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

588
00:29:04,080 --> 00:29:07,400
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

589
00:29:07,520 --> 00:29:10,480
Speaker 1: with the Bloomberg Business app. You can also listen live

590
00:29:10,560 --> 00:29:14,160
Speaker 1: on Amazon Alexa from our flagship New York station. Just

591
00:29:14,200 --> 00:29:16,720
Speaker 1: say Alexa play Bloomberg eleven thirty.

592
00:29:17,000 --> 00:29:19,840
Speaker 3: This conversation is so timely, so important. We're going to

593
00:29:19,840 --> 00:29:22,920
Speaker 3: place it before CPI right now. As you know, the

594
00:29:22,960 --> 00:29:26,760
Speaker 3: President and mister Putin will meet in Alaska. Site unknown

595
00:29:26,800 --> 00:29:30,560
Speaker 3: and Marie Horden are reporting on that each and every day,

596
00:29:30,840 --> 00:29:35,280
Speaker 3: and Ukraine is on the periphery. Kira Rudik is of

597
00:29:35,320 --> 00:29:40,320
Speaker 3: the Ukraine Parliament, serving as a People's Deputy of Ukraine

598
00:29:40,360 --> 00:29:42,480
Speaker 3: and from the Holos party, and we're thrilled she could

599
00:29:42,480 --> 00:29:46,880
Speaker 3: brief us this morning. Kira, all of Ukraine must be

600
00:29:47,080 --> 00:29:52,400
Speaker 3: riveted on this debate. What is Ukraine's best outcome for

601
00:29:52,560 --> 00:29:53,600
Speaker 3: this Friday meeting?

602
00:29:55,120 --> 00:29:57,440
Speaker 11: Hello, and thank you so much for having me. Well,

603
00:29:57,480 --> 00:30:00,800
Speaker 11: the best outcome would be that President Trump wouldn't take

604
00:30:01,200 --> 00:30:07,480
Speaker 11: yet another public humidiation from Russian President put In, and

605
00:30:07,800 --> 00:30:11,080
Speaker 11: that he will get finally annoyed and will impose sanctions

606
00:30:11,080 --> 00:30:14,440
Speaker 11: that he has promised and tariffs on everybody who is

607
00:30:14,480 --> 00:30:17,840
Speaker 11: buying something from Russia and will go ahead on continuing

608
00:30:17,880 --> 00:30:22,160
Speaker 11: pressuring Russia. The best outcome would be for President Trump

609
00:30:22,160 --> 00:30:25,360
Speaker 11: to realize yet again that it's not Ukraine that is

610
00:30:25,400 --> 00:30:31,880
Speaker 11: on the way of the peace coming. And well, you

611
00:30:32,520 --> 00:30:35,360
Speaker 11: to judge if it's realistic, but this will be the

612
00:30:35,400 --> 00:30:36,959
Speaker 11: best outcome that we can hope for.

613
00:30:37,200 --> 00:30:40,800
Speaker 3: Should Ukraine give up territory, acreage land?

614
00:30:42,840 --> 00:30:46,240
Speaker 11: The main question here, because you know everybody's asking should

615
00:30:46,320 --> 00:30:50,360
Speaker 11: Ukraine give up territories? The main question is for what?

616
00:30:51,040 --> 00:30:54,760
Speaker 11: And the second question is who or what will make

617
00:30:54,800 --> 00:30:57,960
Speaker 11: sure that in this case Russia would not attack us again,

618
00:30:58,320 --> 00:31:02,720
Speaker 11: Because asking Ukraine about territories is a simple question, Asking

619
00:31:02,880 --> 00:31:05,240
Speaker 11: who will make sure that Trashia will keep the part

620
00:31:05,240 --> 00:31:08,720
Speaker 11: of the bargain, whatever that bargain is, is a complicated question.

621
00:31:08,840 --> 00:31:12,840
Speaker 11: And we didn't hear any single world leader trying to

622
00:31:12,840 --> 00:31:16,000
Speaker 11: figure out that or at least hint him of how

623
00:31:16,040 --> 00:31:18,760
Speaker 11: it will work. Because we have been in so called

624
00:31:19,160 --> 00:31:23,600
Speaker 11: ceasefires with Russia since twenty thirteen dozens of times and

625
00:31:23,680 --> 00:31:26,280
Speaker 11: it never worked and there was nobody to complain to,

626
00:31:26,720 --> 00:31:29,840
Speaker 11: So how this time will be different? President Trump was

627
00:31:29,880 --> 00:31:32,840
Speaker 11: talking about swapping of the territories. How do you make

628
00:31:32,880 --> 00:31:37,240
Speaker 11: sure if even if we talk about swapping territories the

629
00:31:37,320 --> 00:31:40,000
Speaker 11: Trausia wouldn't take them back in like one or two.

630
00:31:40,000 --> 00:31:45,760
Speaker 5: Years, Kira, For those in your country that advocate for peace,

631
00:31:46,680 --> 00:31:49,800
Speaker 5: what is that kind of based upon? What would be

632
00:31:49,840 --> 00:31:55,720
Speaker 5: an acceptable reasonable peace negotiation form? Do you think.

633
00:31:56,840 --> 00:31:59,680
Speaker 11: Again, like when we are talking about peace, of course

634
00:32:00,280 --> 00:32:02,960
Speaker 11: people here on the ground they want peace, and we

635
00:32:03,000 --> 00:32:04,320
Speaker 11: are all exhausted.

636
00:32:03,880 --> 00:32:04,320
Speaker 7: Of the war.

637
00:32:04,680 --> 00:32:08,760
Speaker 11: But we also know again that whatever you agree with Russia,

638
00:32:08,880 --> 00:32:12,280
Speaker 11: it's very hard, almost impossible to make them stick to it.

639
00:32:12,760 --> 00:32:19,000
Speaker 11: So whatever talks are about heritories, about any agreements, the

640
00:32:19,080 --> 00:32:22,720
Speaker 11: first thing is how do you President Trump or European

641
00:32:22,800 --> 00:32:25,960
Speaker 11: leaders or whoever, how do you pressure Russia to keep

642
00:32:26,000 --> 00:32:29,760
Speaker 11: the part of the bargain. And before that, anything else

643
00:32:29,880 --> 00:32:33,760
Speaker 11: is useless to discuss because if the security guarantees are

644
00:32:33,800 --> 00:32:36,840
Speaker 11: not there, Russia will just use this time to group

645
00:32:37,120 --> 00:32:39,560
Speaker 11: and they will attack us again in a couple of years.

646
00:32:39,600 --> 00:32:44,080
Speaker 11: This is what happened again and again to us.

647
00:32:42,800 --> 00:32:47,000
Speaker 3: This unique situation. And if we assume mister Zelenski is

648
00:32:47,040 --> 00:32:51,400
Speaker 3: on the outside, what do you need from Europe? Are

649
00:32:51,440 --> 00:32:55,920
Speaker 3: you looking the individual nations, Heiro rudic Or you're looking

650
00:32:56,040 --> 00:32:59,280
Speaker 3: to Brussels of a modern European Union.

651
00:33:01,560 --> 00:33:04,200
Speaker 11: What worked for us in the past is working with

652
00:33:04,560 --> 00:33:10,840
Speaker 11: the individual nations. So we didn't get like certain amount

653
00:33:10,840 --> 00:33:14,240
Speaker 11: of weapons from NATO as it is, but from countries

654
00:33:14,280 --> 00:33:19,240
Speaker 11: like Britain, like Denmark, like Norway, like Germany, France. So

655
00:33:19,400 --> 00:33:21,440
Speaker 11: it works the best when we are working with the

656
00:33:21,480 --> 00:33:26,480
Speaker 11: individual nations. And the overall truth is we want everyone

657
00:33:26,920 --> 00:33:29,520
Speaker 11: just to execute on the promises that they have already made.

658
00:33:30,000 --> 00:33:32,320
Speaker 11: If that was done, we will already be in the

659
00:33:32,360 --> 00:33:37,040
Speaker 11: better positions. Unfortunately, times go differently in Ukraine when you

660
00:33:37,080 --> 00:33:40,520
Speaker 11: are under the bombardment and in peaceful cities of Europe

661
00:33:41,200 --> 00:33:44,160
Speaker 11: that are able to stay peaceful while we are stopping

662
00:33:44,200 --> 00:33:47,240
Speaker 11: Russia from whatever wherever they want to go next. And

663
00:33:47,360 --> 00:33:51,440
Speaker 11: so sometimes between the political promise and the moment when

664
00:33:51,560 --> 00:33:54,600
Speaker 11: Ukrainian soldiers getting weapons in his or her hands, it

665
00:33:54,600 --> 00:33:56,840
Speaker 11: could be years and this is not something that we

666
00:33:56,880 --> 00:33:57,400
Speaker 11: can afford.

667
00:33:57,480 --> 00:34:00,440
Speaker 3: Right now, when you're in New York again, we would

668
00:34:00,480 --> 00:34:02,680
Speaker 3: be honored to have you in. Kier Rudik is a

669
00:34:02,720 --> 00:34:06,560
Speaker 3: member of Parliament for the Ukraine for Ukrainian Government. I

670
00:34:06,560 --> 00:34:10,239
Speaker 3: should say she's the People's Deputy of Ukraine, leader of

671
00:34:10,320 --> 00:34:14,759
Speaker 3: the holiest Party.

672
00:34:17,239 --> 00:34:21,160
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

673
00:34:21,160 --> 00:34:24,200
Speaker 1: starting at seven am Eastern on Apple, Corplay and Android

674
00:34:24,200 --> 00:34:27,200
Speaker 1: Otto with the Bloomberg Business app. You can also watch

675
00:34:27,280 --> 00:34:30,239
Speaker 1: us live every weekday on YouTube and always on the

676
00:34:30,280 --> 00:34:31,280
Speaker 1: Bloomberg Terminal.

677
00:34:31,360 --> 00:34:34,200
Speaker 3: Juvensteinis and the rest of the elite of the United

678
00:34:34,280 --> 00:34:36,920
Speaker 3: Kingdom have lived it. I'm going to say two years

679
00:34:36,960 --> 00:34:41,400
Speaker 3: ago they had a modest pension issue where they basically

680
00:34:41,440 --> 00:34:46,120
Speaker 3: had a marketing concept around pensions, which blew up. I mean,

681
00:34:46,280 --> 00:34:49,160
Speaker 3: just let's cut. Let's just leave it at that because

682
00:34:49,160 --> 00:34:53,120
Speaker 3: of time. He Peu von steinas with Oliver Wyman, just

683
00:34:53,160 --> 00:34:56,240
Speaker 3: wrote an essay. You know, Tracy Eloway and Joe Wis

684
00:34:57,680 --> 00:35:00,120
Speaker 3: them roars. He wrote it. You know he's the kill

685
00:35:00,880 --> 00:35:04,200
Speaker 3: and you wrote an essay for ad lites. The next

686
00:35:04,200 --> 00:35:07,759
Speaker 3: big thing in private credit? Come on, Hewett. Reminds me

687
00:35:07,800 --> 00:35:11,280
Speaker 3: of what you people lived in the Liz Trust. Blow

688
00:35:11,360 --> 00:35:16,560
Speaker 3: up your pension system? Do we really want bitcoin or directly,

689
00:35:16,600 --> 00:35:19,600
Speaker 3: do we want private credit in our four or one k?

690
00:35:20,320 --> 00:35:20,480
Speaker 2: Well?

691
00:35:20,480 --> 00:35:22,160
Speaker 12: Thanks for having me back on, Tom Well. The first

692
00:35:22,239 --> 00:35:25,560
Speaker 12: lesson I learned is never to I don't own the title,

693
00:35:25,719 --> 00:35:28,919
Speaker 12: the headline and the rock stars to use the title. Look,

694
00:35:29,000 --> 00:35:32,000
Speaker 12: I think that if you look at a retirement savings

695
00:35:32,000 --> 00:35:34,400
Speaker 12: around the world. You know, in the States a defined

696
00:35:34,400 --> 00:35:37,280
Speaker 12: benefit scheme has about twenty three percent in real estate

697
00:35:37,360 --> 00:35:41,160
Speaker 12: fixing come private equity Australia twenty to thirty points. But

698
00:35:41,200 --> 00:35:44,120
Speaker 12: for US retirees it's close to zero. It's actually about

699
00:35:44,120 --> 00:35:48,280
Speaker 12: two percent. And so I think giving investors more opportunities

700
00:35:48,280 --> 00:35:52,439
Speaker 12: to save and also manage their retirement is responsible. How

701
00:35:52,440 --> 00:35:54,640
Speaker 12: it's done. You know, there's a lot of innovation which

702
00:35:54,680 --> 00:35:56,600
Speaker 12: needs to be done. But literally give you one statistic.

703
00:35:56,760 --> 00:35:59,240
Speaker 12: About three and a half trillion are in target date funds.

704
00:36:00,120 --> 00:36:02,400
Speaker 12: Sixty eight percent of all inflows go into target light funds.

705
00:36:02,480 --> 00:36:04,840
Speaker 12: Do you know how many people switch every year? Just

706
00:36:04,960 --> 00:36:08,279
Speaker 12: one percent? It means it's the stickiest investment product on

707
00:36:08,280 --> 00:36:10,840
Speaker 12: the planet. And therefore, to say you have to invest

708
00:36:11,040 --> 00:36:14,400
Speaker 12: all of that in daily liquidity funds feels too tight. Okay,

709
00:36:14,480 --> 00:36:15,320
Speaker 12: what's the right amount?

710
00:36:15,360 --> 00:36:15,920
Speaker 7: That's a debate.

711
00:36:16,000 --> 00:36:18,280
Speaker 3: Let me get the line up here. Are you telling

712
00:36:18,360 --> 00:36:21,480
Speaker 3: me that Lisa Mateo in or two or John Tucker

713
00:36:21,520 --> 00:36:24,719
Speaker 3: in his two oh one K John Tucker goes into

714
00:36:24,760 --> 00:36:28,239
Speaker 3: private credit, he's going to get the quality the three

715
00:36:28,360 --> 00:36:30,919
Speaker 3: phone calls from Blackstone's going to get. I just don't

716
00:36:30,920 --> 00:36:33,080
Speaker 3: buy it. I mean, how do we know that we're

717
00:36:33,080 --> 00:36:36,760
Speaker 3: going to have quality private credit in a reserve vehicle.

718
00:36:37,239 --> 00:36:38,960
Speaker 12: Look, I think it's a great question. So I think

719
00:36:38,960 --> 00:36:40,320
Speaker 12: you've got a couple of layers to this. So the

720
00:36:40,400 --> 00:36:43,200
Speaker 12: first is there's a whole bunch of fiduciaries who run

721
00:36:43,239 --> 00:36:47,160
Speaker 12: these systems. So there's investment consultants, there's planned sponsors. And

722
00:36:47,200 --> 00:36:50,520
Speaker 12: I think also these assets are not going to just

723
00:36:50,560 --> 00:36:53,800
Speaker 12: be thrown into a portfolio. They're going to be probably

724
00:36:53,800 --> 00:36:57,320
Speaker 12: in an evergreen fund, so in a thoughtfully managed, professionally

725
00:36:57,320 --> 00:37:00,759
Speaker 12: managed building block. So I think point one is there's

726
00:37:00,760 --> 00:37:02,840
Speaker 12: at least three layers of fiduciaries which are going to

727
00:37:02,880 --> 00:37:05,759
Speaker 12: be overseeing this. I think two is then thinking about

728
00:37:05,840 --> 00:37:08,680
Speaker 12: what is the right risk return. And obviously some large

729
00:37:08,680 --> 00:37:11,759
Speaker 12: institutional investors can take much more risk because they've got

730
00:37:11,760 --> 00:37:14,719
Speaker 12: pots of money and long duration. I think obviously here

731
00:37:14,760 --> 00:37:17,160
Speaker 12: it's going to be building blocks. But I think in

732
00:37:17,200 --> 00:37:19,719
Speaker 12: an environment where more and more loans are being done

733
00:37:19,800 --> 00:37:22,839
Speaker 12: outside of the banking system, I think it's fair enough

734
00:37:22,880 --> 00:37:25,200
Speaker 12: that that investors can invest in more credit, And I

735
00:37:25,200 --> 00:37:27,680
Speaker 12: think the key point, which we've discussed before, is the

736
00:37:27,760 --> 00:37:30,560
Speaker 12: difference between a five year public bond and a five

737
00:37:30,600 --> 00:37:33,200
Speaker 12: year private credit. It's a grey scale now, both are

738
00:37:33,280 --> 00:37:35,879
Speaker 12: quite a liquid, both have got characteristics. So I think

739
00:37:35,920 --> 00:37:38,560
Speaker 12: it's no longer black and white in this market.

740
00:37:38,719 --> 00:37:43,720
Speaker 5: We haven't seen private credit experience a significant prolonged economic downturn,

741
00:37:43,800 --> 00:37:45,520
Speaker 5: have we. We don't know how it's going to perform

742
00:37:45,600 --> 00:37:49,959
Speaker 5: in a capitalic constrained environment. What's the what's the thinking there?

743
00:37:50,480 --> 00:37:51,920
Speaker 7: Look, it's a great question.

744
00:37:52,080 --> 00:37:54,160
Speaker 12: So I mean, one way I think about it is

745
00:37:54,160 --> 00:37:56,720
Speaker 12: that as the as the universe of what's in private

746
00:37:56,719 --> 00:37:59,279
Speaker 12: credit spans, it's going to drift towards what we've learned

747
00:37:59,280 --> 00:38:00,920
Speaker 12: from the banks of the lot twenty or thirty years,

748
00:38:00,920 --> 00:38:03,759
Speaker 12: because effectively these are bank loans which are being put

749
00:38:03,760 --> 00:38:06,759
Speaker 12: into private structures. There was a FED study about two

750
00:38:06,840 --> 00:38:09,160
Speaker 12: years ago, so it's a bit dated now, which showed

751
00:38:09,160 --> 00:38:13,400
Speaker 12: that the loss the probability of default was about a

752
00:38:13,440 --> 00:38:15,880
Speaker 12: third lower for the private credit loans at that stage.

753
00:38:16,080 --> 00:38:18,399
Speaker 12: Probably bit of cherry picking, but then the loss given

754
00:38:18,400 --> 00:38:20,480
Speaker 12: default so when it goes wrong, what you reclaim was

755
00:38:20,520 --> 00:38:23,600
Speaker 12: a bit worse, but net net, so far it's been

756
00:38:24,120 --> 00:38:24,879
Speaker 12: it has been better.

757
00:38:24,880 --> 00:38:25,399
Speaker 7: But you're right.

758
00:38:25,760 --> 00:38:27,960
Speaker 12: As the industry scales, there'll be good decisions and bad

759
00:38:28,000 --> 00:38:30,360
Speaker 12: decisions and so naturally returns will.

760
00:38:30,080 --> 00:38:31,799
Speaker 3: Probably cold down the market.

761
00:38:32,840 --> 00:38:35,719
Speaker 12: Look, this is this is one of the ask this

762
00:38:35,760 --> 00:38:38,040
Speaker 12: is one of the really critical questions. So the moment

763
00:38:38,080 --> 00:38:42,000
Speaker 12: they're marked probably every quarter, every quarter, every quarter, Oh,

764
00:38:42,000 --> 00:38:44,080
Speaker 12: come on, and that's note. So what we argue in

765
00:38:44,080 --> 00:38:47,320
Speaker 12: that piece for the rock stars was that the pricing

766
00:38:47,400 --> 00:38:50,520
Speaker 12: conventions will need to evolve so they're done at least

767
00:38:50,560 --> 00:38:52,000
Speaker 12: on a monthly basis.

768
00:38:52,120 --> 00:38:54,200
Speaker 3: Say, is this a new thing or Colm Tracy and

769
00:38:54,280 --> 00:38:56,759
Speaker 3: Joe rock stars? Yeah, is that like a new thing?

770
00:38:57,320 --> 00:39:02,160
Speaker 3: That's a mandate? Okay, continue the rock starts so every

771
00:39:02,320 --> 00:39:03,640
Speaker 3: ninety days in no way.

772
00:39:04,480 --> 00:39:05,240
Speaker 7: So that's why.

773
00:39:05,360 --> 00:39:09,040
Speaker 12: But this so as you move from money being managed

774
00:39:09,080 --> 00:39:13,120
Speaker 12: for institutional investors and coming into wealth, there's a number

775
00:39:13,120 --> 00:39:15,600
Speaker 12: of things which will have to change, and obviously around

776
00:39:15,600 --> 00:39:18,799
Speaker 12: that ecosystem for a better word, you know, pricing will

777
00:39:18,880 --> 00:39:21,920
Speaker 12: change the structures. You know, there's a lot of work

778
00:39:21,920 --> 00:39:23,320
Speaker 12: which is being done and people.

779
00:39:23,080 --> 00:39:24,839
Speaker 3: Are going to have a limitation and how much they

780
00:39:24,840 --> 00:39:27,440
Speaker 3: can have in private creditor for that matter been done.

781
00:39:28,480 --> 00:39:30,520
Speaker 12: So if we think about in the retirement system. Look,

782
00:39:30,560 --> 00:39:32,840
Speaker 12: we've only just had the executive order last week, so

783
00:39:32,840 --> 00:39:34,719
Speaker 12: there's a lot of work still to be done. But

784
00:39:34,719 --> 00:39:38,640
Speaker 12: it's like rewirement, right, So going back to it, there's

785
00:39:38,640 --> 00:39:41,600
Speaker 12: at least three layers of fiduciaries. I think the fiduciaries

786
00:39:41,640 --> 00:39:44,719
Speaker 12: will have you know, will want to pilot, they want

787
00:39:44,760 --> 00:39:46,600
Speaker 12: to experiment, they want to go slowly. Give you an

788
00:39:46,600 --> 00:39:50,000
Speaker 12: example in the Australian system. Let's take the Australian super Fund.

789
00:39:50,000 --> 00:39:52,080
Speaker 12: It's the biggest funds in Australia. They have twenty three

790
00:39:52,120 --> 00:39:56,480
Speaker 12: points in private assets. They really two percent in private

791
00:39:56,520 --> 00:39:59,719
Speaker 12: credit because they're trying to listen, learn and ex experiment.

792
00:39:59,800 --> 00:40:02,240
Speaker 12: So this is not a this is not a torrent.

793
00:40:02,360 --> 00:40:03,719
Speaker 12: This is going to be something which will take a

794
00:40:03,719 --> 00:40:04,080
Speaker 12: good sh.

795
00:40:04,239 --> 00:40:08,480
Speaker 3: Australia has twenty three plus two twenty five basis points

796
00:40:08,640 --> 00:40:10,520
Speaker 3: in alternative.

797
00:40:09,840 --> 00:40:12,799
Speaker 12: Twenty three twenty three points not basis points points, So

798
00:40:12,920 --> 00:40:16,440
Speaker 12: twenty three percent of the Australian super Fund which.

799
00:40:16,280 --> 00:40:17,920
Speaker 3: Is alternative investments.

800
00:40:18,000 --> 00:40:20,360
Speaker 7: Yeah, now that's across really stay of equity.

801
00:40:20,360 --> 00:40:23,719
Speaker 5: In the Veronicas, Tom, you know the Veronicas, we do

802
00:40:23,760 --> 00:40:26,560
Speaker 5: a lot of work with registered investment advisors here at

803
00:40:26,560 --> 00:40:28,600
Speaker 5: Bloomberg and Alex Steel and I did a bunch of

804
00:40:29,040 --> 00:40:33,360
Speaker 5: remotes with them, and I was shocked at the amount

805
00:40:33,560 --> 00:40:38,000
Speaker 5: that an average registered investment advisor, a retail advisor in

806
00:40:38,080 --> 00:40:42,120
Speaker 5: any town USA has an allocation to private alternatives.

807
00:40:42,160 --> 00:40:42,879
Speaker 7: I thought it would have been.

808
00:40:42,840 --> 00:40:46,440
Speaker 5: Five percent, six percent. No, it's twenty twenty five percent.

809
00:40:47,160 --> 00:40:49,319
Speaker 5: That's just amazing. But I'm guessing not a lot of

810
00:40:49,320 --> 00:40:50,640
Speaker 5: that is in private credit.

811
00:40:51,040 --> 00:40:53,000
Speaker 7: At the moment. It'd be not that much.

812
00:40:53,200 --> 00:40:55,560
Speaker 12: Although actually, you know interesting if you look at these

813
00:40:55,600 --> 00:40:58,919
Speaker 12: sort of private credit funds for wealthy that's called called

814
00:40:58,920 --> 00:41:02,400
Speaker 12: evergreen funds, they're not only for a wealthy of they

815
00:41:02,440 --> 00:41:05,320
Speaker 12: can be for institutions YEA. To date, they're growing about

816
00:41:05,360 --> 00:41:08,680
Speaker 12: sixty percent compound probably makes it the fastest growing part

817
00:41:08,719 --> 00:41:11,160
Speaker 12: of the investment ecosystem. So it's growing, it's growing.

818
00:41:12,000 --> 00:41:15,000
Speaker 3: Keevan Steina's with this area are commercial free until nine am.

819
00:41:15,080 --> 00:41:17,759
Speaker 3: We welcome all of you across at the nation. Good

820
00:41:17,760 --> 00:41:21,400
Speaker 3: morning across the United Kingdom as well. Mister van Stinez

821
00:41:21,480 --> 00:41:26,040
Speaker 3: is with Oliver Wyman, run YouTube. Subscribe to Bloomberg Podcasts

822
00:41:26,080 --> 00:41:30,279
Speaker 3: a live Chad effervescent this morning to say at least read,

823
00:41:30,280 --> 00:41:34,320
Speaker 3: agree to the screen extremely quiet tape here nineteen minutes

824
00:41:34,360 --> 00:41:36,440
Speaker 3: away from the CPI.

825
00:41:36,640 --> 00:41:39,399
Speaker 7: Paul with you please, I mean, I'm shocked, Hugh.

826
00:41:39,440 --> 00:41:42,120
Speaker 5: I want to what your view is. Why are the

827
00:41:42,200 --> 00:41:46,280
Speaker 5: banks allowing this business to go away? From the private

828
00:41:46,280 --> 00:41:48,720
Speaker 5: credit business. I started my career at the Chase Manhattan

829
00:41:48,719 --> 00:41:53,440
Speaker 5: bank leverage lending to the media sector. You know, we

830
00:41:53,680 --> 00:41:56,000
Speaker 5: make money upfront, and we did the deal we did

831
00:41:56,080 --> 00:41:58,920
Speaker 5: lve Woark plus three, we sold off. We syndicated all

832
00:41:58,960 --> 00:42:01,399
Speaker 5: of our risk off the balance the solid to banks

833
00:42:01,440 --> 00:42:03,680
Speaker 5: all around the country so we had no balance sheet risk,

834
00:42:03,920 --> 00:42:05,200
Speaker 5: and then the next day we turn around to do

835
00:42:05,239 --> 00:42:08,319
Speaker 5: it all again. That was a great business. We made

836
00:42:08,320 --> 00:42:10,880
Speaker 5: a fortunes. Why am I letting that business go to

837
00:42:10,960 --> 00:42:12,160
Speaker 5: some of these private credit guys?

838
00:42:12,360 --> 00:42:13,640
Speaker 7: Look, Paul, I think it's a great question.

839
00:42:13,680 --> 00:42:15,600
Speaker 12: I think actually the wins are slightly changing on this,

840
00:42:15,760 --> 00:42:18,799
Speaker 12: partly with the deregulation but stronger banks. But let's face it,

841
00:42:19,120 --> 00:42:22,520
Speaker 12: post the Financial crisis, there was a whole reregulation of banks,

842
00:42:22,960 --> 00:42:26,120
Speaker 12: particularly in twenty twelve the FED told the US banks

843
00:42:26,120 --> 00:42:28,319
Speaker 12: not to own as many leverage loans, and then from

844
00:42:28,320 --> 00:42:31,760
Speaker 12: that there was a decade into the pandemic where private

845
00:42:31,800 --> 00:42:34,680
Speaker 12: credit grew a trillion dollar parallel system in the US,

846
00:42:35,320 --> 00:42:37,240
Speaker 12: and now as we come to today, then we obviously

847
00:42:37,239 --> 00:42:39,399
Speaker 12: twenty three you know, with the interest rate shot banks

848
00:42:39,400 --> 00:42:43,040
Speaker 12: from the back foot, they also were cautious. Today the

849
00:42:43,120 --> 00:42:45,359
Speaker 12: leading banks are now much back on the front foot.

850
00:42:45,440 --> 00:42:48,560
Speaker 12: And if you look at the leverage lending space, many

851
00:42:48,560 --> 00:42:51,480
Speaker 12: of the banks have tried to refinance the private credit

852
00:42:51,480 --> 00:42:53,640
Speaker 12: loans and lift them to try and argue them back.

853
00:42:54,000 --> 00:42:56,399
Speaker 12: But you know, there's also some structural areas where many

854
00:42:56,400 --> 00:42:59,040
Speaker 12: of the private credit firms, being entrepreneurial, are now looking

855
00:42:59,040 --> 00:43:03,240
Speaker 12: for fresher pastures. So they're looking into equipment leasing, aircraft leasing.

856
00:43:03,560 --> 00:43:05,960
Speaker 12: Well thanks just got out of aircraft leasing, you know

857
00:43:06,040 --> 00:43:10,360
Speaker 12: years ago, data center financing again, that's moving increasingly towards

858
00:43:10,360 --> 00:43:13,800
Speaker 12: the private credit. So look, I think everything has a cycle,

859
00:43:14,080 --> 00:43:16,360
Speaker 12: and I think the private smarter private credit funds are

860
00:43:16,400 --> 00:43:17,760
Speaker 12: looking for fresh, fresh loans.

861
00:43:17,960 --> 00:43:20,719
Speaker 3: Okay, I mean everybody wants in on this. I get it.

862
00:43:20,800 --> 00:43:24,719
Speaker 3: And it's an umpteen trillion dollar fronk plan. What are

863
00:43:24,719 --> 00:43:27,200
Speaker 3: you worried about, Hugh Vanstein, is what's the you know,

864
00:43:27,320 --> 00:43:30,759
Speaker 3: paragraph three, page twelve of the red hearing ages ago,

865
00:43:30,800 --> 00:43:32,160
Speaker 3: what's the risk factors here?

866
00:43:32,719 --> 00:43:34,759
Speaker 12: Look, I think there's there's a there's a number of things.

867
00:43:34,840 --> 00:43:38,440
Speaker 12: So as you move towards the wealthy in retail, I think,

868
00:43:38,480 --> 00:43:41,480
Speaker 12: as you said, Tom, we need to get the pricing conventions,

869
00:43:41,560 --> 00:43:44,680
Speaker 12: the right structures, the right cash flows. There's a whole

870
00:43:44,680 --> 00:43:48,480
Speaker 12: bunch of stuff around the engineering of the of the plumbing.

871
00:43:48,600 --> 00:43:51,520
Speaker 12: And look at what we've learned in finance is often

872
00:43:51,560 --> 00:43:54,080
Speaker 12: it's the plumbing which actually creates the problem rather than

873
00:43:54,080 --> 00:43:55,200
Speaker 12: actually just the assets something.

874
00:43:55,320 --> 00:43:59,640
Speaker 3: So tranches, folks, are not a trench, a trunch. Tranches

875
00:43:59,680 --> 00:44:03,120
Speaker 3: are high quality pieces of whatever it is down to

876
00:44:03,160 --> 00:44:07,800
Speaker 3: a lesser quality. We learned in seven that the quality

877
00:44:07,880 --> 00:44:12,440
Speaker 3: tranch is moving was a really ugly mover for institutional money.

878
00:44:12,840 --> 00:44:16,239
Speaker 3: Is private credit going to be trenched out? So you

879
00:44:16,360 --> 00:44:19,120
Speaker 3: know in your four oh and K the level of

880
00:44:19,320 --> 00:44:22,399
Speaker 3: risk of private credit you're going to have in your portfolio.

881
00:44:22,719 --> 00:44:26,480
Speaker 12: So this is a that this is something that I expect.

882
00:44:26,719 --> 00:44:30,040
Speaker 12: I think the ratings agencies are all over this space.

883
00:44:30,480 --> 00:44:32,920
Speaker 12: They see a new business in trying to rate a

884
00:44:33,000 --> 00:44:36,160
Speaker 12: much larger amount of the private credit space too. And look, Tom,

885
00:44:36,200 --> 00:44:38,000
Speaker 12: I think we need to be careful here between the

886
00:44:38,080 --> 00:44:41,440
Speaker 12: risky stuff, the non investment grade and the ig that

887
00:44:41,560 --> 00:44:43,600
Speaker 12: you know what tripped us up in the financial crisis

888
00:44:43,840 --> 00:44:46,520
Speaker 12: was buying an awful lot of the stuff that people

889
00:44:46,520 --> 00:44:49,480
Speaker 12: thought was low risk. Actually the non investment grade by definition,

890
00:44:49,520 --> 00:44:51,160
Speaker 12: you know it's risky, so you don't pile it on.

891
00:44:51,560 --> 00:44:53,319
Speaker 3: We got to do a joint interview with Hugh von

892
00:44:53,400 --> 00:44:57,280
Speaker 3: Steinas and Mark Kearney. Well, Curry is a little occupied something,

893
00:44:57,400 --> 00:44:59,880
Speaker 3: so I think thank Yousina's working with the Bank of

894
00:45:00,160 --> 00:45:01,319
Speaker 3: Them a bit ago.

895
00:45:01,560 --> 00:45:05,440
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

896
00:45:05,480 --> 00:45:08,520
Speaker 1: starting at seven am Eastern on Apple, Corclay and Android

897
00:45:08,520 --> 00:45:11,560
Speaker 1: Auto with the Bloomberg Business app. You can also listen

898
00:45:11,640 --> 00:45:14,920
Speaker 1: live on Amazon Alexa from our flagship New York station,

899
00:45:15,440 --> 00:45:17,400
Speaker 1: Just say Alexa, play Bloomberg.

900
00:45:17,400 --> 00:45:18,640
Speaker 2: Eleven thirty were.

901
00:45:18,440 --> 00:45:19,880
Speaker 3: The Newspaper's Lisa Matteo.

902
00:45:20,000 --> 00:45:21,520
Speaker 9: Okay, Tom, I thought you would get a kick out

903
00:45:21,520 --> 00:45:23,200
Speaker 9: of the story because I know you love the dreaded

904
00:45:23,280 --> 00:45:26,600
Speaker 9: Yankees as you call them. They have the star studded roster, right,

905
00:45:26,600 --> 00:45:28,960
Speaker 9: the three hundred million dollar payroll. But the question and

906
00:45:29,040 --> 00:45:31,880
Speaker 9: every fan's mind is what the heck is going on?

907
00:45:32,040 --> 00:45:32,200
Speaker 6: Right?

908
00:45:32,239 --> 00:45:34,080
Speaker 2: Why is the team not showing up?

909
00:45:34,600 --> 00:45:36,759
Speaker 9: They came out of the weekend barely clinging to the

910
00:45:36,760 --> 00:45:39,120
Speaker 9: half game lead over the Cleveland Guardians to get that

911
00:45:39,280 --> 00:45:42,680
Speaker 9: final Al wild card spot. So the Wall Street Journal

912
00:45:42,760 --> 00:45:46,360
Speaker 9: kind of puts the spotlight on the ownership and points

913
00:45:46,400 --> 00:45:49,200
Speaker 9: to hal Steinbrenner, who took over the family business like

914
00:45:49,280 --> 00:45:54,120
Speaker 9: seventeen years ago, a different managerial philosophy than his father did.

915
00:45:54,400 --> 00:45:56,560
Speaker 9: They said that house a little bit loyal. You know,

916
00:45:56,640 --> 00:45:58,520
Speaker 9: he doesn't scream and do all that kind of stuff.

917
00:45:59,080 --> 00:46:01,879
Speaker 9: But the question there is when does he step in?

918
00:46:02,000 --> 00:46:04,400
Speaker 9: Like the Yankees are struggling right We know that pitching

919
00:46:04,440 --> 00:46:06,560
Speaker 9: has been an issue. They haven't won a title since

920
00:46:06,600 --> 00:46:08,560
Speaker 9: two thousand and nine. I still have the T shirt,

921
00:46:09,640 --> 00:46:13,120
Speaker 9: but little has changed. So that is the question when

922
00:46:13,280 --> 00:46:15,920
Speaker 9: are things going to start to They're.

923
00:46:15,800 --> 00:46:17,200
Speaker 6: In the playoffs pretty much every year.

924
00:46:17,239 --> 00:46:20,399
Speaker 5: They were the World Series last year, but Yankee expectations

925
00:46:20,440 --> 00:46:26,120
Speaker 5: are uniquely higher than everybody else in the sports. It's

926
00:46:26,160 --> 00:46:29,719
Speaker 5: when the World Series orts a it's a bad year.

927
00:46:30,640 --> 00:46:33,279
Speaker 3: Can we note even though we lost last night, the

928
00:46:33,320 --> 00:46:36,480
Speaker 3: ace for the Red Sox is pitching. The ace for

929
00:46:36,520 --> 00:46:38,479
Speaker 3: the Yankees has been out all year.

930
00:46:39,239 --> 00:46:41,200
Speaker 7: Yeah, that's that's a big deal.

931
00:46:41,239 --> 00:46:41,680
Speaker 3: That's key.

932
00:46:41,840 --> 00:46:42,600
Speaker 6: That's a big deal.

933
00:46:42,719 --> 00:46:46,279
Speaker 5: And so we started the airplane just fantastic, But the

934
00:46:46,320 --> 00:46:49,520
Speaker 5: last fifty games have been terrible, so we'll see if

935
00:46:49,520 --> 00:46:50,400
Speaker 5: they can turn it around.

936
00:46:50,920 --> 00:46:52,520
Speaker 3: But they've got time to turn it around.

937
00:46:52,560 --> 00:46:55,360
Speaker 6: You have time with a wild card, I mean exactly.

938
00:46:55,400 --> 00:46:57,960
Speaker 3: You know, I think the Chicago White Sox are reaching

939
00:46:57,960 --> 00:46:59,920
Speaker 3: for the worst right now. You're still in it.

940
00:47:00,360 --> 00:47:03,680
Speaker 9: Next, okay, we'll take you over to the labor market.

941
00:47:04,400 --> 00:47:05,000
Speaker 6: This is interesting.

942
00:47:05,000 --> 00:47:06,520
Speaker 9: The Wall Street Journal is saying the era of those

943
00:47:06,560 --> 00:47:10,160
Speaker 9: big pay raises for low paid workers could be over,

944
00:47:10,320 --> 00:47:10,640
Speaker 9: or at.

945
00:47:10,600 --> 00:47:12,000
Speaker 2: Least maybe taking a pause.

946
00:47:12,400 --> 00:47:14,799
Speaker 9: It's it's a different site before, you know, the year

947
00:47:14,920 --> 00:47:17,160
Speaker 9: right before the pandemic and then right after the pandemic

948
00:47:17,160 --> 00:47:19,200
Speaker 9: where we saw the opposite of it. You know, it

949
00:47:19,239 --> 00:47:21,760
Speaker 9: pointed to the July jobs report which kind of compared

950
00:47:21,800 --> 00:47:24,879
Speaker 9: you know, leisure and hospitality workers, you know, a three

951
00:47:24,920 --> 00:47:27,000
Speaker 9: point five percent increase from a year earlier, and then

952
00:47:27,000 --> 00:47:29,399
Speaker 9: you had the information sector that was up about five

953
00:47:29,440 --> 00:47:32,560
Speaker 9: point four percent. But what it really does, it's a

954
00:47:32,560 --> 00:47:35,000
Speaker 9: good look into the history of the wage gap and

955
00:47:35,040 --> 00:47:37,360
Speaker 9: how that has fluctuated over the past few years. So

956
00:47:37,400 --> 00:47:39,680
Speaker 9: I just thought this was a good one to point

957
00:47:39,680 --> 00:47:41,680
Speaker 9: out because you know, it's a good look back into.

958
00:47:41,480 --> 00:47:42,200
Speaker 6: The history of it.

959
00:47:42,239 --> 00:47:44,800
Speaker 5: And how college Sun's got a summer job. I'm shocked

960
00:47:44,800 --> 00:47:46,120
Speaker 5: that it was getting paid per hour.

961
00:47:46,280 --> 00:47:48,640
Speaker 6: I mean it's like a real paycheck. I'm like, dude,

962
00:47:48,640 --> 00:47:49,760
Speaker 6: what do you can do with all this cash?

963
00:47:49,920 --> 00:47:52,920
Speaker 3: Like, what's there? Lisa, let's stop to show your folks.

964
00:47:53,280 --> 00:47:57,360
Speaker 3: Lisa and Tom Keane asking Paul, how do your children

965
00:47:57,440 --> 00:47:59,120
Speaker 3: are all gods? They're all employed?

966
00:47:59,360 --> 00:48:03,319
Speaker 6: Not hu, she cut him off. But it depends on

967
00:48:03,360 --> 00:48:03,760
Speaker 6: the sector.

968
00:48:03,840 --> 00:48:06,640
Speaker 9: Like my nephew just got a job. He's still in college,

969
00:48:06,640 --> 00:48:10,160
Speaker 9: but they guaranteed him a job making six figures before

970
00:48:10,200 --> 00:48:11,160
Speaker 9: he's even graduated.

971
00:48:11,239 --> 00:48:14,680
Speaker 5: Yeah, I think just for the like the you know,

972
00:48:14,719 --> 00:48:15,600
Speaker 5: the hourly worker.

973
00:48:16,239 --> 00:48:17,640
Speaker 6: Amazon is the market.

974
00:48:17,800 --> 00:48:18,480
Speaker 7: I mean, it's not the.

975
00:48:18,920 --> 00:48:21,680
Speaker 6: Federal governor, the market government market center.

976
00:48:21,800 --> 00:48:22,480
Speaker 3: Absolutely.

977
00:48:22,560 --> 00:48:24,319
Speaker 6: I mean, because they employed so many people and they're

978
00:48:24,360 --> 00:48:27,080
Speaker 6: paying up and that's you have to match it.

979
00:48:27,160 --> 00:48:28,319
Speaker 3: So anyway, thank you.

980
00:48:28,560 --> 00:48:31,400
Speaker 9: Okay, swifties waking up to a real treat.

981
00:48:31,520 --> 00:48:32,399
Speaker 2: Did you know it was.

982
00:48:32,320 --> 00:48:35,200
Speaker 9: A surprise album drop from Taylor Swift It is the

983
00:48:35,320 --> 00:48:37,719
Speaker 9: Life of a show Girl, and she revealed it on

984
00:48:37,760 --> 00:48:41,560
Speaker 9: her boyfriend Travis Kelsey's new Heights poss Still Together. They're

985
00:48:41,640 --> 00:48:45,000
Speaker 9: still together. This was the announcement on Access. She pulled

986
00:48:45,000 --> 00:48:46,640
Speaker 9: out a vinyl record from a briefcase.

987
00:48:46,680 --> 00:48:48,080
Speaker 2: Take a lesson mc green.

988
00:48:49,560 --> 00:48:52,799
Speaker 3: Yep, this is my brand new album, The Life of

989
00:48:52,800 --> 00:48:53,400
Speaker 3: a Showgirl.

990
00:48:56,640 --> 00:48:57,640
Speaker 8: If that is it?

991
00:48:57,800 --> 00:48:58,080
Speaker 7: Okay?

992
00:48:58,080 --> 00:49:00,640
Speaker 9: So the videos posted at twelve twelve New York Time

993
00:49:00,800 --> 00:49:03,320
Speaker 9: on the twelfth, her twelfth studio.

994
00:49:02,960 --> 00:49:04,200
Speaker 6: Album, You Get I Get It.

995
00:49:04,200 --> 00:49:05,040
Speaker 2: Okay, see the theme.

996
00:49:05,120 --> 00:49:08,680
Speaker 9: Okay. It comes after her eleventh album. The official release

997
00:49:08,760 --> 00:49:10,800
Speaker 9: date it hasn't been announced yet, but pre.

998
00:49:10,719 --> 00:49:12,320
Speaker 2: Orders now available.

999
00:49:12,400 --> 00:49:14,640
Speaker 6: So that was the whole thing together. I mean they're

1000
00:49:14,640 --> 00:49:16,960
Speaker 6: in an age.

1001
00:49:17,920 --> 00:49:19,800
Speaker 2: Yeah, she's still going strong.

1002
00:49:21,120 --> 00:49:24,360
Speaker 9: They are, they are, but if these are are rejoicing

1003
00:49:24,440 --> 00:49:24,920
Speaker 9: this morning.

1004
00:49:25,000 --> 00:49:27,200
Speaker 5: But she just got off like a monster tour. That

1005
00:49:27,239 --> 00:49:29,240
Speaker 5: was a couple of years, right, yes, yes.

1006
00:49:29,120 --> 00:49:31,280
Speaker 9: Yes, so now so now comes the next album.

1007
00:49:31,320 --> 00:49:33,720
Speaker 3: All right, this is just you know, out of COVID.

1008
00:49:34,160 --> 00:49:37,960
Speaker 3: I mean, I mean, she invented the self help record

1009
00:49:38,040 --> 00:49:41,200
Speaker 3: in COVID, No kidding, those quiet records.

1010
00:49:41,280 --> 00:49:43,359
Speaker 9: Jack in a big fight against him.

1011
00:49:43,400 --> 00:49:45,879
Speaker 3: Yeah, you know it is Shrewd the right wok.

1012
00:49:46,000 --> 00:49:46,760
Speaker 7: Yeah, totally.

1013
00:49:46,960 --> 00:49:49,960
Speaker 3: Yeah, she's like a big time Shrewd and she's killing it.

1014
00:49:50,080 --> 00:49:52,239
Speaker 3: Lisa Matteo, thank you so much.

1015
00:49:52,680 --> 00:49:57,520
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple Spotify,

1016
00:49:57,640 --> 00:50:01,920
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

1017
00:50:02,040 --> 00:50:05,520
Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the

1018
00:50:05,600 --> 00:50:09,640
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

1019
00:50:09,680 --> 00:50:13,040
Speaker 1: can also watch us live every weekday on YouTube and

1020
00:50:13,239 --> 00:50:14,960
Speaker 1: always on the Bloomberg terminal