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Speaker 3: Concerts Center here at Chief Economists yeaws to get us
Speaker 3: to the report, Rebecca Patterson's scheduled after its commercial free
Speaker 3: across the nation in this hour cons there's no whisper number.
Speaker 3: How do you guess the inflation report? If there's so
Speaker 3: many subsets, do you have to go down to each
Speaker 3: subset to try to peace out a guestimate?
Speaker 2: Yeah.
Speaker 4: I mean we've always had a granular view of forecasting inflation,
Speaker 4: but it has gotten more granular given what's happening with tariffs,
Speaker 4: and of course we're looking at the impact of commodities prices.
Speaker 4: We have other idiosyncratic factors like what's happening with beef shortages.
Speaker 4: So there are a lot of cross currents going on
Speaker 4: in this inflation.
Speaker 3: It's the biggest weight or like everybody's sucking use cars.
Speaker 3: Don't tell me use cars as a big weight, is it?
Speaker 2: It's not a big weight real estate. It's really important.
Speaker 4: And in fact, we're seeing new tenant rent in the
Speaker 4: New Tenant Rent Index starting to rise. We're seeing people
Speaker 4: preferring to rent rather than own, so new households that
Speaker 4: are forming are renting, and that's pushing up rental prices
Speaker 4: in the New Tenant Rent Index. We're going to see
Speaker 4: that feed through to all the components of the CPI
Speaker 4: in the coming months.
Speaker 5: If inflation is creeping up, that's kind of a tough
Speaker 5: environment for the FED to cut rates, isn't it.
Speaker 4: I mean, creeping or shooting is Both of them are tough, right,
Speaker 4: But I think what makes it especially tough, right is
Speaker 4: that services inflation is elevated and sticky. It came down
Speaker 4: and then it sort of stalled out. Meanwhile, goods prices
Speaker 4: were close to flat or zero. That's not the case.
Speaker 4: Goods prices are rising at zero point seven percent a
Speaker 4: month over month. They're thirty five percent of the index,
Speaker 4: and they're going to keep rising.
Speaker 2: And so if.
Speaker 4: Services prices continue to come down, even slowly, you're still
Speaker 4: going to see that overall index increased.
Speaker 3: So what's your blooded number at EIU out twelve months?
Speaker 3: Are you guys two ish three ish high three.
Speaker 2: This is a trick.
Speaker 4: This is a trick question time, because if we look
Speaker 4: at the you want to look at what the FED
Speaker 4: is going to look at, They're going to want to
Speaker 4: look at the three month annualized rate.
Speaker 2: So we expect that to start.
Speaker 4: Moditoring in the end of Q two, beginning of Q
Speaker 4: three next year, and we expect that to come down
Speaker 4: to like a two point three two point one percent.
Speaker 3: Did you say next year next year? Three quarters out,
Speaker 3: four quarters out?
Speaker 2: Yeah, Yeah, it's going to take some time.
Speaker 3: Are looking for results September seventeen.
Speaker 2: Oh if we.
Speaker 5: So, I mean again that that's inflation here. How about
Speaker 5: kind of the labor market? I mean, that's another thing
Speaker 5: that I think people feel comfortable with where kind of
Speaker 5: we are here.
Speaker 6: But they say, well, if you look under the hood,
Speaker 6: some of the trends there might be going the other
Speaker 6: way here.
Speaker 4: Well, we've been concerned about the under the hood since
Speaker 4: the start of the year, and it's the under the
Speaker 4: hood that has made us have our call that we
Speaker 4: think the FED is going to cut, and we think
Speaker 4: they're going to cut in September. We think there's a
Speaker 4: good chance they get in two more cuts before the
Speaker 4: end of the year.
Speaker 2: Yep.
Speaker 3: Do you think the labor market is going to This
Speaker 3: is like, I'm I got a textbook. I got Rick
Speaker 3: Michigan's textbook at CLUBB. You pick a constant, you pick
Speaker 3: the textbook. You're telling me they're going to cut interest
Speaker 3: rates with a three point x percent inflation.
Speaker 4: Well, I'm going to chuse Stan Fisher as you you
Speaker 4: talked about him earlier this morning.
Speaker 2: And here's the thing.
Speaker 4: We know that the tariff inflation impact is going to
Speaker 4: be dare I say the word transitory. But the but
Speaker 4: the issue is what is happening with that services inflation?
Speaker 4: And there are compliments of service in this inflation, like
Speaker 4: transfer in ortation where we're seeing falling demand.
Speaker 3: Uh.
Speaker 4: And the real question is how much can the consumer
Speaker 4: take in terms of say auto inflation.
Speaker 3: We go to surveillance transitory correspondent Lisa Matteo. Right now,
Speaker 3: how's that transitory inflation at Costco?
Speaker 6: Lisa, it's not doing so well?
Speaker 3: So well on a day to day constance hunter like
Speaker 3: in consumption, I just don't see transitory.
Speaker 4: Well, it's well, it's present, But the question is is
Speaker 4: it is it?
Speaker 2: Is it going to last for several years?
Speaker 4: It seems unlikely it will last for several years because
Speaker 4: the economy is weakening under the hood.
Speaker 3: I got, I got a hate letter yesterday. Paul doesn't
Speaker 3: know this. Folks, Lisa and Paul get the love notes.
Speaker 3: Michael Byrn, I get all that hate mail constance. It
Speaker 3: was a hate mail against you and all the others.
Speaker 3: The audience detests when smart people like you say inflation
Speaker 3: is a one off and after the lift and inflation
Speaker 3: will all be okay.
Speaker 4: I didn't it will We'll be okay. A lot say well,
Speaker 4: we'll be okay. It is a tax on the consumer.
Speaker 4: It helps to push growth lower. It is painful for households.
Speaker 4: It makes it harder for people to afford basic necessities.
Speaker 2: Let's let alone.
Speaker 4: Some of the nice to have that they want to
Speaker 4: spend money on. It's very, very challenging.
Speaker 3: So you're saying the fetia cut even if we get
Speaker 3: a rising inflation rate.
Speaker 4: The fetcha cut if we get a rising inflation rate
Speaker 4: and continued confirmation the labor market is weaking, weakening. They
Speaker 4: have to see that labor market weakening cut.
Speaker 3: I agree, it's back to the labor market.
Speaker 6: Poll retail sales on Friday, How do you care that
Speaker 6: the consumer is doing.
Speaker 2: Out there, Well, it depends on what you're buying.
Speaker 4: But you're starting to see you're starting to see an
Speaker 4: impact across the board. You're seeing actually a pullback and
Speaker 4: in some of the revenge spending out of the pandemic.
Speaker 4: Right there're still seemingly endless spending on things like leisure
Speaker 4: and hospitality that is coming down.
Speaker 2: So we expect.
Speaker 4: Restaurants to solve, and a little bit. Home furnishings is weak. Obviously,
Speaker 4: we have a really troubled and problematic housing market, so
Speaker 4: we're not getting the lift from growth from a from
Speaker 4: a growing housing market, so we're expecting home furnishings.
Speaker 2: To be soft.
Speaker 4: So we are we are looking for that softness under
Speaker 4: the hood to come through. Now we have to point
Speaker 4: out the juxtaposition here is everything that's happening in tech
Speaker 4: and AI. We are seeing continuing to see a boom
Speaker 4: in spending there and that's where you get the lift
Speaker 4: in in capital investment.
Speaker 3: But the other investment out there, I mean, I mean
Speaker 3: I thought of this earlier, folks, we didn't bring it
Speaker 3: up on air. Let's do it business investment away from technology,
Speaker 3: business investment. How do you characterize that grim.
Speaker 4: Yeah, it's zero, it's negative, negative, it's declining, declining, and
Speaker 4: we think and we think that's going to continue. And
Speaker 4: and our forecast at the beginning of the year sort
Speaker 4: of cast us back to March when we were looking
Speaker 4: at the rising level of uncertainty, was that this level
Speaker 4: of uncertainty corresponds to business paralysis. We do not see
Speaker 4: investment growing strongly when we have this level of uncertainty,
Speaker 4: because businesses are like, I'll just just wait a quarter,
Speaker 4: I'll wait till I get more clarity.
Speaker 2: Right, I'm not going to Why would I.
Speaker 4: Drive down the road at ninety miles an hour when
Speaker 4: it's really foggy outside, I'll go forty five instead.
Speaker 6: Has that eased up a little bit in the last
Speaker 6: couple of months as well?
Speaker 4: I recognize that, Well, it's eased up, but we're still
Speaker 4: significantly above previous spikes and of course above previous stasis levels.
Speaker 3: So what's your number or in a headline, CPI, are
Speaker 3: you on survey? Are you disinflating or increased inflation?
Speaker 4: Well, we're looking at zero point three percent month over
Speaker 4: month and about two point eight on a year every year.
Speaker 3: Two point eight year every year that's sort of where
Speaker 3: we are. Well. CPI month over month is zero point
Speaker 3: two is a survey, So you're a tick above.
Speaker 2: I'm a tick above.
Speaker 3: Every little tick matters right well, and.
Speaker 2: It matters especially for that annualized rate.
Speaker 4: And it also matters where if people are feeling prices
Speaker 4: go up in things that they purchase frequently, it takes
Speaker 4: it psychologically. That takes a bigger bite out.
Speaker 3: So what we have here at Bloomberg, just to give
Speaker 3: you a snapshot of is the constance one Hunter twelve
Speaker 3: seconds to adjust to this. But what we have here
Speaker 3: is the data that we all talk about in the media.
Speaker 3: And then Michael McDonough and our team develop off the
Speaker 3: Bureau of Labor Statistics a wonderfully colored chart which tells
Speaker 3: a story. And I have core goods instantly here from
Speaker 3: the report. It is zero point one point five to one.
Speaker 3: I have no idea what that number means other than
Speaker 3: constance hunter. I think I'm seeing a continuing trend of
Speaker 3: core goods inflation.
Speaker 4: Ron yep, and we're seeing it in autos. So if
Speaker 4: we look down in the detail, use cars and trucks
Speaker 4: are now row zero point five percent month of a
Speaker 4: month four point eight percent year over year. And like
Speaker 4: I said, services is sticky, right, we have services less
Speaker 4: energy services at zero point four percent month over month,
Speaker 4: three point six percent year over year. And with those
Speaker 4: sticky services, I will have to say it's going to
Speaker 4: be challenging for the FED cut. We're going to have
Speaker 4: to see really weak other data in the form of
Speaker 4: jobs and retail sales.
Speaker 3: Should we say what the market's doing? Paul Sure? I
Speaker 3: think we should five basis points in a lower yield
Speaker 3: on a two year yield, the ten year yield and
Speaker 3: three basis points the equity markets lived from flat up
Speaker 3: to futures up twenty eight and the vicks in almost
Speaker 3: to stick fifteen point four eight punk.
Speaker 7: Yeah.
Speaker 5: The three point one percent annual increase in the core
Speaker 5: CPI takes that measure back to the height since February.
Speaker 5: I'm looking at the Bloomberg Live top.
Speaker 3: Live can to list them there stand right on.
Speaker 6: Top of that, I mean the top like these blogs.
Speaker 6: These guys are all over it.
Speaker 3: It's awesome now Chris and the entered team.
Speaker 7: Yeah, veryxy so.
Speaker 5: Wh sp fiatures up twenty four, Dow up one ninety,
Speaker 5: and NASHTAC up one hundred and five points, it's four
Speaker 5: tens to one percent.
Speaker 6: So certainly a move there constance.
Speaker 5: I mean, you know, it's calling into question that two
Speaker 5: percent ish kind of target that the FED has for inflation,
Speaker 5: whether it's core PCE or however you want to define it.
Speaker 5: Is that a realistic goal these days in this economy.
Speaker 6: I just don't. A.
Speaker 5: I'm not sure whether they're fixated on the number. B.
Speaker 5: I'm not sure how we get there.
Speaker 2: Well, should I answer the easier questions?
Speaker 7: First?
Speaker 4: The reason they're the reason that it's two percent is
Speaker 4: because you need to have some inflation to grease the
Speaker 4: wheels of growth, right, you don't you don't want to
Speaker 4: tip into disinflation or deflation. On the other hand, you
Speaker 4: don't want inflation to be a factor in businesses making
Speaker 4: their decisions. And the problem with the level we have
Speaker 4: now is it is a factor in businesses making their decisions,
Speaker 4: and it's a factor in consumers making their decisions. And
Speaker 4: so that's where it becomes really challenging for the FED.
Speaker 4: On the other hand, we see this as attacks on
Speaker 4: the economy. It in itself is going to slow growth
Speaker 4: in addition to the slowness that we see under the hood,
Speaker 4: and so It really just depends on the timing of
Speaker 4: how quickly the labor market deteriorates and whether or not
Speaker 4: the FED has space to act.
Speaker 5: Yeah, just an extraordinary here so again kind of the CPI, Right, Yeah,
Speaker 5: I gave you your point two percent, Tom, I kind
Speaker 5: of spot on line. I mean that core that ex
Speaker 5: food and energy you're on your one percent is kind
Speaker 5: of getting some play, folks.
Speaker 3: Here's here's the core CPI three monthly annualized is published
Speaker 3: by bl S. This is from April two point one.
Speaker 3: It went down to one point seven, it went up
Speaker 3: to two point four, and now the three month annualized
Speaker 3: is up to two point eight. Every textbook I have,
Speaker 3: Constance Hunder tells me it's really hard to cut rates
Speaker 3: given a three month trend of the three month annualized statistic.
Speaker 4: Right, And if you look at the Fed's work on this,
Speaker 4: going back to the previous time that we raised traffs
Speaker 4: admittedly by substantially less, right, it was that they should
Speaker 4: look through this. Now the question is does a larger
Speaker 4: teriff rate warrant the same look through. I think the
Speaker 4: FED has telegraphed to us that they think it doesn't,
Speaker 4: But does it.
Speaker 2: Warrant zero look through that also.
Speaker 4: They have they have seem to have telegraphed that they
Speaker 4: think it doesn't warrant zero look through. If you look
Speaker 4: at the dot plot, if you look at some of
Speaker 4: the things that different FED governors have been saying, whether
Speaker 4: it's Mary Daily, whether it's Neil Kashkari, right, Fed governors
Speaker 4: that FED presidents have been saying, look, we see weakening
Speaker 4: under the hood. And remember the FED funds, tart run
Speaker 4: funds right right now is restrictive? Does it need to
Speaker 4: be this restrictive? If they were to cut twice, it's
Speaker 4: still restrictive.
Speaker 3: And this this headline here from Mark Niquet, Thank you
Speaker 3: Mark for this. Just it's amazing. Our Bloomberg team gets
Speaker 3: us out us core CPI picks up fastest pay since
Speaker 3: January on services. Constance Hunter, thank you so much. Just
Speaker 3: brilliant with the EIU. This morning, Rebecca Patterson said time
Speaker 3: you really need to wear makeup? And I said no,
Speaker 3: All our handlers are saying YouTube is We're makeup free
Speaker 3: on YouTube at least I am, So we'll go with that.
Speaker 3: Joining us now is Rebecca Patterson with a Council on
Speaker 3: Foreign Relations and all over our service to best of
Speaker 3: our trust JP Morgan and of course Bridgewater over the years. Rebecca,
Speaker 3: this is the oddest place to be. I'm looking for
Speaker 3: the revisions. I guess if I don't trust BLS, I
Speaker 3: guess I trust the data. I don't have revisions yet
Speaker 3: up on the screen. Let's just start with that. Okay,
Speaker 3: the unemployment, right, there's an uproar. We got a new
Speaker 3: guy in a hugely controversial Does Rebecca Patterson trust the
Speaker 3: inflation statistics? Yes, that's where you gotta talk more, Lisa,
Speaker 3: tellers talk more over.
Speaker 8: No, I mean, the United States has the best government
Speaker 8: data in the world by a lot, and there are
Speaker 8: dedicated civil servants who literally go around the country checking
Speaker 8: prices in every community, of every variable and making sure
Speaker 8: the data is as clean and reflective of what's really
Speaker 8: happening as they can.
Speaker 3: My textbooks say, you got to be nuts. You can
Speaker 3: cut rates given a two ish three ish three month
Speaker 3: annualize inflation. Do you see any sense of transitory in
Speaker 3: these statistics.
Speaker 8: I think we're in a new regime for inflation. I
Speaker 8: think we're in a new regime for bond yields. So
Speaker 8: if the economy slows a lot which Constant Constance was
Speaker 8: talking about right before me. If the economy slows enough,
Speaker 8: that's going to help pull inflation down. But that's not
Speaker 8: a situation anyone wants, right. Usually you get deflation when
Speaker 8: you have.
Speaker 3: A deep recession. We don't want that.
Speaker 8: But I think for the Federal Reserve, I was trying
Speaker 8: to look at when is the last time we got
Speaker 8: this rate cuts with inflation above target and the job
Speaker 8: market softening? But okay, okay, nineteen ninety five. So at
Speaker 8: the time they did three twenty five basis point insurance cuts,
Speaker 8: inflation was running about two point three, so lower than where.
Speaker 3: We are now.
Speaker 8: The job market was okay, but the economy broadly was softening,
Speaker 8: and so they said we're going to try to massage
Speaker 8: this a little bit, and the stock market obviously loved it.
Speaker 8: It was up about fifteen percent over the three cut
Speaker 8: period the SMP, and I think that's probably what we're
Speaker 8: going to get this time. I don't know if it's
Speaker 8: one cut, two three. I lean towards less frankly because
Speaker 8: of the inflation risk, and I think they'll they'll do
Speaker 8: a cut in September. It's so priced in it would
Speaker 8: be very difficult for the FED to argue against that,
Speaker 8: but Jackson hole later this month. I believe it's August
Speaker 8: twenty first, twenty third. That'll give us some more color,
Speaker 8: I think on the sidelines of where they're leaning.
Speaker 5: Bloomberg Intelligence US rate strategist Are Jersey out with the
Speaker 5: first take, saying, basically, the CPI print with the CPI
Speaker 5: running at zero point two percent on the headline, suggests
Speaker 5: that the pc print will allow the FED to ease
Speaker 5: in September. So that's the first take from Ira Jersey here.
Speaker 6: What do you make?
Speaker 5: What did you make, Rebecca last week of the labor
Speaker 5: data and then the president firing the BLS head and
Speaker 5: all that kind of stuff, What did you make of
Speaker 5: all that?
Speaker 8: I mean, is there an opportunity for the government to
Speaker 8: modernize its data collection? Absolutely? But this is not easy,
Speaker 8: right if you think about people do analysis of data
Speaker 8: looking back ten twenty fifty in some organizations one hundred years.
Speaker 8: If I suddenly change how I collect the data, I
Speaker 8: have to make sure that new methodology doesn't screw up
Speaker 8: how I look at the old data. Right, we don't
Speaker 8: want apples and oranges. So it's actually a very difficult
Speaker 8: process to make these changes, and you.
Speaker 6: Need resources to do that.
Speaker 8: The government has cut the budget for the BLS the
Speaker 8: Bureau of Labor Statistics, so they have fewer resources, not
Speaker 8: more to this modernization. But I do think they would
Speaker 8: agree that this is the direction they should go. Try
Speaker 8: to see what tools are out there they can use
Speaker 8: to include in this process to make sure the data
Speaker 8: is as relevant and reflective of the economy as possible.
Speaker 8: Firing the head of the BLS I think was performative
Speaker 8: and really a shame. I think at the margin, it's
Speaker 8: one more small nail in the coffin of credibility of
Speaker 8: US institutions.
Speaker 3: Mckey's going to be with a cerin a bit, but
Speaker 3: let's start with you, Rebecca. My biggest problem with us.
Speaker 3: You and I've talked about this before as we set up,
Speaker 3: and I'm not going to blame ail in green Span.
Speaker 3: I'm going to think it's going to come on behind
Speaker 3: green Span. This idea that if we cut rates, once
Speaker 3: we've established a new vector, a new trend of cutting rates,
Speaker 3: why can't they come out, given the mess we're in,
Speaker 3: whatever anybody's politics, and say we're going to do a
Speaker 3: one off, twenty five beep cut. Why can't we do that.
Speaker 8: I think that's what they'll try to condition the market
Speaker 8: towards that we felt there was room to make this
Speaker 8: one insurance cut, and then we're going to continue to
Speaker 8: be data dependent and see what's needed. The job data
Speaker 8: is really tough. I was just looking before I came
Speaker 8: in this morning. On one hand, you have the small
Speaker 8: business sentiment survey this morning. Small business is a huge
Speaker 8: part of the labor market. Confidence improved in July after
Speaker 8: the big, beautiful fiscal stimulus bill was passed, but uncertainties high.
Speaker 8: You get Challenger in Gray showing layoffs year on year
Speaker 8: the oh sorry, year to date, the highest since twenty twenty.
Speaker 8: But we know a lot of layoffs are very specific
Speaker 8: federal government technology. So you can easily paint bullish and
Speaker 8: not bullish, but okay pictures of the labor market and bearish,
Speaker 8: and I feel like right now, depending on where you
Speaker 8: sit in the FED, you can select data to have
Speaker 8: a reasonable argument for your view.
Speaker 3: Are the separations in America? I mean, I think ludite
Speaker 3: nineteenth century, I mean book where we are is a
Speaker 3: nation and we're almost needing to prescribe rather two or
Speaker 3: three FED policies. How can they do an aggregate FED policy, Paul,
Speaker 3: to help the users of chat GBT exactly and perplexity
Speaker 3: and people flat on their back and des moines, I
Speaker 3: still get it.
Speaker 8: Think about Europe, right, you have a central bank governor
Speaker 8: from Italy who's going to have a very different view
Speaker 8: than the central bank governor from Are we.
Speaker 3: Different, brilliant, Are we any different on that?
Speaker 7: No, we're not.
Speaker 8: And that's part of the reason the FED was set
Speaker 8: up the way it was to have a representative from
Speaker 8: Kansas City and one from Texas and one from San Francisco,
Speaker 8: so we represent the different economies within the US and
Speaker 8: ideally they can debate and come up to an aggregate
Speaker 8: view that's not perfect for any given region, but is
Speaker 8: optimal for the economy. That's that's the goal, and that's
Speaker 8: why they're set up that way, and honestly, I don't
Speaker 8: know a better way to do it.
Speaker 6: A surprised at the stock market keeps seeing all time
Speaker 6: hunts every day.
Speaker 8: No, it's oh concentrated in tech, and my perception is
Speaker 8: that there is a lot of belief that in the
Speaker 8: next whatever one to three years, we're going to break
Speaker 8: into superintelligence and you're going to have a hockey stick
Speaker 8: moment for those stocks, similar to what we saw after
Speaker 8: GPT was launched two years ago, two and a half
Speaker 8: years ago, and no one wants to miss that return.
Speaker 8: So everyone's, as they say, holding on for dear life.
Speaker 3: Just so you know. This surveillance on August twelfth, the
Speaker 3: break and super intelligence. It's surveillance is have your offspring
Speaker 3: done their summer reading list? That's what we call super intelligence.
Speaker 3: Right now, Lisa, how are we doing over there? I mean,
Speaker 3: there's their second book, second book out of what eight?
Speaker 7: That's awesome.
Speaker 8: You're there, You're there, success, check the box.
Speaker 3: Kuse me, Rebecca. I got to switch here and apply
Speaker 3: this economics and this inflation. The market's loving in futures.
Speaker 3: I'm thirty three right now. Over to the oddity of
Speaker 3: this market. You have handled really serious family high net
Speaker 3: worth work at Bessemer just as one example, how do
Speaker 3: you invest in this chaos? If you want to be measured,
Speaker 3: want to be prudent, but must participate in the growth,
Speaker 3: do you buy more? Nvidia is at the solution.
Speaker 8: No, I wouldn't hear at these levels, but if I
Speaker 8: owned it, I also wouldn't be rushing to disinvest I
Speaker 8: mean my approach has been for most of this year
Speaker 8: to have be invested in equities, have a Barbelle approach,
Speaker 8: so the tech sector, which is a structural theme despite
Speaker 8: the valuations, but then to protect your downside with some
Speaker 8: defensive sectors like utilities or consumer staples. And you know,
Speaker 8: we've been talking about this for well over a year
Speaker 8: as part of my diversifiers, to protect my downside. I
Speaker 8: like gold, even with the tariff removed by President Trump
Speaker 8: earlier this week, Gold's up twenty seven percent year to date,
Speaker 8: more last year. And I think as long as the
Speaker 8: world is uncertain and inflation and risks are to the upside,
Speaker 8: that's going to be an asset that can benefit you.
Speaker 6: So evaluation here. You mentioned the concentration risk.
Speaker 5: Yeah, we haven't seen that really since the late nineties.
Speaker 5: Now this is a different environment from the late nineties.
Speaker 5: These companies have real earnings, real cash flow, but still
Speaker 5: that concentration risk.
Speaker 6: It certainly makes me concerned.
Speaker 8: Yeah, I agree with that, and again that's part of
Speaker 8: the reason I want to have this Barbell strategy. When
Speaker 8: you talk to the CEOs of these large language models,
Speaker 8: these megacap companies, megacap tech companies.
Speaker 2: They don't know.
Speaker 3: They don't know.
Speaker 8: How this story ends, and they'll admit that, and I
Speaker 8: think they do publicly. So you're taking a risk with this.
Speaker 8: You're counting on this inflection point moment for technology and
Speaker 8: that over time it spreads through the economy. I think
Speaker 8: looking for AI beneficiaries, not just the KEAI companies, is
Speaker 8: a smart play. I think there's other thematics and they're
Speaker 8: getting priced in, but I think they still have runway
Speaker 8: things like infrastructure, things like global defense. Those are ways
Speaker 8: that get an indirect play on AI, but at slightly
Speaker 8: less crazy value. Not crazy crazy is the only word
Speaker 8: to use high valuations.
Speaker 3: I got to call at Kansas City Fed today and
Speaker 3: beg for a chair at the Pioneer Grill for breakfast.
Speaker 3: Sounds good. I think it's on Friday when I'm there.
Speaker 3: Are you going to be a checkson a hole?
Speaker 8: Sadly, I'm not.
Speaker 3: I'm going to Are you not going to be there?
Speaker 8: Because I'm also a mom and I'm going to make
Speaker 8: sure my daughter is set up for a great school year?
Speaker 6: There you go, fun, It is time the.
Speaker 3: Door you do a dorm room like with the TV
Speaker 3: in the Nine Yards. No, no, no, No, this was
Speaker 3: a major debate a couple of nights ago. We're not
Speaker 3: doing this. I don't judge.
Speaker 8: If someone wants to deck out their kids dorm Lisa,
Speaker 8: help have fun, but no, I'm more of a I'm
Speaker 8: going to get you there, make sure you have the
Speaker 8: basics you need. Thank you, you're a grown up. You
Speaker 8: can do this, go for it.
Speaker 3: Yeah, but my kids are perfectly Some of these kids
Speaker 3: go to school today and it's like moving a house.
Speaker 9: There's a thing as a bed party.
Speaker 2: You have a bed party so.
Speaker 9: That the kids come to the house and they decorate
Speaker 9: your child's bed in all the whole you know, merchandise
Speaker 9: of the school.
Speaker 2: It's a thing now.
Speaker 8: I mean, God bless America.
Speaker 3: I guess we are.
Speaker 8: I mean there's a reason sixty eight percent of GDP
Speaker 8: is consumption because people can be convinced they quote unquote
Speaker 8: need to spend on this. And again, no judgment. If
Speaker 8: they want, if that's how they want to spend their money, fine,
Speaker 8: as long as they can afford it, As long as
Speaker 8: these people are financially literate.
Speaker 3: I talked to McKeith, tough it out, tell your daughter,
Speaker 3: kick her out the door. We'll see in JACKSONA Rebecca Patterson,
Speaker 3: thank you so much with the counsul on Ford relations,
Speaker 3: some important essays recently in the media. Just brilliant. There.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 3: Joining us now for Bloomberg Intelligence and fixing Irid Jersey
Speaker 3: as well. Ira. As you set up to write to
Speaker 3: the end of the week, are you looking at bills, notes,
Speaker 3: bonds or are you looking even more short term than that?
Speaker 10: Well, actually medium term, but we're looking at we're looking
Speaker 10: at real yields and what tips are doing and what
Speaker 10: they're suggesting for inflation going forward, because obviously the market
Speaker 10: and how it prices for inflation going forward is going
Speaker 10: to be one of the determinants that the Federal Reserve
Speaker 10: is going to use for determining whether or not, right
Speaker 10: it's close enough to its target of two percent to
Speaker 10: cut rates maybe as early as September.
Speaker 3: Okay, but I'm seeing in a real yield, Am I right?
Speaker 3: The real yield as a general statements within range has
Speaker 3: it broken out up or down?
Speaker 10: Yeah, it's been in this range for the better part
Speaker 10: of this year. You know, call it on the tenure
Speaker 10: about one and a half percent to two percent, and
Speaker 10: you know we're towards the top of that right now.
Speaker 10: And I suspect that over time as the Federal Reserve
Speaker 10: cuts interest rates. Whether or not that's warranted is one thing,
Speaker 10: but you will see probably really yields move a little
Speaker 10: bit lower, but it will be move lower in a
Speaker 10: what we call a bull steepening. So you'll see short
Speaker 10: term like five year and two year tips yields probably
Speaker 10: fall much more quickly than ten yure yields because the
Speaker 10: longer term real yields are affected not only by monetary policy,
Speaker 10: but also by expectations of supply. Right, what is the
Speaker 10: deficit going to be at? And you know, so far
Speaker 10: we haven't seriously addressed deficits, and we're still going to
Speaker 10: have two trillion dollars more of treasuries a year from
Speaker 10: now than we have today, and that's going to continue
Speaker 10: to prop up long term real yields.
Speaker 5: Neil dudd It just out with a note from Renaissance Macro.
Speaker 5: He says, you know, for the Fed July CPI data
Speaker 5: lately cements a September rate cut. You think that's how
Speaker 5: the market's interpreting IRA.
Speaker 10: Yeah, so the market's almost fully priced for a September
Speaker 10: rate cut. What's interesting is that we're priced now for
Speaker 10: a September rate cut and a December rate cut. My
Speaker 10: feeling is is that once the Fed starts to move,
Speaker 10: they're going to move and keep going. They're not going
Speaker 10: to skip a meeting just at random. So I think
Speaker 10: that if they do cut in September, they'll also go
Speaker 10: in October and then December. Now will they go more
Speaker 10: than say, another you know, four cuts and cut one
Speaker 10: hundred basis points or will they cut more than that?
Speaker 10: Still an open question. I suspect that ultimately they will
Speaker 10: cut to below three percent. So you're talking about one
Speaker 10: hundred and fifty basis points one hundred and seventy five
Speaker 10: basis points of rate cuts this cycle. Well, keep in mind, Tom,
Speaker 10: like you know, the way that they're thinking about this. Look,
Speaker 10: inflation right now is two and a half percent. FED
Speaker 10: funds is over four percent, So that means you have
Speaker 10: a one and a half percent or more than one
Speaker 10: and a half percent a real funds rate so to
Speaker 10: get the neutral under be kind of there a simplistic
Speaker 10: view of the world, they should could be able to
Speaker 10: cut one hundred and seventy five base points and just
Speaker 10: be at neutral as opposed to being at.
Speaker 3: Then why why well cut? Yeah?
Speaker 10: I think they haven't cut because they are worried about inflation, right,
Speaker 10: They're worried about another another spike of inflation, and seeing
Speaker 10: with with all the tariffs and the like, they are
Speaker 10: concerned about about that. And also until recently, remember the
Speaker 10: job market seemed to be holding up reasonably well and
Speaker 10: even the wages continue to grow close to four percent.
Speaker 10: When you have when you have job growth that is
Speaker 10: barely at the replacement rate, there is a concern that
Speaker 10: the job market might be the catalyst during this cycle
Speaker 10: to actually slow the economy a lot more. And the
Speaker 10: you know, the Federal Reserve does have a dual mandate.
Speaker 10: And if we get another really weak data print for
Speaker 10: the job market in September, you know, that opens up
Speaker 10: the side open for the market to price in a
Speaker 10: lot more cuts.
Speaker 3: And that's where I'm looking at the labor economy more
Speaker 3: than the inflation focus is the focus to your Avery Jersey,
Speaker 3: thank you so much. With Bloomberg Intelligence.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 3: This conversation is so timely, so important. We're going to
Speaker 3: place it before CPI right now. As you know, the
Speaker 3: President and mister Putin will meet in Alaska. Site unknown
Speaker 3: and Marie Horden are reporting on that each and every day,
Speaker 3: and Ukraine is on the periphery. Kira Rudik is of
Speaker 3: the Ukraine Parliament, serving as a People's Deputy of Ukraine
Speaker 3: and from the Holos party, and we're thrilled she could
Speaker 3: brief us this morning. Kira, all of Ukraine must be
Speaker 3: riveted on this debate. What is Ukraine's best outcome for
Speaker 3: this Friday meeting?
Speaker 11: Hello, and thank you so much for having me. Well,
Speaker 11: the best outcome would be that President Trump wouldn't take
Speaker 11: yet another public humidiation from Russian President put In, and
Speaker 11: that he will get finally annoyed and will impose sanctions
Speaker 11: that he has promised and tariffs on everybody who is
Speaker 11: buying something from Russia and will go ahead on continuing
Speaker 11: pressuring Russia. The best outcome would be for President Trump
Speaker 11: to realize yet again that it's not Ukraine that is
Speaker 11: on the way of the peace coming. And well, you
Speaker 11: to judge if it's realistic, but this will be the
Speaker 11: best outcome that we can hope for.
Speaker 3: Should Ukraine give up territory, acreage land?
Speaker 11: The main question here, because you know everybody's asking should
Speaker 11: Ukraine give up territories? The main question is for what?
Speaker 11: And the second question is who or what will make
Speaker 11: sure that in this case Russia would not attack us again,
Speaker 11: Because asking Ukraine about territories is a simple question, Asking
Speaker 11: who will make sure that Trashia will keep the part
Speaker 11: of the bargain, whatever that bargain is, is a complicated question.
Speaker 11: And we didn't hear any single world leader trying to
Speaker 11: figure out that or at least hint him of how
Speaker 11: it will work. Because we have been in so called
Speaker 11: ceasefires with Russia since twenty thirteen dozens of times and
Speaker 11: it never worked and there was nobody to complain to,
Speaker 11: So how this time will be different? President Trump was
Speaker 11: talking about swapping of the territories. How do you make
Speaker 11: sure if even if we talk about swapping territories the
Speaker 11: Trausia wouldn't take them back in like one or two.
Speaker 5: Years, Kira, For those in your country that advocate for peace,
Speaker 5: what is that kind of based upon? What would be
Speaker 5: an acceptable reasonable peace negotiation form? Do you think.
Speaker 11: Again, like when we are talking about peace, of course
Speaker 11: people here on the ground they want peace, and we
Speaker 11: are all exhausted.
Speaker 7: Of the war.
Speaker 11: But we also know again that whatever you agree with Russia,
Speaker 11: it's very hard, almost impossible to make them stick to it.
Speaker 11: So whatever talks are about heritories, about any agreements, the
Speaker 11: first thing is how do you President Trump or European
Speaker 11: leaders or whoever, how do you pressure Russia to keep
Speaker 11: the part of the bargain. And before that, anything else
Speaker 11: is useless to discuss because if the security guarantees are
Speaker 11: not there, Russia will just use this time to group
Speaker 11: and they will attack us again in a couple of years.
Speaker 11: This is what happened again and again to us.
Speaker 3: This unique situation. And if we assume mister Zelenski is
Speaker 3: on the outside, what do you need from Europe? Are
Speaker 3: you looking the individual nations, Heiro rudic Or you're looking
Speaker 3: to Brussels of a modern European Union.
Speaker 11: What worked for us in the past is working with
Speaker 11: the individual nations. So we didn't get like certain amount
Speaker 11: of weapons from NATO as it is, but from countries
Speaker 11: like Britain, like Denmark, like Norway, like Germany, France. So
Speaker 11: it works the best when we are working with the
Speaker 11: individual nations. And the overall truth is we want everyone
Speaker 11: just to execute on the promises that they have already made.
Speaker 11: If that was done, we will already be in the
Speaker 11: better positions. Unfortunately, times go differently in Ukraine when you
Speaker 11: are under the bombardment and in peaceful cities of Europe
Speaker 11: that are able to stay peaceful while we are stopping
Speaker 11: Russia from whatever wherever they want to go next. And
Speaker 11: so sometimes between the political promise and the moment when
Speaker 11: Ukrainian soldiers getting weapons in his or her hands, it
Speaker 11: could be years and this is not something that we
Speaker 11: can afford.
Speaker 3: Right now, when you're in New York again, we would
Speaker 3: be honored to have you in. Kier Rudik is a
Speaker 3: member of Parliament for the Ukraine for Ukrainian Government. I
Speaker 3: should say she's the People's Deputy of Ukraine, leader of
Speaker 3: the holiest Party.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple, Corplay and Android
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Speaker 1: Bloomberg Terminal.
Speaker 3: Juvensteinis and the rest of the elite of the United
Speaker 3: Kingdom have lived it. I'm going to say two years
Speaker 3: ago they had a modest pension issue where they basically
Speaker 3: had a marketing concept around pensions, which blew up. I mean,
Speaker 3: just let's cut. Let's just leave it at that because
Speaker 3: of time. He Peu von steinas with Oliver Wyman, just
Speaker 3: wrote an essay. You know, Tracy Eloway and Joe Wis
Speaker 3: them roars. He wrote it. You know he's the kill
Speaker 3: and you wrote an essay for ad lites. The next
Speaker 3: big thing in private credit? Come on, Hewett. Reminds me
Speaker 3: of what you people lived in the Liz Trust. Blow
Speaker 3: up your pension system? Do we really want bitcoin or directly,
Speaker 3: do we want private credit in our four or one k?
Speaker 2: Well?
Speaker 12: Thanks for having me back on, Tom Well. The first
Speaker 12: lesson I learned is never to I don't own the title,
Speaker 12: the headline and the rock stars to use the title. Look,
Speaker 12: I think that if you look at a retirement savings
Speaker 12: around the world. You know, in the States a defined
Speaker 12: benefit scheme has about twenty three percent in real estate
Speaker 12: fixing come private equity Australia twenty to thirty points. But
Speaker 12: for US retirees it's close to zero. It's actually about
Speaker 12: two percent. And so I think giving investors more opportunities
Speaker 12: to save and also manage their retirement is responsible. How
Speaker 12: it's done. You know, there's a lot of innovation which
Speaker 12: needs to be done. But literally give you one statistic.
Speaker 12: About three and a half trillion are in target date funds.
Speaker 12: Sixty eight percent of all inflows go into target light funds.
Speaker 12: Do you know how many people switch every year? Just
Speaker 12: one percent? It means it's the stickiest investment product on
Speaker 12: the planet. And therefore, to say you have to invest
Speaker 12: all of that in daily liquidity funds feels too tight. Okay,
Speaker 12: what's the right amount?
Speaker 7: That's a debate.
Speaker 3: Let me get the line up here. Are you telling
Speaker 3: me that Lisa Mateo in or two or John Tucker
Speaker 3: in his two oh one K John Tucker goes into
Speaker 3: private credit, he's going to get the quality the three
Speaker 3: phone calls from Blackstone's going to get. I just don't
Speaker 3: buy it. I mean, how do we know that we're
Speaker 3: going to have quality private credit in a reserve vehicle.
Speaker 12: Look, I think it's a great question. So I think
Speaker 12: you've got a couple of layers to this. So the
Speaker 12: first is there's a whole bunch of fiduciaries who run
Speaker 12: these systems. So there's investment consultants, there's planned sponsors. And
Speaker 12: I think also these assets are not going to just
Speaker 12: be thrown into a portfolio. They're going to be probably
Speaker 12: in an evergreen fund, so in a thoughtfully managed, professionally
Speaker 12: managed building block. So I think point one is there's
Speaker 12: at least three layers of fiduciaries which are going to
Speaker 12: be overseeing this. I think two is then thinking about
Speaker 12: what is the right risk return. And obviously some large
Speaker 12: institutional investors can take much more risk because they've got
Speaker 12: pots of money and long duration. I think obviously here
Speaker 12: it's going to be building blocks. But I think in
Speaker 12: an environment where more and more loans are being done
Speaker 12: outside of the banking system, I think it's fair enough
Speaker 12: that that investors can invest in more credit, And I
Speaker 12: think the key point, which we've discussed before, is the
Speaker 12: difference between a five year public bond and a five
Speaker 12: year private credit. It's a grey scale now, both are
Speaker 12: quite a liquid, both have got characteristics. So I think
Speaker 12: it's no longer black and white in this market.
Speaker 5: We haven't seen private credit experience a significant prolonged economic downturn,
Speaker 5: have we. We don't know how it's going to perform
Speaker 5: in a capitalic constrained environment. What's the what's the thinking there?
Speaker 7: Look, it's a great question.
Speaker 12: So I mean, one way I think about it is
Speaker 12: that as the as the universe of what's in private
Speaker 12: credit spans, it's going to drift towards what we've learned
Speaker 12: from the banks of the lot twenty or thirty years,
Speaker 12: because effectively these are bank loans which are being put
Speaker 12: into private structures. There was a FED study about two
Speaker 12: years ago, so it's a bit dated now, which showed
Speaker 12: that the loss the probability of default was about a
Speaker 12: third lower for the private credit loans at that stage.
Speaker 12: Probably bit of cherry picking, but then the loss given
Speaker 12: default so when it goes wrong, what you reclaim was
Speaker 12: a bit worse, but net net, so far it's been
Speaker 12: it has been better.
Speaker 7: But you're right.
Speaker 12: As the industry scales, there'll be good decisions and bad
Speaker 12: decisions and so naturally returns will.
Speaker 3: Probably cold down the market.
Speaker 12: Look, this is this is one of the ask this
Speaker 12: is one of the really critical questions. So the moment
Speaker 12: they're marked probably every quarter, every quarter, every quarter, Oh,
Speaker 12: come on, and that's note. So what we argue in
Speaker 12: that piece for the rock stars was that the pricing
Speaker 12: conventions will need to evolve so they're done at least
Speaker 12: on a monthly basis.
Speaker 3: Say, is this a new thing or Colm Tracy and
Speaker 3: Joe rock stars? Yeah, is that like a new thing?
Speaker 3: That's a mandate? Okay, continue the rock starts so every
Speaker 3: ninety days in no way.
Speaker 7: So that's why.
Speaker 12: But this so as you move from money being managed
Speaker 12: for institutional investors and coming into wealth, there's a number
Speaker 12: of things which will have to change, and obviously around
Speaker 12: that ecosystem for a better word, you know, pricing will
Speaker 12: change the structures. You know, there's a lot of work
Speaker 12: which is being done and people.
Speaker 3: Are going to have a limitation and how much they
Speaker 3: can have in private creditor for that matter been done.
Speaker 12: So if we think about in the retirement system. Look,
Speaker 12: we've only just had the executive order last week, so
Speaker 12: there's a lot of work still to be done. But
Speaker 12: it's like rewirement, right, So going back to it, there's
Speaker 12: at least three layers of fiduciaries. I think the fiduciaries
Speaker 12: will have you know, will want to pilot, they want
Speaker 12: to experiment, they want to go slowly. Give you an
Speaker 12: example in the Australian system. Let's take the Australian super Fund.
Speaker 12: It's the biggest funds in Australia. They have twenty three
Speaker 12: points in private assets. They really two percent in private
Speaker 12: credit because they're trying to listen, learn and ex experiment.
Speaker 12: So this is not a this is not a torrent.
Speaker 12: This is going to be something which will take a
Speaker 12: good sh.
Speaker 3: Australia has twenty three plus two twenty five basis points
Speaker 3: in alternative.
Speaker 12: Twenty three twenty three points not basis points points, So
Speaker 12: twenty three percent of the Australian super Fund which.
Speaker 3: Is alternative investments.
Speaker 7: Yeah, now that's across really stay of equity.
Speaker 5: In the Veronicas, Tom, you know the Veronicas, we do
Speaker 5: a lot of work with registered investment advisors here at
Speaker 5: Bloomberg and Alex Steel and I did a bunch of
Speaker 5: remotes with them, and I was shocked at the amount
Speaker 5: that an average registered investment advisor, a retail advisor in
Speaker 5: any town USA has an allocation to private alternatives.
Speaker 7: I thought it would have been.
Speaker 5: Five percent, six percent. No, it's twenty twenty five percent.
Speaker 5: That's just amazing. But I'm guessing not a lot of
Speaker 5: that is in private credit.
Speaker 7: At the moment. It'd be not that much.
Speaker 12: Although actually, you know interesting if you look at these
Speaker 12: sort of private credit funds for wealthy that's called called
Speaker 12: evergreen funds, they're not only for a wealthy of they
Speaker 12: can be for institutions YEA. To date, they're growing about
Speaker 12: sixty percent compound probably makes it the fastest growing part
Speaker 12: of the investment ecosystem. So it's growing, it's growing.
Speaker 3: Keevan Steina's with this area are commercial free until nine am.
Speaker 3: We welcome all of you across at the nation. Good
Speaker 3: morning across the United Kingdom as well. Mister van Stinez
Speaker 3: is with Oliver Wyman, run YouTube. Subscribe to Bloomberg Podcasts
Speaker 3: a live Chad effervescent this morning to say at least read,
Speaker 3: agree to the screen extremely quiet tape here nineteen minutes
Speaker 3: away from the CPI.
Speaker 7: Paul with you please, I mean, I'm shocked, Hugh.
Speaker 5: I want to what your view is. Why are the
Speaker 5: banks allowing this business to go away? From the private
Speaker 5: credit business. I started my career at the Chase Manhattan
Speaker 5: bank leverage lending to the media sector. You know, we
Speaker 5: make money upfront, and we did the deal we did
Speaker 5: lve Woark plus three, we sold off. We syndicated all
Speaker 5: of our risk off the balance the solid to banks
Speaker 5: all around the country so we had no balance sheet risk,
Speaker 5: and then the next day we turn around to do
Speaker 5: it all again. That was a great business. We made
Speaker 5: a fortunes. Why am I letting that business go to
Speaker 5: some of these private credit guys?
Speaker 7: Look, Paul, I think it's a great question.
Speaker 12: I think actually the wins are slightly changing on this,
Speaker 12: partly with the deregulation but stronger banks. But let's face it,
Speaker 12: post the Financial crisis, there was a whole reregulation of banks,
Speaker 12: particularly in twenty twelve the FED told the US banks
Speaker 12: not to own as many leverage loans, and then from
Speaker 12: that there was a decade into the pandemic where private
Speaker 12: credit grew a trillion dollar parallel system in the US,
Speaker 12: and now as we come to today, then we obviously
Speaker 12: twenty three you know, with the interest rate shot banks
Speaker 12: from the back foot, they also were cautious. Today the
Speaker 12: leading banks are now much back on the front foot.
Speaker 12: And if you look at the leverage lending space, many
Speaker 12: of the banks have tried to refinance the private credit
Speaker 12: loans and lift them to try and argue them back.
Speaker 12: But you know, there's also some structural areas where many
Speaker 12: of the private credit firms, being entrepreneurial, are now looking
Speaker 12: for fresher pastures. So they're looking into equipment leasing, aircraft leasing.
Speaker 12: Well thanks just got out of aircraft leasing, you know
Speaker 12: years ago, data center financing again, that's moving increasingly towards
Speaker 12: the private credit. So look, I think everything has a cycle,
Speaker 12: and I think the private smarter private credit funds are
Speaker 12: looking for fresh, fresh loans.
Speaker 3: Okay, I mean everybody wants in on this. I get it.
Speaker 3: And it's an umpteen trillion dollar fronk plan. What are
Speaker 3: you worried about, Hugh Vanstein, is what's the you know,
Speaker 3: paragraph three, page twelve of the red hearing ages ago,
Speaker 3: what's the risk factors here?
Speaker 12: Look, I think there's there's a there's a number of things.
Speaker 12: So as you move towards the wealthy in retail, I think,
Speaker 12: as you said, Tom, we need to get the pricing conventions,
Speaker 12: the right structures, the right cash flows. There's a whole
Speaker 12: bunch of stuff around the engineering of the of the plumbing.
Speaker 12: And look at what we've learned in finance is often
Speaker 12: it's the plumbing which actually creates the problem rather than
Speaker 12: actually just the assets something.
Speaker 3: So tranches, folks, are not a trench, a trunch. Tranches
Speaker 3: are high quality pieces of whatever it is down to
Speaker 3: a lesser quality. We learned in seven that the quality
Speaker 3: tranch is moving was a really ugly mover for institutional money.
Speaker 3: Is private credit going to be trenched out? So you
Speaker 3: know in your four oh and K the level of
Speaker 3: risk of private credit you're going to have in your portfolio.
Speaker 12: So this is a that this is something that I expect.
Speaker 12: I think the ratings agencies are all over this space.
Speaker 12: They see a new business in trying to rate a
Speaker 12: much larger amount of the private credit space too. And look, Tom,
Speaker 12: I think we need to be careful here between the
Speaker 12: risky stuff, the non investment grade and the ig that
Speaker 12: you know what tripped us up in the financial crisis
Speaker 12: was buying an awful lot of the stuff that people
Speaker 12: thought was low risk. Actually the non investment grade by definition,
Speaker 12: you know it's risky, so you don't pile it on.
Speaker 3: We got to do a joint interview with Hugh von
Speaker 3: Steinas and Mark Kearney. Well, Curry is a little occupied something,
Speaker 3: so I think thank Yousina's working with the Bank of
Speaker 3: Them a bit ago.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Eleven thirty were.
Speaker 3: The Newspaper's Lisa Matteo.
Speaker 9: Okay, Tom, I thought you would get a kick out
Speaker 9: of the story because I know you love the dreaded
Speaker 9: Yankees as you call them. They have the star studded roster, right,
Speaker 9: the three hundred million dollar payroll. But the question and
Speaker 9: every fan's mind is what the heck is going on?
Speaker 6: Right?
Speaker 2: Why is the team not showing up?
Speaker 9: They came out of the weekend barely clinging to the
Speaker 9: half game lead over the Cleveland Guardians to get that
Speaker 9: final Al wild card spot. So the Wall Street Journal
Speaker 9: kind of puts the spotlight on the ownership and points
Speaker 9: to hal Steinbrenner, who took over the family business like
Speaker 9: seventeen years ago, a different managerial philosophy than his father did.
Speaker 9: They said that house a little bit loyal. You know,
Speaker 9: he doesn't scream and do all that kind of stuff.
Speaker 9: But the question there is when does he step in?
Speaker 9: Like the Yankees are struggling right We know that pitching
Speaker 9: has been an issue. They haven't won a title since
Speaker 9: two thousand and nine. I still have the T shirt,
Speaker 9: but little has changed. So that is the question when
Speaker 9: are things going to start to They're.
Speaker 6: In the playoffs pretty much every year.
Speaker 5: They were the World Series last year, but Yankee expectations
Speaker 5: are uniquely higher than everybody else in the sports. It's
Speaker 5: when the World Series orts a it's a bad year.
Speaker 3: Can we note even though we lost last night, the
Speaker 3: ace for the Red Sox is pitching. The ace for
Speaker 3: the Yankees has been out all year.
Speaker 7: Yeah, that's that's a big deal.
Speaker 3: That's key.
Speaker 6: That's a big deal.
Speaker 5: And so we started the airplane just fantastic, But the
Speaker 5: last fifty games have been terrible, so we'll see if
Speaker 5: they can turn it around.
Speaker 3: But they've got time to turn it around.
Speaker 6: You have time with a wild card, I mean exactly.
Speaker 3: You know, I think the Chicago White Sox are reaching
Speaker 3: for the worst right now. You're still in it.
Speaker 9: Next, okay, we'll take you over to the labor market.
Speaker 6: This is interesting.
Speaker 9: The Wall Street Journal is saying the era of those
Speaker 9: big pay raises for low paid workers could be over,
Speaker 9: or at.
Speaker 2: Least maybe taking a pause.
Speaker 9: It's it's a different site before, you know, the year
Speaker 9: right before the pandemic and then right after the pandemic
Speaker 9: where we saw the opposite of it. You know, it
Speaker 9: pointed to the July jobs report which kind of compared
Speaker 9: you know, leisure and hospitality workers, you know, a three
Speaker 9: point five percent increase from a year earlier, and then
Speaker 9: you had the information sector that was up about five
Speaker 9: point four percent. But what it really does, it's a
Speaker 9: good look into the history of the wage gap and
Speaker 9: how that has fluctuated over the past few years. So
Speaker 9: I just thought this was a good one to point
Speaker 9: out because you know, it's a good look back into.
Speaker 6: The history of it.
Speaker 5: And how college Sun's got a summer job. I'm shocked
Speaker 5: that it was getting paid per hour.
Speaker 6: I mean it's like a real paycheck. I'm like, dude,
Speaker 6: what do you can do with all this cash?
Speaker 3: Like, what's there? Lisa, let's stop to show your folks.
Speaker 3: Lisa and Tom Keane asking Paul, how do your children
Speaker 3: are all gods? They're all employed?
Speaker 6: Not hu, she cut him off. But it depends on
Speaker 6: the sector.
Speaker 9: Like my nephew just got a job. He's still in college,
Speaker 9: but they guaranteed him a job making six figures before
Speaker 9: he's even graduated.
Speaker 5: Yeah, I think just for the like the you know,
Speaker 5: the hourly worker.
Speaker 6: Amazon is the market.
Speaker 7: I mean, it's not the.
Speaker 6: Federal governor, the market government market center.
Speaker 3: Absolutely.
Speaker 6: I mean, because they employed so many people and they're
Speaker 6: paying up and that's you have to match it.
Speaker 3: So anyway, thank you.
Speaker 9: Okay, swifties waking up to a real treat.
Speaker 2: Did you know it was.
Speaker 9: A surprise album drop from Taylor Swift It is the
Speaker 9: Life of a show Girl, and she revealed it on
Speaker 9: her boyfriend Travis Kelsey's new Heights poss Still Together. They're
Speaker 9: still together. This was the announcement on Access. She pulled
Speaker 9: out a vinyl record from a briefcase.
Speaker 2: Take a lesson mc green.
Speaker 3: Yep, this is my brand new album, The Life of
Speaker 3: a Showgirl.
Speaker 8: If that is it?
Speaker 7: Okay?
Speaker 9: So the videos posted at twelve twelve New York Time
Speaker 9: on the twelfth, her twelfth studio.
Speaker 6: Album, You Get I Get It.
Speaker 2: Okay, see the theme.
Speaker 9: Okay. It comes after her eleventh album. The official release
Speaker 9: date it hasn't been announced yet, but pre.
Speaker 2: Orders now available.
Speaker 6: So that was the whole thing together. I mean they're
Speaker 6: in an age.
Speaker 2: Yeah, she's still going strong.
Speaker 9: They are, they are, but if these are are rejoicing
Speaker 9: this morning.
Speaker 5: But she just got off like a monster tour. That
Speaker 5: was a couple of years, right, yes, yes.
Speaker 9: Yes, so now so now comes the next album.
Speaker 3: All right, this is just you know, out of COVID.
Speaker 3: I mean, I mean, she invented the self help record
Speaker 3: in COVID, No kidding, those quiet records.
Speaker 9: Jack in a big fight against him.
Speaker 3: Yeah, you know it is Shrewd the right wok.
Speaker 7: Yeah, totally.
Speaker 3: Yeah, she's like a big time Shrewd and she's killing it.
Speaker 3: Lisa Matteo, thank you so much.
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