WEBVTT - Bloomberg Surveillance TV: September 12th, 2025 0:00:01.120 --> 0:00:07.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:12.680 --> 0:00:16.479 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:16.520 --> 0:00:19.480 with Lisa Bromwitz and am Marie Hordern. Join us each 0:00:19.560 --> 0:00:22.440 day for insight from the best in markets, economics, and 0:00:22.480 --> 0:00:25.759 geopolitics from our global headquarters in New York City. We 0:00:25.840 --> 0:00:28.479 are live on Bloomberg Television weekday mornings from six to 0:00:28.560 --> 0:00:32.080 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:32.280 --> 0:00:34.519 or anywhere else you listen, and as always on the 0:00:34.560 --> 0:00:37.920 Bloomberg Terminal and the Bloomberg Business. John starts of Oppenheimer, 0:00:38.040 --> 0:00:40.120 the Biggest Bull on Wall Street right in the following 0:00:40.280 --> 0:00:42.520 we do not expect any dramatic cards from the Fed, 0:00:42.760 --> 0:00:45.640 but rather measured trims. John joins us now for more. 0:00:45.720 --> 0:00:48.080 Juhnken morning, Good morning. Love that done, your biggest bull 0:00:48.159 --> 0:00:49.440 on Wall Street. It's how I said good morning to 0:00:49.440 --> 0:00:51.280 you when I first saw you this morning. All time 0:00:51.360 --> 0:00:53.920 highs on the SMP, record highs of the Nursdag not 0:00:53.960 --> 0:00:57.080 too far away on small caps are trimmed cuds enough, 0:00:57.560 --> 0:00:58.440 I think trim. 0:00:58.200 --> 0:01:00.840 Cuts will be in love. And the wonderful thing about 0:01:00.880 --> 0:01:03.720 trim cuts is for the FED, what it is is 0:01:03.760 --> 0:01:07.440 the economic data, particularly around the job's number, has offered 0:01:07.680 --> 0:01:10.479 an opportunity of essentially a free haul pass. 0:01:10.959 --> 0:01:13.040 So if the FED Chair. 0:01:13.440 --> 0:01:17.400 The FOMC Comte Committee come out with a cut, it's 0:01:17.440 --> 0:01:21.720 not politics. It's just the dual mandate and looking at 0:01:21.760 --> 0:01:24.640 what the weakness in the jobs market and adding some 0:01:24.720 --> 0:01:28.839 liquidity to the system. And it's also an anniversary shop 0:01:28.920 --> 0:01:31.320 in September. If they do twenty five BIPs, or if 0:01:31.319 --> 0:01:34.319 they do even fifty, the market should be able to 0:01:34.360 --> 0:01:35.240 take it digested. 0:01:35.400 --> 0:01:37.480 Let's address that weakness in a job's market, and we 0:01:37.600 --> 0:01:40.319 testing the limits of bad news being good news for stocks. 0:01:41.040 --> 0:01:43.520 You know, I think somewhere in the middle of that 0:01:43.640 --> 0:01:46.040 job it depends the way traders look at it and 0:01:46.120 --> 0:01:49.800 the way intermediate to longer term investors who are investing 0:01:49.960 --> 0:01:53.440 for retirement, which is a multi generational effort. Now that 0:01:53.520 --> 0:01:56.880 has changed the tone of the private investor and the 0:01:56.920 --> 0:02:01.240 size and presence of the individual private investor more than 0:02:01.280 --> 0:02:03.320 I've ever seen it in forty two years. 0:02:03.800 --> 0:02:06.400 At this point, we're watching what the FED signals next 0:02:06.440 --> 0:02:09.079 week and how that really will play forward. And John 0:02:09.200 --> 0:02:11.320 was talking about you know, he didn't say these words 0:02:11.320 --> 0:02:13.040 because he hates these words, but a hawkish cut or 0:02:13.040 --> 0:02:15.840 a dubbish cut. There's this question going forward if they 0:02:15.880 --> 0:02:18.440 are alluded to it. You alluded to it because you 0:02:18.520 --> 0:02:20.440 tried not to say it, which I admire, and you 0:02:20.440 --> 0:02:22.560 did that very well. But of course I'm going to 0:02:22.600 --> 0:02:25.760 filate that. I guess I'm curious if they are dubbish, 0:02:25.919 --> 0:02:27.960 if they do indicate that this is something more than 0:02:27.960 --> 0:02:31.880 a mid cycle adjustment, does that make you more bearish? 0:02:31.919 --> 0:02:34.840 Well, it would be Would that make me become bearish 0:02:35.040 --> 0:02:35.960 because I'm not buried? 0:02:37.120 --> 0:02:37.320 Okay? 0:02:37.639 --> 0:02:40.919 Would make you a little less bulleted? Yeah, well, it would. 0:02:40.680 --> 0:02:43.239 Certainly make me take a look at the data, see 0:02:43.240 --> 0:02:44.840 where we're going to take a look at what the 0:02:45.280 --> 0:02:48.440 what the terms were that when the FED chair is 0:02:48.480 --> 0:02:49.960 reporting to the press. 0:02:50.240 --> 0:02:54.000 How things went and answering questions. But overall, you know, 0:02:54.360 --> 0:02:57.239 what we've seen really over the last couple of years has. 0:02:57.120 --> 0:03:00.000 Been the size of the US economy and the resons 0:03:00.080 --> 0:03:03.920 allions that exhibited both by corporations and by the consumer, 0:03:04.000 --> 0:03:05.119 I mean the consumer. 0:03:05.160 --> 0:03:06.280 The soft data is. 0:03:06.320 --> 0:03:09.000 Oh, they're so worried about inflation, yet the consumer is 0:03:09.040 --> 0:03:13.720 still spending, you know, at different things. But it also 0:03:13.760 --> 0:03:20.000 prudently you know, this day of digitalization and information going 0:03:20.040 --> 0:03:21.400 around the world fairly quickly. 0:03:21.800 --> 0:03:23.560 It really is remarkable. 0:03:23.040 --> 0:03:25.760 When you look at the US economy around thirty trillion 0:03:25.800 --> 0:03:28.600 in size, still way ahead of China. After all these 0:03:28.720 --> 0:03:31.480 years of US hearing that China was going to surpass 0:03:31.560 --> 0:03:35.760 us and everything else, it hasn't happened. And we think 0:03:35.800 --> 0:03:38.360 a lot of that is related to innovation. The Federal 0:03:38.400 --> 0:03:42.320 Reserve has done its job, we think remarkably well, you know, 0:03:42.680 --> 0:03:45.040 once they got out from being behind the curve and 0:03:45.600 --> 0:03:47.640 what you we call it in March of twenty twenty two. 0:03:48.120 --> 0:03:49.360 So far with all the. 0:03:49.360 --> 0:03:53.160 Hikes, all the pauses, and very few cuts, no recession. 0:03:53.440 --> 0:03:54.040 Remarkable. 0:03:54.120 --> 0:03:56.200 A lot of people who are listening to are probably 0:03:56.240 --> 0:03:58.720 nodding along with this idea of innovation, especially when it 0:03:58.720 --> 0:04:01.040 comes to technology and how much that's powered what we've 0:04:01.080 --> 0:04:05.440 seen in the US equity markets. Can I continue powering it? 0:04:05.640 --> 0:04:08.920 Given how inflated expectations are and how difficult it is 0:04:08.960 --> 0:04:12.560 to price in a sea change in technology innovation at 0:04:12.560 --> 0:04:15.440 the scale that say Oracle is predicting, well. 0:04:15.400 --> 0:04:16.960 I would say, I think. 0:04:18.760 --> 0:04:23.919 What type of overvaluation is being placed by investment or 0:04:24.000 --> 0:04:26.680 capex at this point? Really is in the eyes and 0:04:26.720 --> 0:04:29.880 the ears of the beholder, because maybe the investments that 0:04:29.920 --> 0:04:33.520 are being made across the eleven sectors to participate in 0:04:33.600 --> 0:04:36.719 what AI can do, both for the consumer as well 0:04:36.760 --> 0:04:41.479 as for businesses, maybe this may be appropriate. 0:04:41.560 --> 0:04:44.560 What we're seeing, this is so. 0:04:44.600 --> 0:04:46.880 Different than the you know, I remember the tech bubble, 0:04:46.920 --> 0:04:49.279 you know, I mean, like father time, forty two years. 0:04:49.080 --> 0:04:49.680 In the business. 0:04:49.920 --> 0:04:53.000 Good lord, it's shocking, you know, I still feel thirty five, 0:04:53.120 --> 0:04:55.640 but it's like nearly one hundred, you know, at this point. 0:04:56.279 --> 0:04:58.960 But when I look at it, it's just this is 0:04:59.000 --> 0:05:02.400 not this is not beginners technology. This is, if anything, 0:05:02.480 --> 0:05:05.440 is technology that needs to be has to be checked 0:05:05.480 --> 0:05:09.159 somewhat by regulation necessary, but not by too much regulation. 0:05:09.560 --> 0:05:12.479 And yet what it offers in a world in which 0:05:12.800 --> 0:05:16.600 we have not reproduced enough to replace ourselves, AI may 0:05:16.640 --> 0:05:19.359 be able to fill things out in factories and in 0:05:19.440 --> 0:05:22.800 offices where there might be shortages of employees. I do 0:05:22.880 --> 0:05:25.560 think in case you think I'm just being too bullish 0:05:25.640 --> 0:05:29.000 or too positive, no, what I would say what does 0:05:29.080 --> 0:05:32.880 concern me is when we look at the current environment 0:05:33.000 --> 0:05:36.960 is moving forward, the first tranch beyond what we see 0:05:36.960 --> 0:05:41.359 in technology of layoffs will be a shock to the 0:05:41.440 --> 0:05:43.719 system and will cause a lot of questions as to 0:05:43.760 --> 0:05:45.520 how we're going to deal with it. But I think 0:05:45.520 --> 0:05:50.360 it's an opportunity for corporations to step up and train personnel, 0:05:51.040 --> 0:05:54.760 really position ourselves for what is genuinely a new economy 0:05:54.800 --> 0:05:57.000 that we are moving towards based on innovation. 0:05:57.279 --> 0:05:59.279 That's what I want to ask you to accept this innovation. 0:05:59.400 --> 0:06:01.000 Do we need to accept that we're just going to 0:06:01.120 --> 0:06:04.200 have bigger layoffs and less jobs in the economy. 0:06:04.320 --> 0:06:06.719 Well, I think I think that's the first part, you 0:06:06.720 --> 0:06:07.640 know that it gets. 0:06:07.680 --> 0:06:09.120 I think we need to prepare for that. 0:06:09.320 --> 0:06:11.719 And I think already we've heard Elon Musk and others 0:06:11.760 --> 0:06:16.080 mentioned things that may be necessary to be considered it 0:06:16.960 --> 0:06:21.200 really if we meet it with retraining, looking for opportunities, 0:06:21.200 --> 0:06:23.880 because the biggest thing is as wonderful as the machines 0:06:23.920 --> 0:06:24.280 can be. 0:06:24.360 --> 0:06:27.520 People love to deal with human beings. They just do 0:06:27.760 --> 0:06:32.000 or not always love. But I okay, well it's not no. 0:06:32.440 --> 0:06:35.640 But but at the same time, just think yourself, if 0:06:35.680 --> 0:06:38.640 you're trying to get some customer service, you know it's 0:06:38.800 --> 0:06:41.160 rare that you find an outfit that has real good 0:06:41.560 --> 0:06:45.960 beginners AI in those chat boxes and things to settle things. 0:06:46.240 --> 0:06:48.800 When you mentioned the consumer as well, yesterday we did 0:06:48.839 --> 0:06:52.160 see household furnishings becoming a bit more expensive, clothing, airfares 0:06:52.200 --> 0:06:54.400 are up. Are you concerned about more of a tariff 0:06:54.480 --> 0:06:57.279 pass through as we progress throughout twenty twenty five? 0:06:57.400 --> 0:06:59.720 I think most certainly in the near term, and then 0:07:00.040 --> 0:07:03.680 because we go forward, if we see the benefits that 0:07:03.720 --> 0:07:09.359 the administration expects from it and reducing our deficits, I 0:07:09.400 --> 0:07:12.120 think that would be it would be very much helpful. 0:07:12.200 --> 0:07:14.040 And I also think in addition to that, what we 0:07:14.120 --> 0:07:17.720 haven't seen yet across the sectors in a broad format 0:07:17.880 --> 0:07:21.680 is the reintroduction of competition. And usually, you know, my 0:07:21.800 --> 0:07:26.880 generation went through hyperinflation relative for the US back in 0:07:26.920 --> 0:07:30.480 the late seventies early eighties, and it took years to 0:07:30.520 --> 0:07:36.120 get rid of that inflation stickiness inflation. The institutional memory 0:07:36.200 --> 0:07:40.360 is relatively short, but for the humans that went through it, gosh, 0:07:40.360 --> 0:07:42.960 it takes a while. But eventually you find people go, hey, 0:07:42.960 --> 0:07:46.000 wait a minute, if I give up what I'm charging 0:07:46.040 --> 0:07:48.960 on a per unit price and do volume, I can 0:07:49.040 --> 0:07:53.440 really get ahead of my competition, my competitors. When that begins, 0:07:53.440 --> 0:07:55.800 and it'll start. We've seen a little bit of it 0:07:55.880 --> 0:07:59.880 earlier this year in the airlines, but now it's going 0:08:00.080 --> 0:08:02.720 the other way and that's its demand is what's doing. 0:08:03.080 --> 0:08:05.600 What you said about AI I think is so so important. 0:08:06.000 --> 0:08:09.000 What you're acknowledging is that it's going to be regressive upfront. 0:08:09.280 --> 0:08:11.440 This is something that Luke Kara, former colleague, has talked 0:08:11.440 --> 0:08:14.520 about extensively and something Leasa's hamme it hold on again 0:08:14.560 --> 0:08:16.320 and again and again over the last month or so, 0:08:16.640 --> 0:08:18.440 is that we could see a real decaupling between the 0:08:18.480 --> 0:08:20.840 performance of a stock market and the direction of the 0:08:20.920 --> 0:08:23.640 labor market. Is that what you think people are comfortable 0:08:23.640 --> 0:08:25.000 with going into twenty six? 0:08:25.160 --> 0:08:27.600 Oh, you know, at least at this point, I don't 0:08:27.640 --> 0:08:30.840 think that the market is looking as much to twenty six. 0:08:30.920 --> 0:08:34.120 Yeah, as to the end of this year. I really think. 0:08:34.360 --> 0:08:36.720 I think when we start looking at it in twenty six, 0:08:36.800 --> 0:08:40.440 it'll probably bring up a bit somewhat a periods of 0:08:40.520 --> 0:08:44.560 volatility when we see catalysts in terms of news items 0:08:44.559 --> 0:08:49.080 and things that they'll make trainers, skeptics and bears give 0:08:49.080 --> 0:08:52.080 them an opportunity to take profits without FOMA and what 0:08:52.320 --> 0:08:56.000 likely is a sexual ball market based on the degree 0:08:56.040 --> 0:08:57.800 of innovation we have today. 0:08:58.160 --> 0:08:58.839 Stay with us. 0:08:59.160 --> 0:09:12.000 Marble Impergs have it's coming up after this. Robert Fishman, 0:09:12.360 --> 0:09:15.120 senior research analyst of Muffin Nithisen, is writing this. We 0:09:15.240 --> 0:09:17.680 view the news as a key milestone in the Warner 0:09:17.720 --> 0:09:21.200 Brothers Discovery success story and potentially the opening of a 0:09:21.320 --> 0:09:24.679 second chapter for a growing media conglomerate. Robert joins is 0:09:24.720 --> 0:09:26.640 now for more. Robert, Welcome to the program sir. Let's 0:09:26.679 --> 0:09:28.920 just start with the basics. What's to like this morning 0:09:29.080 --> 0:09:30.240 with this potential tie up? 0:09:31.600 --> 0:09:34.480 Well, I think, as you just heard, what you have 0:09:34.640 --> 0:09:38.560 is a lot of potential strategic combination between these two players. 0:09:39.200 --> 0:09:41.560 We've been talking for a long time about the lack 0:09:41.600 --> 0:09:45.240 of scale on streaming and what this does is really 0:09:45.320 --> 0:09:50.199 help accelerate the streaming story by putting two subscale players 0:09:50.240 --> 0:09:54.200 together to help better compete in the current landscape. Then 0:09:54.240 --> 0:09:56.920 you also have to go to the cost savings that 0:09:56.960 --> 0:10:00.080 were just discussed. We're still working through our assumptions, but 0:10:00.520 --> 0:10:03.960 essentially there will be a lot of extra cost synergies 0:10:04.000 --> 0:10:08.280 putting these portfolios together. And then really what this does 0:10:08.320 --> 0:10:12.640 for Warner Brothers Discovery is allow them to accelerate that 0:10:12.760 --> 0:10:16.880 timeline that you just talked about. And really for investors 0:10:16.920 --> 0:10:20.440 to see the payoff of how valuable these assets are, 0:10:20.520 --> 0:10:24.040 like HBO and Max and Warner Brothers Studio. So it 0:10:24.160 --> 0:10:28.520 really is a really strong evidence of the value in 0:10:28.559 --> 0:10:29.920 the Warner Brothers portfolio. 0:10:30.160 --> 0:10:30.760 Once upon a. 0:10:30.679 --> 0:10:33.880 Time, the idea of CBS and CNN being combined and 0:10:33.920 --> 0:10:37.400 the idea of synergies read probably job losses and some 0:10:37.440 --> 0:10:41.840 consolidation of efforts would have raised concerns by regulators. Will 0:10:41.840 --> 0:10:45.160 it still or has the landscape changed so much competitively 0:10:45.520 --> 0:10:47.600 that it doesn't necessarily reach that level. 0:10:48.800 --> 0:10:52.319 Ye, that's a really interesting question. I would say that 0:10:52.360 --> 0:10:55.200 the landscape has clearly changed. You know, back to my 0:10:55.240 --> 0:10:58.840 first point, Streaming is first and foremost here and that's 0:10:58.880 --> 0:11:02.400 where all the I are going and already you know, 0:11:02.520 --> 0:11:05.720 essentially are for a lot of the parts in the 0:11:05.760 --> 0:11:10.600 media business on news specifically. Yes, it does seem like 0:11:10.679 --> 0:11:14.400 the strategic combination of a CBS News with a CNN 0:11:14.800 --> 0:11:17.120 would be something that that makes a lot of sense 0:11:17.800 --> 0:11:21.040 from a cost saving standpoint and strategically to put those 0:11:21.080 --> 0:11:22.160 two assets together. 0:11:22.600 --> 0:11:24.760 How much do you think that Warner Brothers is just 0:11:24.760 --> 0:11:27.160 going to hold off on any kind of deal because 0:11:27.320 --> 0:11:28.920 they were planning on splitting. 0:11:28.640 --> 0:11:31.079 Up, and they did believe that each of the pieces 0:11:31.320 --> 0:11:32.760 was worth a lot more than the whole. 0:11:32.840 --> 0:11:35.200 We are seeing a premium here in terms of the 0:11:35.200 --> 0:11:38.720 paramount Skydance offer from Ellison. But do you think that 0:11:38.760 --> 0:11:40.319 it's enough or do you think that it's going to 0:11:40.400 --> 0:11:41.200 have to be sweetened? 0:11:43.080 --> 0:11:45.760 Well, I think we're going to see how this all 0:11:45.760 --> 0:11:48.319 plays out, so that this is just kind of the 0:11:48.640 --> 0:11:52.600 first salvo. And really what we're really waiting to see 0:11:52.800 --> 0:11:57.400 is if there's gonna if the paramount sky Dance bid 0:11:57.480 --> 0:12:00.600 is going to bring in other bidders here, because that 0:12:00.640 --> 0:12:04.000 potentially has the opportunity to As we've seen in past, 0:12:04.360 --> 0:12:11.000 these are premium, you know, very very demanded assets, especially 0:12:11.000 --> 0:12:14.840 when you think about the studio and streaming and HBO. 0:12:15.320 --> 0:12:18.440 So if this is the opportunity for other companies to 0:12:18.640 --> 0:12:21.680 explore that that that's something that we're waiting to see 0:12:21.679 --> 0:12:24.640 if if that's going to bring in other potential bidders here. 0:12:24.559 --> 0:12:25.720 Potentially a price war. 0:12:25.800 --> 0:12:28.079 Who else could bid for these assets? 0:12:29.600 --> 0:12:32.439 Well, I mean, if you go through the list, clearly 0:12:32.600 --> 0:12:36.520 Comcast is a potential bidder. It's unclear you know, to 0:12:36.559 --> 0:12:39.960 the regular regulatory point if they're going to look to 0:12:41.280 --> 0:12:43.880 enter into into the fray and and you know, put 0:12:43.880 --> 0:12:47.160 their hat in the ring. But I think Comcast has 0:12:47.320 --> 0:12:50.640 long been discussed again from the streaming side and also 0:12:50.720 --> 0:12:53.400 from the studio side and other assets that that this 0:12:53.480 --> 0:12:56.040 can be part of that. The question is they're going 0:12:56.040 --> 0:13:00.079 through their own spin with versay it and you know, 0:13:00.200 --> 0:13:04.280 essentially do they want to change strategies as well? That 0:13:04.400 --> 0:13:08.400 that's that's that's a remains an open question. You know, 0:13:08.480 --> 0:13:13.079 obviously that the digital big bidders are someone's that that 0:13:13.200 --> 0:13:17.440 we all have to look at and and see whether 0:13:17.520 --> 0:13:19.240 or not they want to really throw the hat in 0:13:19.240 --> 0:13:22.280 the ring. Again from the regulatory side and even a 0:13:22.320 --> 0:13:25.120 company like Apple, if they really want to go all 0:13:25.160 --> 0:13:26.840 in on media, how much. 0:13:26.679 --> 0:13:29.520 More consolidation could we see Robert in this space. 0:13:31.800 --> 0:13:33.160 Well, this is a big one. 0:13:33.640 --> 0:13:36.760 We've been waiting for something like this for a little 0:13:36.760 --> 0:13:40.400 while now, again talking about the potential dance partners with 0:13:40.440 --> 0:13:44.920 a Comcast, with Warner Brothers, Discovery and and Paramounts being 0:13:45.120 --> 0:13:48.760 the three key players. So you know, I think this 0:13:48.800 --> 0:13:52.280 is going to lead to other potential dominoes that that 0:13:52.320 --> 0:13:54.640 could fall. But but clearly that this is the big 0:13:54.679 --> 0:13:56.199 one that we're all focused on right now. 0:13:57.080 --> 0:14:10.320 Stay with us Multpleinberg. Savannah's coming up after this. Andrew 0:14:10.360 --> 0:14:13.439 Holnholt of City Writing, we continue to expect one hundred 0:14:13.480 --> 0:14:15.920 and twenty five basis points of right cuts over the 0:14:15.960 --> 0:14:19.040 next five FMC meetings, with growing risk that the Fed 0:14:19.080 --> 0:14:22.720 will continue cutting interest rates below three percent. Andrew Joints 0:14:22.760 --> 0:14:24.560 is now for more, Andrew and Monic, I've got to 0:14:24.600 --> 0:14:26.200 get to that three percent call in just a moment, Boile, 0:14:26.200 --> 0:14:27.640 I want to address the danks for the last twenty 0:14:27.640 --> 0:14:29.960 four hours, so jobless claims came in close to four 0:14:30.040 --> 0:14:32.720 year highs, spiked a bit of concern. Then we got 0:14:32.720 --> 0:14:35.640 into the numbers and it screams one state, it screams Texas. 0:14:35.960 --> 0:14:37.960 Is that anything will be concerned about here at all? 0:14:38.400 --> 0:14:38.920 I mean, I think you. 0:14:38.880 --> 0:14:41.000 Always have to watch the jobless claims numbers. What we 0:14:41.040 --> 0:14:42.560 would look for is is this going to be a 0:14:42.600 --> 0:14:43.960 sustained movement. 0:14:43.840 --> 0:14:44.960 Up in jobless claims? 0:14:45.000 --> 0:14:46.920 A lot of times you get one week of data 0:14:46.960 --> 0:14:49.000 and it's weekly data, right, You're trying to seasonally a 0:14:49.120 --> 0:14:51.960 just weekly data in a holiday week spiked up in 0:14:52.000 --> 0:14:54.560 one state, So you never take that too seriously. So 0:14:54.560 --> 0:14:56.440 so I'd be kind of cautious in terms of getting 0:14:56.640 --> 0:14:57.880 too concerned about that number. 0:14:57.920 --> 0:15:00.680 The broader backdrop, though, the totality of the data, as 0:15:00.680 --> 0:15:02.680 the Fed likes to say, hasn't been great on the 0:15:02.760 --> 0:15:05.000 labor market side of things. When we go into next week, 0:15:05.040 --> 0:15:07.760 we're talking about the following mid cycle adjustment or the 0:15:07.800 --> 0:15:10.240 start of a really big easy cycle, and you've alluded 0:15:10.280 --> 0:15:12.560 to it, we're going to stop at three percent, or well, 0:15:12.600 --> 0:15:13.640 we need to go even further. 0:15:14.120 --> 0:15:15.920 I think it's increasingly clear that we're going to get 0:15:15.960 --> 0:15:18.320 to at least three percent. And you look at the 0:15:18.400 --> 0:15:21.120 jobs data, and we do have some conflict in the data. 0:15:21.160 --> 0:15:23.320 If you look at the household survey, where the unemployment 0:15:23.360 --> 0:15:26.160 rate comes from, unemployment rate has been more stable, did 0:15:26.240 --> 0:15:28.720 move up in the last report. You look at the 0:15:28.760 --> 0:15:32.200 payrolls data, and with these revisions, it's just fallen apart. 0:15:32.240 --> 0:15:34.200 I mean, we're running at twenty nine thousand jobs per 0:15:34.240 --> 0:15:36.560 month on a moving average basis, just twenty two thousand 0:15:36.640 --> 0:15:39.520 jobs last month. You look at the benchmark revisions and say, 0:15:39.760 --> 0:15:43.120 maybe we're overstating that payrolls number each month, So you know, 0:15:43.160 --> 0:15:45.840 subtract a little for that. We're probably close to zero 0:15:45.960 --> 0:15:49.880 job growth in terms of payrolls. So there's no question 0:15:50.000 --> 0:15:51.960 that you want to be moving rates at least back 0:15:52.000 --> 0:15:55.760 towards a more neutral setting. I think with the cooler 0:15:55.800 --> 0:15:58.480 inflation data that we're getting now, you can really start 0:15:58.520 --> 0:16:00.720 thinking about do they actually move below three percent? 0:16:00.760 --> 0:16:03.960 Hold on a second, the cooling inflation data cooling, sure, 0:16:04.160 --> 0:16:07.080 we're still above three percent on a year over year basis. 0:16:07.080 --> 0:16:10.360 You still haven't gotten below two percent going back more 0:16:10.400 --> 0:16:13.480 than four years. Is that enough at this point to 0:16:13.560 --> 0:16:16.320 be actually a reason for the Fed to cut aggressively? 0:16:16.480 --> 0:16:19.360 Well, I think the reason to cut aggressively is the 0:16:19.440 --> 0:16:21.800 jobs data, what we're seeing in the labor market. The 0:16:21.880 --> 0:16:24.200 question is how can strained are you by inflation? To 0:16:24.240 --> 0:16:26.360 your point, and you're right. You look at core pc inflation, 0:16:26.560 --> 0:16:28.760 we're still above three percent when we looked at the 0:16:28.800 --> 0:16:31.680 CPI report yesterday. Though, this is really interesting. You map 0:16:31.760 --> 0:16:34.840 that through to core PCEE inflation. We're getting just zero 0:16:34.920 --> 0:16:37.960 point two zero percent month on month core PCEE inflation. 0:16:38.120 --> 0:16:42.440 So that's monthly annualized core inflation that's running pretty close 0:16:42.480 --> 0:16:44.920 to two percent, and that year on year figure maybe 0:16:44.960 --> 0:16:46.840 going to come down to two point nine percent, so 0:16:47.080 --> 0:16:49.080 we could get below three percent on a year on 0:16:49.160 --> 0:16:51.880 year basis. I'm running close to two percent on a 0:16:51.880 --> 0:16:55.280 monthly basis. And remember this is August inflation data. This 0:16:55.320 --> 0:16:57.840 was meant to be the peak of tariff pass through 0:16:57.960 --> 0:16:59.600 and you know the high inflation that we were going 0:16:59.600 --> 0:17:01.440 to see, and we're close to target. So I think 0:17:01.560 --> 0:17:03.600 there's a lot less of a constrain on the inflation 0:17:03.800 --> 0:17:06.440 side that's going to be more underappreciated by the market 0:17:06.520 --> 0:17:09.040 right now. I think everyone's acknowledging now that you have 0:17:09.119 --> 0:17:10.840 this risk on the labor market side. 0:17:10.920 --> 0:17:12.480 I'm pretty clear what the Fed's going to do here. 0:17:12.520 --> 0:17:15.320 I mean, we've got the Restoration Hardware CEO cursing out 0:17:15.359 --> 0:17:17.640 the investors because of their inability to have pricing power, 0:17:17.720 --> 0:17:19.960 So it raises a question of further disinflation. There is 0:17:19.960 --> 0:17:21.760 a feeling though that going forward there is going to 0:17:21.800 --> 0:17:24.720 be a reacceleration of the economy, thus the bet on 0:17:24.800 --> 0:17:28.080 small caps, thus the bet on equities, And how much 0:17:28.119 --> 0:17:30.760 do you see that as sort of predicated on the 0:17:30.760 --> 0:17:33.080 FED cuts that you're talking about, that that will ignite 0:17:33.600 --> 0:17:37.200 the reacceleration of growth that so many people are hinging 0:17:37.240 --> 0:17:37.760 their bets on. 0:17:38.040 --> 0:17:40.240 There's a little bit of a disconnect between markets here, 0:17:40.280 --> 0:17:42.760 and this is I hear this when I speak with investors. Also, 0:17:42.800 --> 0:17:45.640 that equity market, I think definitely thinks that there will 0:17:45.640 --> 0:17:47.480 be this reacceleration in the economy. 0:17:47.680 --> 0:17:49.720 Not as clear to me that the rates. 0:17:49.560 --> 0:17:51.520 Market is sold on that, which is part of why 0:17:51.520 --> 0:17:53.760 we're pricing in these cuts in the rates market. So 0:17:54.040 --> 0:17:56.320 maybe you need to kind of reconcile those two markets 0:17:56.359 --> 0:17:59.800 with each other. I do think that these FED cuts 0:17:59.840 --> 0:18:03.359 are getting increasingly priced in. I think that is part 0:18:03.400 --> 0:18:06.560 of the story of what is supposed to get the 0:18:06.600 --> 0:18:09.280 economy moving a little bit faster. You look at the 0:18:09.320 --> 0:18:12.199 housing market, that's the most interest rate sensitive sector of 0:18:12.240 --> 0:18:15.760 the economy, and we have really weak housing right now. 0:18:15.600 --> 0:18:18.640 In terms of activity. In terms of prices moving lower. 0:18:18.480 --> 0:18:20.399 You need to get rates lower if you want to 0:18:20.440 --> 0:18:22.440 re accelerate that portion of the economy. 0:18:22.720 --> 0:18:24.880 The question, though, is if fit cuts interest. 0:18:24.720 --> 0:18:26.399 Rates, it's going to bring down policy rates, it's going 0:18:26.440 --> 0:18:28.960 to bring down the two year yield. How much lower 0:18:29.000 --> 0:18:30.520 will we get in terms of the ten year yield. 0:18:30.560 --> 0:18:32.879 It has been moving down together with the front end 0:18:32.880 --> 0:18:34.760 of the yield curve, but I think that's still an 0:18:34.760 --> 0:18:35.359 open question. 0:18:35.560 --> 0:18:37.960 Andrew, how likely is it potentially that they go fifty 0:18:38.000 --> 0:18:40.679 basis points, especially given everything you've just outlined in the 0:18:40.720 --> 0:18:41.600 last five minutes. 0:18:41.960 --> 0:18:43.840 So I think fundamentally, you can look at this data 0:18:43.840 --> 0:18:45.960 and you can say, look back at June payrolls. June 0:18:46.000 --> 0:18:48.480 payrolls originally reported above one hundred and fifty thousand. 0:18:48.720 --> 0:18:51.240 Now it's negative. Right, if we had had a negative. 0:18:50.920 --> 0:18:53.439 Payrolls print in June, I'm pretty sure this is a 0:18:53.440 --> 0:18:55.200 FED that would have been cutting in July. 0:18:55.320 --> 0:18:55.399 Right. 0:18:55.480 --> 0:18:59.560 We have seen rate cuts by now. That said, they're 0:18:59.560 --> 0:19:02.040 a big diferences across the committee. Remember back in June, 0:19:02.040 --> 0:19:03.840 we had a lot of FED officials who didn't want 0:19:03.840 --> 0:19:06.120 to cut at all. This year, Powell has to pull 0:19:06.160 --> 0:19:08.840 that committee together. So twenty five basis points I think 0:19:08.920 --> 0:19:10.760 is going to be a lot easier to build a 0:19:10.800 --> 0:19:13.560 consensus around. We could see some descents for fifty. I 0:19:13.560 --> 0:19:16.280 wouldn't be surprised if we see some descents, but twenty 0:19:16.320 --> 0:19:18.439 five looks much much more likely than fifty. 0:19:18.600 --> 0:19:21.280 What is a FED under Laurence Lindsay, Kevin Warsh or 0:19:21.359 --> 0:19:23.399 James Bullard look like, given the fact that those are 0:19:23.440 --> 0:19:26.200 the most recent individuals to sit down the Treasury Secretary. 0:19:26.320 --> 0:19:29.080 Yeah, personnel matters here, right, There's no question that the 0:19:29.359 --> 0:19:32.200 fedchair matters. It is a committee, right, So we always 0:19:32.200 --> 0:19:34.120 think about where are the votes actually going to line 0:19:34.200 --> 0:19:37.560 up in terms of where policy rates go. One discussion, 0:19:37.560 --> 0:19:40.200 we're talking about three percent. Why does everyone talk about 0:19:40.240 --> 0:19:42.359