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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business App. Francis Donald of RBC

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Speaker 2: has this to say, The timing of the government shutdown

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Speaker 2: is not ideal for the Federal Reserve. Limited visibility into

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Speaker 2: the September data increases the probability of an October pause.

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Speaker 2: Francis joins us now from More Francis, good morning.

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Speaker 3: It's good morning.

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Speaker 2: So this is a slightly different say because we've had

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Speaker 2: a guests come on the program and say they're not

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Speaker 2: going to deviate from the dot plot. Ultimately they're expecting

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Speaker 2: a raid cut still in our Why wou'd this lead

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Speaker 2: to a pause.

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Speaker 4: Well, let's remember chir Powell has talked a lot in

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Speaker 4: the past, when you're walking in a room and it

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Speaker 4: goes dark, you go more slowly, you don't necessarily speed up.

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Speaker 4: And at the end of the day, we have to

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Speaker 4: remember this shutdown is compounding an existing problem, which is

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Speaker 4: that our data is being substantially distorted by tariff developments

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Speaker 4: front loading inventories. We know that companies, clients that we

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Speaker 4: talk to and others are finding ways to navigate around

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Speaker 4: that using things like bonded warehouses for example, or changing

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Speaker 4: the timing of their purchases. And then on top of that,

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Speaker 4: now we're going to miss probably a month of solid

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Speaker 4: evidence as to what actually happened in there. So from

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Speaker 4: our point of view, just like a company or a

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Speaker 4: consumer at the end of the day is maybe going

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Speaker 4: to say, let's be a little bit more cautious. To us,

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Speaker 4: this is going to raise more questions than it is

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Speaker 4: make it very clear what the definitive path ahead should be.

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Speaker 2: So A Marie was talking about this earlier on this morning.

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Speaker 2: The data itself has been a problem. How dependable is

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Speaker 2: the data anyway for this federal Well, this is.

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Speaker 4: The thing for economists right now is there is already

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Speaker 4: a giant question mark around what data should we be using,

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Speaker 4: are there biases within the data? Were there will there

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Speaker 4: be on a go forward basis. We've already for years

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Speaker 4: been dealing with low response rates, and we know that

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Speaker 4: the economy is operating in a way that changes the

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Speaker 4: way we need to use data. Confidence data, for example,

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Speaker 4: in our view, is still very valuable. It explains how

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Speaker 4: consumers are feeling. But if the top ten percent of

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Speaker 4: consumers are spending fifty percent of all of the consumption,

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Speaker 4: then confidence data is not the same valuable tool it

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Speaker 4: was in the past. Layer on top of that tariffs

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Speaker 4: and we've been really in a dark place with respect

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Speaker 4: to how we can read visibly. And that's why, in

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Speaker 4: a way, John, I'm not that upset that we're going

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Speaker 4: to miss a month of data because I think there's

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Speaker 4: so much obsession over this month to month, in part

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Speaker 4: driven by the FED, that's highly data dependent. We need

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Speaker 4: to focus on some of the bigger trends, and the

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Speaker 4: bigger trends are clear. This is a labor market that

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Speaker 4: is structurally very different. We don't need the same amount

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Speaker 4: of job growth as we did before. We only believe

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Speaker 4: that this needs This economy needs to create forty thousand

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Speaker 4: jobs a month the unemployment rate to stay stable. We

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Speaker 4: know growth is slowing off the back of tariffs and

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Speaker 4: some price pressures that are coming through, and we know

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Speaker 4: inflation is likely to reaccelerate into year end. And I

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Speaker 4: could for a month go dark on data and tell

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Speaker 4: you that I'm still fairly confident that will be the

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Speaker 4: story thirty days from now. But when, of course we're

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Speaker 4: hypersensitive and we're in an environment where policy makers are

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Speaker 4: really trying to move months to month, of course the

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Speaker 4: market is going to feel a little more uncomfortable with

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Speaker 4: that lack of visibility.

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Speaker 5: Are you saying the FED is too data dependent?

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Speaker 4: Well, no, What we're saying is that the month to

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Speaker 4: month variability in data, this has always been true, sometimes

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Speaker 4: leads us in the wrong directions. And I think what's

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Speaker 4: really challenging right now is that that tariff distortion is

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Speaker 4: very much still in play. We hear all the time, oh,

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Speaker 4: tariffs are not inflationary. That may turn out to be true,

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Speaker 4: it's not our view, but we won't know that till

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Speaker 4: the middle of twenty twenty six. So the issue with

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Speaker 4: data dependence right now isn't data dependence in and of itself.

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Speaker 4: It's data dependence in an environment where we don't have

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Speaker 4: good reads and our month to month data is not

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Speaker 4: telling us the true story of the amare economy or

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Speaker 4: the American consumer.

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Speaker 5: So what do you look at in daylight today? You're

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Speaker 5: not getting the job support. What's your north star in

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Speaker 5: terms of directing you towards these trends?

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Speaker 4: Well, today's not actually the problem. So any economists would

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Speaker 4: have released their estimate for where jobs would be last

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Speaker 4: week and everybody's week ahead. Our estimate was fifty two thousand.

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Speaker 4: The problem will be next month when we don't have

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Speaker 4: the aggregate amount of data that helps us forecast what

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Speaker 4: happens next. At the end of the day, we tail

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Speaker 4: clients focus on the trend. We think the unemployment rate

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Speaker 4: will rise gradually to four and a half four point

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Speaker 4: six percent. But we've been through a few cycles, all

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Speaker 4: of us at this table, if I may say that,

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Speaker 4: we know that four point six percent unemployment is still

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Speaker 4: very low, very tight labor market underneath the surface. So

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Speaker 4: we are doing what we've been doing for the last year,

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Speaker 4: much more bottom up work, much more sector focus. Look

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Speaker 4: at your actual end consumer, which one are you servicing,

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Speaker 4: which one are you investing in? And look at their

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Speaker 4: individual stories, and then of course we have a table

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Speaker 4: of all the indicators that we look at, from warn

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Speaker 4: notices to LinkedIn postings that help us get a little

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Speaker 4: bit more of a month to month gauge. But the

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Speaker 4: message here is actually one of leef focus on the

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Speaker 4: big picture that's probably going to guide you towards better

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Speaker 4: investment decisions and better operating decisions if you're running a business.

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Speaker 2: You'll forgive me for bringing out the shutdown then, but

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Speaker 2: we do have to talk about it just a little bit,

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Speaker 2: the government shut down in Washington. It can't have implications

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Speaker 2: for the economy. Typically we know how the movie goes.

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Speaker 2: Economy has a bit of a blit, then we accelerate,

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Speaker 2: we pick up again, and we look through the whole thing.

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Speaker 2: And that's ult to me. How markets play this story too?

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Speaker 2: Do you see it's delayed deferred activity? Or are we

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Speaker 2: at this point where things are a little bit more

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Speaker 2: frenchiolet than where things could be somewhat derailed.

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Speaker 4: Well, I watch your show in the mornings, and I'll

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Speaker 4: repeat what just about every economist has told you. Our

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Speaker 4: traditional rule of thumb is the shutdown is worth aboute

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Speaker 4: point one percentage points of GDP each week that it

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Speaker 4: goes on, and then it becomes nonlinear, likely around the

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Speaker 4: middle of the month. The longer it's out, the more

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Speaker 4: it bleeds. For the economy. We're focused on some of

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Speaker 4: the things related to contract workers as well, so all

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Speaker 4: the economy that circulates around the government that may see

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Speaker 4: a pause at the end of the day. You know,

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Speaker 4: I talk about the shutdown being emblematic of larger trends,

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Speaker 4: and there's two that sort of worry us. This economy

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Speaker 4: was already slowing down, so these additional bumps, they exacerbate

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Speaker 4: the problem. They exacerbate the uncertainty component.

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Speaker 6: But under the.

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Speaker 4: Surface, we've also in the past year again we're thinking

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Speaker 4: about how this relates to the bigger trends, been much

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Speaker 4: more focused on the fiscal side of the picture, the

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Speaker 4: policy side of the picture, than the monetary policy side

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Speaker 4: of the picture. And that's largely because this economy is

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Speaker 4: becoming less sensitive to the Fed's next move and much

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Speaker 4: more sensitive to what's happening in Washington.

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Speaker 3: We see this in the yield curve.

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Speaker 4: We see this at the long end of the curve,

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Speaker 4: but many Americans are leveraged to the belly and the

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Speaker 4: long end of the yield curve with the FED is

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Speaker 4: not successfully being able to influence at this point of view,

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Speaker 4: So acrimonious Washington, to me, is not necessarily about the

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Speaker 4: GDP impact for September or October. It's about this transformation

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Speaker 4: where we move away from monetary policy being the core

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Speaker 4: driver of the business cycle and realize that if we

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Speaker 4: really want to know where are we, we have to

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Speaker 4: watch fiscal spending, the deficit and the path for that ahead.

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Speaker 5: Is this shut down different though? If Trump decides to

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Speaker 5: make these furloughs permanent.

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Speaker 4: Absolutely, And so when we look at the numbers, for example,

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Speaker 4: if we were to see and this is the extreme example,

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Speaker 4: this wouldn't happen. But if by October seventeenth, that'll be

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Speaker 4: the reference week for next month's job number, if we

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Speaker 4: haven't seen folks come back, you could see the unemployment

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Speaker 4: rate jump to four point eight percent. Now, our estimate

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Speaker 4: is that it would then come back down. But these

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Speaker 4: are the types of numbers that begin to skew the

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Speaker 4: story we're certain down.

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Speaker 5: I'm saying, if he decides to say, I actually want

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Speaker 5: to move more people into the private sector, and I'm

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Speaker 5: getting rid of these offices, these jobs. Isn't that more

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Speaker 5: of a permanent effect.

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Speaker 4: Absolutely, that would be more permanent, but that number is

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Speaker 4: ultimately probably going to be quite small. But the most

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Speaker 4: extreme thing, let's say every person would be laid off,

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Speaker 4: which is not going to happen, you would see that

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Speaker 4: number jump to four point eight. Again, this is emplematic

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Speaker 4: of the bigger picture, which is job growth is slowing.

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Speaker 4: We are going to see less job creation on a

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Speaker 4: go forward basis, with the exception of healthcare. Healthcare is

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Speaker 4: going to continue to be fairly robust there. So this

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Speaker 4: is the trend continuing. Slower job growth, slower overall growth,

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Speaker 4: less confidence in the economy, and reduced data visibility. It is,

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Speaker 4: as we say, stagflation.

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Speaker 6: Light stay with us.

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Speaker 2: More Bloomberg surveillance coming up after this. Let's get to Tesla.

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Speaker 2: I promise you an update. Shares recovering this morning high

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Speaker 2: by a little more than one percent of following yesterday's slide,

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Speaker 2: which followed the company reporting record third quarter deliveries. Dan

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Speaker 2: ives of Webbush maintaining is outperform rating and writing the

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Speaker 2: following with must now driving Tesla into its next stage

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Speaker 2: of growth. As Wartime CEO, we estimate the AI and

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Speaker 2: autonomous opportunity is worth at least one trillion dollars alone,

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Speaker 2: Dan joins us. Now for more, Dan welcome, Let's just

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Speaker 2: start with yesterday's move. Then we'll get to the future

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Speaker 2: and all that great stuff. How much of that story

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Speaker 2: with the deliveries, which is a massive pull forward in demand.

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Speaker 7: I think probably about thirty percent of it was maybe

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Speaker 7: a pull forward your relative to incremental b But look,

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Speaker 7: the demands story is stabilizing, and now I think you're

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Speaker 7: starting to see that turnaround happen.

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Speaker 8: But as we've talked about, that's just the appetizer.

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Speaker 7: The main event is the AI revolution coming to Tesla

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Speaker 7: with the autonomous and then the robotics piece. I mean,

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Speaker 7: I think there's gonna be a three trillion dollar mark cav.

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Speaker 7: That's why I think six hundred dollars is almost a

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Speaker 7: be's keys for where we see it.

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Speaker 2: So Dan, you understand the tension well. I feel like

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Speaker 2: we've covered this together a million times, But it's the

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Speaker 2: tension between the near term fundamentals and the long term

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Speaker 2: hope and dreams. The fundamentals at the moment when you

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Speaker 2: say the demand story stabilizing, stabilizing demand, it's not the

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Speaker 2: kind of story we'd associate with a multiple like the

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Speaker 2: one on Tesla right now, Now, Dan, how are we

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Speaker 2: going to.

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Speaker 6: Resolve those issues?

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Speaker 2: Do we just keep the faith in the multiple and

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Speaker 2: the stock and the hopes and dreams, or at some

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Speaker 2: times do we have to reconcile these issues.

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Speaker 8: Yeah, it's a great point. Look, you're gonna have ten.

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Speaker 7: Million Teslas on the root and when you think about

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Speaker 7: since the beginningonomous value, as you start to see robotaxis

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Speaker 7: to point thirty thirty five cities, you see full self driving,

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Speaker 7: get the forty fifty percent of the actual Tesla's out there,

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Speaker 7: that's the game changer because ultimately I think they're going

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Speaker 7: to own eighty ninety percent of the autonomous world over

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Speaker 7: the coming years as we get the true what I've

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Speaker 7: used level for Look, I.

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Speaker 8: Think that's the reality. I think investors are looking.

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Speaker 7: Autonomous is truly what I view is really you know,

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Speaker 7: the Goldilock scenario for Tesla because AI physical AI. There's

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Speaker 7: two great physical phenomenal AI plays out there.

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Speaker 8: It's in Nvidia and it's Tesla. When it comes to

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Speaker 8: physical AI.

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Speaker 5: When it comes to EVS. For Tesla, one of the

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Speaker 5: biggest competitors is BID, which is absolutely crushing them in Europe.

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Speaker 5: When it comes to autonomous, who is going to be

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Speaker 5: their biggest competitor? Is it coming from China?

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Speaker 7: Look, I think it comes from China ultimately, you know,

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Speaker 7: when you think about all the technology, you know insis

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Speaker 7: that we've seen there, But globally, no one has a

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Speaker 7: scaling the scope of Tesla not you know, Look, I

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Speaker 7: think dy D is obviously going to be the main competition.

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Speaker 7: But when I think about scale and scope globally, especially

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Speaker 7: not just in the US, but what we see around

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Speaker 7: the world, I think Tesla continues to win that battle.

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Speaker 8: But we don't.

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Speaker 7: Also, we don't view this as one where there's just

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Speaker 7: one winner. And I think when you think about autonomous

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Speaker 7: and you think about this next wave of AI, you know,

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Speaker 7: from the chips to the software to the ripple e fact,

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Speaker 7: it speaks to our view like this AI revolution, we're

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Speaker 7: still in the second inning of a nine inning game

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Speaker 7: and ultimately Yankees end up winning that game.

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Speaker 2: Don't encourage it to. We'll get to that later. Then

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Speaker 2: let's say you're right, let's find some common ground. The

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Speaker 2: autonomous opportunity is massive drivelist vehicles, all of that stuff

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Speaker 2: I think a lot of people can get on board

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Speaker 2: with that. But I want to understand why you think

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Speaker 2: the Tesla path that road is the road's success. So

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Speaker 2: they're using cameras, Weymous using landa. What kind of technology

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Speaker 2: do you ultimately think wins out look?

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Speaker 7: I think it's ultimate Tesla from a data perspective.

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Speaker 8: When you look at the AI engineers and you look.

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Speaker 7: At all the improvements that they're going to make on

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Speaker 7: these next you know sometime.

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Speaker 6: Let's just give me a second. What dates are you

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Speaker 6: looking at?

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Speaker 2: Because I can go off the weekly trips that Weymous

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Speaker 2: do in at the moment and that kind of dates,

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Speaker 2: it looks pretty decent.

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Speaker 6: What are you stacking that up against?

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Speaker 7: I look at as Weimo, there're two hundred thousand dollar

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Speaker 7: cars and essentially five cities.

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Speaker 8: The scaling scope that Tesla has.

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Speaker 7: Given, the millions and millions of miles driven and the

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Speaker 7: ten million vehicles in the road, and everything that they're

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Speaker 7: doing in Moscow is being wartime CEO. That's where I

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Speaker 7: think we see there six months from now, the breakthroughs

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Speaker 7: will happen, and ultimately when it comes to scale, especially

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Speaker 7: when you look at robotax and cybercaps.

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Speaker 8: No one's going to be able to match, Tessa.

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Speaker 7: I view that as just basically what was fact as

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Speaker 7: it plays out.

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Speaker 5: So Dan, when it comes to deliveries, they don't even

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Speaker 5: matter Anymoreks, everyone's so focused on what's going to happen

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Speaker 5: in the future.

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Speaker 7: Look, they matter in terms of just we'll call it.

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Speaker 7: I guess a signal from a stabilization respective, especially after

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Speaker 7: what we've seen over the last six nine months. But

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Speaker 7: I think from an investor perspective, it's all about to

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Speaker 7: a PHARAOHSTO might just like give me marks on autonomous

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Speaker 7: show me the technology innovations, on the AI story, show

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Speaker 7: me that we're going to get the full scale, and

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Speaker 7: optimists show me in November to shareolder me that they're

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Speaker 7: going to have a big piece of XAI. I mean,

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Speaker 7: that's why you see Musk. It's a different mood now.

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Speaker 7: It's that wartime CEO that we're seeing. Those are the marks,

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Speaker 7: and that's how we're going to be looking at six hundred,

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Speaker 7: seven hundred and ultimately you know a stock I think

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Speaker 7: three trillion.

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Speaker 6: That's the lots of play for the road ahead.

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Speaker 7: Dan.

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Speaker 2: Before we leave here, the baseball you want to finish

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Speaker 2: there Yankees when getting it done? Who do you think

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Speaker 2: it's this all done world series like of this year?

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Speaker 7: Look, I mean I think Yankees obviously have a great

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Speaker 7: each to go. I think they're going to surprise many

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Speaker 7: out there. I think this could be their year. And look,

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Speaker 7: Emory there obviously is a good walk charm.

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Speaker 8: So we got to see how the players out Have.

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Speaker 6: We given up on Penn State?

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Speaker 7: Dan?

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Speaker 6: Are we done with that?

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Speaker 2: Now?

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Speaker 8: Look?

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Speaker 7: I'm here, Ombassady at u c A the bounds back starts.

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Speaker 7: That's another one Penn State Yankees.

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Speaker 8: At the at the end, they'll be whole troupe.

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Speaker 6: Stay with us.

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Speaker 2: Mulblinpax surveillance coming up after this. Janet Loo Shatikas joins

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Speaker 2: us now for more Janet. As you know, as is

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Speaker 2: often the case, this is one or lost in the

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Speaker 2: court of public opinion.

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Speaker 6: Who's winning to lose in right now?

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Speaker 8: Yeah?

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Speaker 1: I mean right now? I think if you look at

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Speaker 1: the poll, do you do see that Republicans are getting

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Speaker 1: a little bit more blame than Democrats are currently, But

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Speaker 1: both parties are getting a hit from this, and in

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Speaker 1: general we do see that both per generally do get

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Speaker 1: some backlash for a government shutdown. The same thing happened

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Speaker 1: in twenty thirteen, with President Obama getting some of the blame.

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Speaker 1: Even the Republicans kind of put the government into a shutdown.

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Speaker 1: So both parties may ultimately suffer from this, and that's

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Speaker 1: how they kind of have to figure out who's suffering more.

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Speaker 1: Is where their the pain point may be to actually

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Speaker 1: get the government to reopen.

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Speaker 5: Jennett, what do you say is the off ramp?

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Speaker 1: So this is going to be kind of a difficult situation.

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Speaker 1: So the parties are kind of far apart right now.

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Speaker 1: The Republicans do agree that probably something does need to

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Speaker 1: be done to extend the ACA subsidies, probably a short

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Speaker 1: term extension, maybe a year, maybe a year, with some

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Speaker 1: amendments of reforms to the process, and so the Democrats

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Speaker 1: are pushing for that, but the Republicans are also saying

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Speaker 1: that they can't do anything until the government is reopened,

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Speaker 1: while the Democrats are nervous that the Republicans will not

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Speaker 1: hold their word on this. So what we're thinking is

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Speaker 1: that probably what you're going to have to see is

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Speaker 1: either a major political pressure coming in, which would mean

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Speaker 1: we're seeing missed paychecks in the middle of the month

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Speaker 1: for our military members for Congressional staff, which will also

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Speaker 1: put pressure. But then also do the moderate members come

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Speaker 1: together to figure out how they can figure out some

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Speaker 1: sort of agreement to get us out of this shutdown.

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Speaker 1: It probably will have to be in some form around

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Speaker 1: the AC subsidies. The longer this goes on, this could

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Speaker 1: last two to three weeks, just depending if we don't

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Speaker 1: see any momentum towards a deal. As we get later

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Speaker 1: into the month, you have the miss paychecks that as pressure.

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Speaker 1: You start to maybe get some of these premium increase

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Speaker 1: announces that will add pressure and that could be where

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Speaker 1: we see the ultimate solution.

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Speaker 5: Well, the Republicans already picked up three votes in terms

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Speaker 5: of Democrats willing to vote for the clean stopgap funding measure.

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Speaker 5: Who else should we be looking at?

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Speaker 1: Yeah, I think you look at retiring members, So members

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Speaker 1: like Senator Shaheen from New Hampshire, Senator Peters from Michigan

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Speaker 1: also watching the Virginia senators since they have a significant

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Speaker 1: portion of the workforce in their constituencies. Those will also

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Speaker 1: be key members to watch, so we would want to

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Speaker 1: see if there are they have a vote today. Do

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Speaker 1: more Democratic senators join on to the clean CR or

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Speaker 1: do we go into the weekend and have no movement

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Speaker 1: at all. If we do see more Democratic centers join,

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Speaker 1: then obviously that would be showing a sign that there

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Speaker 1: is more pressure to get to a deal at some point.

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Speaker 1: But if we don't, this could definitely start to linger

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Speaker 1: a lot longer into next week and potentially even the

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Speaker 1: following week.

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Speaker 5: And how are you thinking about the president's meeting with

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Speaker 5: russ Vote yesterday and whether or not he was going

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Speaker 5: to be making layoffs that usually historically are just furloughs

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Speaker 5: and those individuals come back to their job permanent.

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Speaker 1: Yeah, I mean, this is obviously at least a threat.

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Speaker 1: So this is something that they think the administration would

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Speaker 1: like to do, and they see this as an opportunity.

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Speaker 1: This is one of the reasons that Democrats were actually

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Speaker 1: worried about having a government shut down the first place,

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Speaker 1: because they thought that this could be a tactic that

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Speaker 1: the administration would use. But then at the same time,

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Speaker 1: you're also seeing demo prats getting some support among the

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Speaker 1: federal worker unions saying it's okay that you're doing the

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Speaker 1: shutdown because we know we're under attack anyways from this administration.

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Speaker 1: So there's a little bit of We could probably definitely

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Speaker 1: see some layoffs, some permanent layoffs, but then they also

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Speaker 1: may be challenged by the courts and that also could

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Speaker 1: play into public opinion as well. So that also could

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Speaker 1: be something that depending on how these play out, that

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Speaker 1: could be key to which side actually gets more blane

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Speaker 1: and where the pressure ends up being longer.

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Speaker 6: Term stay with us.

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Speaker 2: More Bloomberg surveillance coming up after this. Let's turn back

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Speaker 2: to market. So the S and P five hundred is

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Speaker 2: looking for a sixth consecutive day of gains. It's on

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Speaker 2: a five day winning run, the longest street gone back

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Speaker 2: to late July. Jeff Rosenberg of black Rock has this

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Speaker 2: to say. We believe the current market backdrop masks the

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Speaker 2: high level of dispersion within the economy today. Jeff, John

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Speaker 2: just now for more. Jeff, welcome to the program, sir,

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Speaker 2: No payrolls.

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Speaker 6: We're gonna have to get me deep and all the

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Speaker 6: other stuff. Jeff.

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Speaker 2: I think that what you just said in that quote

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Speaker 2: kind of builds on what we were discussing with regards

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Speaker 2: to the airlines. How much dispersion are you seeing?

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Speaker 9: Yeah, this is really about the difference between what you're

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Speaker 9: seeing on the on the top.

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Speaker 3: Line and the headline and what's going on underneath.

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Speaker 9: And we've talked about it a lot, you know, when

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Speaker 9: we do have payrolls or when we do have FMC meetings,

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Speaker 9: when Tom's with us, we talk a lot about the

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Speaker 9: K shaped recovery, about the differences between something you were

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Speaker 9: just talking about the top end and the bottom end.

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Speaker 3: And you see that.

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Speaker 9: Both for consumers but also within businesses. You have the

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Speaker 9: winners and you have the bottom end that is struggling,

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Speaker 9: and that is the recipe for dispersion.

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Speaker 3: And so when you take away kind of.

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Speaker 9: The big headline that we might have been talking about today,

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Speaker 9: which is good for the economy, bad for the economy,

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Speaker 9: of stocks going up, stocks going down, you go underneath

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Speaker 9: the surface and there's a tremendous amount of churn.

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Speaker 3: Going on underneath.

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Speaker 9: And that when you take away kind of beta investing

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Speaker 9: and you focus on alpha investing, has created a tremendous

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Speaker 9: amount of opportunity. And you see that in some of

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Speaker 9: the returns that look at, say factor returns, stripping out

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Speaker 9: kind of directionality in the markets.

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Speaker 5: When you've joined us in July, you were talking about

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Speaker 5: a tricky environment ahead for the FED. How tricky, is

442
00:20:23,680 --> 00:20:27,200
Speaker 5: it now that they might miss an entire month of data.

443
00:20:29,000 --> 00:20:30,960
Speaker 9: Yeah, So if we shift back to kind of the

444
00:20:31,080 --> 00:20:35,480
Speaker 9: data problem it is, it's tricky for the FED, it's

445
00:20:35,520 --> 00:20:38,439
Speaker 9: tricky for us in investors. You know, I was going

446
00:20:38,480 --> 00:20:41,040
Speaker 9: to suggest that, you know, if we wanted to look

447
00:20:41,080 --> 00:20:43,800
Speaker 9: at and maybe your producers can do this quickly. The

448
00:20:43,880 --> 00:20:48,240
Speaker 9: one area that might be benefiting from this lack of

449
00:20:48,359 --> 00:20:51,840
Speaker 9: data is interest rate uncertainty. So maybe put up a

450
00:20:51,920 --> 00:20:54,680
Speaker 9: chart of the move index, which is collapsed here.

451
00:20:55,040 --> 00:20:56,360
Speaker 3: But you look at kind of.

452
00:20:56,320 --> 00:20:58,520
Speaker 9: What we've been talking about this morning around the lack

453
00:20:58,560 --> 00:21:00,959
Speaker 9: of data, and you have a lot of agreement. The

454
00:21:01,000 --> 00:21:03,359
Speaker 9: good news is you've got a lot of alternative data,

455
00:21:03,400 --> 00:21:05,359
Speaker 9: but kind of the bad news is none of us

456
00:21:05,480 --> 00:21:08,880
Speaker 9: can agree as to what that alternative data means. Good

457
00:21:08,880 --> 00:21:12,800
Speaker 9: example is, and I saw this morning two different estimates

458
00:21:12,840 --> 00:21:16,160
Speaker 9: from alternative data, one using state filings, the other looking

459
00:21:16,200 --> 00:21:20,639
Speaker 9: at extrapolating initial claims forecasts off a challenger layoffs. They

460
00:21:20,720 --> 00:21:25,480
Speaker 9: came up with completely different conclusions. Another example, on the

461
00:21:25,520 --> 00:21:29,760
Speaker 9: earlier segment, you were talking to Manpower talking about switchers

462
00:21:30,280 --> 00:21:31,920
Speaker 9: and the lack of switching, but you look at the

463
00:21:31,960 --> 00:21:35,920
Speaker 9: Atlanta FED wage data and you know, switching wages actually

464
00:21:36,040 --> 00:21:38,920
Speaker 9: went up a little bit, so in the cacaphony, I

465
00:21:38,960 --> 00:21:42,760
Speaker 9: think the benefit might accrue to uncertainty, although that doesn't

466
00:21:42,800 --> 00:21:44,160
Speaker 9: make the FEDS job any easier.

467
00:21:44,320 --> 00:21:46,560
Speaker 5: Well, if you had to decide what your top three

468
00:21:46,640 --> 00:21:48,560
Speaker 5: data points were, what would they be?

469
00:21:51,320 --> 00:21:53,840
Speaker 9: You know, when we're talking about the payroll data and

470
00:21:53,880 --> 00:21:57,320
Speaker 9: the lack of payroll data, you know, I turned to

471
00:21:57,440 --> 00:22:01,280
Speaker 9: the wage data and looking at inferences from that.

472
00:22:01,400 --> 00:22:03,080
Speaker 3: We have the Atlanta Fed wage data.

473
00:22:03,920 --> 00:22:06,320
Speaker 9: We have a lot of private sources in terms of

474
00:22:06,720 --> 00:22:07,680
Speaker 9: what you can scrape.

475
00:22:07,800 --> 00:22:09,400
Speaker 3: I'd like that alternative data.

476
00:22:09,440 --> 00:22:12,360
Speaker 9: We've used that a lot in terms of both frequency

477
00:22:12,800 --> 00:22:16,040
Speaker 9: and turning points. That would be you know, kind of

478
00:22:16,560 --> 00:22:19,240
Speaker 9: data point number one. I think, And Jonathan, you made

479
00:22:19,240 --> 00:22:22,439
Speaker 9: reference to this earlier about the inflation data, and you know,

480
00:22:22,440 --> 00:22:24,080
Speaker 9: whether we're going to start to lose some of that.

481
00:22:24,480 --> 00:22:26,840
Speaker 9: I think the good news there is that with the

482
00:22:26,840 --> 00:22:30,119
Speaker 9: webscrape data, we have a lot of uh, you know,

483
00:22:30,200 --> 00:22:32,800
Speaker 9: kind of consistency around where what people are looking at.

484
00:22:32,840 --> 00:22:36,040
Speaker 9: In terms of alternative forms of data, people talk about

485
00:22:36,040 --> 00:22:36,960
Speaker 9: the price stats data.

486
00:22:36,960 --> 00:22:39,399
Speaker 3: I think that's a that's a good form.

487
00:22:39,680 --> 00:22:41,760
Speaker 9: And then I think the pivot to the private data

488
00:22:41,800 --> 00:22:45,560
Speaker 9: that you mentioned where we hope will continue to get

489
00:22:45,560 --> 00:22:48,000
Speaker 9: that the survey data, the PMIS, they take on a

490
00:22:48,040 --> 00:22:51,400
Speaker 9: heightened you know, importance in this environment of the lack

491
00:22:51,440 --> 00:22:53,760
Speaker 9: of the government data. We have to caveat that with

492
00:22:53,840 --> 00:22:57,480
Speaker 9: the notion that the kind of accuracy that we've seen

493
00:22:57,680 --> 00:23:01,240
Speaker 9: from the survey data the PMI data in terms of

494
00:23:01,240 --> 00:23:04,200
Speaker 9: its importance for this kind of economy, that's that's really

495
00:23:04,280 --> 00:23:07,240
Speaker 9: kind of gone down. And we've seen a decrease in

496
00:23:07,280 --> 00:23:10,840
Speaker 9: the correlation between the PMI data and say, the industrial

497
00:23:10,880 --> 00:23:13,159
Speaker 9: production data in this cycle, so that that's sort of

498
00:23:13,160 --> 00:23:14,960
Speaker 9: a caveat to that third data point.

499
00:23:15,000 --> 00:23:17,800
Speaker 2: And Jeff, we've talked about five six, seven minutes about

500
00:23:17,840 --> 00:23:21,080
Speaker 2: economic data. If I'd given you the payrolls dates or

501
00:23:21,119 --> 00:23:24,040
Speaker 2: the start of the year for the next nine months,

502
00:23:24,280 --> 00:23:25,840
Speaker 2: I think you would have tried it this market and

503
00:23:25,840 --> 00:23:27,960
Speaker 2: completely the wrong way. So I just wanted to Jeff,

504
00:23:28,000 --> 00:23:30,240
Speaker 2: what is the relevant data point right now, because clearly

505
00:23:30,359 --> 00:23:32,320
Speaker 2: some dates is more important than others.

506
00:23:34,000 --> 00:23:37,240
Speaker 9: Yeah, that's that's absolutely you know, it's absolutely the case.

507
00:23:37,280 --> 00:23:40,280
Speaker 9: And it's you know, the classical sort of break between

508
00:23:40,440 --> 00:23:43,679
Speaker 9: kind of growth and inflation and the pivot as to

509
00:23:43,840 --> 00:23:46,679
Speaker 9: which one has the focus of the market, and you know,

510
00:23:46,760 --> 00:23:49,600
Speaker 9: going into before we had the shutdown, you know, the

511
00:23:49,640 --> 00:23:52,920
Speaker 9: other conversation would have been that this is the pivot

512
00:23:53,040 --> 00:23:57,080
Speaker 9: away from the inflation concerns towards the growth concerns, and

513
00:23:57,119 --> 00:24:00,359
Speaker 9: that the kind of you know, top tier data point

514
00:24:00,480 --> 00:24:02,920
Speaker 9: on payrolls is giving us that read on the growth

515
00:24:02,920 --> 00:24:06,080
Speaker 9: and the Fed's pivot towards a focus more on the

516
00:24:06,119 --> 00:24:07,720
Speaker 9: growth and less on the inflation.

517
00:24:07,800 --> 00:24:09,720
Speaker 3: And I think that's kind of the read here.

518
00:24:09,880 --> 00:24:11,560
Speaker 9: In contrast to the beginning of the year, where the

519
00:24:11,560 --> 00:24:14,199
Speaker 9: focus was on inflation the impact on tariffs and tariff

520
00:24:14,240 --> 00:24:16,800
Speaker 9: passed through, we really shifted that focus and I think

521
00:24:16,840 --> 00:24:20,159
Speaker 9: that's really the driver behind the directionality here and interest

522
00:24:20,240 --> 00:24:22,719
Speaker 9: rates really the fear and the concerns to your earlier

523
00:24:22,760 --> 00:24:25,920
Speaker 9: conversation with Seth Carpenter around you know, is there this

524
00:24:26,400 --> 00:24:28,440
Speaker 9: lagged slow down, the lagged effect.

525
00:24:28,560 --> 00:24:29,800
Speaker 3: Remember, the tariff.

526
00:24:29,440 --> 00:24:32,920
Speaker 9: Impact that Seth's talking about is not about the inflation piece,

527
00:24:33,160 --> 00:24:36,680
Speaker 9: but it's on the real wage piece. That the temporary,

528
00:24:36,760 --> 00:24:40,040
Speaker 9: even if it is temporary impact in terms of the

529
00:24:40,080 --> 00:24:42,840
Speaker 9: inflation from tariffs, its impact.

530
00:24:42,400 --> 00:24:43,480
Speaker 3: Is on real wage growth.

531
00:24:43,520 --> 00:24:45,640
Speaker 9: And that's really about the growth side, and that's what's

532
00:24:45,680 --> 00:24:47,280
Speaker 9: driving the rates markets right now.

533
00:24:48,000 --> 00:24:51,560
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534
00:24:51,560 --> 00:24:54,639
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535
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538
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