WEBVTT - Nike, PCE, and Space 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.159 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market moven News. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:55.600 --> 0:01:00.320 We can break down this story here on Nike with 0:01:00.400 --> 0:01:03.959 Putum Goil. She is the retail analyst for Bloomberg Intelligence. 0:01:04.040 --> 0:01:06.600 She follows this stuff. She's done it for decades. She 0:01:06.640 --> 0:01:09.840 knows what's happening, so put them. Thanks so much for 0:01:09.920 --> 0:01:14.040 joining us here. Is this a Nike issue? Is just 0:01:14.040 --> 0:01:16.840 this reflection of the consumer. What's going on? 0:01:17.959 --> 0:01:20.640 It's definitely not a Nike issue. It's more a reflection 0:01:20.720 --> 0:01:23.479 of the consumer and just the macro environment that we operated. 0:01:23.880 --> 0:01:25.559 You know, when you look at the results that Nike 0:01:25.720 --> 0:01:28.520 post did and you just look at the different geographies 0:01:28.520 --> 0:01:31.960 that they operated, the myss was really in two geographies. 0:01:32.160 --> 0:01:35.160 One was China and two Baza Mia. Now the China 0:01:35.240 --> 0:01:38.040 miss consensus is looking for a twelve point five percent 0:01:38.120 --> 0:01:41.520 increase on sales in constant currency. They posted an eight 0:01:41.520 --> 0:01:44.720 percent increase. That's not so bad. I mean, it's definitely, 0:01:44.840 --> 0:01:47.680 you know, behind consensus, but eight percent growth is still 0:01:47.720 --> 0:01:50.880 pretty respectable. Now when you look at Emia the negative 0:01:50.920 --> 0:01:53.240 three percent that we saw there versus an Estama for 0:01:53.280 --> 0:01:55.800 a little single digit gain there, I think, you know, 0:01:56.040 --> 0:01:59.280 whether it was really the culprit not apparel sales which 0:01:59.360 --> 0:02:01.960 hurt them. And that's something that we wouldn't be too 0:02:02.000 --> 0:02:04.240 concerned with when we think about Nike for the longer 0:02:04.320 --> 0:02:06.880 term because those kind of situations have been slow. 0:02:07.840 --> 0:02:09.960 All right, So here we go, hold on, let's go 0:02:09.960 --> 0:02:11.959 to the I'm gonna go back to an earlier We 0:02:12.040 --> 0:02:16.080 were discussing simone tennis shoes versus sneakers, and Eric Mala, 0:02:16.160 --> 0:02:20.120 our producer, popped something in the chat. Here a map 0:02:20.840 --> 0:02:24.079 showing the United States and where people call it tennis 0:02:24.080 --> 0:02:27.160 shoes and where they call it sneakers. So like the northeast, 0:02:27.320 --> 0:02:30.640 kind of like from Pennsylvania up to the northeast sneakers, 0:02:31.040 --> 0:02:37.240 Southern Florida sneakers, the rest of the country, including Alaska 0:02:37.560 --> 0:02:38.120 tennis shoes. 0:02:38.200 --> 0:02:38.920 I don't buy it. 0:02:39.000 --> 0:02:41.120 You don't buy that, But pun what do. 0:02:41.080 --> 0:02:42.200 You call them? 0:02:42.560 --> 0:02:45.640 I call them sneakers, see expert. 0:02:46.919 --> 0:02:47.440 Experts. 0:02:48.760 --> 0:02:51.640 That must be an interesting conversation to have at industry of. 0:02:52.360 --> 0:02:55.919 Well, in Chicago and Cincinnati. You might lace up your quote. 0:02:55.639 --> 0:02:57.799 Gym shoes that I've heard. 0:02:57.840 --> 0:03:01.640 Actually, I'm sneaks, you know, sneakers. Sneaks, that's the. 0:03:01.639 --> 0:03:02.000 Way you go. 0:03:03.760 --> 0:03:05.840 I want to get your sense. How much is this 0:03:06.080 --> 0:03:10.240 a story of sneakers. How much is this a story 0:03:10.320 --> 0:03:14.000 of apparel? And how much is this, you know, athletic war, 0:03:14.240 --> 0:03:17.440 and how much is this a story of overall apparel? 0:03:18.440 --> 0:03:20.679 Sure? So, I think the bigger story here, which has 0:03:20.720 --> 0:03:24.079 been in the story for some time, is broader apparel weakness. 0:03:24.400 --> 0:03:27.240 Now we have seen this across the board because inventories 0:03:27.280 --> 0:03:30.040 were too high and that's what caused apparel to be 0:03:30.120 --> 0:03:33.359 marked down. Now, the other thing was apparel is versus footwear. 0:03:33.360 --> 0:03:36.800 It's for Nike. Nike is dominant in footwear, but when 0:03:36.840 --> 0:03:39.600 it comes to apparel, they don't have that lead that 0:03:39.640 --> 0:03:42.680 they have in footwear with rivals. So it's anyone's game 0:03:42.720 --> 0:03:45.520 when it comes to apparel, and Nike has to fight 0:03:45.680 --> 0:03:49.720 for its share. So it's definitely a tougher marketplace. Though 0:03:49.720 --> 0:03:51.560 when it comes to the footwear, I think they do 0:03:51.640 --> 0:03:54.200 have a lead. I think it comes back to innovation, 0:03:54.280 --> 0:03:57.240 which they're pressing the pedal harder on and that will 0:03:57.240 --> 0:04:00.640 continue to really help them maintain that lead. So footwear, 0:04:00.680 --> 0:04:03.680 I do think they're very strong in and you could 0:04:03.800 --> 0:04:07.280 argue that, you know, there's been competition from companies like 0:04:07.400 --> 0:04:11.080 Foca and on, especially on the running side, but those 0:04:11.120 --> 0:04:14.200 brands are very small. When you look at Nike's footwear 0:04:14.280 --> 0:04:18.320 market and its size there, it's multiple fold of those 0:04:18.400 --> 0:04:21.839 smaller brands and we don't see them losing that lead, 0:04:22.320 --> 0:04:25.640 especially with Jordan. Right Jordan's position to be the second 0:04:25.839 --> 0:04:29.799 largest global footwear brand or at leisure brand in the world, 0:04:29.880 --> 0:04:32.599 and that says something for the Nike flagship. 0:04:33.120 --> 0:04:36.480 But we also heard Nike introducing about two billion dollars 0:04:36.480 --> 0:04:40.440 worth of cost cuts over the next three years. Will 0:04:40.480 --> 0:04:41.840 that impact innovation? 0:04:43.120 --> 0:04:45.440 I don't think so, because the cost cuts are now 0:04:45.480 --> 0:04:49.240 going to be to limit innovation or to really reduce 0:04:49.320 --> 0:04:52.920 spending on innovation. They're really happening on the operation side 0:04:53.040 --> 0:04:55.480 where they may have had redundancy and they're kind of 0:04:55.520 --> 0:04:59.600 backstaff where they're just reorganizing to make matters more efficient, 0:05:00.120 --> 0:05:03.960 more about driving efficiencies. So you could argue that, you know, 0:05:04.000 --> 0:05:06.920 maybe they were two layered to start with and now 0:05:06.920 --> 0:05:10.080 they're just peeling off those layers. I don't think this 0:05:10.160 --> 0:05:13.680 will impact their roadmap for innovation to drive newness into 0:05:13.680 --> 0:05:15.320 the business, especially in footware. 0:05:16.440 --> 0:05:19.200 So simone, you know, Punham's one of the top retail 0:05:19.240 --> 0:05:22.159 anamalsts on Wall Street. Her job, a big part of 0:05:22.160 --> 0:05:25.839 her job is literally going to shopping malls and just 0:05:25.920 --> 0:05:29.839 watching people. What are they buying, what's hot, where's the 0:05:29.880 --> 0:05:33.560 traffic going, how are the promotions out there? And we 0:05:33.600 --> 0:05:37.840 actually pay her to do this stuff. Punum, what are 0:05:37.880 --> 0:05:40.800 you seeing here on this holiday? Shopping. What's your outlook 0:05:40.839 --> 0:05:43.600 here for holiday shopping overall? 0:05:44.640 --> 0:05:46.880 I think we're gonna have a really good homebase even fall, 0:05:47.560 --> 0:05:50.400 irrespective of what we have heard about the US consumer 0:05:50.520 --> 0:05:53.440 and how they're shopping, where they're shopping. The stores are crowded, 0:05:53.480 --> 0:05:57.839 people are buying stuff online. Trucks are being seen all 0:05:57.839 --> 0:06:01.080 over the US delivering multiple blocks, so the lobbies are full, 0:06:01.920 --> 0:06:04.640 so it will be a good holiday. The question is 0:06:04.720 --> 0:06:07.719 what happens after holiday? Do we go into a lull? 0:06:08.160 --> 0:06:10.400 Do you have you bought everything that you wanted and 0:06:10.440 --> 0:06:13.159 now you're just going to take a break. And that's 0:06:13.160 --> 0:06:15.720 really what we'll see into twenty twenty four. But for now, 0:06:15.800 --> 0:06:19.440 people are spending. They're using more buy now, pay later mediums, 0:06:19.480 --> 0:06:23.039 alternative stayment mediums to facilitate the spend, which is also 0:06:23.080 --> 0:06:26.640 something we'll be watching for. But holiday spend online in 0:06:26.760 --> 0:06:31.560 stores looks robust, especially at the key that have done 0:06:31.560 --> 0:06:34.360 a good job in just you know, harping their value 0:06:34.400 --> 0:06:37.040 message and also driving the nique product into their stores. 0:06:37.040 --> 0:06:41.479 Of online businesses, Are there any sectors of the broader 0:06:41.520 --> 0:06:45.000 retail space that may benefit going into next year? What's 0:06:45.040 --> 0:06:45.640 your take on that. 0:06:46.720 --> 0:06:49.440 I think the online retailers are well positioned going into 0:06:49.440 --> 0:06:53.000 twenty twenty four because now things have normalized where you know, 0:06:53.000 --> 0:06:55.839 we've were passed the pandemic and people went to stores 0:06:55.880 --> 0:06:58.080 that wanted to go to stores. They have that experience there. 0:06:58.480 --> 0:07:01.960 But now convenience comes back into play. You want to 0:07:02.000 --> 0:07:04.000 be able to shop from your home, shop from wherever 0:07:04.040 --> 0:07:07.040 you want, and just have things delivered to you, especially 0:07:07.040 --> 0:07:10.120 as things are coming faster now with two day shipping, 0:07:10.160 --> 0:07:12.800 Monday shipping with bio Fine that's being rolled out to 0:07:14.040 --> 0:07:16.320 companies that don't typically sell on Anthon but to be 0:07:16.320 --> 0:07:19.120 able to use that service. So we do think that 0:07:19.280 --> 0:07:22.680 consumers will lean back a little more on digital in 0:07:22.720 --> 0:07:24.800 twenty twenty four than on stories. 0:07:25.280 --> 0:07:26.880 All right, put them Goil, Thank you so much. We 0:07:26.960 --> 0:07:29.560 appreciate that. Put them Goil. She's a senior retail analyst 0:07:29.600 --> 0:07:32.760 for Bloomberg Intelligence, one of the best on Wall Street, 0:07:33.160 --> 0:07:35.679 giving again extent so kind of where the trends are 0:07:35.720 --> 0:07:39.480 for consumers and what retailers are best position to meet those. 0:07:39.520 --> 0:07:44.840 So check out Bloomberg's put them's research on Bloomberg Intelligence. 0:07:44.880 --> 0:07:47.280 You go to Big on the terminal and get all 0:07:47.320 --> 0:07:50.600 of the research from Bloomberg Intelligence. Including put them stuff 0:07:50.600 --> 0:07:54.240 here so it's good stuff, and calling for a decent holiday. 0:07:54.280 --> 0:07:54.640 Are you doing you? 0:07:55.160 --> 0:07:58.680 Which is interesting because you know traffic in store was 0:07:58.720 --> 0:08:03.760 so lackluster it seemed like one Black Friday. No, I 0:08:03.800 --> 0:08:04.960 have not done on my holiday. 0:08:04.960 --> 0:08:07.720 Shn you need to get going there. I need to 0:08:07.720 --> 0:08:10.600 click click a few buttons myself. I'm actually waiting for 0:08:10.640 --> 0:08:13.000 a couple of things that have not been delivered, one 0:08:13.040 --> 0:08:16.120 by Amazon and one by another retailler, So maybe supply 0:08:16.240 --> 0:08:17.240 chain issues out there. 0:08:18.600 --> 0:08:22.440 You're listening to the Team Can't Live program Bloomberg Markets 0:08:22.520 --> 0:08:25.600 weekdays at ten am Eastern on Bloomberg dot Com, the 0:08:25.680 --> 0:08:28.800 iHeartRadio app, and the Bloomberg Business App, or listen on 0:08:28.880 --> 0:08:30.840 demand wherever you get your podcasts. 0:08:33.120 --> 0:08:36.599 We welcome now our Bloomberg television and radio audience. Is 0:08:36.640 --> 0:08:39.360 the top story of course today. Cooling inflation in the 0:08:39.480 --> 0:08:43.520 United States call PCEE barely rising in November. You want 0:08:43.520 --> 0:08:45.480 a cool figure, take a look at the six month 0:08:45.520 --> 0:08:48.920 annualized number, the core metric. They're up one point nine percent, 0:08:49.160 --> 0:08:53.320 ie below two percent. Let's get some reaction from Washington. 0:08:53.440 --> 0:08:55.920 Leil Break, our director of the National Economic Council at 0:08:55.920 --> 0:08:58.000 the White House, and of course, former Vice Chair of 0:08:58.080 --> 0:09:00.920 the Federal Reserve joins us now along with our own 0:09:01.400 --> 0:09:04.640 Kaylee Lines low Brain. Not great to see you. We've 0:09:04.679 --> 0:09:07.400 all been anticipating this number and looking forward to seeing 0:09:07.400 --> 0:09:09.199 exactly what it was going to deliver and what the 0:09:09.280 --> 0:09:12.520 data are going to deliver. It's a really solid number. 0:09:12.600 --> 0:09:14.560 I'm wondering whether we are now at the points where 0:09:14.559 --> 0:09:16.920 we can declare victory, whether it is time for a 0:09:17.040 --> 0:09:20.920 victory lap, whether the inflation dragon has now been slain. 0:09:22.880 --> 0:09:26.640 Well, look, it is really good to see that we're 0:09:26.640 --> 0:09:29.440 closing out the year with inflation on a six month 0:09:29.520 --> 0:09:33.600 basis at two percent. That's the pre pandemic benchmark, and 0:09:33.640 --> 0:09:37.240 it's a very significant milestone. And if you look back 0:09:37.280 --> 0:09:40.320 over the course of the year, it is really stunning 0:09:40.400 --> 0:09:45.160 how much progress the economy has made. Inflations come down 0:09:45.240 --> 0:09:49.360 faster than even the more optimistic forecasts, and growth has 0:09:49.400 --> 0:09:53.480 remained very resilient, along with a strong employment. If you 0:09:53.559 --> 0:09:56.600 recall a year ago, the consensus projection was that getting 0:09:56.600 --> 0:10:01.520 inflation down will require a spike in unemployment recession, but 0:10:01.600 --> 0:10:04.480 in fact, the unemployment rate has remained below four percent 0:10:04.559 --> 0:10:06.920 for twenty two months in a row, and of course, 0:10:06.960 --> 0:10:11.200 we're still seeing more data suggesting growth is resilient. But no, 0:10:12.320 --> 0:10:15.600 it is not time to rest. It is time to 0:10:15.640 --> 0:10:19.120 continue working. And that's what the President is determined to do, 0:10:20.040 --> 0:10:26.400 keep working to keep bringing down prices and improving the 0:10:26.440 --> 0:10:29.000 economy from the middle out and the bottom up. 0:10:30.360 --> 0:10:33.520 Well, and Director brainerd it's Kaylee in Washington. Obviously, he 0:10:33.559 --> 0:10:36.360 has tried to do that domestically, but geopolitics are a 0:10:36.400 --> 0:10:38.840 factor here as well. If it's not time yet to 0:10:38.920 --> 0:10:42.800 declare victory on inflation, if there may still be upside 0:10:42.880 --> 0:10:45.760 risks to inflation out there, How worried are you about 0:10:45.800 --> 0:10:47.560 what's happening in the Red Sea and what it could 0:10:47.600 --> 0:10:49.920 mean for energy prices and supply chains. 0:10:51.400 --> 0:10:55.280 Well, the Red Sea situation is one that we are 0:10:55.320 --> 0:11:00.840 monitoring very closely. Our National security team is in constant 0:11:00.880 --> 0:11:06.000 contact with partners in the region, with shippers, and we 0:11:06.160 --> 0:11:10.000 are doing everything we can to make sure that those 0:11:10.600 --> 0:11:15.400 shipping routes disruptions do not lead to broader disruption supply 0:11:15.480 --> 0:11:18.199 chain disruptions in the US economy. And of course we're 0:11:18.280 --> 0:11:22.160 much better equipped today than we were just two or 0:11:22.160 --> 0:11:26.040 three years ago, because we have under the presence leadership, 0:11:26.040 --> 0:11:28.880 done so much to work in partnership with the private 0:11:28.920 --> 0:11:32.000 sector on supply chain resilience. 0:11:33.679 --> 0:11:37.080 Doctor Brenand, are you confident that the current outlook when 0:11:37.080 --> 0:11:40.480 it comes to wages, it's consistent with let's call it 0:11:40.520 --> 0:11:43.120 two percent, so the target that we're all shooting for here. 0:11:43.760 --> 0:11:45.679 Are you confident that some of the deals that have 0:11:45.720 --> 0:11:47.360 be done this year that are going to take effect 0:11:47.400 --> 0:11:50.600 next year are going to really take us in that direction. 0:11:52.280 --> 0:11:56.400 Well, as you said yourself, that core number, which is 0:11:56.440 --> 0:12:02.760 the really important number on inflation, is actually slightly below 0:12:02.960 --> 0:12:06.439 two percent on a six month basis, and that should 0:12:06.480 --> 0:12:11.559 give everyone a lot of confidence that inflation is sustainably 0:12:12.559 --> 0:12:17.520 down and we can continue to see good growth in 0:12:18.320 --> 0:12:24.400 real disposable incomes, in real wages, and in fact, if 0:12:24.440 --> 0:12:29.080 you look at the real disposable income growth over the 0:12:29.120 --> 0:12:32.559 past year that we saw today three point seven percent, 0:12:32.800 --> 0:12:36.920 very strong, and it is coming in the context of 0:12:37.120 --> 0:12:41.320 rising productivity. You can see that in the last year, 0:12:41.679 --> 0:12:44.720 productivity has been nearly two and a half percent. So 0:12:44.800 --> 0:12:49.280 that gives room for American workers to continue to enjoy 0:12:49.880 --> 0:12:53.640 that take home pay that allows them to purchase thirty 0:12:53.679 --> 0:12:57.360 five hundred dollars more today than they could pre pandemic. 0:12:59.200 --> 0:13:02.640 Okay, so let's talk about American workers, or perhaps more specifically, 0:13:02.720 --> 0:13:05.600 Director Brainerd American voter. So you've mentioned a few times 0:13:05.600 --> 0:13:08.679 here the work the president has done on addressing supply chains, 0:13:08.720 --> 0:13:12.040 on trying to bring inflation down, and clearly the economic 0:13:12.120 --> 0:13:14.760 data supports this idea that the economy is held in 0:13:14.800 --> 0:13:17.720 there even as price pressures have eased. Whatever it is 0:13:17.760 --> 0:13:21.040 not reflected, though, is in the President's approval in consistent 0:13:21.080 --> 0:13:23.079 pulling we are seeing. It's not really a question of 0:13:23.120 --> 0:13:25.840 whether there is a disconnect, because clearly there is one. 0:13:25.880 --> 0:13:28.920 But how do you advise the president as an economic advisor, 0:13:29.240 --> 0:13:31.080 how to address it? What does he need to do? 0:13:32.400 --> 0:13:35.160 Yeah, so when I talked to the President, he has 0:13:35.280 --> 0:13:38.800 focused on one thing. He always wants to know what 0:13:38.840 --> 0:13:43.000 does the strong data, the strong economy mean for American workers, 0:13:43.360 --> 0:13:45.640 What does it mean for their wages, their wallets. We've 0:13:45.720 --> 0:13:50.559 already noted that American consumers are now seeing declines in 0:13:50.679 --> 0:13:53.960 prices over the year on things that really matter to 0:13:54.000 --> 0:13:57.000 them a gallon of gas, a gallon of milk, toys 0:13:57.000 --> 0:14:01.120 for the holiday season, appliances and you know for the holidays, 0:14:01.160 --> 0:14:04.000 car rentals and airfaress are all down over the year. 0:14:04.120 --> 0:14:08.400 Wealth is up thirty seven percent since before the pandemic. 0:14:08.559 --> 0:14:13.080 Home ownership is up, Housing wealth is up, retirement accounts, 0:14:13.080 --> 0:14:16.000 as you know, is up. And today we saw a 0:14:16.080 --> 0:14:22.000 consumer sentiment jumping and that's the biggest jump we have 0:14:22.080 --> 0:14:27.360 seen in years, which suggests that Americans may finally beginning 0:14:27.440 --> 0:14:29.880 to feel a little bit more confident, a little bit 0:14:29.920 --> 0:14:33.440 more secure. But the President is going to continue to 0:14:33.480 --> 0:14:38.040 push us to work to lower costs for American families 0:14:38.040 --> 0:14:42.560 and to keep these gains over the course of the 0:14:42.640 --> 0:14:44.480 next year and years. 0:14:46.120 --> 0:14:48.400 Do you think these gains and inflation should be taken 0:14:48.440 --> 0:14:51.640 for granted? Dr Brain not. The financial markets are pricing 0:14:51.680 --> 0:14:55.400 in six rate cuts for next year. Do you think 0:14:55.400 --> 0:14:57.880 this is an economy that needs that level of easing. 0:15:00.160 --> 0:15:02.800 Look, this is a president who respects the independence of 0:15:02.880 --> 0:15:06.240 the Federal Reserve, so I won't comment on Federal reserve 0:15:06.680 --> 0:15:11.360 policy making. What I can say is that the conditions 0:15:11.920 --> 0:15:15.880 are very favorable in the sense that inflation has come 0:15:15.920 --> 0:15:19.120 down to two percent on a six month basis, much 0:15:19.200 --> 0:15:23.120 earlier than people predicted at a time where the labor 0:15:23.200 --> 0:15:27.080 market is in much better balance. And why it's because 0:15:27.120 --> 0:15:31.520 supply chains have healed, and workers are coming back into 0:15:31.560 --> 0:15:35.040 the labor force at much larger numbers three point three 0:15:35.080 --> 0:15:38.920 million over the last year alone. So that work on 0:15:39.000 --> 0:15:42.160 supply chains that the President has really pushed forward since 0:15:42.200 --> 0:15:44.840 the first month of his presidency is showing up in 0:15:44.920 --> 0:15:49.040 those lower inflation prints, and the market does seem to 0:15:49.080 --> 0:15:55.360 be taking that to a more benign set of interest rates. 0:15:55.400 --> 0:15:58.360 I mean, you look at mortgage rates one and a 0:15:58.400 --> 0:16:01.440 half percentage point DCRE and mortgage rates just over the 0:16:01.520 --> 0:16:02.280 last few months. 0:16:02.360 --> 0:16:03.200 It's very welcome. 0:16:04.840 --> 0:16:07.760 So I understand the restraint around what you can say 0:16:07.800 --> 0:16:10.080 on the monetary policy side, but I wonder what all 0:16:10.080 --> 0:16:12.080 of this means on the fiscal policy side of the 0:16:12.120 --> 0:16:15.720 equation as well, Knowing when Congress returns in January, there 0:16:15.760 --> 0:16:17.920 is going to be a massive spending fight that has 0:16:18.000 --> 0:16:19.960 to take place in terms of the budget. Are we 0:16:20.080 --> 0:16:22.560 looking at a US economy right now that is able 0:16:22.600 --> 0:16:25.160 to withstand greater fiscal restraint. 0:16:26.880 --> 0:16:31.840 Well, this economy has proven to be remarkably resilient, defying 0:16:32.040 --> 0:16:35.840 all the predictions, and looks to close out this year 0:16:35.880 --> 0:16:39.760 certainly on a much stronger level of growth than had 0:16:39.760 --> 0:16:45.720 been anticipated in terms of the fiscal trajectory. President Biden 0:16:45.880 --> 0:16:50.040 really wants to see the agreement that he put in 0:16:50.120 --> 0:16:55.160 place that would cut an additional one trillion in spending, 0:16:55.360 --> 0:17:00.400 a bipartisan budget deal the Fiscal Responsibility Act to and 0:17:00.720 --> 0:17:04.919 put into place. Congress needs to move forward and do 0:17:05.080 --> 0:17:08.040 its job, And of course he's already seen a one 0:17:08.080 --> 0:17:11.800 trillion reduction in depths, it's just in the time since 0:17:11.840 --> 0:17:14.520 he's been in office. So we'll continue to work with 0:17:14.600 --> 0:17:17.640 Congress on a bipartisan basis. The President is really very 0:17:17.680 --> 0:17:21.439 focused on being fiscally sustainable. 0:17:23.840 --> 0:17:27.520 Does big physically sustainable mean as well that we need 0:17:27.600 --> 0:17:31.960 lower interest rates. There's a growing discussion about the interest 0:17:31.960 --> 0:17:35.040 bill that the American economy now carries. That the federal 0:17:35.119 --> 0:17:39.120 government now carries. Significantly lower interest rates obviously would make 0:17:39.160 --> 0:17:43.120 that challenge much much easier to handle. Do you think 0:17:43.119 --> 0:17:47.199 there is a case of fiscal dominance beginning to emerge 0:17:47.240 --> 0:17:50.880 in the United States that the economy is not capable 0:17:50.880 --> 0:17:54.440 of sustaining itself unless it has lower interest rates given 0:17:54.440 --> 0:17:56.640 the interest bill that has now been built up. 0:17:58.400 --> 0:18:01.000 Well, I would come at it from the reverse direction 0:18:01.359 --> 0:18:05.000 and simply say that the benign data that we are 0:18:05.040 --> 0:18:10.359 seeing that suggests that inflation really is sustainably coming down 0:18:10.960 --> 0:18:14.720 on the back of these great improvements and supply chains. 0:18:15.200 --> 0:18:19.600 With the inflation on a six month basis now at 0:18:19.600 --> 0:18:24.080 the two percent pre pandemic benchmark, that's a benign outlook 0:18:24.400 --> 0:18:30.400 that will be much better for our fiscal outlook all 0:18:30.440 --> 0:18:36.760 around in terms of growth, revenues and the longer run 0:18:36.920 --> 0:18:41.400 physcal sustainability. So this is a benign outlook, and yes, 0:18:41.440 --> 0:18:44.960 it's very positive I think for the fiscal trajectory, but 0:18:45.040 --> 0:18:46.240 there's more work to do there. 0:18:48.680 --> 0:18:52.240 I'd like to switch topics if we can, to something 0:18:52.240 --> 0:18:54.320 else that you've addressed this week, which is the proposed 0:18:54.320 --> 0:18:58.240 takeover of a Japanese steel company, Nipon Steel and US Steel. 0:18:58.400 --> 0:19:01.040 You have written in response to this at the purchase 0:19:01.080 --> 0:19:03.760 of an iconic American owned company by a foreign entity, 0:19:03.800 --> 0:19:08.359 even one from a closed ally, deserves serious scrutiny. Why 0:19:08.400 --> 0:19:13.240 does a US ally as close as Japan deserve the scrutiny. 0:19:14.280 --> 0:19:19.760 Well, I think it is longstanding position of the US 0:19:19.840 --> 0:19:24.879 government and longley held, long held view of President Biden 0:19:25.800 --> 0:19:30.760 that steel is a very vital sector for US national 0:19:30.840 --> 0:19:36.440 security and for critical supply chain resilience. And we've seen 0:19:36.480 --> 0:19:40.600 that in past policies that have been undertaken by this president. 0:19:41.359 --> 0:19:48.840 So it is important to review or to make sure 0:19:48.840 --> 0:19:54.040 that there is serious scrutiny of these kinds of transactions 0:19:54.480 --> 0:19:59.280 from the perspective of national security and supply chain resilience. 0:19:59.720 --> 0:20:05.400 While we continue, of course to welcome investment from abroad 0:20:05.680 --> 0:20:11.840 and have seen record foreign direct investment in the US economy. 0:20:11.119 --> 0:20:13.960 Doctor Brandon, have you spoken to has the administration spoken 0:20:14.000 --> 0:20:18.439 to the United steel Workers on this issue? Have you 0:20:18.440 --> 0:20:21.080 got any feedback from them? And is that feedback influencing 0:20:21.119 --> 0:20:22.440 in any way you're thinking. 0:20:23.359 --> 0:20:27.880 Well, I will say that the steel workers are a 0:20:28.000 --> 0:20:35.200 vital part of our steel strength here in the US. 0:20:35.920 --> 0:20:41.080 They are partners with industry, and they are at the 0:20:41.119 --> 0:20:45.920 center of President Biden's vision for growing the economy from 0:20:46.480 --> 0:20:50.240 the middle out and the bottom up. So it is 0:20:50.440 --> 0:20:57.000 important to continue to see strong, good union jobs continuing 0:20:57.040 --> 0:21:02.240 to sustain our steel industry, which is US manufacturing, vital 0:21:02.280 --> 0:21:05.040 to our supply chains, vital to our national security. 0:21:06.920 --> 0:21:09.520 We really appreciate your time today, have a very happy holiday. 0:21:10.119 --> 0:21:11.840 We end on a good note with that data. 0:21:12.040 --> 0:21:12.280 LEL. 0:21:12.320 --> 0:21:16.200 Brighter, Director of the National Economic Council, and of course 0:21:16.240 --> 0:21:18.320 I thanks to bloombergs Kdie Lines. 0:21:18.600 --> 0:21:21.680 You're listening to the tape. Can's our live program Bloomberg 0:21:21.800 --> 0:21:25.399 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:21:25.440 --> 0:21:28.680 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:21:28.720 --> 0:21:31.520 You can also listen live on Amazon Alexa from our 0:21:31.560 --> 0:21:35.960 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:21:37.760 --> 0:21:41.720 Lots of economic data today, personal income PC, deflator on 0:21:41.760 --> 0:21:47.119 the inflation front, durable goods, you know you mish coming 0:21:47.119 --> 0:21:48.919 in a little bit better than expected. They don't just 0:21:48.960 --> 0:21:50.800 have a good football team, they have good economists over 0:21:50.840 --> 0:21:53.399 there at the University of Michigan. So some pretty solid 0:21:53.520 --> 0:21:56.080 data coming across. Let's check in with Stuart Paul, another 0:21:56.080 --> 0:21:59.439 good economists, another good economist, Bloomberg Economics. Now he usually 0:21:59.520 --> 0:22:02.600 joins us in studio, but he's joining us via zoom 0:22:02.640 --> 0:22:04.280 here today. So I'm going to go out on a 0:22:04.320 --> 0:22:08.000 limb and say he might be at Windham Mountain. Now, 0:22:08.000 --> 0:22:10.920 he's got this kind of cheesy background on a zoom, 0:22:10.920 --> 0:22:13.160 which I'm not buying whatsoever, because I think we really 0:22:13.200 --> 0:22:16.000 had the real background. It would be like the slopes 0:22:16.000 --> 0:22:19.320 of Windom Mountain, Stuart, I gotta ask you, where are you, dude. 0:22:20.560 --> 0:22:23.760 I'm in Wyndom. Yeah, he got a light dusting of snow, 0:22:24.080 --> 0:22:25.840 and as soon as I hang up with you guys, 0:22:25.840 --> 0:22:28.240 I'm going out for a hike. All the data is out. 0:22:28.560 --> 0:22:30.400 The data was a gift to Jay Powell. 0:22:30.680 --> 0:22:33.320 I'm taking it personally as a gift for the holidays, 0:22:33.400 --> 0:22:35.080 and after this I'm done. 0:22:34.880 --> 0:22:37.240 And just full disclosure on behalf of Stuart. He is 0:22:37.280 --> 0:22:40.440 an all mountain ski patroller at Windham Mountain Resort. He's 0:22:40.440 --> 0:22:43.040 been doing that for many years. So that's good stuff there. 0:22:43.160 --> 0:22:45.280 So Stuart, what did you take away from again, a 0:22:45.320 --> 0:22:48.959 lot of this data this morning? It seems, I guess, 0:22:49.560 --> 0:22:51.280 give a little bit more leeway for the FED to 0:22:51.320 --> 0:22:54.159 be a little dovershare. Maybe it does. 0:22:54.480 --> 0:22:56.560 It does, But the real question that we need to 0:22:56.600 --> 0:22:59.080 be thinking about the background is just why does the 0:22:59.160 --> 0:23:01.640 data look as good as it does. So we saw 0:23:01.880 --> 0:23:07.000 headline PC inflation actually deflation during the month of November 0:23:07.000 --> 0:23:09.760 because energy price is globally declined, so we got ten 0:23:09.800 --> 0:23:14.440 basis points of deflation for the headline. Core PC inflation 0:23:14.680 --> 0:23:17.960 slowed to just ten bases points, allowing the six month 0:23:18.080 --> 0:23:22.200 annualized pace of core inflation to decline to one point 0:23:22.280 --> 0:23:24.800 nine percent. So if the FED is thinking about what 0:23:24.920 --> 0:23:29.440 trend core inflation looks like, they're thinking, oh, wow, it's 0:23:29.480 --> 0:23:34.119 actually at our target. But in the background, we have 0:23:34.600 --> 0:23:38.920