1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify, or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,880 Speaker 2: Terminal and the Bloomberg Business App. 10 00:00:36,400 --> 00:00:39,120 Speaker 3: Turning to the economy, investors are watching for signals from 11 00:00:39,120 --> 00:00:42,080 Speaker 3: policymakers heading into a key year for the Federal Reserve, 12 00:00:42,159 --> 00:00:44,839 Speaker 3: with a new chair expected to be announced soon. Cleveland 13 00:00:44,880 --> 00:00:47,760 Speaker 3: Fed President Beth Hammock among those preferring to hold rates 14 00:00:47,840 --> 00:00:50,400 Speaker 3: higher for longer, while our next guest is taking the 15 00:00:50,440 --> 00:00:53,440 Speaker 3: other side, voting for a fifty basis point cut at 16 00:00:53,479 --> 00:00:55,800 Speaker 3: the Fed's last meeting. Joining us now is Federal Reserve 17 00:00:55,840 --> 00:00:57,040 Speaker 3: Governor Stephen Myron. 18 00:00:57,120 --> 00:00:58,280 Speaker 4: Very good morning to you, Steven, Thank you. 19 00:00:58,280 --> 00:00:59,760 Speaker 5: So much for joining us. Good morning, thanks for having 20 00:00:59,760 --> 00:01:00,200 Speaker 5: me back. 21 00:01:00,360 --> 00:01:03,160 Speaker 3: So let's start with Beth Ham actually came out over 22 00:01:03,160 --> 00:01:05,560 Speaker 3: the weekend, and we heard for Williams as well on 23 00:01:05,640 --> 00:01:08,840 Speaker 3: Friday saying that potentially where we are right now, rates 24 00:01:08,840 --> 00:01:11,520 Speaker 3: should be steady and they're looking at what's going on inflation. 25 00:01:11,760 --> 00:01:13,759 Speaker 3: Even the Fed Shair was talking about, maybe you need 26 00:01:13,800 --> 00:01:16,319 Speaker 3: to look at inflation the data we had with some 27 00:01:16,400 --> 00:01:18,880 Speaker 3: grain of salt because of the government shutdown. How are 28 00:01:19,040 --> 00:01:21,600 Speaker 3: you viewing that side of the Fed's mandate right now? 29 00:01:22,040 --> 00:01:24,199 Speaker 6: Yeah, So I gave a speech on the inflation netlook 30 00:01:24,280 --> 00:01:27,000 Speaker 6: last week, and you know, and I still believe everything 31 00:01:27,040 --> 00:01:28,880 Speaker 6: I said last week in light of this week's print. 32 00:01:29,600 --> 00:01:31,520 Speaker 6: Last week's print, I mean, look, there were a couple 33 00:01:31,560 --> 00:01:34,560 Speaker 6: of anomalies in last week's print related to consequences of 34 00:01:34,600 --> 00:01:37,920 Speaker 6: the government shutdown, which have distorted and delayed economic data 35 00:01:37,959 --> 00:01:41,240 Speaker 6: that we need to make policy. But you know, and 36 00:01:41,360 --> 00:01:43,319 Speaker 6: those consequences I think are not huge. 37 00:01:43,360 --> 00:01:43,920 Speaker 5: There when you. 38 00:01:43,880 --> 00:01:45,280 Speaker 6: Sort of get to when you get to sort of 39 00:01:45,600 --> 00:01:48,320 Speaker 6: the ultimate PC print, which is what the Fed, which 40 00:01:48,320 --> 00:01:51,200 Speaker 6: is what the FED targets, it's probably ultimately going to 41 00:01:51,200 --> 00:01:53,080 Speaker 6: be in the neighborhood of two tenths of a point, 42 00:01:53,160 --> 00:01:54,800 Speaker 6: maybe a tenth of that is going to be sheltered 43 00:01:54,840 --> 00:01:56,320 Speaker 6: and tenth of the other stuff is going to be 44 00:01:56,400 --> 00:01:59,400 Speaker 6: you know, calendar stuff like prices, like data were collected 45 00:01:59,400 --> 00:02:01,480 Speaker 6: in the second half the month, or and Black Friday stuff. 46 00:02:01,600 --> 00:02:03,120 Speaker 6: But we'll have to sort of see when we get 47 00:02:03,120 --> 00:02:06,640 Speaker 6: the PC data. But it is true that the shelter 48 00:02:06,680 --> 00:02:08,840 Speaker 6: stuff was somewhat distorted by some of the quirks of 49 00:02:09,240 --> 00:02:10,400 Speaker 6: recovering from the shutdown. 50 00:02:11,000 --> 00:02:12,760 Speaker 5: But it's also true that. 51 00:02:12,639 --> 00:02:15,280 Speaker 6: The shelter data were distorted for most of the year 52 00:02:15,680 --> 00:02:19,160 Speaker 6: because of really long lands with which shelter inflation is calculated. 53 00:02:19,280 --> 00:02:21,120 Speaker 6: If you look at market rents, they've been running at 54 00:02:21,160 --> 00:02:23,799 Speaker 6: about a one percent rate for about two years now, right. 55 00:02:23,960 --> 00:02:27,240 Speaker 6: That's not indicative of any price pressures in housing whatsoever, 56 00:02:27,440 --> 00:02:29,480 Speaker 6: but it takes a really long time for measured shelter 57 00:02:29,520 --> 00:02:31,600 Speaker 6: inflation to catch up to that, just because of various 58 00:02:31,680 --> 00:02:34,120 Speaker 6: quirks of the statistical measurement process that I got into 59 00:02:34,160 --> 00:02:36,200 Speaker 6: my speech last week. So I do think there was 60 00:02:36,200 --> 00:02:38,240 Speaker 6: maybe some downward bias in last week's print. But at 61 00:02:38,240 --> 00:02:40,840 Speaker 6: the same time, there's been tons of upward bias in 62 00:02:40,960 --> 00:02:44,600 Speaker 6: data for the entire year, and it's inappropriate to say, Okay, well, 63 00:02:44,639 --> 00:02:46,440 Speaker 6: we have to adjust for the downward bias, but we're 64 00:02:46,440 --> 00:02:48,560 Speaker 6: going to accept the upward bias that itself is a 65 00:02:48,600 --> 00:02:49,519 Speaker 6: deeply biased position. 66 00:02:49,560 --> 00:02:50,760 Speaker 5: We've got to be clear right about both. 67 00:02:50,919 --> 00:02:53,679 Speaker 3: Well, do you feel like yourself included? But do you 68 00:02:53,760 --> 00:02:56,760 Speaker 3: feel like members of the FED are cherry picking what 69 00:02:56,800 --> 00:02:58,560 Speaker 3: about inflation they like or dislike? 70 00:02:59,120 --> 00:03:00,480 Speaker 6: Well, I mean, you know, I think that for the 71 00:03:00,560 --> 00:03:03,359 Speaker 6: last few months, we've had data come out in accordance 72 00:03:03,400 --> 00:03:05,520 Speaker 6: with I think my view of the world. The inflation 73 00:03:05,639 --> 00:03:09,000 Speaker 6: data has steadily come in cooler than expectations. The unemployment 74 00:03:09,120 --> 00:03:12,160 Speaker 6: rate has poked up potentially above where people thought it 75 00:03:12,240 --> 00:03:14,240 Speaker 6: was going to go, and so we've had data that 76 00:03:14,320 --> 00:03:16,799 Speaker 6: should push people into a duvish direction. And I think 77 00:03:16,800 --> 00:03:19,160 Speaker 6: it's somewhat problematic if you see those data coming out 78 00:03:19,200 --> 00:03:21,720 Speaker 6: and you don't adjust your policy prescriptions in a duvish direction. 79 00:03:21,919 --> 00:03:24,080 Speaker 6: What does that say about the reactiveness of policy to 80 00:03:24,120 --> 00:03:26,280 Speaker 6: the economy? You know, I think it looks very it 81 00:03:26,280 --> 00:03:27,760 Speaker 6: reflects very poorly upon the institution. 82 00:03:27,960 --> 00:03:29,680 Speaker 7: At the end of that speech at Columbia, you nodded 83 00:03:29,720 --> 00:03:33,160 Speaker 7: to the fact that recessions are inevitable. Fed's job, it's 84 00:03:33,200 --> 00:03:35,880 Speaker 7: kind of forestall them as much as they can. Policymakers' jobs. 85 00:03:35,880 --> 00:03:38,240 Speaker 7: For that, I'm very curious when you look at the 86 00:03:38,280 --> 00:03:40,200 Speaker 7: labor market, in particularly the rise that we've seen in 87 00:03:40,200 --> 00:03:42,880 Speaker 7: the unemployment rate. That's kind of rise we've seen customarily 88 00:03:42,920 --> 00:03:46,360 Speaker 7: before recessions. How do you assess the risk of there 89 00:03:46,440 --> 00:03:48,120 Speaker 7: being a recession here in the near term when you 90 00:03:48,160 --> 00:03:49,400 Speaker 7: look at the labor market, for instance. 91 00:03:49,640 --> 00:03:51,440 Speaker 6: So I don't see a recession in the near term, 92 00:03:51,440 --> 00:03:55,360 Speaker 6: in part because we are adjusting our policy rate, belowering it, 93 00:03:55,360 --> 00:03:56,240 Speaker 6: which is appropriate. 94 00:03:56,840 --> 00:03:57,040 Speaker 1: You know. 95 00:03:57,120 --> 00:04:00,920 Speaker 6: My view, as I've described is that ietya of shocks 96 00:04:00,920 --> 00:04:03,320 Speaker 6: that hit the economy, you know, including changes to the 97 00:04:03,320 --> 00:04:05,840 Speaker 6: population growth rate due to changes in the border policy, 98 00:04:06,080 --> 00:04:08,280 Speaker 6: have pushed what we call the neutral rate down, and 99 00:04:08,320 --> 00:04:10,920 Speaker 6: that policy needs to adjust downward to reflect that downward 100 00:04:10,920 --> 00:04:14,360 Speaker 6: shift and neutral. If we don't adjust policy down, then 101 00:04:14,400 --> 00:04:18,000 Speaker 6: I think that we do run risks of rising recessions. 102 00:04:18,320 --> 00:04:20,680 Speaker 6: I don't think it's too late to prevent that, and 103 00:04:20,720 --> 00:04:22,799 Speaker 6: so I think it's important that we keep on adjusting 104 00:04:22,800 --> 00:04:24,839 Speaker 6: our policy rate down. But at the moment it's not 105 00:04:24,880 --> 00:04:26,640 Speaker 6: my base case, in part because I think that we 106 00:04:26,760 --> 00:04:29,760 Speaker 6: ultimately will end up continuing to adjust interestraights down. 107 00:04:29,760 --> 00:04:31,039 Speaker 1: I want to ask you about the utility of the 108 00:04:31,080 --> 00:04:32,000 Speaker 1: myrone descent. 109 00:04:32,200 --> 00:04:35,440 Speaker 7: So we had the FED share asked that press conference 110 00:04:35,480 --> 00:04:38,640 Speaker 7: about the increasing confractured nature of the FED Committee. We've 111 00:04:38,640 --> 00:04:41,880 Speaker 7: talked about quiet descents as well. What are you achieving 112 00:04:41,960 --> 00:04:43,880 Speaker 7: or so what's the reaction been to you dissenting as 113 00:04:43,880 --> 00:04:46,480 Speaker 7: you have been kind of in the conversation among the committee. 114 00:04:46,720 --> 00:04:49,599 Speaker 6: Yeah, so, look, I mean there's not really any strategy here. 115 00:04:49,680 --> 00:04:52,080 Speaker 6: I'm just transparent and say what I think and always 116 00:04:52,080 --> 00:04:53,680 Speaker 6: have and that gets me in a lot of trouble. 117 00:04:54,000 --> 00:04:56,360 Speaker 7: And does it or is it a constructive So when 118 00:04:56,360 --> 00:04:57,839 Speaker 7: you descend in the way in which you do, is 119 00:04:57,839 --> 00:04:59,880 Speaker 7: it a constructive descent? Do you find that others are 120 00:05:00,160 --> 00:05:03,360 Speaker 7: willing to engage with you and your perspective on inflation 121 00:05:03,400 --> 00:05:03,880 Speaker 7: for instance? 122 00:05:04,080 --> 00:05:06,960 Speaker 6: Yeah, Well, my perspective on inflation is you know, look 123 00:05:06,960 --> 00:05:08,920 Speaker 6: at my first speech, I talked about inflation a little bit, 124 00:05:08,960 --> 00:05:11,239 Speaker 6: but I mostly was focused on neutral. 125 00:05:11,880 --> 00:05:13,000 Speaker 5: My speech last week. 126 00:05:12,839 --> 00:05:15,120 Speaker 6: I really drew out a lot about my outlook for 127 00:05:15,160 --> 00:05:17,480 Speaker 6: inflation that was sort of implicit in the first speech 128 00:05:17,480 --> 00:05:21,479 Speaker 6: and sort of just cursely, curse cursorily treated, and I 129 00:05:21,480 --> 00:05:23,640 Speaker 6: really drew that out. So my views and inflation haven't 130 00:05:23,640 --> 00:05:25,640 Speaker 6: been out there, fully fleshed out for the committee for 131 00:05:25,720 --> 00:05:27,919 Speaker 6: so long, and now running into holiday season. But I 132 00:05:27,960 --> 00:05:30,320 Speaker 6: have found that that people are constructive, they want to 133 00:05:30,320 --> 00:05:32,880 Speaker 6: discuss these things, and I think that's important. And you know, look, 134 00:05:32,960 --> 00:05:36,880 Speaker 6: one positive benefit of me potentially dissenting like this is 135 00:05:36,880 --> 00:05:40,560 Speaker 6: that it introduces more a wider variety of views. I 136 00:05:40,560 --> 00:05:42,960 Speaker 6: think it's really really important to avoid group think. I 137 00:05:43,000 --> 00:05:45,800 Speaker 6: think if you fall into group think, you stop questioning 138 00:05:45,839 --> 00:05:47,520 Speaker 6: where you could be wrong, and then it just becomes 139 00:05:47,600 --> 00:05:50,400 Speaker 6: much easier to be a complacent consensus that is in error. 140 00:05:50,480 --> 00:05:52,080 Speaker 5: I think we've seen that over and over this year. 141 00:05:52,200 --> 00:05:53,320 Speaker 5: For example, on tariffs. 142 00:05:53,920 --> 00:05:56,800 Speaker 3: Let's talk potentially about tariffs. The President is pushing for 143 00:05:56,920 --> 00:05:59,520 Speaker 3: this two thousand dollars tariff, give it in the Church 144 00:05:59,640 --> 00:06:02,560 Speaker 3: Secretary talking about these tax refunds start of twenty twenty six, 145 00:06:02,680 --> 00:06:06,279 Speaker 3: is there potential that more money in consumers pockets could 146 00:06:06,279 --> 00:06:06,960 Speaker 3: goose inflation? 147 00:06:07,680 --> 00:06:10,640 Speaker 6: Yeah, so there is potential for some of these factors 148 00:06:10,640 --> 00:06:13,440 Speaker 6: to boost economic growth. With respect to sort of tax refunds, 149 00:06:13,440 --> 00:06:15,920 Speaker 6: you know, I think that sorry, with respect to terriffic refunds, 150 00:06:15,920 --> 00:06:17,159 Speaker 6: I think we need to sort of wait and see 151 00:06:17,200 --> 00:06:21,800 Speaker 6: what the policy looks like before getting into analyzing its consequences. 152 00:06:21,800 --> 00:06:24,040 Speaker 6: If there does end up being a policy with respect 153 00:06:24,040 --> 00:06:27,360 Speaker 6: to tax refunds that are results of the already legislated 154 00:06:27,920 --> 00:06:30,560 Speaker 6: tax bill, the One Be Beautiful Bill Act from last year. 155 00:06:30,680 --> 00:06:33,120 Speaker 6: Those are already baked into the forecast and they will 156 00:06:33,120 --> 00:06:35,359 Speaker 6: provide a little bit of demand stimulus. But there's so 157 00:06:35,440 --> 00:06:37,560 Speaker 6: much other stuff going on as a result of policy, 158 00:06:37,640 --> 00:06:41,240 Speaker 6: in O triple B, in deregulation, in other things that 159 00:06:41,279 --> 00:06:43,480 Speaker 6: are going on in policy that ultimately push out the 160 00:06:43,480 --> 00:06:45,880 Speaker 6: supply side of the economy too. And my view is 161 00:06:45,880 --> 00:06:47,839 Speaker 6: that if you push out the demand side while you're 162 00:06:47,880 --> 00:06:50,000 Speaker 6: putting the brakes in the supply side, you get inflation. 163 00:06:50,279 --> 00:06:52,200 Speaker 6: If you push out supply and demand at the same time, 164 00:06:52,240 --> 00:06:54,200 Speaker 6: it doesn't really have an effect on priceis do you. 165 00:06:54,160 --> 00:06:56,200 Speaker 3: Think it was a mistake that when we had under 166 00:06:56,200 --> 00:06:59,000 Speaker 3: the Biden administration the American Rescue Plan Inflation Reduction Act 167 00:06:59,040 --> 00:07:00,839 Speaker 3: sending out checks to and consumers. 168 00:07:01,120 --> 00:07:01,920 Speaker 5: Was that an error? 169 00:07:02,080 --> 00:07:04,600 Speaker 6: Well, it's not appropriate for you know, for a member 170 00:07:04,600 --> 00:07:06,840 Speaker 6: of the Federal Reserve described to man as an error 171 00:07:06,960 --> 00:07:08,440 Speaker 6: or not. But I do think that if you if 172 00:07:08,480 --> 00:07:10,680 Speaker 6: you hit if you hit the gas on demand while 173 00:07:10,720 --> 00:07:12,760 Speaker 6: you're hitting the brakes on supply at the same time, 174 00:07:13,000 --> 00:07:14,440 Speaker 6: it will result in higher prices. 175 00:07:14,480 --> 00:07:16,480 Speaker 5: That is that is, that is an economic. 176 00:07:16,200 --> 00:07:19,800 Speaker 3: When two thousand dollars checks do a similar reaction as 177 00:07:19,800 --> 00:07:22,160 Speaker 3: we saw on by the other checks during the American 178 00:07:22,200 --> 00:07:22,880 Speaker 3: Rescue plan. 179 00:07:22,760 --> 00:07:24,680 Speaker 6: Well it depends what's happening on the supply. So two 180 00:07:24,680 --> 00:07:27,200 Speaker 6: things matter. One is the state of the demand, state 181 00:07:27,200 --> 00:07:31,200 Speaker 6: of aggregate demand outside of those checks. And if you 182 00:07:31,240 --> 00:07:33,680 Speaker 6: go back several years, the economy was recovering on its 183 00:07:33,720 --> 00:07:36,760 Speaker 6: own from COVID. Right, What COVID was not like you know, 184 00:07:36,800 --> 00:07:40,280 Speaker 6: the great the financial crisis which had lingering deleveraging effects 185 00:07:40,360 --> 00:07:43,440 Speaker 6: for a decade plus, which meant that demand was was 186 00:07:43,480 --> 00:07:47,520 Speaker 6: persistently depressed. After COVID, you know, we started getting vaccines, 187 00:07:47,520 --> 00:07:50,080 Speaker 6: we started getting at the virals. Places started opening back up. 188 00:07:50,080 --> 00:07:52,280 Speaker 6: The economy started returning to normal on its own, and 189 00:07:52,280 --> 00:07:54,800 Speaker 6: so demand was growing quite healthily, and jobs numbers were 190 00:07:54,840 --> 00:07:58,080 Speaker 6: beating every month, and so throwing more economic support on 191 00:07:58,120 --> 00:08:00,680 Speaker 6: top of that wound up sort of pushing and already 192 00:08:00,680 --> 00:08:03,480 Speaker 6: expanding demand side to expand even further. Right now, you 193 00:08:03,520 --> 00:08:05,800 Speaker 6: see the unemployment rate is tilting up on its own. Right, 194 00:08:05,880 --> 00:08:07,840 Speaker 6: So demand is in a separate is in a very 195 00:08:07,840 --> 00:08:09,960 Speaker 6: different place than it was in twenty twenty one, But 196 00:08:10,080 --> 00:08:12,679 Speaker 6: so is supply, and I think that if you're taking 197 00:08:12,720 --> 00:08:14,840 Speaker 6: policy steps that are going to push out supply, or 198 00:08:14,840 --> 00:08:17,040 Speaker 6: supply is moving out for reasons other than policy, for 199 00:08:17,080 --> 00:08:20,120 Speaker 6: instance AI, which I find difficult to quantify, but a 200 00:08:20,160 --> 00:08:22,480 Speaker 6: lot of people put a lot of faith in if 201 00:08:22,520 --> 00:08:25,320 Speaker 6: supply is moving out for whatever reasons, it can accommodate 202 00:08:25,360 --> 00:08:27,840 Speaker 6: increasing demand, and so the effect on prices could be 203 00:08:27,920 --> 00:08:28,440 Speaker 6: very different. 204 00:08:28,960 --> 00:08:31,400 Speaker 7: On higher goods inflation, there is a prevailing narrative that 205 00:08:31,400 --> 00:08:33,080 Speaker 7: the terroist policy has a lot to do with what's 206 00:08:33,080 --> 00:08:35,160 Speaker 7: been pushing that up, and you kind of push back 207 00:08:35,160 --> 00:08:36,480 Speaker 7: against that. You did that in the speech that you 208 00:08:36,480 --> 00:08:39,720 Speaker 7: delivered at Columbia as well. At the same time, you 209 00:08:39,720 --> 00:08:42,480 Speaker 7: talk a lot about humility, how much uncertainty there is. 210 00:08:42,480 --> 00:08:44,079 Speaker 7: I think you nodded to Mervin King in that speech 211 00:08:44,120 --> 00:08:45,600 Speaker 7: and what he's written about uncertainty. 212 00:08:46,160 --> 00:08:47,040 Speaker 1: What's it going to take. 213 00:08:47,679 --> 00:08:49,200 Speaker 7: Do you feel like you have a grasp of the 214 00:08:49,200 --> 00:08:51,000 Speaker 7: effect of the tarist policy thus far or are you 215 00:08:51,080 --> 00:08:52,800 Speaker 7: still waiting to figure out sort of what that's going 216 00:08:52,800 --> 00:08:54,520 Speaker 7: to mean for the economy broadly, And yes when it 217 00:08:54,520 --> 00:08:55,720 Speaker 7: comes to goods inflation. 218 00:08:56,040 --> 00:08:58,320 Speaker 6: Yeah, So look in the speech I did discuss how 219 00:08:58,320 --> 00:09:01,760 Speaker 6: there's this consensus has emerged that tariffs are a significant 220 00:09:01,840 --> 00:09:04,440 Speaker 6: driver of inflation in the same way consensus emerged earlier 221 00:09:04,480 --> 00:09:06,080 Speaker 6: in the year the tariffs are going to drive some 222 00:09:06,120 --> 00:09:11,200 Speaker 6: sort of crazy recession, you know that was there. And 223 00:09:11,240 --> 00:09:13,000 Speaker 6: I think that consensus is wrong, and I think and 224 00:09:13,000 --> 00:09:17,520 Speaker 6: I think it's complacent. I described camera factuals, right. If 225 00:09:17,559 --> 00:09:20,920 Speaker 6: you're describing a result in prices to tariffs, you need 226 00:09:20,960 --> 00:09:23,679 Speaker 6: to say what the world would have been like without tariffs. Now, 227 00:09:23,840 --> 00:09:25,880 Speaker 6: what most people do is they look at what we 228 00:09:25,920 --> 00:09:27,880 Speaker 6: call the pre trends, what were the trends of various 229 00:09:27,920 --> 00:09:29,640 Speaker 6: items before tariffs? 230 00:09:29,720 --> 00:09:29,840 Speaker 5: Right? 231 00:09:30,160 --> 00:09:33,320 Speaker 6: And most people select pre trends from the two decades 232 00:09:33,360 --> 00:09:36,960 Speaker 6: before the pandemic, right when the world was very, very different. 233 00:09:37,160 --> 00:09:39,680 Speaker 6: I don't think that that's really appropriate. Instead, the counter 234 00:09:39,760 --> 00:09:41,720 Speaker 6: factors that I want to look at that I describe 235 00:09:42,040 --> 00:09:44,480 Speaker 6: in the speech and I include pictures for them, are 236 00:09:44,600 --> 00:09:48,559 Speaker 6: two things. One what are imported goods imported core goods 237 00:09:48,640 --> 00:09:51,480 Speaker 6: in the PC index doing relative to overall core goods? 238 00:09:51,800 --> 00:09:55,319 Speaker 6: And two what are what's happening on an international basis? 239 00:09:55,360 --> 00:09:58,200 Speaker 6: And in both of those cases, I don't see anything 240 00:09:58,240 --> 00:10:00,439 Speaker 6: that would indicate to me that tariffs are the are 241 00:10:00,600 --> 00:10:02,920 Speaker 6: the driver of core goods inflation. When you look at 242 00:10:02,920 --> 00:10:06,960 Speaker 6: imported goods versus overall core goods, they're inflating at similar rates. 243 00:10:07,200 --> 00:10:09,600 Speaker 6: Importive goods don't stick out. We look at US core 244 00:10:09,640 --> 00:10:12,360 Speaker 6: goods versus other countries. Again, US core goods are in 245 00:10:12,400 --> 00:10:13,920 Speaker 6: the middle of the pack, and there hasn't been a 246 00:10:14,000 --> 00:10:15,880 Speaker 6: change that would indicate to me that there's some sort 247 00:10:15,880 --> 00:10:18,319 Speaker 6: of very significant terror show. So I think it's actually 248 00:10:18,400 --> 00:10:22,040 Speaker 6: quite complacent for people to ascribe all this inflation to tariffs. 249 00:10:22,160 --> 00:10:24,480 Speaker 6: And indeed, if you look at CPI core goods, and 250 00:10:24,520 --> 00:10:27,280 Speaker 6: CPI bottomed down in the middle of last year, right 251 00:10:27,520 --> 00:10:29,480 Speaker 6: seven or eight months before tariffs were implemented. 252 00:10:29,760 --> 00:10:31,800 Speaker 3: I just want to get a sense before you leave us, 253 00:10:31,840 --> 00:10:33,520 Speaker 3: how are you thinking about the next meeting, because it 254 00:10:33,520 --> 00:10:36,120 Speaker 3: couldn't potentially be your last. Do you plan on dissenting 255 00:10:36,240 --> 00:10:37,960 Speaker 3: in favor of fifty basis point cut again? 256 00:10:38,320 --> 00:10:41,160 Speaker 6: Look, I plan on pushing for the policy that I 257 00:10:41,200 --> 00:10:43,480 Speaker 6: think is appropriate at the time. I will say, when 258 00:10:43,480 --> 00:10:45,400 Speaker 6: I got to the FED, we hadn't cut rates at 259 00:10:45,400 --> 00:10:47,960 Speaker 6: all this year, and so it was very important for 260 00:10:48,040 --> 00:10:51,040 Speaker 6: us to move rates down quickly. Since then, we've pushed 261 00:10:51,080 --> 00:10:54,079 Speaker 6: rates down three times seventy five basis points of cuts 262 00:10:54,080 --> 00:10:56,560 Speaker 6: to the policy rate, so the need for me to 263 00:10:56,559 --> 00:10:59,520 Speaker 6: dissent for fifty becomes a little bit less as we 264 00:10:59,559 --> 00:11:01,520 Speaker 6: come down. I haven't yet decided whether I'm going to 265 00:11:01,520 --> 00:11:03,560 Speaker 6: push for twenty five or fifty next meeting. I think 266 00:11:03,600 --> 00:11:06,680 Speaker 6: it depends on a variety of factors. So I could 267 00:11:06,720 --> 00:11:09,160 Speaker 6: see voting for twenty five, but I do think it's 268 00:11:09,200 --> 00:11:11,880 Speaker 6: important that we continue steadily reducing the policy rate. 269 00:11:12,040 --> 00:11:13,679 Speaker 3: So basically, you'll vote for twenty five with the rest 270 00:11:13,679 --> 00:11:15,360 Speaker 3: of the committee's there. If they're not going to push 271 00:11:15,360 --> 00:11:20,480 Speaker 3: through twenty five, you may alert everyone of your disfatisfaction 272 00:11:20,600 --> 00:11:21,720 Speaker 3: with them by going for fifty. 273 00:11:22,559 --> 00:11:25,839 Speaker 6: Well, no, it depends. I think I want to see 274 00:11:25,880 --> 00:11:27,960 Speaker 6: the data. You know, we're still witting on a lot 275 00:11:27,960 --> 00:11:29,320 Speaker 6: of data because of the shutdown, right, so I want 276 00:11:29,360 --> 00:11:31,480 Speaker 6: to see what the data do to my forecast going forward, 277 00:11:31,720 --> 00:11:33,840 Speaker 6: and they and how they change my forecast going forward. 278 00:11:33,880 --> 00:11:35,079 Speaker 6: But the truth is that I think that it was 279 00:11:35,120 --> 00:11:38,240 Speaker 6: really important to vote to sorry to cut in bigger 280 00:11:38,240 --> 00:11:42,120 Speaker 6: clips when policy was very high. As we continue reducing policy, 281 00:11:42,240 --> 00:11:44,240 Speaker 6: I think you sort of get into into territory where 282 00:11:44,280 --> 00:11:47,199 Speaker 6: you can start micromanaging instead of big instead of big 283 00:11:47,240 --> 00:11:49,480 Speaker 6: cuts and I don't know whether we're here yet or 284 00:11:49,480 --> 00:11:51,240 Speaker 6: it would sort of still take a couple more cuts 285 00:11:51,240 --> 00:11:52,839 Speaker 6: to get there. But at some point you sort of 286 00:11:52,880 --> 00:11:54,800 Speaker 6: start to become okay with sort of steady twenty five 287 00:11:54,800 --> 00:11:56,680 Speaker 6: business point cuts instead of fifty business point cuts. 288 00:11:56,679 --> 00:11:58,160 Speaker 4: Do you think it's going to be your last meeting? 289 00:11:58,280 --> 00:12:00,199 Speaker 3: Has the White House reached out about whether or not 290 00:12:00,240 --> 00:12:01,400 Speaker 3: you were going to stay on at the FED? 291 00:12:01,960 --> 00:12:02,720 Speaker 5: I have no idea. 292 00:12:02,800 --> 00:12:04,760 Speaker 6: I mean, look, you know, if nobody is confirmed in 293 00:12:04,800 --> 00:12:07,360 Speaker 6: my seat by January thirty, first I assume that I 294 00:12:07,360 --> 00:12:07,800 Speaker 6: will stay. 295 00:12:07,880 --> 00:12:08,800 Speaker 5: I will stay in my seat. 296 00:12:09,080 --> 00:12:11,360 Speaker 6: You know, you can stay in a seat until a 297 00:12:11,400 --> 00:12:15,120 Speaker 6: successor is confirmed, and then beyond beyond that, you know, 298 00:12:15,120 --> 00:12:18,240 Speaker 6: it'll all depend on who the President ultimately nominates to 299 00:12:18,280 --> 00:12:21,800 Speaker 6: be the next chairman of the FED, because it'll depend on, 300 00:12:22,000 --> 00:12:23,679 Speaker 6: you know, what seats are available and who the President 301 00:12:23,720 --> 00:12:24,480 Speaker 6: wants to fill them. 302 00:12:24,360 --> 00:12:26,760 Speaker 3: When it comes to the next chairman of the Federal Reserve. 303 00:12:26,880 --> 00:12:29,440 Speaker 3: There are two individuals that you've worked closely with just 304 00:12:29,480 --> 00:12:31,600 Speaker 3: this year alone, Kevin Hassett of course, and you were 305 00:12:31,880 --> 00:12:34,400 Speaker 3: at the White House, and also Christopher Wallernent Waller of. 306 00:12:34,400 --> 00:12:35,360 Speaker 5: Course with you at the FED. 307 00:12:35,640 --> 00:12:38,120 Speaker 3: Can you just give us your evaluation of both those individuals, 308 00:12:38,160 --> 00:12:41,160 Speaker 3: given the fact that you have a very good, I 309 00:12:41,160 --> 00:12:42,800 Speaker 3: imagine relationship with both of them. 310 00:12:43,200 --> 00:12:43,440 Speaker 5: Yeah. 311 00:12:43,480 --> 00:12:47,440 Speaker 6: Look, they're both supremely talented economists and extremely effective individuals 312 00:12:47,440 --> 00:12:48,960 Speaker 6: that I have the utmost respect for, and I think 313 00:12:48,960 --> 00:12:51,760 Speaker 6: the country would be very lucky to have either of them. 314 00:12:52,160 --> 00:12:54,400 Speaker 7: A quick question just about what you've witnessed in terms 315 00:12:54,440 --> 00:12:55,840 Speaker 7: of the chairman's role at the FED. 316 00:12:55,880 --> 00:12:57,000 Speaker 1: You've been there for a few months. 317 00:12:58,120 --> 00:13:00,160 Speaker 7: Is there anything that's surprised you about the way that 318 00:13:00,200 --> 00:13:02,880 Speaker 7: fed Share Powell is able to kind of go to 319 00:13:02,920 --> 00:13:05,520 Speaker 7: get people to galvanize themselves around any kind of unanimity. 320 00:13:05,520 --> 00:13:06,840 Speaker 7: The way that he runs the committee. I think we 321 00:13:06,880 --> 00:13:08,920 Speaker 7: think about the fed sharers this kind of principal position. 322 00:13:08,960 --> 00:13:10,840 Speaker 7: The President kind of makes us think that way that 323 00:13:10,880 --> 00:13:12,280 Speaker 7: this is going to be a highly persons have a 324 00:13:12,320 --> 00:13:15,240 Speaker 7: lot of determinism himself, but the FED Chair's responsibility is 325 00:13:15,240 --> 00:13:17,600 Speaker 7: to try to get everybody on board with decisions. What 326 00:13:17,640 --> 00:13:19,600 Speaker 7: if you wouldness about fed Share Powell's ability to do that, 327 00:13:19,640 --> 00:13:21,840 Speaker 7: what would you say to the president down that facet 328 00:13:21,960 --> 00:13:23,680 Speaker 7: a FED chair has to have to be effective. 329 00:13:24,160 --> 00:13:26,640 Speaker 6: Look, you know, I think that there's obviously a lot 330 00:13:26,640 --> 00:13:29,840 Speaker 6: of people on the committee who are not comfortable with 331 00:13:29,840 --> 00:13:33,320 Speaker 6: with three cuts. And I think that's the wrong economic 332 00:13:33,360 --> 00:13:35,040 Speaker 6: position at the moment, given the data that we have 333 00:13:35,040 --> 00:13:36,960 Speaker 6: available to us, and the forecast that we have available 334 00:13:36,960 --> 00:13:39,880 Speaker 6: to us, and the very well known, very well understood 335 00:13:39,960 --> 00:13:43,360 Speaker 6: upward biases that are that are affecting inflation measurement at 336 00:13:43,360 --> 00:13:45,600 Speaker 6: this moment in time, I think that's the wrong the 337 00:13:45,600 --> 00:13:48,400 Speaker 6: wrong view, no question about it. Nevertheless, I think you 338 00:13:48,480 --> 00:13:50,880 Speaker 6: have to give Chairman Powell, you know, a credit for 339 00:13:50,920 --> 00:13:53,839 Speaker 6: having wrangled, you know, wrangled three cuts out of these 340 00:13:53,880 --> 00:13:56,600 Speaker 6: guys in succession. And and it's a it's a it's 341 00:13:56,640 --> 00:13:58,319 Speaker 6: a it's a it's a cat hurting task. 342 00:13:58,760 --> 00:13:58,840 Speaker 5: Uh. 343 00:13:58,960 --> 00:14:00,600 Speaker 6: And you know, and I think we have to, you know, 344 00:14:00,720 --> 00:14:01,760 Speaker 6: we got to give a little. 345 00:14:01,559 --> 00:14:02,079 Speaker 5: Credit for that. 346 00:14:03,200 --> 00:14:06,520 Speaker 2: Stay with us, multiple IMPEX surveillance coming up off to. 347 00:14:06,559 --> 00:14:17,840 Speaker 3: This still with us as Governor Stephen Myron, he heard 348 00:14:17,840 --> 00:14:20,080 Speaker 3: that Neil Dutta of Renmack was coming up. So we 349 00:14:20,120 --> 00:14:22,720 Speaker 3: want to stay around for this discussion because you heard 350 00:14:22,720 --> 00:14:24,520 Speaker 3: something in the green room. You liked what Neil had 351 00:14:24,560 --> 00:14:26,960 Speaker 3: to say, and you were potentially going to include it 352 00:14:27,040 --> 00:14:28,440 Speaker 3: maybe in some of your speeches or right. 353 00:14:28,320 --> 00:14:29,040 Speaker 4: Here on the program. 354 00:14:29,200 --> 00:14:31,160 Speaker 6: I did look, I think I think Neil said something 355 00:14:31,360 --> 00:14:33,960 Speaker 6: very eloquently which which I think is a really fantastic 356 00:14:34,000 --> 00:14:35,680 Speaker 6: way of framing it, which is Neil said that there 357 00:14:35,680 --> 00:14:39,760 Speaker 6: are three drivers of inflation. There's shelter, there's labor, and 358 00:14:39,800 --> 00:14:43,200 Speaker 6: there's energy, and neither of them is remotely flashing orange 359 00:14:43,240 --> 00:14:44,720 Speaker 6: right now, let alone the red. When you look at 360 00:14:44,720 --> 00:14:47,000 Speaker 6: those three drivers, it looks like cool all around. So 361 00:14:47,080 --> 00:14:48,800 Speaker 6: as a result, you know, you got to make some 362 00:14:48,800 --> 00:14:50,440 Speaker 6: conclusions about where inflation's going. 363 00:14:50,360 --> 00:14:54,080 Speaker 5: Over the next year or two. Yel what do you 364 00:14:54,120 --> 00:14:55,760 Speaker 5: want me to say? I mean, it's true. 365 00:14:55,960 --> 00:14:57,920 Speaker 8: I mean, well, so, I think the one thing I 366 00:14:57,960 --> 00:15:00,960 Speaker 8: would say is that everyone's kind of lamenting the fact 367 00:15:00,960 --> 00:15:04,080 Speaker 8: that the BLS made these assumptions around the last inflation number. 368 00:15:04,160 --> 00:15:07,760 Speaker 8: What if assuming zero for shelter inflation was the right assumption. 369 00:15:08,400 --> 00:15:10,600 Speaker 8: You know, there's a lot of focus on non housing 370 00:15:10,640 --> 00:15:13,360 Speaker 8: services as well, but as the labor markets continue to 371 00:15:13,360 --> 00:15:15,960 Speaker 8: cool off, the prices for those things will also cool off. 372 00:15:15,960 --> 00:15:18,440 Speaker 8: I mean, the quits rate is actually at a cycle 373 00:15:18,480 --> 00:15:22,320 Speaker 8: low in the private sector, so that tells me that 374 00:15:22,400 --> 00:15:25,520 Speaker 8: workers don't really have the confidence to leave their jobs, 375 00:15:25,600 --> 00:15:28,120 Speaker 8: which means that the balance of power in the jobs 376 00:15:28,120 --> 00:15:32,440 Speaker 8: market I think has shifted towards employers, and so I 377 00:15:32,480 --> 00:15:36,120 Speaker 8: think that's encouraging for the inflation outlook. And with respect 378 00:15:36,120 --> 00:15:40,400 Speaker 8: to energy, I mean, look, retail gasoline prices are falling now. 379 00:15:40,400 --> 00:15:42,840 Speaker 8: Obviously that's sort of a one time thing, but it 380 00:15:42,880 --> 00:15:45,920 Speaker 8: will take pressure off of household inflation expectations, which the 381 00:15:45,960 --> 00:15:51,080 Speaker 8: FED says that they're concerned about. So I'm encouraged by 382 00:15:51,080 --> 00:15:54,160 Speaker 8: the inflation outlook, and I think the balance of risks 383 00:15:54,440 --> 00:15:57,720 Speaker 8: are such that the FED should be supporting growth. 384 00:15:57,960 --> 00:16:00,440 Speaker 3: But you're less encouraged by what's going on in the 385 00:16:00,480 --> 00:16:01,080 Speaker 3: labor market. 386 00:16:01,160 --> 00:16:02,200 Speaker 5: Is that correct? 387 00:16:03,040 --> 00:16:04,800 Speaker 8: I mean, what's there to be encouraged about. All the 388 00:16:04,880 --> 00:16:08,040 Speaker 8: jobs growth is basically coming from healthcare. I mean that 389 00:16:08,160 --> 00:16:11,240 Speaker 8: was true in the last number as well. Cyclical industries 390 00:16:11,280 --> 00:16:13,560 Speaker 8: are still slowing, and you have to look at you know, 391 00:16:13,560 --> 00:16:16,800 Speaker 8: to me, it's important to kind of think about, you know, 392 00:16:16,840 --> 00:16:19,160 Speaker 8: sort of an add up exercise looking at the underbelly 393 00:16:19,200 --> 00:16:21,160 Speaker 8: of the jobs market and like where's the jobs growth 394 00:16:21,240 --> 00:16:23,240 Speaker 8: coming from? You know, home build we talk about record 395 00:16:23,280 --> 00:16:25,520 Speaker 8: high profit margins. A lot of that's driven by tech 396 00:16:25,840 --> 00:16:29,280 Speaker 8: that's not a big driver of employment. You look at 397 00:16:29,280 --> 00:16:32,560 Speaker 8: the margins for home builders home builder profit margins have 398 00:16:32,640 --> 00:16:34,840 Speaker 8: been eroding. I mean, it's very challenging to keep buying 399 00:16:34,880 --> 00:16:37,320 Speaker 8: people down at you know, at these at the rates 400 00:16:37,320 --> 00:16:40,440 Speaker 8: that they've been doing. That opens up risk for residential 401 00:16:40,480 --> 00:16:44,320 Speaker 8: construction jobs. What about mining? Oil prices are down, you 402 00:16:44,320 --> 00:16:46,640 Speaker 8: think oil riggs are going to hire mining workers or lumber? 403 00:16:46,920 --> 00:16:49,840 Speaker 8: Lumber prices are down too, right, So there's a lot 404 00:16:49,840 --> 00:16:52,840 Speaker 8: of this sort of focus on how you know, I 405 00:16:52,840 --> 00:16:56,600 Speaker 8: think tariffs are weighing on employment, But the truth is 406 00:16:56,640 --> 00:16:58,920 Speaker 8: in things like oil and lumber and housing, I mean, 407 00:16:58,960 --> 00:17:02,720 Speaker 8: prices are down and there's no there's no hiring going on. 408 00:17:02,800 --> 00:17:05,760 Speaker 8: So I think by sort of putting it all the 409 00:17:05,920 --> 00:17:08,840 Speaker 8: onus on the White House, I mean you're absolving the 410 00:17:08,880 --> 00:17:11,879 Speaker 8: Fed in that regard, and I think that that's a mistake. 411 00:17:11,920 --> 00:17:13,720 Speaker 8: I think there are things the Fed can do to 412 00:17:13,720 --> 00:17:14,400 Speaker 8: support growth. 413 00:17:14,680 --> 00:17:16,359 Speaker 5: The economy is weak because of what's going on the 414 00:17:16,440 --> 00:17:17,000 Speaker 5: labor market. 415 00:17:17,040 --> 00:17:19,359 Speaker 3: I mean, Neil's not exactly pointing out a rosy picture 416 00:17:19,520 --> 00:17:21,720 Speaker 3: when it comes to jobs and employment. 417 00:17:22,640 --> 00:17:23,199 Speaker 5: No he's not. 418 00:17:23,359 --> 00:17:25,080 Speaker 6: And as I've said before, I think the Federal reserve 419 00:17:25,119 --> 00:17:27,120 Speaker 6: is too tight. I think it's our job to balance 420 00:17:27,160 --> 00:17:29,119 Speaker 6: prices in the labor market, and I think that we 421 00:17:29,160 --> 00:17:31,280 Speaker 6: are not doing a great job of that at the moment. 422 00:17:31,720 --> 00:17:33,920 Speaker 6: I think lower rates are appropriate, and I think, look, 423 00:17:33,960 --> 00:17:35,880 Speaker 6: you know, one of the key factors here is that 424 00:17:35,920 --> 00:17:38,760 Speaker 6: monetary policy hits the economy with lacks. Right, most people 425 00:17:38,760 --> 00:17:40,960 Speaker 6: think those lags are about twelve to eighteen months. That means 426 00:17:41,040 --> 00:17:43,400 Speaker 6: right now, we got to make policy for twenty twenty seven. 427 00:17:43,680 --> 00:17:45,800 Speaker 6: And I think there's an excessive data dependence at the 428 00:17:45,800 --> 00:17:48,680 Speaker 6: Federal Reserve because that makes you very backward looking. There's 429 00:17:48,720 --> 00:17:50,240 Speaker 6: a lot of people who say, I want to see it, 430 00:17:50,240 --> 00:17:52,000 Speaker 6: and you know, I need to sort of see this 431 00:17:52,320 --> 00:17:54,920 Speaker 6: ABC in the data, right, But the data are right 432 00:17:54,960 --> 00:17:56,639 Speaker 6: now giving you information from July. 433 00:17:57,160 --> 00:17:58,880 Speaker 5: Right. It's very backward looking. 434 00:17:58,880 --> 00:18:00,960 Speaker 6: And in some cases because the lags and shelter that 435 00:18:00,960 --> 00:18:03,160 Speaker 6: we talked about earlier, the data are giving information about 436 00:18:03,200 --> 00:18:05,679 Speaker 6: twenty twenty three right, not now. So we need to 437 00:18:05,720 --> 00:18:07,879 Speaker 6: be making policy for twenty twenty seven. We should not 438 00:18:07,960 --> 00:18:09,840 Speaker 6: be making policy for twenty twenty three. In the rear 439 00:18:09,920 --> 00:18:11,919 Speaker 6: view mirror, I think it's really important for us to 440 00:18:11,960 --> 00:18:14,240 Speaker 6: be forward looking about what developments and inflation the labor 441 00:18:14,240 --> 00:18:16,439 Speaker 6: market are. And I think that's sort of paying attention 442 00:18:16,560 --> 00:18:21,840 Speaker 6: to overly overly data dependent means your two rear view mirror. 443 00:18:21,560 --> 00:18:23,639 Speaker 5: Driving, and I think that's an accident for missing turns. 444 00:18:23,720 --> 00:18:25,360 Speaker 8: Do you think that there are things that FEED can 445 00:18:25,400 --> 00:18:29,680 Speaker 8: do outside of red cuts to help revive labor market conditions? 446 00:18:29,680 --> 00:18:32,439 Speaker 8: I mean, you know, we see this morning. You know 447 00:18:32,520 --> 00:18:36,320 Speaker 8: JGB yields have exploded. I mean, I think you know 448 00:18:36,359 --> 00:18:38,320 Speaker 8: there is an open question about how much red cuts 449 00:18:38,359 --> 00:18:41,320 Speaker 8: would actually bring down longer term rates, right, So have 450 00:18:41,400 --> 00:18:44,800 Speaker 8: you thought about balance sheet tools to kind of pull 451 00:18:44,880 --> 00:18:46,439 Speaker 8: down longer term interest rates? 452 00:18:46,840 --> 00:18:47,720 Speaker 5: I mean not at present. 453 00:18:47,800 --> 00:18:50,960 Speaker 6: I still think we're in a relatively vanilla economic environment 454 00:18:51,000 --> 00:18:53,919 Speaker 6: where lower front end rates will pull lower back end 455 00:18:54,000 --> 00:18:55,040 Speaker 6: rates down over time. 456 00:18:55,160 --> 00:18:57,720 Speaker 5: All LSEQL. Now, of course all else is never equal. 457 00:18:57,760 --> 00:19:00,440 Speaker 6: But the type of regime you're describing where you cut 458 00:19:00,480 --> 00:19:02,040 Speaker 6: the front end rate and that sort of causes the 459 00:19:02,080 --> 00:19:04,760 Speaker 6: back end rate to sell off, that can occur. That 460 00:19:04,840 --> 00:19:07,600 Speaker 6: tends to occur in places where there's uh, you know, 461 00:19:08,480 --> 00:19:12,639 Speaker 6: worries about about about fiscal solvency and liquidity. And I 462 00:19:12,680 --> 00:19:15,200 Speaker 6: don't really see any of that when you sort. 463 00:19:15,040 --> 00:19:15,440 Speaker 5: Of look around. 464 00:19:15,440 --> 00:19:17,199 Speaker 6: I think we're in a very in a very normal, 465 00:19:17,359 --> 00:19:20,680 Speaker 6: uh normal environment where where lower lower front end rates 466 00:19:20,680 --> 00:19:22,119 Speaker 6: would would support the bomb market. 467 00:19:23,920 --> 00:19:27,359 Speaker 2: Stay with us, mult Blemberg, Savannah's coming up off to this. 468 00:19:36,200 --> 00:19:38,720 Speaker 3: You are now joined by Marvin Low. Marvin, thank you 469 00:19:38,760 --> 00:19:42,720 Speaker 3: so much for joining us this morning. You talk about 470 00:19:42,800 --> 00:19:45,479 Speaker 3: while the low hanging fruit of the capital investment are falling, 471 00:19:45,560 --> 00:19:49,719 Speaker 3: US rates has largely been priced and picked, there is 472 00:19:49,800 --> 00:19:54,440 Speaker 3: some vegetation on the tree that to continue to support 473 00:19:54,560 --> 00:19:55,240 Speaker 3: risk taking. 474 00:19:55,560 --> 00:19:56,720 Speaker 5: Talk us to this vegetation. 475 00:19:56,920 --> 00:19:59,840 Speaker 9: Yeah, I mean, I mean, ultimately, when we think about 476 00:20:00,080 --> 00:20:03,199 Speaker 9: what investors absorbed this year, you know, it certainly is 477 00:20:03,280 --> 00:20:07,120 Speaker 9: one where investors are willing to look through. 478 00:20:06,920 --> 00:20:07,760 Speaker 4: Some of the noise. 479 00:20:07,880 --> 00:20:10,000 Speaker 9: And you know, not to say that geopolitics are noise, 480 00:20:10,040 --> 00:20:14,800 Speaker 9: but you know, generally speaking from a market perspective, asset 481 00:20:14,920 --> 00:20:21,120 Speaker 9: values incorporate that uncertainty quite quickly. Is there anything that 482 00:20:21,200 --> 00:20:24,040 Speaker 9: I see in the horizon that really kind of changes 483 00:20:24,160 --> 00:20:26,119 Speaker 9: that positive ultimate environment? 484 00:20:26,240 --> 00:20:27,720 Speaker 4: And you know, we still haven't. 485 00:20:27,920 --> 00:20:29,560 Speaker 9: We still have a world where we're talking about lower 486 00:20:29,600 --> 00:20:31,040 Speaker 9: rates from the FED, maybe. 487 00:20:30,840 --> 00:20:31,920 Speaker 4: Not necessarily around the world. 488 00:20:32,040 --> 00:20:36,119 Speaker 9: That's incredibly supportive, and the capital spend associated with what 489 00:20:36,200 --> 00:20:38,439 Speaker 9: has been the driver for a lot of these equity 490 00:20:38,520 --> 00:20:40,600 Speaker 9: value values are still out there. 491 00:20:40,760 --> 00:20:42,600 Speaker 5: We didn't touch on the ten year yield up. It's 492 00:20:42,640 --> 00:20:44,040 Speaker 5: up to basis points this morning. 493 00:20:44,080 --> 00:20:46,959 Speaker 3: This is of course coming off across what's happening in Japan. 494 00:20:47,359 --> 00:20:51,920 Speaker 3: Jgp's up six basis points. We still see Japanese yields rising. 495 00:20:52,480 --> 00:20:54,080 Speaker 3: Is that a risk to the US story? 496 00:20:54,240 --> 00:20:54,840 Speaker 4: You know what it is? 497 00:20:54,960 --> 00:20:59,160 Speaker 9: Ultimately my view is that the Bank of Japan has 498 00:20:59,200 --> 00:21:02,240 Speaker 9: the ability to some to cap that ultimately if they 499 00:21:02,640 --> 00:21:06,400 Speaker 9: provide the market with some substance in terms of how 500 00:21:06,480 --> 00:21:07,360 Speaker 9: high they're going. 501 00:21:07,200 --> 00:21:09,440 Speaker 4: To go and what they need to do to control inflation. 502 00:21:09,680 --> 00:21:12,639 Speaker 9: But until then, that uncertainty definitely pulls up US yields, 503 00:21:12,800 --> 00:21:17,040 Speaker 9: definitely pulls up global yields, and from the perspective of 504 00:21:17,119 --> 00:21:20,359 Speaker 9: what a lot of these economies want, which is lower 505 00:21:20,400 --> 00:21:22,840 Speaker 9: long yields. Kind of given how important that long yield 506 00:21:22,920 --> 00:21:27,280 Speaker 9: is to overall economic development, it's not a great thing. 507 00:21:27,480 --> 00:21:31,040 Speaker 9: But we're also not at levels that create a massive 508 00:21:31,040 --> 00:21:32,400 Speaker 9: amount of concern yet. 509 00:21:32,640 --> 00:21:36,000 Speaker 7: I'll stick with your vegetation metaphor the ripeness of some 510 00:21:36,040 --> 00:21:37,080 Speaker 7: of what's on the tree here. 511 00:21:37,160 --> 00:21:38,720 Speaker 1: So the story here over the last. 512 00:21:38,520 --> 00:21:42,680 Speaker 7: Few weeks has been about AI concerns over capital spending. 513 00:21:43,160 --> 00:21:45,600 Speaker 7: I'm curious of where you think we are in that narrative. 514 00:21:45,640 --> 00:21:47,480 Speaker 7: So looking ahead to twenty twenty six, we have we 515 00:21:47,520 --> 00:21:49,400 Speaker 7: turned a page in any sort of way. How much 516 00:21:49,480 --> 00:21:50,800 Speaker 7: is that going to color the way that you're looking 517 00:21:50,840 --> 00:21:51,440 Speaker 7: at the market. 518 00:21:51,280 --> 00:21:53,040 Speaker 9: So I think so, I think there are two things 519 00:21:53,040 --> 00:21:58,760 Speaker 9: to think through here. One is just the AI process itself, 520 00:21:58,800 --> 00:22:01,000 Speaker 9: and I think we're still an early in there. You know, 521 00:22:01,880 --> 00:22:03,879 Speaker 9: there was a wonderful story in the Wall Street Journal 522 00:22:03,880 --> 00:22:08,160 Speaker 9: about a vending machine and how AI was ultimately given 523 00:22:08,240 --> 00:22:11,679 Speaker 9: the ability to figure out what to sell and what 524 00:22:11,760 --> 00:22:14,399 Speaker 9: to buy and it didn't work. So we're still, you know, 525 00:22:14,520 --> 00:22:17,240 Speaker 9: quite early in the process of it being integrated into 526 00:22:17,240 --> 00:22:20,080 Speaker 9: our daily life. So from an investment perspective, that is 527 00:22:20,160 --> 00:22:22,480 Speaker 9: still I think a piece of this out there. When 528 00:22:22,480 --> 00:22:25,160 Speaker 9: we talk about the hyperscalers and the amount of investment 529 00:22:25,280 --> 00:22:27,719 Speaker 9: needed to kind of get that into the economy, if 530 00:22:27,760 --> 00:22:30,919 Speaker 9: you will, there are there are you know, winners and 531 00:22:30,960 --> 00:22:33,080 Speaker 9: losers that people are picking right now, and I think 532 00:22:33,080 --> 00:22:35,760 Speaker 9: that's healthy. Just to say that I'm going to buy 533 00:22:35,800 --> 00:22:39,000 Speaker 9: anything at whatever cost is where you wind up in 534 00:22:39,040 --> 00:22:41,320 Speaker 9: trouble in financial markets. So the fact that we're starting 535 00:22:41,320 --> 00:22:44,399 Speaker 9: to rationalize our capital is a good part of this 536 00:22:44,440 --> 00:22:45,359 Speaker 9: evolutionary process. 537 00:22:45,359 --> 00:22:47,800 Speaker 7: How are you thinking about that rationalization? So what are 538 00:22:47,800 --> 00:22:49,399 Speaker 7: you looking for? Is you kind of doesn't have to 539 00:22:49,440 --> 00:22:52,040 Speaker 7: be the hyperscalers, but other kind of ancillary companies to AI. 540 00:22:52,160 --> 00:22:54,960 Speaker 7: What are you looking at or what's giving you the 541 00:22:55,000 --> 00:22:57,080 Speaker 7: most pauses you look at their kind of outlooks. 542 00:22:56,720 --> 00:22:59,720 Speaker 9: From I think you touched on correctly. It is the 543 00:23:00,000 --> 00:23:02,240 Speaker 9: little side of things. It is the amount of debt 544 00:23:02,280 --> 00:23:05,200 Speaker 9: that's out there, and it is the fact that the 545 00:23:05,240 --> 00:23:09,199 Speaker 9: amount of capital and debt available is not unlimited. And 546 00:23:09,240 --> 00:23:12,040 Speaker 9: we know that, and it does show to a certain 547 00:23:12,040 --> 00:23:15,240 Speaker 9: degree maturation of where we are in the cycle. But 548 00:23:15,640 --> 00:23:18,720 Speaker 9: large deals are still getting done. So if in fact 549 00:23:18,800 --> 00:23:21,000 Speaker 9: these large deals can get done and they cost more, 550 00:23:21,119 --> 00:23:23,520 Speaker 9: it's probably coming from somewhere else. So let's think through 551 00:23:23,560 --> 00:23:25,879 Speaker 9: kind of these knock on effects. Think about what parts 552 00:23:25,880 --> 00:23:27,920 Speaker 9: of the market might be more effective. 553 00:23:28,040 --> 00:23:29,520 Speaker 4: And it might not necessarily be AI. 554 00:23:29,640 --> 00:23:34,520 Speaker 9: Right, it's a capital pool that finds an efficient investment. 555 00:23:35,000 --> 00:23:37,480 Speaker 9: If it's all going to one place, that means that 556 00:23:37,480 --> 00:23:39,080 Speaker 9: there's some rationalization elsewhere. 557 00:23:39,160 --> 00:23:40,920 Speaker 3: Marbred, how do you think about the FED next year? 558 00:23:41,000 --> 00:23:43,080 Speaker 3: Money markets pricing in to cuts. 559 00:23:43,119 --> 00:23:46,640 Speaker 9: I think that's too much, you know, I personally I do, 560 00:23:46,720 --> 00:23:48,639 Speaker 9: but I think it's too much by one If you 561 00:23:48,680 --> 00:23:50,800 Speaker 9: will so in the grand scheme of how big this 562 00:23:50,840 --> 00:23:53,760 Speaker 9: economy is. One rate cut here or there doesn't really 563 00:23:53,840 --> 00:23:56,760 Speaker 9: make a difference. And really the fact that we haven't 564 00:23:56,840 --> 00:23:59,959 Speaker 9: seen much movement in yields around this kind of one 565 00:24:00,160 --> 00:24:03,159 Speaker 9: versus two type of discussion means that, you know, it's 566 00:24:03,240 --> 00:24:06,520 Speaker 9: somewhat irrelevant. What winds up happening is that when you 567 00:24:06,560 --> 00:24:10,240 Speaker 9: think about the reaction function, it's still to lower yields, 568 00:24:10,320 --> 00:24:13,320 Speaker 9: which is ultimately supportive. We're not talking about higher yields 569 00:24:13,320 --> 00:24:17,320 Speaker 9: that asymmetric. That asymmetry associated with kind of that decision 570 00:24:17,320 --> 00:24:20,240 Speaker 9: tree is supportive for risk assets ultimately. 571 00:24:20,320 --> 00:24:24,359 Speaker 3: You had Williams on Friday talking about distorted data. Beth Hammock, 572 00:24:24,400 --> 00:24:27,760 Speaker 3: who's going to get a vote exactly this year to 573 00:24:27,800 --> 00:24:29,560 Speaker 3: the Wall Street Journal, was talking about the fact that 574 00:24:29,640 --> 00:24:32,360 Speaker 3: she is still concerned about inflation. What do you make 575 00:24:32,400 --> 00:24:34,720 Speaker 3: of the underlying inflation data when we got Do you 576 00:24:34,720 --> 00:24:37,480 Speaker 3: think it was distorted because of the collection issues we 577 00:24:37,520 --> 00:24:38,720 Speaker 3: had with the government shutdown? 578 00:24:38,880 --> 00:24:39,040 Speaker 10: Yeah? 579 00:24:39,119 --> 00:24:41,480 Speaker 9: Yeah, I mean it was going to be a wonky 580 00:24:41,560 --> 00:24:43,919 Speaker 9: number no matter what. You know, we didn't have collection 581 00:24:44,000 --> 00:24:47,520 Speaker 9: throughout the month of October. We were quite short in 582 00:24:47,640 --> 00:24:52,959 Speaker 9: terms of our surveys. In November and the amount of 583 00:24:53,119 --> 00:24:56,240 Speaker 9: estimates that the bails needed to make was one where 584 00:24:56,560 --> 00:24:58,920 Speaker 9: it really calls into question what you could do with it. 585 00:24:59,040 --> 00:25:01,120 Speaker 9: The market didn't react to it, so the market looked 586 00:25:01,119 --> 00:25:03,560 Speaker 9: through it. We've got a lot of data between now 587 00:25:03,640 --> 00:25:05,800 Speaker 9: and the next FED meeting, and that's going to really 588 00:25:05,960 --> 00:25:08,359 Speaker 9: provide much better guidance on where the economy is going. 589 00:25:08,400 --> 00:25:11,359 Speaker 7: How much confidence do you have about your understanding how 590 00:25:11,400 --> 00:25:13,320 Speaker 7: much inflation is out there at this point that Stephen 591 00:25:13,320 --> 00:25:14,840 Speaker 7: Myron is going to come on later. One of his 592 00:25:14,880 --> 00:25:17,560 Speaker 7: big criticisms is it's not just backward looking, it's too 593 00:25:17,600 --> 00:25:19,440 Speaker 7: backward looking. We don't have a firm grasp sort of 594 00:25:19,440 --> 00:25:20,280 Speaker 7: what the inflation. 595 00:25:20,080 --> 00:25:22,399 Speaker 1: Picture looks like. How about you? How much are we 596 00:25:22,440 --> 00:25:23,560 Speaker 1: fumbling through this right now? 597 00:25:23,840 --> 00:25:24,159 Speaker 5: You know what? 598 00:25:24,680 --> 00:25:27,040 Speaker 9: There there have been a lot of concerns with just 599 00:25:27,080 --> 00:25:30,040 Speaker 9: the collection process four years. The response rate has been 600 00:25:30,040 --> 00:25:32,680 Speaker 9: going down since the pandemic, not only in the US 601 00:25:32,720 --> 00:25:34,919 Speaker 9: but but ultimately globally. We've got a lot of all 602 00:25:35,000 --> 00:25:36,760 Speaker 9: data out there also to kind of support it. So 603 00:25:36,800 --> 00:25:39,359 Speaker 9: I think we get a decent picture and all of 604 00:25:39,440 --> 00:25:42,280 Speaker 9: us are living through, you know, our anecdotal evidence, if 605 00:25:42,320 --> 00:25:44,000 Speaker 9: you will, you know, just kind of walking around New York, 606 00:25:44,000 --> 00:25:47,240 Speaker 9: going to the supermarket. That all provides us with insights, 607 00:25:47,240 --> 00:25:49,760 Speaker 9: so I think we will get a good picture of 608 00:25:49,840 --> 00:25:53,440 Speaker 9: where ultimately inflation is. You know, it might take a 609 00:25:53,440 --> 00:25:55,560 Speaker 9: little bit longer for the official data to get there, 610 00:25:55,920 --> 00:25:58,920 Speaker 9: and then we can calibrate in our minds what policy 611 00:25:58,960 --> 00:26:01,200 Speaker 9: is supposed to be. And that's where the FED discussion 612 00:26:01,200 --> 00:26:04,720 Speaker 9: becomes really really important. If you know, the havings of 613 00:26:04,760 --> 00:26:07,600 Speaker 9: the world are correct and they say that we should 614 00:26:07,600 --> 00:26:11,000 Speaker 9: wait to see this inflation evolve, and in fact we're 615 00:26:11,000 --> 00:26:12,800 Speaker 9: on this kind of hold period at least for the 616 00:26:12,800 --> 00:26:15,919 Speaker 9: next couple of quarters, you can have some comfort that 617 00:26:15,960 --> 00:26:18,440 Speaker 9: the FED is doing the right thing from that perspective. 618 00:26:19,160 --> 00:26:22,320 Speaker 9: If there's a push, you know, really to cut to 619 00:26:22,440 --> 00:26:25,159 Speaker 9: cut rates, even with the data that's pushing against it, 620 00:26:25,359 --> 00:26:25,960 Speaker 9: that's when. 621 00:26:25,760 --> 00:26:27,880 Speaker 4: We wind up with kind of concerns moving. 622 00:26:27,760 --> 00:26:29,200 Speaker 1: From policy to personnel. 623 00:26:29,480 --> 00:26:32,600 Speaker 7: Talking about Rick Reader, the two Kevin's, how are you 624 00:26:32,640 --> 00:26:33,760 Speaker 7: watching all of this unfold? 625 00:26:33,760 --> 00:26:34,480 Speaker 1: How much does it matter? 626 00:26:34,520 --> 00:26:36,240 Speaker 7: You've seen that short list and there is so much 627 00:26:36,240 --> 00:26:39,320 Speaker 7: in that ven diagram that these candidates share, these finalists share. 628 00:26:39,800 --> 00:26:41,200 Speaker 1: How much will it matter who he picks? 629 00:26:41,200 --> 00:26:43,320 Speaker 9: And you know what, I'm not that concerned with it. 630 00:26:43,800 --> 00:26:47,040 Speaker 9: You know, I think that we're looking at qualified candidates. 631 00:26:47,480 --> 00:26:50,399 Speaker 9: Certainly the administration has a view of where it thinks 632 00:26:50,480 --> 00:26:52,560 Speaker 9: rates should be, and those candidates embrace that. 633 00:26:53,320 --> 00:26:54,280 Speaker 4: But you know, we've got the. 634 00:26:54,200 --> 00:26:57,040 Speaker 9: Federal Reserve Act, which has lasted decades in terms of 635 00:26:57,119 --> 00:27:01,600 Speaker 9: really creating a strugg sure that's supposed to have, that's 636 00:27:01,600 --> 00:27:04,359 Speaker 9: supposed to be able to keep the FED immune from 637 00:27:04,680 --> 00:27:07,280 Speaker 9: you know, political if you will, interference into the process. 638 00:27:07,600 --> 00:27:10,280 Speaker 9: I think that that's still out there, you know, Hammock 639 00:27:10,359 --> 00:27:13,480 Speaker 9: and really the smidst of the world being vocal is 640 00:27:13,560 --> 00:27:16,440 Speaker 9: part of that process. And you know, so long as 641 00:27:16,480 --> 00:27:19,120 Speaker 9: we have that structure out there, you know, I think 642 00:27:19,160 --> 00:27:23,000 Speaker 9: that's the independence aspect of the FED becomes something that 643 00:27:23,080 --> 00:27:25,040 Speaker 9: investors are still comfortable with. 644 00:27:27,240 --> 00:27:30,720 Speaker 2: Stay with us, Mault, Blomberg, Savannah's coming up after this. 645 00:27:39,520 --> 00:27:43,440 Speaker 3: Here's the latest the term administration intensifying it's blockade against Venezuela, 646 00:27:43,520 --> 00:27:47,080 Speaker 3: the Coast Guard targeting and pursuing a third sanctioned oil 647 00:27:47,160 --> 00:27:50,439 Speaker 3: tanker off the country's coast. Joining us to discuss is 648 00:27:50,640 --> 00:27:53,640 Speaker 3: Patrick mckenry, former chair of the House Financial Services Committee 649 00:27:53,640 --> 00:27:54,919 Speaker 3: and a Bloomberg contributor. 650 00:27:55,240 --> 00:27:57,640 Speaker 5: Thank you so much for joining us. Patrick. Really great 651 00:27:57,680 --> 00:27:58,840 Speaker 5: to have you on this week. 652 00:27:59,240 --> 00:28:01,639 Speaker 3: I'd love to ask, how do you think your former 653 00:28:01,720 --> 00:28:05,239 Speaker 3: colleagues in Congress view what the administration is doing when 654 00:28:05,280 --> 00:28:06,560 Speaker 3: it comes to Latin America. 655 00:28:07,880 --> 00:28:10,119 Speaker 10: Well, the first question here is what does it do 656 00:28:10,240 --> 00:28:15,320 Speaker 10: to prices? That's the most pertinent political issue here domestically 657 00:28:15,720 --> 00:28:19,520 Speaker 10: number one. Number two, We've had roague regimes to our 658 00:28:19,560 --> 00:28:24,919 Speaker 10: south for decades that have bucked US administrations. So in 659 00:28:24,960 --> 00:28:29,160 Speaker 10: many respects, with the Trump administration saying they're pulling back 660 00:28:29,160 --> 00:28:32,240 Speaker 10: from the world, there is still an expression and need 661 00:28:32,400 --> 00:28:36,600 Speaker 10: for American politicians to show strength that our military might 662 00:28:36,960 --> 00:28:40,720 Speaker 10: does matter, it can be effective. And this is one expression, 663 00:28:41,760 --> 00:28:45,560 Speaker 10: and it does have a wider support among Republicans and 664 00:28:45,640 --> 00:28:49,000 Speaker 10: Democrats on Capitol Hill than is currently being expressed. 665 00:28:49,160 --> 00:28:51,520 Speaker 3: When it comes to price, Venezuela as at present not 666 00:28:51,640 --> 00:28:54,040 Speaker 3: as important to the oil markets, say it was pre 667 00:28:54,160 --> 00:28:57,920 Speaker 3: Hugo Chaves error. It's less than one percent of global supply. 668 00:28:58,640 --> 00:29:00,920 Speaker 3: But at the same time, do you think that is 669 00:29:00,960 --> 00:29:04,680 Speaker 3: the reason why the administration feels like they can intensify 670 00:29:04,760 --> 00:29:07,400 Speaker 3: this pressure, Amadoro, No, this. 671 00:29:07,560 --> 00:29:12,240 Speaker 10: Is a decade in the making, Frankly, and Venezuela and 672 00:29:12,320 --> 00:29:16,840 Speaker 10: Cuba are inextricly linked. One funds the other, and they 673 00:29:16,840 --> 00:29:20,040 Speaker 10: each prop each other up. And so this is viewed 674 00:29:20,040 --> 00:29:23,800 Speaker 10: by I think you would see Marco Rubio and his 675 00:29:23,880 --> 00:29:27,960 Speaker 10: State Department group look at this as a long needed 676 00:29:28,200 --> 00:29:31,840 Speaker 10: work and necessary work right in our own backyard. 677 00:29:32,960 --> 00:29:34,640 Speaker 7: I'm going to pick up on something that Ambria asked you, 678 00:29:34,640 --> 00:29:37,000 Speaker 7: which is sort of about the broader South America strategy here, 679 00:29:37,040 --> 00:29:38,800 Speaker 7: because I think that's something a lot of Americans probably 680 00:29:38,840 --> 00:29:40,160 Speaker 7: haven't figured out or thought. 681 00:29:39,920 --> 00:29:40,760 Speaker 1: A lot about yet. 682 00:29:40,840 --> 00:29:44,040 Speaker 7: So we saw the US's commitment to Argentina earlier this year. 683 00:29:44,080 --> 00:29:46,200 Speaker 7: We've seen the US embrace in Bolivia, another country in 684 00:29:46,280 --> 00:29:48,600 Speaker 7: South America the US have kind of shunned for several 685 00:29:48,640 --> 00:29:51,440 Speaker 7: recent years because it had a leftist leader in place. 686 00:29:52,240 --> 00:29:54,480 Speaker 7: Do you have a holistic understanding what the US is 687 00:29:54,760 --> 00:29:57,320 Speaker 7: trying to do here, not just in Venezuela, but but 688 00:29:57,320 --> 00:30:00,000 Speaker 7: in the region overall. You talk about these rogue regimes. 689 00:30:00,040 --> 00:30:02,200 Speaker 7: The plan is going forward now. 690 00:30:02,160 --> 00:30:06,120 Speaker 10: It's popular in connection with our closest neighbors and biggest 691 00:30:06,120 --> 00:30:10,720 Speaker 10: trading allies. This is always complicated when we're talking about 692 00:30:10,760 --> 00:30:13,440 Speaker 10: foreign affairs with the Trump administration. 693 00:30:13,800 --> 00:30:14,440 Speaker 5: What does it mean? 694 00:30:14,520 --> 00:30:15,680 Speaker 10: What are the layers to it? 695 00:30:15,800 --> 00:30:16,600 Speaker 1: And so on. 696 00:30:17,800 --> 00:30:21,160 Speaker 10: But what we've generally seen is this administration one of 697 00:30:21,280 --> 00:30:25,360 Speaker 10: more Central and South America to us economically and militarily. 698 00:30:26,240 --> 00:30:29,000 Speaker 10: That is a different approach than we've seen in decades 699 00:30:29,400 --> 00:30:33,200 Speaker 10: in Washington, but long standing since someone Row doctrine that 700 00:30:33,200 --> 00:30:36,720 Speaker 10: we want to understand our neighbors and be their greatest 701 00:30:36,760 --> 00:30:42,400 Speaker 10: strength and ally, and long neglected in recent decades. So 702 00:30:42,520 --> 00:30:45,280 Speaker 10: it is a long It's an expression of a longer 703 00:30:45,360 --> 00:30:49,760 Speaker 10: term American strategy of more in our neighbors to us. 704 00:30:50,200 --> 00:30:52,400 Speaker 1: I imagine you have many former colleagues in the House. 705 00:30:52,440 --> 00:30:55,440 Speaker 7: We're eager for the President to talk more about domestic issues. 706 00:30:55,440 --> 00:30:57,320 Speaker 7: He did delivered that speech last week where he talked 707 00:30:57,320 --> 00:30:59,800 Speaker 7: about affordability. Seems to have come around and have been pushed 708 00:30:59,800 --> 00:31:02,000 Speaker 7: to around to talking about it more. 709 00:31:02,560 --> 00:31:03,040 Speaker 1: What does that. 710 00:31:03,000 --> 00:31:05,640 Speaker 7: Message need to sound like to your ears going into 711 00:31:05,640 --> 00:31:08,920 Speaker 7: twenty twenty six to kind of reclaim the narrative here 712 00:31:08,960 --> 00:31:12,000 Speaker 7: going forward about this administration's efforts when it comes to 713 00:31:12,000 --> 00:31:14,000 Speaker 7: sort of writing the economy in the country. 714 00:31:14,120 --> 00:31:18,080 Speaker 10: So Joe Biden tried the don't believe your lying eyes 715 00:31:18,960 --> 00:31:22,000 Speaker 10: message to the American people what you feel is not 716 00:31:22,240 --> 00:31:26,840 Speaker 10: really legitimate. That's not a good response from any politician, 717 00:31:27,000 --> 00:31:29,320 Speaker 10: much less than president of the United States. So President 718 00:31:29,360 --> 00:31:32,800 Speaker 10: Trump should not try to recreate that failed message Number one. 719 00:31:32,880 --> 00:31:37,600 Speaker 10: Number two, he should acknowledge the reality, which is prices 720 00:31:37,600 --> 00:31:40,800 Speaker 10: are higher now and that is putting a pinch on 721 00:31:40,840 --> 00:31:46,280 Speaker 10: the American people. And when prices outstrip waging increases, the 722 00:31:46,600 --> 00:31:50,360 Speaker 10: rising prices outstripped wage increases, the American people feel terrible. 723 00:31:51,080 --> 00:31:54,600 Speaker 10: And so you's got to acknowledge that and then forcefully 724 00:31:55,520 --> 00:31:59,800 Speaker 10: land the administration's policies and communicate on landing those policies. 725 00:32:00,040 --> 00:32:04,280 Speaker 10: We still have tariffs unresolved, in trading agreements unresolved. We 726 00:32:04,320 --> 00:32:07,600 Speaker 10: still have the new tax cut to be implemented in 727 00:32:07,640 --> 00:32:10,520 Speaker 10: the coming year, in regulatory or relief. There's a lot 728 00:32:10,560 --> 00:32:12,760 Speaker 10: that the President could talk about and needs to talk 729 00:32:12,800 --> 00:32:17,160 Speaker 10: about of administration successes. But to tell the American people 730 00:32:17,520 --> 00:32:21,080 Speaker 10: don't trust what they think they're experiencing isn't going to 731 00:32:21,080 --> 00:32:22,440 Speaker 10: be a good wedding message. 732 00:32:22,480 --> 00:32:24,360 Speaker 7: A lot to talk about, indeed, a lot to taut 733 00:32:24,400 --> 00:32:26,160 Speaker 7: And I was struck on the show last week talking 734 00:32:26,160 --> 00:32:28,000 Speaker 7: to a lot of folks from Wall Street who said, look, 735 00:32:28,000 --> 00:32:29,920 Speaker 7: this is a year in which, in light of what 736 00:32:29,920 --> 00:32:32,840 Speaker 7: you've just mentioned, the benefits of this tax and spending 737 00:32:32,840 --> 00:32:35,440 Speaker 7: bill coming into effect, that there were things that could 738 00:32:35,440 --> 00:32:37,560 Speaker 7: be quite advantageous for a lot of Americans. And yet 739 00:32:37,560 --> 00:32:39,960 Speaker 7: we haven't heard a whole lot from the White House 740 00:32:40,000 --> 00:32:42,160 Speaker 7: in terms of what they should be prioritizing, in terms 741 00:32:42,160 --> 00:32:44,200 Speaker 7: of what they should be communicating to the American people. 742 00:32:44,800 --> 00:32:46,920 Speaker 7: What has the most promises you've seen? Where should the 743 00:32:46,920 --> 00:32:47,960 Speaker 7: White House be leaning in? 744 00:32:48,920 --> 00:32:54,920 Speaker 10: No, look, President Trump's political strength is his view his 745 00:32:55,640 --> 00:33:01,480 Speaker 10: economic strength, sorry capacity in the first term to turn 746 00:33:01,520 --> 00:33:05,760 Speaker 10: the administrative to turn the whole administration on renewing and 747 00:33:05,800 --> 00:33:11,240 Speaker 10: reviving the economy became his strongest political attribute, and that 748 00:33:11,320 --> 00:33:13,240 Speaker 10: brought him back to the White House. The facts that 749 00:33:13,680 --> 00:33:15,680 Speaker 10: the fact that he fixed the economy and make people 750 00:33:15,720 --> 00:33:18,600 Speaker 10: feel better and get people on the right track. So 751 00:33:18,600 --> 00:33:21,400 Speaker 10: he's got to fortunately communicate all of the things that 752 00:33:21,440 --> 00:33:24,920 Speaker 10: they've done to make life better for the average American, 753 00:33:24,960 --> 00:33:28,080 Speaker 10: and they've done a ton, but so much of that 754 00:33:28,200 --> 00:33:33,280 Speaker 10: has to be realized, so the economic indicators start going 755 00:33:33,320 --> 00:33:36,360 Speaker 10: in a positive direction for the average America and how 756 00:33:36,440 --> 00:33:39,680 Speaker 10: families live, and he's got to talk about that on 757 00:33:39,720 --> 00:33:43,040 Speaker 10: a repeated basis, in a sustained way. 758 00:33:43,720 --> 00:33:46,360 Speaker 3: A dozen or so House lawmakers have already announced that 759 00:33:46,360 --> 00:33:48,800 Speaker 3: they will not run for reelection, the latest being a 760 00:33:48,920 --> 00:33:51,720 Speaker 3: least staphonic who also decided she's not going to go 761 00:33:51,880 --> 00:33:54,840 Speaker 3: for the New York governor's race. How challenging do you 762 00:33:54,840 --> 00:33:57,920 Speaker 3: think this is going to be for Republican leadership in 763 00:33:57,960 --> 00:33:58,400 Speaker 3: the House. 764 00:33:59,600 --> 00:34:03,840 Speaker 10: Well, the loss of Representative Stephanik is devastating. I mean, 765 00:34:03,880 --> 00:34:10,839 Speaker 10: she's a highly talented, young, dynamic elected official, huge opportunity 766 00:34:11,280 --> 00:34:15,920 Speaker 10: in her future, and for her to say she's stepping 767 00:34:15,920 --> 00:34:19,880 Speaker 10: aside from politics is devastating for Republicans for sure, And 768 00:34:21,080 --> 00:34:25,600 Speaker 10: that is the one announcements made me quite sad this year. 769 00:34:26,120 --> 00:34:28,200 Speaker 10: But she's got a long life ahead and I think 770 00:34:28,200 --> 00:34:33,040 Speaker 10: we'll come back to politics at some point. The announcements 771 00:34:33,080 --> 00:34:36,600 Speaker 10: of retirements from the House show that the House has 772 00:34:36,640 --> 00:34:40,040 Speaker 10: not gotten done as much as they wanted to get 773 00:34:40,080 --> 00:34:44,120 Speaker 10: done this year long dis government shutdown. Everything was jammed 774 00:34:44,120 --> 00:34:46,919 Speaker 10: in the one big beautiful bill. Not much else got 775 00:34:46,960 --> 00:34:51,520 Speaker 10: done legislatively. This is a bad sign about the workplace 776 00:34:51,600 --> 00:34:55,080 Speaker 10: environment on Capitol Hill and how the electeds view it. 777 00:34:56,120 --> 00:34:59,560 Speaker 10: And the final piece is what Republicans view is their 778 00:34:59,600 --> 00:35:03,800 Speaker 10: opportun tunerty to maintain control the US House next Congress. 779 00:35:04,120 --> 00:35:05,000 Speaker 5: Those are the facts. 780 00:35:05,600 --> 00:35:08,640 Speaker 10: We've had a year before I'm sorry, eleven months before 781 00:35:08,680 --> 00:35:11,960 Speaker 10: the next election, so a lot can change in that time. 782 00:35:12,480 --> 00:35:15,759 Speaker 10: But this at this end of year and going into 783 00:35:15,760 --> 00:35:20,040 Speaker 10: the Christmas season, not a great time for House Republicans 784 00:35:20,920 --> 00:35:24,719 Speaker 10: and a bad time as politicians are reassessing whether or 785 00:35:24,719 --> 00:35:25,880 Speaker 10: not to run again. 786 00:35:27,239 --> 00:35:30,799 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 787 00:35:30,800 --> 00:35:34,160 Speaker 2: in markets, economics, antient politics. You can watch the show 788 00:35:34,200 --> 00:35:37,160 Speaker 2: live on Bloomberg TV weekday mornings from six am to 789 00:35:37,280 --> 00:35:41,040 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 790 00:35:41,160 --> 00:35:43,400 Speaker 2: or anywhere else you listen, and as always, on the 791 00:35:43,400 --> 00:35:45,839 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.