WEBVTT - Why Fed Yield Curve Control Is Price Fixing: Jim Bianco

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<v Speaker 1>Welcome to the Bloomberg Penl podcast. I'm Paul swing you

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<v Speaker 1>along with my co host Lisa Brahma Wicks. Each day

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<v Speaker 1>we bring you the most noteworthy and useful interviews for

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<v Speaker 1>podcast or wherever you listen to podcasts, as well as

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<v Speaker 1>at Bloomberg dot com. Paul this week starts the marking

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<v Speaker 1>period of are we seeing a hopium trade or is

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<v Speaker 1>there something real underpinning this. We're seeing a real beginning

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<v Speaker 1>of a of a reopening and a lot of people

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<v Speaker 1>gaining optimism that perhaps we will get a sharper rebound

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<v Speaker 1>than some people had expected. It's sort of a V

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<v Speaker 1>shaped recovery and in V shaped recovery expectations um Joining

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<v Speaker 1>us now to discuss Jim Bianco, President and founder of

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<v Speaker 1>Bianco Research based in Chicago, also a contributor to Bloomberg Opinion.

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<v Speaker 1>I love speaking with Jim. You always have a great

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<v Speaker 1>contrarian but apt view of multi asset class perspective, but

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<v Speaker 1>with a focus the bond market right now, what you're

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<v Speaker 1>seeing is it more hope than reality? I'm afraid that

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<v Speaker 1>there's a little bit more hope in here than the reality.

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<v Speaker 1>And here's why. If you go back to two thousand eight,

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<v Speaker 1>at the worst point of that recession, you had output

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<v Speaker 1>at nine of what it was in two thousand seven,

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<v Speaker 1>you only had a four percent contraction, and output um

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<v Speaker 1>in the Great Depression, you actually had a sevent of

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<v Speaker 1>the output that you had at high. If you go

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<v Speaker 1>with the consensus figures, we should have about an eleven

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<v Speaker 1>or twelve percent contraction at the end of the second quarter.

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<v Speaker 1>Then comes the rebound. Okay, we got to get back

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<v Speaker 1>to where we were. We gotta get back to night

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<v Speaker 1>and that's would just put us at a two thousand

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<v Speaker 1>eight type recession. We gotta get back to percent of

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<v Speaker 1>where we were to have a garden variety recession. So

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<v Speaker 1>when I look at things like the mobility numbers, the

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<v Speaker 1>open table numbers, the consumption of gasoline numbers, these numbers

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<v Speaker 1>are nowhere near getting back to just two percent of

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<v Speaker 1>where they were in January. There's still twenty or thirty

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<v Speaker 1>percent below. And I'm worried that we're not going to

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<v Speaker 1>get all the way back. And I'll give you one

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<v Speaker 1>more um uh statistics Yesterday we had two point one

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<v Speaker 1>million people file for initial unemployment claims. If you add

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<v Speaker 1>in the pandemic insurance for the gig workers, it's more

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<v Speaker 1>like three million. And I got this from Mike McKee.

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<v Speaker 1>He tweeted this out yesterday. Look, we're ten weeks into

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<v Speaker 1>the pandemic, and last week the Connecticut became the fiftieth

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<v Speaker 1>state to be in some stage of restarting their economy.

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<v Speaker 1>If we still had two million people file for claims

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<v Speaker 1>last week when everybody restarted, those are probably permanently lost jobs.

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<v Speaker 1>Those are probably not temporarily furlough jobs because of the

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<v Speaker 1>pandemic that happened leer in the pandemic. That really leads

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<v Speaker 1>up me to believe, yeah, we'll get back to where

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<v Speaker 1>we were. But that's still a bad recession, and I

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<v Speaker 1>think that's gonna be a big disappointment for a lot

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<v Speaker 1>of people. So, Jim, I guess a new term for

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<v Speaker 1>me and for many UH investors this week was yield

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<v Speaker 1>curve control. What does yield curve control? Me to you,

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<v Speaker 1>and you think it's a good idea slash strategy, yield

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<v Speaker 1>curve control, it goes by another phrase called price fixing.

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<v Speaker 1>That's the price they set the price. They've already done

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<v Speaker 1>it on the front end of the yeld curve. They

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<v Speaker 1>set it at zero, and now we're talking about them

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<v Speaker 1>setting the price further out the yeld curve, and then

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<v Speaker 1>they would say with their balance sheet they would use

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<v Speaker 1>it in an unlimited way. Hopefully wouldn't be unlimited, that

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<v Speaker 1>they would ensure that that price would be set. Price

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<v Speaker 1>fixing has never worked. Now to be charitable about it,

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<v Speaker 1>the day you set the price is probably close to

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<v Speaker 1>the proper value um, just like Japan did in two

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<v Speaker 1>thousand and sixteen when they set the price of their

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<v Speaker 1>tenure yield at zero. But then over time, the economy will,

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<v Speaker 1>you know, expand contract investor preferences will change, things will

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<v Speaker 1>be different, But what won't change is the interest rate

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<v Speaker 1>that will be the same every single day, and eventually,

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<v Speaker 1>over time it becomes the wrong interest rate and it

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<v Speaker 1>winds up causing more problems than it's worth. So I'm

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<v Speaker 1>very worried. I think if the FED words to study

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<v Speaker 1>the Japanese example of yield curve control, or the example

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<v Speaker 1>that they did during World War two from seven they

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<v Speaker 1>did yield curve control, it largely didn't work. But yet

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<v Speaker 1>I think the reason they're doing it is because they

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<v Speaker 1>don't want to go to negative interest rates, another scheme

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<v Speaker 1>that doesn't work, and this one is kind of like

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<v Speaker 1>a negative interest rates light, you know, and it just

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<v Speaker 1>gets them to be able to say that they're doing something,

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<v Speaker 1>but they're not doing the draconian thing of negative interest rates.

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<v Speaker 1>But nevertheless, it's still not a good policy, and I

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<v Speaker 1>hope that they don't follow through on it. Well's showing

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<v Speaker 1>the limits of monetary policy at a time when people

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<v Speaker 1>are saying fiscal policy is necessary. And we've gotten that,

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<v Speaker 1>and this was evident in the consumer income numbers that

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<v Speaker 1>we received today, where we actually saw saw incomes rise

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<v Speaker 1>by ten and a half percent in April, people attributing

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<v Speaker 1>this to the enhanced unemployment benefits. When will we start

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<v Speaker 1>to see this in spending which actually was worse than expectations.

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<v Speaker 1>We're seeing people put this money in savings or by

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<v Speaker 1>basic necessities, but it really isn't bleeding into overall consumption yet. Yeah,

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<v Speaker 1>you know what's consistent with that. Number two is the

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<v Speaker 1>University of Chicago study that said scent of the people

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<v Speaker 1>that are now getting unemployment insurance, and remember there's an

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<v Speaker 1>extra six hundred dollars a week from the federal government.

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<v Speaker 1>In there are actually making more money off of unemployment

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<v Speaker 1>insurance than they did in their job, and that's what

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<v Speaker 1>you see in those personal consumption numbers. I think really

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<v Speaker 1>the reason that you're seeing the spending is are the

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<v Speaker 1>spending not kick in is we know that that's going

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<v Speaker 1>to end in a couple of months unless it's renewed. Uh.

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<v Speaker 1>And so yeah, I'm you know, I'm I'm happy that

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<v Speaker 1>I'm getting more money on unemployment than I didn't, uh,

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<v Speaker 1>than when I was working. But I know that that's

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<v Speaker 1>not forever. And I think once there's a permanent resolution

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<v Speaker 1>to that, either it gets extended for a long period

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<v Speaker 1>of time or doesn't, is going to determine how people spend. Hey, Jim,

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<v Speaker 1>thanks much for joining us. We always appreciate your perspective.

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<v Speaker 1>Jim Bianco, President and founder Bianco Research. Jim is also

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<v Speaker 1>a contributor to Bloomberger Opinion, giving us his thoughts on

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<v Speaker 1>kind of the FED, the economy, and what is to

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<v Speaker 1>come for the US economy. This is Bloomberg Markets with

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<v Speaker 1>Lisa A. Bramoeds and Paul's Wheeney on Bloomberg Radio. While

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<v Speaker 1>we are awaiting a press conference from President Trump sometime

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<v Speaker 1>later today. One of the many topics likely to be

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<v Speaker 1>addressed will be the rising tensions between the US and China.

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<v Speaker 1>Whenever we want to get smart on China, we welcome

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<v Speaker 1>our guest, Leland Miller. Leland is the CEO of China

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<v Speaker 1>Basebook International. So, Leland, I hate to put you on

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<v Speaker 1>the spot. What do you think we could possibly hear

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<v Speaker 1>from President Trump today as it relates to the current

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<v Speaker 1>state of US Chinese relations. Well, look, the issue of

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<v Speaker 1>the day is Hong Kong, and I think it's important

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<v Speaker 1>to understand the landscape has changed dramatically over the past

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<v Speaker 1>several weeks. So, first, Beijing pushed through Article twenty three

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<v Speaker 1>uh sedition laws in Hong Kong. It's a process, but

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<v Speaker 1>they've announced it's happening. It's coming out of the National

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<v Speaker 1>People's Congress. The State Department, the U S State Department

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<v Speaker 1>has responded by the certifying Hong Kong as an autonomous

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<v Speaker 1>entity uh SO, saying there's no difference between Hong Kong

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<v Speaker 1>and China based on its review. What this is essentially

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<v Speaker 1>done is is set the two sides up to see

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<v Speaker 1>how much is this going to escalate and President Trump

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<v Speaker 1>has as president today, he's going to UH layout the

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<v Speaker 1>fact that that the situation has changed. The United States

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<v Speaker 1>is prepared to to escalate in some dramatic ways if

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<v Speaker 1>it's these Hong Kong changed dramatically on the ground. But

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<v Speaker 1>I think right now you're at a point in which

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<v Speaker 1>each side is looking at each other and saying, we're

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<v Speaker 1>going to see how bad this gets, and we're going

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<v Speaker 1>to react based on some of the realities on the

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<v Speaker 1>ground rather than rather than the initial step of of

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<v Speaker 1>the laws going into effect. What are some of the

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<v Speaker 1>USS options in getting tough with China right now? Well, look,

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<v Speaker 1>you can you have nuclear options that the the White

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<v Speaker 1>House is is not ready to go to. But I

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<v Speaker 1>think the more realistic ones are requirement and leads a

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<v Speaker 1>requirement changes. UH. There's a lot of worries about extradition,

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<v Speaker 1>UM and and and ways of the Chinese will take

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<v Speaker 1>advantage of the new laws to basically disappear people that

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<v Speaker 1>needs to the extraditions and major topic. UH. Sanctions are

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<v Speaker 1>going to be on the table, particularly financial sanctions. And

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<v Speaker 1>then of course tariffs are looming in the background. You know,

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<v Speaker 1>the President loves tariffs. This doesn't mean they're ready to

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<v Speaker 1>actually uh commit to to hiking tariffs and and to

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<v Speaker 1>revoking special status. Uh they don't appear to be there yet,

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<v Speaker 1>but it means that the president has to lay out

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<v Speaker 1>the landscape, here's what we've got on the table, and

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<v Speaker 1>then sort of bait their Beijing to to behave within

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<v Speaker 1>then the construct of the new system leland with any

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<v Speaker 1>sense of why China is taking this harder more, uh

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<v Speaker 1>sterner stands towards Hong Kong right now? Is there anything

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<v Speaker 1>unique in the in the timing here. Yeah, you know,

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<v Speaker 1>it's there's a there's a tendency to look at everything

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<v Speaker 1>through the US China leads, and and it's not that

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<v Speaker 1>they're even't a US China angle here, but this is basically, uh,

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<v Speaker 1>a reaction to Hong Kong's domestic political schedule. You have,

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<v Speaker 1>you have legislative Council elections in September, and if those proceed,

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<v Speaker 1>pro Beijing forces are going to get demolished. So Beijing

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<v Speaker 1>had an option of either postponing or suspending or getting

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<v Speaker 1>rid of those elections, or else moving in the summer

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<v Speaker 1>window to push forward Article twenty three, which will essentially

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<v Speaker 1>make it illegal to do anything promoting secessions. Addition, treason

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<v Speaker 1>gives them wide uh, you know, a wide variety of

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<v Speaker 1>options to be able to ensure that people they don't

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<v Speaker 1>like don't rise to power in Hong Kong. So this

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<v Speaker 1>is their window. They're moving on it. It just happens

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<v Speaker 1>to be the very critical time in the US China

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<v Speaker 1>relationship as well. So everything is a reaction everything else.

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<v Speaker 1>You said it earlier, and you said this number of

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<v Speaker 1>times that you think that the Phase one trade deal

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<v Speaker 1>is going to get torpedoed later this year. We were

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<v Speaker 1>speaking with a number of people from the Trump administration.

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<v Speaker 1>That doesn't seem to be on the table right now.

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<v Speaker 1>There seems to be a cautiousness about going that route.

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<v Speaker 1>What do you think would make that change? Well, I

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<v Speaker 1>think the reality on the ground is the Chinese can't

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<v Speaker 1>live up to the terms of the deal. And you

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<v Speaker 1>can say that some of its COVID or a lot

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<v Speaker 1>of its COVID. Uh, you could say part of it

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<v Speaker 1>was an unrealistic deal. But going into the fall, we're

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<v Speaker 1>entering the most toxic period in US China relations since

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<v Speaker 1>its Tenement Square is back in. I think things are

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<v Speaker 1>gonna get really, really tough and As a result, it's

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<v Speaker 1>gonna be very difficult for the President to stick by

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<v Speaker 1>a deal, particularly with the Chinese, particularly when they're not

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<v Speaker 1>adhering to most of it. They're hitting some targets, they

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<v Speaker 1>may even exceed a few targets on the agricultural side,

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<v Speaker 1>but in order to back the deal, the President is

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<v Speaker 1>going to have a lot of pressure on him to

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<v Speaker 1>to to to condemn the Chinese and will walk away

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<v Speaker 1>from it. And I think that sooner rather than later.

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<v Speaker 1>That actually gets to it's interesting Leland, I think real quickly.

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<v Speaker 1>My question, I guess is just one. Is there really

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<v Speaker 1>anything that we can do to prevent Hong Kong from

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<v Speaker 1>really becoming a significantly a part of China and really

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<v Speaker 1>lose It's it's an independence in internationalism. Uh No, we

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<v Speaker 1>have no way of stopping what's happening, but we can

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<v Speaker 1>affect how it looks. So one of the reasons why

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<v Speaker 1>I wouldn't expect to see the full range of options

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<v Speaker 1>laid out today, or at least uh pushed out today,

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<v Speaker 1>is that the United States has an ability to affect

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<v Speaker 1>how aggressively the Chinese act in Hong Kong, even if

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<v Speaker 1>when Article twenty three is a reality on the ground.

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<v Speaker 1>If people are disappearing left and right, particularly you know,

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<v Speaker 1>next week is a tenement UH anniversary. UH. That will

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<v Speaker 1>be extremely incendiary. If this law applies retroactively, it would

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<v Speaker 1>be it would encompass all the people who can participate

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<v Speaker 1>in democracy protests for the last couple of years. It

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<v Speaker 1>would be extremely incendiary. Really worry people on the ground

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<v Speaker 1>in Hong Kong, even more so than than than in

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<v Speaker 1>this case. Now. So the United States, by keeping active,

0:12:41.480 --> 0:12:44.800
<v Speaker 1>by keeping aggressive, but keeping its options open, can affect

0:12:44.800 --> 0:12:46.960
<v Speaker 1>the way this plays out on the ground. It can't

0:12:47.000 --> 0:12:50.080
<v Speaker 1>reverse it, but can affect how it looks, you know,

0:12:50.160 --> 0:12:52.600
<v Speaker 1>six months or a year from now. Leland Miller, thank

0:12:52.640 --> 0:12:55.040
<v Speaker 1>you so much for being with us. As always, your

0:12:55.080 --> 0:12:58.240
<v Speaker 1>insights are incredibly valuable. Leland Miller, chief executive Officer of

0:12:58.320 --> 0:13:04.199
<v Speaker 1>China beige Book International. This is Bloomberg Markets with Lisa

0:13:04.360 --> 0:13:08.520
<v Speaker 1>Ramowitz and Paul Sweeney on Bloomberg Radio. The market has

0:13:08.520 --> 0:13:12.120
<v Speaker 1>been buffeted recently by a series of economic data that

0:13:12.160 --> 0:13:15.320
<v Speaker 1>show a brutal reality, as well as the incredible policy

0:13:15.360 --> 0:13:20.040
<v Speaker 1>response that has fueled optimism in markets, and now increasingly

0:13:20.080 --> 0:13:23.880
<v Speaker 1>a focus on growing tensions between the US and China.

0:13:24.200 --> 0:13:26.400
<v Speaker 1>There is no one better to speak about all of

0:13:26.440 --> 0:13:28.720
<v Speaker 1>these things in the intersection of them, the Nathan Sheets,

0:13:28.760 --> 0:13:32.240
<v Speaker 1>chief economist and head of macroeconomic research at PIGEM Fixed

0:13:32.240 --> 0:13:35.000
<v Speaker 1>Income with more than eight hundred billion dollars under management,

0:13:35.200 --> 0:13:37.680
<v Speaker 1>who has worked at the FED working on some of

0:13:37.679 --> 0:13:40.800
<v Speaker 1>these emergency programs during the last financial crisis, as well

0:13:40.840 --> 0:13:44.960
<v Speaker 1>as in the Treasury Department, working internationally with a front

0:13:44.960 --> 0:13:49.079
<v Speaker 1>eye view in the possible issues that may arise there. Nathan,

0:13:49.080 --> 0:13:50.760
<v Speaker 1>thank you so much for being with us. We have

0:13:50.840 --> 0:13:53.960
<v Speaker 1>talked so much about the policy response. I want to

0:13:53.960 --> 0:13:57.600
<v Speaker 1>shift gears in terms of the US's response to China

0:13:57.720 --> 0:14:01.800
<v Speaker 1>and from a financial perspective, how worried market watchers should

0:14:01.800 --> 0:14:04.600
<v Speaker 1>be about the escalating tensions right now between the U

0:14:04.679 --> 0:14:10.920
<v Speaker 1>S and China. The US China relationship is clearly a

0:14:11.120 --> 0:14:15.239
<v Speaker 1>first order risk for the economy and for the markets.

0:14:15.720 --> 0:14:18.600
<v Speaker 1>I think we saw last year with the trade war,

0:14:19.280 --> 0:14:23.080
<v Speaker 1>and I think that this escalation and the tensions between

0:14:23.080 --> 0:14:26.360
<v Speaker 1>the United States and China UH that we're seeing in

0:14:26.480 --> 0:14:32.440
<v Speaker 1>recent weeks here also holds some very significant rest we

0:14:32.480 --> 0:14:37.160
<v Speaker 1>need to worry about. UH. Now, my expectation is the

0:14:37.240 --> 0:14:41.840
<v Speaker 1>President Trump is going to try to keep this mainly

0:14:41.880 --> 0:14:45.880
<v Speaker 1>in the field of rhetoric between now and the election,

0:14:46.680 --> 0:14:51.960
<v Speaker 1>but the possibility that he missteps, the possibility that Congress

0:14:52.040 --> 0:14:56.520
<v Speaker 1>forces his hand, or the possibility that the Chinese react

0:14:56.640 --> 0:15:01.280
<v Speaker 1>more vigorously than what the administration is expecting. I think

0:15:01.360 --> 0:15:07.880
<v Speaker 1>all of those possibilities um wold meaningful risks, and I

0:15:07.920 --> 0:15:12.720
<v Speaker 1>think our our our concrete uh, you know, risks that

0:15:12.760 --> 0:15:15.440
<v Speaker 1>we need to be thinking hard about as we as

0:15:15.480 --> 0:15:18.840
<v Speaker 1>we consider the markets over the next six months. All right,

0:15:18.920 --> 0:15:21.880
<v Speaker 1>so we've got that to worry about it. But we

0:15:21.960 --> 0:15:26.240
<v Speaker 1>also have the reopening, if you will, Nathan of America.

0:15:26.280 --> 0:15:28.520
<v Speaker 1>It's kind of on a state by state basis, region

0:15:28.560 --> 0:15:32.640
<v Speaker 1>by region basis. What is your expectation for how this

0:15:32.760 --> 0:15:36.600
<v Speaker 1>reopening goes and what it might mean for economic economic

0:15:36.640 --> 0:15:40.160
<v Speaker 1>activity and a potential rebound later in the year. So

0:15:40.400 --> 0:15:47.120
<v Speaker 1>I am persuaded that the geographical diversity and heterogeneity that

0:15:47.200 --> 0:15:51.280
<v Speaker 1>you described that different regions are opening up at different

0:15:51.320 --> 0:15:54.600
<v Speaker 1>paces is likely to be a feature of the US

0:15:54.720 --> 0:16:01.080
<v Speaker 1>economy that is somewhat supportive of recovery. And to emphasize that,

0:16:01.160 --> 0:16:04.360
<v Speaker 1>I think right now much of the industrial northeast of

0:16:04.400 --> 0:16:07.960
<v Speaker 1>the country is still pretty well locked down, but there

0:16:07.960 --> 0:16:12.280
<v Speaker 1>are broad swaths of the south, the Midwest, and the

0:16:12.320 --> 0:16:16.760
<v Speaker 1>western part of the country where the economy is moving

0:16:16.840 --> 0:16:20.760
<v Speaker 1>back toward normal at a pretty pretty rapid rate. So

0:16:20.760 --> 0:16:23.000
<v Speaker 1>when I put all of this together, it gives me

0:16:23.280 --> 0:16:25.880
<v Speaker 1>maybe a little bit more confidence than I had a

0:16:25.880 --> 0:16:28.960
<v Speaker 1>few weeks ago that the US economy is going to

0:16:29.040 --> 0:16:34.480
<v Speaker 1>be able to achieve a gradual U shaped recovery. I

0:16:34.520 --> 0:16:37.440
<v Speaker 1>don't expect the level of GDP to be back to

0:16:37.560 --> 0:16:39.880
<v Speaker 1>where it was at the end of two thousand nineteen

0:16:40.640 --> 0:16:45.880
<v Speaker 1>until a well ended but I think a gradual recovery

0:16:45.960 --> 0:16:49.120
<v Speaker 1>growth in the second half of the year is is

0:16:49.120 --> 0:16:51.480
<v Speaker 1>a pretty reasonable baseline, and I think it's the one

0:16:51.560 --> 0:16:55.400
<v Speaker 1>that's being priced in UH in UH in the markets

0:16:55.400 --> 0:16:58.360
<v Speaker 1>at this stage. The hallmark of this downturn is the

0:16:58.440 --> 0:17:00.920
<v Speaker 1>unemployment rate, which has been so ching and may reach

0:17:01.480 --> 0:17:04.600
<v Speaker 1>with some expect to this month and figures that come

0:17:04.640 --> 0:17:07.520
<v Speaker 1>out next Friday, a week from today. I'm struggling to

0:17:07.640 --> 0:17:10.840
<v Speaker 1>understand the skills gap that emerges and how we closed

0:17:10.880 --> 0:17:13.280
<v Speaker 1>at the idea that a lot of these jobs will

0:17:13.280 --> 0:17:15.359
<v Speaker 1>not come back in the same form and that people

0:17:15.400 --> 0:17:18.200
<v Speaker 1>will have to get rehired in new roles that require

0:17:18.400 --> 0:17:20.960
<v Speaker 1>new skills. How long do you think that takes and

0:17:21.080 --> 0:17:24.480
<v Speaker 1>what could speed it up? In in my view, the

0:17:24.720 --> 0:17:29.480
<v Speaker 1>three big questions that characterize this UH this recovery, and

0:17:29.520 --> 0:17:32.719
<v Speaker 1>I think frame the risks around them or first, UH,

0:17:33.080 --> 0:17:37.240
<v Speaker 1>what happens with the virus? Second, what happens in terms

0:17:37.320 --> 0:17:41.560
<v Speaker 1>of psychology of of consumers? And the third one is

0:17:41.560 --> 0:17:45.680
<v Speaker 1>is exactly this issue that you're highlighting through this period

0:17:45.760 --> 0:17:50.920
<v Speaker 1>to what extent has the underlying structure of the economy

0:17:51.000 --> 0:17:54.479
<v Speaker 1>been damaged? How many workers are there that are not

0:17:54.520 --> 0:17:56.800
<v Speaker 1>going to be able to go back to their jobs

0:17:56.880 --> 0:17:59.600
<v Speaker 1>and their skills are diminishing. How many firms that were

0:17:59.680 --> 0:18:04.160
<v Speaker 1>previous to sleep productive will now be bankrupt and as

0:18:04.160 --> 0:18:07.399
<v Speaker 1>a result of that, unable to produce. I think it

0:18:07.520 --> 0:18:11.160
<v Speaker 1>is very much The answer is very much an open issue.

0:18:11.520 --> 0:18:14.080
<v Speaker 1>But I think what we can say is the faster

0:18:14.240 --> 0:18:18.160
<v Speaker 1>we're able to get back, the better the virus proceeds,

0:18:18.560 --> 0:18:22.760
<v Speaker 1>that the less damage will see over the medium to

0:18:22.840 --> 0:18:25.960
<v Speaker 1>long run UH in the economy. I think the other

0:18:26.000 --> 0:18:29.399
<v Speaker 1>point that's important here is I think that the stimulus

0:18:29.400 --> 0:18:32.399
<v Speaker 1>that the Fed and in Congress have put in place

0:18:32.760 --> 0:18:39.520
<v Speaker 1>will also help buffer the downside and help drive a

0:18:39.640 --> 0:18:43.240
<v Speaker 1>stronger recovery than might occur otherwise. So I guess I

0:18:43.240 --> 0:18:46.760
<v Speaker 1>would say I'm cautiously optimistic that we won't see long

0:18:46.760 --> 0:18:49.600
<v Speaker 1>live damage, but we're still in a place where there's

0:18:50.040 --> 0:18:54.359
<v Speaker 1>a lot of uncertainty surrounding those assessments. Nathan, you mentioned

0:18:54.359 --> 0:18:57.320
<v Speaker 1>fiscal stimulus. We've gotten a couple of rounds so far.

0:18:57.400 --> 0:19:01.040
<v Speaker 1>I guess the the next one eventually might be something

0:19:01.040 --> 0:19:03.040
<v Speaker 1>along the lines at the House pass the three trillion

0:19:03.040 --> 0:19:07.680
<v Speaker 1>dollar stimulus bill. How important is another round the fiscal stimulus,

0:19:07.720 --> 0:19:11.280
<v Speaker 1>particularly one that focuses on states and local municipalities as

0:19:11.720 --> 0:19:15.040
<v Speaker 1>many governors have called for. So I I do expect

0:19:15.080 --> 0:19:20.240
<v Speaker 1>that we will see another fiscal stimulus bill. I think

0:19:20.320 --> 0:19:23.840
<v Speaker 1>that he needs to replenish the p p P program

0:19:23.920 --> 0:19:27.639
<v Speaker 1>for the small businesses, to extend the unemployment benefits, and

0:19:27.680 --> 0:19:31.480
<v Speaker 1>as you say, to do something for the standard local governments.

0:19:31.520 --> 0:19:34.959
<v Speaker 1>I think that that is UH will be compelling and

0:19:35.119 --> 0:19:38.360
<v Speaker 1>Congress will see that as something that is is unavoidable.

0:19:38.760 --> 0:19:42.520
<v Speaker 1>That said, I don't think we're going to see a

0:19:42.680 --> 0:19:46.719
<v Speaker 1>three trillion dollar package. My guess is there would be

0:19:46.760 --> 0:19:48.879
<v Speaker 1>more in the one to one and a half trillion

0:19:48.920 --> 0:19:52.320
<v Speaker 1>dollar range UH, and I would expect that Congress would

0:19:52.320 --> 0:19:56.880
<v Speaker 1>approve that probably late June or into the first half

0:19:56.920 --> 0:20:00.359
<v Speaker 1>of July. Nathan twenty seconds. I'm just wondering. Right now

0:20:00.400 --> 0:20:02.600
<v Speaker 1>we're seeing a FED balance sheet at seven point one

0:20:02.640 --> 0:20:05.080
<v Speaker 1>trillion dollars. Where do you think it gets by the

0:20:05.160 --> 0:20:08.359
<v Speaker 1>end of the year. Well, I think it's going to

0:20:08.480 --> 0:20:14.080
<v Speaker 1>be probably close to ten trillion, a little bit below that.

0:20:14.600 --> 0:20:18.679
<v Speaker 1>But you know what we're seeing now is market stabilization, Quewie.

0:20:19.119 --> 0:20:20.520
<v Speaker 1>I think come the middle of the year we're going

0:20:20.560 --> 0:20:24.119
<v Speaker 1>to see monetary policy of it with the focus on

0:20:24.160 --> 0:20:26.119
<v Speaker 1>the dual mandate, and that the FAT is going to

0:20:26.200 --> 0:20:28.919
<v Speaker 1>be buying so close to ten trillion by the end

0:20:28.920 --> 0:20:32.240
<v Speaker 1>of the year, and uh, you know who knows in

0:20:32.359 --> 0:20:35.159
<v Speaker 1>coming years. Nathan, Thanks so much for joining us. We

0:20:35.160 --> 0:20:38.280
<v Speaker 1>always appreciate your insights. Nathan Sheet's chief economists ahead of

0:20:38.320 --> 0:20:41.760
<v Speaker 1>macro economic research at JIM Fixed Income, based in Newark,

0:20:41.760 --> 0:20:47.400
<v Speaker 1>New Jersey. Thanks for listening to the Bloomberg pan L podcast.

0:20:47.560 --> 0:20:50.160
<v Speaker 1>You can subscribe and listen to interviews at Apple Podcasts

0:20:50.280 --> 0:20:53.359
<v Speaker 1>or whatever podcast platform you prefer. Paul Sweeney, I'm on

0:20:53.400 --> 0:20:55.840
<v Speaker 1>Twitter at p T. Sweeney. I'm Lisa abram Woy. It's

0:20:55.840 --> 0:20:58.880
<v Speaker 1>I'm on Twitter at Lisa A. Bramwoit's one before the podcast.

0:20:58.880 --> 0:21:05.400
<v Speaker 1>You can always catch us worldwide on'm Bloomberg radioh