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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 1: with Paul Sweeney. Join us each day for insight from

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Speaker 1: the best in economics, finance, investment, and international relations. You

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Speaker 1: can also watch the show live on YouTube. Visit the

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Speaker 1: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 1: mornings from seven to ten am Eastern from our global

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Speaker 1: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 1: or anywhere else you listen, and always on Bloomberg Radio,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app.

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Speaker 2: This is a joy.

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Speaker 1: Every research report is the character of the individual. Stephen

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Speaker 1: Schork knows every valve in the Northeast on oil. He's

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Speaker 1: gone out there, He's turned them. When you say what's

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Speaker 1: Harbor doing, he could give you six flavors of the

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Speaker 1: price of oil in New York Harbor. It is an

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Speaker 1: acuity on oil and gas like we've never seen.

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Speaker 2: He's a shark. Report.

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Speaker 1: Can't say enough about his work, Stephen, Good morning. As

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Speaker 1: simple as I can. Are we energy independent?

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Speaker 2: Now? Within the holistic Shark report? Is this nation energy independent?

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Speaker 3: Absolutely not? Tom, We were up until a few years ago.

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Speaker 3: That is to say, we were reducing a tremendous amount

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Speaker 3: of oil. Now we're back to those levels, and actually

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Speaker 3: we're at record levels. But the investments that we are

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Speaker 3: seeing have certainly held us back. And there is a

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Speaker 3: misnomer out there when people hear energy independent, they kind

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Speaker 3: of think, well, hey, we're not reliant on imports or

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Speaker 3: so forth.

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Speaker 4: We are.

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Speaker 3: We do export a considerable amount of products gasoline, diesel,

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Speaker 3: jet fuels, so forth. And we're also at Tom's signific

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Speaker 3: exporters of crude oil. That was never the case up

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Speaker 3: until a few years ago. This is Ina Davian.

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Speaker 1: I just want to say on YouTube, all the secrets

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Speaker 1: are given away. Steve Short is coming to us from

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Speaker 1: right off the ninth at the Ocean Forest Golf Club,

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Speaker 1: Sea Island, Georgia this morning.

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Speaker 2: You know, we getting them in the middle of his games.

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Speaker 5: That's a good Sea Island. You should be going shooting

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Speaker 5: ski shooting down in Sea Island.

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Speaker 3: Stephen, No, no, no, no, I'm actually doing market research

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Speaker 3: in working this quarter from cursu So and we're on

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Speaker 3: the south part of the island with direct sidelines to

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Speaker 3: the Venezuelan shipping lanes. It's been very interesting. So I

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Speaker 3: was watching the tankers go back and forth. So this

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Speaker 3: is all work related.

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Speaker 2: There's an umbrella in his tank.

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Speaker 5: Yeah, sure, Steve, and I have to ask you. We

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Speaker 5: have Brent here at seventy nine oh six grappling with

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Speaker 5: the psychological eighty dollars a hour level, you know, level

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Speaker 5: it hasn't seen since November. Quite honestly, my question for

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Speaker 5: you is in the futures complex, you mentioned open interest

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Speaker 5: on the rise, volumes rise, What are you getting from sentiment?

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Speaker 5: What are options markets telling you?

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Speaker 3: It's so right now we're starting to see some activity

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Speaker 3: building up. We've had we've been in this significant downturn

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Speaker 3: and oil prices since October, since the start of and

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Speaker 3: I'm going to call it a RAN's war with the West,

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Speaker 3: and we've only seen prices go lower at this time.

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Speaker 3: And I'm of the opinion that really traders are whistling

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Speaker 3: past the graveyard here. But what we're seeing now in

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Speaker 3: the complex, the futures complex is first and foremost, open

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Speaker 3: interest is rising now algebraic notation and prices are falling.

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Speaker 3: That's a negative. Multiply that by rising positive you have

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Speaker 3: a lot of money that's been coming into the market

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Speaker 3: that's been short yep.

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Speaker 4: And in fact, when.

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Speaker 3: We look at the large speculators, they are short the

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Speaker 3: equivalent of about six hundred and seventy million barrels of oil.

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Speaker 3: That's about ninety five percent of the strategic patroller deserve equivalent.

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Speaker 3: So you have a tremendous amount of bearish and volume

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Speaker 3: intensity has been building now just based on I just

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Speaker 3: looked at the numbers coming in up until this point, volatility,

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Speaker 3: price variance has been falling. That's starting to rise now

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Speaker 3: and the spreads. You're starting to see a premium being

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Speaker 3: placed into this spot market. So this is clearly a

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Speaker 3: sign that the market's getting ready to potentially explode. You

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Speaker 3: have a lot of money in the market, A lot

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Speaker 3: of that money is short. Trading volume has been intense

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Speaker 3: now volatility is picking up. All you need is hence

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Speaker 3: one more headline, I e. Something out of the Middle East.

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Speaker 3: You got really see oil take off from this point.

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Speaker 5: You're taking the words right out of my mouth, Steven Opik.

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Speaker 5: Plus can they keep the supply cuts up? Are you

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Speaker 5: expecting them to be able to hold fast in the

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Speaker 5: face of brincrude below eighty dollars?

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Speaker 3: I know I'm not, and I think with OPEC. People

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Speaker 3: kind of think it's it's not a corporation. It's not that, Okay,

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Speaker 3: the board or the CEO makes a decision and.

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Speaker 4: The company carries it out.

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Speaker 3: No, it is an organization that is a multifaceted, all

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Speaker 3: different countries, all acting on their own self interest. And

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Speaker 3: of course Saudi Arabia they're trying to our rate in production,

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Speaker 3: but mainly your African producers need the cash at this point,

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Speaker 3: so it's really difficult now for OPRAT i e.

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Speaker 4: Saudi Arabia to keep control of production.

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Speaker 1: One find a question Stephen Short and I look at

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Speaker 1: this with a gale and a guest, John Tucker's down.

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Speaker 1: You're gonna give us a gal and a gas update

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Speaker 1: with a hummer. But are we are we anywhere near

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Speaker 1: a gallon of gas where we shift to electric vehicles?

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Speaker 1: What are six months it's been in the electric vehicle debate.

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Speaker 1: You've provided real leadership here. Electric vehicles need a higher

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Speaker 1: gallon of gas price to succeed.

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Speaker 4: Yeah.

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Speaker 3: Absolutely, and Tom, as you know, in economics, there are

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Speaker 3: two variables that drive prices and demand, and that's essentially

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Speaker 3: price shocks, which since the Arab oil and margo in.

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Speaker 4: The early seventies.

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Speaker 3: We've had plenty of shocks to the market, but we've

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Speaker 3: never had that secondariable until recently.

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Speaker 4: I eat the substitute.

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Speaker 3: But the problem now with substitutes or or with evs

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Speaker 3: is technology. And I'm only to speaking, you know, from

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Speaker 3: my own perspective anecdotally. I have an electric high bred

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Speaker 3: plug in and I love the garden thing. But the

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Speaker 3: problem is I'm not buying them. I'm just leasing them

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Speaker 3: because every three years they technology improved. So now and

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Speaker 3: I'm not the only one, so there's this overhang of

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Speaker 3: used evs that's no one's buying.

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Speaker 4: So no one's buying those. It's going to be very difficult.

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Speaker 3: So prices right now under that four dollar gallon are

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Speaker 3: not high enough to really push consumers back to complete ev.

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Speaker 1: Steven Shark thank you so much for short report coming

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Speaker 1: from his studios and.

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Speaker 2: Play a lagoton curse out. We literally have research notes.

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Speaker 1: It's say, Doc Electaco, I mean mister doct.

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Speaker 2: Ed to see here Mark, and you know people like

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Speaker 2: Mark Crumpton.

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Speaker 1: He knows everybody's name cold and I'm like useless.

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Speaker 2: So they got a big flashing billboard here. Gregory daka

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Speaker 2: like Taco wonderful to have you here with Ernst in

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Speaker 2: young Ey he's our chief economist. And it's more than

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Speaker 2: just like market economics, what's GDP going to do. It's

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Speaker 2: like the fabric the makeup of our economics as well.

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Speaker 2: And Greg, I've got to go seriously here to this

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Speaker 2: analysis of the new productivity? Do you and e Y,

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Speaker 2: with all of your abilities in corporate America have any

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Speaker 2: understanding of the new productivity? Or do we have to

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Speaker 2: wait five years to find out what it is?

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Speaker 6: Do we have to wait until it happens to actually

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Speaker 6: talk about it now? I think we can talk about

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Speaker 6: it today. I think what's very interesting in our insights

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Speaker 6: that we gather at e WHY is that we talked

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Speaker 6: to a lot of CEOs. We talked to a lot

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Speaker 6: of business leaders as to how they're navigating things highly

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Speaker 6: uncertain environment where inflation and cost fatigue remained very much

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Speaker 6: constraint on economic activity and where supply remains very much fragile.

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Speaker 6: And there's a lot of effort happening from CEOs across

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Speaker 6: the different sectors of the US economy that are trying

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Speaker 6: to alleviate some of these pressures. They're looking at ways

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Speaker 6: to improve processes and stimulate efficiency gains via these process improvements.

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Speaker 6: But they're also looking at technology as an avenue to

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Speaker 6: stimulate stronger growth and less inflation.

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Speaker 1: And that's where to me, this is the heart of

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Speaker 1: the matter. Is we go tech and we say ai

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Speaker 1: AI and it's all ei eio.

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Speaker 2: It's all technology. And the answer is what matters is

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Speaker 2: tech on Monsanto right exactly? Or tech on DuPont it

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Speaker 2: matters just as much.

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Speaker 5: Well, Greg, first of all, let me apologize your father

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Speaker 5: for butchering for computing the doctor last name. But you know,

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Speaker 5: in your most recent macropulsey you're talking about the disinflationary

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Speaker 5: winds that are still blowing. And I wonder if you

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Speaker 5: could just help us understand why the market is so

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Speaker 5: hyper focused on next Friday's PCE print. What's so important

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Speaker 5: about it? What should be looking for?

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Speaker 6: Well, the simple answer is that the FED will be

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Speaker 6: reacting mechanically to inflation developments over the course of this year,

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Speaker 6: and that's why there's a lot of focus on the

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Speaker 6: next data print.

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Speaker 5: And I think, now, what are we expecting there?

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Speaker 6: Is it? We'll show, We'll show you know, lower inflation.

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Speaker 6: We're going to see this ongoing disinflationary momentum. We'll likely

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Speaker 6: have core inflation ending twenty twenty three below three percent,

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Speaker 6: which is something that very few.

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Speaker 5: Four only three and a half. Two and a half

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Speaker 5: is the number we're looking for.

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Speaker 6: There well, core inflation under three percent, which is quite

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Speaker 6: the feat. I think the disinflationary currents will continue. We

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Speaker 6: have an environment where we're seeing gradually moderating final demand growth.

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Speaker 6: We're seeing supply that is relatively well served. We're seeing

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Speaker 6: an environment where businesses are looking for wage growth compression

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Speaker 6: as an avenue to limit costs. We're also seeing an

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Speaker 6: environment where there is less pressing power and much more

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Speaker 6: sensitivity to increases in prices. And then rent disinflation is

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Speaker 6: still very much in the pipeline. So that's the right

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Speaker 6: combo to get more disinflation.

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Speaker 1: You know, look ahead in the next week into February

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Speaker 1: into twenty twenty four.

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Speaker 2: Rent disinflation to.

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Speaker 5: Me is absolutely of course, it is, of course, But

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Speaker 5: you know, I mean, we could talk about shelter, and

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Speaker 5: we could talk about inflation until we're blue in the face, Greg.

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Speaker 5: But you know, one of the interesting pieces you just

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Speaker 5: put out is on Genai, and you know, Tom is

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Speaker 5: not convinced on Ai. Okay, I'm just gonna preface that,

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Speaker 5: and yet I'm reading this wonderful piece about the productivity

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Speaker 5: boost and you know what the impact of it is

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Speaker 5: and job reshuffling. Talk to us a little bit about

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Speaker 5: what you believe the economic impact of Jenai is going

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Speaker 5: to be.

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Speaker 6: I think the economic impact of Jenai is going to

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Speaker 6: be felt across most sectors. It may not necessarily be

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Speaker 6: a game changer in the sense that it multiplies the

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Speaker 6: pace of growth by a factor of two or three,

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Speaker 6: but it is going to have a significant impact. The

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Speaker 6: way we look at it is that there's going to

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Speaker 6: be a need and a desire to invest a lot

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Speaker 6: in Genai. There is a need to invest in the infrastructure,

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Speaker 6: the software, the company adoption that is going to lead

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Speaker 6: to a boost of GDP. After that, we're also going

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Speaker 6: to see significant productivity gains. We estimate that over the

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Speaker 6: next decade for the US economy, we could have a

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Speaker 6: boost of three and a half percent of gend.

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Speaker 1: Okay, guys like you and fancy you see how Greg

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Speaker 1: is dressing now, He said, Ey, he used to dress

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Speaker 1: like a market economist. Now this looks like he's consulting

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Speaker 1: to somebody at ten thousand.

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Speaker 2: Dollars an hour down in Dallas, flying in.

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Speaker 5: We're in contacts. Now you ditch the ditch the glasses.

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Speaker 2: That's the heart of the matter.

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Speaker 1: Now, did you get wonky or I'm looking at productivity

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Speaker 1: and we, of course we lost this year the giant

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Speaker 1: of productivities, Robert Solo of MIT I got capital dynamics,

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Speaker 1: I got labor dynamics, and I got this.

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Speaker 2: Wackle thing called total factor productivity. Which of those three

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Speaker 2: is the shock forward to our new American productivity?

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Speaker 6: Well, it's it's a timing issue, right. Initially you have

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Speaker 6: to invest. So initially the boost to economic activity actually

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Speaker 6: comes from the additional investment capital deepening in the capital

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Speaker 6: deepening and capital investment generally in technology. After that you

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Speaker 6: get the benefits in terms of productivity growth, and it's

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Speaker 6: not going to be some magical number that comes out

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Speaker 6: of nowhere. It's actually going to be more efficiency in

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Speaker 6: the way we do our jobs, and it's going to

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Speaker 6: be across sectors. And I think we have to step

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Speaker 6: away from this notion that it's only going to be

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Speaker 6: low skilled jobs. Actually, high skilled jobs can be augmented

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Speaker 6: quite tremendously by Jenai.

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Speaker 5: Let me quantify this for our audience here. Greg estimates

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Speaker 5: and the team D and Y estimate that the lift

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Speaker 5: to global GDP from stronger productivity to total Are you

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Speaker 5: ready for this? Between one point two and two point

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Speaker 5: four trillion dollars over the next decade. But that's not

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Speaker 5: just the US now, is it? Where do you think

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Speaker 5: the impact of that productivity boost is going to be

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Speaker 5: felt most? Is it going to be the US? Is

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Speaker 5: it Europe? Is at Asia?

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Speaker 6: I think the US is going to benefit most from

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Speaker 6: that because the US is essentially leading the way when

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Speaker 6: it comes to these new technologies. But Europe is investing

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Speaker 6: a lot. And then after that you have China and

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Speaker 6: the rest of Asia that's also falling very closely. So

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Speaker 6: that's going to be a positive booth in terms of

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Speaker 6: global economics.

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Speaker 1: How do you an eye treat China hang saying is greatering,

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Speaker 1: et cetera, et cetera.

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Speaker 2: What is the ey summary of how China will recover?

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Speaker 3: Well?

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Speaker 6: I think we have to understand that China is no

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Speaker 6: longer going to be the global engine of growth that

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Speaker 6: it once was. We're going to be in an environment

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Speaker 6: where there are cyclical headwinds in terms of economic activity.

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Speaker 6: We're seeing less spending in terms of retail sales, industrials activity,

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Speaker 6: the real estate sector. But we're also and very importantly,

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Speaker 6: seeing structural headwinds. The population is not only aging, it's

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Speaker 6: also shrinking. That is a big drag on the economy's

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Speaker 6: potential growth. And I wouldn't be surprised that in the

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Speaker 6: next five to ten years China grows at an advanced

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Speaker 6: economy pace rather than as an emerging economy.

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Speaker 2: Pervidak with Ey just really really valuable in a lot

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Speaker 2: of different You get a whole different perspective from the

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Speaker 2: major accountancies and consultants than you do from people going,

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Speaker 2: you know what's.

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Speaker 5: GDP got no skin in the game. That's right, it's

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Speaker 5: an unfiltered, unbiased opinion.

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Speaker 1: Now, Brian Lovett with Invesco, Brian, I got some chit chat.

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Speaker 1: But because the time, let's get right to it now.

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Speaker 1: Is cash an asset for Invesco?

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Speaker 7: Well, investors are clearly viewing it as an asset, and

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Speaker 7: I think it does hold the place at certain times.

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Speaker 7: The challenges Right now with yields above five percent, investors

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Speaker 7: are loving it. The risks that they have is reinvestment.

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Speaker 7: And so if we're right, and the Federal Reserve is

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Speaker 7: going to be normalizing the yield curve, well, then those

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Speaker 7: yields will come down. We've been telling people lock it in.

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Speaker 7: If you like yields for thirty days, you'll probably love

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Speaker 7: them for five or ten years.

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Speaker 5: Brian, I want you to put on your foreign exchange

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Speaker 5: hat for me for a second. I'm going to talk

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Speaker 5: about one of your close colleagues, Alethio de Longez, who's

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Speaker 5: a senior PM head of Global Tactical Asset Allocation at Investco,

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Speaker 5: and his work on factor investment in foreign exchange. Talk

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Speaker 5: to us about the beta regime that we're coming out of,

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Speaker 5: one where FX performance has really been driven by rate differentials.

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Speaker 5: Are we moving into a new regime where value is

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Speaker 5: going to take control of that?

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Speaker 7: Talk to us well, I think over the next couple

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Speaker 7: of year years we will Typically what happens is the

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Speaker 7: FED normalizes, the ye'll curb. You start to unlock some

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Speaker 7: of the value that exists in the world, whether that's

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Speaker 7: in US value stocks, whether that's in right now international market.

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Speaker 7: The challenge we have in the near term is that

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Speaker 7: we got a lot of returns in November and December.

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Speaker 7: I wish we would have taste them out over a

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Speaker 7: longer period of time. So you've growth below trend right now.

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Speaker 7: The market recalibrating where the Fed's going to be in

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Speaker 7: March and by the end of the year, so you

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Speaker 7: may see a little bit of a quality growthy trade

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Speaker 7: again in here. But if you're an intermediate term investor

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Speaker 7: expecting the FED to normalize the yelk curb, then yeah,

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Speaker 7: value oriented investments should perform well over the next couple

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Speaker 7: of years.

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Speaker 5: And talk to us a little bit about the the

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Speaker 5: end of QT. I mean there's been some talk that's

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Speaker 5: going to end early. Talk to us about central bank runoff.

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Speaker 5: Does this have the potential to crowd out other fixed

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Speaker 5: and comac and classes.

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Speaker 7: I don't think it does. I mean the fixed and

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Speaker 7: cume market has been behaving, I would say appropriately. If

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Speaker 7: you look at where the tenure treasury has been, it's

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Speaker 7: now hovering around what the nominal growth potential of this

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Speaker 7: country likely is. So I don't think that this is

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Speaker 7: being significantly manipulated one way or the other. And as

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Speaker 7: the FED has wound down its balance sheet, the markets

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Speaker 7: have operated. The markets have operated just fine. I think

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Speaker 7: it makes sense right now. Policy is just too tight,

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Speaker 7: you know, five and a quarter on the funds rate,

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Speaker 7: slowly winding down the balance sheet when growth is slowing.

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Speaker 7: Policy is too tight, so we should expect an easier

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Speaker 7: environment going forward.

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Speaker 1: Brian Levitt, thank you so much. Too short of visit.

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Speaker 1: We'll do it again soon, sin soon. Brian Levits with

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Speaker 1: Invesco there with a more holistic view on your asset allocation.

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Speaker 2: Now joining us a gentleman of inherent optimism.

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Speaker 1: There's points where he can wax philosophical and get gloomy.

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Speaker 2: But Neil Dutta with.

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Speaker 1: Us with run back, and I made very clear he

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Speaker 1: was out front with optimism amid the gloom.

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Speaker 2: I'm gonna call it fourteen months ago or so. I

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Speaker 2: just looked at Atlanta GDP and.

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Speaker 1: After a four point x percent Q three, we're modeling

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Speaker 1: out somewhere in the vicinity of a normal American economy.

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Speaker 1: Two point three percent. That seems better than good versus

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Speaker 1: a gloom of recession. Neil Dutta, thank you so much

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Speaker 1: for joining us. Is two point three percent a run

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Speaker 1: rate for the American economy?

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Speaker 4: Yeah, I think so.

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Speaker 8: I mean, I think we're probably in a range of

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Speaker 8: around two to two and a half percent. I mean,

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Speaker 8: it's important to note, as you did, that we're coming

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Speaker 8: off of a very strong quarter in the third quarter,

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Speaker 8: so it was I think inevitable that the economy would

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Speaker 8: buckle a little bit under its own weight. I mean,

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Speaker 8: you can't sustain that kind of momentum. But I think

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Speaker 8: what's important, Tom, is that you know that estimate you mentioned,

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Speaker 8: you know, Atlanta fed around you know, let's say two percent.

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Speaker 8: I mean that's despite a pretty significant decline in inventory investment.

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Speaker 8: In other words, inventories are cutting GDP growth, and so

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Speaker 8: final sales look pretty healthy. And you know, I think

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Speaker 8: that's important because you know, ultimately firms are going to

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Speaker 8: replenish inventories, and when that happens, supports the local areas

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Speaker 8: of the economy.

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Speaker 1: Bob Burgess, Sir Robert Burgess of Bloomberg News, as my

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Speaker 1: chart of the week, folks, it's a log regression of

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Speaker 1: retail sales since time began. I think he goes back

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Speaker 1: to the War of eighteen twelve, And the answer is,

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Speaker 1: with the noise around the Great Financial Crisis and noise

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Speaker 1: around COVID, with the stimulus, we've had a massive retail boom.

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Speaker 2: Money questioned Neil data. Does retail consumption sales do they

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Speaker 2: come back to trend line or do we assume at

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Speaker 2: some point we see diminished consumption off long term trend.

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Speaker 8: Well, I don't think it's coming back to that trend line.

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Speaker 8: I mean absence some kind of a recession. You know,

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Speaker 8: people tend to keep on spending money so long as

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Speaker 8: the economy and employment are growing, and that's what's happening,

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Speaker 8: you know, I do. I mean, you mentioned a lot

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Speaker 8: about the stimulus, but I really think that that's you know,

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Speaker 8: yesterday's story. I mean, ultimately, what's driving consumers spending at

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Speaker 8: this point is a revival in real incomes. Right, So

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Speaker 8: inflation has slowed, the labor markets are steady, and as

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Speaker 8: a result, real incomes have been accelerating. So that's ultimately

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Speaker 8: what's driving consumer spending. And I think that that's poised

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Speaker 8: to continue. It's one of the reasons why consumers are

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Speaker 8: a bit more confident. I mean, the fact that prices

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Speaker 8: have come down and that'll likely continue over the next

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Speaker 8: couple of quarters.

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Speaker 4: That's important.

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Speaker 8: And you know that decline in price inflation lifts in

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Speaker 8: real incomes obviously, and that in turn supports consumer spending.

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Speaker 8: This story you know, the excess savings, fiscal stimulus. You know,

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Speaker 8: these arguments I think have really outlived their usefulness.

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Speaker 5: Neo financial markets appear infatuated, infatuated with next week's GDP

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Speaker 5: sorry PCE deflator print. Talk to us about that. What

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Speaker 5: are you looking for next week?

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Speaker 8: Well, I think it'll be a soft point two. I

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Speaker 8: think the Bloomberg News consensus is point two. I think

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Speaker 8: it's a soft point too. But you know, what I

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Speaker 8: would say is that, you know, for all this talk

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Speaker 8: about the last mile of inflation is the hardest. It's

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Speaker 8: a bumpy road back to two percent. It's important for

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Speaker 8: people to know that core PCEE inflation over the last

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Speaker 8: six months is already running below two percent. Right It's

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Speaker 8: at one point nine percent at an annual rate. So

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Speaker 8: you know, keep in mind that, you know, the Fed

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Speaker 8: believes that core inflation this year is going to be

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Speaker 8: two point four percent a year over year. In the

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Speaker 8: fourth quarter, we're running below that. So I think by

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Speaker 8: the time the Fed meets in March going to have

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Speaker 8: to revise down their core inflation estimates yet again. And

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Speaker 8: I think it's going to be very difficult for them to,

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Speaker 8: you know, push back on raid cuts at that point.

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Speaker 8: I mean, so they may they may either their cutting

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Speaker 8: in March or they're using the March meeting to set

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Speaker 8: up a raid cut.

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Speaker 5: In by Neil Tom is right, you called it looking

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Speaker 5: back some You know, a year and a half ago,

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Speaker 5: you were fading the hard landing scenario. You were calling

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Speaker 5: for the soft landing and materialized. And here we are

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Speaker 5: today and the markets are still looking for soft landing.

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Speaker 5: Do you agree with that?

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Speaker 8: Yes? I do. I mean I think, you know, I

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Speaker 8: think the markets are right to anticipate a benign scenario.

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Speaker 8: I mean there's a lot of inertia behind the disinflation process.

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Speaker 8: I mean I think this time last year, I mean

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Speaker 8: Powell probably in my view was probably was prematurely, frankly

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Speaker 8: declaring the start of a disinflation process. I mean at

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Speaker 8: the time, I wasn't arguing for soft landing. I was

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Speaker 8: arguing for no.

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Speaker 2: Landing, right right.

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Speaker 8: But but but I think, but I think at this point,

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Speaker 8: you know, we have a soft landing unfolding right before

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Speaker 8: our eyes. I mean, I have a fair degree of

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Speaker 8: confidence that inflation is cooling off. Keep in mind that

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Speaker 8: used car prices will probably decline quite sharply over the

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Speaker 8: next several months. That's not something that we saw in

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Speaker 8: either November or December, but it's it's likely something we're

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00:22:20,800 --> 00:22:22,240
Speaker 8: going to see a part of the year. And we

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00:22:22,320 --> 00:22:26,200
Speaker 8: know that housing rents are moderating, Well that's growing.

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00:22:26,320 --> 00:22:27,840
Speaker 1: Yeah, that's where I wanted to go because to me,

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00:22:27,920 --> 00:22:30,119
Speaker 1: that's the theme for the day. Julia Coronado out with

443
00:22:30,119 --> 00:22:31,960
Speaker 1: a chart on this. Joe Lavorn I thought it was

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00:22:32,000 --> 00:22:34,399
Speaker 1: quite good this morning. Let's hear from Neil Dota of

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00:22:34,440 --> 00:22:38,840
Speaker 1: Renmack and Neil, the fact is shelter wrapped around rent

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00:22:39,320 --> 00:22:41,920
Speaker 1: and not this goofy oe er, which I have no

447
00:22:41,960 --> 00:22:46,520
Speaker 1: idea how it's calculated. But what's the actual countable disinflation

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00:22:46,760 --> 00:22:51,840
Speaker 1: you see across multifamily, across single home rentals like what

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00:22:51,920 --> 00:22:55,200
Speaker 1: Blackstone's doing, and across home ownership in America.

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00:22:57,080 --> 00:22:59,639
Speaker 8: Well, it's interesting you mentioned Oeer. I mean, one reason

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00:22:59,640 --> 00:23:01,880
Speaker 8: why that number is looking a little bit firmer, Tom,

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00:23:02,080 --> 00:23:06,040
Speaker 8: because the owned housing stock obviously is more single family

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00:23:06,160 --> 00:23:09,840
Speaker 8: than multifamily, right, and so single family residential rents have

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00:23:09,960 --> 00:23:12,320
Speaker 8: been holding up a little bit firmer than multi than

455
00:23:12,359 --> 00:23:15,040
Speaker 8: apartment rents. You know, we saw yesterday as an example

456
00:23:15,080 --> 00:23:18,919
Speaker 8: that multi family completions jump sharply, and so we do

457
00:23:18,960 --> 00:23:21,399
Speaker 8: have a lot of apartments supply coming on. But I

458
00:23:21,440 --> 00:23:26,520
Speaker 8: think what's important is that new tenant rents, which is

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00:23:26,520 --> 00:23:30,520
Speaker 8: what the BLS released yesterday. That index is down about

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00:23:30,520 --> 00:23:32,840
Speaker 8: four and a half percent against against last year. Now,

461
00:23:32,840 --> 00:23:37,080
Speaker 8: it probably overstates things, you know, that is clear in

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00:23:37,119 --> 00:23:39,639
Speaker 8: the data. It tends to over exaggerate the swings in

463
00:23:40,000 --> 00:23:43,840
Speaker 8: the CPI number, but it does tell you fairly clearly

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00:23:43,880 --> 00:23:47,480
Speaker 8: what the direction of travel is lower. And so you know,

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00:23:47,520 --> 00:23:49,880
Speaker 8: I think housing and rental inflation will continue to melt

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00:23:49,920 --> 00:23:52,640
Speaker 8: over the next couple of quarters. And again I mean

467
00:23:52,680 --> 00:23:57,800
Speaker 8: that will support a recalibration of monetary policy this year.

468
00:23:57,840 --> 00:24:01,040
Speaker 2: I got one final question is really important? Do we

469
00:24:01,119 --> 00:24:03,120
Speaker 2: need to model out.

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00:24:02,840 --> 00:24:05,679
Speaker 1: After pictures and coutches, Like if we get out in

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00:24:05,680 --> 00:24:09,120
Speaker 1: your opening day where the Detroit Targers starts strong, they're

472
00:24:09,119 --> 00:24:10,720
Speaker 1: going to be playing one thousand.

473
00:24:10,359 --> 00:24:12,159
Speaker 2: Ball by you know they're gonna win opening day and

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00:24:12,200 --> 00:24:13,560
Speaker 2: then it's down from there.

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00:24:13,640 --> 00:24:16,000
Speaker 1: Neil Daughta, When we get up to April, are we

476
00:24:16,080 --> 00:24:19,600
Speaker 1: going to have some form of inflation series one point

477
00:24:19,840 --> 00:24:20,400
Speaker 1: x percent?

478
00:24:20,560 --> 00:24:21,800
Speaker 2: Can it get below two?

479
00:24:24,640 --> 00:24:27,320
Speaker 8: I mean, it's it's plausible as I mentioned. I mean,

480
00:24:27,359 --> 00:24:30,520
Speaker 8: we're there, We're already there on a six month basis,

481
00:24:30,840 --> 00:24:33,320
Speaker 8: and you know, you still have some distance in front

482
00:24:33,320 --> 00:24:36,480
Speaker 8: of us. So it's certainly plausible that you'll be you

483
00:24:36,600 --> 00:24:39,600
Speaker 8: on a path Damien's trying to make.

484
00:24:39,520 --> 00:24:41,879
Speaker 5: Someone I mean, yeah, you know, I mean, Tom John Lesa.

485
00:24:41,960 --> 00:24:44,159
Speaker 5: They always want to know from you, because you know,

486
00:24:44,240 --> 00:24:46,000
Speaker 5: they want to know about the US economy. What I

487
00:24:46,080 --> 00:24:47,600
Speaker 5: want to know is, I want to know your thoughts

488
00:24:47,640 --> 00:24:49,240
Speaker 5: on China. I want you to talk to me about

489
00:24:49,320 --> 00:24:51,720
Speaker 5: China deflation. I want to talk about dollar you on.

490
00:24:51,880 --> 00:24:53,480
Speaker 5: I want you to talk to me about the property

491
00:24:53,480 --> 00:24:56,280
Speaker 5: sector and this economy that's so clearly on its back,

492
00:24:56,320 --> 00:24:59,359
Speaker 5: And forget about investing in China. What's the impact on

493
00:25:00,040 --> 00:25:01,960
Speaker 5: global financial markets and valuations here?

494
00:25:05,000 --> 00:25:07,119
Speaker 8: I mean, I don't I mean to me, China is

495
00:25:07,119 --> 00:25:08,760
Speaker 8: a bit of a black box. I don't follow it

496
00:25:08,840 --> 00:25:10,760
Speaker 8: very closely. What I can tell you is that for

497
00:25:10,840 --> 00:25:13,320
Speaker 8: all the weakness in China, it's important to note that,

498
00:25:13,760 --> 00:25:16,040
Speaker 8: you know, the emerging markets outside of China had been

499
00:25:16,040 --> 00:25:18,879
Speaker 8: holding up reasonably well, yes, during this period, So I

500
00:25:18,920 --> 00:25:20,280
Speaker 8: think that's that's notable.

501
00:25:20,320 --> 00:25:22,159
Speaker 4: So maybe you know the.

502
00:25:22,720 --> 00:25:25,000
Speaker 8: Two thousands were all about how China was sort of

503
00:25:25,000 --> 00:25:28,119
Speaker 8: the mental driver of demand globally, and maybe that's not

504
00:25:28,160 --> 00:25:29,240
Speaker 8: as much the case anymore.

505
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Speaker 1: Here's your valuable Neil Dutta, Thank you so much. A

506
00:25:31,720 --> 00:25:34,159
Speaker 1: lot to chew on there, folks, with optimism on the

507
00:25:34,160 --> 00:25:39,160
Speaker 1: American economy wrapped around a better than good real wage.

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Speaker 1: This is the Bloomberg Surveillance Podcast, bringing you the best

509
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