WEBVTT - Single Best Idea with Tom Keene: Andrew Sheets & Elizabeth Economy

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Single best idea and we're going to keep it short today.

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<v Speaker 2>The news flow here just absolutely extraordinary. Is you know,

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<v Speaker 2>you come in on a Wednesday before Christmas is sort

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<v Speaker 2>of like you know, okay, there's CPI great service sector

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<v Speaker 2>was a little bit higher. Excuse me, thank you Ira

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<v Speaker 2>Jersey of Bloomberg Intelligence. There you know, like two minutes out,

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<v Speaker 2>he's got the key statistics. Service sector inflation is running

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<v Speaker 2>at a four and a half percent level. What else

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<v Speaker 2>do you need to know? And you know it's great

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<v Speaker 2>to see in the market lift here off of Apple

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<v Speaker 2>and Broadcommon, the distraction of a grocery merger blowing up

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<v Speaker 2>and to the as we tape this, I'm not sure

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<v Speaker 2>if Mandoleese is going after Hershey Pennsylvania. I don't maybe

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<v Speaker 2>they get the Hershey bears it as well. That's a

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<v Speaker 2>hockey team for my childhood. Anyway, it's crazy day, so

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<v Speaker 2>let's get to it quickly. Here Andrew Sheets joined from

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<v Speaker 2>Morgan Stanley, and you know, to me, the great vector

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<v Speaker 2>is is inflation flat. Good morning, Jim biarn'co. Brilliant call.

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<v Speaker 2>Good morning, Lindsay Pieg's a brilliant call, Good morning, Mohammed Alarian,

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<v Speaker 2>brilliant call. Or do we have a vector of disinflation

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<v Speaker 2>Ander Sheets of Morgan Stanley.

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<v Speaker 3>We do see disinflation in place, although you know not

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<v Speaker 3>yet you know inflation is still holding up through the

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<v Speaker 3>end of the year. Where we, I think are are

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<v Speaker 3>a little bit more optimistic on inflation than the consensus

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<v Speaker 3>is next year, where we see inflation coming down and

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<v Speaker 3>I think importantly it's really coming down in the first

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<v Speaker 3>half of the year, where for the incoming Trump administration,

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<v Speaker 3>we think it's going to be a case where policy

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<v Speaker 3>has kind of fast announcement but slow implementation. You don't

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<v Speaker 3>get the inflationary effects of tariffs of immigration changes until

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<v Speaker 3>kind of in the back half of twenty twenty five,

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<v Speaker 3>and in the first part of the year. We think

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<v Speaker 3>that a lot of inflation which is being driven by

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<v Speaker 3>shelter auto insurance, that that can come down, that those

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<v Speaker 3>series are running well ahead of where the real economy

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<v Speaker 3>markets for those are, and that some of the difficult

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<v Speaker 3>seasonality in January in February, which previously is boosted inflation,

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<v Speaker 3>we think that actually sets an attractive bar that might

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<v Speaker 3>make it a little bit easier for inflation to be

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<v Speaker 3>a little bit better than expected. So we do see

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<v Speaker 3>inflation coming down. We see that disinflation the first half

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<v Speaker 3>of the year, and we think that will mean that

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<v Speaker 3>the FED cuts not just this month but in January

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<v Speaker 3>as well.

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<v Speaker 2>Andre Sheets and Morgan Stanley with their call, and there's

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<v Speaker 2>like eighteen other calls out there as well. But to

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<v Speaker 2>Iira Jersey's point, I just am absolutely fascinated on an

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<v Speaker 2>easy rate cut December eighteenth. Then what for the Fed

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<v Speaker 2>is a huge opening question. It was great to have

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<v Speaker 2>in the studios today Jay Brison of Wells Fargo Economics.

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<v Speaker 2>Doctor Bryson was really really tentative given the uncertainties that

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<v Speaker 2>are out there with a Wells Fargo call again looking

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<v Speaker 2>for disinflation as well. She has been silent for I'm

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<v Speaker 2>going to say three even four years. Elizabeth Economy is

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<v Speaker 2>definitive on China. She has done public service for America

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<v Speaker 2>with the Department of Congress, with Gina Romando being her

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<v Speaker 2>important Asia advisor. Doctor Economy is now at Stanford University.

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<v Speaker 2>It was great to get an update with her on

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<v Speaker 2>the new revolution that is China.

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<v Speaker 1>I mean, I'm not sure that there's really a way

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<v Speaker 1>to buy at the line.

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<v Speaker 4>I think there's a way to ensure that the United States,

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<v Speaker 4>you know.

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<v Speaker 1>Is the dragon.

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<v Speaker 4>I guess in the sense that you know, what I

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<v Speaker 4>think our message should be is that we're still looking

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<v Speaker 4>toward US leadership on the global stage, right and US

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<v Speaker 4>technological leadership and military leadership.

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<v Speaker 1>I think, to me, what we want to do is

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<v Speaker 1>to run faster. I sometimes worry that we over index

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<v Speaker 1>on our defensive tools, and so that would be a concern.

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<v Speaker 1>I think with President Trump and you know, sort of

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<v Speaker 1>the approach of just letting more tariffs, I'd like to

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<v Speaker 1>see US invest more, you know, in science and technologies.

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<v Speaker 1>We're still waiting to see the science rart of the

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<v Speaker 1>the Chips Act. I think that, to me is what

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<v Speaker 1>the United States needs to do, and not simply say

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<v Speaker 1>we don't want China to do this, stop China from

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<v Speaker 1>doing that.

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<v Speaker 2>Elizabeth Economy can't say enough about it work the Third Revolution.

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<v Speaker 2>I read it cover to cover. It was I think

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<v Speaker 2>my book of the Summer a couple of years ago

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<v Speaker 2>is still very fresh on President Gee. Can't say enough

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<v Speaker 2>about doctor Economy's work. Now it's Stanford. I thought it

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<v Speaker 2>would be somewhat quiet today. I was wrong, wrong, wrong,

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<v Speaker 2>please stay with us through the week and up to

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<v Speaker 2>December eighteen FED meeting. I don't know what happens December nineteenth.

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<v Speaker 2>Maybe we just roll up and go away, but I'll

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<v Speaker 2>tell you it is really something to behold. Right now

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<v Speaker 2>we are out on YouTube podcast. This is a single

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<v Speaker 2>best idea sen