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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownowitz Jay Lee, we bring

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Speaker 1: you insight from the best and economics, finance, investment, and

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Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, Uncloud, Bloomberg

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Speaker 1: dot Com, and of course on the Bloomberg Terminal. I'm

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Speaker 1: Jonathan Farrell. Were joined out by US Labor Secretary Money Welsh.

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Speaker 1: Secretary Welsh fantastic to catch up with you, sir. A

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Speaker 1: robust labor market report Rick read with black Rock called

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Speaker 1: It's Solid. Here's my question for you, sir. You're more

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Speaker 1: worried about people losing their jobs or getting it down inflation. Um,

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Speaker 1: I think we we need to work on We were

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Speaker 1: worry worried about both. Obviously I don't want people lose

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Speaker 1: their job, but we need to continue to bring down

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Speaker 1: the flash very pressures that people have. Certainly what OPEC

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Speaker 1: made a decision on this week to do was not

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Speaker 1: helpful to us. The President was disappointed with this point

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Speaker 1: to this administration. But we need to continue to bring

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Speaker 1: down those pressures. I mean I think that you know,

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Speaker 1: I had a long conversation in my office today I

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Speaker 1: certainly don't want to see the unemployment number go up.

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Speaker 1: I'd like to see people working. That's what the fetish forecasting.

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Speaker 1: Some people say, that's the objective. How are you preparing

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Speaker 1: for the pain that they're forecasting, and what can we

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Speaker 1: do on the supply side when it comes to things

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Speaker 1: like immigration, well on on the on the unemployment. You know,

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Speaker 1: we were talking for the last three months about seeing

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Speaker 1: those numbers go down, and in the year two we've

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Speaker 1: had about four d and forty jobs. For a month,

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Speaker 1: we're still seeing people two hundred sixty three thousand people

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Speaker 1: going to work today. Uh, this this month, I should

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Speaker 1: say last month, we're still seeing those numbers going on.

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Speaker 1: So I think that that's something that that is important

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Speaker 1: that we continue to put those games. We still have

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Speaker 1: job openings, people are still looking for work. Obviously, we'd

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Speaker 1: like to see the participation rate a little higher. I

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Speaker 1: mean that number went down a little bit this month,

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Speaker 1: I think one tenth of a percent. So we're gonna

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Speaker 1: we have to see what's happening there. Clearly, the employee

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Speaker 1: over the last couple of years is getting some leverage

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Speaker 1: it hasn't had for a few years. A number of

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Speaker 1: years maybe even decades over their employers. You've broken a

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Speaker 1: deal with unions in the last few months with freight

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Speaker 1: rail companies. The twelve unions, I understand, four of them

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Speaker 1: have ratified the deal, Marti Secredy Walsh. Are you worried

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Speaker 1: about the other eight? No, I'm not. I mean they're

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Speaker 1: out there explaining. When I say they, the union leadership

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Speaker 1: now and the bargaining committees are author explaining to the

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Speaker 1: members what's in those contracts. It was a very painful negotiation,

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Speaker 1: not with what I had but prip leading up to me,

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Speaker 1: two years in negotiation with really no movement. Uh. And

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Speaker 1: I think that there there's explaining to do in these contracts.

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Speaker 1: And I look at these these contracts. They're good. They're

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Speaker 1: a good contract. I mean it's it's over five years,

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Speaker 1: healthcare freeze, cap work rules change. It was a good

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Speaker 1: contract for the employer and employee as well. So hopefully

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Speaker 1: we can get the rest of these ratified in the

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Speaker 1: next of the next six weeks. In the Rose Guard

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Speaker 1: and the president said this, because of this labor agreement,

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Speaker 1: those rail workers will get better pay, wage increase over

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Speaker 1: the next five years, improved working conditions, peace of mind

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Speaker 1: around their healthcare by cap and the cost the workers

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Speaker 1: will have to pay. Have the poor workers on the

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Speaker 1: West Coast Secretary Walsh asked for the same conditions. No,

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Speaker 1: I mean, I don't know. I didn't get it. I

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Speaker 1: don't know what they're what they're asking for for wages

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Speaker 1: and benefits. But certainly those are all the conversations that

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Speaker 1: generally on the table A little different negotiation, the West

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Speaker 1: Coast Port negotiation, Uh, is a very fluid conversation that

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Speaker 1: the both sides are at the table. Uh, they're both

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Speaker 1: having conversations. It's a longer process then then then I anticipated.

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Speaker 1: But that's this historically the way they've operated. They kind

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Speaker 1: of take one segment at a time. I stay in

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Speaker 1: close contact with both the employers side, in the in

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Speaker 1: the unions on the West Coast Port, and uh, you know,

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Speaker 1: both sides expressed to me that they're still moving forward. Uh.

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Speaker 1: They'll obviously be sticky issues that will pop up every

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Speaker 1: now and then, but not nothing that's making me be

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Speaker 1: concerned that I have to have a twenty hour meeting

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Speaker 1: in my office about what would make you concerned? Because

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Speaker 1: you've seen pretty relaxed about that over the last few minutes.

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Speaker 1: Through much of the side. I think if I heard

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Speaker 1: one side or the other side just kind of saying

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Speaker 1: that that they're not moving forward and off al quick enough,

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Speaker 1: and there's there's really concerned I gets seeing their voice

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Speaker 1: are here in a voice, so that that expressed to me.

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Speaker 1: You know, I've spent before this negotiations started, I spent

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Speaker 1: a lot of time out in the West Coast, both

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Speaker 1: sitting down with the unions and sitting down with the employers.

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Speaker 1: So in this case, I have a very I have

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Speaker 1: a lot better relationship with the employers in the unions

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Speaker 1: than I did in the rail The rail was kind

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Speaker 1: of all new to me. The union side, I knew

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Speaker 1: who they were, but I really didn't know the leaders

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Speaker 1: of the unions, and I certainly didn't know the rail

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Speaker 1: companies because I wasn't familiar with them in my old job.

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Speaker 1: But so having that relationship with with both sides going

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Speaker 1: in it makes it a lot easier to navigate and

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Speaker 1: try and help continue move along. A second watch, if

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Speaker 1: my memory serves me correct, I think the last time

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Speaker 1: we did this on the West Coast was maybe And

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Speaker 1: you can correct me if I'm wrong, But I'm just

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Speaker 1: wondering previous experience. Did it take this long? Yeah? I did.

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Speaker 1: It took longer actually, and that's why you know. I

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Speaker 1: I was having a conversation the other day and I

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Speaker 1: asked how long it actually took longer? I think, I

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Speaker 1: want to say twenty eighth. There was I think it

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Speaker 1: might have been a lockout in twenty eight and there

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Speaker 1: was a strike in nineteen seventy two, I think it was.

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Speaker 1: So it does take a long time because it's very

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Speaker 1: complicated that they're doing the whole point, all of the

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Speaker 1: the West Coast negotiation, and every every um, every pier

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Speaker 1: has a different set of rules and negotiations that they

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Speaker 1: have to do as well. So it's a it's a

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Speaker 1: master contract, but then there's individual rules in each of

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Speaker 1: the points, so that they're going through all this systematically. Secondly, Welsh,

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Speaker 1: big months coming up. Looking forward to catching up with you.

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Speaker 1: Our next conversation will be sandwiched in between. I think

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Speaker 1: the Federal's decision in the midst of Secondly, wolfsh thank

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Speaker 1: you the Labor Secretary multi wolfs that Dan in Washington

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Speaker 1: day sake. Tiffany Wilding joins us. Now is we love

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Speaker 1: to talk to Tiffany anytime particularly on jobs days. Uh.

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Speaker 1: Tiffany is a Pimco Chief US Economists. Tiffany, thanks so

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Speaker 1: much for taking the time to join Lisa and myself.

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Speaker 1: We had non farm payrolls come in a little bit

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Speaker 1: better than expected, less than last month, so it is slowing,

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Speaker 1: but still this is a pretty solid labor market out there.

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Speaker 1: What did you take away from today's numbers, and more importantly,

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Speaker 1: what do you think maybe the Federal Reserve takes away

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Speaker 1: from today's numbers? Yeah, and I think nothing in this

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Speaker 1: rapport changes um changes them from the path that they

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Speaker 1: kind of set out with their sumari of economic projections

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Speaker 1: at the September meeting, which is that they expect a

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Speaker 1: hike at other seventy five basis points in November and

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Speaker 1: then follow that up with another fifty basis point rate

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Speaker 1: hike in December and then ultimately get to somewhere between

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Speaker 1: four and a half and five percent. As you as

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Speaker 1: you mentioned, there's maybe some kind of mixed details of

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Speaker 1: this report. You know, the participation rate fell, the unemployment

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Speaker 1: rate of fell, which suggests that you know, labor supply

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Speaker 1: is relatively scarce, you know, But against that, we had

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Speaker 1: average eily earnings, which maybe we were a little bit

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Speaker 1: less firm than expected. So I mean, like on the details,

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Speaker 1: maybe more mixed, but overall as a strong report, it

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Speaker 1: doesn't change the fence trajectory over the over the past

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Speaker 1: few weeks. Tiffany, how much have you changed your view

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Speaker 1: of the terminal rate that we're heading towards with the

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Speaker 1: Federal Reserve may have to go with more of a

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Speaker 1: Larry Summer's approach and go much further than they previously

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Speaker 1: had expected in terms of rate hikes. Yeah. Well, I

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Speaker 1: mean I think if you if you think back to

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Speaker 1: maybe earlier this summer, um, you know, maybe maybe there

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Speaker 1: was you know, kind of the thinking was kind of

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Speaker 1: four to four and a half per cent um, you know,

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Speaker 1: maybe a little bit less than that in terms of

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Speaker 1: the the area where the Fed is expected to pause. Um.

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Speaker 1: And then I think over the summer, what happened was that,

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Speaker 1: you know, underlying inflation, uh just appears more broad based

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Speaker 1: and frankly sticky. You had um longer term inflation expectations

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Speaker 1: from the survey of professional forecasters, the Philly Fed survey

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Speaker 1: for example, which tends to be very stable, start to

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Speaker 1: take up um. You know that had these kinds of

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Speaker 1: things happen not only in the United States but but

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Speaker 1: elsewhere in large developed markets. UM. And then finally, you know,

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Speaker 1: you've had wage trends UM the Atlanta FED Wage tracker,

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Speaker 1: for example, but other measures as well, you know, that

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Speaker 1: have really started to take off. So I think all

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Speaker 1: of that basically suggests that the underlying trend and inflation

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Speaker 1: might actually be moving up a little bit, you know,

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Speaker 1: even though you know, had like some of the more

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Speaker 1: volatile components like headline UM, energy prices, food, et cetera,

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Speaker 1: probably will will moderate a little bit. So I think

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Speaker 1: all of that is enough for FEED officials to you know,

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Speaker 1: reassess the risks UH to inflation here and and really

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Speaker 1: revise up their expectations for for the policy rate and

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Speaker 1: where it's going to end up. Jiffany, you said something

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Speaker 1: just there that that really caught my attention and is

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Speaker 1: somewhat alarming. Do you think we might not have seen

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Speaker 1: peak inflation in the US? UM? You know, Look, I

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Speaker 1: think it's certainly possible. You know, I think for one thing,

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Speaker 1: energy prices are very volatile, UM, you know, and and

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Speaker 1: they're ultimately going to kind of help dictate you know,

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Speaker 1: where inflation really PEEQUS out you know now they're they're

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Speaker 1: underlying secular trends, um you know, the brown to green

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Speaker 1: transition in the fossil fuels industry that will probably continue

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Speaker 1: to put upward pressure on on global oil prices. Of course,

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Speaker 1: we got the surprising OPEC decision as well, so it's

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Speaker 1: certainly possible, um and you know, next year, as we

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Speaker 1: have a reopening, their demand for for commodities could start

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Speaker 1: to increase. So it's certainly possible that you can see

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Speaker 1: oil prices that are um you know, that are ultimately

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Speaker 1: driving higher into your end. So there's a lot of

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Speaker 1: uncertainty around that, um you know. So I think it's

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Speaker 1: really tough to know at this point kind of where

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Speaker 1: the peak of an inflation is. I mean, we hope

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Speaker 1: that we already you know, we already got past it

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Speaker 1: for the headline level. But again, I think it's just

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Speaker 1: because things are so volatile now, it's it's it's highly uncertain, Tiffany.

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Speaker 1: You know, I guess the recession call out there, it

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Speaker 1: feels like it's becoming more consensus. I guess maybe the

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Speaker 1: question now is if we do in fact enter into

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Speaker 1: a recession, how deep will it be? How long will

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Speaker 1: it be. Do you folks with pimple have a view

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Speaker 1: on that? Yeah, I mean so ultimately, we do think

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Speaker 1: you enter a recession not only in the US, but

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Speaker 1: to kind of cross the large developed market economies, um,

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Speaker 1: you know, and that's the combination of two economic shocks,

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Speaker 1: large economic shocks. The first is just that you know,

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Speaker 1: the tightening and financial conditions, the pace of rate hikes

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Speaker 1: that we've seen not only in the United States but

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Speaker 1: elsewhere that don't really start to affect large developed markets

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Speaker 1: coming into the back half of this year and early next.

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Speaker 1: And then of course you have the energy supply shock

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Speaker 1: in Europe, you know, which will have global implications and

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Speaker 1: global spillovers. So we do think the combination of those

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Speaker 1: two things, you know, does result in in a recession.

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Speaker 1: We think the recession is gonna be relatively mild though,

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Speaker 1: um you know, because you know, the imbalances that you

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Speaker 1: have tended to see before prior recessions that accelerate the downturn.

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Speaker 1: You know, we just don't see as many of those imbalances.

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Speaker 1: So like banks are relatively strong, households had a lot

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Speaker 1: of cash coming into this, you know, businesses as well

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Speaker 1: really able to like push out the maturities of their

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Speaker 1: of their dads. So um, you know, I think shallow

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Speaker 1: recessions reasonable. Um, you know, but against that, you know,

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Speaker 1: it might not be short um. And the reason is

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Speaker 1: it's just because with high inflation you can't get that

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Speaker 1: usual countercyc local policy response you know from the central

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Speaker 1: bank or from the governments like you have in the past.

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Speaker 1: That it really caused that V shaped recession on the

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Speaker 1: back half, right, So this one could be more like,

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Speaker 1: you know, if you had to put a letter on it,

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Speaker 1: more like an L because you get this kind of

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Speaker 1: more prolonged small contraction and growth that kind of rebounds

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Speaker 1: only to something that's sluggish and below trend um. Some

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Speaker 1: not a great outlook. This is this is also a

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Speaker 1: really important point and it raises this issue that some

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Speaker 1: investors who come on Bloebrook surveillance have talked about that

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Speaker 1: they're expecting longer term depressed returns because of just this

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Speaker 1: dynamic that you're not going to see growth pick up.

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Speaker 1: There just aren't the policy levers. Would you agree, I mean,

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Speaker 1: are you talking like two years, you're talking three years?

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Speaker 1: Are we talking a lost decade? How much and how

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Speaker 1: long does this L shape stand? For Yeah, well, I

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Speaker 1: mean I think you know, we we call it our

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Speaker 1: secular horizon, but kind of call it a three to

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Speaker 1: five year horizon um. You know, we've been saying for

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Speaker 1: the last couple of years now that you know, we've

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Speaker 1: moved on from that period of you know, relatively low

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Speaker 1: economic and market volatility, but relatively sluggish growth below trend

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Speaker 1: inflation that we got to call it the great moderation

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Speaker 1: um of pre pandemic. We have we've moved past that

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Speaker 1: and what we are, what we're transitioning into, or what

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Speaker 1: we have transitioned into as a period of elevated volatility

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Speaker 1: um and in a period that's more likely to have

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Speaker 1: boom and bus like we've seen, um, you know, in

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Speaker 1: a period with with the potential for for lower returns.

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Speaker 1: So yeah, I mean we would we would certainly agree

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Speaker 1: with with that, Tiffany Wilding, PIMPO Chief US Economists Randy

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Speaker 1: Crows that joins us now you can almost professor at

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Speaker 1: the University of Chicago boost score. Former Fed Governor Randy

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Speaker 1: would lovely reaction to this. Futures down just a little,

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Speaker 1: a little bit. We're off four tense of one percent

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Speaker 1: your thought sun this report, So I think exactly as

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Speaker 1: you were describing, it's going to keep the FED on

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Speaker 1: track for seventy five basis point move at the next meeting.

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Speaker 1: It's broadly within the parameters of what they were expecting.

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Speaker 1: Um As as you had said that, they were hoping

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Speaker 1: that they'd still see a little bit more uptick in

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Speaker 1: labor force participation, but um they didn't get that. They do.

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Speaker 1: I think they are expecting the unemployment rate we'll start

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Speaker 1: to move up a bit. Something that will be heartening

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Speaker 1: is that we didn't see an acceleration in wage growth,

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Speaker 1: So so that isn't isn't taking off. That would be

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Speaker 1: the most problematic thing for them because I would suggest

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Speaker 1: inflation expectations or inflation really becoming quite entringed. And so

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Speaker 1: I think that's the other key thing to be looking

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Speaker 1: at going forward. Whereas wage growth going and so far

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Speaker 1: far that at five percent, obviously that's higher, much higher

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Speaker 1: than it has been, but certainly lower than pretty much

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Speaker 1: any measure of headline inflation. Randy, I want to stick

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Speaker 1: on participation rate for just a minute. We haven't gotten

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Speaker 1: back to the pre pandemic levels and a lot of

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Speaker 1: people were hoping for a soft landing or you have

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Speaker 1: more people come into the labor market who were sort

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Speaker 1: of sitting out during the pandemic in the direct aftermath.

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Speaker 1: How does this rejigger the expectations of the Federal Reserve

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Speaker 1: of this labor market and how much it's been transformed

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Speaker 1: post pandemic. I don't think this one report is really

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Speaker 1: really changing that, but I think they're gradually coming to

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Speaker 1: realize that a lot of people are just not coming

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Speaker 1: back in. For example, older workers labor force participation had

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Speaker 1: been quite high before the pandemic, and now it's significantly lower.

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Speaker 1: People older workers found a lot of people that they

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Speaker 1: knew didn't make it through covid um. They want to

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Speaker 1: be able to spend time with their their families and

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Speaker 1: uh and so I think those they're much less likely

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Speaker 1: to come back in. And that's a challenge for the

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Speaker 1: labor market because those are the most skilled workers. And

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Speaker 1: this is one of the challenges that we're seeing now,

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Speaker 1: this skilled mismatch that there are. You know, there are

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Speaker 1: a lot of openings, but there aren't people who have

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Speaker 1: the right skills for those for those jobs. Randy, I

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Speaker 1: just have to point out this tweet from Ivan the

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Speaker 1: k on Twitter reminder be sure to fit today's labor

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Speaker 1: market report into your narrative, even if you need to

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Speaker 1: use a shoehorn. How does the narrative change or what

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Speaker 1: should the narrative be heading into year end as we

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Speaker 1: look at the multitude the totality of data and try

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Speaker 1: to understand where we are in this economic cycle. Well,

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Speaker 1: I mean, we're fortunate that, um, we still have a

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Speaker 1: very strong labor market and so people have a lot

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Speaker 1: of job opportunities despite the Fed having moved interest rates

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Speaker 1: up so much and so so quickly. But as I

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Speaker 1: had said before, monetary policy has impact with long and

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Speaker 1: variable lags, So typically it starts having an impact about

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Speaker 1: six months or so, and we're getting to that point.

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Speaker 1: So I do think that we're going to start to

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Speaker 1: see the labor market weaken through the rest of the year,

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Speaker 1: but the Fed's going to keep at it. There's nothing

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Speaker 1: in this, uh, this report that is going to suggects

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Speaker 1: to them that they need to pull back. They're going

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Speaker 1: to continue full bore towards four plus by the end

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Speaker 1: of the year, and then somewhere in the mid fours

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Speaker 1: are so they'll or closer to five, they will they

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Speaker 1: will stop. But that that will then depend on the

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Speaker 1: data and how things are evolving next year, and also

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Speaker 1: the uncertainties of what Mr Putin might do. And Randy,

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Speaker 1: we appreciate Sunted, I said, as always looking forward to

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Speaker 1: next month's conversation Randy Krosner that of the University of Chicago.

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Speaker 1: Jeff Rosenberg joins us now following the labor market report

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Speaker 1: that we got pretty much bang on for the expectations.

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Speaker 1: Black Rock portfolio manager of the Systemic Multi Strategy Fund. Jeff,

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Speaker 1: your take on this particular jobs report, Yeah, at Lisa,

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Speaker 1: I think you hit it on the head earlier in

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Speaker 1: your reaction to the unemployment rate and the labor force

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Speaker 1: participation rate. I think that's why you're seeing, you know,

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Speaker 1: a little bit of negative reaction in the front end

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Speaker 1: of on curves, a little bit of negative reaction in

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Speaker 1: interest rates, sorry, in equity futures. You know. I think

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Speaker 1: this is a slight disappointment relative to hopes that you know,

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Speaker 1: this report would would give a piece of evidence in

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Speaker 1: favor of the camp that there's a slowdown and a

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Speaker 1: pivot underway, and I think that's going to be disappointed

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Speaker 1: in this report. It's one report. It's probably not even

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Speaker 1: the most important report. Next week we'll get the most

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Speaker 1: important report, which is the CPI report. But I think

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Speaker 1: in total, uh, that's really the numbers that sort of

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Speaker 1: stand out to me is the failure to see an

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Speaker 1: increase in the participation rate. And that's really about the

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Speaker 1: forward looking view on wage pressures. So, yes, the wage

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Speaker 1: pressures didn't go up, but they're still exceedingly high. And

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Speaker 1: while they stay high, that is the source of the

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Speaker 1: other camps view, which is that we're in a wage

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Speaker 1: price spiral. So I think it's a little bit disappointing

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Speaker 1: to the to the doublish camp, a little bit reinforcing

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Speaker 1: to the hawk is camp minor on both sides of

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Speaker 1: the of the argument, but but definitely tilting that way.

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Speaker 1: And that's why you're getting the market reaction you are today.

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Speaker 1: So we get a lot of fun managers on the show,

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Speaker 1: and they always say, we're not trading every day, we're

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Speaker 1: not an algo uh, And they say, you know, we

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Speaker 1: have a certain approach and we kind of move along.

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Speaker 1: How is your approach shifted as you get the multitude

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Speaker 1: of data that we're getting and how much are you

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Speaker 1: looking to change it heading into your end? Well, so

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Speaker 1: it's a great question, Lisa, And the issue is is

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Speaker 1: the degree of uncertainty here with regards to the inflation

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Speaker 1: outlook UM and and it's it's very hard to forecast.

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Speaker 1: So we have a little saying if you if you

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Speaker 1: don't have a good forecast, then observed. It's sort of

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Speaker 1: what the FED is saying in terms of being data dependent.

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Speaker 1: They don't know what the trajectory of inflation is going

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Speaker 1: to be, and so they're going to observe. So it's

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Speaker 1: very hard to kind of trade every little UH change

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Speaker 1: and turn and in the in the data, we take

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Speaker 1: a step back and we look at the overall trend

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Speaker 1: and as I as I just highlighted this is, you know,

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Speaker 1: one piece of information that's a little bit in the

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Speaker 1: camp of the of the hawk is camp that the

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Speaker 1: FIT needs to do more. But no one really knows

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Speaker 1: where inflation is going to go. And we have UH expectations, however,

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Speaker 1: in the bond market and the consensus view of a

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Speaker 1: relatively benign amount of impact to the economy for a

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Speaker 1: dramatic increation, sorry, dramatic decrease in the amount of inflation.

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Speaker 1: And I think the the weight of the proof of

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Speaker 1: that being the correct view is on that side of

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Speaker 1: the argument, and and and so I think it's it's

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Speaker 1: highly uncertain And today is a little bit on the

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Speaker 1: hawker side. You can't trade every little data point you say.

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Speaker 1: But yesterday we saw job was claims up just a

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Speaker 1: little bit, still very very low, and markets turned around.

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Speaker 1: When are they gonna get the message that the Fed

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Speaker 1: is ending and just kind of sit back and let

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Speaker 1: the economy go because the ft isn't going to change

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Speaker 1: its mind. Well, you know, the feed is sending mixed

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Speaker 1: messages right If if you look at the distribution of

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Speaker 1: the out years SEP median FED funds expectations, they're they're

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Speaker 1: all over the map and they represent basically the it's

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Speaker 1: time to slow and we want to avoid the overtightening

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Speaker 1: camp to the we need to get inflation down and

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Speaker 1: that's job number one. On top of that is a

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Speaker 1: very strong history of central bank react central banks reacting

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Speaker 1: to financial stability concerns. You know, right now, with a

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Speaker 1: strong labor market, this is the relatively easy part of

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Speaker 1: the FEDS tightening cycle, and I think they're trying to

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Speaker 1: get as much as they can under their belt. While

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Speaker 1: labor markets are strong, when you start to see significant

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Speaker 1: financial stability concerns, and when you start to see the

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Speaker 1: slowdown that they're hoping for and anticipating in the economy

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Speaker 1: and in the labor market, Uh, the job is going

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Speaker 1: to get that much difficult, more difficult, both for the

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Speaker 1: Fed as well as for US and financial market participants. Jeff,

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Speaker 1: how comfortable are you right now with market pricing that

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Speaker 1: we're going to get rate cuts as soon as late

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Speaker 1: next year? Well, that was really what I was kind

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Speaker 1: of referring to, is that we've got the rate cards

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Speaker 1: priced into the market. We've got a slow but steady

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Speaker 1: decline in inflation forecasts and consensus forecasts back down to

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Speaker 1: two percent, back down to the pre COVID environment without

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Speaker 1: a tremendous amount of tightening required. And I think that

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Speaker 1: that remains a challenged view as we see how the

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Speaker 1: data develops today is a little bit uh in favor

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Speaker 1: of that view. We haven't seen the significant tightening yet. Yes,

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Speaker 1: monetary policy operates with the lag, so we're waiting on

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Speaker 1: those lags. But the disappointment and the real issue for

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Speaker 1: markets will come next week because we haven't seen the

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Speaker 1: slow down in core CPI and and that's the bigger concern,

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Speaker 1: and it weighs into the argument that Summers and Jason

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Speaker 1: Furman are making that the market is off, the Fed

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Speaker 1: is off with respect to their forecast of how much

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Speaker 1: tightening is required, and that there's going to require a

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Speaker 1: lot more tightening before we see the decline in inflation,

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Speaker 1: that is in market expectations. So I think those declines

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Speaker 1: in the second half of next year. Um, you know

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Speaker 1: that very much remains to be seen. We're a little

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Speaker 1: bit cautious on adopting that view right now. Jeff Rosenberg,

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Speaker 1: portfolio manager of the Systematic Multi Strategy Fund at black Rock,

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Speaker 1: Thank you so much. This is the Bloomberg Surveillance Podcast.

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Speaker 1: Tom keene In. This is Bloomberg