Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
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Speaker 2: Terminal and the Bloomberg Business app. We begin this out
Speaker 2: with tech earnings helping to offset cycnical threats building the
Speaker 2: energy market as US around tensions continue to simm up.
Speaker 2: Bitter chairb Academy securities right in. My best case is
Speaker 2: that the chatter from last week of an impending and
Speaker 2: very strong deal for the US comes to fruition. Pete
Speaker 2: joins us now for more. Pete and Monic Warrick. That's
Speaker 2: your best case. What's your base case?
Speaker 1: Bias case?
Speaker 3: I think is that this continues to struggle and it
Speaker 3: starts weighing a little bit more on the economy. You
Speaker 3: just pointed out We've been looking longer day to futures
Speaker 3: contracts and you're out to eighty dollars in WTI out
Speaker 3: to November now, so that's different, and you're starting in
Speaker 3: those longer months September, October, November, you're actually at the
Speaker 3: highs of the whole cycle. So unlike the front contract,
Speaker 3: which we're still below kind of those spikes, we're seeing
Speaker 3: this kind of push out and it's really hard to
Speaker 3: figure out who's in charge in Iran. So I think
Speaker 3: that's a big issue, and it's really figure out who's
Speaker 3: willing to make that first move. I think when we
Speaker 3: talk to our Geopolitical intelligence group, the consensus view is
Speaker 3: that we will probably to end this war, have to
Speaker 3: escalate once more. To actually win that we will have
Speaker 3: to go in that, we will have to fight, and
Speaker 3: we will have to put pressure on Iran. Trump sometime's
Speaker 3: reluctant to do that right now, but we don't really
Speaker 3: see winning any other way right now.
Speaker 2: Right now, we're not tried in the economy. We're tried
Speaker 2: in the market, and there's slightly different things. The economy
Speaker 2: is not great in Asia, in Europe, there's a real threat.
Speaker 2: In the US, things are okay, but they're better than good.
Speaker 2: If you look at a US tech story and the
Speaker 2: earnings profile of some of the chip makers at the moment,
Speaker 2: what's your best bet in the market, how are you
Speaker 2: allocating capital? What are about have to full well?
Speaker 3: As you know, we've been talking about this production for security,
Speaker 3: so we love that. And Intel was actually one of
Speaker 3: our names we've expect because we did think that the
Speaker 3: US had to grow chip business organically, domestically. I think
Speaker 3: now that's almost I've got to admit I started selling
Speaker 3: a little bit a header earning as I'm probably going
Speaker 3: to be closed a bit more. It's better lucky than
Speaker 3: smart sometimes, but you know, we've had that great play.
Speaker 3: I think you have to start really looking tune out
Speaker 3: of Europe and thinking that Europe is finally going to
Speaker 3: get the joke that you have to invest in heavy industry.
Speaker 3: You have to invest in your own electricity production. You
Speaker 3: have to let BP, Shell Totel do what they're good
Speaker 3: at and not so worry. You know, don't worry as
Speaker 3: much about carbon in one degree temperature change is five
Speaker 3: years from now, when the reality is you need electricity,
Speaker 3: need energy. I think they start unleashing some of this.
Speaker 3: They're getting a little bit more creative. I think they're
Speaker 3: getting a little bit more organized, partly because they're getting
Speaker 3: a little bit more desperate. You know, it kind of
Speaker 3: takes them years to figure anything out. They got kicked
Speaker 3: by Russia. Now they're getting kicked by iron. I think
Speaker 3: that's going to be really interesting. So I want to
Speaker 3: own the energy plays. I want to own kind of
Speaker 3: that production for security, not just now in the US,
Speaker 3: but really heavily into US.
Speaker 2: They so we mentioned it briefly. You see the pressure
Speaker 2: on the Europeans and the economy in the PMI data.
Speaker 2: You see it in the markets too. I think the
Speaker 2: euro stocks fifty so far this week is down some
Speaker 2: three percent.
Speaker 4: They are hit in both ways.
Speaker 5: Number one, their energy importers, but they also don't have
Speaker 5: the techt story, And the tech story seems to be
Speaker 5: supporting the market in two ways. On one hand, you've got,
Speaker 5: of course, just the idea that there's upside surprise and
Speaker 5: the equities, but also the investment the capex, which seems
Speaker 5: to be supporting the picks and shovels that we see
Speaker 5: with the semiconductors and the energy stocks in the US.
Speaker 5: And that's been a huge support because that is existential spending.
Speaker 5: It isn't necessarily something that's coming from an obvious use case.
Speaker 2: It takes us the next week. So next week, next Wednesday,
Speaker 2: we get some big earnings from Microsoft, from Meta, from Alphabet.
Speaker 2: They are the big spenders, and some of them are
Speaker 2: also cunning jobs to support that spending. To Lisa's point,
Speaker 2: when they feel like it's existential and they've got the
Speaker 2: balance sheet to carry on spending at least trades, you
Speaker 2: want to be on the wrong side of to get
Speaker 2: on the other side of.
Speaker 3: At the moment, I think we're all kind of waiting
Speaker 3: to see if software can really turn around. So the
Speaker 3: Microsoft story, I think will be really interesting, right can
Speaker 3: we get this turnaround software? And you know I'm him tempted.
Speaker 3: I don't think I'll get to the point this weekend,
Speaker 3: but I want to write the note, like you know,
Speaker 3: your costs or someone else's customers. And I'm getting a
Speaker 3: little bit worried about the job situation. Right we kind
Speaker 3: of have this working poor situation. We have affordability that's
Speaker 3: doing nothing but getting worse right now, and I know
Speaker 3: we kind of focus so much at gas.
Speaker 1: At the pump.
Speaker 3: I'm getting increasingly worried about what's going to happen to
Speaker 3: fuel costs? Right, Diesel is such a big component of
Speaker 3: fuel costs. We haven't even started feeling the impact of
Speaker 3: higher fertilizer prices on food costs. I feel this affordability
Speaker 3: like this working poor and people who are not able
Speaker 3: to make ends meet the way they thought. That income
Speaker 3: line keeps creeping higher and higher. Now you're starting to
Speaker 3: lay off some people, you know, very nice jobs in
Speaker 3: many of these cases. I'm a little bit worried that
Speaker 3: there is a subtext of this economy that's worse and
Speaker 3: that the one thing we're not I'm still trying to
Speaker 3: figure out how to pick this up myself, but I
Speaker 3: feel like we are very good at identifying job loss
Speaker 3: lead recessions. Right we see the job loss, we start
Speaker 3: figuring out we know how to deal with that. I'm
Speaker 3: not sure we've had an affordability led recession, And despite
Speaker 3: the fact that chips and things are doing so well,
Speaker 3: I'm increasingly worried that you're seeing pressure on the consumer
Speaker 3: ways their make hands meet, their make hands meat.
Speaker 1: We got the bump from you know.
Speaker 3: The tax relief and things, where are they two months
Speaker 3: from now?
Speaker 5: So a lot of people will be nodding along and
Speaker 5: they'll be saying, we see this in the data, we
Speaker 5: see this in the sentiment that we have, of course
Speaker 5: coming out through all the surveys that indicate this fear
Speaker 5: about affordability.
Speaker 1: But then stocks.
Speaker 5: Get rewarded for cutting staff and saying that they're going
Speaker 5: to invest in AI instead.
Speaker 4: How awkward is that?
Speaker 5: I mean, do you think that that's going to be
Speaker 5: the theme going forward? That if companies cut a staff
Speaker 5: wholesale and say we're going to invest in AI. That's
Speaker 5: a by the stock moment.
Speaker 3: I think at some point people start getting worried about
Speaker 3: the job losses, and not at that individual company level,
Speaker 3: but at the national level, and say where are we
Speaker 3: And you know it was just what two months ago
Speaker 3: we were going to have the AI took over all
Speaker 3: the jobs, and that kind of narrative disappeared.
Speaker 1: I think that starts coming back right.
Speaker 3: This is a little bit concerning if you're going to
Speaker 3: lose these jobs, who's going to take those jobs? The
Speaker 3: same time, you know, continue to use AI. You hear
Speaker 3: about AI slop and people having to redo work. I
Speaker 3: believe with big law firm just have to make some
Speaker 3: announcement that they'd included some hallucination.
Speaker 1: So this is not yet perfect and we're treating it
Speaker 1: that way. So thanks, you don't want to read it
Speaker 1: for your love and again.
Speaker 3: Yeah, I keep for you looking at the fire side
Speaker 3: and you you might be the only species that extincts ourselves.
Speaker 1: It's like we're sitting there and going out over our week.
Speaker 2: The market's encouraging it. And this is the key point
Speaker 2: Lisa makes it. This was interest Citerni research a number
Speaker 2: of months ago, and I thought it was the most
Speaker 2: important point in that research piece, Lisa was that you
Speaker 2: replace the operation expenses the op X, with the capex,
Speaker 2: and the market rewards you for it. So then you
Speaker 2: drop the opex again, you boost the capex, and the
Speaker 2: market rewards you for it, and that's the labor market
Speaker 2: doom loom, and you end up in this really, really
Speaker 2: bad situation where the market's doing well and rewarding that
Speaker 2: kind of behavior, and unemployment starts to climb. Now, I'm
Speaker 2: not saying that's the base case for you, the base
Speaker 2: case for you, or the base case for me. I'm
Speaker 2: just saying that's the fear. That's the fear of what
Speaker 2: could happen in the next several years well.
Speaker 5: And essentially if you start to see companies have to
Speaker 5: justify their expense in capex tied to AI by cutting
Speaker 5: staff for efficiencies, then what does that set us up for?
Speaker 5: I mean, is that essentially what you see going forward, Pete,
Speaker 5: that there's going to be a sense that companies have
Speaker 5: to cut somewhere in order to keep spending on AI
Speaker 5: at the speed that they have been.
Speaker 3: There's certainly some of that sense right now. And again
Speaker 3: I think they're going to get more and more investment
Speaker 3: in the semiconductor industry, right I think that's just one A.
Speaker 1: You've got these companies. B.
Speaker 3: You can start looking at places like Nokia ericson what
Speaker 3: in Europe might benefit if Europe can kind of get
Speaker 3: serious about AI. You've seen some smaller companies. You know
Speaker 3: that Blackbeer I think is a company I own a
Speaker 3: small bit of. All of a sudden, that's interesting because
Speaker 3: they're doing something in the space. So you're seeing kind
Speaker 3: of every and I think, look to okay, what else
Speaker 3: can benefit. I think that's going to drive that part
Speaker 3: of the market. I think it continues to do pretty well.
Speaker 2: Can I just get funn of word on government intervention?
Speaker 2: Intel talked a lot about spirit and what's going to happen.
Speaker 2: There was save that conversation for later this morning. Intel.
Speaker 2: I don't want to downplay the real developments taking place
Speaker 2: of this company, but how many companies do you think
Speaker 2: of re engaging with Intel because of the government involvement
Speaker 2: and the halo that offers, and maybe they want to
Speaker 2: play some people.
Speaker 3: I think when that was part of why we had
Speaker 3: the prosac right and we concluded Intel because of the
Speaker 3: ten percent government stake. And part of my thesis had
Speaker 3: been Trump likes to win. Trump owns this on behalf
Speaker 3: of the American people, So the American people are winning,
Speaker 3: but people are going to do business with this company
Speaker 3: because you want to be on the right side of Trump.
Speaker 3: So I think that was part of my thesis. I
Speaker 3: think that's probably played out very well, for better or
Speaker 3: for worse. I do wish that when we're making these investments,
Speaker 3: whether it's in that there were some guidelines set up
Speaker 3: and that we had some group that actually does this
Speaker 3: and was well organized. That's not how this administration works,
Speaker 3: and fighting how this administration works isn't a good way
Speaker 3: to make money. Figuring out how the administration works and
Speaker 3: taking advantage or following it.
Speaker 1: I think is Ben's nice.
Speaker 2: Defense contract is Flying Spirit because that was going to
Speaker 2: happen next Now.
Speaker 3: I do think I'm looking for, you know, anything in
Speaker 3: the drone space. The drone space is just going to
Speaker 3: continue to take off. I think a lot of those
Speaker 3: companies are private, though I'd expect a lot of IPOs.
Speaker 3: As we were talking offline, you know, there's going to
Speaker 3: be IPOs and everything. I think you're going to see that.
Speaker 3: And I think surface drones have not get enough attention.
Speaker 3: That's you know, boats basically, So you can look at
Speaker 3: companies again, I think the shipbuilding industry, which is allegedly
Speaker 3: why the Secretary of the Navy was let go as
Speaker 3: he was not focusing enough on shipbuilding. That's an area
Speaker 3: I think is going to gain inten I look at
Speaker 3: Brunswick for example. They make small boats, you know, not
Speaker 3: military or anything like that, but why don't they get
Speaker 3: involved in this.
Speaker 1: I think you're going to see that this.
Speaker 3: Drone space explode, and I think shipbuilding really is a
Speaker 3: big focus that we need to do. So that's if
Speaker 3: I'm bathing right now, I'm shifting some money out of
Speaker 3: maybe the semis that have done so well, I'm looking
Speaker 3: for other things.
Speaker 2: Stay with US Mulblindberg surveillance coming up after this. So
Speaker 2: here's the latest this morning, a US soldier facing charges
Speaker 2: for allegedly using classified intel to rake in over four
Speaker 2: hundred thousand on polymarket betting on the timing of the
Speaker 2: capture of Venezuela's then president Nicholas Maduro. With the latest
Speaker 2: in Washington, Amory has more Montinggomery, Good.
Speaker 6: Morning, John, And it's not just what's happening in terms
Speaker 6: of this criminal investigation, but also the CFTC is lodging
Speaker 6: its very own in parallel civil investigation into this soul.
Speaker 6: And this marks the first time we see that regular
Speaker 6: take that step when it comes to prediction markets. It
Speaker 6: also comes to this own White House sent out a
Speaker 6: memo to staff a few weeks ago to make sure
Speaker 6: that they are not making these kinds of bets, especially
Speaker 6: given they have access to information. And we've seen a
Speaker 6: number of sizable trades, not just when it comes to
Speaker 6: trading platforms online like Caushee and Polymarket, but also in
Speaker 6: our own financial markets, especially when it comes to massive
Speaker 6: oil positions put on in a timely fashion before the
Speaker 6: President comes out with a truth social post and for
Speaker 6: more of this. I'm very glad to be joined by
Speaker 6: John Lieber of your Asia group or friend of the show. John,
Speaker 6: thank you so much for joining joining me. So the
Speaker 6: CFTC is also joining in on this in a parallel suit.
Speaker 6: Are we going to see more of these kinds of lawsuits?
Speaker 1: I hope so.
Speaker 7: I mean, I think this is actually a pretty major
Speaker 7: issue where you've got government officials who are using their
Speaker 7: position to profit and the proliferation of new markets that
Speaker 7: allow that to happen with very little oversight and very
Speaker 7: little regulation means we're going to see more of it.
Speaker 7: So I'm actually surprised the CFTC has gotten in on this.
Speaker 7: The oil investigation that they're launching about Trump's Aron attacks,
Speaker 7: who knows where that thing leads. I mean, these could
Speaker 7: be some very politically sensitive investigations, and I think that
Speaker 7: as these things proliferate, you're going to see more of this.
Speaker 8: Rep.
Speaker 6: Luna yesterday took to Twitter and said, less the DOJ
Speaker 6: plans on going after all the crooks in Congress currently
Speaker 6: insider trading.
Speaker 4: This is simply skewed justice. Will there be.
Speaker 6: More pressure on Congress to also make sure that Congressional lawmakers, senators,
Speaker 6: staffers cannot trade.
Speaker 7: Yeah, there's been pressure on Congress to stop getting rich
Speaker 7: off of inside information for decades now, and it seems
Speaker 7: like members of Congress somehow find a way to keep
Speaker 7: getting wealthier. So I doubt there will be any serious enforcement.
Speaker 7: The Stock Act was passed over a decade ago, and
Speaker 7: there haven't been that many prosecutions, meaningful prosecutions brought under it.
Speaker 7: I think that probably Congressional staff are certainly scared about this.
Speaker 7: Members of Congress are right now more or less above
Speaker 7: the law.
Speaker 6: Here when it comes to Congress and the War and
Speaker 6: Iron there's an important deay line coming up when it
Speaker 6: comes to the War Powers Act.
Speaker 4: Does it matter to this White House?
Speaker 1: No, I don't think so.
Speaker 7: I think the War Powers Act, which was passed decades
Speaker 7: ago in order to be a check on the president's
Speaker 7: power to do exactly what Trump is doing in Irun
Speaker 7: right now, is more or less defunct as long as
Speaker 7: Congress is not willing to enforce it. And unfortunately, the
Speaker 7: only enforcement mechanism they have is impeachment, and we know
Speaker 7: they're not going to impeach Trump, So what are they
Speaker 7: going to do here?
Speaker 6: Does this change though potentially after the Metrum elections, if
Speaker 6: we do see a changing of power, whether that's in
Speaker 6: the House or the Senate, it.
Speaker 7: Could I mean, the Democrats would certainly control the House
Speaker 7: and maybe the Senate. But you still have the enforcement here,
Speaker 7: which is you know, it doesn't it isn't really there's
Speaker 7: no real enforcement channel. And I think President Trump, who
Speaker 7: in his first term disputed the legality of the War
Speaker 7: Powers Act as an unconstitutional check on his ability to
Speaker 7: conduct foreign affairs, I think probably continues to just ignore this.
Speaker 2: Well.
Speaker 6: Obama sort of ignored it as well when it comes
Speaker 6: to Libby's So we've seen.
Speaker 7: This simple circumstantial legality, right, circumstantial rule of law, where
Speaker 7: you care about it when it's your side, and you
Speaker 7: don't care about it when it's preventing you from doing
Speaker 7: what you want.
Speaker 6: When it comes to the war in Iran, where's your
Speaker 6: rasure right now? In terms of this potential off ramp
Speaker 6: talks that are happening. There was a cease fire announced
Speaker 6: yesterday by the President. When it comes to Israel Lebanon,
Speaker 6: does that help the United States when it comes to
Speaker 6: trying to get the Iranians back at the table.
Speaker 7: So if you look at where the two sides are
Speaker 7: right now. The Iranians look pretty dug in. They've got
Speaker 7: a flow of oil moving out. They've got oil revenues
Speaker 7: that are much higher than what they originally budgeted for
Speaker 7: this year, with two million barrels a day on average
Speaker 7: going out over the last month or so. That probably
Speaker 7: drops significantly under the US barricade that's happening, but the
Speaker 7: US is quickly backpedaling off of its position. We don't
Speaker 7: think Trump is able to go back in in any
Speaker 7: meaningful way because of the political constraints that are on
Speaker 7: him in the United States, and the Iranians know this.
Speaker 7: So I think the negotiations that are happening right now
Speaker 7: eventually do lead to some kind of a deal that
Speaker 7: reopens the strait, let's say, by the end of May,
Speaker 7: and I think this weekend is going to be a
Speaker 7: key times two sides are exchanging ideas about what exactly
Speaker 7: the Iranians are going to do. Probably they stop, are
Speaker 7: forced to stop enriching uranium. They probably get some pause
Speaker 7: over some period of time, and the US probably ends
Speaker 7: up lifting some of these sanctions, which looks a lot
Speaker 7: like the JCPOA that President Obama.
Speaker 6: As you're saying this, I'm like, Okay, I've seen this
Speaker 6: deal before that the President then ripped up and Trump
Speaker 6: want Is Trump willing to take a deal that he
Speaker 6: in his prior term would say that it is not efficient?
Speaker 7: So if o're betting on poly market, I would have
Speaker 7: lost a lot of money betting on Trump right now.
Speaker 7: So who knows what he's going to do. But right now,
Speaker 7: the signals that the White House are sending or that
Speaker 7: they are backing off of their heat demands and they
Speaker 7: want to get a deal to make this thing go away.
Speaker 7: And that's at least the direction of travel right now.
Speaker 7: Trump of course can change his mind at any time
Speaker 7: for any reason, but that's what it looks like right now.
Speaker 6: I spoke to the former Centcom commander Motel yesterday as
Speaker 6: well as a six time CIA station chief, and they
Speaker 6: said nine to twelve.
Speaker 7: Months straight is open again until things.
Speaker 4: Are back to normal.
Speaker 6: Potentially we have a deal.
Speaker 7: Yeah, I think, well, I mean I think there's going
Speaker 7: to be. There's kind of two levels of a deal.
Speaker 7: There's like the memorandum of understanding that allows the blockades
Speaker 7: to go away and the Iranians can open the strait
Speaker 7: once again. And then there's a deal, which is, you know,
Speaker 7: you move uranium out of the country, we get inspectors in.
Speaker 7: Here's some cash. So I think that the deal part
Speaker 7: of it might take a little longer. But right now
Speaker 7: we think they are headed towards some kind of memorandum
Speaker 7: of understanding that would sketch out the parameters of a
Speaker 7: deal without even if something's not written. But I do
Speaker 7: agree that the disruptions we're living with right now are
Speaker 7: going to be with us for a while, and the
Speaker 7: strait's not going to be fully open till at least
Speaker 7: the middle of the summer, if not beyond that.
Speaker 6: Right Actually, I said yesterday that they were laying more minds.
Speaker 6: Doesn't the Iranians want to make this as complicated for
Speaker 6: the president before the Metrum election?
Speaker 7: Certainly that's what it looks like right now. There's been
Speaker 7: a lot of reporting about how Trump's tweeting is disrupting
Speaker 7: the negotiations and the Iranians, I think, think they're playing
Speaker 7: a stronger hand, and I think they're playing a stronger
Speaker 7: hand too, So I think that puts the Americans at
Speaker 7: a very difficult position in the negotiation here.
Speaker 6: If we think they're winning, then why would they back off.
Speaker 7: They want it to be I mean, I think everyone
Speaker 7: wants us to be over, for LEFE to return to normal.
Speaker 2: Stay with us. More Blindberg surveillance coming up after this.
Speaker 2: If Veronica Klankov SETI writing this on the Fed's next move,
Speaker 2: we expect a combination of self decoor inflation and loosening
Speaker 2: labor markets to help Wash convince the maturity if the
Speaker 2: FMC to cut rates before the end of the year.
Speaker 2: For Ronica joined us now for more.
Speaker 4: For roonicha good morning, Good to see it.
Speaker 2: Kevin Walsh did not really articulate a good arguments cut
Speaker 2: interest rates this week. Is that because there isn't one
Speaker 2: or because he didn't want to?
Speaker 4: Yeah, I think he just repeated this.
Speaker 8: You know, productivity enhancements, gains from AI, things like that
Speaker 8: that can be disinflationary. We can cut and not stand
Speaker 8: in the way of stronger growth. That's argument the administration
Speaker 8: has been making, though I don't think that's one that
Speaker 8: other FED officials are going to buy until we see
Speaker 8: it in software inflation data itself. Yeah, he was not
Speaker 8: terribly convincing, at least in terms of the near term.
Speaker 2: Pass your time info cuts changed has it been pushed
Speaker 2: down because of this shock of the Middle East.
Speaker 4: Yeah, we did. We pushed it out to September.
Speaker 8: But I think what we'll see and obviously it will depend,
Speaker 8: of course on what happens in the Middle East with
Speaker 8: oil prices, but the focus the next couple months will
Speaker 8: absolutely still be inflation. Data will get some uncomfortably strong
Speaker 8: readings even in April and may, I think, but as
Speaker 8: we get into the summer, I do think we won't see,
Speaker 8: you know, the substantial pass through of higher energy prices
Speaker 8: to core inflation. And what has happened in the summer
Speaker 8: of the last few years is that that's when the
Speaker 8: labor market starts to look weaker, and I think that
Speaker 8: will repeat, and then the pattern has been that then
Speaker 8: the FED cuts in September.
Speaker 5: How many scenarios do you have right now on your
Speaker 5: desk and potential outcomes for employment and inflation?
Speaker 4: Too many?
Speaker 8: Yeah, there's too many, even if you weren't even if
Speaker 8: we weren't dealing with the oil shock. You know, this
Speaker 8: is a labor market that's very unlike any that we've
Speaker 8: seen before, and so it's really hard to forecast when
Speaker 8: you don't have historical comparisons. To to basose forecasts on
Speaker 8: so all we're really doing is for the labor market
Speaker 8: at least looking at you know, this is a very
Speaker 8: low higher low fire dynamic.
Speaker 4: It's happened this way for a while.
Speaker 8: What that has meant the last few years is starting
Speaker 8: within the next couple of weeks, jobless claims start to
Speaker 8: rise in the summer, and that precedes a rise in
Speaker 8: the unemployment rate by the end of the year, just
Speaker 8: three to four tenths.
Speaker 4: It's gradual.
Speaker 8: But yeah, this a lot of ways, this is an
Speaker 8: economy that is very unfamiliar to us.
Speaker 5: Is there anything about the earnings that gives you pause?
Speaker 5: Given the fact that we're seeing very strong earnings, consumer
Speaker 5: discretionary companies coming out and saying that demand remains strong
Speaker 5: even amid some higher prices, and you have credit card
Speaker 5: companies coming out and saying people are still spending. I mean,
Speaker 5: at a certain point, do you say prices remain where
Speaker 5: they are right now? In the energy complex, we can
Speaker 5: maintain this level of activity and frankly that becomes more
Speaker 5: inflationary than it does, but suppressive of growth.
Speaker 8: Yeah, the earnings and the survey data and these anecdotes,
Speaker 8: they're they're interesting, but it's always kind of hard to
Speaker 8: translate those to macro forecasts aggregate data. I mean, if anything,
Speaker 8: in some cases it seems like earnings are stronger because
Speaker 8: of job losses and cutting costs. That way, what we've
Speaker 8: seen in the actual spending data of the last.
Speaker 4: Few months or so is, yes, consumption is very resilient.
Speaker 8: That's been the story for the last few years. But
Speaker 8: we were slowing as we were getting into this year.
Speaker 8: Of course, we've had a very strong retail sales print
Speaker 8: this week. A lot of that is nominal higher gas prices.
Speaker 8: There is a bit of a cushion right now for
Speaker 8: some consumers, you know, getting higher tax refunds than they
Speaker 8: did last year. But the primary driver of if people
Speaker 8: are spending or not, I think is aggregate take home
Speaker 8: labor income, and that is slowing this year.
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