1 00:00:05,120 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 2 00:00:08,520 --> 00:00:12,319 Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,880 Speaker 1: for insight from the best and economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,079 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:30,320 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. With us 7 00:00:30,320 --> 00:00:33,800 Speaker 1: again with Michael McKee is Randall Krasner, professor at the 8 00:00:33,920 --> 00:00:36,280 Speaker 1: University of Chicago Boost School, and of course a former 9 00:00:36,360 --> 00:00:40,240 Speaker 1: FED governor. I want, at least I thought captured it beautifully, 10 00:00:40,280 --> 00:00:44,760 Speaker 1: Professor Krasner. The confusion we have the movable parts of 11 00:00:44,880 --> 00:00:49,480 Speaker 1: labor that is in any labor economics textbook, Which movable 12 00:00:49,560 --> 00:00:53,200 Speaker 1: part of the American labor economy matters to you right now? 13 00:00:53,680 --> 00:00:57,280 Speaker 2: Well, probably the piece that matters most is what's happening 14 00:00:57,320 --> 00:01:01,080 Speaker 2: to wages, and so that the FED can take a 15 00:01:01,080 --> 00:01:03,680 Speaker 2: little bit of comfort in that despite the very strong 16 00:01:03,760 --> 00:01:06,040 Speaker 2: numbers that the headline numbers that we saw on the 17 00:01:06,120 --> 00:01:10,160 Speaker 2: upward revisions, we're not seeing an intensifying wage pressure. But 18 00:01:10,240 --> 00:01:11,960 Speaker 2: that's going to be really the key that the FED 19 00:01:12,000 --> 00:01:13,959 Speaker 2: would be looking at because that's what feeds through to 20 00:01:14,680 --> 00:01:20,160 Speaker 2: costs of services and then CPI, PCEE all the implications 21 00:01:20,240 --> 00:01:22,600 Speaker 2: for inflation's going and cost of living. 22 00:01:23,120 --> 00:01:25,720 Speaker 3: This is messy data. This is really messy data right 23 00:01:25,720 --> 00:01:28,840 Speaker 3: now because it's not just with respect to headline numbers, 24 00:01:28,880 --> 00:01:31,199 Speaker 3: it's also the composition. A lot of story here. Which 25 00:01:31,280 --> 00:01:34,040 Speaker 3: jobs are being added? Are they lower income jobs? Is 26 00:01:34,080 --> 00:01:35,920 Speaker 3: that what we're looking at? And then what does that 27 00:01:36,080 --> 00:01:38,720 Speaker 3: say about wage gains? Does that really give you an 28 00:01:38,720 --> 00:01:41,600 Speaker 3: apples to apples comparison? Is part of the reason why 29 00:01:41,720 --> 00:01:44,440 Speaker 3: data dependency is taking on less important simply because the 30 00:01:44,520 --> 00:01:46,880 Speaker 3: data is too messy to really read in any kind 31 00:01:46,880 --> 00:01:47,560 Speaker 3: of clean manner. 32 00:01:48,000 --> 00:01:50,400 Speaker 2: Yeah, you bring up a very important point, because it's 33 00:01:50,400 --> 00:01:54,600 Speaker 2: really important to unpack those numbers and look at the composition. 34 00:01:55,040 --> 00:01:57,040 Speaker 2: Is it that you know where are the layoffs happening. 35 00:01:57,080 --> 00:01:58,960 Speaker 2: Are they happening at the lower end of the income 36 00:01:59,040 --> 00:02:01,320 Speaker 2: spectrum or the happening at higher end of the income spectrum, 37 00:02:01,360 --> 00:02:03,760 Speaker 2: Because that makes a very big difference for what average 38 00:02:03,760 --> 00:02:06,360 Speaker 2: wage growth is going to be so important unpacked that. 39 00:02:06,480 --> 00:02:09,960 Speaker 2: Undoubtedly that's what the people the FED will be will 40 00:02:10,000 --> 00:02:13,480 Speaker 2: be doing. But we'll see I think my guess is 41 00:02:13,680 --> 00:02:17,560 Speaker 2: this will be consistent with a skip, but you know, 42 00:02:17,680 --> 00:02:18,480 Speaker 2: one never knows. 43 00:02:18,919 --> 00:02:20,679 Speaker 1: We're gonna with us Randy krass and we're going to 44 00:02:20,720 --> 00:02:24,160 Speaker 1: continue with Professor Krausner here in a moment again, I'll 45 00:02:24,240 --> 00:02:26,440 Speaker 1: lift to the equity markets off of where we were 46 00:02:26,480 --> 00:02:29,440 Speaker 1: before the report. The vix is stunning fifteen point three 47 00:02:29,520 --> 00:02:33,079 Speaker 1: two to imagine, or fourteen vix will be extraordinary two 48 00:02:33,120 --> 00:02:36,000 Speaker 1: year yield out five basis points as well, oil with 49 00:02:36,080 --> 00:02:38,880 Speaker 1: a bit of a rally opposite off, I should say 50 00:02:38,919 --> 00:02:43,320 Speaker 1: from the jobs at report dollar weakness this morning, Professor Krassner, I. 51 00:02:43,360 --> 00:02:44,320 Speaker 4: Want to go narrow on you. 52 00:02:44,360 --> 00:02:46,200 Speaker 1: Now I can do this because you're so damn good 53 00:02:46,240 --> 00:02:49,280 Speaker 1: at this. But the answer is, there's been angst over 54 00:02:49,320 --> 00:02:52,120 Speaker 1: the last ten days about the revisions that Mike McKee 55 00:02:52,200 --> 00:02:55,160 Speaker 1: talks about. Nobody trusts him. Jack Welch to late Great 56 00:02:55,240 --> 00:02:58,840 Speaker 1: Jack Welch of GE didn't trust Bureau of Labor statistics 57 00:02:58,840 --> 00:03:03,560 Speaker 1: and all that. There's a thing the birth death adjustment 58 00:03:03,800 --> 00:03:07,920 Speaker 1: to all of the statistics. Explain how experts like you 59 00:03:08,720 --> 00:03:11,680 Speaker 1: are not worried or don't have the inks that we 60 00:03:11,800 --> 00:03:14,079 Speaker 1: have in the birth death study. 61 00:03:14,960 --> 00:03:18,320 Speaker 2: I think so, I think just stepping back bigger picture, 62 00:03:18,600 --> 00:03:21,320 Speaker 2: I don't think these numbers are politicized. I do think 63 00:03:21,320 --> 00:03:23,840 Speaker 2: they try to do the best job possible. But it 64 00:03:23,880 --> 00:03:25,840 Speaker 2: ain't easy every month trying to come up with a 65 00:03:25,880 --> 00:03:29,079 Speaker 2: total number of workers in the economy coming in coming out, 66 00:03:29,280 --> 00:03:32,280 Speaker 2: and so you have these challenges of seeing, well, what 67 00:03:32,320 --> 00:03:35,320 Speaker 2: are new firms coming in, what are firms that are exiting? 68 00:03:35,840 --> 00:03:37,480 Speaker 2: How well do you cover those? And that's one of 69 00:03:37,520 --> 00:03:39,120 Speaker 2: the issues that comes up to when there's a lot 70 00:03:39,160 --> 00:03:41,720 Speaker 2: of churn in that part of the market, which there 71 00:03:41,760 --> 00:03:44,720 Speaker 2: is right now, you can get some of this volatility. 72 00:03:44,320 --> 00:03:46,760 Speaker 3: As you take a step back, especially with the upward revisions. 73 00:03:47,560 --> 00:03:50,680 Speaker 3: Can we make some assumption that perhaps there should be 74 00:03:50,720 --> 00:03:54,080 Speaker 3: an increased pricing of further rate hikes down the line, 75 00:03:54,080 --> 00:03:57,280 Speaker 3: that perhaps city groups Andrew Hollenhorst is more right than 76 00:03:57,320 --> 00:03:59,640 Speaker 3: some of the people who are saying that they're going 77 00:03:59,680 --> 00:04:01,360 Speaker 3: to be cut starting in September. 78 00:04:01,840 --> 00:04:02,040 Speaker 4: Yeah. 79 00:04:02,080 --> 00:04:05,320 Speaker 2: I don't see any evidence for rate cuts coming anytime soon. 80 00:04:05,360 --> 00:04:05,480 Speaker 5: Now. 81 00:04:05,480 --> 00:04:07,800 Speaker 2: There could be some sort of geopolitical event or something 82 00:04:07,880 --> 00:04:11,520 Speaker 2: extreme like that that happens, but for that the FED 83 00:04:11,600 --> 00:04:14,080 Speaker 2: is going to hang tough. They remember what happened to 84 00:04:14,480 --> 00:04:17,360 Speaker 2: the FED in the late nineteen seventies early eighties when 85 00:04:17,400 --> 00:04:19,680 Speaker 2: the FED pulled back too quickly when they thought, ah, 86 00:04:19,760 --> 00:04:23,159 Speaker 2: we've vanquished inflation, they didn't. Inflation went back up, and 87 00:04:23,160 --> 00:04:25,720 Speaker 2: then they had rates to double digit levels. They don't 88 00:04:25,720 --> 00:04:28,080 Speaker 2: want to do that. They'd much rather move things up 89 00:04:28,120 --> 00:04:31,320 Speaker 2: to the upper fives rather than take a long pause 90 00:04:31,360 --> 00:04:32,719 Speaker 2: and then have to go to eight or ten. 91 00:04:32,960 --> 00:04:35,919 Speaker 3: How high is the thresholder right now to cut, oh, I. 92 00:04:35,880 --> 00:04:39,000 Speaker 2: Think be very very high. Unless there's some sort of 93 00:04:39,040 --> 00:04:42,279 Speaker 2: miracle where we get this immaculate disinflation and inflation just 94 00:04:42,360 --> 00:04:44,960 Speaker 2: falls like a stone, which I've seen no evidence for. 95 00:04:45,440 --> 00:04:46,800 Speaker 2: They ain't going to be cutting anytime soon. 96 00:04:46,839 --> 00:04:48,480 Speaker 1: It's a beautiful chart we're not going to show out 97 00:04:48,480 --> 00:04:50,680 Speaker 1: today with all the moving parts here, but if you 98 00:04:50,720 --> 00:04:54,800 Speaker 1: look at the standard deviation of American unemployment, three point 99 00:04:54,920 --> 00:04:58,480 Speaker 1: seven percent is still an act of god. Michael McKee 100 00:04:58,520 --> 00:05:01,960 Speaker 1: has parsed through all the data. Three point seven zero percent, Mike, 101 00:05:02,040 --> 00:05:06,200 Speaker 1: were well within the center tendency of the post pandemic trend. 102 00:05:06,680 --> 00:05:09,640 Speaker 1: In your mind, what's the level of unemployment where we 103 00:05:09,680 --> 00:05:11,640 Speaker 1: begin to change this dialogue? 104 00:05:12,000 --> 00:05:14,120 Speaker 6: I think most people defendive said you got to get 105 00:05:14,200 --> 00:05:17,719 Speaker 6: at least over four or has been what they considered 106 00:05:17,760 --> 00:05:19,560 Speaker 6: sort of the neutral rate for a long time, and 107 00:05:19,600 --> 00:05:23,000 Speaker 6: we've obviously been below that. But even at four percent, 108 00:05:23,480 --> 00:05:25,280 Speaker 6: that's lower than it was a couple of years ago 109 00:05:25,400 --> 00:05:27,560 Speaker 6: in terms of what a neutral rate would be, so 110 00:05:27,680 --> 00:05:31,080 Speaker 6: I think there's certainly scope for them to fall more. 111 00:05:31,360 --> 00:05:35,080 Speaker 6: Now interesting decomposition of the unemployment rate. We had seen 112 00:05:35,200 --> 00:05:38,520 Speaker 6: a lot of a lot made of the fact that 113 00:05:38,560 --> 00:05:42,640 Speaker 6: black unemployment had fallen to the lowest ever. It has 114 00:05:42,760 --> 00:05:46,960 Speaker 6: jumped up significantly, almost a full percentage point nine tenths 115 00:05:47,000 --> 00:05:50,960 Speaker 6: of eight percent higher than it was in the last report. 116 00:05:51,040 --> 00:05:56,279 Speaker 6: So at this point we're looking at five point six percent, 117 00:05:56,520 --> 00:06:03,920 Speaker 6: so a big increase in Black and African American employment unemployment, 118 00:06:03,960 --> 00:06:06,160 Speaker 6: which is not necessarily a good thing. 119 00:06:06,400 --> 00:06:08,719 Speaker 1: Just joining US markets on the move, Lisa Browinson, Tom 120 00:06:08,760 --> 00:06:11,320 Speaker 1: King John getting ready for the next hour. Randall Crosner 121 00:06:11,360 --> 00:06:13,760 Speaker 1: with us from the Boot School Chicago. Michael McKee with 122 00:06:13,880 --> 00:06:18,400 Speaker 1: all of his abilities, Professor Crossner's with us. Jeff Rosenberg, 123 00:06:18,480 --> 00:06:20,760 Speaker 1: thank you so much with black Rock today. Really look 124 00:06:20,839 --> 00:06:26,159 Speaker 1: forward to hearing from you through the month of June. 125 00:06:28,080 --> 00:06:30,840 Speaker 1: Jeff Rosenberg joins us right now, Jeff, I'm going to 126 00:06:30,880 --> 00:06:35,160 Speaker 1: ask you Krosner like question, which I'm sure Carnegie Melanie, 127 00:06:35,160 --> 00:06:37,360 Speaker 1: you know Carnegie mellon economics, right, you know. 128 00:06:37,480 --> 00:06:39,000 Speaker 4: They're like first rate stuff. 129 00:06:39,400 --> 00:06:41,839 Speaker 1: Jeff, I'm going to ask you here about the bombshell 130 00:06:41,880 --> 00:06:44,599 Speaker 1: from John Williams a couple of days ago, which is 131 00:06:44,720 --> 00:06:50,400 Speaker 1: our start stays lower, which I believe significance signals a 132 00:06:50,600 --> 00:06:54,640 Speaker 1: shift lower in interest rates. Are you an investing at 133 00:06:54,680 --> 00:07:00,480 Speaker 1: black Rock presuming lower yield, higher fixed income price. 134 00:07:01,120 --> 00:07:03,400 Speaker 5: It's been going in the opposite direction, obviously. 135 00:07:03,440 --> 00:07:07,040 Speaker 7: It's it's about higher interest rates, and you know we've 136 00:07:07,040 --> 00:07:08,279 Speaker 7: been investing along that way. 137 00:07:08,320 --> 00:07:10,160 Speaker 5: As he talked about in terms of the curve. 138 00:07:10,520 --> 00:07:12,680 Speaker 7: You know, we're facing an inverted yield curve, and so 139 00:07:12,760 --> 00:07:15,280 Speaker 7: the highest interest rates are in the in the front end. 140 00:07:15,920 --> 00:07:17,679 Speaker 5: You know, the long term. 141 00:07:17,800 --> 00:07:22,200 Speaker 7: Our star story is really about whether or not policy 142 00:07:22,560 --> 00:07:25,920 Speaker 7: is tight right now. And you know, if our star 143 00:07:26,160 --> 00:07:29,280 Speaker 7: is as Williams laid out, then a policy is tight. 144 00:07:29,320 --> 00:07:31,200 Speaker 7: And that's what the Fed be leaves and that's why 145 00:07:31,200 --> 00:07:35,120 Speaker 7: they're taking a pause. What today's labor market report sort 146 00:07:35,120 --> 00:07:39,120 Speaker 7: of says is where's the tightness. You've raised interest rates 147 00:07:39,160 --> 00:07:40,240 Speaker 7: five hundred basis points and. 148 00:07:40,200 --> 00:07:43,400 Speaker 5: We're still delivering three three hundred thousand over three hundred 149 00:07:43,400 --> 00:07:44,080 Speaker 5: thousand jobs. 150 00:07:44,080 --> 00:07:47,600 Speaker 7: So the disconnect here is that you're not really seeing 151 00:07:47,640 --> 00:07:50,840 Speaker 7: the slowing in the labor market. Where you're seeing the 152 00:07:50,920 --> 00:07:54,040 Speaker 7: slowing is in the goods producing part of the economy, 153 00:07:54,200 --> 00:07:57,800 Speaker 7: And the split in the outlook is goods and survey 154 00:07:57,880 --> 00:08:00,960 Speaker 7: based data on goods is at risk session type level. 155 00:08:01,040 --> 00:08:06,200 Speaker 7: But services are holding in just fine. So Randy said earlier, 156 00:08:06,280 --> 00:08:08,000 Speaker 7: you know, you got to look at the details. One 157 00:08:08,000 --> 00:08:10,320 Speaker 7: of the details that sort of sticks out here is 158 00:08:10,360 --> 00:08:14,320 Speaker 7: a turnaround in the goods producing areas of the economy 159 00:08:14,360 --> 00:08:17,680 Speaker 7: in terms of hiring. That's a little bit worrisome for 160 00:08:17,760 --> 00:08:21,080 Speaker 7: the FED and the inflation because all the disinflation's coming 161 00:08:21,080 --> 00:08:24,280 Speaker 7: from the goods. And so if goods prices are stabilizing, 162 00:08:24,320 --> 00:08:27,440 Speaker 7: if goods hiring is increasing, which is what we see 163 00:08:27,440 --> 00:08:30,360 Speaker 7: in this report, then you know, you may have the 164 00:08:30,440 --> 00:08:33,840 Speaker 7: consensus outlook here, which is focused on these nap them surveys. 165 00:08:33,880 --> 00:08:35,480 Speaker 5: The pmis we got it earlier. 166 00:08:35,520 --> 00:08:38,560 Speaker 7: The isms, you know, collapsing into recession levels that may 167 00:08:38,760 --> 00:08:42,160 Speaker 7: just be a nominal effect and is really not telling 168 00:08:42,200 --> 00:08:45,080 Speaker 7: you the story. And for the FED, yeah, it's a 169 00:08:45,160 --> 00:08:49,160 Speaker 7: pause or a skip. Sorry, it's a skip. And then 170 00:08:49,320 --> 00:08:53,400 Speaker 7: you know, a couple more strong reports, and it may 171 00:08:53,440 --> 00:08:56,000 Speaker 7: not be that the rates and the real rate is 172 00:08:56,040 --> 00:08:58,320 Speaker 7: as low as Williams thinks it is because you're not 173 00:08:58,559 --> 00:09:00,000 Speaker 7: getting the effective tightening. 174 00:09:00,559 --> 00:09:03,640 Speaker 3: Jeff, I keep wondering whether people have gotten to sanguine 175 00:09:03,720 --> 00:09:06,040 Speaker 3: on the idea of inflation coming back to that two 176 00:09:06,120 --> 00:09:08,679 Speaker 3: percent level of the Federal Reserve and I'm looking right 177 00:09:08,720 --> 00:09:11,280 Speaker 3: now at break even rates two point two percent over 178 00:09:11,280 --> 00:09:13,720 Speaker 3: the next five to ten years. Do you think that 179 00:09:13,800 --> 00:09:16,480 Speaker 3: the suggestion here with a skip by the Fed and 180 00:09:16,520 --> 00:09:20,120 Speaker 3: a hot labor market report suggests a stickiness and a 181 00:09:20,200 --> 00:09:23,000 Speaker 3: resilience that is not priced into this market. 182 00:09:24,520 --> 00:09:28,160 Speaker 7: Well, it's certainly not priced into the break evens. You know, 183 00:09:28,240 --> 00:09:32,840 Speaker 7: they are reflecting the immaculate disinflation. And yeah, the evidence 184 00:09:32,840 --> 00:09:36,720 Speaker 7: hasn't really shown anything to support the immaculate disinflation. 185 00:09:36,800 --> 00:09:39,440 Speaker 5: So there's very much a hope trade going on here 186 00:09:39,480 --> 00:09:40,600 Speaker 5: in the fixed income. 187 00:09:40,320 --> 00:09:44,880 Speaker 7: Market in two factors, the hope that inflation immaculately falls, 188 00:09:45,160 --> 00:09:48,040 Speaker 7: and then the second implication of that is the Fed's 189 00:09:48,080 --> 00:09:49,560 Speaker 7: going to be able to go back to its old 190 00:09:49,559 --> 00:09:53,000 Speaker 7: playbook and ride to the rescue of acid prices and 191 00:09:53,040 --> 00:09:57,240 Speaker 7: acid inflation and cut interest rates by the end of 192 00:09:57,320 --> 00:10:00,000 Speaker 7: this year, which is you know, again, you just don't 193 00:10:00,120 --> 00:10:03,800 Speaker 7: see anything in the data that supports that. So I 194 00:10:03,840 --> 00:10:05,920 Speaker 7: think this report is a little bit challenging. Yeah, the 195 00:10:06,000 --> 00:10:09,120 Speaker 7: unemployment rate helps a bit, but it's a very noisy. 196 00:10:10,240 --> 00:10:13,679 Speaker 5: Data series. And so we'll have to see there. 197 00:10:14,000 --> 00:10:17,000 Speaker 1: Random crossin with us as well as Jeff Rosenberg. And 198 00:10:17,040 --> 00:10:19,640 Speaker 1: again we'll get to Ira Jersey and Gino Martin Adams 199 00:10:19,640 --> 00:10:21,800 Speaker 1: on this stock market that won't quit. She's been very 200 00:10:21,800 --> 00:10:24,000 Speaker 1: good about that for us A Crassner, I want to 201 00:10:24,040 --> 00:10:27,040 Speaker 1: go back to Frank Knight the advent of the Chicago School, 202 00:10:27,200 --> 00:10:30,240 Speaker 1: and it came out of something I got totally wrong, 203 00:10:30,280 --> 00:10:33,760 Speaker 1: which is my grandmother talking about the pandemic of nineteen eighteen. 204 00:10:33,800 --> 00:10:37,080 Speaker 1: We used to laugh at Grandma. We laughed at if 205 00:10:37,120 --> 00:10:39,719 Speaker 1: Frank Knight and everybody else who had to live that pandemic. 206 00:10:39,760 --> 00:10:42,640 Speaker 1: We're coming out of our own pandemic now. Can you 207 00:10:42,880 --> 00:10:46,480 Speaker 1: practice the evil trade of labor economics now? Or is 208 00:10:46,480 --> 00:10:49,360 Speaker 1: there just too much uncertainty to know what's going to 209 00:10:49,440 --> 00:10:52,480 Speaker 1: happen for it? Surprise after surprise after surprise. 210 00:10:52,600 --> 00:10:55,080 Speaker 4: Do we really know what we're doing? Well? 211 00:10:55,200 --> 00:10:58,840 Speaker 2: I mean, obviously we don't have pandemics all that often, 212 00:10:58,880 --> 00:11:01,680 Speaker 2: and so trying that. So you've got two main data points, 213 00:11:01,760 --> 00:11:04,160 Speaker 2: the recent one and one from a century ago. So 214 00:11:04,200 --> 00:11:07,720 Speaker 2: it's hard to make sure that you've got your your 215 00:11:07,760 --> 00:11:12,080 Speaker 2: models really well uh well calibrated. But that said, I 216 00:11:12,080 --> 00:11:14,880 Speaker 2: think we see some general characteristics that make sense. As 217 00:11:14,880 --> 00:11:17,240 Speaker 2: we're talking about before. You're going to see lower labor 218 00:11:17,240 --> 00:11:19,760 Speaker 2: force participation by older workers. You're going to see your 219 00:11:19,760 --> 00:11:22,000 Speaker 2: reluctance of people going back to to the office. So 220 00:11:22,000 --> 00:11:24,760 Speaker 2: I think those things are sort of broadly, broadly predictable. 221 00:11:25,840 --> 00:11:28,360 Speaker 2: But you know, the strength that we're continuing strength in 222 00:11:28,400 --> 00:11:31,120 Speaker 2: the labor market. But for you know, five hundred basis 223 00:11:31,120 --> 00:11:33,440 Speaker 2: point increase by the FED, that is pretty surprising. 224 00:11:33,480 --> 00:11:35,959 Speaker 1: I mean, you take the Jeff Rosenberg across the century 225 00:11:36,000 --> 00:11:39,319 Speaker 1: here from pandemic one to pandemic too frame with your 226 00:11:39,360 --> 00:11:43,120 Speaker 1: fixed income view Jeff Rosenberg, the distance from gules be 227 00:11:43,320 --> 00:11:45,640 Speaker 1: to bullet right now, it seems extraordinary. 228 00:11:47,400 --> 00:11:49,440 Speaker 5: Yeah, there's a there's a long way to go here, 229 00:11:49,640 --> 00:11:51,880 Speaker 5: And you know, is ther Andy just echo. You know, 230 00:11:51,960 --> 00:11:54,800 Speaker 5: five hundred basis points is a big increase. 231 00:11:54,920 --> 00:11:57,439 Speaker 7: But you know there is the other school of thought 232 00:11:57,520 --> 00:12:00,600 Speaker 7: on this real interest rate that the pandemic ushered in. 233 00:12:00,920 --> 00:12:05,040 Speaker 7: You know, some significant structural changes that effectively raises the 234 00:12:05,080 --> 00:12:07,880 Speaker 7: real interest rate, and if the real interest rate is 235 00:12:07,960 --> 00:12:09,480 Speaker 7: actually higher. 236 00:12:09,400 --> 00:12:11,480 Speaker 5: Then the FED nominal. 237 00:12:11,000 --> 00:12:13,520 Speaker 7: Interest rate has to be higher in order to get 238 00:12:13,520 --> 00:12:16,679 Speaker 7: tightening in. Now, we just have to be in this 239 00:12:16,760 --> 00:12:21,600 Speaker 7: period of uncertainty and it may be long and variable lags, 240 00:12:21,760 --> 00:12:24,959 Speaker 7: and it's just around the corner, and labor markets can 241 00:12:25,040 --> 00:12:27,720 Speaker 7: change very quickly and we can, you know, get into 242 00:12:27,960 --> 00:12:32,040 Speaker 7: negative numbers on the headline payrolls and then the Fed 243 00:12:32,080 --> 00:12:35,160 Speaker 7: will be justified in the in the skip. 244 00:12:35,600 --> 00:12:38,600 Speaker 5: But the lack of momentum, the. 245 00:12:38,600 --> 00:12:41,120 Speaker 7: Lack of evidence on making any of that progress, and 246 00:12:41,160 --> 00:12:44,360 Speaker 7: the longer that proceeds sort of starts to push on 247 00:12:44,480 --> 00:12:47,920 Speaker 7: the other argument that you really have had a structural 248 00:12:48,000 --> 00:12:50,720 Speaker 7: change here. You need a much higher interest rate. There's 249 00:12:50,840 --> 00:12:54,520 Speaker 7: less interest rate sensitivity. And you know, the other big 250 00:12:54,559 --> 00:12:57,319 Speaker 7: thing here is that is the balance sheet in liquidity. 251 00:12:57,360 --> 00:13:00,000 Speaker 7: And perhaps we'll look back on this period and recogniz 252 00:13:00,200 --> 00:13:02,480 Speaker 7: is that you know, it wasn't about the interest rate. 253 00:13:02,520 --> 00:13:06,040 Speaker 7: It was just that you had this legacy of excess 254 00:13:06,080 --> 00:13:08,880 Speaker 7: liquidity that you had to wait to get that liquidity 255 00:13:08,920 --> 00:13:13,160 Speaker 7: out before those interest rates started to really bite. And 256 00:13:13,559 --> 00:13:17,200 Speaker 7: if you waited too long, perhaps that allowed inflation and 257 00:13:17,240 --> 00:13:20,480 Speaker 7: inflation psychology to take hold, and that would be you. 258 00:13:20,440 --> 00:13:22,320 Speaker 5: Know where we go. But you know that's just that's 259 00:13:22,360 --> 00:13:23,520 Speaker 5: one potential path. 260 00:13:23,880 --> 00:13:26,520 Speaker 3: Just real quickly here, Jeff. Given the uncertainty and given 261 00:13:26,640 --> 00:13:28,880 Speaker 3: the inability to really get an edge on data that's 262 00:13:28,920 --> 00:13:31,800 Speaker 3: moving quickly and that really has defied a lot of expectations, 263 00:13:32,080 --> 00:13:33,800 Speaker 3: what are you pushing back against. Where do you get 264 00:13:33,840 --> 00:13:38,360 Speaker 3: conviction in terms of market positioning, given that there are 265 00:13:38,480 --> 00:13:41,040 Speaker 3: so many question marks around some of these big parameters. 266 00:13:42,400 --> 00:13:45,640 Speaker 5: You know, it's it's really hard. There's very little conviction. 267 00:13:46,000 --> 00:13:48,360 Speaker 7: You know, if you if you take this consensus view 268 00:13:48,440 --> 00:13:53,360 Speaker 7: sixty five percent, seventy percent probability of recession in the 269 00:13:53,400 --> 00:13:58,080 Speaker 7: next twelve months, you know it's it's recession, is the consensus. 270 00:13:58,120 --> 00:14:00,080 Speaker 7: And you know, you look at a report like to 271 00:14:00,640 --> 00:14:04,400 Speaker 7: you look at how well financial markets are holding up 272 00:14:04,440 --> 00:14:06,240 Speaker 7: in terms of beta and returns. 273 00:14:06,320 --> 00:14:07,880 Speaker 5: Yes, there's a big AI. 274 00:14:07,720 --> 00:14:10,600 Speaker 7: And tech and we're back into tech dominating you know, 275 00:14:10,800 --> 00:14:14,560 Speaker 7: seven stocks that make it. But you know, there's not 276 00:14:14,720 --> 00:14:18,000 Speaker 7: a lot of recession risk priced into the financial markets. 277 00:14:18,040 --> 00:14:20,480 Speaker 7: Look at credit markets and credit spreads, they're at mid 278 00:14:20,520 --> 00:14:21,400 Speaker 7: expansion level. 279 00:14:21,440 --> 00:14:23,880 Speaker 5: So if you're going to push back anywhere. I think the. 280 00:14:23,840 --> 00:14:27,680 Speaker 7: Pushback is this kind of seventy percent consensus probability of 281 00:14:27,680 --> 00:14:30,000 Speaker 7: recession right around the corner. And that's the issue is 282 00:14:30,040 --> 00:14:32,640 Speaker 7: it's just not right around the corner. That's what report, 283 00:14:32,760 --> 00:14:36,400 Speaker 7: this report tells you. It's pushed out further and further. 284 00:14:36,480 --> 00:14:39,880 Speaker 7: It's the long and variable lags. So that time dimension 285 00:14:39,960 --> 00:14:41,840 Speaker 7: is I think the thing you push again. 286 00:14:41,760 --> 00:14:43,920 Speaker 1: Rosenberg and Krasner and pushing up the two year yield 287 00:14:44,040 --> 00:14:47,880 Speaker 1: ten basis points four point four to four percent. Krassner 288 00:14:48,000 --> 00:14:50,280 Speaker 1: never did that when he was at the FED. Professor 289 00:14:50,320 --> 00:14:52,760 Speaker 1: Krausner's with us. Jeff Rosenberg, thank you so much of 290 00:14:52,880 --> 00:15:06,920 Speaker 1: Black Rocket. Tiffany Wilding is so smart. She didn't do 291 00:15:06,960 --> 00:15:09,800 Speaker 1: the dumb thing I did. She bought at the market bottom, 292 00:15:10,080 --> 00:15:12,360 Speaker 1: so she was she going to retire next week. Joining 293 00:15:12,400 --> 00:15:15,240 Speaker 1: US now from Pimco. Getting the stock market right. Tiffany 294 00:15:15,240 --> 00:15:20,400 Speaker 1: Wilding joins US our chief economist. Tiffany bespoke at this great, 295 00:15:20,440 --> 00:15:24,920 Speaker 1: great chart out Kyle Keatney ever retweeted it fourteen months 296 00:15:24,960 --> 00:15:28,680 Speaker 1: in a row. Tiffany Wilding's been wrong about a great 297 00:15:28,840 --> 00:15:32,120 Speaker 1: job economy. Let's just start with a why why are 298 00:15:32,200 --> 00:15:35,160 Speaker 1: smart people like you getting this job economy so wrong. 299 00:15:36,920 --> 00:15:39,760 Speaker 8: Well, this payroll report, I would just point out, was 300 00:15:39,840 --> 00:15:43,680 Speaker 8: much higher than even the highest economist estimate on the 301 00:15:43,680 --> 00:15:46,680 Speaker 8: Bloomberg consensus. So there are a lot of people that 302 00:15:46,720 --> 00:15:50,080 Speaker 8: got this one wrong. You know. The bottom line is 303 00:15:50,080 --> 00:15:53,840 Speaker 8: is that just job growth in this recovery has been 304 00:15:53,960 --> 00:15:58,720 Speaker 8: just more persistent and sustainable than anybody expected. And I 305 00:15:58,720 --> 00:16:00,840 Speaker 8: think part of the reason why that's going on is 306 00:16:00,880 --> 00:16:03,920 Speaker 8: because you are having companies coming out of the pandemic 307 00:16:03,960 --> 00:16:06,200 Speaker 8: that had a lot of trouble getting labor, you know, 308 00:16:06,240 --> 00:16:09,400 Speaker 8: that now want to make sure that they can continue 309 00:16:09,400 --> 00:16:11,880 Speaker 8: to have the labor when they need it. So what 310 00:16:11,920 --> 00:16:14,400 Speaker 8: they're doing is they're hiring more people but working them 311 00:16:14,440 --> 00:16:17,640 Speaker 8: fewer hours. And so I think the reason why they're 312 00:16:17,640 --> 00:16:19,560 Speaker 8: doing that is because they're saying, well, if we have 313 00:16:19,680 --> 00:16:21,760 Speaker 8: some weakness and demand, we can kind of weather it. 314 00:16:21,800 --> 00:16:23,720 Speaker 8: But if demand picks up, we have a bunch of 315 00:16:23,720 --> 00:16:26,360 Speaker 8: people that can work more hours, and we can also 316 00:16:26,440 --> 00:16:28,960 Speaker 8: deal with some capacity there as well. So that seems 317 00:16:29,000 --> 00:16:32,520 Speaker 8: to be what's going on. But it's producing productivity that's contracting. 318 00:16:32,560 --> 00:16:36,360 Speaker 8: We've had five consecutive quarters more than ever in the 319 00:16:36,400 --> 00:16:40,120 Speaker 8: history of the statistics of productivity contraction, so you know 320 00:16:40,160 --> 00:16:41,320 Speaker 8: this is coming at a cost. 321 00:16:42,040 --> 00:16:43,560 Speaker 9: So Tivvy, I want to ask you about the China 322 00:16:43,600 --> 00:16:45,080 Speaker 9: read through in just a moment, but first let's round 323 00:16:45,120 --> 00:16:48,320 Speaker 9: out the employment story. What is it going to take 324 00:16:48,600 --> 00:16:51,760 Speaker 9: to shake this labor market in the context of that 325 00:16:51,800 --> 00:16:54,800 Speaker 9: the Federal Reserve has already thrown the kitchen sink at it. 326 00:16:54,960 --> 00:16:55,760 Speaker 9: What's it going to take? 327 00:16:56,400 --> 00:16:59,000 Speaker 8: Well, you know, I would just just taking a step 328 00:16:59,040 --> 00:17:01,080 Speaker 8: back from this report, the three months moving average of 329 00:17:01,120 --> 00:17:04,439 Speaker 8: courses is also very strong, well above levels that we 330 00:17:04,480 --> 00:17:06,760 Speaker 8: traditionally think are needed to keep the unemployment right stable. 331 00:17:06,800 --> 00:17:09,080 Speaker 8: But if you do look over the last couple of years, 332 00:17:09,480 --> 00:17:12,760 Speaker 8: and the three month moving average of payrolls has been decelerating, 333 00:17:13,160 --> 00:17:17,480 Speaker 8: you know, at quite a consistent pace. And if you 334 00:17:17,560 --> 00:17:20,760 Speaker 8: kind of just extrapolate that out then and we continue 335 00:17:20,800 --> 00:17:23,320 Speaker 8: to decelerate as we've been decelerating, you know, that does 336 00:17:23,359 --> 00:17:26,919 Speaker 8: suggest payrolls will be negative by the end of this year. So, 337 00:17:27,400 --> 00:17:29,680 Speaker 8: you know, even though things still appear to be strong 338 00:17:29,720 --> 00:17:31,600 Speaker 8: on a level basis, if you just look at where 339 00:17:31,600 --> 00:17:34,920 Speaker 8: they've been, you know, they are slowing, and I do 340 00:17:34,960 --> 00:17:37,359 Speaker 8: think that is a sign that monetary policy is working, 341 00:17:37,400 --> 00:17:40,080 Speaker 8: maybe not as fast as some people were expecting, but 342 00:17:40,119 --> 00:17:42,080 Speaker 8: I think it is working. The other thing is, if 343 00:17:42,119 --> 00:17:44,560 Speaker 8: you look onto the details of today's report, it actually 344 00:17:44,680 --> 00:17:49,760 Speaker 8: wasn't as great as the headline suggested. The aggregate hours 345 00:17:49,800 --> 00:17:54,560 Speaker 8: worked were low, they contracted, aggregate incomes decelerated, and the 346 00:17:54,560 --> 00:17:57,520 Speaker 8: household survey, you know, employment, which is the other survey, 347 00:17:57,520 --> 00:17:58,439 Speaker 8: actually contracted. 348 00:17:58,760 --> 00:17:58,960 Speaker 4: You know. 349 00:17:59,000 --> 00:18:00,760 Speaker 8: So there's a little bit of a mixed picture coming 350 00:18:00,800 --> 00:18:01,359 Speaker 8: from this report. 351 00:18:01,400 --> 00:18:05,399 Speaker 1: Overall, pretty ian linga in the fixed income space, it 352 00:18:05,520 --> 00:18:07,840 Speaker 1: being capital markets mentioned the same thing. 353 00:18:08,560 --> 00:18:11,320 Speaker 9: It's starting to become a growing consensus. Although it sounds 354 00:18:11,320 --> 00:18:12,679 Speaker 9: like Tiffany is out in front of it. 355 00:18:12,840 --> 00:18:15,440 Speaker 1: Market doesn't believe it. We're up three und ninety points. 356 00:18:15,800 --> 00:18:18,520 Speaker 9: No, the market definitely does not believe it, but they 357 00:18:18,560 --> 00:18:21,320 Speaker 9: are perhaps believing what you're seeing over in China, at 358 00:18:21,400 --> 00:18:23,440 Speaker 9: least on the slowing down front. And Tiffany, that's where 359 00:18:23,440 --> 00:18:24,240 Speaker 9: I want to come to you. 360 00:18:24,160 --> 00:18:24,919 Speaker 1: To me today. 361 00:18:25,480 --> 00:18:27,440 Speaker 9: I'm I'm a journalist. I have to It's like this 362 00:18:27,480 --> 00:18:28,359 Speaker 9: is how I get my paycheck. 363 00:18:28,440 --> 00:18:28,720 Speaker 4: Tom. 364 00:18:29,480 --> 00:18:32,560 Speaker 9: Does the China read through Tiffany of twenty twenty three 365 00:18:33,440 --> 00:18:36,520 Speaker 9: look like it did fifteen years ago? Should we care 366 00:18:36,560 --> 00:18:38,560 Speaker 9: about what we're hearing on the other side? 367 00:18:38,560 --> 00:18:39,160 Speaker 4: Of the Pacific. 368 00:18:40,640 --> 00:18:43,000 Speaker 8: Well, you know, when I think about so, China has 369 00:18:43,600 --> 00:18:48,679 Speaker 8: led you know, just global industrial production over you know, 370 00:18:48,760 --> 00:18:51,320 Speaker 8: call it the last fifteen years. So whatever trends were 371 00:18:51,359 --> 00:18:53,639 Speaker 8: happening in China, you know, whether it be with the 372 00:18:53,640 --> 00:18:57,720 Speaker 8: property sector or infrastructure investment, you know, they needed a 373 00:18:57,760 --> 00:19:01,360 Speaker 8: lot of global commodities, you know, and and other global 374 00:19:01,400 --> 00:19:04,080 Speaker 8: inputs in order to kind of do the things that 375 00:19:04,119 --> 00:19:07,199 Speaker 8: they were doing domestically internally on the supply side. And 376 00:19:07,280 --> 00:19:09,359 Speaker 8: as a result of that, when China is doing well, 377 00:19:09,720 --> 00:19:12,320 Speaker 8: global industrial production tends to be doing well. In the 378 00:19:12,400 --> 00:19:15,760 Speaker 8: United States, you know, investment in things like equipment and 379 00:19:16,119 --> 00:19:18,560 Speaker 8: other things also tends to be doing well. So it's 380 00:19:18,600 --> 00:19:21,280 Speaker 8: really important we always we always certainly watch China. It's 381 00:19:21,320 --> 00:19:24,320 Speaker 8: really important to understand what their credit and as well 382 00:19:24,359 --> 00:19:27,080 Speaker 8: as their fiscal policy is doing, because that gives you 383 00:19:27,119 --> 00:19:29,399 Speaker 8: a sense, you know, on some of these supply side 384 00:19:29,560 --> 00:19:31,840 Speaker 8: reforms now China, you know, Chinese policy makers have been 385 00:19:31,920 --> 00:19:35,080 Speaker 8: very excited because they thought that domestic consumption would really 386 00:19:35,119 --> 00:19:37,480 Speaker 8: pick back up. I think, you know, there's a rising 387 00:19:37,600 --> 00:19:40,040 Speaker 8: questions about you know, kind of the extent and durability 388 00:19:40,040 --> 00:19:41,879 Speaker 8: of that, and so do I think the question in 389 00:19:41,880 --> 00:19:44,119 Speaker 8: my mind is, do they you know, harken back to 390 00:19:44,160 --> 00:19:46,679 Speaker 8: the usual levers they pull, which is to increase their 391 00:19:46,720 --> 00:19:49,200 Speaker 8: own capacity, and does that, you know, then pull up 392 00:19:49,359 --> 00:19:51,160 Speaker 8: you know, global industrial production with it. 393 00:19:51,160 --> 00:19:54,960 Speaker 1: It's inferting. Just quickly here your house call on the 394 00:19:55,160 --> 00:20:02,000 Speaker 1: rapidity to lower interest rates? What's the PIMCO call disinflation? 395 00:20:02,280 --> 00:20:02,920 Speaker 1: If you will? 396 00:20:03,520 --> 00:20:06,200 Speaker 8: Yeah, well, you know, I think the you know, from 397 00:20:06,200 --> 00:20:09,760 Speaker 8: our perspective, rates are restrictive right now, and we do 398 00:20:09,840 --> 00:20:13,880 Speaker 8: think that will slow the economy over time. And as 399 00:20:13,880 --> 00:20:17,000 Speaker 8: it slows the economy, you don't need restrictive interest rates anymore, 400 00:20:17,240 --> 00:20:18,760 Speaker 8: you know. So we think the FED will go back 401 00:20:18,760 --> 00:20:21,280 Speaker 8: to two and a half percent, and when inflation falls, 402 00:20:21,359 --> 00:20:24,080 Speaker 8: you know, to two point something, as Rich Claire, to 403 00:20:24,560 --> 00:20:27,040 Speaker 8: my esteem colleague suggests, you know, then the Fed will 404 00:20:27,080 --> 00:20:28,720 Speaker 8: get go back to two and a half kind of 405 00:20:28,720 --> 00:20:32,040 Speaker 8: where they see neutral, you know, but I don't necessarily 406 00:20:32,080 --> 00:20:35,000 Speaker 8: think they're going back to zero. And unless we have 407 00:20:35,040 --> 00:20:37,960 Speaker 8: a more severe recession, which we're not forecasting. So you know, 408 00:20:38,000 --> 00:20:40,320 Speaker 8: we do think rates will be on average higher than 409 00:20:40,320 --> 00:20:42,560 Speaker 8: they were you know, in the ten to fifteen years 410 00:20:42,560 --> 00:20:45,520 Speaker 8: before the pre you know, before the pandemic. But you know, nevertheless, 411 00:20:45,560 --> 00:20:48,280 Speaker 8: we are still in this kind of low neutral rate environment. 412 00:20:48,359 --> 00:20:55,360 Speaker 1: Sivty Wilde. Thank you so much, Chief Economists, Pimcoff. I'm 413 00:20:55,359 --> 00:20:58,000 Speaker 1: ready to talk to Nadia level here and just absolutely 414 00:20:58,040 --> 00:21:00,720 Speaker 1: dive into the equity out of upstate today. 415 00:21:00,760 --> 00:21:02,280 Speaker 4: What watch you watching, prant. 416 00:21:02,040 --> 00:21:05,000 Speaker 1: Ganda makeup's not showing me blushing? Not your level saves 417 00:21:05,080 --> 00:21:09,240 Speaker 1: us right now, Senior US Equity Strategies ubs Global Nadia, 418 00:21:09,320 --> 00:21:13,000 Speaker 1: it seems like the stock market is going opposite of 419 00:21:13,040 --> 00:21:15,000 Speaker 1: all the angst and economics. 420 00:21:15,200 --> 00:21:15,960 Speaker 4: Is that true? 421 00:21:16,280 --> 00:21:19,359 Speaker 10: It seems so. You know, it's been a tough market 422 00:21:19,440 --> 00:21:21,840 Speaker 10: to navigate. You know, as we know that we've seen 423 00:21:21,960 --> 00:21:24,960 Speaker 10: just wide dispersion in the market, and we have seen 424 00:21:25,440 --> 00:21:29,399 Speaker 10: one of the narrowest breadth in the market, particularly for 425 00:21:29,600 --> 00:21:33,320 Speaker 10: a market that's coming off of a being market localized low. 426 00:21:33,720 --> 00:21:35,240 Speaker 10: I mean, it's only a third of the S and 427 00:21:35,240 --> 00:21:39,360 Speaker 10: P constituents that are our performing the index Sincy October low, 428 00:21:39,359 --> 00:21:41,160 Speaker 10: and if you look over the last month, that's even 429 00:21:41,200 --> 00:21:44,480 Speaker 10: a smaller fraction. So Tom I would say, this continuous 430 00:21:44,960 --> 00:21:48,520 Speaker 10: narrowing of market leadership is not a homemark of a 431 00:21:48,560 --> 00:21:49,199 Speaker 10: new cycle. 432 00:21:49,320 --> 00:21:50,040 Speaker 5: And we think that this. 433 00:21:50,040 --> 00:21:52,679 Speaker 10: Makes the market a little bit more vulnerable. We know 434 00:21:52,760 --> 00:21:55,240 Speaker 10: that it's a AI frenzy that's really the powerhouse of 435 00:21:55,640 --> 00:21:59,000 Speaker 10: late and we do believe in that trend, but we 436 00:21:59,040 --> 00:22:01,440 Speaker 10: think that there's just a lot be discounted right now, 437 00:22:01,680 --> 00:22:05,000 Speaker 10: and we just questioned the resiliency of this market going forward. 438 00:22:05,280 --> 00:22:08,880 Speaker 10: It's now trended towards our upside scenario forty four hundreds 439 00:22:08,880 --> 00:22:11,440 Speaker 10: for this year, despite the fact that you as you 440 00:22:11,560 --> 00:22:15,320 Speaker 10: noted the deteriorate and macro backdrop, and so we just 441 00:22:15,359 --> 00:22:19,560 Speaker 10: don't think that this cocktail is very appetizing at these levels. 442 00:22:19,680 --> 00:22:22,760 Speaker 3: Perhaps not an overarching scale, but I do wonder whether 443 00:22:22,800 --> 00:22:25,760 Speaker 3: there's opportunity created by just how narrow the breath has 444 00:22:25,800 --> 00:22:29,879 Speaker 3: been and the incredible losses in other areas. Bespoke Investment 445 00:22:29,920 --> 00:22:32,600 Speaker 3: came out with this that the Nasdaq is outperforming the 446 00:22:32,680 --> 00:22:36,720 Speaker 3: Doer did back in May by nine point three percentage points. 447 00:22:36,760 --> 00:22:39,359 Speaker 3: That is the ninth widest margin of our performance for 448 00:22:39,359 --> 00:22:42,040 Speaker 3: the Nasdaq relative to the Dow in history. At what 449 00:22:42,160 --> 00:22:44,520 Speaker 3: point do you start looking at some of the discarded 450 00:22:45,200 --> 00:22:47,760 Speaker 3: companies as something of an opportunity. 451 00:22:49,480 --> 00:22:51,439 Speaker 10: We have been, I mean, we've sort of been more 452 00:22:51,520 --> 00:22:54,520 Speaker 10: clign and more the defensive areas of a market, like 453 00:22:54,800 --> 00:22:58,439 Speaker 10: consumer staples as well as utilities, and coupling that with 454 00:22:58,560 --> 00:23:03,199 Speaker 10: some cyclical exposure on industrials. We are concerned about the 455 00:23:03,240 --> 00:23:06,320 Speaker 10: economy going forward, and we do think that the economy 456 00:23:06,400 --> 00:23:08,600 Speaker 10: we were sold out of courses a continuous debate and 457 00:23:08,640 --> 00:23:10,399 Speaker 10: whether or not we end up in a recession. We 458 00:23:10,480 --> 00:23:12,920 Speaker 10: think that we're probably going to not see any economic 459 00:23:12,960 --> 00:23:14,720 Speaker 10: road by the time we get to the end of 460 00:23:14,720 --> 00:23:17,119 Speaker 10: the year. So it becomes a point flip, and so 461 00:23:17,160 --> 00:23:19,399 Speaker 10: we think from a position and standpoint, you want to 462 00:23:19,400 --> 00:23:23,240 Speaker 10: continue to lead in a bit into the defensive areas 463 00:23:23,440 --> 00:23:25,560 Speaker 10: of the market and take the opportunity and take some 464 00:23:25,640 --> 00:23:28,160 Speaker 10: chips off of some of those areas of the market 465 00:23:28,160 --> 00:23:30,159 Speaker 10: that's really gone up and its feeling a little bit 466 00:23:30,200 --> 00:23:31,120 Speaker 10: frothy at this point. 467 00:23:31,200 --> 00:23:33,160 Speaker 3: I've been hearing so many people say that they're going 468 00:23:33,160 --> 00:23:36,679 Speaker 3: into defensives. Aren't they overpriced right now? Based on some 469 00:23:36,760 --> 00:23:38,440 Speaker 3: of the others. What does it mean to even be 470 00:23:38,560 --> 00:23:42,199 Speaker 3: defensive at a time when the economy is growing and 471 00:23:42,240 --> 00:23:45,160 Speaker 3: there's sort of a rolling recession in different sectors. 472 00:23:46,600 --> 00:23:49,680 Speaker 10: There is a rolling in sessions recession in different sectors. 473 00:23:49,720 --> 00:23:52,760 Speaker 10: But we again, we haven't seen the full impact of 474 00:23:52,880 --> 00:23:55,920 Speaker 10: tighter monetary policies and we know that credit lending standards 475 00:23:55,960 --> 00:23:58,439 Speaker 10: are tightening, and when you look at the forward and 476 00:23:58,480 --> 00:24:00,399 Speaker 10: then indicator, which I think is John and there's a 477 00:24:00,440 --> 00:24:02,320 Speaker 10: point now. For much of the morning, we pay very 478 00:24:02,320 --> 00:24:06,000 Speaker 10: close attention to the ISM manufacturing indexes because that tends 479 00:24:06,000 --> 00:24:09,120 Speaker 10: to have a very good correlation with earnest growth going 480 00:24:09,119 --> 00:24:12,280 Speaker 10: forwarded that continues to deteriorate. We're even seeing the weakness 481 00:24:12,320 --> 00:24:15,360 Speaker 10: in the new orders and we're seeing a normalization of that. 482 00:24:15,359 --> 00:24:17,359 Speaker 10: That points to additional weaknesses ahead. 483 00:24:17,359 --> 00:24:18,159 Speaker 5: And we know that. 484 00:24:18,280 --> 00:24:22,040 Speaker 10: Credit London standers have a very good correlation where job growth, 485 00:24:22,040 --> 00:24:24,920 Speaker 10: particularly for smaller mid sized businesses, and while we're not 486 00:24:25,040 --> 00:24:29,480 Speaker 10: seeing thatteriation immediately today, it does point to that there 487 00:24:29,480 --> 00:24:32,159 Speaker 10: will be some ahead. So that's why we continue to 488 00:24:32,200 --> 00:24:35,440 Speaker 10: believe that the defensive position is the right one in 489 00:24:35,600 --> 00:24:39,159 Speaker 10: this environment of uncertainty. And as we get later in the. 490 00:24:39,200 --> 00:24:41,760 Speaker 11: Year, trade for the brave by the hand saying sal 491 00:24:41,800 --> 00:24:44,359 Speaker 11: ai naddie, are you wanting to make it. That's what 492 00:24:44,600 --> 00:24:46,480 Speaker 11: Michael Hanna brought up this morning over at b of A. 493 00:24:48,080 --> 00:24:51,480 Speaker 10: We do have a preference for China. You know, the 494 00:24:51,520 --> 00:24:54,720 Speaker 10: recovery there has been on even but we are seeing 495 00:24:54,720 --> 00:24:56,119 Speaker 10: some encouraging data. 496 00:24:55,880 --> 00:24:57,600 Speaker 5: Particularly on the server. 497 00:24:57,440 --> 00:25:00,879 Speaker 10: Side of the economy, as when you look around the label, 498 00:25:00,920 --> 00:25:05,000 Speaker 10: they weekend a few weeks ago, So we would lean 499 00:25:05,040 --> 00:25:07,840 Speaker 10: in more on those areas the leisure side of the 500 00:25:07,920 --> 00:25:11,040 Speaker 10: Chinese economy and not so much your property side. 501 00:25:11,240 --> 00:25:16,520 Speaker 1: The Nadia, are we modeling in disinflation which is boosting 502 00:25:16,600 --> 00:25:20,240 Speaker 1: the PEM ratios of the presumed ratio of the market 503 00:25:20,680 --> 00:25:24,760 Speaker 1: and particularly the profit making technology companies. Is this just 504 00:25:24,880 --> 00:25:27,959 Speaker 1: the stock market getting out six months or dare I 505 00:25:28,040 --> 00:25:31,960 Speaker 1: say out a year and expecting a disinflation? 506 00:25:33,720 --> 00:25:36,000 Speaker 10: Well, I think when you say about tech, I think 507 00:25:36,040 --> 00:25:40,200 Speaker 10: people are looking two three years out for AI revenues 508 00:25:40,240 --> 00:25:43,560 Speaker 10: that might not materialize for everyone. 509 00:25:43,920 --> 00:25:45,760 Speaker 5: Yes, we do favor. 510 00:25:45,600 --> 00:25:49,800 Speaker 10: The AI big data as well as cybersecurity. This is 511 00:25:49,840 --> 00:25:52,159 Speaker 10: part of our ABC of Tech framework that we've been 512 00:25:52,240 --> 00:25:54,960 Speaker 10: using for the last two years. But we do think 513 00:25:55,000 --> 00:25:58,840 Speaker 10: that you have to become increasingly selective because there's a 514 00:25:58,880 --> 00:26:01,680 Speaker 10: lot right now of discount particularly in some of the 515 00:26:01,680 --> 00:26:04,120 Speaker 10: semi names. So we think that it's more it's less 516 00:26:04,119 --> 00:26:07,439 Speaker 10: about the disinflation that we're seeing and more about the 517 00:26:08,000 --> 00:26:11,280 Speaker 10: enthusiasm about the market opportunity for AI. 518 00:26:11,600 --> 00:26:15,280 Speaker 11: Nadia, Thank you, Nadia, Love with a UPS Guy against pyros. 519 00:26:25,240 --> 00:26:27,600 Speaker 1: Let us, recalibrate on a Friday and move forward, and 520 00:26:27,600 --> 00:26:29,280 Speaker 1: we're going to try to avoid the silliness of the 521 00:26:29,280 --> 00:26:32,359 Speaker 1: political season. You can do that with Daniel Clifton to 522 00:26:32,400 --> 00:26:35,280 Speaker 1: say he's partner and had a policy research that Strtigis 523 00:26:35,320 --> 00:26:38,840 Speaker 1: doesn't describe that when he started writing notes years ago 524 00:26:38,880 --> 00:26:41,879 Speaker 1: that came out of the screen, came off the internet 525 00:26:42,280 --> 00:26:46,320 Speaker 1: with tearce facts about what's going on, the fact that 526 00:26:46,359 --> 00:26:50,640 Speaker 1: he's changed. Dan Clifton is the guy from Bakersfield. Here's 527 00:26:50,680 --> 00:26:53,680 Speaker 1: a kid out of Bakersfield. Here's a fire Friday or 528 00:26:53,720 --> 00:26:56,679 Speaker 1: who worked his way through one of the kel state systems. 529 00:26:56,880 --> 00:27:01,520 Speaker 1: Kevin McCarthy's been underestimated by every body from day one. 530 00:27:01,720 --> 00:27:05,320 Speaker 1: You're right this morning on the underestimation of the speaker. 531 00:27:05,560 --> 00:27:07,879 Speaker 1: How big a victory is it for Kevin McCarthy. 532 00:27:08,640 --> 00:27:11,160 Speaker 12: Well, it's big. It's not the biggest. He still has 533 00:27:11,200 --> 00:27:13,920 Speaker 12: problems in his caucus, but this is big. He earned 534 00:27:13,960 --> 00:27:17,320 Speaker 12: his speakership over the last three months. This was a 535 00:27:17,359 --> 00:27:20,240 Speaker 12: president who said I will not negotiate on the debt sealing. 536 00:27:20,600 --> 00:27:23,000 Speaker 12: I believe the president was very clear about that based 537 00:27:23,000 --> 00:27:26,040 Speaker 12: on his own experiences, which you remember very clearly tom 538 00:27:26,080 --> 00:27:29,240 Speaker 12: from twenty eleven when he was Vice president and the 539 00:27:29,280 --> 00:27:32,439 Speaker 12: Speaker unified his caucus, passed a bill out of the 540 00:27:32,440 --> 00:27:36,520 Speaker 12: House of Representatives, forced a negotiation, and got a trillion 541 00:27:36,560 --> 00:27:39,520 Speaker 12: dollars of spending cuts. Did they get everything they wanted? 542 00:27:39,640 --> 00:27:42,399 Speaker 12: Absolutely not, And that's evident by the vote totals that 543 00:27:42,480 --> 00:27:43,720 Speaker 12: Jonathan just reported on. 544 00:27:44,160 --> 00:27:46,240 Speaker 4: More Democrats voted for. 545 00:27:46,080 --> 00:27:48,480 Speaker 12: The debt sealing bill in the House and Senate than 546 00:27:48,560 --> 00:27:49,480 Speaker 12: Republicans did. 547 00:27:49,880 --> 00:27:51,720 Speaker 4: But this could have gone far worse. 548 00:27:52,040 --> 00:27:57,480 Speaker 12: The Brakesmanship could have been far, far intense if McCarthy 549 00:27:57,600 --> 00:27:59,760 Speaker 12: wasn't able to unify his caucus the way he did, 550 00:28:00,160 --> 00:28:04,080 Speaker 12: and he delivered two thirds of Republicans in support of 551 00:28:04,160 --> 00:28:06,840 Speaker 12: raising the dead ceiling. It's a big, big win and 552 00:28:06,920 --> 00:28:10,639 Speaker 12: he showed that he do this better than previous speakers. 553 00:28:10,400 --> 00:28:14,720 Speaker 1: To stagger forward to November twenty twenty four. Sure is 554 00:28:14,760 --> 00:28:17,280 Speaker 1: the middle changed? I mean, obviously there's going to be 555 00:28:17,280 --> 00:28:22,160 Speaker 1: a polarity primary on both sides. But did the respect 556 00:28:22,400 --> 00:28:25,200 Speaker 1: for the middle change within our political class? 557 00:28:27,160 --> 00:28:30,159 Speaker 4: No. I think that we always have the middle. 558 00:28:30,359 --> 00:28:33,840 Speaker 12: It's just the extremes tend to amplify that. 559 00:28:33,960 --> 00:28:35,080 Speaker 4: Let me give you one example. 560 00:28:35,119 --> 00:28:39,000 Speaker 12: We've had nine federal elections since the financial crisis, and 561 00:28:39,040 --> 00:28:41,080 Speaker 12: the voters of this country have removed the party in 562 00:28:41,160 --> 00:28:42,160 Speaker 12: power in eight. 563 00:28:42,000 --> 00:28:43,160 Speaker 4: Of those nine elections. 564 00:28:43,520 --> 00:28:46,719 Speaker 12: So that's somebody in the middle moving between both sides 565 00:28:46,760 --> 00:28:49,280 Speaker 12: back and forth. And I do think that that middle 566 00:28:49,320 --> 00:28:52,920 Speaker 12: does hold. It's just a really ugly process here, the 567 00:28:52,960 --> 00:28:56,400 Speaker 12: process of getting legislation passed, but it got done on 568 00:28:56,440 --> 00:29:01,000 Speaker 12: a bipartisan basis, and how we select our presidents moving forward, 569 00:29:01,080 --> 00:29:02,280 Speaker 12: and so I think this is going. 570 00:29:02,200 --> 00:29:04,320 Speaker 4: To be the wildest election of our lifetime. 571 00:29:04,560 --> 00:29:07,280 Speaker 12: It's going to make twenty sixteen in two thousand and eight, 572 00:29:07,320 --> 00:29:11,840 Speaker 12: which were just classic amazing elections, be very very different 573 00:29:11,880 --> 00:29:12,360 Speaker 12: this time. 574 00:29:12,600 --> 00:29:15,040 Speaker 4: But we have a lot of challenges tom before we 575 00:29:15,080 --> 00:29:15,600 Speaker 4: get there. 576 00:29:15,800 --> 00:29:17,880 Speaker 12: We're going to have to settle how we're going to 577 00:29:17,960 --> 00:29:20,680 Speaker 12: do the defense spending budget, even though we have a 578 00:29:20,680 --> 00:29:23,280 Speaker 12: top line spending number. We're going to have to figure 579 00:29:23,280 --> 00:29:25,240 Speaker 12: out how we're going to respond to China with these 580 00:29:25,280 --> 00:29:28,440 Speaker 12: new budget limits in place, and the treasury is going 581 00:29:28,480 --> 00:29:31,400 Speaker 12: to be very very constrained, and how they are raising 582 00:29:31,440 --> 00:29:34,280 Speaker 12: the debt with the rising debt service costs in the 583 00:29:34,280 --> 00:29:36,920 Speaker 12: first thirty five years. So it's easy to pull forward 584 00:29:37,120 --> 00:29:39,040 Speaker 12: and say, Okay, we got this big crisis out of 585 00:29:39,080 --> 00:29:39,320 Speaker 12: the way. 586 00:29:39,600 --> 00:29:40,160 Speaker 4: What's going to. 587 00:29:40,080 --> 00:29:42,280 Speaker 12: Happen in twenty four But we're going to have some 588 00:29:43,000 --> 00:29:46,480 Speaker 12: serious domestic and international challenges before we get there, and 589 00:29:46,520 --> 00:29:50,520 Speaker 12: governing is going to be needed. And the biggest implication 590 00:29:50,600 --> 00:29:52,920 Speaker 12: from this debt ceiling deal is that there's now just 591 00:29:53,000 --> 00:29:56,920 Speaker 12: a smidge of trust between Kevin McCarthy and Joe Biden, 592 00:29:57,000 --> 00:30:00,280 Speaker 12: something that did not exist as late as three we. 593 00:30:00,440 --> 00:30:02,320 Speaker 3: I wanted to pick up down this idea of the 594 00:30:02,520 --> 00:30:05,240 Speaker 3: tax constraint of how much revenue they can raise, the 595 00:30:05,280 --> 00:30:08,040 Speaker 3: sort of fiscal drag that starts to take hold. I 596 00:30:08,040 --> 00:30:09,800 Speaker 3: woke up this morning very excited that maybe we could 597 00:30:09,800 --> 00:30:11,880 Speaker 3: stop talking about the debt ceiling debate and that perhaps 598 00:30:12,000 --> 00:30:14,640 Speaker 3: we've moved on. But you point out that once debt 599 00:30:14,680 --> 00:30:18,880 Speaker 3: servicing costs exceed fourteen percent of GDP, I believe you 600 00:30:19,080 --> 00:30:22,120 Speaker 3: end up with this real pressure. Can you talk about 601 00:30:22,240 --> 00:30:23,560 Speaker 3: what that means economically? 602 00:30:24,400 --> 00:30:26,360 Speaker 12: So, if you talk to anybody who's been in markets 603 00:30:26,440 --> 00:30:28,680 Speaker 12: or washing in for thirty five years or like, deficits 604 00:30:28,680 --> 00:30:31,000 Speaker 12: really don't matter. There's a lot of complaining about it, 605 00:30:31,200 --> 00:30:33,520 Speaker 12: but this is the first time our debt servicing costs 606 00:30:33,560 --> 00:30:35,080 Speaker 12: is rising in thirty five years. 607 00:30:35,360 --> 00:30:36,600 Speaker 4: We measure that by. 608 00:30:36,600 --> 00:30:39,400 Speaker 12: Net interest costs as a percent of tax revenue. Interest 609 00:30:39,400 --> 00:30:42,240 Speaker 12: costs are surging because of higher interest rates, and tax 610 00:30:42,280 --> 00:30:43,440 Speaker 12: revenues are declining. 611 00:30:43,680 --> 00:30:45,760 Speaker 4: And so what's what the debt ceiling really. 612 00:30:45,560 --> 00:30:49,520 Speaker 12: Represented, Lisa was the first course in a larger period 613 00:30:49,800 --> 00:30:52,680 Speaker 12: of austerity. And how did we reach that conclusion. We 614 00:30:52,760 --> 00:30:55,280 Speaker 12: went back eighty years and we looked at whether the 615 00:30:55,400 --> 00:30:58,920 Speaker 12: US was in a period of austerity or stimulus, and 616 00:30:59,000 --> 00:31:02,880 Speaker 12: really the defining factors that debt servicing costs. Once you 617 00:31:03,000 --> 00:31:06,440 Speaker 12: hit over fourteen percent, the bond market starts to put 618 00:31:06,520 --> 00:31:09,960 Speaker 12: pressure on policymakers and it forces austerity. 619 00:31:10,400 --> 00:31:13,560 Speaker 4: We raise taxes six years in a row in the early. 620 00:31:13,360 --> 00:31:17,320 Speaker 12: Eighties under Ronald Reagan while we had that fourteen percent 621 00:31:17,800 --> 00:31:20,160 Speaker 12: interest costs and it was higher, and so we'll hit 622 00:31:20,200 --> 00:31:22,760 Speaker 12: it in the next couple of months. And that's why 623 00:31:22,760 --> 00:31:26,680 Speaker 12: you're seeing Treasury so constrained on its ability to raise debt. 624 00:31:26,680 --> 00:31:28,960 Speaker 12: I mean, they were raising cash management bills this week 625 00:31:29,160 --> 00:31:31,840 Speaker 12: at six point one five percent. Sure, the debt ceiling 626 00:31:31,880 --> 00:31:34,520 Speaker 12: added a little previeum to that, but come on at 627 00:31:34,600 --> 00:31:36,960 Speaker 12: six percent for three day cash management build. 628 00:31:37,040 --> 00:31:39,840 Speaker 4: It's a pretty big, big problem. And I think that 629 00:31:39,840 --> 00:31:41,080 Speaker 4: that's going to be a bigger issue. 630 00:31:41,200 --> 00:31:44,520 Speaker 12: So Treasury's got to reload TGA, the Treasury General Account. 631 00:31:44,800 --> 00:31:45,680 Speaker 4: They're going to try and. 632 00:31:45,640 --> 00:31:48,400 Speaker 12: Do it out of the reverse repos LISA, and that's 633 00:31:48,440 --> 00:31:50,280 Speaker 12: going to be really hard to do because that reverse 634 00:31:50,320 --> 00:31:53,480 Speaker 12: repo rate is pretty high. There's no duration risk, and 635 00:31:53,560 --> 00:31:56,120 Speaker 12: if they can't get it out of reverse repos, it's. 636 00:31:55,920 --> 00:31:57,440 Speaker 4: Going to come out of It's going to come out 637 00:31:57,440 --> 00:31:57,920 Speaker 4: of bank. 638 00:31:57,720 --> 00:32:00,640 Speaker 12: Reserves and that means that there's going to be less liquidity. 639 00:32:00,880 --> 00:32:03,560 Speaker 12: And so we've been arguing throughout the whole debt ceiling debate, 640 00:32:03,840 --> 00:32:07,200 Speaker 12: is that stockskin rally into the debt ceiling debate because 641 00:32:07,240 --> 00:32:10,280 Speaker 12: there will be massive liquidity being pumped into the system. 642 00:32:10,520 --> 00:32:13,360 Speaker 12: Once the debt ceiling gets raised, that liquidity may come 643 00:32:13,400 --> 00:32:16,280 Speaker 12: out and they're posing some risks for financial markets in 644 00:32:16,320 --> 00:32:17,280 Speaker 12: the second half of the year. 645 00:32:17,360 --> 00:32:19,440 Speaker 11: A lot of people focused on the potential for that. Dan, 646 00:32:19,480 --> 00:32:21,520 Speaker 11: I just want to finish on the general the election 647 00:32:21,800 --> 00:32:24,200 Speaker 11: next year. Are just a word on the front runners 648 00:32:24,240 --> 00:32:26,360 Speaker 11: at the moment. Can you think of a time when 649 00:32:26,400 --> 00:32:28,400 Speaker 11: such a large chunk in the middle of this country 650 00:32:29,040 --> 00:32:31,640 Speaker 11: is facing the prospect of two candidates facing each other 651 00:32:31,680 --> 00:32:34,040 Speaker 11: again that they just don't want them to run. 652 00:32:35,560 --> 00:32:36,120 Speaker 4: Great question. 653 00:32:36,200 --> 00:32:39,280 Speaker 12: I spent eleven weeks on the road into the last election, 654 00:32:39,400 --> 00:32:41,480 Speaker 12: and every time I say Trump, first, Biden, no matter 655 00:32:41,480 --> 00:32:43,400 Speaker 12: who that person was, they gave me a funny look, 656 00:32:43,520 --> 00:32:47,040 Speaker 12: right and a Republican Democrat Old Young It didn't really matter. 657 00:32:47,320 --> 00:32:48,760 Speaker 4: And so there's support. 658 00:32:48,520 --> 00:32:50,480 Speaker 12: Maybe a little bit softer than what you would see 659 00:32:50,480 --> 00:32:52,680 Speaker 12: in the polls because of high name. I d we're 660 00:32:52,680 --> 00:32:55,920 Speaker 12: going to have a very spirited debate in a Republican primary. 661 00:32:56,120 --> 00:32:58,520 Speaker 12: I keep an eye on Glenn Youngkin, the governor of Virginia, 662 00:32:58,640 --> 00:33:01,520 Speaker 12: seems to be indicating anyone to get in. Rocky Santis 663 00:33:01,640 --> 00:33:03,920 Speaker 12: is won a landslide in Florida, so as he gets 664 00:33:04,000 --> 00:33:05,680 Speaker 12: used to the rhythm of the campaign, I think he's 665 00:33:05,680 --> 00:33:07,560 Speaker 12: going to be a formerable candidate, and I keep an 666 00:33:07,560 --> 00:33:10,480 Speaker 12: eye on Tim Scott. Then on the Democratic side, I 667 00:33:10,560 --> 00:33:13,360 Speaker 12: could just keep an eye on RFK being a Pat 668 00:33:13,440 --> 00:33:15,880 Speaker 12: Buchanon like candidate. What pap you can and did to 669 00:33:15,920 --> 00:33:19,120 Speaker 12: George Herbert Walker Busch, Joe Biden wants to be the nominee, 670 00:33:19,120 --> 00:33:20,880 Speaker 12: he will be the nominee. I'm not saying that in 671 00:33:20,920 --> 00:33:24,200 Speaker 12: any way Papucan indent at George Herbert Walker Bush in 672 00:33:24,280 --> 00:33:27,800 Speaker 12: ninety two ultimately led to Bill Clinton's victory, and there 673 00:33:27,840 --> 00:33:30,080 Speaker 12: could be some concern about. 674 00:33:29,720 --> 00:33:31,360 Speaker 4: That as we get deeper into the race. 675 00:33:31,360 --> 00:33:32,880 Speaker 12: So I think we're going to have a very spirited 676 00:33:32,880 --> 00:33:36,760 Speaker 12: debate and candidates are going to be tested, and you know, again, 677 00:33:36,800 --> 00:33:39,040 Speaker 12: the process isn't very pretty, but I think the outcome 678 00:33:39,360 --> 00:33:41,240 Speaker 12: will produce one that may be a little bit different 679 00:33:41,280 --> 00:33:42,920 Speaker 12: than the consensus expects right now. 680 00:33:42,920 --> 00:33:45,800 Speaker 11: Interesting, Dan, Thanks for that. Dan Clifton. There, that's to 681 00:33:45,800 --> 00:33:47,120 Speaker 11: take us research consy. 682 00:33:47,240 --> 00:33:51,080 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 683 00:33:51,200 --> 00:33:55,400 Speaker 1: anywhere else you get your podcasts. Listen live every weekday 684 00:33:55,680 --> 00:33:59,160 Speaker 1: starting at seven am Eastern. I'm Bloomberg dot Com, the 685 00:33:59,280 --> 00:34:03,280 Speaker 1: iHeart Radio app, tune In, and the Bloomberg Business app. 686 00:34:03,720 --> 00:34:07,400 Speaker 1: You can watch us live on Bloomberg Television and always 687 00:34:07,760 --> 00:34:11,600 Speaker 1: on the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, 688 00:34:11,840 --> 00:34:13,600 Speaker 1: and this is Bloomberg