WEBVTT - Bloomberg Surveillance TV: June 16th, 2026 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.400 --> 0:00:40.520 Stocks hovering at fresh records as investors await the first 0:00:40.600 --> 0:00:43.760 policy decision under a new regime. Victoria Fernandez of Cross 0:00:44.040 --> 0:00:47.640 Global Investments writing, we believe there is still room to 0:00:47.720 --> 0:00:50.000 run even if we get higher rates. As long as 0:00:50.000 --> 0:00:53.519 earnings and margins remain strong, the market can digest a 0:00:53.600 --> 0:00:55.080 rotation of leadership. 0:00:55.280 --> 0:00:56.440 Victoria joins us. 0:00:56.480 --> 0:00:59.640 Now, Victoria, where else do you see this market having 0:00:59.640 --> 0:01:00.480 more room to run? 0:01:01.680 --> 0:01:01.880 Yeah? 0:01:01.920 --> 0:01:04.000 Well, I think when you look at the rotation that 0:01:04.040 --> 0:01:06.679 we've seen, we saw those high momentum, those high beta 0:01:06.760 --> 0:01:09.920 names really come back over the last week, and so 0:01:10.200 --> 0:01:12.480 other areas have started to pick up a little bit. 0:01:12.520 --> 0:01:15.280 You saw it in some transportation, you saw it in healthcare, 0:01:15.680 --> 0:01:17.960 you saw it in some energy names. Obviously we've seen 0:01:18.080 --> 0:01:20.880 energy names come back a little bit based on the 0:01:21.160 --> 0:01:24.000 information of the last few days, but it's still not 0:01:24.080 --> 0:01:26.800 in an over sold position. I think at this point 0:01:26.880 --> 0:01:29.560 in time, what you're looking for is maybe. 0:01:29.200 --> 0:01:31.600 Not necessarily specific sectors. 0:01:31.680 --> 0:01:33.880 The names that are going to be able to run 0:01:34.240 --> 0:01:37.759 are those that have those positive factors like good free 0:01:37.800 --> 0:01:41.959 cash flow, good profitability, like return on equity, looking at 0:01:42.000 --> 0:01:45.479 strong earnings yield right, not just earnings growth, those high 0:01:46.200 --> 0:01:49.360 growth names, but relating that to pe So, I do 0:01:49.400 --> 0:01:52.240 think there's some opportunities within all of the sectors. But 0:01:52.320 --> 0:01:54.840 on a broad base, you are seeing some of those 0:01:54.880 --> 0:01:57.200 that have been hardest hit that are now in up 0:01:57.240 --> 0:01:59.840 trends starting to make a comeback here, and I think 0:01:59.880 --> 0:02:01.960 that's important when we look at the breadth of this 0:02:02.080 --> 0:02:04.960 market and how far this bull market can actually go. 0:02:05.160 --> 0:02:07.200 Well, Victoria, one of the things that you point out 0:02:07.200 --> 0:02:10.600 that one should be cautious on. It's clearly not outright 0:02:10.960 --> 0:02:14.000 bearish by any means, but is the consumer. What are 0:02:14.000 --> 0:02:15.960 you seeing that's leading you just to be a little 0:02:16.000 --> 0:02:18.760 bit more tepid about the state of the American consumer. 0:02:19.720 --> 0:02:22.440 Yeah, so, you know, Danny, it's really amazing when you 0:02:22.480 --> 0:02:25.520 think of how well the consumer has held up over 0:02:25.560 --> 0:02:28.200 the last months. As we've been very concerned about things 0:02:28.240 --> 0:02:31.240 that are happening, and you're looking at wages that are 0:02:31.240 --> 0:02:35.639 really stagnating, You're looking at the difference between real wage 0:02:35.680 --> 0:02:40.040 growth and real consumption that continues to widen as savings 0:02:40.120 --> 0:02:42.800 continues to come down. We had a little bit of 0:02:42.800 --> 0:02:45.880 improvement in consumer confidence, but it's still very low. 0:02:45.919 --> 0:02:47.520 We're back below levels that. 0:02:47.480 --> 0:02:50.440 We saw in COVID on some of those things and 0:02:50.639 --> 0:02:51.880 small businesses. 0:02:52.000 --> 0:02:54.480 That's to me a big yellow flag. 0:02:54.800 --> 0:02:57.600 You've got the NFIB report that came out last week 0:02:57.800 --> 0:03:00.639 that really is not showing tremendous signs of improvement there. 0:03:00.680 --> 0:03:04.040 They are still struggling and still concerned. So as we 0:03:04.120 --> 0:03:07.760 get you know, additional signs of layoffs. We had more 0:03:07.840 --> 0:03:11.120 layoff reports reported this morning. I think that tells us 0:03:11.160 --> 0:03:13.880 the consumer is going to continue to be a little 0:03:13.960 --> 0:03:17.520 bit cautious in what they're doing, especially with some of 0:03:17.560 --> 0:03:20.360 the liquidity efforts we've seen earlier in this year start 0:03:20.400 --> 0:03:23.679 to pull back. Like I said, wages stagnating and savings 0:03:23.720 --> 0:03:24.440 being depleted. 0:03:24.720 --> 0:03:27.000 I mean, we heard the news overnight that Blackrock is 0:03:27.000 --> 0:03:29.760 going to cut about two hundred roles worldwide. I think 0:03:29.800 --> 0:03:33.200 maybe perhaps what you're talking about, But Victoria, what do 0:03:33.240 --> 0:03:36.080 you do with that? I mean, AI is still hot. 0:03:36.200 --> 0:03:38.640 These companies are still spending a lot, even if there 0:03:38.680 --> 0:03:42.120 is some softness in hiring. How do you factor that 0:03:42.240 --> 0:03:43.560 into your trades at the moment. 0:03:44.280 --> 0:03:46.720 Yeah, I think when you're looking at these companies, obviously 0:03:46.800 --> 0:03:50.320 Capex is really driving the productivity that we're seeing, and 0:03:50.360 --> 0:03:53.640 we're hoping productivity is going to be supportive of earnings. 0:03:53.840 --> 0:03:55.600 So I think you go back to some of those 0:03:55.640 --> 0:03:58.080 elements we were talking about a minute ago. I think 0:03:58.120 --> 0:04:00.760 you look at what are the companies that give us 0:04:00.800 --> 0:04:03.480 those high earnings yield. I mean, look at a company 0:04:03.520 --> 0:04:06.320 like a video you can still add to your tech 0:04:06.400 --> 0:04:08.800 positions and videos doing well Fortinet. 0:04:09.000 --> 0:04:11.000 Look at Cybersecurity again. 0:04:10.880 --> 0:04:14.200 High earnings yield, so good earnings growth, but a lower 0:04:14.200 --> 0:04:17.960 pe relative to other companies within its sector and within 0:04:18.000 --> 0:04:22.080 the market. Even Adobe is fitting within that category and 0:04:22.120 --> 0:04:25.559 profitability as well. So I do think there's some things 0:04:25.600 --> 0:04:28.039 you can do within these sectors, and that's how we're 0:04:28.040 --> 0:04:30.640 looking at where to invest for our clients along with 0:04:30.720 --> 0:04:33.760 adding a little bit of that defensive component because of 0:04:33.800 --> 0:04:35.920 our concerns, you can add a little bit to fixed 0:04:35.920 --> 0:04:38.600 income here, because I do think when you look at 0:04:38.600 --> 0:04:40.240 the short end of the curve you guys were talking 0:04:40.279 --> 0:04:43.120 about a minute ago, two years are still over fifty 0:04:43.160 --> 0:04:45.719 basis points above the low end of FED funds, So 0:04:46.120 --> 0:04:48.279 as some of that starts to get priced out, the 0:04:48.320 --> 0:04:49.320 short end of the curve. 0:04:49.160 --> 0:04:50.640 Could be advantageous as well. 0:04:50.720 --> 0:04:51.120 Victoria. 0:04:51.120 --> 0:04:54.920 Of course, we have Kevin Walsh's first meeting as FED chair. 0:04:55.000 --> 0:04:57.520 We just heard from Betsy do former FED governor, says 0:04:57.600 --> 0:04:59.120 Kevin Warsh is going to be a hall and she's 0:04:59.240 --> 0:05:01.960 expecting a complete rewrite of the statement. 0:05:02.040 --> 0:05:03.719 What are you expecting from him? 0:05:04.240 --> 0:05:07.200 Yeah, I was surprised to hear say that she expects 0:05:07.200 --> 0:05:08.320 a complete rewrite. 0:05:08.400 --> 0:05:10.440 I do think we'll see some changes. 0:05:10.440 --> 0:05:13.320 Obviously, everyone's looking to have that easing bias removed, and 0:05:13.360 --> 0:05:16.240 I think that's somewhat given at this point. What I'm 0:05:16.279 --> 0:05:18.720 going to be looking at is what is being told 0:05:18.880 --> 0:05:21.640 around how communication is going to happen in the future. 0:05:21.720 --> 0:05:23.800 I think that is going to be the key point 0:05:23.839 --> 0:05:26.320 that we're looking at here. Does Walsh even give us 0:05:26.320 --> 0:05:29.320 a dot on the SEP. I'll be very curious to 0:05:29.320 --> 0:05:30.920 see if that happens. I don't think he's going to 0:05:31.000 --> 0:05:33.640 replace Myron's dot. Where is he going to land on 0:05:33.720 --> 0:05:35.800 there or does he give us one? And what is 0:05:35.839 --> 0:05:38.960 he going to say around press conferences going forward? How 0:05:39.040 --> 0:05:41.279 much FED governors are going to be able to go 0:05:41.360 --> 0:05:44.040 out and talk about things. To me, it's some of 0:05:44.080 --> 0:05:48.039 those changes, along with potential balance sheet changes that we're 0:05:48.040 --> 0:05:48.920 going to be watching. 0:05:49.480 --> 0:05:51.480 How do you expect the market maybe to test him 0:05:51.480 --> 0:05:54.360 when we see the market test new FED chairs, but 0:05:54.560 --> 0:05:58.279 this is a known figure, he's been around his establishment 0:05:58.320 --> 0:05:59.240 figure for years. 0:05:59.279 --> 0:06:01.200 Do you think the market's going to test him? 0:06:02.000 --> 0:06:04.120 You know they say they're always tested, and we've seen 0:06:04.120 --> 0:06:07.400 it historically. Maybe the test is going to be sitting 0:06:07.440 --> 0:06:10.520 here where we are right now, where labor market is 0:06:10.600 --> 0:06:14.120 actually holding its own somewhat right now, so it's not 0:06:14.200 --> 0:06:17.080 giving you really a case to ease, which we assume 0:06:17.120 --> 0:06:19.559 he's coming in with maybe a little bias towards wanting 0:06:19.600 --> 0:06:22.679 to ease, but at the same time having this sticky inflation. 0:06:22.880 --> 0:06:25.159 I don't think inflation is going to come down just 0:06:25.240 --> 0:06:28.520 because we get a deal signed with Iran potentially over 0:06:28.520 --> 0:06:31.040 the next few weeks. I think some of that inflation 0:06:31.200 --> 0:06:33.600 is really built in there. We saw it even before 0:06:33.960 --> 0:06:36.920 the Iran war started, and I think it will continue. 0:06:37.440 --> 0:06:40.160 I mean, you look at super core CPI over the 0:06:40.240 --> 0:06:42.240 last three months, you're running at a five and a 0:06:42.279 --> 0:06:44.800 half percent rate on an annual basis. 0:06:45.040 --> 0:06:46.880 So I think there's that may be his test. 0:06:47.000 --> 0:06:51.120 We've got that sticky inflation, you know, labor somewhat holding steady. 0:06:51.200 --> 0:06:54.120 So with his easing bias, will he actually be more 0:06:54.160 --> 0:06:55.560 of a hawk. I think that's what we have to 0:06:55.560 --> 0:06:56.039 wait and see. 0:06:56.200 --> 0:06:58.560 Or maybe he already got the test with just a 0:06:58.640 --> 0:07:02.599 market that started to remove from it Victoria. I mean, 0:07:02.640 --> 0:07:05.520 maybe that's a help for him at this moment. I 0:07:05.560 --> 0:07:07.640 was home to Amory about this idea before that. There 0:07:07.680 --> 0:07:09.760 does seem to be sort of a disconnective with the 0:07:09.760 --> 0:07:11.440 bond market and the stock. 0:07:11.200 --> 0:07:12.680 Market has been doing in the recent week. 0:07:12.760 --> 0:07:15.640 Both of them clearly are pricing in something of a 0:07:15.680 --> 0:07:18.800 piece premium, but the equity market seems to have gone further, 0:07:19.160 --> 0:07:22.520 almost at a high when we haven't quitely removed any 0:07:22.840 --> 0:07:26.600 we haven't totally removed the hiking bias from what the 0:07:26.600 --> 0:07:29.400 future's probability you're pricing in from this FED. What do 0:07:29.440 --> 0:07:31.800 you make of that slight disconnect between the two markets. 0:07:32.680 --> 0:07:33.600 Yeah, it's interesting. 0:07:33.640 --> 0:07:36.800 So I actually manage fixed income strategies. I mean, I 0:07:36.800 --> 0:07:38.680 grew up in the fixed income world, and we tend 0:07:38.680 --> 0:07:41.120 to be a little more cautious and the things that 0:07:41.120 --> 0:07:42.800 we do. And I think that's what the bond market 0:07:42.840 --> 0:07:45.760 is doing here. They're saying, look, we're not blowing out, 0:07:45.840 --> 0:07:48.480 you know, anything on credit spreads. We're not saying there's 0:07:48.520 --> 0:07:51.200 this tremendous issue that we have to look at, no 0:07:51.360 --> 0:07:55.040 credit concerns right now. But we also are not so 0:07:55.080 --> 0:07:57.840 sure that inflation is going to come down very quickly. 0:07:58.040 --> 0:08:00.200 We're not so sure that this deal. 0:08:00.720 --> 0:08:03.680 Or memorandum of understanding is going to flow through and 0:08:03.760 --> 0:08:07.000 help earnings. Like the equity market is tending to just 0:08:07.120 --> 0:08:10.040 be all in on that thought process. So I just 0:08:10.080 --> 0:08:11.960 think the bond market is being a little bit more 0:08:11.960 --> 0:08:15.119 cautious to say, wait and show me market right now. 0:08:15.640 --> 0:08:17.520 And that's what the numbers are showing. 0:08:17.600 --> 0:08:19.640 I think as we go over the next couple of weeks, 0:08:19.920 --> 0:08:22.400 if we get more concrete answers, you might see the 0:08:22.400 --> 0:08:24.360 bond market respond a little bit more. 0:08:25.080 --> 0:08:28.480 Stay with us multile impeg, Savannah's coming up off. 0:08:28.320 --> 0:08:28.680 To this. 0:08:37.559 --> 0:08:41.240 Investors awaiting Kevin Walsh's first meeting as Federal Reserve chair 0:08:41.600 --> 0:08:44.760 as warring inflation adds to uncertainty over the direction of 0:08:44.840 --> 0:08:48.120 rates of Torsten's Slock of Apollo writing with geopolitical risk 0:08:48.200 --> 0:08:51.080 easing and FED shair, Kevin Warsh focus on simplifying FED 0:08:51.120 --> 0:08:55.320 communication the number of words and the FOMC statement could 0:08:55.360 --> 0:09:00.240 move down to levels seen under Alan Greenspan. Torsen joins us, Now, okay, 0:09:00.240 --> 0:09:01.920 so a statement comes out, do you need to read 0:09:01.960 --> 0:09:03.520 it first or just do a quick word count? 0:09:04.760 --> 0:09:06.640 We certainly need to read it first because the key 0:09:06.640 --> 0:09:09.360 issue here is, of course what style of communication we're 0:09:09.400 --> 0:09:12.520 going to get, and in particular, what is the forward guidance? 0:09:12.559 --> 0:09:14.880 Is that any forward guidance? Is he going to say 0:09:14.880 --> 0:09:17.720 that we do not like forward guidance. This is still 0:09:17.880 --> 0:09:20.440 a very very unclear area in terms of what is 0:09:20.440 --> 0:09:23.280 the communications style and what is Kevin what was going 0:09:23.280 --> 0:09:24.959 to do in terms of what is he going to say. 0:09:24.960 --> 0:09:25.600 At the press. 0:09:25.360 --> 0:09:28.720 Conference, former Fed Governor Betsy Duke was just on with 0:09:28.800 --> 0:09:30.880 us and she was talking about how there could be 0:09:30.920 --> 0:09:33.600 a complete rewrite of the statement not just a little 0:09:33.600 --> 0:09:36.240 tweak of the easing bias, is that what you're expecting 0:09:36.280 --> 0:09:36.720 as well? 0:09:36.840 --> 0:09:39.040 I think that is something that we should expect. That's 0:09:39.080 --> 0:09:41.480 one of the outcomes we just don't know. So that's 0:09:41.520 --> 0:09:43.640 the reason why the market, of course, has been used 0:09:43.679 --> 0:09:47.160 to having very well anchored expectations around the dot plot. 0:09:47.360 --> 0:09:49.800 The dot plot has been around now for fifteen years. 0:09:49.840 --> 0:09:52.559 Almost the ACP meaning the forecast, been around for almost 0:09:52.600 --> 0:09:55.440 twenty years, so most people in financial markets have grown 0:09:55.520 --> 0:09:58.880 up with very anchored expectations about the economic outlook and 0:09:59.000 --> 0:10:01.320 very anchored expectations about what the fab will do. And 0:10:01.400 --> 0:10:04.160 this discussion about is there an anchor is there not 0:10:04.200 --> 0:10:04.720 an anchor? 0:10:05.000 --> 0:10:07.040 Of course, it's good to have an anchor in the sense. 0:10:06.840 --> 0:10:09.120 That that's clear then where everyone knows where we're going. 0:10:09.240 --> 0:10:11.480 But at the same time, if the world changes, then 0:10:11.520 --> 0:10:13.120 it's not good to have an anchor. And this is 0:10:13.120 --> 0:10:15.439 the debate up on the scale, namely, do we want 0:10:15.440 --> 0:10:16.640 to have an anchor or do we not want to 0:10:16.640 --> 0:10:18.640 have an anchor that will give more flexibility to their 0:10:18.720 --> 0:10:19.400 fund sheet in. 0:10:19.440 --> 0:10:20.120 This very moment. 0:10:20.200 --> 0:10:22.120 If we remove some of that and we remove some 0:10:22.200 --> 0:10:25.000 of the forward guidance, does that not all things considered 0:10:25.440 --> 0:10:27.520 make us a little bit more hawkish because we don't 0:10:27.640 --> 0:10:30.319 have that residual easing bias that had been there before. 0:10:31.120 --> 0:10:31.800 Yes, and next with. 0:10:32.240 --> 0:10:34.720 Particularly important if we begin to think about the discussion 0:10:34.760 --> 0:10:37.559 around rates, because Kevin Wiss has also been focusing on 0:10:37.679 --> 0:10:41.160 shrinking the balance sheet, and a compromise could potentially be that, well, 0:10:41.200 --> 0:10:43.400 we're not going to change much communication on rates, but 0:10:43.640 --> 0:10:46.679 maybe saying that the balancey will be smaller is simplicitly 0:10:46.720 --> 0:10:49.280 also going to be a tightening opposition. So it all 0:10:49.360 --> 0:10:52.439 depends on where the committee stands at where they discuss 0:10:52.520 --> 0:10:54.800 today and what their outcome stations in terms of how 0:10:54.840 --> 0:10:57.199 should they communicate, how are they going to signal to 0:10:57.280 --> 0:10:59.360 your point, Danny, that there is still some problems with 0:10:59.440 --> 0:11:01.480 inflation being too high. We still have a strong label 0:11:01.520 --> 0:11:03.240 market which all argues that the. 0:11:03.280 --> 0:11:06.040 Fed should be tightening financial positions. Do you think this 0:11:06.200 --> 0:11:06.400 is a. 0:11:06.440 --> 0:11:09.319 Chair warsh who will want to sort of galvanize a 0:11:09.360 --> 0:11:12.760 consensus as Powell had, And how challenging will that be? 0:11:12.920 --> 0:11:15.760 If so, if he does want to implement something in 0:11:15.880 --> 0:11:17.319 his words of a regime. 0:11:17.160 --> 0:11:20.200 Change for the Fed, well, Kevin was knows what he's doing. 0:11:20.360 --> 0:11:22.160 But I think what is a very important challenge of 0:11:22.200 --> 0:11:25.400 course for him is that he wants any changes, Basically 0:11:25.480 --> 0:11:28.320 he needs to have the other eleven members on their firm, 0:11:28.360 --> 0:11:30.960 see the voting members on board with whatever he wants 0:11:31.000 --> 0:11:33.240 to change. So that's why it must be clear also 0:11:33.320 --> 0:11:35.880 for him he needs to get them on his side 0:11:36.120 --> 0:11:39.160 in terms of any decision made, because always decisions about 0:11:39.200 --> 0:11:42.679 not only rates, also about qe QT whatever needs to 0:11:42.720 --> 0:11:45.040 be changed in terms of policy, there are twelve voting 0:11:45.080 --> 0:11:47.440 members and they vote about what do they want to change, 0:11:47.480 --> 0:11:50.600 And therefore the number of descents also potentially becomes important. 0:11:50.720 --> 0:11:51.839 When we get the statement. 0:11:51.600 --> 0:11:53.959 Tomorrow, do you think we get less FED speak then? 0:11:54.080 --> 0:11:55.640 With Kevin Warsh as the. 0:11:55.640 --> 0:11:59.200 FED chair, Well, that's really challenging because telling the regional 0:11:59.240 --> 0:12:01.600 FED presidents that they're not allowed to talk more, even 0:12:01.640 --> 0:12:03.439 the governors that they're not to talk more, that's just 0:12:03.559 --> 0:12:06.000 not possible. And given we have had a history now 0:12:06.160 --> 0:12:08.680 of a lot of communication. That means also the market 0:12:08.720 --> 0:12:10.839 has been putting more weight on the fit chair, and 0:12:10.920 --> 0:12:12.800 I think the Markel continues to put most weight on 0:12:12.840 --> 0:12:13.319 the fit chair. 0:12:13.400 --> 0:12:15.760 And don't you think we've seen more of this robust 0:12:15.840 --> 0:12:18.880 debate and communication because of Steve Myron, who was a 0:12:18.960 --> 0:12:22.160 Trump appointee. So it would be pretty odd if Kevin 0:12:22.200 --> 0:12:24.679 moorsh came in and said, actually stopped talking as much. 0:12:24.920 --> 0:12:27.280 Yeah, because we've also had some of course, to your 0:12:27.320 --> 0:12:30.000 point here, we have some quite diverting views in terms 0:12:30.040 --> 0:12:31.760 of the dot plot. And this is of course also 0:12:31.800 --> 0:12:34.960 why the dot plot creates sometimes a bit more confusion. Yes, 0:12:35.000 --> 0:12:37.560 it may be anchoring expectations, but the stain of deviation 0:12:37.679 --> 0:12:39.880 of those expectations also get a lot of attention. In 0:12:39.960 --> 0:12:42.480 other words, how divergent are the views in terms of 0:12:42.520 --> 0:12:44.400 what's going to happen in the future, And we don't 0:12:44.440 --> 0:12:46.480 know which dot is the fit chair dot. So that 0:12:46.640 --> 0:12:49.679 also makes it more complicated in terms of the dots 0:12:49.720 --> 0:12:52.080 coming out actually going to be helpful in the sense 0:12:52.080 --> 0:12:54.760 of anchoring expectations or do they raise more questions about 0:12:54.800 --> 0:12:57.280 the uncertainty of what is a disagreement on the committee. 0:12:57.280 --> 0:12:59.640 There's also debate right now whether or not Kevin Moosh 0:12:59.720 --> 0:13:00.839 put a dot on the plot. 0:13:01.480 --> 0:13:03.559 Yeah, because he could also decide to This would be 0:13:03.640 --> 0:13:04.240 highly unusual. 0:13:04.280 --> 0:13:05.480 Of course, that will of course. 0:13:05.360 --> 0:13:06.800 Decide he could decide to say I'm not going to 0:13:06.840 --> 0:13:08.680 put in a dot. He could also decide to say 0:13:08.720 --> 0:13:11.199 I'm not going to submit my CP forecast, meaning his 0:13:11.280 --> 0:13:12.760 forecast for he thinks the economy is going. 0:13:12.800 --> 0:13:14.160 That would be pretty dramatic. 0:13:14.400 --> 0:13:16.079 So if the goal here for him, remember the most 0:13:16.080 --> 0:13:18.320 important job for the FT chair is really to create 0:13:18.400 --> 0:13:22.360 consensus about a decision. All books written by previous Fetchair 0:13:22.360 --> 0:13:24.280 as they all emphasize that a key part of the 0:13:24.400 --> 0:13:27.400 job is to basically call around to all the voting 0:13:27.400 --> 0:13:29.440 here from C members and also the non voting members 0:13:29.559 --> 0:13:32.040 and say, what do you think should be the outcome 0:13:32.080 --> 0:13:34.360 of this meeting? What is your view and try to 0:13:34.440 --> 0:13:36.520 come up with some solution and try to come up 0:13:36.559 --> 0:13:38.719 with some path where he can get a majority and 0:13:38.880 --> 0:13:41.200 ideally a big majority for the decision that they're going 0:13:41.240 --> 0:13:41.520 to take. 0:13:41.640 --> 0:13:44.120 It's complicated, but does this week's news on Iran a 0:13:44.200 --> 0:13:47.000 deal with memorandum of understanding being designed on fighting make 0:13:47.040 --> 0:13:50.040 things less complicated for Fetchhair. 0:13:49.640 --> 0:13:52.839 Worsh absolutely, because one key issue was that inflation is 0:13:52.880 --> 0:13:56.719 still roughly three percent in COPCE and COCPI, And the 0:13:56.760 --> 0:13:58.839 problem is when inflation is three and the FEDS target 0:13:58.960 --> 0:14:01.520 is two, then we have at least one good news 0:14:01.720 --> 0:14:03.640 is of course that we have energy prices coming down, 0:14:03.920 --> 0:14:06.240 but we still have a fairly strong economy getting tailwins 0:14:06.240 --> 0:14:08.200 from the AI boom, getting tailwins from the one big 0:14:08.240 --> 0:14:09.800 bit of a bill. And we also at the same 0:14:09.840 --> 0:14:12.160 time have up with pressure and inflation from tariff still 0:14:12.440 --> 0:14:15.160 hanging over and putting up with pressure, as several fit 0:14:15.240 --> 0:14:16.240 posts have been suggesting. 0:14:16.480 --> 0:14:18.960 So the key answer to your question is he absolutely 0:14:19.080 --> 0:14:21.040 is absolutely a help. He's helped by the fact that 0:14:21.200 --> 0:14:22.760 enterprise is how moving low. He is help. 0:14:22.800 --> 0:14:24.640 But again to your point to us, and there's inflation 0:14:24.800 --> 0:14:28.080 coming from other parts of this economy. So if he 0:14:28.200 --> 0:14:30.320 wants to lean more dubbish, if he wants to kind 0:14:30.320 --> 0:14:32.240 of like fulfill the promise that he had been talking 0:14:32.280 --> 0:14:34.440 to you from Trump, what points to the parts of 0:14:34.480 --> 0:14:36.120 this economy can he point to you to say we 0:14:36.200 --> 0:14:36.760 can still. 0:14:36.600 --> 0:14:37.400 Get a cut this year. 0:14:37.520 --> 0:14:39.360 Yeah, And the double saute is, of course that when 0:14:39.480 --> 0:14:41.800 energy prices go down, then we spend less money and 0:14:41.880 --> 0:14:44.000 energy and we spend more money on something else. And 0:14:44.080 --> 0:14:46.920 given that literally all high frequency indicators are still very strong, 0:14:47.160 --> 0:14:49.280 still very strong data from the TSA, how many people 0:14:49.320 --> 0:14:51.720 travel on airplanes, still very strong data on the weekly 0:14:51.800 --> 0:14:54.280 data from Redbook on how many people are consuming stuff 0:14:54.360 --> 0:14:56.800 at Walmart and Target and Tjmax. And we also have 0:14:56.840 --> 0:14:58.960 still very strong data when it comes to Hotel Demain 0:14:59.120 --> 0:15:01.800 on a weekly basis. So just it's very built science 0:15:01.800 --> 0:15:04.080 that no signs essentially at this point of the economies 0:15:04.120 --> 0:15:07.520 slowing down, so too high inflation, strong labor market that argues, 0:15:07.560 --> 0:15:08.920 of course for the fit needs to move. 0:15:08.880 --> 0:15:10.640 Towards a more hawkish stands. 0:15:11.920 --> 0:15:15.320 Stay with us, multiple impex Savannah's coming up after this. 0:15:24.400 --> 0:15:27.360 Ariana Salvator, the head of US public policy strategy at 0:15:27.360 --> 0:15:29.480 Morgan Stanley, joins us now for more. Thank you so 0:15:29.600 --> 0:15:31.920 much for joining us. How important do you think it 0:15:32.120 --> 0:15:34.560 was for the president to get this done now before 0:15:34.600 --> 0:15:36.760 we go into peak driving season in the summer, before 0:15:36.800 --> 0:15:38.280 everyone starts traveling for July. 0:15:38.320 --> 0:15:40.200 Fourth, and then of course the midterms. 0:15:40.680 --> 0:15:40.840 Yeah. 0:15:40.880 --> 0:15:41.360 Absolutely. 0:15:41.400 --> 0:15:45.120 When we think about Trump's incentive structure, you can't discount 0:15:45.160 --> 0:15:48.120 the importance of gasoline prices, right, But when we think 0:15:48.120 --> 0:15:49.920 about this in the election, we think about this in 0:15:49.960 --> 0:15:53.120 the context of affordability. Cost of living is the number 0:15:53.160 --> 0:15:56.040 one issue for voters, right aside from foreign policy, even 0:15:56.080 --> 0:15:58.920 the Iran war, you know, being largely net unfavorable for voters. 0:15:59.360 --> 0:16:01.360 And on that front, we think what matters more than 0:16:01.400 --> 0:16:03.560 the actual gas line price in the absolute level is 0:16:03.600 --> 0:16:06.560 the rate of change. So heading into peak driving season, 0:16:06.640 --> 0:16:09.360 you know, coming into the fall, if you're seeing gas 0:16:09.440 --> 0:16:11.800 prices actually on the decline, that might set up a 0:16:11.800 --> 0:16:14.320 different environment for Republicans come November than you would have 0:16:14.400 --> 0:16:16.400 if the election were today. Right, So that's what we 0:16:16.440 --> 0:16:18.480 think about, But again it's one piece of the puzzle. 0:16:18.520 --> 0:16:21.120 We also think about things like consumer sentiment. We look 0:16:21.120 --> 0:16:23.760 at the generic ballot, we look at prediction markets. All 0:16:23.840 --> 0:16:25.520 these are kind of painting the mosaic of. 0:16:25.560 --> 0:16:26.120 What to expect. 0:16:26.200 --> 0:16:28.000 When you look at pulling and you look at surveys, 0:16:28.440 --> 0:16:31.800 you see a consumer that's frustrated. At the same time, 0:16:32.080 --> 0:16:34.800 the data shows they've been relatively resilient. 0:16:35.240 --> 0:16:37.720 Right, How do you know square that circle? 0:16:38.040 --> 0:16:39.840 Yeah, So when we think about the consumer and the 0:16:39.880 --> 0:16:42.920 outlook there, our economists are forecasting a step down on 0:16:42.960 --> 0:16:45.080 a relative basis to last year, right, so just about 0:16:45.120 --> 0:16:46.040 one point eight percent. 0:16:46.640 --> 0:16:48.720 That's still you know, okay levels. 0:16:48.760 --> 0:16:50.880 It's not as healthy as it was last year, per se, 0:16:51.240 --> 0:16:52.680 but things aren't falling off a cliff. 0:16:52.680 --> 0:16:53.840 And I think that's from a. 0:16:53.880 --> 0:16:57.040 Political perspective, the most important point to underscore, right, So 0:16:57.160 --> 0:16:59.240 this is not the type of environment that's going to 0:16:59.280 --> 0:17:04.080 necessitate another reconciliation package, some sort of direct relief to consumers, 0:17:04.160 --> 0:17:06.760 something like that. That's not really entering the conversations in 0:17:06.840 --> 0:17:09.080 Congress as far as we can tell for now, what 0:17:09.160 --> 0:17:10.879 we tend to look at is, like I said, aside 0:17:10.880 --> 0:17:13.760 from consumer sentiment, things like the generic ballot and how 0:17:13.840 --> 0:17:17.280 consumers are feeling about the incumbent party in Congress, and 0:17:17.359 --> 0:17:19.320 there what we see is that Democrats are still up 0:17:19.359 --> 0:17:23.000 about seven points. Notably, that's actually pretty similar to how 0:17:23.040 --> 0:17:25.320