Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Right now,
Speaker 1: I want to turn our attention back to markets, in
Speaker 1: particular how to invest. James Paulston joins US now. He's
Speaker 1: chief investment strategist at the looth Hold Group, which oversees
Speaker 1: about one and a half billion dollars and is based
Speaker 1: in Minneapolis, Minnesota. James, thank you so much for joining US.
Speaker 1: I want to start with Risk your Credit because we've
Speaker 1: been speaking with some money managers who've been saying they
Speaker 1: have started reducing their allocations to US hiled bonds as
Speaker 1: well as more so even in Europe. Europe UH. The
Speaker 1: list includes Jpmorg and Asset Management, Double Line, uh Alean's
Speaker 1: Global Investors, Deutscha Asset Management. Do you agree, well, I certainly,
Speaker 1: UH bonds in general, I would still be underweight. Um. Well,
Speaker 1: the bonds are I mean bonds could be government bonds,
Speaker 1: which are haven investment and would be you know, it
Speaker 1: would hinge on inflation and growth. But if you have
Speaker 1: risk your credit, you're looking more at the credit worthiness
Speaker 1: of companies and also the pretty high valuations that we're
Speaker 1: seeing in the market right now. Yeah, I would, I
Speaker 1: would stay overweighted, uh there at least. I think that
Speaker 1: the risk for that is when do you think the
Speaker 1: next recession is? And I don't think that's real near
Speaker 1: and if it's not, I think in the balance of
Speaker 1: this recovery, I think the bond investor is going to
Speaker 1: need a yield buffer because I do think before the
Speaker 1: next recession comes, we're going to reset interest rates higher. Um.
Speaker 1: Probably this recovery is going to end the way most
Speaker 1: post war recoveries have ended, that is in some sense
Speaker 1: of overheat. At some point. I do think wages and
Speaker 1: inflation probably rise above three and um, I think that's
Speaker 1: going to cause a major reset and the tenure yield
Speaker 1: probably above three percent as well. And unless you have
Speaker 1: some yield buffer, whether that be from credit or whether
Speaker 1: it be from structure, I think it's going to be
Speaker 1: a very damaging position to be in and just nothing
Speaker 1: but high quality paper. The other thing about spreads is typically,
Speaker 1: although they're tight today, and I would agree with that, um,
Speaker 1: I think that they probably stay relatively tight until the
Speaker 1: recession risk gets pretty close. Um. And so even if
Speaker 1: they don't tighten further from here, um, you could still
Speaker 1: have excess return and in a buffer against rising yields. Um,
Speaker 1: even if they just hold at the at the current
Speaker 1: you know, tightness of spread that they possessed today. So, Jim,
Speaker 1: you just said something that was actually incredibly radical. You
Speaker 1: said that, uh, that you think inflation is going to
Speaker 1: pick up to that's radical and very different from what
Speaker 1: a lot of people are saying. What gives you confidence
Speaker 1: that that will happen? Well, Um, you know, the range
Speaker 1: on inflation that we've had over the last quarter century
Speaker 1: almost has been very narrow. It's one of the great
Speaker 1: accomplishments in the United States is we've had very low
Speaker 1: inflation volatility. Not only low inflation, but it's been very
Speaker 1: low volatility over the last ten years. Now. One standard
Speaker 1: deviation about the current inflation rate at one is above
Speaker 1: it is three percent, and blow it is about thirty
Speaker 1: basis points. It wouldn't take a lot of inflation to
Speaker 1: shock people that are used to low and stable inflation,
Speaker 1: and I think three percent inflation looks very likely. Wage
Speaker 1: inflation year on year is already least have been at
Speaker 1: two point nine percent inflation in this year on year
Speaker 1: in this recovery, we're still hanging at two five Medium
Speaker 1: wage inflation is already at three three UM. The the
Speaker 1: other labor indicators suggest private wage pressures. UM if the
Speaker 1: unemployment rate, just like the claims number this morning, falling
Speaker 1: to almost its lowest level of the recovery, suggesting we're
Speaker 1: gonna have continued job growth, I think it's very likely
Speaker 1: we're gonna get wages over three. And if we do,
Speaker 1: I think companies are going to be forced to raise
Speaker 1: selling prices, and that puts your CPI above it. One
Speaker 1: other thing that's at play right now is the US
Speaker 1: dollar is very close to breaking below a thirty one
Speaker 1: month trading range. It's been down about ten per year
Speaker 1: to date, but I think it could If it breaks
Speaker 1: that range, it could fall even further, which would also
Speaker 1: put some life back into crude oil and other come
Speaker 1: o of the prices aggravating or least elevating inflationary expectations.
Speaker 1: So right now I'm looking at a tenure treasure yield
Speaker 1: at two a little bit more than that, but it's
Speaker 1: down on the year. Given your expectation for a surprising
Speaker 1: amount of inflation and possibly three UH wage growth. Where
Speaker 1: are you seeing this tenure yields at the end of
Speaker 1: this year. Well, I'm not sure this will. All you
Speaker 1: know happened before the end of the year. Indeed, I
Speaker 1: think that one of the reasons I'm positive on stocks
Speaker 1: right now, Lisa, is that I think we're in a
Speaker 1: sweet spot with inflation where we're growing. The economy of
Speaker 1: the City Group Economic Surprise Index has been rising against
Speaker 1: since late June in the United States, reports have been
Speaker 1: getting better, but we're not aggravating inflation and interest rates.
Speaker 1: As long as we stay in that sweet spot, I
Speaker 1: think stocks move higher. Eventually. If we aggravate those, and
Speaker 1: I think we will, that could be what ends the
Speaker 1: stock market rally as well as the bond rally. But personally,
Speaker 1: I think that's probably a two eighteen event now, um,
Speaker 1: but I would get prepared for it, and I certainly
Speaker 1: wouldn't be hanging out and overweights in a in a
Speaker 1: two in your treasury because I think the terminal level
Speaker 1: is going to be probably more like three and a
Speaker 1: half percent before this recovery is over. Jim Paulson, thank
Speaker 1: you so much for joining us. Jim Paulson is chief
Speaker 1: investment strategist with the luth Hold Group in Minneapolis. One
Speaker 1: other area that we are watching is in currency is
Speaker 1: particularly the Euro. It fell at one point the most
Speaker 1: since December, although it's recovered some of the losses after
Speaker 1: ECB European Central Bank officials said that they're worried that
Speaker 1: the Euro might strengthen more than justified by the economic upturn.
Speaker 1: And with us to discuss is Doug Barthwick. He's managing
Speaker 1: director and head of f X at Chapelen and Company. Doug,
Speaker 1: I first want to just get your thoughts on the
Speaker 1: knee jerk reaction by the market of selling the euro
Speaker 1: based on this com these comments by the e c B.
Speaker 1: Do you think the ECB would and could take actions
Speaker 1: to devalue the Euro. No. I don't think they'll take
Speaker 1: access to divide the year. I think this is a
Speaker 1: really job owning, a job owning effect, and I think
Speaker 1: that the market maybe has taken it a little the
Speaker 1: wrong way and that euro strength can be shown not
Speaker 1: just against the dollar, but against many other currencies. The euro,
Speaker 1: you know, trading around this one set four, it's so
Speaker 1: much lower than one sixty it was back in two
Speaker 1: thousand nine, or even one thirty seven in September two fourteen.
Speaker 1: And so when you look at your who does the
Speaker 1: Europe export to only coming to the US. So if
Speaker 1: you're concerned about their exports and the strength of the Euro,
Speaker 1: it may not be just against the US, but certainly
Speaker 1: against China. So euro China, which has retraced about of
Speaker 1: it's high to low going back to two, certainly looks
Speaker 1: like the euro maybe a little bit overvide or maybe
Speaker 1: overdone there. But against the dollar, if you were to
Speaker 1: go sixt one above the loans, they're we're looking at
Speaker 1: one and the euro. So I think that the euro
Speaker 1: still has further moves higher against the dollars. Certainly because
Speaker 1: while the ECB may be anxious about the strength of
Speaker 1: the Euro, that's US administration sift with the Trump administration,
Speaker 1: it's very concerned about dollar strength. But not only is
Speaker 1: the U S concerned about it, the b I S
Speaker 1: and the I m F, both around these levels, have
Speaker 1: said that they believe the dollar to be ten over valued.
Speaker 1: In other words, you've got the U S and uh,
Speaker 1: you know, talking against the ECB. No one wants to
Speaker 1: have a strong currency. But I think it's the U
Speaker 1: S that's really in the driving seat here, and that
Speaker 1: the Euro still is under vied relative to maybe where
Speaker 1: it should be, and I think that's probably around the
Speaker 1: level well before we get to the dolls. So do
Speaker 1: you want to get your thoughts on the dollar. I
Speaker 1: just want to stick with the e c B for
Speaker 1: one second, because to me, the implication here is, even
Speaker 1: if this is just jaw boning, the e jerk reaction
Speaker 1: on the part of ECB officials would be to hold
Speaker 1: benchmark rates lower for longer and to move more slowly
Speaker 1: as far as removing accommodation in order to keep the
Speaker 1: economy kind of in this place where the Euro is
Speaker 1: sort of stabilized, even as as as the economy grows, right,
Speaker 1: I mean, because I don't really see what other moves
Speaker 1: easy B could take. Well, the the CP would have
Speaker 1: to keep on doing something at a at a greater
Speaker 1: level than the FED is doing it. Now. We can
Speaker 1: look at the Fed, right, and I believe that maybe
Speaker 1: there's one more rate rise this year, and certainly e
Speaker 1: CP won't be raising rates. But even if you look
Speaker 1: at the ten year yields and the US tenure yields
Speaker 1: are unchanged in the year, but tenure yield let's say
Speaker 1: for Germany or maybe city basis points higher, So the
Speaker 1: yield differentials moving more in the favor of Europe than
Speaker 1: it is in the US. And remember, when you look
Speaker 1: at currencies, you look have to look at, well, what's
Speaker 1: the FED doing versus what's the ECB doing. The e
Speaker 1: c B going forward into two thousand nine is maybe
Speaker 1: going to have Bidman in charge. Widman is much more
Speaker 1: of a hawk and would like to see rates get
Speaker 1: a little bit higher in the year zone, whereas you
Speaker 1: may have Cone coming into the FED in the US
Speaker 1: who's seen as being a dove. And so longer term,
Speaker 1: we're still looking at the US maybe having lower yields
Speaker 1: for longer and the ECB moving out of the lower yields.
Speaker 1: Plus the e c B is now running out of
Speaker 1: products they can buy in the market. You know, there's
Speaker 1: only so much you can buy in terms of big
Speaker 1: income in Europe, and they begin to really fill their coffers.
Speaker 1: Already with respect to the dollar, the dollar did strengthen
Speaker 1: a touch today after falling quite a bit yesterday. Uh,
Speaker 1: basically just due to some of the turmoil, particularly having
Speaker 1: to do with the Economic Council and the CEO stepping
Speaker 1: away and this idea that possibly, uh, there could be
Speaker 1: less progress made on tax or form and other policy issues.
Speaker 1: But I have to wonder what your view is. Do
Speaker 1: you think that the dollar has further to fall? It
Speaker 1: sounds like you do. I certainly do. I think that
Speaker 1: the dollar is going to be on this weekending stands
Speaker 1: really going off over the next couple of years. I
Speaker 1: think that a weak dollar policy are certainly a step
Speaker 1: away from the strong dollar policy is the new US term.
Speaker 1: And so based on that, I think that what folks
Speaker 1: are worried about more globally is not how far the
Speaker 1: dollar is going to weaken, but just how I mean,
Speaker 1: what's the pace of that? And I think that when
Speaker 1: we get more of a sense at Jackson Hole. But
Speaker 1: certainly there is a very strong belief and understanding in
Speaker 1: the US that in order to keep equity markets as
Speaker 1: bit as they are, you need to have the dollar
Speaker 1: continue to weaken, because remember, for every one percent that
Speaker 1: the dollar weakens, that that moves into a half a
Speaker 1: percent rise in terms of the earnings per share for
Speaker 1: the SMP five. So as the US, you know, the
Speaker 1: US dollars to we can buy you's here and per
Speaker 1: share go up by ten percent. And so that's now
Speaker 1: that that's considerable. And still within the US, we still
Speaker 1: have this issue where you have underfunded pension plans. You've
Speaker 1: got you know, government engine plans that are sitting there.
Speaker 1: They're very underfunded right now, and the way the boost
Speaker 1: them is by having equities boosted. The way to do that,
Speaker 1: certainly would be to have the dollar week considerably. Dog
Speaker 1: borth birth Wick, thank you so much for your comments.
Speaker 1: Dog Borthwick as managing director and head of FX at
Speaker 1: Chapter Lane and Company. Well, today Walmart posted its best
Speaker 1: grocery sales growth in five years for the second quarter
Speaker 1: of This is really important because the grocery business accounts
Speaker 1: for more than half of Walmart's overall revenue. It beat
Speaker 1: estimates and yet its shares are down. To get a
Speaker 1: little bit more perspective about why and whether this decline
Speaker 1: will continue, I want to bring in my colleague Sarah
Speaker 1: How's act. She's a retail columnist, a Bloomberg gad fly
Speaker 1: bloombergad Fly is a fast commentary section with a smart
Speaker 1: and analysis of breaking news. Sarah, what was your take
Speaker 1: when you saw there sort of tepid X diectations going
Speaker 1: forward paired with this pretty impressive performance. Yeah, Look, I
Speaker 1: think Walmart is doing the right things that needs to
Speaker 1: do for the long term. What investors seem to be
Speaker 1: skittish about was the fact that this third quarter guidance
Speaker 1: wasn't quite as high as they hoped it would be.
Speaker 1: But Walmart is in a position right now where it
Speaker 1: really needs to spend big if it's going to in
Speaker 1: a serious, full throated way take the e commerce fight
Speaker 1: to Amazon. And so if it's not spending this money
Speaker 1: um and pressuring its profits, it's hard to see how three, five,
Speaker 1: ten years down the road it's a viable competitor in
Speaker 1: the digital space. So how much money is it spending
Speaker 1: and where exactly is it spending? Yeah, it's spending several
Speaker 1: billion over the next few years, and a big part
Speaker 1: of that investment is in supply chain. What it wants
Speaker 1: to do is to have fulfillment centers that are more
Speaker 1: state of the art so it can get orders to
Speaker 1: people more quickly. And it's also experimenting with different kinds
Speaker 1: of tactics for reaching shoppers in a more profitable way. So,
Speaker 1: for example, on millions of items now Walmart is giving
Speaker 1: you a discount if you buy the item online but
Speaker 1: pick it up in store. That's a more profitable transaction
Speaker 1: for them, and so they want to reward that. You know,
Speaker 1: I have to wonder Walmart's not alone in shelling out
Speaker 1: as much money as they can to try to boost
Speaker 1: their online operations and their uh digital distribution. I'm wondering
Speaker 1: if a things are getting a lot more expensive and
Speaker 1: because of the demand from Walmart and Target and everybody else, uh,
Speaker 1: and and be whether they're behind the times already. I mean,
Speaker 1: we were talking yesterday about how if they didn't impress today,
Speaker 1: it was going to be a really rough next two quarters.
Speaker 1: Do agree, Yeah, So I think there is something to
Speaker 1: the fact that they are a little bit behind the
Speaker 1: curve here, and they probably should have been making these investments, uh,
Speaker 1: quite a bit earlier. But at least they're trying now, right,
Speaker 1: And I think it's also encouraging that they're thinking creatively
Speaker 1: and inquisitively. I mean, we've seen them pick up jet
Speaker 1: dot Com, They've also bought the Nobo's, They've bought Modcloth,
Speaker 1: and their reports out there now that they might be
Speaker 1: looking to buy birch Box, and so at least they're
Speaker 1: they're thinking in different ways about how they might boost
Speaker 1: their e commerce muscle by bringing in sort of acquahiring, right,
Speaker 1: bringing in some different talent to help them think differently
Speaker 1: about this problem. One other problem that I am facing
Speaker 1: right now is that the margins are much smaller on
Speaker 1: online sales for Walmart just simply because, uh, the amount
Speaker 1: that they have to pay to fulfill the order and
Speaker 1: process everything is higher at this point. If they're trying
Speaker 1: to move more of their business online and they make
Speaker 1: less money from it and they're spending more, Uh, this
Speaker 1: equation doesn't seem that rosie. That means they have to
Speaker 1: make it up on volume. Do they address that? Not
Speaker 1: that specifically. But I think the hope is that as
Speaker 1: over time things get better on the profit ability front,
Speaker 1: because theoretically, once you have a network built out right,
Speaker 1: once you have these supply chains that have all the
Speaker 1: right fulfillment centers excuse me, they have all the right
Speaker 1: technology and place once you're not building those from scratch,
Speaker 1: that you can start to have some you know, more
Speaker 1: scale benefits there, and that's sort of a similar argument
Speaker 1: that Amazon makes, and the investors seem more convinced when
Speaker 1: Amazon makes it right, We're plowing all this money into
Speaker 1: building out our supply chain and that will benefit us
Speaker 1: on the back end. And I think Walmart is hopeful
Speaker 1: that the same thing will happen for them. And Walmart
Speaker 1: still is very much a brick and mortar operation, and
Speaker 1: there were were a lot of complaints in the past
Speaker 1: few years about shelves being unstalked, about staff being inattentive.
Speaker 1: Do they talk at all about better kind of operations
Speaker 1: within stores as well as what the increase in wages
Speaker 1: that they did deliver has done to their bottom line
Speaker 1: and what they expect going forward. Yeah. So they've said
Speaker 1: for the last several quarters that they've seen improving customer
Speaker 1: score when they survey them about the experience that they're
Speaker 1: having in stores, and that likely reflects that they have
Speaker 1: made all these efforts on making sure stores are better stucked,
Speaker 1: making sure produces fresher and deploying staffers in the right
Speaker 1: way so that you're getting good customer service. So they
Speaker 1: have now had twelve straight quarters of positive comparable sales,
Speaker 1: and I think almost the same number of straight quarters
Speaker 1: of positive traffic to the stores, and so that's a
Speaker 1: good sign that some of those investments are working for them.
Speaker 1: You know, I'm struck by what you're saying, which is
Speaker 1: which is wise? You know, I mean, at some point
Speaker 1: they're going to have to spend, so they should spend
Speaker 1: sooner than later. Uh, And yet it's just the shares
Speaker 1: are just not forgiving. Investors are not being forgiving right now.
Speaker 1: Do you think that they will come to some kind
Speaker 1: of uh Kumbaya moment where they say, you know what,
Speaker 1: we believe in you, or do you think that they're
Speaker 1: going to sort of go into a show me mode
Speaker 1: for the rest of the year. I think there for
Speaker 1: at least for the short term, there could be a
Speaker 1: little more show me, because it's hard for me to
Speaker 1: see how just in the next one quarter or quarter
Speaker 1: after that they do something that really meaningfully changes their
Speaker 1: narrative to investors on this question of profitability. Um. But
Speaker 1: over the long haul, if they really continue to deliver
Speaker 1: this strong e commerce growth, uh, maybe investors will start
Speaker 1: rewarding them for it. Sarah Hols like, thank you so
Speaker 1: much for joining us always a pleasure. Sarah Holsing is
Speaker 1: a retail columnist at Bloomberg. Gad Flies are fast commentary group.
Speaker 1: You can find it at Bloomberg dot com, slash gad fly,
Speaker 1: on the web or on the terminal at n I
Speaker 1: space Gadfly Go. Yesterday was a pretty big day, uh,
Speaker 1: in turmoil Land. For politics. We have President Trump generating
Speaker 1: controversy after his press conference and some comments from Republicans,
Speaker 1: and then you had the disbandment of the Council of CEOs.
Speaker 1: This matters to markets arguably because it raises some questions
Speaker 1: about how quickly President Trump can move on his policy agenda.
Speaker 1: And here to talk about that is Mike McDonough. He's
Speaker 1: Global director of Economics Research and chief economist at Bloomberg Intelligence,
Speaker 1: and he joins us in our eleven three oh studios. So, Mike,
Speaker 1: how much does all of this actually make an impact
Speaker 1: on these policies? I mean, are you getting sense? Yeah? So,
Speaker 1: I think you know, the the the actual resignation of
Speaker 1: the CEOs and disbanding of the Council's Uh, that's somewhat
Speaker 1: more symbolic than meaningful in a way, because I mean
Speaker 1: I actually said this. I think that no one, Not
Speaker 1: many Americans, if any Americans could name any successes the
Speaker 1: Council has had. But you know, as of twenty four
Speaker 1: hours ago. But it was always symbolic. It was never
Speaker 1: anything but symbolic. So this is the extent that it
Speaker 1: was a symbolic vote of support that gave people confidence.
Speaker 1: Is now the opposite? Well, you know, like I said
Speaker 1: that every everyone could now name at least once CEO
Speaker 1: who's quit from this panel. Where it makes more of
Speaker 1: a difference is infrastructure is one area where both the
Speaker 1: Republicans and Democrats needed agree it needs to get done.
Speaker 1: They have some differences on how. But when you're going
Speaker 1: when you're coming out and saying, Okay, this is the
Speaker 1: infrastructure press conference, I'm gonna do something, you should leave
Speaker 1: with everyone applauding, everyone joining hands and saying, finally something
Speaker 1: is getting done. Uh for the press conference to derail
Speaker 1: as it derailed, and you've basically, you know, shifted from
Speaker 1: infrastructure to these divisive comments where you have Republicans coming
Speaker 1: out and and coming coming out against you. Now you
Speaker 1: basically have gone from something that should have had a
Speaker 1: really good outcome to where it's increasingly difficult to see
Speaker 1: how he's going to be able to get any of
Speaker 1: his agenda done, and it's incredibly important that he does
Speaker 1: get some of this stuff done. Infrastructure is needed, tax
Speaker 1: reform is needed. I don't see how it gets done.
Speaker 1: And this is maybe the nail on the coffin for
Speaker 1: a lot of that. So, but how much was it
Speaker 1: his agenda to start with, because as you just said,
Speaker 1: it was Wilkins and Democrats who wanted to come together
Speaker 1: and come up with some infrastructure plan. I mean, can't
Speaker 1: they do that anywhere? Or does he have to be
Speaker 1: leading it? Well? I think, you know, the president has
Speaker 1: to lead that sort of. I mean, maybe it's possible
Speaker 1: some of he gets out of the way and let
Speaker 1: some of his cabinet handle it, but I mean it's
Speaker 1: going to be hard for him to get must or
Speaker 1: any the type of support needed because you know, while
Speaker 1: I said, both sides agree this needs to get done,
Speaker 1: they differ on how it should be then, you know,
Speaker 1: be it from public private partnerships versus how much the
Speaker 1: government should fund on the infrastructure side, and then on
Speaker 1: the tax reform who who should have benefit? Right should it? Well?
Speaker 1: So on the Bloomberg I think in the past, the
Speaker 1: past week or so, there was a story about two
Speaker 1: thirds of economists surveyed. I think that the current administration
Speaker 1: will get some kind of tax plan passed by the
Speaker 1: end of the year, but that the effects won't take
Speaker 1: place until after after the year after, possibly next year
Speaker 1: as well. I'm that that that ratio surprises me. I
Speaker 1: think that the idea of there's two things we need
Speaker 1: to look at. One is the probability of tax reform,
Speaker 1: comprehensive tax reform that seems like it's zero percent. It
Speaker 1: seems like it's been zero percent for a while. Uh.
Speaker 1: Then there's the probability for tax cuts. That's probably what
Speaker 1: the economists and this survey we're referring to. I mean,
Speaker 1: I think there is a chance you could get some
Speaker 1: tax cuts, but I don't think I would be in
Speaker 1: the two thirds thinking something could happen. And keep in
Speaker 1: mind that survey was probably done before yesterday, in the
Speaker 1: past weeks, for sure. But I have to wonder how
Speaker 1: much where I was going with this is how much
Speaker 1: is this optimism about the policies, uh that President Trump
Speaker 1: espoused during the campaign. How much has that optimism been
Speaker 1: baked into markets already and it hasn't been already beaten
Speaker 1: out that still needs to sort of come out of
Speaker 1: the market should we really fail to see anything materialized.
Speaker 1: So I think you saw euphoria fading a bit. Uh
Speaker 1: in the rates market. In the dollar equities is a
Speaker 1: place where you haven't seen it come out as much.
Speaker 1: And I think that's partially because, uh, you know, it
Speaker 1: did start to get baked in, but then once people
Speaker 1: started baking it in after the election, you had a
Speaker 1: series of better than expected earning seasons, so that kind
Speaker 1: of helped catalyze the view that that was going to happen.
Speaker 1: So I think that, uh, you know, if if you
Speaker 1: look at the reaction of the market this morning to
Speaker 1: the rumor that Gary Cohne may have been resigning, I
Speaker 1: think that's kind of an indication of what could happen
Speaker 1: if the market sees no hope of any of this
Speaker 1: stuff getting done. I have to wonder, though, I mean,
Speaker 1: what is do you really believe that? Do you buy
Speaker 1: that that that if Gary Cohen were to resign that
Speaker 1: the market would tang? You have to think about it.
Speaker 1: It's it's it's not just meaningful because he's he's the
Speaker 1: National Economics Council director, he's also the front runner to
Speaker 1: take over the FED. So the market needs the price in,
Speaker 1: you know, the impact on Trump's physical agenda. But then
Speaker 1: it also has to kind of look at, well, what
Speaker 1: could the monetary policy implications be if he were to
Speaker 1: actually resign. So it's not just simply saying this is
Speaker 1: his current job. You have to look at the fact
Speaker 1: that he is a front runner to replace Yelling in February.
Speaker 1: So what impact might that have? Right, He's a he's
Speaker 1: probably like Yelling, a kind of low interest rate guy.
Speaker 1: The market likes that. Who could the possible um, you know,
Speaker 1: replacement B if he were to step down to be
Speaker 1: the front runner, you know, would it increase the likelihood
Speaker 1: that Yelling uh stays in the job. You know, these
Speaker 1: are all questions that the market had to momentarily begin
Speaker 1: answering this morning. But an ego boost, you know, it's
Speaker 1: like if someone someone leaves the whole market tanks, you
Speaker 1: know that it might be film pretty good fo um.
Speaker 1: Mike mcdonna, thank you so much for joining me. As always,
Speaker 1: Mike mcdonna is Global director of Economic Research and Chief
Speaker 1: Economist at Bloomberg Intelligence in New York. Thanks for listening
Speaker 1: to the Bloomberg P and L podcast. You can subscribe
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter
Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo. It's
Speaker 1: one before the podcast. You can always catch us worldwide
Speaker 1: on Blueberg Radio