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Speaker 2: In the game of getting your message out, you wander
Speaker 2: into late May and you have a meeting over some
Speaker 2: Stille Sanka coffee and you go, this is what the
Speaker 2: outlook looks like, and then you blow it up ten
Speaker 2: times on the way to June thirty, two thousand whatever,
Speaker 2: Jeffrey Rosenberg set a record. They had to rewrite there
Speaker 2: bond quarterly here with the events going on something like
Speaker 2: fourteen times. Are you on speaking terms for the Rick
Speaker 2: reader or is it just forever broken?
Speaker 3: Oh no, it's all good.
Speaker 2: Yes, it's all good. In this report, how does different
Speaker 2: from where it would have been thirty days ago?
Speaker 4: Yeah, that's I mean, so much has happened between you
Speaker 4: know where we were, you know sixty days ago, the
Speaker 4: and the and the tariffs and the concerns and bonds.
Speaker 4: You know, the outlook has had to change a lot,
Speaker 4: and you've seen it in terms of you know what
Speaker 4: you're talking about and in terms of the number of
Speaker 4: contributors to that piece and trying to get the trying
Speaker 4: to get the tone right.
Speaker 5: But you know, the the.
Speaker 4: Big issue there is is still that you know, it's
Speaker 4: relatively sanguine in terms of the rate range bound in
Speaker 4: terms of.
Speaker 3: The biggest input impact.
Speaker 4: And we talked about in fixed singcam out looked for
Speaker 4: the ten years, you know, not not as much volatility
Speaker 4: as what you've seen, say the equity market.
Speaker 6: Paul's been great on this.
Speaker 2: I mean, Paul's not the way on this, but but
Speaker 2: the bottom line, Paul is it's bringing duration.
Speaker 3: Right, Yep.
Speaker 5: Absolutely, I'm just looking at some something coming off the
Speaker 5: Bloomberg News desk.
Speaker 7: The treasury market is wrapping up its best monthly return
Speaker 7: since February and its biggest first half stretch in five years.
Speaker 5: So you guys, aren't I mean, people want to talk
Speaker 5: to you guys now right.
Speaker 4: Yeah, you know, bonds have been, bounds have been okay.
Speaker 4: And the big story, and Rick's talked so much about
Speaker 4: this is the restoration of income. And you know part
Speaker 4: of that is just where the Fed is and the
Speaker 4: redsence to say even cut rates. But that you brought
Speaker 4: interest rates back up above the level of inflation. And
Speaker 4: for a very long time period you just didn't have that.
Speaker 4: You had very negative real interest rates and that was
Speaker 4: a penalty to fixed income because.
Speaker 3: It propagated out the curve.
Speaker 4: And so it's a very different environment and that you
Speaker 4: know over all, you know, in terms of interest rate moves,
Speaker 4: it's just the starting point. You know, fixed income is
Speaker 4: about yield, and yield is the driver of returns.
Speaker 3: It's a little bit different than equities.
Speaker 4: It's a little bit simpler that you're starting yield is
Speaker 4: your best predictor of your future return. And that's the
Speaker 4: big story, is that we've returned.
Speaker 7: Holders hold exactly right, and then that's what buy them
Speaker 7: and hold them? How about credit risk here?
Speaker 5: What are we doing on the credit side here?
Speaker 4: So there's two sides of the credit risks story, which
Speaker 4: it's been for a long time, and that is you've
Speaker 4: got the pricing of credit risk, which is, you know,
Speaker 4: not particularly attractive in terms of is there an entry
Speaker 4: point here from timing, But again it comes back to
Speaker 4: the difference between price return and income, and the income
Speaker 4: piece is the bigger story from credit where yield plus
Speaker 4: spread is attractive. Spread on its own is a little
Speaker 4: bit less attractive in terms of like you're pricing in
Speaker 4: you know, very very benign conditions. But newsflash, it is
Speaker 4: a very benign outlook in terms of what's going on
Speaker 4: in terms of fundamentals. Now that's what we've realized now
Speaker 4: going forward that may change. Markets are pricing in a
Speaker 4: very benign credit environment. So there's a little bit of
Speaker 4: asymmetric downside.
Speaker 3: You see that.
Speaker 4: You know most of the time in credit, it's a
Speaker 4: little bit exacerbated this time.
Speaker 3: So you want to be kind.
Speaker 4: Of more up in quality and a little bit more
Speaker 4: up in defensiveness just given the where the asymmetry is.
Speaker 3: But credit has been the dog here that has embarked.
Speaker 2: There's all these manufacturers products. I'm gonna say, folks are
Speaker 2: collared out and manipulated and maybe somebody makes a bigger
Speaker 2: fee just cut to the you know, fabose chase, the
Speaker 2: mark who it's chased does a sixty forty portfolio work
Speaker 2: here that.
Speaker 4: Is definitely cutting to the chase, And you know, I
Speaker 4: think you have to rethink that idea and what made
Speaker 4: sixty forty really work for a very long period of time,
Speaker 4: very simple idea that we lived in an environment of
Speaker 4: too little inflation, and when you live in an environment
Speaker 4: of too little inflation, the FED has no constraint on
Speaker 4: its ability to be accommodative when you need them to be.
Speaker 3: That's really important.
Speaker 4: That cascades down into a thing we call the divine
Speaker 4: coincidence of monetary policy basically says when there isn't an
Speaker 4: inflation risk, the only thing the FED has to focus on.
Speaker 3: Is growth, and that means it's really good for your equition.
Speaker 2: Drinking the kool aid here of Allen Meltzer and Marvin Short,
Speaker 2: I mean, it's just so Carnegie Melon exactly.
Speaker 7: I'm looking at the eye end. Go funk on the
Speaker 7: Bloomberg terminal, Bloomberg Index browser. The best performance in US
Speaker 7: fixing come has been US corporate high yield. I mean,
Speaker 7: people don't mind taking the risk.
Speaker 5: It seems like they don't.
Speaker 4: And that again, that's because it's been a very benign
Speaker 4: environment for what we've seen realized in terms of in
Speaker 4: terms of corporations, of cash flows, default risk, and the
Speaker 4: pricing there got a little bit concerned around the April ninth,
Speaker 4: April second tariff piece, and so you had a big
Speaker 4: recovery from credit spread wides in every environment so far,
Speaker 4: it's been one where widening's have been you know, purchase
Speaker 4: buying opportunities. Again, you got to take a little bit
Speaker 4: of a bigger picture there to remember, this is a
Speaker 4: credit cycle, and if all of these concerns around the
Speaker 4: economics slow down eventually manifest themselves, then you're going to
Speaker 4: see an uptick in defaults. But that's forward looking. I
Speaker 4: haven't seen any of that so far. That's why I've
Speaker 4: seen the really strong performance in corporate.
Speaker 2: There's there forcing me, the media people are forcing me
Speaker 2: to rewrite my bio. And it's torture, folks, I can
Speaker 2: tell you. And it's about the conversation with Jeff Rosenberg
Speaker 2: and others. The first name I mentioned in the bio
Speaker 2: is Alan Meltzer, and one of yours in my heroes
Speaker 2: at Carnegie Mellon and Professor Meltzer told me aggregate data
Speaker 2: for America. Can we do that now? Jeff Rosenberg is
Speaker 2: a template at Blackrock, a glass half full in this
Speaker 2: wild Barbel America.
Speaker 4: Yeah, yeah, yeah, your term is exactly right, you know,
Speaker 4: Barbel America, k shaped America.
Speaker 3: The aggregation of data is.
Speaker 4: Very problematic in that it masks over a lot of
Speaker 4: the really underlying issues inside the economy, and.
Speaker 3: That's really important, especially.
Speaker 4: When you're thinking about not kind of you know, the
Speaker 4: direction you a macro variable like the ten year interest
Speaker 4: rate really can kind of map to the aggregate. But
Speaker 4: when you talk about the corporate bond market or you
Speaker 4: talk about the equity market, where the cross section of
Speaker 4: performance is much more important, taking into account things like
Speaker 4: the distributional aspect underneath the economic data becomes much more important.
Speaker 5: What's our feter reserve going to do here today this year?
Speaker 7: I'm looking at the WRP function kind of pressing and
Speaker 7: maybe two, maybe a little bit more than two rate
Speaker 7: cuts this year. What do you think they should do?
Speaker 4: So that's been where we've been for a while, around
Speaker 4: around two cuts. You know, I think they should be
Speaker 4: in a weight and see mode, as Powell has has discussed,
Speaker 4: because we're in this interim period where we don't really
Speaker 4: know what the impact to the macro data is going
Speaker 4: to be of the policy and policy uncertainty.
Speaker 3: So far, it's been better.
Speaker 4: Than feared, and we've had four or five in a
Speaker 4: row better than feared inflation reports.
Speaker 3: This is the time, and you know, this is.
Speaker 4: The week prior to payrolls, and so that becomes a
Speaker 4: really important input because we're starting to see some slow down.
Speaker 4: You can see in the Bloomberg that consensus for Friday,
Speaker 4: you know, slowing. I think it's around one to ten.
Speaker 4: You know, it's a significant slow down. But it's still
Speaker 4: a pretty strong market. So they've got the room to wait,
Speaker 4: and I think that's the right thing to do.
Speaker 3: But wait for what?
Speaker 4: Wait for whether or not you know, this inflation in
Speaker 4: terms of the tariffs really shows up in a more
Speaker 4: significant way. That's going to validate them holding off, or
Speaker 4: this slow down in jobs accelerates, and then the waiting
Speaker 4: will be proven wrong.
Speaker 3: But they'll pivot, and I think that's.
Speaker 4: The key, is that they'll pivot to the data.
Speaker 2: Jeffrey, Thank you so much. Jeffrey Rosenberg. Now was a
Speaker 2: six point thirty view for Blackrock. You can run, but
Speaker 2: you can't hedge the bond markets. Warning shot. Get that
Speaker 2: from Blackrock. Please you protect the copyright of all of
Speaker 2: our guests.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2: Henrietta Trey's has been just fabulous at Veda Partners. Henrietta,
Speaker 2: I just use Google Gemini because I'm hip and I
Speaker 2: do a and I typed in what is the vhotama?
Speaker 2: And it exploded.
Speaker 6: The servers exploded at Google.
Speaker 2: What in God's name, coach trace is voter rama?
Speaker 8: Oh, it's so exciting. Gear up to watch. He's been
Speaker 8: two all day long. It will be nothing short of riveting.
Speaker 8: It's actually really cool. You know, the Senate is a
Speaker 8: highly scripted, very regimented body, and voter rama is like
Speaker 8: our free for all. So all amendments are germane. You
Speaker 8: can throw anything at the.
Speaker 9: Wall here and they will be voting all day, all night,
Speaker 9: maybe even into tomorrow. So it's really exciting if you're
Speaker 9: into that kind of thing.
Speaker 6: Are any important, Yes.
Speaker 9: They're critically important.
Speaker 8: There are millions of individuals at risk of losing Medicaid
Speaker 8: in this package. That will be a big amendment vote
Speaker 8: from Rick Scott, Republican in Florida that will need to
Speaker 8: pass otherwise it could risk as many as four Republican
Speaker 8: senators defecting away from this bill. However, if it is passed,
Speaker 8: it may fail in the House. So it's a very
Speaker 8: delicate balance that Republicans need to walk here.
Speaker 9: The most important one is going to be.
Speaker 8: A procedural change that fundamentally undermines and effectively removes the
Speaker 8: filibuster from the United States Senate for the rest of
Speaker 8: all time. This is a massive deficit increasing provision, and
Speaker 8: it authorizes the use of current policy baseline by overriding
Speaker 8: the parliamentarian our referee, and it will pave the way
Speaker 8: for increase in the deficit by four trillion dollars without
Speaker 8: paying for it in this package. So a lot is
Speaker 8: very heavy stuff on.
Speaker 6: The line today.
Speaker 7: Is there any political fallout for anybody, Henriette, for raising
Speaker 7: these deficits by I don't know the fourth trillion you
Speaker 7: just mentioned.
Speaker 9: Yeah, I think that there are. You don't often see
Speaker 9: this without an election happening.
Speaker 8: But Tom Tillis, for example, Republican of North Carolina, has
Speaker 8: decided this bill is so atrocious, who's quitting the entire it,
Speaker 8: And so he's going to vote against the package and
Speaker 8: he's moving on with his life, which is a shame.
Speaker 8: He's an excellent senator with some incredible staff that we've
Speaker 8: worked with and been lucky to work with now for years.
Speaker 8: But this is real ramifications in real time. And the
Speaker 8: next time you hear someone say, you know, Rome died
Speaker 8: because of its deficits and debt, ask him how they
Speaker 8: voted on this bill.
Speaker 7: President Trump is on one heck of a winning streak here.
Speaker 5: Do the Democrats recognize this?
Speaker 7: Is there any pushback, any sense of we want to
Speaker 7: get our message out?
Speaker 9: What message?
Speaker 2: I mean?
Speaker 8: This bill is filled with literally trillions of dollars worth
Speaker 8: of messages, and the Republican package is so massive that
Speaker 8: they've sort of just been washed over by the flood
Speaker 8: of it. So if you follow an individual member's statements,
Speaker 8: you can catch you know where they stand on Medicaid
Speaker 8: and things along those lines. But it's really hard to
Speaker 8: get a message through. I was actually with a doctor
Speaker 8: friend of mine this weekend, who you know, and I
Speaker 8: cover this now for the entire year, and I just
Speaker 8: learned that sixty five percent of births in Louisiana come
Speaker 8: from Medicaid patients. And this is cutting millions of people
Speaker 8: off of Medicaid nationwide, twelve million.
Speaker 9: Though it's pretty substantial.
Speaker 2: It's sixty thousand feet and I've got a nodding memory
Speaker 2: of this is this the pullback of the great society
Speaker 2: is what we're really talking here. I get into the
Speaker 2: maths forty and twenty sixty years on. We're slamming ourselves
Speaker 2: back to Pleasantville and Dwight David Eisenhower.
Speaker 9: I mean, this is the end of caring about deficits.
Speaker 8: This is the end of paying for legislation on a
Speaker 8: go forward basis. So, for example, any tax provision that
Speaker 8: you like right now that's on the books can be
Speaker 8: extended into perpetuity without ever paying for it ever. Again,
Speaker 8: So any short term provision you put in there, the
Speaker 8: salt cap, the IRA tax credits, the child tax credit,
Speaker 8: whatever it may be. These are hundreds of billions of
Speaker 8: dollars on a line by line basis.
Speaker 9: But perhaps the biggest comp into this bill is the
Speaker 9: wealth transfer.
Speaker 8: Think about the tariffs that have been put on by
Speaker 8: this Trump administration. I don't think that's a win, but
Speaker 8: the President has made it appear as though he's really,
Speaker 8: you know, strong army.
Speaker 9: But it's four hundred billion dollars entire for revenue collection.
Speaker 9: The entirety of.
Speaker 8: The president's campaign agenda, no taxes on tips, no taxes
Speaker 8: on you know, retirement payments and things like that is
Speaker 8: one hundred and sixty three hundred and sixty three billion
Speaker 8: dollars worth of this package, and the tariffs are four
Speaker 8: hundred billion dollars in revenue. So we are passing a
Speaker 8: massively regressive tax bill that does not return what the
Speaker 8: President is giving you on.
Speaker 2: That at a time. How many pages will this legislation be?
Speaker 5: I mean asking for John Tuckner.
Speaker 6: He's going to read it at the beach.
Speaker 9: It has already read aloud.
Speaker 8: It took something like fifteen and a half hours and
Speaker 8: it's nine hundred and forty pages.
Speaker 6: Forty okay, Henritta Trace.
Speaker 2: Thank you so much.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on a Corplay and Android
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: The patron out of Oxford University in Lbs, Ibrahim Abari
Speaker 2: joins this iconic city group with Villimbauder, Catherine Mann and others.
Speaker 2: Nathan Sheets and now with Absolute Strategy Research and working
Speaker 2: with Tina Fordham Fordham Global Foresight for a terrific brief. Yeah. Iber,
Speaker 2: First of all, your notes are way too long.
Speaker 6: Can you cut it half?
Speaker 2: I mean, just for starters.
Speaker 6: The heritage of Rabari.
Speaker 2: Economics and this plays off Villimbauder is an old world
Speaker 2: respect for the balance sheet. It's very non American to me.
Speaker 2: It's not foreign, it's just a different view across the water.
Speaker 2: The state of the American balance sheet or the guests
Speaker 2: on that balance sheet three or five years out.
Speaker 10: Well, I think the state of the American balance sheet
Speaker 10: is a tailor's two stories, and I think that's what's
Speaker 10: allowed asset prices to continue to do so well as
Speaker 10: they continue even as we enter this week. Private sector
Speaker 10: balance heats are the best we've seen for decades, and
Speaker 10: that's given the public sector a bit of an excuse
Speaker 10: to maybe use.
Speaker 6: That financial capital.
Speaker 10: So our concerns, my concerns are predominantly about the health
Speaker 10: of the public sector balance heat to some degree, how
Speaker 10: we can keep the two together in a way that
Speaker 10: keeps the economy running and pumping. But if I'm honest
Speaker 10: with you, I am concerned. I do think we will
Speaker 10: run into a major point of tension in the next
Speaker 10: couple of years, and what we've heard from Congress over
Speaker 10: the last week or so probably adds to these concerns
Speaker 10: rather than reduce it them.
Speaker 7: So given that backdrop here, at least in the near term,
Speaker 7: it feels like the market is expecting this Fed to
Speaker 7: cut rates, maybe not a lot, but on maybe a
Speaker 7: couple of times this year.
Speaker 5: Does that seem reasonable to you?
Speaker 6: It does? It does seem reasonable.
Speaker 8: Now.
Speaker 10: I should say I came into the year thinking the
Speaker 10: FED is going to cut a lot, and because it
Speaker 10: was facing going to face the perfect storm from much
Speaker 10: weaker growth than people expected, a very weak stock market,
Speaker 10: which of course at the beginning of the year we had,
Speaker 10: and one point that often comes up, the FED nominally
Speaker 10: is still very restrictive, so it's starting at a very
Speaker 10: high point.
Speaker 5: Now.
Speaker 10: Most of these things have played out, with one big exception,
Speaker 10: of course, which is that the stock market rebounded with
Speaker 10: a vengeance. As you're already remarked upon. Now, the reason
Speaker 10: why I think the FED is probably wise to cut
Speaker 10: at least from an insurance standpoint a little bit, is
Speaker 10: because the economy has been showing signs of signs of
Speaker 10: slowing more signs of slowing than we've seen for a
Speaker 10: while in some areas pretty concerning signs of slowing and
Speaker 10: the label market and the housing market. So again, if
Speaker 10: you start from one one and a half points above neutral,
Speaker 10: you're probably better off cutting a little bit and then
Speaker 10: seeing where you are in a couple of months time.
Speaker 7: So you know, I don't know the economy is slowing,
Speaker 7: but I think we've taken recession off the table. I
Speaker 7: haven't heard that discussed in the last four or five months. Inflation,
Speaker 7: I think surprisingly to most people, we've not seen that
Speaker 7: really create too much into the economy. So it seems
Speaker 7: like maybe the Fed's kind of got this continued soft landing.
Speaker 5: I guess.
Speaker 10: I think there's a narrow path, and I think your
Speaker 10: your remarks are very much on point that we're facing
Speaker 10: a bimode outlook for the US economy. For financial markets,
Speaker 10: what's maybe the single most interesting thing across financial markets
Speaker 10: right now is how differently equity markets and the bond
Speaker 10: market are looking at the economy.
Speaker 6: And I don't just mean at.
Speaker 10: The headline level, but the evolution of interest rates over
Speaker 10: the last couple of weeks versus how cyclicals have.
Speaker 6: Done within equities. It's one of the bigger divergences.
Speaker 10: And one of the reasons I highlight, other than that
Speaker 10: I think people haven't taken enough notice of it, is
Speaker 10: that that diversion does sometimes show up at cyclical inflection points.
Speaker 10: So it's not totally clear, but bonds on average or
Speaker 10: a better predictor of what happens at these inflection points.
Speaker 6: So when I.
Speaker 10: Hear you speak, I in my head, I'm playing through
Speaker 10: is this Goldilock scenario going to continue to play out?
Speaker 10: Or are we facing a scenario? Actually, we're facing a
Speaker 10: bit of a cliff not too far from now.
Speaker 2: Extended conversation with Ibrahim Avari of Absolute Strategy Research. We
Speaker 2: welcome all of you on your commute here last day,
Speaker 2: the second quarter commute across America. Good morning, ninety nine
Speaker 2: one FM in Washington. Was Nathan in today?
Speaker 5: I don't know, I mean, you know, yes?
Speaker 11: He?
Speaker 2: Oh, he was in today?
Speaker 5: Okay, he darkened the door.
Speaker 2: Nathan Hager at ninety nine one FM in Washington. On
Speaker 2: YouTube subscribe to Bloomberg Podcast. Absolutely humbled by the last
Speaker 2: six months of the YouTube buildout. I'm learning every day
Speaker 2: about this strange digital ballet. I want to go back
Speaker 2: to the FED, which I usually don't want to do,
Speaker 2: but I think it's so important, Ibraham. They are trapped
Speaker 2: in this cycnical inflection point and maybe bimodal a ambiguous
Speaker 2: outcome by having to justify a trend of rate cuts.
Speaker 2: Why can't they just do one and done and the
Speaker 2: chairman come out and say, we're cutting interest rates at
Speaker 2: the next meeting. We're not sure where we're going, but
Speaker 2: we're just bringing it in for one. Where did that
Speaker 2: surgical view disappear to? Oh?
Speaker 10: I think they should take your advice, to be quite frankly,
Speaker 10: And if you go back to the last two press conference,
Speaker 10: at least the perspective they had to defend and justify
Speaker 10: was not considering cutting not easy.
Speaker 6: And I think that's.
Speaker 10: Both because the way they've been communicating over the last
Speaker 10: six months is very different from how Chepaw used to communicate,
Speaker 10: including of course a year ago where they suddenly started
Speaker 10: cutting grades pretty pretty sharply. But I think the right
Speaker 10: thing to do would be exactly as you say, take
Speaker 10: restrict to rates and the slowing of the economy. Say
Speaker 10: I'm cutting now, but if we see inflation pickup, we
Speaker 10: can migrate again.
Speaker 2: They where in our history do we blame John Taylor
Speaker 2: out at Stanford'll be where who do we blame for
Speaker 2: this idiocy that if we raise or cut we're establishing
Speaker 2: a trend. I just don't get it.
Speaker 10: I don't I don't have the answer. But I've had
Speaker 10: that conversation with Central makers many times. I've had a
Speaker 10: very similar conversation with the ECB.
Speaker 2: Philip Blaine's say, working with the guarded ECB.
Speaker 10: I think at some level they are They're open to
Speaker 10: the idea of you can reverse when when the facts change,
Speaker 10: they can change their mind.
Speaker 6: In practice, that does tend to come.
Speaker 10: With a loss of credibility that they all fear were
Speaker 10: accused of flip flopping, of changing the narrative. I think
Speaker 10: it's the other way around again, maybe because of my
Speaker 10: tutor Lich with Villain, who was never shied to change
Speaker 10: his mind when the facts change. So I think that's
Speaker 10: what Chapwell would do. I think it would in fact
Speaker 10: improve his credibility, which I think has suffered a little
Speaker 10: bit because he has had difficulty to explain why the
Speaker 10: FED has been somewhat slow.
Speaker 7: Right Bloomberg Dollar Index, it's down almost ten percent from
Speaker 7: its earlier earlier this year high, what's going on with
Speaker 7: the dollar.
Speaker 10: So we had a perfect storm for the dollar early
Speaker 10: on the DA And again it's a similar story to
Speaker 10: what I said about the US economy and rates. You've
Speaker 10: started from a very high starting point, you had disruptive policy,
Speaker 10: and then investors globally just had to diversify into some
Speaker 10: degree re rate the riskiness of US investments. Now that's
Speaker 10: gone a fair amount of the way, and FX hedging
Speaker 10: has played its part.
Speaker 6: Where we are now is a lot more what I
Speaker 6: would call.
Speaker 10: Cross currents, because what you're actually see in the last
Speaker 10: couple of weeks of dollar weakening that's.
Speaker 6: Been alongside US rates.
Speaker 10: It's the bond market pricing in weaker growth in the US.
Speaker 10: It's no longer US equities underperforming global acuities. It's no
Speaker 10: longer the riskiness of the US that stands out. It's
Speaker 10: really the sick cyclical sole down And therefore again we're in.
Speaker 6: A bimodel near term outlook.
Speaker 10: I see dollar weakness, I would be a lot more
Speaker 10: selective in how I would express it within markets, and
Speaker 10: we'll learn a bit more this week, so I think
Speaker 10: that'll have an impact.
Speaker 2: On the driver. I mean, Abrahm, I'm looking at a
Speaker 2: thirteen year dollar trend. Folks, you can do this on
Speaker 2: the Bloomberg Professional Service BBDXY Index, GPL Space M Space
Speaker 2: role than I say it too perfectly for those driving
Speaker 2: the answer is I got a strong dollar trend. I'm
Speaker 2: down one point five standard deviations off the trend back
Speaker 2: thirteen years. Have we finally broken the strong dollar trend?
Speaker 10: That's my view right now, and I think, quoting Chair Powell,
Speaker 10: you have to be humble and nimble in a world
Speaker 10: where we wake up to news, you know, pretty pretty comedy.
Speaker 10: But my view is we have reached that inflection point
Speaker 10: in the dollar, and actually, depending on the measure that
Speaker 10: you use, we may have reached it in twenty twenty
Speaker 10: two or we reached it earlier this year. So I
Speaker 10: do think we're the big of a long term, significant downtrend.
Speaker 10: We probably have another ten percent or so to go
Speaker 10: at least. The question is is that going to continue
Speaker 10: as consistently as it happened so far this year? I
Speaker 10: have my doubts, but over a longer period of time,
Speaker 10: I think there's a lot more to come.
Speaker 2: How do you respond to stagflation or to a persistent
Speaker 2: higher nominal GDP?
Speaker 10: So I I see a near term threat.
Speaker 6: It's even you have to talk on radio.
Speaker 5: We're toasted.
Speaker 2: If there's silence continue.
Speaker 10: I would say I see a near term threat, including
Speaker 10: what we may face in the US in the next
Speaker 10: six months. Again, the real side week inflation is going
Speaker 10: to pick up maybe half a percent, maybe a percent
Speaker 10: over the next year. As a durable phenomenon, I don't
Speaker 10: think it really it is likely to play out.
Speaker 7: I think weaker growth will weigh on probus American exceptionalism.
Speaker 7: Is that a thing in the past.
Speaker 10: I think in some ways yes, and I think it's
Speaker 10: for good reasons and for bad I think at this
Speaker 10: moment we should acknowledge that the impact it has had
Speaker 10: on the rest of the world. The administrations and the
Speaker 10: policy impacts have been partly benign. My own country Germany
Speaker 10: waking up to the need to upgrade its infrastructure to
Speaker 10: spend more on defense. So the changing balance of fiscal
Speaker 10: spending globally, I think that's an element of changing impacts
Speaker 10: on US exceptionalism.
Speaker 7: What's the biggest challenge for this federal Reserve?
Speaker 5: Right here?
Speaker 7: Where's the mistake you think they could make here?
Speaker 10: So the biggest mistake, from my point of view, is
Speaker 10: that they stay as data independent as they have been,
Speaker 10: and that they don't communicate why they operate differently from
Speaker 10: where they were in twenty twenty.
Speaker 6: Four, and as a result, maybe act too late.
Speaker 10: So Chapal's greatest fear throughout most of his tenure was
Speaker 10: that the FED would be too late in acting. I
Speaker 10: think they're at risk of that. Again, that's not to
Speaker 10: dismiss that we have in a bubbling inflation problem, but
Speaker 10: again they can address that by then reacting as they
Speaker 10: face more of it.
Speaker 5: You're mentioning your Germany.
Speaker 7: Your Germany has stepped up in a big way in
Speaker 7: terms of stated plans to invest in its military and
Speaker 7: in its infrastructure. Do you think other European countries can
Speaker 7: do the same. We have confidence that Germany can do it.
Speaker 7: How about some of the other countries in Europe it
Speaker 7: seems I don't know.
Speaker 10: I think Germany, if I can use that word again,
Speaker 10: is a little exceptional in that regard, and that that's
Speaker 10: both because it faces a bigger.
Speaker 6: Deficit, so it's underinvested in infrastructure.
Speaker 10: And in defense, and it has a still healthier balance
Speaker 10: sheet even though it's a little flattered by You know,
Speaker 10: how we treat pension spending in Europe, so I think
Speaker 10: it's much more of a German story. When it comes
Speaker 10: to financial markets, it has its spillover so though it
Speaker 10: does mean that spreads between German bombs and the rest
Speaker 10: of the European bond market are going to continue to narrow,
Speaker 10: and it is a sea change in the European bondmarkt.
Speaker 2: Help me with the dollars, then, Paul's got us in
Speaker 2: a trend of weaker dollars nine percent? Should we I mean,
Speaker 2: is it a harmonic average? Now we go down four
Speaker 2: point five percent? I mean, is is the trend in place?
Speaker 6: I think the trend is in place in the short term.
Speaker 10: I think we need to watch what happens with the
Speaker 10: US data to reinforce it. But also I see more
Speaker 10: opportunity in special places in the riskier part of the spectrum.
Speaker 10: If the world is okay, the dollar will sell off
Speaker 10: more against the Australian dollars.
Speaker 2: We don't care what europe euro one twenty.
Speaker 10: I think we'll see euro one twenty this year at
Speaker 10: this at this very moment, I would not buy euros.
Speaker 5: I don't know.
Speaker 7: I mean, tom word one spot one seven already happen
Speaker 7: to parody. I was looking for the Tom King parody
Speaker 7: there on the earth are looking for that.
Speaker 4: Those tastes are over.
Speaker 2: I think it has really changed. I mean, folks to
Speaker 2: look at the Bloomberg launch pad, the red and green
Speaker 2: blinking it is. I can assure you I had no
Speaker 2: concept the first week of January that we'll be looking
Speaker 2: at this now. Particular levels on Future sixty two hundred,
Speaker 2: YEP sixty two fifty on SPX forty four, three hundred
Speaker 2: and down twenty two thousand, eight hundred of six tenths
Speaker 2: of a ibrah Mravari, thank you so much. Just brilliant,
Speaker 2: absolute strategy at Research Ashure working at Fordham Global Foresay.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.
Speaker 2: A really important conversation. We are focused on capitalism. We
Speaker 2: are focused on all that we do in economics, finance
Speaker 2: and investment, and to have someone with a pedigree of
Speaker 2: Hampshire College in the New School in Lower Manhattan is important.
Speaker 2: Heather Boushe showed public service with President Biden, among others.
Speaker 2: She's president and CEO of the Washington Center for Equitable Growth.
Speaker 2: I can't say enough right now about the mystery of
Speaker 2: her Democratic Party on our website, how the econmic and
Speaker 2: political geography of the United States fuels right wing populism
Speaker 2: and what the Democratic Party can do about it. Heather,
Speaker 2: why are the Democrats silent in this June of twenty
Speaker 2: twenty five?
Speaker 11: Democrats silent? Well, I hear a lot coming from Democrats
Speaker 11: right now. I mean, certainly, the thing that we have
Speaker 11: all been watching over the past week and of course
Speaker 11: NonStop all weekend is what the Republicans have been doing
Speaker 11: with their budget bill that is going to give massive
Speaker 11: tax cuts at the top and you know, strip income
Speaker 11: and benefits from folks you know, on the bottom half
Speaker 11: of the income distribution. I know that, you know, for example,
Speaker 11: Check Schumer made them actually read that bill out loud
Speaker 11: and hopefully have to think about each and every action
Speaker 11: that they're doing. But you know, this is a huge, huge,
Speaker 11: huge moment for the country, huge moment for the US economy.
Speaker 2: But Heather, what's so important to me here is does
Speaker 2: the Democratic Party witness Schumer's comments this weekend. Does it
Speaker 2: move to the left and liberal progressive or does it
Speaker 2: try to move to a Democratic Party center of old.
Speaker 11: So here's the thing. When I look at what this
Speaker 11: legislation that the Republicans are jamming through the Senate right
Speaker 11: now will do. Let's say that this passes, we're going
Speaker 11: to be left with the world where not only have
Speaker 11: you stripped the federal government of enormous human capital and
Speaker 11: talent and capacity, but we will put the US economy
Speaker 11: on a long term trajectory of lack of competitiveness where
Speaker 11: we're going to see following and Democrats, Democrats, let me
Speaker 11: just finish this point. Democrats are going to be faced
Speaker 11: with an economy that will be in many ways in shambles.
Speaker 11: And so I think that's where we need to start
Speaker 11: our conversation. What do we need to do? What will
Speaker 11: we need to do to get the economy back on track?
Speaker 11: And that's going to require thinking about some fundamental things.
Speaker 11: The crisis of climate change is not going going away.
Speaker 2: I no, but Heather, you didn't answer my question. Should
Speaker 2: the Democrats witness the election in New York City for
Speaker 2: mayor should they move towards Mumdani in a liberal progressive
Speaker 2: Democratic party or do they need to refine the center.
Speaker 11: They need to find a place where they can obviously
Speaker 11: get enough votes, but that is going to be going
Speaker 11: back to economic basics, making sure that we have an
Speaker 11: economy that thrives and delivers for the broad middle, which
Speaker 11: is exactly what won't be happening. So when you think
Speaker 11: about what they're going to need to do, We're going
Speaker 11: to need to make in significant investments in clean energy
Speaker 11: for example. We're going to be needing to make significant
Speaker 11: investments in education and healthcare because right now we're about
Speaker 11: to throw somewhere between twelve and upwards maybe seventeen million
Speaker 11: people off of Medicaid. That's going to require significant public investment.
Speaker 11: That's what Democrats are going to be facing is they
Speaker 11: confront the midterms and the twenty twenty eight election. So
Speaker 11: whether or not that is super ath inrist, that's where
Speaker 11: the party is going to need to be because this
Speaker 11: Republican budget bill puts the economy and the humans in
Speaker 11: this country on a downward spirral right, and so how
Speaker 11: we're going to reconfigure and come back from that that
Speaker 11: has to be job number one.
Speaker 7: Heather what did you And let me put another head
Speaker 7: of the Democratic Party nationally in Washington, DC. View the
Speaker 7: Democratic primary here in New York City with mister mom
Speaker 7: Dominie having that surprising win over Governor Cuomo.
Speaker 11: I mean, I wasn't following so much. I was really
Speaker 11: following closely what was happening with the budget bill. But
Speaker 11: I think that they see that as, or at least
Speaker 11: what I have read, they see that as an indication that, oh,
Speaker 11: you know, the Democrats are perhaps going too left. But
Speaker 11: here's the thing New York City is, you know, it's
Speaker 11: an important Democratic constituency. The people in New York. One
Speaker 11: of the most exciting things that I saw coming out
Speaker 11: of that election was how many young people got out
Speaker 11: and voted, and how excited they were about a candidate
Speaker 11: that they could believe in. And he was focusing Mondamin
Speaker 11: was focusing on bread and butter, kitchen table issues, lowering
Speaker 11: the cost of housing, making sure that groceries are affordable,
Speaker 11: making sure that childcare is accessible. These are exactly the
Speaker 11: kinds of things that we saw at the federal level
Speaker 11: in the last election. Well, President Trump ran wait, let
Speaker 11: me just finish. President Trump ran on a platform of
Speaker 11: lowering costs for Americans. Instead, what he is doing is
Speaker 11: making our healthcare mores more unaffordable. He's making it likely
Speaker 11: inaccessible for rural Americans to access healthcare at all, making
Speaker 11: our energy costs up. And so I think that what
Speaker 11: you saw in New York City was those kitchen table
Speaker 11: bread and butter economic issues coming to the fore with
Speaker 11: an enthusiasm for a new candidate there.
Speaker 2: Well, ha, there one final question. Quickly, will the rich
Speaker 2: people leave in New York City as the rich people
Speaker 2: are leaving the United Kingdom right now?
Speaker 11: Well, it's uncleared me. Where those rich people are going
Speaker 11: to go? Manhattan is amazing. Now, here's the thing. If
Speaker 11: you are basically saying that people in a community need
Speaker 11: to accept no healthcare, no nutrition assistance for the poor,
Speaker 11: no good jobs, just so they can have some rich
Speaker 11: people in their community, what are those rich people doing
Speaker 11: for them? That is the question that we are asking.
Speaker 11: What are they giving back? Are they investing in good
Speaker 11: jobs in their community? Are they making sure that that
Speaker 11: community has access to the things they need? So that
Speaker 11: is the question that I think all of us should
Speaker 11: be asking of America's wealthiest. We live in one of
Speaker 11: the richest countries of the world has ever seen. There
Speaker 11: are all of these billionaires, but are they actually doing
Speaker 11: anything that is good for the economy and improving middle
Speaker 11: class incomes?
Speaker 2: Heather, thank you so much, suld Doctor Bische, of course,
Speaker 2: with the Washington Center for Equitable Growth through Public Service
Speaker 2: to the Biden In administration.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android
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Speaker 1: Just say Alexa, play Bloomberg eleven thirty.
Speaker 2: The newspapers only Lisa Mateo can do it.
Speaker 4: Lisa, good morning.
Speaker 12: All right, we'll start with the Wall Street Journal. So
Speaker 12: they're talking about Halloween fans. They just can't wait till October.
Speaker 12: So there's this new holiday tradition. It starts this month.
Speaker 12: It's called Summer Ween. Okay, so it first started to
Speaker 12: catch on last summer.
Speaker 6: It's grown even bigger.
Speaker 12: But the thing is, retailers are really starting to cash
Speaker 12: in on this Summer Ween. So you have, for example,
Speaker 12: TJ max As decorations. It's Frankenstein on a beach chair skeletons.
Speaker 12: It's excuse to people to spend money in the retailers.
Speaker 12: They have blankets with like skeletons and bikinis, and towns
Speaker 12: are getting into it doing these summer ween Hola celebrations,
Speaker 12: like they're carving watermelons like jack O'Lanterns, They're having parades
Speaker 12: and people dressing up. So it's starting to become a thing.
Speaker 12: I don't know, I haven't I've seen it in the stores.
Speaker 7: I haven't seen it in that that are just so
Speaker 7: in the hot Halloween.
Speaker 6: Yes, yes, they're fanatics. They're a huge following.
Speaker 12: So they're saying this is going to start, you know,
Speaker 12: becoming something bigger. But they're also saying because of a
Speaker 12: certainty around tariffs and pricing, people want to buy these
Speaker 12: things earlier because they don't know how much the prices
Speaker 12: on some of these hallowing items are going to increase.
Speaker 12: That's another strategy they have, but it could be coming soon.
Speaker 12: This one, Paul, is up your alley because I know
Speaker 12: you're a fan of the Cracker barrel. Okay listens the
Speaker 12: Wall Street Journal, you know, right, it's known for the
Speaker 12: old Country charm. People like it because they have the
Speaker 12: decor like you feel like you're in grandma's house. It's
Speaker 12: like the antiques and the bottles and the farming tools,
Speaker 12: all the chatch keys everywhere. But Cracker Bower are saying,
Speaker 12: you know what, we want to declutter and we want
Speaker 12: to make things different.
Speaker 5: Yeah.
Speaker 7: This photo they have there of the remodeled one in Tennessee,
Speaker 7: Holy cow, that's different going for a new budy. I
Speaker 7: don't know.
Speaker 12: It's a good question. I mean, they're they're trying and
Speaker 12: maybe they're trying to attract a younger audience. I don't
Speaker 12: know if that's exactly exactly. Maybe that's what they're trying
Speaker 12: to do, but they're just saying that. It's a debate
Speaker 12: between workers and people go to the restaurant. They're saying
Speaker 12: they don't want it summer people saying, well, you know what,
Speaker 12: it cleans things up a bit, you know, makes things
Speaker 12: less cluttered.
Speaker 7: And it does. I mean it looks good, but boy
Speaker 7: is it different.
Speaker 12: But it's completely because I mean you walk into a
Speaker 12: Cracker barrel and you know, there's like clutter everywhere, like
Speaker 12: that's their thing.
Speaker 7: Though people love it, but I'm guessing this is an
Speaker 7: audience that does not like change.
Speaker 5: So see how this plays out.
Speaker 12: Yes, exactly, exactly okay, and oh and they're getting rid
Speaker 12: of the rocking chairs and they're pudding. I next, and
Speaker 12: go there Squid Game. I don't know if either of
Speaker 12: you want.
Speaker 2: In the offspring watch it?
Speaker 9: Really?
Speaker 7: Okay?
Speaker 12: Okay, see my kids watch it too, and for me, yes,
Speaker 12: so I thought it was kind of violent.
Speaker 7: But okay.
Speaker 12: So this is the third season. So it premiered this
Speaker 12: past Friday. It topped like you know, global rankings on
Speaker 12: Netflix and all countries did great. But the thing is
Speaker 12: is that they had rankings about how the audience liked it,
Speaker 12: and the audience didn't like it as much for this season.
Speaker 12: So that's why you have Squid Game stocks. They're starting
Speaker 12: to sync, you know, like Artist Studio, South Korea based
Speaker 12: firm Texter Dexter Studios. They're all sinking. But it's still
Speaker 12: I mean, it's still the most watch show of all time.
Speaker 2: For Netflix into the summer. Does streaming have momentum.
Speaker 7: Yes, it's just it's secular momentum. It's not seasonal. It's
Speaker 7: just secular change taking place, just like cable television, you know,
Speaker 7: displaced broadcast television to some degree, it's even more pronounced
Speaker 7: here with streaming versus kind of what most people grew
Speaker 7: up with was a basic cable and broadcast and all
Speaker 7: that kind of stuff.
Speaker 5: So absolutely fast, yep.
Speaker 2: I I have no idea where we are in five
Speaker 2: years now. We're doing the digital thing here, folks, and
Speaker 2: I've got an immense respect for people thinking as hard
Speaker 2: as they can, Like, what is the impact of YouTube
Speaker 2: about five years?
Speaker 3: Yes?
Speaker 7: Well, I mean podcast at least was saying squid games
Speaker 7: the biggest thing in normal, wouldn't I don't know what
Speaker 7: it is.
Speaker 5: I mean generation you couldn't say that.
Speaker 7: Ago a generation though, you couldn't say that whatever it
Speaker 7: was you know that was. It's just so dispersedpers Listen
Speaker 7: to Matato, Thank you so much.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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