1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,440 --> 00:00:40,440 Speaker 1: The FMC widely expected to hold read steady, but it 11 00:00:40,479 --> 00:00:44,400 Speaker 1: does plan on updating its economic forecast. Krishna guhov evercore 12 00:00:44,479 --> 00:00:47,839 Speaker 1: Isi joins us. Now, Krishna, are we expecting to hear 13 00:00:47,880 --> 00:00:50,559 Speaker 1: absolutely anything other than we are in a dark room 14 00:00:50,560 --> 00:00:52,840 Speaker 1: with a blindfold, bumping into chairs, just like the rest 15 00:00:52,840 --> 00:00:53,040 Speaker 1: of you. 16 00:00:54,840 --> 00:00:57,920 Speaker 3: So I'm afraid you probably are going to get a 17 00:00:57,920 --> 00:01:01,000 Speaker 3: lot more wait and see, lot more to learn. 18 00:01:01,960 --> 00:01:02,200 Speaker 4: You know. 19 00:01:03,160 --> 00:01:07,640 Speaker 3: That sort of guidance from fed chair how consistent with 20 00:01:07,720 --> 00:01:12,160 Speaker 3: the idea that unless something radical changes, not only is 21 00:01:12,200 --> 00:01:15,319 Speaker 3: nothing happening at this month's meeting, but nothing's going to 22 00:01:15,360 --> 00:01:19,679 Speaker 3: happen in July either and then really in September we 23 00:01:19,800 --> 00:01:22,720 Speaker 3: have that decision point for the FED as it's seen 24 00:01:22,880 --> 00:01:25,319 Speaker 3: enough to want to cut right to that point or not. 25 00:01:25,840 --> 00:01:28,520 Speaker 3: I think what the market will be focused on at 26 00:01:28,560 --> 00:01:31,840 Speaker 3: this meeting it's really the extent of the updates in 27 00:01:31,880 --> 00:01:35,120 Speaker 3: the Fed's forecast, and in particular whether policy makers are 28 00:01:35,240 --> 00:01:39,280 Speaker 3: already shifting towards just a one cut baseline rather than 29 00:01:39,319 --> 00:01:40,560 Speaker 3: two cuts for this year. 30 00:01:41,000 --> 00:01:43,320 Speaker 1: Christina, how much does it really matter? Because right now 31 00:01:43,360 --> 00:01:45,800 Speaker 1: the FED seems highly uncertain, very much on the fence. 32 00:01:46,040 --> 00:01:50,320 Speaker 1: Their a sort of strategic analysis is shape shifting depending 33 00:01:50,440 --> 00:01:53,280 Speaker 1: on the day, and we're seeing data that hints at 34 00:01:53,320 --> 00:01:55,960 Speaker 1: something of a labor market softening that's caused a lot 35 00:01:55,960 --> 00:01:58,320 Speaker 1: of people to be a little bit concerned. I'm talking 36 00:01:58,360 --> 00:02:02,120 Speaker 1: about continuing claims to get retail sales in just about 37 00:02:02,160 --> 00:02:04,880 Speaker 1: just under two hours time. How much is that almost 38 00:02:04,960 --> 00:02:06,640 Speaker 1: more important than the rhetoric that we hear out of 39 00:02:06,640 --> 00:02:07,840 Speaker 1: the FED right now? 40 00:02:08,760 --> 00:02:10,040 Speaker 4: So I think you're certainly right. 41 00:02:10,120 --> 00:02:12,960 Speaker 3: The first of all, you know, the real action here 42 00:02:13,000 --> 00:02:16,000 Speaker 3: is on the Trump economic agenda above all trade, but 43 00:02:16,120 --> 00:02:20,640 Speaker 3: also immigration, fiscal you mentioned, you know, regulatory other policies, 44 00:02:20,800 --> 00:02:22,919 Speaker 3: and the FED to a large extent is responding to 45 00:02:22,960 --> 00:02:26,960 Speaker 3: those shocks and learning from the economic data how they 46 00:02:27,000 --> 00:02:32,239 Speaker 3: are impacting economic activity. So yes, you know the FED 47 00:02:32,560 --> 00:02:35,480 Speaker 3: is going to take its queue from the first the 48 00:02:35,520 --> 00:02:39,120 Speaker 3: path of policies like trade policy. Secondly, how this is 49 00:02:39,160 --> 00:02:43,280 Speaker 3: builting through the macro data, the market data. But it 50 00:02:43,360 --> 00:02:47,840 Speaker 3: does matter what reaction function the FED is sketching out 51 00:02:48,040 --> 00:02:52,680 Speaker 3: that it will apply in these different economic circumstances. You know, 52 00:02:52,840 --> 00:02:55,520 Speaker 3: there's a relatively easy case where the labor market doesn't 53 00:02:55,520 --> 00:02:57,960 Speaker 3: weave it at all. Why are you cutting in a 54 00:02:58,120 --> 00:03:02,600 Speaker 3: period when inflation is going to move up under these tariffs. Conversely, 55 00:03:03,000 --> 00:03:05,480 Speaker 3: if the wheels come off the bus in the labor market, 56 00:03:05,760 --> 00:03:08,200 Speaker 3: for sure, we know they're going to be cutting even 57 00:03:08,240 --> 00:03:12,919 Speaker 3: though there's going to be elevated inflation, provided the expectations 58 00:03:12,960 --> 00:03:15,280 Speaker 3: remain be well behaved. To say, all right, now, the 59 00:03:15,400 --> 00:03:18,440 Speaker 3: question is in this middle zone, in this ray zone, 60 00:03:18,720 --> 00:03:22,040 Speaker 3: how are they thinking about, you know, what would constitute 61 00:03:22,040 --> 00:03:25,920 Speaker 3: a materially enough weakening of the labor market to want 62 00:03:26,000 --> 00:03:29,880 Speaker 3: to cut to lean against that getting any worse. And 63 00:03:30,240 --> 00:03:32,920 Speaker 3: also what do they think they're learning from the most 64 00:03:33,000 --> 00:03:37,240 Speaker 3: recent data, which certainly is imperfect in the way you describe. 65 00:03:37,280 --> 00:03:40,920 Speaker 3: But I'd say for May overall, top tier employment report 66 00:03:41,160 --> 00:03:44,560 Speaker 3: and inflation both a little more benign than might have 67 00:03:44,600 --> 00:03:45,360 Speaker 3: been expected. 68 00:03:45,600 --> 00:03:47,440 Speaker 5: Hey, Chris nuts, Chris, can you talk of just for 69 00:03:47,480 --> 00:03:50,360 Speaker 5: a moment about kind of this divergence between the market 70 00:03:50,440 --> 00:03:53,040 Speaker 5: rate and the policy rate. We've always joked in our 71 00:03:53,080 --> 00:03:54,960 Speaker 5: work that who needs feed speakers when you have the 72 00:03:54,960 --> 00:03:57,960 Speaker 5: two year yields? Is there a level on the two 73 00:03:58,000 --> 00:04:00,840 Speaker 5: year yield down where you'd say, Okay, the Fed is 74 00:04:00,880 --> 00:04:02,880 Speaker 5: now behind the curve and kind of needs to get 75 00:04:02,920 --> 00:04:06,120 Speaker 5: back in the easing cycle, maybe faster than you thought. 76 00:04:08,320 --> 00:04:11,400 Speaker 3: Yeah, So that's a very good important distinction to draw, 77 00:04:11,840 --> 00:04:15,800 Speaker 3: right the Fed obviously it sets the overnight funds rate, 78 00:04:15,880 --> 00:04:18,480 Speaker 3: but it's the two year, five, ten, and so on 79 00:04:18,800 --> 00:04:20,960 Speaker 3: rates that are much more important for the economy as 80 00:04:20,960 --> 00:04:24,240 Speaker 3: a whole. And of course those will also embed information 81 00:04:24,520 --> 00:04:27,800 Speaker 3: as to how market protestants are thinking about the outblook. 82 00:04:28,080 --> 00:04:30,599 Speaker 3: What I would say is that the Fed doesn't try 83 00:04:30,640 --> 00:04:32,160 Speaker 3: to micromanage, you. 84 00:04:32,120 --> 00:04:33,279 Speaker 4: Know, the two year yield. 85 00:04:33,839 --> 00:04:36,359 Speaker 3: It couldn't even if it wanted to. And so I 86 00:04:36,360 --> 00:04:38,360 Speaker 3: don't think that it's so wildly out of whack right 87 00:04:38,360 --> 00:04:40,800 Speaker 3: now with what Fed officials might be thinking on a 88 00:04:40,960 --> 00:04:46,400 Speaker 3: probability weighted basis, because remember, the market isn't just pricing 89 00:04:46,440 --> 00:04:49,320 Speaker 3: the baseline case, but they're pricing a range of risks, 90 00:04:49,320 --> 00:04:51,880 Speaker 3: including the risk that we do after all, end up 91 00:04:51,880 --> 00:04:54,400 Speaker 3: falling into a recession of bed has to come a lot. 92 00:04:54,600 --> 00:04:56,880 Speaker 3: So right now I think the fairly comfortable. So to 93 00:04:56,960 --> 00:04:58,760 Speaker 3: let the market operates a little bit of an automatic 94 00:04:58,839 --> 00:05:02,720 Speaker 3: stabilizer going down in the market when the news is 95 00:05:02,760 --> 00:05:05,960 Speaker 3: weak at rates moving up when the news is stronger 96 00:05:06,080 --> 00:05:09,000 Speaker 3: or there's a signs of some more inflation pressure. Are 97 00:05:09,040 --> 00:05:11,719 Speaker 3: they're not yet at a point where they would feel 98 00:05:11,760 --> 00:05:15,279 Speaker 3: the need to make a call on rates themselves in 99 00:05:15,360 --> 00:05:16,520 Speaker 3: terms of the FED fund set. 100 00:05:17,000 --> 00:05:18,800 Speaker 5: Christin, do you think kind of in the spirit of 101 00:05:18,839 --> 00:05:21,120 Speaker 5: the Fed might not make the same mistake, they might 102 00:05:21,160 --> 00:05:25,720 Speaker 5: make new mistakes. That two is coloring they're thinking too 103 00:05:25,760 --> 00:05:29,960 Speaker 5: much on this idea of kind of the inflation risk. 104 00:05:31,520 --> 00:05:33,599 Speaker 5: Maybe in a lot of respects, the appropriate word to 105 00:05:33,680 --> 00:05:36,640 Speaker 5: use today, and we talked about this earlier, is actually transitory, 106 00:05:36,960 --> 00:05:40,360 Speaker 5: given that Tarifa a one time price hike or oil. 107 00:05:40,520 --> 00:05:42,800 Speaker 5: Yet they're so reluctant to do that because of the 108 00:05:42,839 --> 00:05:44,039 Speaker 5: recent experience. 109 00:05:45,480 --> 00:05:48,520 Speaker 3: So look, at some level, I think you're right right, 110 00:05:49,040 --> 00:05:52,480 Speaker 3: everyone fights the last war, and the FED can be 111 00:05:52,520 --> 00:05:55,120 Speaker 3: guilty of that too. There's no question that the fact 112 00:05:55,120 --> 00:05:58,480 Speaker 3: that the FED, you know, went out with a transitory 113 00:05:58,480 --> 00:06:00,840 Speaker 3: story and lived a regret at last time is I 114 00:06:00,880 --> 00:06:03,839 Speaker 3: think coloring, and they're thinking some this time too. But 115 00:06:04,520 --> 00:06:08,320 Speaker 3: there are two important objective considerations there that do weigh 116 00:06:08,400 --> 00:06:11,680 Speaker 3: a bit in this direction. The first is that these 117 00:06:11,720 --> 00:06:14,080 Speaker 3: tariffs are not simply on end products. They're also on 118 00:06:14,200 --> 00:06:18,960 Speaker 3: intermediate goods inputs into US production. And it's those tariffs 119 00:06:19,000 --> 00:06:22,280 Speaker 3: on intermediate goods that the economic research tells US can 120 00:06:22,360 --> 00:06:25,160 Speaker 3: have more persistent effects on inflation, not just that a 121 00:06:25,240 --> 00:06:29,240 Speaker 3: one and done, certainly if you like tax increase effects. 122 00:06:29,400 --> 00:06:31,760 Speaker 3: The other thing is that the FED does have reason 123 00:06:31,800 --> 00:06:36,560 Speaker 3: to wonder where the inflation expectations, wage bargaining, price setting 124 00:06:36,560 --> 00:06:40,760 Speaker 3: behaviors are quite as well locked down now after several 125 00:06:40,839 --> 00:06:45,400 Speaker 3: years of elevated inflation as they work previously, And these 126 00:06:45,440 --> 00:06:48,919 Speaker 3: starting conditions economists will use the term initial conditions do 127 00:06:49,120 --> 00:06:52,279 Speaker 3: matter in terms of your risk management judgment. 128 00:06:52,640 --> 00:06:55,080 Speaker 1: Christian, just real quickly here. If I were cynical, I 129 00:06:55,120 --> 00:06:57,360 Speaker 1: would think the FED would just err on the side 130 00:06:57,400 --> 00:06:59,479 Speaker 1: of being more hawkish in order to keep some of 131 00:06:59,520 --> 00:07:02,680 Speaker 1: the INFLA and expectations restrained. Why isn't that the case 132 00:07:02,720 --> 00:07:05,120 Speaker 1: that we can basically expect them to say something that 133 00:07:05,240 --> 00:07:07,159 Speaker 1: is going to be hawkish, whether they think it or not. 134 00:07:09,560 --> 00:07:14,120 Speaker 3: So I think they are mildly hawkish. I mean, after all, 135 00:07:14,200 --> 00:07:17,480 Speaker 3: they're telling us that they judge that the current setting 136 00:07:17,600 --> 00:07:22,880 Speaker 3: of policy is moderately restrictive, modestly restrictive. The individual officials 137 00:07:22,960 --> 00:07:26,680 Speaker 3: use different terms, but restrictive And why is it restrictive? Well, 138 00:07:26,680 --> 00:07:30,040 Speaker 3: it's restrictive precisely because, as you say, they want to 139 00:07:30,080 --> 00:07:35,440 Speaker 3: try to lock down inflation expectations into the initial sticker 140 00:07:35,520 --> 00:07:38,960 Speaker 3: shock from the tariff price increases when that comes, and 141 00:07:38,960 --> 00:07:40,440 Speaker 3: as I said, it hasn't really shown up in May, 142 00:07:40,600 --> 00:07:42,960 Speaker 3: we do expect it to shop more over the next 143 00:07:43,240 --> 00:07:47,080 Speaker 3: few months near term. That's certainly hawkish, But I think 144 00:07:47,080 --> 00:07:50,760 Speaker 3: it's also important to understand that the FED recognizes that 145 00:07:50,880 --> 00:07:55,000 Speaker 3: a precondition for being able to cut rates in response 146 00:07:55,040 --> 00:07:57,720 Speaker 3: to labor market weakness at a time when spot inflation 147 00:07:57,840 --> 00:07:59,880 Speaker 3: will be high because of the task is that you 148 00:07:59,920 --> 00:08:02,280 Speaker 3: have to make sure that you've locked down the inflation 149 00:08:02,400 --> 00:08:03,600 Speaker 3: expectations first. 150 00:08:03,840 --> 00:08:05,760 Speaker 4: So yes, it's moving in order of priorities. 151 00:08:05,800 --> 00:08:09,880 Speaker 3: Lock down the expectations first, then look at business cycle management. 152 00:08:10,040 --> 00:08:12,240 Speaker 3: If they get the first right, they will have the 153 00:08:12,320 --> 00:08:14,800 Speaker 3: flexibility to do the second if it's needed. 154 00:08:14,920 --> 00:08:27,440 Speaker 1: Christy, who have ever CORESI thank you so much. Another 155 00:08:27,520 --> 00:08:30,440 Speaker 1: leg that could potentially offset some of the deficit concerns 156 00:08:30,440 --> 00:08:32,439 Speaker 1: are the tariffs and the revenue that could be possibly 157 00:08:32,480 --> 00:08:35,480 Speaker 1: brought into the United States. Former senior Trump trade advisor 158 00:08:35,559 --> 00:08:38,559 Speaker 1: Kelly and Shaw joining us now, Kelly an, I'm curious 159 00:08:38,600 --> 00:08:41,760 Speaker 1: what we've learned, in particular from the trade discussions over 160 00:08:42,000 --> 00:08:45,520 Speaker 1: as part of the G seven meetings in Canada, particularly 161 00:08:45,520 --> 00:08:47,160 Speaker 1: when it comes to the UK and the US. How 162 00:08:47,240 --> 00:08:48,160 Speaker 1: much of a template is that? 163 00:08:49,520 --> 00:08:52,079 Speaker 6: Yeah, good morning, and thanks so much for having me so. 164 00:08:52,320 --> 00:08:55,360 Speaker 6: The big announcement regarding trade at this year's G seven 165 00:08:55,520 --> 00:09:00,920 Speaker 6: was of course that UK deal on autoparts, on imports 166 00:09:00,960 --> 00:09:03,720 Speaker 6: and then aerospace, and then the executive order that the 167 00:09:03,720 --> 00:09:06,880 Speaker 6: White House issued last night to accompany the deal also 168 00:09:07,000 --> 00:09:09,439 Speaker 6: teased out that there would be relief on steal and 169 00:09:09,520 --> 00:09:11,640 Speaker 6: aluminum for the UK at some point in the future, 170 00:09:11,920 --> 00:09:13,800 Speaker 6: but the details still forthcoming. 171 00:09:14,120 --> 00:09:15,120 Speaker 4: So what this shows is. 172 00:09:15,120 --> 00:09:17,200 Speaker 6: The UK is still very much front of the queue, 173 00:09:17,280 --> 00:09:20,200 Speaker 6: ahead of any other government. The next closest we got 174 00:09:20,400 --> 00:09:24,360 Speaker 6: was an announcement by a prime minister of Canada that 175 00:09:24,440 --> 00:09:27,520 Speaker 6: the US and Canada would be negotiating a deal within 176 00:09:27,600 --> 00:09:29,960 Speaker 6: the next thirty days, which is a bit longer than 177 00:09:30,000 --> 00:09:32,840 Speaker 6: we were originally expecting, but at least it's an agreement. 178 00:09:32,480 --> 00:09:33,920 Speaker 4: To agree, Kelly. 179 00:09:33,960 --> 00:09:37,240 Speaker 7: And we also saw no deals from the likes of Japan, 180 00:09:37,360 --> 00:09:39,360 Speaker 7: for example, and I'm sure the prime minister there would 181 00:09:39,400 --> 00:09:42,000 Speaker 7: have liked to have seen something. And also the ability 182 00:09:42,040 --> 00:09:44,120 Speaker 7: to reach a deal was cut short with the President 183 00:09:44,200 --> 00:09:47,720 Speaker 7: leaving back to Washington, DC with a new hot war 184 00:09:47,840 --> 00:09:50,200 Speaker 7: for President Trump to deal with and to think about. 185 00:09:50,280 --> 00:09:53,280 Speaker 7: Does it show the limitations of deals being led by 186 00:09:53,280 --> 00:09:57,080 Speaker 7: the president? Will this ultimately slowed down the timeline? 187 00:09:57,480 --> 00:09:57,760 Speaker 4: Yeah? 188 00:09:57,960 --> 00:10:00,680 Speaker 6: And I thought what was interesting about the early departure, 189 00:10:00,720 --> 00:10:03,000 Speaker 6: and obviously there are things flaring up in the Middle 190 00:10:03,000 --> 00:10:07,320 Speaker 6: East that required his attention, was that the two deals 191 00:10:07,320 --> 00:10:09,480 Speaker 6: that I thought could come together this weekend that were 192 00:10:09,559 --> 00:10:11,920 Speaker 6: left on the cutting room floor, in addition to Japan, 193 00:10:12,080 --> 00:10:15,040 Speaker 6: would have been India and Mexico a deal on steel 194 00:10:15,080 --> 00:10:17,400 Speaker 6: and perhaps fentanyl. He was set to meet with both 195 00:10:17,440 --> 00:10:20,480 Speaker 6: Mody and shine Bomb today. Those meetings, of course won't happen, 196 00:10:21,320 --> 00:10:24,840 Speaker 6: but I do think what it shows is some competing priorities. 197 00:10:25,040 --> 00:10:27,520 Speaker 6: But look, he's got an entire team who is dedicated 198 00:10:27,559 --> 00:10:33,679 Speaker 6: to these trade negotiations USTR, Ambassador Greer, Secretary Bessett, Howard Lutnik. 199 00:10:33,880 --> 00:10:36,080 Speaker 6: They're not going to be as involved as some of 200 00:10:36,120 --> 00:10:39,040 Speaker 6: the defense and National security advisors will be on this 201 00:10:39,120 --> 00:10:42,280 Speaker 6: Iran is real conflict, So they are going to be 202 00:10:42,320 --> 00:10:43,959 Speaker 6: focused exclusively. 203 00:10:43,360 --> 00:10:44,319 Speaker 4: On these trade talks. 204 00:10:44,360 --> 00:10:46,840 Speaker 6: Now, of course, that doesn't mean that one doesn't influence 205 00:10:46,920 --> 00:10:49,840 Speaker 6: the other, but there are separate lanes in his administration 206 00:10:49,880 --> 00:10:50,880 Speaker 6: who can handle both. 207 00:10:51,400 --> 00:10:53,360 Speaker 7: Is it your assumption then that we do get those 208 00:10:53,400 --> 00:10:57,360 Speaker 7: deals that you mentioned that we're close to by July eighth. 209 00:10:57,480 --> 00:11:00,280 Speaker 6: Yeah, that is my expectation, and we really don't know 210 00:11:00,320 --> 00:11:03,240 Speaker 6: what's going to happen in July. We had Secretary Bessett 211 00:11:03,280 --> 00:11:06,640 Speaker 6: during a hearing last week teas that for countries negotiating 212 00:11:06,679 --> 00:11:09,880 Speaker 6: and good faith, they could see an extension of that period, 213 00:11:10,160 --> 00:11:12,560 Speaker 6: But the President hasn't said one way or the other. 214 00:11:12,920 --> 00:11:15,280 Speaker 6: And I think negotiators are going to seek to put 215 00:11:15,320 --> 00:11:17,800 Speaker 6: pressure on a number of governments where things are close 216 00:11:18,160 --> 00:11:19,960 Speaker 6: in order to try to get the deal. And we've 217 00:11:19,960 --> 00:11:23,680 Speaker 6: heard directly from the administration that India is close, and 218 00:11:23,760 --> 00:11:26,719 Speaker 6: my expectation is that Canada and Mexico are also very 219 00:11:26,760 --> 00:11:29,280 Speaker 6: much top of the queue. If for no other reason, 220 00:11:29,360 --> 00:11:32,360 Speaker 6: then there are two of the US's most important trading partners, 221 00:11:32,360 --> 00:11:35,240 Speaker 6: and we still do have sizable tariffs on both for 222 00:11:35,320 --> 00:11:38,480 Speaker 6: goods that don't currently qualify for those USMCA deals. So 223 00:11:38,600 --> 00:11:40,240 Speaker 6: that's going to be a big ticket item, not just 224 00:11:40,240 --> 00:11:42,480 Speaker 6: for the US, but also for Canada and Mexico. 225 00:11:42,800 --> 00:11:45,400 Speaker 1: Kelly and Shaw, a former senior Trump trade advisor, thank 226 00:11:45,440 --> 00:11:47,240 Speaker 1: you so much for being with us and the insights 227 00:11:47,600 --> 00:11:49,679 Speaker 1: on what's going on with trade. 228 00:11:59,760 --> 00:12:00,280 Speaker 8: US now. 229 00:12:00,480 --> 00:12:04,160 Speaker 1: Is Reza Palavi, the son of the last Shaw of Iran, Raza, 230 00:12:04,240 --> 00:12:06,160 Speaker 1: thank you so much for being with us. I want 231 00:12:06,160 --> 00:12:09,600 Speaker 1: to start with a question, are you in active discussions 232 00:12:09,640 --> 00:12:12,680 Speaker 1: in any way to return to Iran in a leadership 233 00:12:12,800 --> 00:12:16,720 Speaker 1: role if there is some sort of regime change in Iran? 234 00:12:18,720 --> 00:12:22,680 Speaker 9: Good morning to you and to my fellow competters following 235 00:12:22,679 --> 00:12:26,360 Speaker 9: this program and all of your audience. There is a 236 00:12:26,400 --> 00:12:30,440 Speaker 9: campaign for liberation that we've been committed to all these years. 237 00:12:30,880 --> 00:12:34,200 Speaker 9: The moment is approaching very fast. The regime is on 238 00:12:34,240 --> 00:12:37,440 Speaker 9: the verge of collapse. We see elements within the regime 239 00:12:37,880 --> 00:12:41,320 Speaker 9: already talking defections, they get in touch with us. We 240 00:12:41,440 --> 00:12:44,720 Speaker 9: see a leader who is now hiding in a bunker 241 00:12:44,840 --> 00:12:48,720 Speaker 9: like a rat, while many high elements are taking flight 242 00:12:48,800 --> 00:12:51,800 Speaker 9: from Iran. I think all of this is conducive to 243 00:12:51,880 --> 00:12:55,040 Speaker 9: something that may bay soon happen, and finally my fellow 244 00:12:55,040 --> 00:12:59,080 Speaker 9: competits will be able to overcome. And of course there's 245 00:12:59,120 --> 00:13:02,160 Speaker 9: a plan not only for this phase of our struggle, 246 00:13:02,160 --> 00:13:05,520 Speaker 9: which is liberation from this regime, but what happens right 247 00:13:05,559 --> 00:13:09,080 Speaker 9: next the transition to what we hope will culminate in 248 00:13:09,120 --> 00:13:12,040 Speaker 9: a democratic outcome. I have stepped in to leave this 249 00:13:12,120 --> 00:13:15,320 Speaker 9: campaign at the behalse of my compatriots. I have a 250 00:13:15,360 --> 00:13:18,240 Speaker 9: plan of action not only to manage this phase of transition, 251 00:13:18,720 --> 00:13:22,080 Speaker 9: but also to plan for Evan's future recovery and prosperity, 252 00:13:22,640 --> 00:13:24,280 Speaker 9: which has to go hand. 253 00:13:24,160 --> 00:13:26,160 Speaker 4: In love with our democratic GUIDEA just just. 254 00:13:26,160 --> 00:13:28,920 Speaker 1: A question here, who are the compatriots who've approached you 255 00:13:29,240 --> 00:13:35,239 Speaker 1: to try to harmless leadership push. 256 00:13:33,760 --> 00:13:36,520 Speaker 9: Well, I think that you have people who have vested 257 00:13:36,559 --> 00:13:39,760 Speaker 9: interest in preserving this regime, because the whole survival depends 258 00:13:39,800 --> 00:13:42,920 Speaker 9: on this regime all this time, whereas the millions of 259 00:13:42,920 --> 00:13:45,280 Speaker 9: my compatriots who were the first victim of this regime, 260 00:13:45,640 --> 00:13:48,600 Speaker 9: have paid all these four decades a very heavy price. 261 00:13:49,000 --> 00:13:53,000 Speaker 9: We have seen many campaigns that people protested. The latest 262 00:13:53,040 --> 00:13:55,760 Speaker 9: one was two years ago the Woman Live Freedom movement. 263 00:13:56,240 --> 00:13:58,120 Speaker 4: And finally, I think today. 264 00:13:57,800 --> 00:14:01,240 Speaker 9: With this clear weakening of regime, and as I said, 265 00:14:01,440 --> 00:14:04,400 Speaker 9: I'm being on the version of collapse, finally, all these 266 00:14:04,720 --> 00:14:09,079 Speaker 9: people who have reached their lives and honorably put their 267 00:14:09,120 --> 00:14:11,800 Speaker 9: lives on the line and did die for the cause, 268 00:14:12,200 --> 00:14:15,120 Speaker 9: we'll be able to remember that as heroes of this conflict, 269 00:14:15,440 --> 00:14:18,280 Speaker 9: because we'll be liberated sooner than everybody thinks. And my 270 00:14:18,480 --> 00:14:21,400 Speaker 9: entire commitment has been from day one to support my 271 00:14:21,480 --> 00:14:24,720 Speaker 9: competit in the struggle for liberation. And we believe that 272 00:14:24,760 --> 00:14:26,960 Speaker 9: the end is very near for the regime and our 273 00:14:27,040 --> 00:14:29,560 Speaker 9: dreams of liberty will finally be realized very soon. 274 00:14:29,920 --> 00:14:32,400 Speaker 7: Rather on the ground, what we've seen in Iran is 275 00:14:32,480 --> 00:14:35,760 Speaker 7: those in Tehran, for example, trying to evacuate Israel, saying 276 00:14:35,760 --> 00:14:38,680 Speaker 7: more recently that they would look at targeting places there. 277 00:14:38,720 --> 00:14:41,040 Speaker 7: You've seen fear, you've seen strikes, and you've seen death. 278 00:14:41,120 --> 00:14:43,640 Speaker 7: How complicated and how difficult is it to ask a 279 00:14:43,680 --> 00:14:46,160 Speaker 7: populace to rise up and rally behind you when they're 280 00:14:46,200 --> 00:14:48,680 Speaker 7: the very same ones that are under threat right now. 281 00:14:49,920 --> 00:14:53,160 Speaker 9: Look, I think many of my competitors are smart enough 282 00:14:53,200 --> 00:14:56,480 Speaker 9: to understand that if right now, if until now, and 283 00:14:56,520 --> 00:14:58,320 Speaker 9: in fact, many of your colleagues in the media have 284 00:14:58,400 --> 00:15:00,640 Speaker 9: always asked me, how do you find the regime that 285 00:15:00,760 --> 00:15:03,920 Speaker 9: is so repressive, that it's so ruthless, that executes that 286 00:15:04,200 --> 00:15:08,160 Speaker 9: threatened dissidents or activit is at home, to which I said, well, 287 00:15:08,160 --> 00:15:09,360 Speaker 9: obviously the playing. 288 00:15:09,080 --> 00:15:11,640 Speaker 4: Field has to be more equalized. This is a case 289 00:15:11,680 --> 00:15:14,160 Speaker 4: where for the first time in four years, we see 290 00:15:14,200 --> 00:15:19,119 Speaker 4: this d cloud literally d cloud. But it is also. 291 00:15:18,920 --> 00:15:21,520 Speaker 9: Important to have the support of the world community because 292 00:15:21,680 --> 00:15:25,000 Speaker 9: until now, many times my compatriots have been thrown under 293 00:15:25,000 --> 00:15:27,400 Speaker 9: the bus when they had an opportunity to be backed 294 00:15:27,600 --> 00:15:31,840 Speaker 9: because of a policy of appeasement or containment. I think 295 00:15:31,880 --> 00:15:34,080 Speaker 9: now the situation for the first time exists for the 296 00:15:34,120 --> 00:15:37,040 Speaker 9: world to realize that it is not availed to expect 297 00:15:37,040 --> 00:15:40,680 Speaker 9: this regime to change its attitude and behavior. Ali Hamena 298 00:15:40,920 --> 00:15:43,240 Speaker 9: is at work with the world, not the Iranian people. 299 00:15:43,560 --> 00:15:46,520 Speaker 9: He's the main culprit for being here and having Iranians 300 00:15:46,560 --> 00:15:50,920 Speaker 9: also have innocent victims and civilians to whom my heart 301 00:15:50,960 --> 00:15:53,560 Speaker 9: goes up, of course, but I think right now we 302 00:15:53,640 --> 00:15:55,600 Speaker 9: need to be focused on the goal and the aim. 303 00:15:55,960 --> 00:15:59,280 Speaker 9: We have a tremendous opportunity to overcome this regime. I 304 00:15:59,320 --> 00:16:01,400 Speaker 9: think the world would be the sigh of relief with 305 00:16:01,440 --> 00:16:04,760 Speaker 9: this regime no longer be there. We are carrying on our. 306 00:16:04,760 --> 00:16:09,440 Speaker 7: Finances because the goal and the aim is a regime change. 307 00:16:09,520 --> 00:16:12,000 Speaker 7: What we have heard from Israel is that their goal 308 00:16:12,400 --> 00:16:15,040 Speaker 7: is to dismantle the nuclear forces from Iran. Is it 309 00:16:15,040 --> 00:16:18,080 Speaker 7: you're understanding that a regime change is also a goal 310 00:16:18,120 --> 00:16:20,520 Speaker 7: from the Israelis, and have you been in contact with them. 311 00:16:21,840 --> 00:16:25,800 Speaker 9: I'm not asking any foreign governments to state the policy 312 00:16:25,840 --> 00:16:28,160 Speaker 9: of regime change, although I think many of them do 313 00:16:28,280 --> 00:16:31,320 Speaker 9: believe that ultimately that would be the best formula to 314 00:16:31,360 --> 00:16:34,200 Speaker 9: get rid of so many problems at the same time, 315 00:16:34,280 --> 00:16:35,760 Speaker 9: and not just the nuclear threat. 316 00:16:36,080 --> 00:16:38,960 Speaker 4: As a result of this regime track record. 317 00:16:38,600 --> 00:16:43,600 Speaker 9: Of behavior in the region and beyond formatting terrorism, supporting, 318 00:16:44,600 --> 00:16:49,320 Speaker 9: you know, their their proxies like Eyler Hamas in the 319 00:16:49,360 --> 00:16:52,760 Speaker 9: region and so on, so the disappears. 320 00:16:52,240 --> 00:16:52,960 Speaker 4: Of this regime. 321 00:16:53,280 --> 00:16:56,880 Speaker 9: We're eliminating too many problems that this regime has caused 322 00:16:56,920 --> 00:17:00,200 Speaker 9: in one shot. The first beneficiary of regime change are 323 00:17:00,200 --> 00:17:01,680 Speaker 9: the running people themselves. 324 00:17:01,840 --> 00:17:02,920 Speaker 4: But we believe that. 325 00:17:02,760 --> 00:17:05,560 Speaker 9: Our immediate neighborhood and the region, whether it is the 326 00:17:05,600 --> 00:17:10,439 Speaker 9: Israelis or Arab neighbors, and beyond that the rest of 327 00:17:10,480 --> 00:17:13,880 Speaker 9: the free world will understand that the running people, who 328 00:17:14,000 --> 00:17:17,720 Speaker 9: unlike this regime want to be part of the civilized 329 00:17:17,720 --> 00:17:20,680 Speaker 9: world with the same values and principles of liberty and 330 00:17:20,760 --> 00:17:27,560 Speaker 9: freedom and human rights. Unlike this regime, would be certainly 331 00:17:26,480 --> 00:17:32,240 Speaker 9: the element of change, and if you will, the alternatives 332 00:17:32,280 --> 00:17:33,040 Speaker 9: to this regime. 333 00:17:33,119 --> 00:17:35,680 Speaker 4: I think this is where the world needs to be focused. 334 00:17:35,280 --> 00:17:38,800 Speaker 9: Now, beyond the immediate campaign that is a result of 335 00:17:39,080 --> 00:17:42,280 Speaker 9: the stubbornness of how many must dragged our country into it. 336 00:17:42,520 --> 00:17:44,919 Speaker 9: But let's look at the positive aspect of once we 337 00:17:45,200 --> 00:17:48,280 Speaker 9: get rid of this regime, how we can envisage your future. 338 00:17:48,320 --> 00:17:51,080 Speaker 9: We're or back to an element of stability and regional peace, 339 00:17:51,760 --> 00:17:56,040 Speaker 9: which is in everybody's interest. 340 00:17:54,680 --> 00:17:56,879 Speaker 1: Just to build them. What Danny was asking, have you 341 00:17:56,920 --> 00:17:59,080 Speaker 1: been in contact with the Israeli leadership. 342 00:18:00,080 --> 00:18:03,280 Speaker 9: We are reaching out to everyone and everyone, including the 343 00:18:03,359 --> 00:18:06,280 Speaker 9: Israeli side, to understand what it is that we stand. 344 00:18:06,600 --> 00:18:09,200 Speaker 9: What is the expectation of the Iranian people in terms 345 00:18:09,200 --> 00:18:12,080 Speaker 9: of world support. I think it's pretty much the same 346 00:18:12,119 --> 00:18:15,600 Speaker 9: thing that many struggling nations under totally tenor regime. 347 00:18:15,760 --> 00:18:18,760 Speaker 4: We're looking at any country that understand. 348 00:18:18,359 --> 00:18:20,920 Speaker 9: That they have to stand with the people of a 349 00:18:21,000 --> 00:18:23,760 Speaker 9: country that is trying to liberate itself. And again, whether 350 00:18:23,760 --> 00:18:26,480 Speaker 9: it's the Israeli government or the American government or any 351 00:18:26,480 --> 00:18:29,840 Speaker 9: other government for that matter, the question is whose side 352 00:18:29,880 --> 00:18:32,080 Speaker 9: are you going to stand with today the i Ruanian 353 00:18:32,160 --> 00:18:35,080 Speaker 9: people or continue to insist negotiating with the regime that 354 00:18:35,200 --> 00:18:36,280 Speaker 9: is on the verge of collapse. 355 00:18:36,320 --> 00:18:39,040 Speaker 1: There's also a question of what this new leadership looks 356 00:18:39,119 --> 00:18:41,199 Speaker 1: like or as are you talking about re establishing the 357 00:18:41,240 --> 00:18:45,040 Speaker 1: monarchy when that was controversial and it might not have 358 00:18:45,119 --> 00:18:49,800 Speaker 1: full support from all parties, particularly the more religious elements 359 00:18:49,840 --> 00:18:51,280 Speaker 1: of the Iranian society. 360 00:18:52,240 --> 00:18:54,919 Speaker 4: Well, I have never advocated for one for of a 361 00:18:54,960 --> 00:18:55,840 Speaker 4: regime or another. 362 00:18:56,000 --> 00:18:59,240 Speaker 9: What I did and have advocated, and in fact it's 363 00:18:59,280 --> 00:19:01,959 Speaker 9: part of my trans plan, is a process that it's 364 00:19:02,040 --> 00:19:05,720 Speaker 9: totally democratic. That means that the running people have to 365 00:19:05,760 --> 00:19:10,160 Speaker 9: have the ability to ponder upon whatever a constitutional assembly 366 00:19:10,200 --> 00:19:15,399 Speaker 9: will propose as a constitutional formula, a future constitution, the 367 00:19:15,520 --> 00:19:18,720 Speaker 9: form that the regime can take, what it will mean 368 00:19:19,000 --> 00:19:22,040 Speaker 9: and Unlike nineteen seventy nine, when people had no cluer 369 00:19:22,119 --> 00:19:25,280 Speaker 9: idea what an Islamic republic means and by the time 370 00:19:25,320 --> 00:19:27,640 Speaker 9: they figured it out it was too late. This time, 371 00:19:27,680 --> 00:19:30,600 Speaker 9: in full transparency, that'll have the option to look at 372 00:19:30,640 --> 00:19:33,320 Speaker 9: what's the best model that fits them and let the 373 00:19:33,359 --> 00:19:36,119 Speaker 9: ballot box decide the majority what the running people will 374 00:19:36,160 --> 00:19:38,280 Speaker 9: look for. Will it be a republic, will it be 375 00:19:38,320 --> 00:19:42,000 Speaker 9: auctional monarchy, or whatever it is. My objective is not 376 00:19:42,119 --> 00:19:44,879 Speaker 9: to stand here as the result of that, and my 377 00:19:45,000 --> 00:19:47,879 Speaker 9: responsibility right now, my only focus is to see this 378 00:19:48,359 --> 00:19:52,840 Speaker 9: process through so we can ensure that ultimately we replace 379 00:19:52,920 --> 00:19:58,240 Speaker 9: this dictatorship with a democratic and let me underline, a 380 00:19:58,400 --> 00:19:59,920 Speaker 9: secular democrat. 381 00:20:00,080 --> 00:20:03,480 Speaker 4: See what's the key separation of religion from state as 382 00:20:03,520 --> 00:20:05,359 Speaker 4: a prerequisite to that point. 383 00:20:05,760 --> 00:20:09,240 Speaker 7: Past attempts to engineer regime shifts in the Middle East 384 00:20:09,720 --> 00:20:13,640 Speaker 7: haven't often ended in liberal, pro Western governments. There are 385 00:20:13,680 --> 00:20:18,240 Speaker 7: examples many out there Libya, Syria, Yemen, Somalia, all ending 386 00:20:18,600 --> 00:20:22,000 Speaker 7: in things that look like fragmentation or current armed forces 387 00:20:22,040 --> 00:20:24,400 Speaker 7: having the most power and being the ones that emerge 388 00:20:24,840 --> 00:20:27,320 Speaker 7: in the chaos of a regime shift. What do you 389 00:20:27,440 --> 00:20:29,639 Speaker 7: suggest that it is different this time? 390 00:20:30,920 --> 00:20:35,040 Speaker 9: I think Iranian society not just for centuries of proving 391 00:20:35,200 --> 00:20:38,400 Speaker 9: that they have as a nation state, a concept of 392 00:20:38,800 --> 00:20:44,160 Speaker 9: a nationhood, national identity, natural pride and objective, a culture, 393 00:20:44,280 --> 00:20:48,600 Speaker 9: a civilization, but also a polity, and a generation today 394 00:20:49,240 --> 00:20:53,720 Speaker 9: very shrewd and very clever by knowing what it is 395 00:20:54,160 --> 00:20:56,720 Speaker 9: that would be in their interest. They see the world 396 00:20:56,760 --> 00:21:00,480 Speaker 9: and how it has evolved that have since successful campaign 397 00:21:00,480 --> 00:21:04,879 Speaker 9: of liberation. They understand the key elements that sustains and 398 00:21:05,000 --> 00:21:08,440 Speaker 9: preserves democratic order, and I believe today's gen z and 399 00:21:08,480 --> 00:21:11,800 Speaker 9: Iran is more than ever equipped to understand not only 400 00:21:11,840 --> 00:21:14,480 Speaker 9: the needs, but how and what it will take to 401 00:21:14,560 --> 00:21:15,199 Speaker 9: implement that. 402 00:21:15,560 --> 00:21:17,320 Speaker 4: No, it's a collective project. 403 00:21:17,640 --> 00:21:21,520 Speaker 9: Everybody have to roll up their sleeves and participate. The 404 00:21:21,640 --> 00:21:24,280 Speaker 9: premise remains the same in the principles of liberty and 405 00:21:24,359 --> 00:21:27,360 Speaker 9: human rights. But if each member of society is committed 406 00:21:27,720 --> 00:21:30,800 Speaker 9: to see through it and actively engage in that process, 407 00:21:31,119 --> 00:21:33,600 Speaker 9: that's where we can guarantee that it's going to be 408 00:21:33,680 --> 00:21:37,639 Speaker 9: actually a result that would be positive. I have absolute 409 00:21:37,680 --> 00:21:41,000 Speaker 9: faith and confidence in my computers and their wisdom and 410 00:21:41,040 --> 00:21:43,640 Speaker 9: their know how and their knowledge. They do need guidance, 411 00:21:43,760 --> 00:21:46,560 Speaker 9: of course, they do need support. Of course they do 412 00:21:46,680 --> 00:21:49,360 Speaker 9: need some level of leadership, of course, but at the end, 413 00:21:49,760 --> 00:21:53,439 Speaker 9: they are the elements and instruments of change, and we 414 00:21:53,480 --> 00:21:55,960 Speaker 9: are working together very closely to see that through. 415 00:21:56,560 --> 00:21:58,960 Speaker 1: Zavalavi, thank you so much for your time. Really appreciate 416 00:21:59,040 --> 00:22:11,680 Speaker 1: you getting on with us. Who just Rouma Berkeley's joins 417 00:22:11,720 --> 00:22:14,439 Speaker 1: us now with her own argument, how do you interpret this? 418 00:22:14,520 --> 00:22:16,840 Speaker 1: Thank you so much for being here, given the fact 419 00:22:16,880 --> 00:22:18,960 Speaker 1: that there's something for everyone, which is kind of the 420 00:22:18,960 --> 00:22:20,640 Speaker 1: theme that we've seen in a lot of the economic 421 00:22:20,680 --> 00:22:21,320 Speaker 1: data recently. 422 00:22:21,720 --> 00:22:25,159 Speaker 8: That's true, well so far. I sort of agree with 423 00:22:25,240 --> 00:22:27,480 Speaker 8: what she said in the sense that right now it 424 00:22:27,560 --> 00:22:30,680 Speaker 8: just looks like everything seems to be good. So far, 425 00:22:30,800 --> 00:22:33,119 Speaker 8: so good is how you know, I would put it, 426 00:22:34,040 --> 00:22:36,520 Speaker 8: But it's hard to say how things are going to 427 00:22:36,520 --> 00:22:39,760 Speaker 8: pan out sort of going forward. Just a quick take 428 00:22:39,800 --> 00:22:42,840 Speaker 8: on the retail sales from my end is that we 429 00:22:42,880 --> 00:22:45,640 Speaker 8: had expected a slightly weaker control group, So the fact 430 00:22:45,680 --> 00:22:49,960 Speaker 8: that it actually did better than we'd expected is again, maybe, 431 00:22:50,320 --> 00:22:54,880 Speaker 8: you know, like she said, maybe a resilient consumer. Income fundamentals, 432 00:22:54,920 --> 00:22:57,720 Speaker 8: wealth fundamentals for consumers have been looking good. It's something 433 00:22:57,760 --> 00:23:02,560 Speaker 8: we've said on and off, but I do expect at 434 00:23:02,560 --> 00:23:05,840 Speaker 8: some point a pullback and a moderation in consumer spending 435 00:23:05,880 --> 00:23:08,399 Speaker 8: to materialize. Did it happen in this print? 436 00:23:08,720 --> 00:23:09,240 Speaker 7: It didn't. 437 00:23:09,440 --> 00:23:12,560 Speaker 1: Maybe there's a correlation though, between the decline that we've 438 00:23:12,560 --> 00:23:15,600 Speaker 1: seen in oil and gas prices and the increase that 439 00:23:15,640 --> 00:23:17,560 Speaker 1: we saw the strength that we saw in the control group, 440 00:23:17,560 --> 00:23:19,879 Speaker 1: because there's a theory that if you're not paying as 441 00:23:19,920 --> 00:23:21,440 Speaker 1: much when you go to fill up the tank in 442 00:23:21,480 --> 00:23:24,080 Speaker 1: your car, you have more to spend on other things. 443 00:23:24,359 --> 00:23:27,159 Speaker 1: How much is that these is threatened if oil prices 444 00:23:27,200 --> 00:23:29,600 Speaker 1: start to spike at a time of conflict in the 445 00:23:29,600 --> 00:23:30,160 Speaker 1: Middle East. 446 00:23:30,440 --> 00:23:32,879 Speaker 8: No, that's a valid point. The one thing that I 447 00:23:32,880 --> 00:23:36,840 Speaker 8: would add is that you know, the spending on gasoline 448 00:23:36,840 --> 00:23:40,200 Speaker 8: as a share of consumer spending isn't as high as 449 00:23:40,240 --> 00:23:42,080 Speaker 8: what most would think. You know, it's about two to 450 00:23:42,119 --> 00:23:45,400 Speaker 8: three percent for the consumption basket. So you would need 451 00:23:45,440 --> 00:23:48,440 Speaker 8: a pretty persistent and a pretty big rise and oil 452 00:23:48,480 --> 00:23:51,800 Speaker 8: prices for consumers to actually start feeling threatened and for 453 00:23:51,840 --> 00:23:54,240 Speaker 8: them to actually start pulling back. It's what we call 454 00:23:54,280 --> 00:23:57,280 Speaker 8: like the discretionary income channel, because you know, you have 455 00:23:57,320 --> 00:23:59,520 Speaker 8: to spend on oil. We think demand is relatively in 456 00:23:59,520 --> 00:24:01,800 Speaker 8: the last for oil, and so when you have to 457 00:24:01,840 --> 00:24:04,359 Speaker 8: spend more on oil you're forced to sort of pull 458 00:24:04,400 --> 00:24:07,120 Speaker 8: back elsewhere. So that is a risk, but we think 459 00:24:07,119 --> 00:24:10,000 Speaker 8: it's developing. I wouldn't say that's a baseline right now. 460 00:24:10,760 --> 00:24:13,680 Speaker 7: When it comes to a consumer that you expect eventually 461 00:24:13,720 --> 00:24:15,960 Speaker 7: to weaken, what is the trigger for it? Because we 462 00:24:15,960 --> 00:24:18,760 Speaker 7: already see some underlying weakness in the labor market a 463 00:24:18,760 --> 00:24:21,200 Speaker 7: little bit in their things like the unemployment some of 464 00:24:21,240 --> 00:24:25,200 Speaker 7: the weekly initial job was claims taking higher. Companies are 465 00:24:25,240 --> 00:24:27,560 Speaker 7: not hiring right now. There seems to be a freeze. 466 00:24:27,880 --> 00:24:30,360 Speaker 7: What needs to change for that actually to trickle down 467 00:24:30,440 --> 00:24:32,119 Speaker 7: into some weakness for the consumer. 468 00:24:32,680 --> 00:24:34,960 Speaker 8: Well, I think two things. We need to see this 469 00:24:35,119 --> 00:24:38,840 Speaker 8: consistent discipline gradual slowing in the labor market for the 470 00:24:38,880 --> 00:24:42,520 Speaker 8: consumer to start feeling a little worried. The other thing, 471 00:24:42,560 --> 00:24:45,880 Speaker 8: which we've been saying that should happen eventually is as 472 00:24:45,920 --> 00:24:49,879 Speaker 8: the prices start increasing because of tariffs, there could be 473 00:24:50,080 --> 00:24:53,600 Speaker 8: some pressure on the consumer purchasing power. When both of 474 00:24:53,640 --> 00:24:57,480 Speaker 8: these things materialize together is a world in which we 475 00:24:57,600 --> 00:25:01,120 Speaker 8: think the consumer would feel cautious about spending. And that's 476 00:25:01,160 --> 00:25:04,280 Speaker 8: when we should hopefully start seeing the personal saving rate 477 00:25:04,320 --> 00:25:06,399 Speaker 8: take up because you're trying to save up. 478 00:25:06,720 --> 00:25:08,920 Speaker 7: Just be clear, does it actually need to happen, because 479 00:25:08,960 --> 00:25:11,719 Speaker 7: you have seen the sentiment measures sour quite a bit 480 00:25:11,760 --> 00:25:13,840 Speaker 7: to start this year, they've been bouncing around since then, 481 00:25:13,880 --> 00:25:15,960 Speaker 7: and there's a whole host of reasons why maybe you 482 00:25:16,000 --> 00:25:18,800 Speaker 7: shouldn't pay attention to them. But is the expectation for 483 00:25:19,040 --> 00:25:23,160 Speaker 7: economic weakness or geopolitical strife do any of those sentiment 484 00:25:23,280 --> 00:25:26,160 Speaker 7: type issues weigh on the consumer or do they keep 485 00:25:26,200 --> 00:25:29,760 Speaker 7: spending through it until the actual prices, the actual data changes. 486 00:25:30,240 --> 00:25:33,080 Speaker 8: Well, it's hard to say, but I would think there 487 00:25:33,080 --> 00:25:35,640 Speaker 8: has to be some amount of precaution that that has 488 00:25:35,680 --> 00:25:39,080 Speaker 8: to set in. The Other thing that we've been saying 489 00:25:39,240 --> 00:25:42,919 Speaker 8: is the price level is already so high across a 490 00:25:42,920 --> 00:25:46,480 Speaker 8: whole host of commodities goods, and this is an aftermath 491 00:25:46,520 --> 00:25:50,159 Speaker 8: as a pandemic that now any additional price increase, we 492 00:25:50,200 --> 00:25:52,359 Speaker 8: think the consumer is likely to be sensitive to that. 493 00:25:53,600 --> 00:25:55,679 Speaker 1: Just to if you're just joining us right now, just 494 00:25:55,680 --> 00:25:58,200 Speaker 1: to reseat, we did get retail sales that came in 495 00:25:58,280 --> 00:26:01,080 Speaker 1: on the headline level, Wakers and Express did down nine 496 00:26:01,119 --> 00:26:04,560 Speaker 1: tens of a percent versus the expected six tens of percent. 497 00:26:04,840 --> 00:26:07,280 Speaker 1: That sounds negative, That sounds like a weakening. Oh no, 498 00:26:07,520 --> 00:26:09,040 Speaker 1: And then you take a look at the control group 499 00:26:09,080 --> 00:26:12,520 Speaker 1: that came in stronger than expected of zero point four 500 00:26:12,560 --> 00:26:15,640 Speaker 1: percent from the zero point three percent that people had 501 00:26:15,680 --> 00:26:19,240 Speaker 1: been expecting. The revisions to the prior month, as Danny 502 00:26:19,320 --> 00:26:22,359 Speaker 1: was talking about, also were revised to be less bad 503 00:26:22,560 --> 00:26:25,640 Speaker 1: than they were initially, and it raises this question of 504 00:26:25,720 --> 00:26:29,000 Speaker 1: what the response in markets is. The response is interesting, actually, 505 00:26:29,000 --> 00:26:30,760 Speaker 1: which you're seeing is less of a bid to the 506 00:26:30,800 --> 00:26:32,800 Speaker 1: two year yield and more of a bid to the 507 00:26:32,880 --> 00:26:36,080 Speaker 1: thirty year yields, which signifies that maybe people see this 508 00:26:36,359 --> 00:26:39,359 Speaker 1: and I'm really taking liberties here as an excuse for 509 00:26:39,600 --> 00:26:42,000 Speaker 1: the FED not to cut rates as quickly because of 510 00:26:42,000 --> 00:26:44,320 Speaker 1: that strength in the control group that could lead to 511 00:26:44,440 --> 00:26:47,040 Speaker 1: longer term weakness. How much are you looking at that 512 00:26:47,119 --> 00:26:49,880 Speaker 1: type of scenario that people say the longer the FED 513 00:26:49,920 --> 00:26:53,320 Speaker 1: is on hold, the more longer term we see potential 514 00:26:53,640 --> 00:26:57,520 Speaker 1: for a decline in inflation expectations and more weakness. 515 00:26:58,680 --> 00:27:01,320 Speaker 8: Well, I think in the it makes sense for them 516 00:27:01,320 --> 00:27:04,439 Speaker 8: to be on hold just because there is you know, 517 00:27:04,480 --> 00:27:06,840 Speaker 8: there's an obvious tension between what we think is going 518 00:27:06,880 --> 00:27:09,239 Speaker 8: to happen to inflation and the fact that we're not 519 00:27:09,280 --> 00:27:12,320 Speaker 8: seeing of very material slowing in the labor market. So 520 00:27:12,359 --> 00:27:13,960 Speaker 8: I think in the near term it makes sense that 521 00:27:13,960 --> 00:27:17,760 Speaker 8: they're on hold. I don't quite buy the argument that 522 00:27:17,800 --> 00:27:21,080 Speaker 8: it would necessarily lead to more weakness going forward. I 523 00:27:21,119 --> 00:27:23,399 Speaker 8: think it eventually it is going to give them a 524 00:27:23,440 --> 00:27:25,280 Speaker 8: window to come in and cut rates. 525 00:27:26,640 --> 00:27:28,400 Speaker 1: Okay, So this is the argument some people have made, 526 00:27:28,560 --> 00:27:30,239 Speaker 1: and this is sort of the question that we've been 527 00:27:30,240 --> 00:27:33,399 Speaker 1: banding around all morning. Why wouldn't the Fed come out 528 00:27:33,440 --> 00:27:36,840 Speaker 1: and aggressively be hawkish to try to tamp down inflation 529 00:27:36,920 --> 00:27:39,800 Speaker 1: expectations and then later this year things to weaken. They 530 00:27:39,800 --> 00:27:42,359 Speaker 1: can say, Okay, just kidding, we actually do want to 531 00:27:42,400 --> 00:27:42,840 Speaker 1: cut rates. 532 00:27:42,840 --> 00:27:44,080 Speaker 7: I mean, why is that not the. 533 00:27:44,080 --> 00:27:45,399 Speaker 1: Playwork for the Federal Reserve. 534 00:27:45,880 --> 00:27:48,040 Speaker 8: Well, we think they might actually come out and look 535 00:27:48,080 --> 00:27:51,200 Speaker 8: pretty hawkish in the June meeting. Right our own forecast 536 00:27:51,320 --> 00:27:54,320 Speaker 8: is for the June SEPs to look relatively hawkish. We 537 00:27:54,400 --> 00:27:57,199 Speaker 8: think the median dot would show only one cut in 538 00:27:57,280 --> 00:28:00,840 Speaker 8: twenty twenty five, and that makes sense. I think the 539 00:28:00,920 --> 00:28:02,679 Speaker 8: signal that they would want to send out at this 540 00:28:02,720 --> 00:28:06,280 Speaker 8: point in time is we are watching inflation expectations. We 541 00:28:06,359 --> 00:28:09,760 Speaker 8: are cognizant that inflation could go higher the labor market 542 00:28:09,800 --> 00:28:12,040 Speaker 8: side of the mandate for the time being, looks okay, 543 00:28:13,040 --> 00:28:15,520 Speaker 8: and so you know, I think the message from them 544 00:28:15,600 --> 00:28:18,919 Speaker 8: is we're in no rush to cut rates, and I 545 00:28:18,960 --> 00:28:21,359 Speaker 8: think that it's the flip side, right, should things actually 546 00:28:21,400 --> 00:28:24,359 Speaker 8: materially start to weaken, they could come in and cut rates. 547 00:28:24,480 --> 00:28:27,280 Speaker 7: It's interesting because Bloomberg Economics has the same outlook Ana 548 00:28:27,280 --> 00:28:30,240 Speaker 7: Wong and her team there, but they said Chair Powell 549 00:28:30,280 --> 00:28:32,359 Speaker 7: isn't as hawkish as the rest of the committee. So 550 00:28:32,400 --> 00:28:34,639 Speaker 7: if you get one dot on the dot plot of cuts, 551 00:28:34,960 --> 00:28:37,080 Speaker 7: expect Chair Power to come up and kind of downplay 552 00:28:37,119 --> 00:28:38,880 Speaker 7: and say, oh, we have a range of outcomes, it 553 00:28:38,920 --> 00:28:41,880 Speaker 7: doesn't matter, not least which because he'll probably get political 554 00:28:41,880 --> 00:28:44,320 Speaker 7: pressure coming from the White House should that be the outcome. 555 00:28:44,640 --> 00:28:47,560 Speaker 7: Do you expect Chair Powell to also lean more hawkish 556 00:28:47,840 --> 00:28:50,040 Speaker 7: in his communicated to the press after the decision. 557 00:28:51,560 --> 00:28:54,240 Speaker 8: I think I think that's going to be a tough one. 558 00:28:54,520 --> 00:28:56,160 Speaker 8: I think he's going to stick to the messages that 559 00:28:56,240 --> 00:28:58,840 Speaker 8: he's always, you know, been saying, you know, we're in 560 00:28:58,840 --> 00:29:01,080 Speaker 8: no rush to cut rates, gonna wait and watch, we 561 00:29:01,120 --> 00:29:05,000 Speaker 8: need to see how the data evolve, so all of that. Yeah, 562 00:29:05,480 --> 00:29:08,520 Speaker 8: I don't know if he's going to particularly be dubbish, 563 00:29:08,560 --> 00:29:10,400 Speaker 8: but I think he's going to stick to the message. 564 00:29:10,560 --> 00:29:13,480 Speaker 8: The other thing I feel is, you know, most people 565 00:29:13,560 --> 00:29:16,120 Speaker 8: would also look at the SEPs quite closely, at least 566 00:29:16,120 --> 00:29:19,320 Speaker 8: analysts like ourselves, and we're literally counting the number of 567 00:29:19,360 --> 00:29:21,960 Speaker 8: dots everywhere, so we get a sense of I guess 568 00:29:22,000 --> 00:29:24,000 Speaker 8: how the committee is leaning as well. 569 00:29:24,240 --> 00:29:26,200 Speaker 1: Counting dots. That's what we have to look forward to 570 00:29:26,320 --> 00:29:28,520 Speaker 1: for tomorrow. Put us for Rama, Parkley, Thank you so 571 00:29:28,560 --> 00:29:29,640 Speaker 1: much for being with us. 572 00:29:30,200 --> 00:29:33,720 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 573 00:29:33,800 --> 00:29:37,120 Speaker 2: in markets, economics, angiot politics. You can watch the show 574 00:29:37,160 --> 00:29:40,120 Speaker 2: live on Bloomberg TV weekday mornings from six am to 575 00:29:40,240 --> 00:29:44,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 576 00:29:44,160 --> 00:29:46,360 Speaker 2: or anywhere else you listen, and as always on the 577 00:29:46,400 --> 00:29:48,920 Speaker 2: Bloomberg Terminal and the Bloomberg Business Out