1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

2
00:00:09,200 --> 00:00:13,200
Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you

3
00:00:13,280 --> 00:00:18,600
Speaker 1: insight from the best and economics, finance, investment, and international relations.

4
00:00:18,840 --> 00:00:23,799
Speaker 1: To find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,

5
00:00:23,920 --> 00:00:30,160
Speaker 1: and of course on the Bloomberg terminal. We are honored

6
00:00:30,280 --> 00:00:33,320
Speaker 1: to give you the chief Global Economist at Morgan Stanley.

7
00:00:33,360 --> 00:00:36,520
Speaker 1: They have a heritage which is defined by Stephen Roach

8
00:00:36,600 --> 00:00:40,680
Speaker 1: and others over the years. Seth Carpenter joins us this morning. Seth,

9
00:00:40,720 --> 00:00:43,040
Speaker 1: I'm gonna go to the Morgan Stanley way, which is

10
00:00:43,080 --> 00:00:48,120
Speaker 1: you guys under roaches, leadership, codified, a vision, visible argument.

11
00:00:48,560 --> 00:00:51,320
Speaker 1: What is the number one thing your team is arguing

12
00:00:51,360 --> 00:00:55,760
Speaker 1: about as we enter two thousand twenty three. Gosh, what

13
00:00:55,880 --> 00:00:57,760
Speaker 1: sorts of things that were not arguing about. Let me

14
00:00:57,960 --> 00:01:00,240
Speaker 1: say I I heard you all just the where the

15
00:01:00,280 --> 00:01:04,759
Speaker 1: segment talking about the ADP data and the labor market

16
00:01:04,840 --> 00:01:06,800
Speaker 1: and whether or not the economy is slowing in one

17
00:01:06,840 --> 00:01:10,559
Speaker 1: place where we have um tried to hold our ground.

18
00:01:10,600 --> 00:01:12,800
Speaker 1: Ellen Sander, as you know, as our chief US economist,

19
00:01:13,120 --> 00:01:15,720
Speaker 1: she and I have been steadfast and saying we think

20
00:01:15,720 --> 00:01:18,880
Speaker 1: the economy is clearly slowing, but boy, we're not calling

21
00:01:18,920 --> 00:01:23,160
Speaker 1: for a recession in three. We're still there. I don't

22
00:01:23,200 --> 00:01:25,520
Speaker 1: think we're actually in the majority with that view, but

23
00:01:25,600 --> 00:01:28,160
Speaker 1: the fact that the economy is holding up is part

24
00:01:28,160 --> 00:01:33,240
Speaker 1: of our view. There you mentioned the initial jobless claims data. Uh,

25
00:01:33,280 --> 00:01:35,160
Speaker 1: what we're thinking is going to happen, and this is

26
00:01:35,160 --> 00:01:37,960
Speaker 1: consistent with the anecdotes from the minutes, is that businesses

27
00:01:37,959 --> 00:01:41,400
Speaker 1: will try to hoard labor, and so what we're likely

28
00:01:41,440 --> 00:01:43,920
Speaker 1: to see is slower and slower and slower. Non farm

29
00:01:43,959 --> 00:01:47,160
Speaker 1: perils will get tomorrow's data obviously where we're looking for

30
00:01:47,240 --> 00:01:51,040
Speaker 1: about five thousand UM, but we're looking for us slowing

31
00:01:51,080 --> 00:01:53,840
Speaker 1: down and hiring. We're not looking for a wave of

32
00:01:55,000 --> 00:01:57,640
Speaker 1: picking out that territory is going to be is where

33
00:01:57,640 --> 00:02:00,080
Speaker 1: we've been. We've alluded to the seventies. You two on

34
00:02:00,200 --> 00:02:03,120
Speaker 1: to remember the embarrassing Lapel's Michael McKee and I wore

35
00:02:03,280 --> 00:02:08,640
Speaker 1: years ago. What actually happens to our economy, frankly, the

36
00:02:08,639 --> 00:02:12,040
Speaker 1: global economy. If we got a Neil cash cary five

37
00:02:12,080 --> 00:02:16,480
Speaker 1: point four percent, a board six point seven whatever percent,

38
00:02:16,880 --> 00:02:18,919
Speaker 1: do we all fall apart and die? Or I mean

39
00:02:19,040 --> 00:02:22,960
Speaker 1: we we move forward, right, I mean, I do think

40
00:02:23,000 --> 00:02:26,120
Speaker 1: we move forward, but you know, we are looking for

41
00:02:26,160 --> 00:02:29,120
Speaker 1: a soft ish landing, if I can steal that phrase

42
00:02:29,160 --> 00:02:31,880
Speaker 1: from share pol. I do believe that the committee right

43
00:02:31,919 --> 00:02:35,880
Speaker 1: now is feeling their way. They are close to being

44
00:02:36,000 --> 00:02:38,440
Speaker 1: as restrictive as they need to be. It'll be up

45
00:02:38,480 --> 00:02:41,040
Speaker 1: to the next several data points to figure out exactly

46
00:02:41,080 --> 00:02:45,160
Speaker 1: when they call it quits on hiking. But then it's

47
00:02:45,160 --> 00:02:47,560
Speaker 1: going to be a question for them how long to

48
00:02:47,680 --> 00:02:50,359
Speaker 1: stay restrictive like that. And I think that's the part

49
00:02:50,360 --> 00:02:53,440
Speaker 1: that the market really needs to internalize, is that the

50
00:02:53,480 --> 00:02:57,040
Speaker 1: FETE is not trying to trash the economy now to

51
00:02:57,080 --> 00:03:01,360
Speaker 1: bring inflation down next year. They're trying to slow the

52
00:03:01,400 --> 00:03:04,040
Speaker 1: economy down over a multi year process, and that really

53
00:03:04,120 --> 00:03:06,160
Speaker 1: is going to be the difference I think between now

54
00:03:06,639 --> 00:03:08,959
Speaker 1: uh and the seventies. And for the record, I was

55
00:03:09,000 --> 00:03:12,880
Speaker 1: alive for all of thee that there is this issue

56
00:03:13,200 --> 00:03:15,480
Speaker 1: of how much do you actually listen to what FED

57
00:03:15,520 --> 00:03:18,160
Speaker 1: officials say and do what they say, versus take that

58
00:03:18,200 --> 00:03:20,280
Speaker 1: as signaling that's playing some game theory to try to

59
00:03:20,280 --> 00:03:22,120
Speaker 1: get the market to a place so that they can

60
00:03:22,160 --> 00:03:24,280
Speaker 1: then say, look, we're all good and we don't have

61
00:03:24,320 --> 00:03:26,600
Speaker 1: to raise rates as much as we previously thought. I

62
00:03:26,639 --> 00:03:29,560
Speaker 1: say this as Kansas City FEDS esther George speaks and

63
00:03:29,600 --> 00:03:32,240
Speaker 1: start talking about how she raised her forecasts for our

64
00:03:32,280 --> 00:03:34,520
Speaker 1: FEDS rates will ultimately end up. This is kind of

65
00:03:34,520 --> 00:03:37,440
Speaker 1: what Neil Kushkari was talking about a bit yesterday. Does

66
00:03:37,480 --> 00:03:40,200
Speaker 1: that guide you in any capacity? Do you trust them

67
00:03:40,440 --> 00:03:41,960
Speaker 1: or do you push back against them with the rest

68
00:03:42,000 --> 00:03:45,440
Speaker 1: of the market. Uh So I trust them in the

69
00:03:45,520 --> 00:03:48,480
Speaker 1: in the following sense, they are talking about what they

70
00:03:48,880 --> 00:03:52,280
Speaker 1: think they would do based on the availability of information

71
00:03:52,440 --> 00:03:54,800
Speaker 1: right now. Uh. And so then what we have to

72
00:03:54,800 --> 00:03:57,480
Speaker 1: do is overlay well we think is actually going to

73
00:03:57,560 --> 00:04:01,320
Speaker 1: happen with the actual data, what's going to happen with jobs,

74
00:04:01,320 --> 00:04:04,800
Speaker 1: what's going to happen with inflation? And if inflation keeps

75
00:04:04,840 --> 00:04:07,680
Speaker 1: coming off as it has been, and if job creation

76
00:04:07,760 --> 00:04:10,800
Speaker 1: continues to slow, then I think what they're going to

77
00:04:10,840 --> 00:04:13,720
Speaker 1: say is, Wow, we have got the traction that we

78
00:04:13,760 --> 00:04:17,760
Speaker 1: wanted from restrictive policy, and we were seeing this sloan

79
00:04:17,839 --> 00:04:19,760
Speaker 1: that we want, so we'll be able to step back.

80
00:04:19,800 --> 00:04:21,200
Speaker 1: So I don't think they're going to get to the

81
00:04:21,240 --> 00:04:24,080
Speaker 1: heights with the funds rate that some of the members

82
00:04:24,120 --> 00:04:27,640
Speaker 1: of the Committee have pointed to because I think the

83
00:04:27,720 --> 00:04:29,760
Speaker 1: data will slow enough to give the core of the

84
00:04:29,760 --> 00:04:32,520
Speaker 1: committee that sort of comfort that they can stop. The

85
00:04:32,560 --> 00:04:34,960
Speaker 1: problem is is that the data on the goods inflation

86
00:04:35,040 --> 00:04:38,480
Speaker 1: has slowed, that you are seeing some disinflation there, but

87
00:04:38,520 --> 00:04:40,520
Speaker 1: you're not seeing that in jobs. And this is where

88
00:04:40,520 --> 00:04:43,520
Speaker 1: we go. Let's let's really end where we began here.

89
00:04:43,839 --> 00:04:46,920
Speaker 1: This is the big dilemma. Will the Fed keep hiking

90
00:04:47,000 --> 00:04:49,320
Speaker 1: rates in the face of strong labor market data even

91
00:04:49,320 --> 00:04:52,719
Speaker 1: if there are signs of disinflation elsewhere? Yeah, I think

92
00:04:52,720 --> 00:04:56,840
Speaker 1: if it is continued very strong labor market, then then

93
00:04:56,880 --> 00:04:59,680
Speaker 1: I think they keep going. You know, we're looking for

94
00:05:00,000 --> 00:05:04,359
Speaker 1: another step down tomorrow. The ADP data came in. I

95
00:05:04,400 --> 00:05:06,120
Speaker 1: tend not to look at their numbers, but I do

96
00:05:06,320 --> 00:05:09,440
Speaker 1: spend time looking at the commentary that comes through, and

97
00:05:09,520 --> 00:05:11,640
Speaker 1: they are pointing to a little bit of easing of

98
00:05:11,720 --> 00:05:14,120
Speaker 1: wage pressures as well. So I do think we are

99
00:05:14,160 --> 00:05:16,400
Speaker 1: seeing signs that were going in the right direction, that

100
00:05:16,480 --> 00:05:19,560
Speaker 1: things are slowing. But there's no sense in which right

101
00:05:19,600 --> 00:05:21,520
Speaker 1: now things are weak. If we went back up to

102
00:05:21,600 --> 00:05:23,560
Speaker 1: three hundred thousand jobs per month and stay and then

103
00:05:23,640 --> 00:05:26,159
Speaker 1: there's no question they keep hiking Before we let you go, Seth.

104
00:05:26,440 --> 00:05:29,760
Speaker 1: I want to mark a funeral for negative fielding debt.

105
00:05:30,040 --> 00:05:32,320
Speaker 1: It is gone, it is dead. It is over. The

106
00:05:32,400 --> 00:05:35,839
Speaker 1: last negative field in coupon has gone. Well, the consequences

107
00:05:36,080 --> 00:05:38,560
Speaker 1: of the end of the negative yielding era be born

108
00:05:38,680 --> 00:05:41,560
Speaker 1: out over the next decade, over the next year, or

109
00:05:41,560 --> 00:05:45,159
Speaker 1: have we already seen it in what we experienced last year? Oh?

110
00:05:45,200 --> 00:05:47,880
Speaker 1: I think there's I think there's any number of repercussions

111
00:05:47,880 --> 00:05:50,000
Speaker 1: to come. And if if we're right and the feed

112
00:05:50,120 --> 00:05:52,240
Speaker 1: is able to stick with their strategy of not just

113
00:05:52,720 --> 00:05:55,360
Speaker 1: hiking until they're restrictive, but staying there for at least

114
00:05:55,400 --> 00:05:58,760
Speaker 1: the balance of this year, then then those higher rates

115
00:05:58,760 --> 00:06:00,720
Speaker 1: are going to be have have an effect for some

116
00:06:00,800 --> 00:06:03,480
Speaker 1: time to come. I think the other interesting question that

117
00:06:03,560 --> 00:06:05,760
Speaker 1: will come up and will be a topic of discussion

118
00:06:05,839 --> 00:06:10,240
Speaker 1: is going to be one of fiscal sustainability because as

119
00:06:10,279 --> 00:06:13,520
Speaker 1: those interest rates go open player and governments have increased

120
00:06:13,520 --> 00:06:16,320
Speaker 1: their dead totally entertainment that they're making is going to

121
00:06:16,400 --> 00:06:18,120
Speaker 1: have to go up as well. So I've been nice

122
00:06:18,120 --> 00:06:20,280
Speaker 1: at Ollen Sentner, you know, but just you know, New

123
00:06:20,320 --> 00:06:23,200
Speaker 1: Year's resolution, don't be so argumented like Steve Roach was

124
00:06:23,320 --> 00:06:27,080
Speaker 1: years ago. Seth carpenter of the fractures Margan Stanley team

125
00:06:27,160 --> 00:06:33,080
Speaker 1: as well. Here's the line from Anon Sender right from

126
00:06:33,080 --> 00:06:37,159
Speaker 1: Morgan Stanley, financial conditions aren't too easy, reflecting a misperception

127
00:06:37,200 --> 00:06:40,200
Speaker 1: among investors of the fetes reaction function. Let's get Russ

128
00:06:40,200 --> 00:06:42,040
Speaker 1: cos tricks view on that. The portfolio manager for the

129
00:06:42,040 --> 00:06:44,599
Speaker 1: black Rock Global Allocation Fund Russ. Would you agree with

130
00:06:44,600 --> 00:06:48,760
Speaker 1: that line from Annon Sentmocan Stanley, Well, good morning, Jonathan.

131
00:06:48,839 --> 00:06:51,640
Speaker 1: I think i'd agree with the fact that there's clearly

132
00:06:51,720 --> 00:06:54,640
Speaker 1: this tension right now within the Federal Reserve. This is

133
00:06:54,680 --> 00:06:56,320
Speaker 1: not a new thing. This is what you rail the

134
00:06:56,360 --> 00:06:59,840
Speaker 1: market back in August, where you're concerned about the market

135
00:07:00,000 --> 00:07:03,359
Speaker 1: eating ahead of itself, whether that's a function of the

136
00:07:03,400 --> 00:07:06,520
Speaker 1: stock market going too high, credit markets getting too tight.

137
00:07:07,000 --> 00:07:09,960
Speaker 1: There is that concern that the financial conditions ease off

138
00:07:10,000 --> 00:07:13,280
Speaker 1: too much. Is that going to hamper their fight against inflation?

139
00:07:14,680 --> 00:07:17,640
Speaker 1: And I look for us where we are, and we

140
00:07:17,680 --> 00:07:20,520
Speaker 1: have to piece this together. You have the responsibility to

141
00:07:20,560 --> 00:07:26,200
Speaker 1: piece it together with portfolio allocation. How are you reallocating?

142
00:07:27,440 --> 00:07:30,160
Speaker 1: So honestly, you know, Tom, we are pretty much going

143
00:07:30,200 --> 00:07:32,600
Speaker 1: into twenty three the way we left twenty two up.

144
00:07:32,960 --> 00:07:35,400
Speaker 1: We're not making a major change right now. So what

145
00:07:35,440 --> 00:07:39,480
Speaker 1: does the portfolio look like. We're underweight equities, were underweight bonds.

146
00:07:39,800 --> 00:07:43,160
Speaker 1: Were emphasizing carrying the portfolio because in a market that's

147
00:07:43,280 --> 00:07:45,400
Speaker 1: range bound, we want to be able to earn some

148
00:07:45,480 --> 00:07:49,800
Speaker 1: income for our clients. We're focused on quality stocks. Now.

149
00:07:49,880 --> 00:07:52,600
Speaker 1: I do think we're gonna get to a point later

150
00:07:52,640 --> 00:07:55,640
Speaker 1: in the year, probably in the first half, were closer

151
00:07:55,680 --> 00:07:59,040
Speaker 1: to a FED pivot. At that point, evaluations are where

152
00:07:59,040 --> 00:08:00,960
Speaker 1: they are a bit lower. I think you can get

153
00:08:01,000 --> 00:08:03,800
Speaker 1: a very good tradeable bottom. But this is not the

154
00:08:03,920 --> 00:08:06,160
Speaker 1: point where I think you want to load up on risks.

155
00:08:06,360 --> 00:08:09,040
Speaker 1: Are the the cost cutting is going to be efficacious

156
00:08:09,120 --> 00:08:12,640
Speaker 1: as every corporation and every sector goes out and recalibrates.

157
00:08:12,680 --> 00:08:15,000
Speaker 1: Here as we see from tech and all that. I

158
00:08:15,000 --> 00:08:18,360
Speaker 1: don't mean to micro call it, but are thinking to

159
00:08:18,440 --> 00:08:21,240
Speaker 1: be efficacious and helping their margins, are they actually going

160
00:08:21,280 --> 00:08:24,080
Speaker 1: to have impact? Well, let's over a couple of things.

161
00:08:24,120 --> 00:08:25,640
Speaker 1: I mean, tell him, I think you raised a very

162
00:08:25,680 --> 00:08:28,240
Speaker 1: important point. You know, a few minutes ago, you know

163
00:08:28,680 --> 00:08:32,680
Speaker 1: Big check is ridiculously profitable. You know, if you look

164
00:08:32,760 --> 00:08:35,439
Speaker 1: at most of the companies in the NASTAC one hundred,

165
00:08:35,480 --> 00:08:39,360
Speaker 1: particularly the megacap tech names, their cash flow, their profitability

166
00:08:39,400 --> 00:08:42,440
Speaker 1: is enormous. Margins just still close to a record high.

167
00:08:42,800 --> 00:08:45,960
Speaker 1: So yes, companies are gonna trying to manage costs that

168
00:08:46,120 --> 00:08:49,160
Speaker 1: arguably climbed up a little too much during the the

169
00:08:49,200 --> 00:08:52,760
Speaker 1: euphoria post pandemic. But the reality is these are still

170
00:08:53,000 --> 00:08:57,160
Speaker 1: very profitable companies. We're not talking about two thousand when

171
00:08:57,160 --> 00:09:00,679
Speaker 1: you had Banhastic one D and barely any offit ability.

172
00:09:01,160 --> 00:09:02,680
Speaker 1: Ross I can't let you get away with saying the

173
00:09:02,679 --> 00:09:05,640
Speaker 1: word pivot without really pressing into what that means. You

174
00:09:05,679 --> 00:09:08,040
Speaker 1: think that with all of this backdrop and the potential

175
00:09:08,080 --> 00:09:10,200
Speaker 1: pain that we're seeing in terms of layoffs, there will

176
00:09:10,240 --> 00:09:12,559
Speaker 1: be a pivot. What does pivot mean? Does it mean cuts?

177
00:09:12,559 --> 00:09:15,280
Speaker 1: Does it mean a pause? I think it's more of

178
00:09:15,280 --> 00:09:17,439
Speaker 1: a pause. I think the FED has been very clear

179
00:09:17,440 --> 00:09:20,319
Speaker 1: and again conditions can change, and they reserve the right

180
00:09:20,360 --> 00:09:24,040
Speaker 1: to change their minds. But it's not necessarily practical to

181
00:09:24,080 --> 00:09:27,560
Speaker 1: expect cuts this year. The question is where where's the

182
00:09:27,559 --> 00:09:30,280
Speaker 1: turninal FED funds rate? Is it five five and a

183
00:09:30,400 --> 00:09:33,680
Speaker 1: quarter market right now? Is uh? You know, forecasting someone

184
00:09:33,720 --> 00:09:36,440
Speaker 1: in the zip code to five or the conditions force

185
00:09:36,520 --> 00:09:38,280
Speaker 1: them to go much higher than that to five and

186
00:09:38,280 --> 00:09:40,720
Speaker 1: a half five and three quarters. I think that's the

187
00:09:40,800 --> 00:09:43,360
Speaker 1: question the market right now is trying to resolve. Is

188
00:09:43,400 --> 00:09:46,680
Speaker 1: you see signs of deceilration and inflation as you see

189
00:09:46,720 --> 00:09:49,199
Speaker 1: some salt in the labor market, and you get clarity

190
00:09:49,240 --> 00:09:52,000
Speaker 1: around that. That I think is when you get a

191
00:09:52,000 --> 00:09:55,079
Speaker 1: more tradeable bottom in financial markets. Can we get to

192
00:09:55,120 --> 00:09:57,960
Speaker 1: a pivot, Russ if we don't get a significant sell

193
00:09:58,040 --> 00:10:00,920
Speaker 1: off in equities, if we don't get the tightening for

194
00:10:01,240 --> 00:10:04,920
Speaker 1: financial conditions that the FED has been looking for, Yes,

195
00:10:05,000 --> 00:10:07,600
Speaker 1: I think you can. I think the FED is clearly

196
00:10:08,000 --> 00:10:11,040
Speaker 1: financial conditions are are front and center. But at the

197
00:10:11,120 --> 00:10:13,160
Speaker 1: end of the day, they've told us what they're focused on,

198
00:10:13,200 --> 00:10:15,480
Speaker 1: And if I had to focus on one factor, it's

199
00:10:15,480 --> 00:10:17,760
Speaker 1: going to be the labor market. Because we know that

200
00:10:17,840 --> 00:10:21,800
Speaker 1: headline inflation is coming down, goods inflation is coming down.

201
00:10:22,120 --> 00:10:25,240
Speaker 1: What has been remarkably resilient has been the labor market.

202
00:10:25,600 --> 00:10:27,000
Speaker 1: And that's where I think the FED is going to

203
00:10:27,080 --> 00:10:29,559
Speaker 1: focus not necessarily and whether the S and P five

204
00:10:29,640 --> 00:10:32,800
Speaker 1: hundreds at thirty seven hundred or thirty nine, Russ, can

205
00:10:32,840 --> 00:10:34,720
Speaker 1: you help me understand what's going on with the labor market.

206
00:10:34,800 --> 00:10:36,800
Speaker 1: So I looked at the quits right yesterday got the

207
00:10:36,880 --> 00:10:39,560
Speaker 1: jobs report. Job openings, quits are up, Quits picked up

208
00:10:39,600 --> 00:10:42,360
Speaker 1: for the first time since February. That screams confidence in

209
00:10:42,400 --> 00:10:44,960
Speaker 1: the labor market. Job opening still about one point seven

210
00:10:45,400 --> 00:10:48,560
Speaker 1: openings for every single unemployed American. Again, that screams a

211
00:10:48,640 --> 00:10:51,880
Speaker 1: tight labor market. Then, Russ, I see this news from Salesforce,

212
00:10:52,120 --> 00:10:54,280
Speaker 1: from Amazon, from others as well. Russ, We're trying to

213
00:10:54,320 --> 00:10:56,839
Speaker 1: work out what should I believe here we the corporations

214
00:10:56,840 --> 00:10:59,120
Speaker 1: in one industry, autnemy or what the official data is

215
00:10:59,160 --> 00:11:02,080
Speaker 1: telling me month a month, weay come weak. Well, I

216
00:11:02,080 --> 00:11:04,000
Speaker 1: think I think you hit it. It's what the its

217
00:11:04,040 --> 00:11:06,520
Speaker 1: industry by industry, and that is why this is such

218
00:11:06,559 --> 00:11:10,520
Speaker 1: a difficult labor market. Absolutely, we're seeing layoffs in tech,

219
00:11:11,080 --> 00:11:14,960
Speaker 1: We're seeing solignated in parts of the professional class. But

220
00:11:15,240 --> 00:11:20,439
Speaker 1: if you look at other parts of the labor market, hospitality, restaurants, healthcare,

221
00:11:21,000 --> 00:11:23,880
Speaker 1: these segments of the economy lost hundreds of thousands of

222
00:11:23,920 --> 00:11:27,440
Speaker 1: workers during the pandemic that have never come back. They're

223
00:11:27,440 --> 00:11:30,440
Speaker 1: still missing workers, which is why the quit rate is

224
00:11:30,480 --> 00:11:33,440
Speaker 1: still high, and that's why the labor market may remain

225
00:11:33,559 --> 00:11:36,560
Speaker 1: somewhat resilient, at least in those parts of the market

226
00:11:36,600 --> 00:11:39,720
Speaker 1: that are playing catch up with all of his dislocations

227
00:11:39,760 --> 00:11:42,320
Speaker 1: that happened during the pandemic. I rush, this was great.

228
00:11:42,320 --> 00:11:43,880
Speaker 1: We appreciate it happen to year to you in the

229
00:11:43,920 --> 00:11:58,319
Speaker 1: same thank you breast constrict typing of black Tom Forte

230
00:11:58,440 --> 00:12:01,600
Speaker 1: with us. He's senior research unlest did d a davidsonboat

231
00:12:01,640 --> 00:12:06,160
Speaker 1: It really is is a guy encyclopedic on what goes

232
00:12:06,200 --> 00:12:10,040
Speaker 1: on at Amazon. The background story we don't hear of.

233
00:12:10,440 --> 00:12:13,400
Speaker 1: I love how you end your note. Tom. You talk

234
00:12:13,480 --> 00:12:17,400
Speaker 1: about revenge travel. Bramo owns that, and you also talk

235
00:12:17,520 --> 00:12:20,640
Speaker 1: about we're all going to see Taylor Swift. You've gotta

236
00:12:20,679 --> 00:12:23,840
Speaker 1: be kidding me. Did Amazon just blow this with a

237
00:12:23,880 --> 00:12:29,880
Speaker 1: blowout growth track to the end of the pandemic? Sure? So,

238
00:12:30,200 --> 00:12:35,640
Speaker 1: e commerce companies in general overestimated demands for the current

239
00:12:35,679 --> 00:12:38,400
Speaker 1: state of the pandemic, not just Amazon. You see it

240
00:12:38,400 --> 00:12:42,400
Speaker 1: at Wayfair, you see it at Shopify. So I think

241
00:12:42,440 --> 00:12:46,680
Speaker 1: that what what happened was initially, when the stores were closed,

242
00:12:46,960 --> 00:12:52,400
Speaker 1: consumers leaned into e commerce to such extensive levels that

243
00:12:52,640 --> 00:12:55,840
Speaker 1: there was an expectation that those levels would hold. And

244
00:12:55,960 --> 00:12:59,480
Speaker 1: first what happened is consumers return to physical stores. Then

245
00:13:00,160 --> 00:13:02,480
Speaker 1: they had inflation, so they had more money spent on

246
00:13:02,559 --> 00:13:06,560
Speaker 1: food and on energy, and then they had Revengie Travel,

247
00:13:07,120 --> 00:13:09,600
Speaker 1: and then they had Taylor Swift. So I think you

248
00:13:09,640 --> 00:13:12,720
Speaker 1: are seeing a return to live events. But from Amazon's

249
00:13:12,800 --> 00:13:16,040
Speaker 1: vanage point, as well as Wayfair and shopifies, people are

250
00:13:16,080 --> 00:13:19,040
Speaker 1: not shopping on e commerce and that's a problem at least.

251
00:13:19,080 --> 00:13:21,199
Speaker 1: So this is just as shattered the A and R

252
00:13:21,280 --> 00:13:24,600
Speaker 1: screen on the Bloomberg there's fifty five buys, three holes

253
00:13:25,400 --> 00:13:28,920
Speaker 1: in one cell the streets, just violently against what Jesse

254
00:13:29,080 --> 00:13:31,920
Speaker 1: is doing. Yeah, clearly they don't see this is being

255
00:13:31,960 --> 00:13:34,040
Speaker 1: a massive downside. In fact, this might just be just

256
00:13:34,160 --> 00:13:37,360
Speaker 1: the medicine the Amazon needs to have the same kind

257
00:13:37,400 --> 00:13:39,480
Speaker 1: of profitability that they're pricing in. I do wander though,

258
00:13:39,520 --> 00:13:43,240
Speaker 1: Tom eighteen tho corporate jobs cut. Does that indicate a

259
00:13:43,320 --> 00:13:46,120
Speaker 1: much broader wave of job cuts among the rank and

260
00:13:46,160 --> 00:13:49,160
Speaker 1: file in the months to come? Yes, So I think

261
00:13:49,200 --> 00:13:51,319
Speaker 1: part of what you're seeing is so if you look

262
00:13:51,360 --> 00:13:54,600
Speaker 1: at Salesforce laying off ten thousand, you look at you know,

263
00:13:54,960 --> 00:13:58,520
Speaker 1: big tech company to your with more layoffs, is that

264
00:13:58,760 --> 00:14:02,920
Speaker 1: to some extent there was some element of bloated headcount.

265
00:14:03,240 --> 00:14:05,839
Speaker 1: So you had a very tight job market, especially in

266
00:14:05,880 --> 00:14:09,520
Speaker 1: the technology area, and you have companies that ramped their

267
00:14:09,520 --> 00:14:14,280
Speaker 1: headcount very significantly. Some of it was a miscalculation of demand,

268
00:14:14,679 --> 00:14:16,600
Speaker 1: but I think some of it is turning out to

269
00:14:16,640 --> 00:14:19,640
Speaker 1: be bloated headcount. So I think that there is a

270
00:14:19,640 --> 00:14:23,520
Speaker 1: possibility that you could see some margin improvement in Amazon

271
00:14:23,920 --> 00:14:27,160
Speaker 1: and some of these other big tech companies from scaling

272
00:14:27,160 --> 00:14:29,800
Speaker 1: back their headcount. But I do think it is worrisome

273
00:14:30,120 --> 00:14:32,520
Speaker 1: again for the current state of demand for e commerce.

274
00:14:33,280 --> 00:14:35,800
Speaker 1: This is kind of bizarre to me. Tom. Basically, this

275
00:14:35,920 --> 00:14:37,520
Speaker 1: is like Tom going to the bobs and asking for

276
00:14:37,520 --> 00:14:40,000
Speaker 1: a hairdcunt. Someone pulls out of teas. Tom, this is

277
00:14:40,040 --> 00:14:41,880
Speaker 1: even a big problem, and they're not dealing with it,

278
00:14:42,280 --> 00:14:43,800
Speaker 1: or it's not a big problem, and that just doing

279
00:14:43,840 --> 00:14:46,280
Speaker 1: something small. I didn't get it. Tom. If I've got

280
00:14:46,320 --> 00:14:50,920
Speaker 1: one point five median people on the books, then what

281
00:14:51,080 --> 00:14:54,520
Speaker 1: is eighteen thousand? So so think of it as two ways.

282
00:14:54,600 --> 00:14:58,760
Speaker 1: Amazon basically has two workforces, the blue collar workforce that

283
00:14:58,880 --> 00:15:01,880
Speaker 1: employs that the fulfillment center. They had a hundred thousand

284
00:15:02,000 --> 00:15:04,840
Speaker 1: quiet production and headcamp between the March quarter and June

285
00:15:04,880 --> 00:15:07,720
Speaker 1: quarter of last year. As they basically didn't hire back

286
00:15:08,280 --> 00:15:11,880
Speaker 1: on attrition. And then the white collar workforce. And what

287
00:15:11,960 --> 00:15:14,560
Speaker 1: we're talking about here is a white collar workforce eighteen

288
00:15:14,560 --> 00:15:17,280
Speaker 1: thousand jobs and a ten thousand jobs, and I think

289
00:15:17,360 --> 00:15:21,800
Speaker 1: that is an indication of software demand and a greater

290
00:15:21,880 --> 00:15:25,840
Speaker 1: effort for cost controls. So two different labor forces in Amazon.

291
00:15:26,320 --> 00:15:29,720
Speaker 1: Here we're talking more about white collar job layoffs. That's

292
00:15:29,720 --> 00:15:32,520
Speaker 1: impulland climsy tumpson. Can you tell me where the other

293
00:15:32,600 --> 00:15:34,600
Speaker 1: leavers are and whether you think they might have to

294
00:15:34,640 --> 00:15:37,880
Speaker 1: be pulled in the year ahead. The big challenge for

295
00:15:37,960 --> 00:15:41,080
Speaker 1: Amazon in the third quarter wasn't that their e commerce

296
00:15:41,160 --> 00:15:44,240
Speaker 1: was slowing. It was that their higher margin, higher growth

297
00:15:44,480 --> 00:15:48,240
Speaker 1: cloud computing and advertising business. We're starting to feel the

298
00:15:48,320 --> 00:15:53,040
Speaker 1: negative impact of challenging macroeconomic environment environment. So to the

299
00:15:53,080 --> 00:15:56,280
Speaker 1: extent that you consider, you see more weakness than ten

300
00:15:56,320 --> 00:16:00,520
Speaker 1: thousand could become eighteen thousand could become thirty thousand. Will

301
00:16:00,520 --> 00:16:03,320
Speaker 1: see how they continue to manage costs as the demand,

302
00:16:03,680 --> 00:16:07,760
Speaker 1: especially for cloud computing and advertising, remains in flux in

303
00:16:07,760 --> 00:16:11,400
Speaker 1: a challenging macro tom what is Jesse gonna do about

304
00:16:11,440 --> 00:16:17,320
Speaker 1: the ginormous headache the logistics of the last mile for Amazon?

305
00:16:17,760 --> 00:16:20,920
Speaker 1: They got all those boxes piled up, and it just

306
00:16:20,920 --> 00:16:24,240
Speaker 1: seems like getting the last mile, getting the last four miles,

307
00:16:24,560 --> 00:16:27,160
Speaker 1: getting the last four hundred yards in New York City

308
00:16:27,680 --> 00:16:29,760
Speaker 1: is the ultimate battle. Are they going to fix that?

309
00:16:31,080 --> 00:16:33,800
Speaker 1: I think this is their strength. So if you look

310
00:16:33,800 --> 00:16:37,280
Speaker 1: at the duopoly of FedEx in UPS, one of my

311
00:16:37,360 --> 00:16:41,360
Speaker 1: favorite moments in UH tech was within the last three

312
00:16:41,360 --> 00:16:44,640
Speaker 1: months when FedEx said we're about to enter a global recession.

313
00:16:45,120 --> 00:16:48,920
Speaker 1: Second statement, we're raising prices. So I see an opportunity

314
00:16:49,040 --> 00:16:53,280
Speaker 1: for Amazon to use their first party delivery efforts for

315
00:16:53,360 --> 00:16:57,600
Speaker 1: all retailers. They could break the duopoly of FedEx and UPS.

316
00:16:57,640 --> 00:17:00,360
Speaker 1: So I see that as actually an opportunity for Amazon,

317
00:17:00,880 --> 00:17:03,480
Speaker 1: and I think that that's something that seven percent of

318
00:17:03,520 --> 00:17:06,320
Speaker 1: units sold an Amazon were third party that could grow

319
00:17:06,320 --> 00:17:10,840
Speaker 1: to sever time. Leveraging their delivery effort is what will

320
00:17:10,920 --> 00:17:15,840
Speaker 1: enable them to do that. That's fascinating clinic from some

321
00:17:16,040 --> 00:17:17,679
Speaker 1: FOTA at Day, I send him what he thinks it's

322
00:17:17,680 --> 00:17:23,919
Speaker 1: gonna happen with Amazon. We thought we would get some

323
00:17:24,000 --> 00:17:27,680
Speaker 1: perspective on the madness in Washington now. And there's no

324
00:17:27,720 --> 00:17:30,919
Speaker 1: one better than Wendy Schiller, who owns a high ground

325
00:17:30,920 --> 00:17:35,320
Speaker 1: at Brown University on American politics. Wendy, I'm gonna cut

326
00:17:35,400 --> 00:17:37,560
Speaker 1: to the chase. You and I were channeling the great

327
00:17:37,640 --> 00:17:41,880
Speaker 1: Alan Evans on Grover Cleveland and a time from another place,

328
00:17:42,440 --> 00:17:45,320
Speaker 1: and there was a guy from Maine, Tom Reid of

329
00:17:45,400 --> 00:17:50,119
Speaker 1: Bowden College, who changed the rules. What did Zuri do

330
00:17:50,720 --> 00:17:54,360
Speaker 1: in eighteen eighty five or whatever that matters to Mr

331
00:17:54,440 --> 00:17:58,680
Speaker 1: McCarthy today, it's it's very similar. He changed the Rules Committee.

332
00:17:58,680 --> 00:18:01,520
Speaker 1: The Rules Committee is the gateway put legislation on the floor,

333
00:18:01,640 --> 00:18:03,399
Speaker 1: and when you get through the Rules Committee, they determine

334
00:18:03,400 --> 00:18:05,360
Speaker 1: which amendments you can offer and who can offer them,

335
00:18:05,359 --> 00:18:07,960
Speaker 1: and how long you debate the bill. So read basically

336
00:18:08,000 --> 00:18:10,560
Speaker 1: stacked the deck. He took control of Speaker of the

337
00:18:10,640 --> 00:18:12,919
Speaker 1: Rules Committee and then gave the Rules Committee and the

338
00:18:12,920 --> 00:18:16,760
Speaker 1: Steering Committee the opportunity to shape legislation and cut out

339
00:18:16,800 --> 00:18:19,320
Speaker 1: individual members and members gave him the power to do

340
00:18:19,359 --> 00:18:22,320
Speaker 1: that precisely what you just mentioned, Tom. The McKinley Tarift Bill,

341
00:18:22,560 --> 00:18:24,520
Speaker 1: they all wanted to get it past a big industry.

342
00:18:24,560 --> 00:18:27,159
Speaker 1: Republicans were united. They needed to get it through, and

343
00:18:27,160 --> 00:18:30,520
Speaker 1: they needed a uniform process to squelch all the opposition,

344
00:18:30,520 --> 00:18:33,560
Speaker 1: particularly Southern Democrats who want to free trade that's not

345
00:18:33,680 --> 00:18:35,879
Speaker 1: here today. They don't seem to have a kind of

346
00:18:35,920 --> 00:18:40,480
Speaker 1: agreement in the Republican Party singular policy calls. Pelosi had

347
00:18:40,560 --> 00:18:44,560
Speaker 1: Louise slaughter, She went with an iron grip, handled the

348
00:18:44,640 --> 00:18:49,000
Speaker 1: rules committee in a McCarthy house. Does he have a

349
00:18:49,080 --> 00:18:51,879
Speaker 1: rules committee when maybe Greg Valier says he's going to

350
00:18:52,000 --> 00:18:54,240
Speaker 1: give it up to one vote could throw him out

351
00:18:54,280 --> 00:18:57,680
Speaker 1: of office? This isn't This is an even Pelosi slaughter

352
00:18:58,119 --> 00:19:01,320
Speaker 1: of five years ago, is it? No? But you know

353
00:19:01,320 --> 00:19:04,840
Speaker 1: they're clamoring for more open legislative process, you know, and

354
00:19:05,080 --> 00:19:07,840
Speaker 1: in the midst of all the opposition and name calling,

355
00:19:08,200 --> 00:19:10,080
Speaker 1: you know, in the Senate, the same thing. The parties

356
00:19:10,080 --> 00:19:12,840
Speaker 1: have really consolidated leadership. Senators complained they can't do anything

357
00:19:12,840 --> 00:19:15,000
Speaker 1: on the floor of the Cannel far amendments. The legislative

358
00:19:15,000 --> 00:19:18,199
Speaker 1: process isn't really there anymore for for either chamber. So

359
00:19:18,280 --> 00:19:21,000
Speaker 1: they're making a valid point that they want a bigger stay.

360
00:19:21,040 --> 00:19:22,920
Speaker 1: And what happens, the problem is they don't share the

361
00:19:22,960 --> 00:19:26,159
Speaker 1: same ideological viewpoint or policy goals, so they will obstruct

362
00:19:26,440 --> 00:19:30,040
Speaker 1: and with such a slim margin, it really paralyzes the House. Wendy,

363
00:19:30,080 --> 00:19:34,280
Speaker 1: the Democrats are remaining quiet, probably wisely so to allow

364
00:19:34,320 --> 00:19:37,119
Speaker 1: this to play out without their input. I am wondering,

365
00:19:37,160 --> 00:19:39,560
Speaker 1: though we had expected after the holidays to hear from

366
00:19:39,600 --> 00:19:42,720
Speaker 1: President Biden about whether he would run again, he hasn't

367
00:19:42,760 --> 00:19:45,760
Speaker 1: announced and talked about that at all. When is he

368
00:19:45,840 --> 00:19:48,520
Speaker 1: going to discuss that more in full? Do you get

369
00:19:48,560 --> 00:19:50,800
Speaker 1: any scuttle butt about what's going on on that behind

370
00:19:50,800 --> 00:19:53,600
Speaker 1: the scenes? Well at LISTA, that's a great question. It

371
00:19:53,640 --> 00:19:55,520
Speaker 1: seems to me since the State of the Union address

372
00:19:55,560 --> 00:19:58,000
Speaker 1: will be earlier this year than it was last year,

373
00:19:58,080 --> 00:20:01,359
Speaker 1: most likely makes sense to take that unique opportunity do

374
00:20:01,400 --> 00:20:03,879
Speaker 1: it as a neutral, you know, bipartisan leader of the

375
00:20:03,880 --> 00:20:07,080
Speaker 1: country event uh, and then announced you're gonna run. And

376
00:20:07,119 --> 00:20:09,440
Speaker 1: if you do it beforehand, then everything about the State

377
00:20:09,440 --> 00:20:11,520
Speaker 1: of the Union is tainted by that announcement. So my

378
00:20:11,560 --> 00:20:13,080
Speaker 1: guess as he waits till after the State of the

379
00:20:13,160 --> 00:20:15,879
Speaker 1: Union and does announce that he's going to seek the presidency,

380
00:20:15,960 --> 00:20:18,840
Speaker 1: particularly if the Republicans look like they're in disarray, it

381
00:20:18,880 --> 00:20:22,000
Speaker 1: really stomps on whatever momentum some of these challengers like

382
00:20:22,080 --> 00:20:26,560
Speaker 1: Rhonda Scientists, Donald Trump have going into to look ahead

383
00:20:26,560 --> 00:20:29,159
Speaker 1: to twenty four. Some people would argue the opposite that

384
00:20:29,320 --> 00:20:31,919
Speaker 1: President Biden said that he would run again if former

385
00:20:31,960 --> 00:20:34,200
Speaker 1: President Trump was in the running. Sure, he's in the running,

386
00:20:34,200 --> 00:20:35,560
Speaker 1: but he's kind of taken a back seat when it

387
00:20:35,560 --> 00:20:39,439
Speaker 1: comes to leadership, certainly with this latest House speaker nomination

388
00:20:39,680 --> 00:20:42,200
Speaker 1: and vote that we've seen go down in d C.

389
00:20:42,440 --> 00:20:46,720
Speaker 1: At what point does that factor into what President Biden does?

390
00:20:46,760 --> 00:20:49,359
Speaker 1: Where does the leadership go for the future in the

391
00:20:49,400 --> 00:20:53,400
Speaker 1: Democratic Party. Well that's a really great question. But right

392
00:20:53,440 --> 00:20:56,240
Speaker 1: now Biden is like he's got a lead in sports analogy,

393
00:20:56,280 --> 00:20:57,760
Speaker 1: He's got to lead in the game. He's sitting on

394
00:20:57,800 --> 00:21:00,280
Speaker 1: the lead. They out team doesn't have their acting together.

395
00:21:00,680 --> 00:21:02,639
Speaker 1: Why would you step off the field, Why would you

396
00:21:02,640 --> 00:21:04,359
Speaker 1: give up the game? You know, He's gonna go forward.

397
00:21:04,359 --> 00:21:06,640
Speaker 1: He's got some good cabinet members, got some good governors

398
00:21:06,640 --> 00:21:09,800
Speaker 1: in the wings. I think given today's political environment, people

399
00:21:09,840 --> 00:21:12,919
Speaker 1: can ramp up pretty quickly to run for president. So

400
00:21:13,040 --> 00:21:15,399
Speaker 1: I don't think it hurts the Democratic Party. And as

401
00:21:15,440 --> 00:21:17,919
Speaker 1: long as they stay solid and united, that's the message

402
00:21:17,960 --> 00:21:20,159
Speaker 1: they put forward, while the Republicans appeared to be at

403
00:21:20,200 --> 00:21:23,040
Speaker 1: the moment in disarray. You know, and I'm looking at

404
00:21:23,160 --> 00:21:26,800
Speaker 1: Wendy and the Tuesday lunch bunch at Brown University is

405
00:21:26,840 --> 00:21:30,080
Speaker 1: something having to do with pizza and Providence. There's the

406
00:21:30,200 --> 00:21:33,840
Speaker 1: moderates of the Tuesday lunch Bunch, now the Republican Government's

407
00:21:33,880 --> 00:21:37,200
Speaker 1: Committee in Washington. I don't think enough is being said

408
00:21:37,240 --> 00:21:39,480
Speaker 1: here about what I'm gonna call. I know I'm gonna

409
00:21:39,480 --> 00:21:41,960
Speaker 1: get a lot of hate mail on this normal non

410
00:21:42,040 --> 00:21:47,280
Speaker 1: Maga Republicans. How did they move forward? Well, and Tom,

411
00:21:47,280 --> 00:21:49,560
Speaker 1: that's a great point because there's two hundred of them.

412
00:21:49,720 --> 00:21:52,800
Speaker 1: You know, McCarthy can say he's conservative and people sort

413
00:21:52,840 --> 00:21:54,760
Speaker 1: of believe them. But you know, when you're from California,

414
00:21:54,800 --> 00:21:57,960
Speaker 1: it's a tough sell if it's not to be a

415
00:21:58,000 --> 00:22:01,119
Speaker 1: really red Republican. But there are two dred Republicans who

416
00:22:01,119 --> 00:22:03,439
Speaker 1: want McCarthy to be speaker. So how they come to

417
00:22:03,440 --> 00:22:06,000
Speaker 1: the table. Maybe Steve Scalise, you know, second in command.

418
00:22:06,040 --> 00:22:09,919
Speaker 1: Louisiana Republican is different from Midwestern Republican and they all

419
00:22:10,040 --> 00:22:12,639
Speaker 1: one closer racist than they expected, and they want to

420
00:22:12,640 --> 00:22:15,160
Speaker 1: win again. So I think this is a really big

421
00:22:15,200 --> 00:22:17,119
Speaker 1: problem for them. They're not just gonna lie down and

422
00:22:17,200 --> 00:22:19,520
Speaker 1: let these twenty kids, if you want to call them that.

423
00:22:20,560 --> 00:22:23,240
Speaker 1: So I don't mean to interrupt, running out of time,

424
00:22:23,320 --> 00:22:26,959
Speaker 1: if they're not gonna lie down. What do they do

425
00:22:27,440 --> 00:22:31,679
Speaker 1: when this, this this clown show is over, Well, I

426
00:22:31,720 --> 00:22:34,159
Speaker 1: think that they have to stay. What they should do

427
00:22:34,280 --> 00:22:36,960
Speaker 1: right now is stick together. They shouldn't relent. McCarthy shouldn't

428
00:22:37,000 --> 00:22:40,359
Speaker 1: quit too soon, because that's that's their exercise of power.

429
00:22:40,400 --> 00:22:42,600
Speaker 1: The two wonders that want McCarthy shouldn't throw in the

430
00:22:42,600 --> 00:22:46,040
Speaker 1: towel today or tomorrow. Make this go on, make them

431
00:22:46,080 --> 00:22:48,600
Speaker 1: fill a buster this for a longer period of time,

432
00:22:48,760 --> 00:22:51,400
Speaker 1: and certainly go out to contributors and say, listen, don't

433
00:22:51,440 --> 00:22:53,280
Speaker 1: give these people any money anymore, even though that's what

434
00:22:53,280 --> 00:22:55,359
Speaker 1: they complain they want to be protected from. You know,

435
00:22:55,520 --> 00:22:58,040
Speaker 1: make sure that you stay solid, to signal to them

436
00:22:58,280 --> 00:23:00,159
Speaker 1: that you're not going to roll over today, You're not

437
00:23:00,160 --> 00:23:01,920
Speaker 1: going to roll over six months from now. I don't

438
00:23:01,920 --> 00:23:03,399
Speaker 1: know if they can do it, but that's what I

439
00:23:03,400 --> 00:23:06,000
Speaker 1: would recommend to hold their power in the Republican Party

440
00:23:06,040 --> 00:23:07,840
Speaker 1: in the House. Wendy. A lot of investors trying to

441
00:23:07,880 --> 00:23:10,639
Speaker 1: be politically agnostic. I'm not sure if that's achievable or not,

442
00:23:10,680 --> 00:23:12,560
Speaker 1: but they at least try, and I think they're probably

443
00:23:12,560 --> 00:23:16,280
Speaker 1: wondering watching this play out, what is this consequential for me? Wendy,

444
00:23:16,400 --> 00:23:19,400
Speaker 1: how long can this go on for before it's truly consequential.

445
00:23:20,880 --> 00:23:24,760
Speaker 1: I think it can go on for a long time. Actually, unfortunately,

446
00:23:25,119 --> 00:23:28,160
Speaker 1: it's consequential today. You know, when the leader the free

447
00:23:28,160 --> 00:23:30,439
Speaker 1: world of the United States is the leader, and our

448
00:23:30,480 --> 00:23:33,200
Speaker 1: economic and political powers are tied together, and if one

449
00:23:33,200 --> 00:23:36,680
Speaker 1: of our chambers is grossly dysfunctional, then the world starts

450
00:23:36,680 --> 00:23:38,480
Speaker 1: to wonder if they should invest in the United States.

451
00:23:38,680 --> 00:23:40,960
Speaker 1: So if we want to issue new treasuries to fund

452
00:23:40,960 --> 00:23:42,959
Speaker 1: that debt, you know, we have to get more stable.

453
00:23:43,040 --> 00:23:45,320
Speaker 1: So I think it has implications starting today. The rest

454
00:23:45,359 --> 00:23:47,560
Speaker 1: of the world is having some issues too in their legislatures,

455
00:23:47,560 --> 00:23:51,120
Speaker 1: but nonetheless it matters today. Whether that matters to Matt

456
00:23:51,160 --> 00:23:53,920
Speaker 1: Gates or Lawren Boberg or you know, Chip Roy. The

457
00:23:53,960 --> 00:23:56,680
Speaker 1: people who are leading this charge, I'm not sure they're

458
00:23:56,680 --> 00:23:59,159
Speaker 1: not particularly international in their focus. But that's where the

459
00:23:59,200 --> 00:24:01,920
Speaker 1: business community, to me, has stayed too silent. Right now

460
00:24:02,200 --> 00:24:04,080
Speaker 1: they have to weigh in and they have to say, listen,

461
00:24:04,080 --> 00:24:05,920
Speaker 1: we give you a lot of money and we want

462
00:24:05,920 --> 00:24:08,439
Speaker 1: the thing settled, so get it done. Wendy, Thank you, Wendy,

463
00:24:08,440 --> 00:24:13,280
Speaker 1: Si Brand Universty. This is the Bloomberg surveillance podcast. Thanks

464
00:24:13,280 --> 00:24:16,600
Speaker 1: for listening. Join us live weekdays from seven to ten

465
00:24:16,640 --> 00:24:20,480
Speaker 1: a m. Eastern on Bloomberg Radio and on Bloomberg Television

466
00:24:20,840 --> 00:24:24,880
Speaker 1: each day from six to nine am for insight from

467
00:24:24,880 --> 00:24:29,439
Speaker 1: the best in economics, finance, investment, and international relations. And

468
00:24:29,520 --> 00:24:34,720
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

469
00:24:34,720 --> 00:24:38,439
Speaker 1: dot com, and of course on the terminal. I'm Tom Keene,

470
00:24:38,440 --> 00:24:40,480
Speaker 1: and this is Bloomberg