Speaker 1: Welcome to the Bloomberg Surveillance Podcast Hometown Keene. Along with
Speaker 1: Jonathan Ferrill and Lisa A. Brownwitz Jayleie, we bring you
Speaker 1: insight from the best and economics, finance, investment and international relations,
Speaker 1: Fine Bloomberg Surveillance, an Apple podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. Early this week,
Speaker 1: one call from one economist and one team on Wall
Speaker 1: Street made a ton of headlines that came from Goldman
Speaker 1: and this was the quote from near the top of
Speaker 1: the south Side research. In the near term, a complete
Speaker 1: service sector recovery will likely require fully overcoming virus fares
Speaker 1: and returning to office work patterns, both now appear likely
Speaker 1: to take longer than we anticipated. That was Janhattis and
Speaker 1: the team over at Goldman Sax, the chief economist joins
Speaker 1: us right now and yeah, because of that, you've downgraded
Speaker 1: your forecast. Can you just walk me through this just
Speaker 1: a little bit more that agree to think to which
Speaker 1: you think we will decelerate in the coming quarters. We
Speaker 1: are looking for a pretty significant deceleration as we go
Speaker 1: into two thousand and twenty two. Right now, you know,
Speaker 1: obviously six and a half percent growth in Q two,
Speaker 1: probably more than that in Q three, But then we're
Speaker 1: at one and a half to two by the second
Speaker 1: half of two thousand and twenty two. And that's partly
Speaker 1: because the return to full utilization in the in the
Speaker 1: service sector is it's a slow process. Just one data
Speaker 1: point that I think is very important. U. The office
Speaker 1: occupancy rate in the United States is still only thirty
Speaker 1: of the pre pandemic level, and even in Texas, which
Speaker 1: is most advanced, it's only fift And this you know,
Speaker 1: I do think those numbers are going to be much
Speaker 1: higher eventually, but we're we're still it's a very slow process. US.
Speaker 1: You're one point five to trend growth. Yeah, and that
Speaker 1: was amazing just to read that one point five to
Speaker 1: two percent trend by the back end at two it's
Speaker 1: a second half of two young, you're looking for one
Speaker 1: point five to two percent GDP. Groves. Now that's the call.
Speaker 1: Help me understand how you reconcile that with your call
Speaker 1: from the Federal Reserve. How does the policy call reconcile
Speaker 1: with the growth call that you're making. Well, the policy
Speaker 1: call is that the FED is still going to be
Speaker 1: very gradual in exiting from the current policy stands, or
Speaker 1: we have tapering starting in early two thousand and twenty two,
Speaker 1: announced that the decemberform C meeting. Then a pretty gradual,
Speaker 1: you know, fifteen billion and meeting tapering pace. So it
Speaker 1: takes you until the end of two thousand twenty two
Speaker 1: until tapering is done, and then whether you get rate
Speaker 1: hikes thereafter, it's going to depend on whether the criteria
Speaker 1: that the Feds laid out are met. So what are
Speaker 1: the criteria two percent inflation, confidence that you'll be somewhat
Speaker 1: above two for a while, and full employment. When those
Speaker 1: conditions are met, they will hike. Our baseline is that
Speaker 1: that happens in late two thousand twenty three, but I
Speaker 1: think the risks are towards the later side, could slip
Speaker 1: into two thousand and twenty four, and that is, you know,
Speaker 1: somewhat later than what markets are pricing I think for
Speaker 1: all of these things. So I think it's consistent with
Speaker 1: a growth forecast that is still strong in the short
Speaker 1: term but decelerates quite a lot because of the withdrawal
Speaker 1: of fiscal stimulus and less of a boost from reopening. Okay,
Speaker 1: that said, some of the factors that you're talking about,
Speaker 1: like people getting back to the office and the delta
Speaker 1: variant will subside. Potentially, it will take a couple of
Speaker 1: months longer, but will subside. I mean, why do you
Speaker 1: disagree with City macro strategists that actually put out our
Speaker 1: report today saying that this stagflation surprise regime is tactical
Speaker 1: in nature and shouldn't last more than a couple of months. Well,
Speaker 1: I certainly agree on the the inflation side of of
Speaker 1: things that we you know, I've seen obviously a big
Speaker 1: increase in inflation, and we do think that is transitory.
Speaker 1: We have a sharp deceleration in inflation in terms of
Speaker 1: core PC, you know, we think will be below two
Speaker 1: percent for much of two thousand and twenty two. So
Speaker 1: I think on that part, we you know, we certainly
Speaker 1: have a similar view. You know. I think on the
Speaker 1: growth side, we've been very optimistic about the the rebound
Speaker 1: in growth in two thousand and twenty one basically because
Speaker 1: you've seen a massive amount of fiscal support and a
Speaker 1: big boost from reopening and those things have not quite
Speaker 1: played out yet, but they are temporary. The reopening is
Speaker 1: a is a one time boost to the growth rate
Speaker 1: and you know, permanent boost to the level. But at
Speaker 1: one time boost to the growth rate, and fiscal actually
Speaker 1: turns into a neg to have impact in two thousand
Speaker 1: and twenty two because a lot of the enormous support
Speaker 1: of two thousand twenty one isn't repeated in twenty two. Sure,
Speaker 1: we're not going to get instant trillion dollar money dumps
Speaker 1: like we got during the pandemic. It's not going to
Speaker 1: be instantaneous fiscal policy, but we're still talking about trillions
Speaker 1: of dollars in the longer term economics spending on Capitol
Speaker 1: Hill that is making progress. I know it's spread out
Speaker 1: over a long time, but how do you factor that
Speaker 1: in here? Well, I think that is the key point.
Speaker 1: That it's spread out over a long time. So the
Speaker 1: headline number is going to be very big. Let's say
Speaker 1: it's going to be three trillion dollars when all is
Speaker 1: said and done. But there are two things to consider. One,
Speaker 1: um maybe one one and a half trillion of that
Speaker 1: is going to be offset by higher taxes. And number two,
Speaker 1: it's spread over a ten year horizon, So you basically
Speaker 1: have to divide all these numbers, you know, one and
Speaker 1: a half trillion or three trillion by ten and then
Speaker 1: you're talking about something that's sort of in the one
Speaker 1: percent of GDP range and nowhere near the support that
Speaker 1: the American Rescue Plan provided for two thousand and twenty one.
Speaker 1: And what I'm most interested in in terms of the
Speaker 1: impulse to growth is what's the change from one year
Speaker 1: to the next. What do we get there? Fiscal support
Speaker 1: worth about twelve percent of GDP in two thousand and
Speaker 1: twenty one, and even with our assumption on fiscal which
Speaker 1: is actually fairly expensive, we only get four percent of
Speaker 1: GDP in two thousand twenty two. So that's an eight
Speaker 1: percentage point reduction. Now that's not an eight percentage point
Speaker 1: negative impulse, because some of this, of course is the
Speaker 1: flip side of a more normal economy, but it's still
Speaker 1: pretty sizeable negative impulse. And just quickly, just around things up,
Speaker 1: we've done a beautiful job of explaining how you think
Speaker 1: growth will decelerate in the coming years to coming quarters.
Speaker 1: Can you help me also understand how you expect their
Speaker 1: READI of inflation to decelerate as well? From the high
Speaker 1: rates we're at right now, does that persist into the
Speaker 1: new year. We don't think so, because if you look
Speaker 1: at the high rate right now and the upside surprise,
Speaker 1: it's very concentrated in a small number of areas that
Speaker 1: are very likely to be temporary. The single most important
Speaker 1: one is used cars, and the used car market is
Speaker 1: already showing some signs of relaxation. We have data on
Speaker 1: auction prices which have been going down over the last
Speaker 1: six weeks or so. That hasn't shown up in the
Speaker 1: in the CPI and PC yet, but it will show
Speaker 1: up over the next several months. And so you're going
Speaker 1: to go from positive impulse to to a negative impulse,
Speaker 1: not just neutral, but a negative impulse as you go
Speaker 1: into into next year. Other observations. I think wage pressure
Speaker 1: has been sizeable but looks quite temporary and probably related
Speaker 1: at least in part to the top up unemployment benefits
Speaker 1: which are expiring. And then lastly, inflation expectations still seem
Speaker 1: very anchored, at least for the longer term. You have
Speaker 1: always super sharp and credit cant shop with you on
Speaker 1: the WEEKI down credit growth. You're Nhancys Government Sex chief economist,
Speaker 1: look Fairy stay Street, head of mac Rice Strategy North America,
Speaker 1: joined us now lee this conversation about stagflation light just
Speaker 1: give me a pushback if you want to push back, leak,
Speaker 1: I'd love to push back. I mean stag stagflation. It's
Speaker 1: a phrase that comes up virtually every slowdown we have
Speaker 1: or if we have a high inflation print and growth
Speaker 1: is not about high people talk about stagflation. Real stagflation
Speaker 1: is really, really, really hard to get in an economy,
Speaker 1: and really the last time was probably in the seventies.
Speaker 1: But that's when you've got price controls, right, you know,
Speaker 1: because if you have a slowdown the economy, price pressures diminished.
Speaker 1: That's in a normal functioning market economy, that's what happened.
Speaker 1: So this idea of stagflation, this growth is going to
Speaker 1: be you know, let's just say north of five percent
Speaker 1: this year. We've got some reopening inflation pressures that we're seeing. Now,
Speaker 1: that's not stagflation. I mean, you can call it stag
Speaker 1: light if you want, but you're basically saying it's not stagflation.
Speaker 1: Let's call it something new that actually doesn't exist. Important
Speaker 1: to recognize where the price pressure is coming from. Is
Speaker 1: it coming from demand that's too big, or is it
Speaker 1: coming from supply constraints that could persist. How would you
Speaker 1: characterize it? Um it's a good question. Actually, I mean
Speaker 1: it's from supply you know, in my mind this is
Speaker 1: from supply constraints. Um that yes, they could persist. But listen,
Speaker 1: what what we need to do and what people aren't doing?
Speaker 1: Not even the FREED really is to work out or
Speaker 1: to to to define what's the difference between transitory and
Speaker 1: persistent right, And the difference between the two is transitory
Speaker 1: will go away on its own without the FED having
Speaker 1: to do anything. Right, price pressures will diminish, they will
Speaker 1: come back down towards two percent or maybe even below
Speaker 1: without any FED action. Persistent means that without the FED
Speaker 1: tightening and slowing the economy and reducing demand, we will
Speaker 1: have constantly rising inflation for the foreseeable future with no
Speaker 1: change in that part. That will neither shot from outside
Speaker 1: to stop inflation rising. That's not where we are. These
Speaker 1: are reopening pressures. Yes, some retailers, your restaurants, et cetera,
Speaker 1: taking the opportunity of the reopening to raise prices from
Speaker 1: where they were pre pandemic. And people are desperate to
Speaker 1: go out again, the desper to go to restaurants, etcetera.
Speaker 1: And they're paying those higher prices. Well, but that doesn't
Speaker 1: mean that they'll raise prices again next year or the
Speaker 1: year after in six months time. And that's what persistent
Speaker 1: inflation is. This is transitory lee. One of the key
Speaker 1: determining factors, as many people say, as wages. Right, if
Speaker 1: we start to see wage pressure, that could change the
Speaker 1: equation to a more persistent inflationary impulse. And I have
Speaker 1: to pair these ideas of sag inflation, light and higher
Speaker 1: wages with this statistic. The biggest US single family landlord
Speaker 1: boosted rents by eight percent nationwide just in the second quarter,
Speaker 1: giving you a sense, as have the basic costs of
Speaker 1: life going up, how much do you expect wages to
Speaker 1: have to increase? With the labor shortages and fact the
Speaker 1: fact that consumers are looking at these costs and saying
Speaker 1: I can't afford to get the same wage that I
Speaker 1: got last year. That may be the case, but are
Speaker 1: they going to get paid more? You know, when we
Speaker 1: talk about labor shortages, there are six point eight million
Speaker 1: people out of work, more than they were pre pandemic. Yes,
Speaker 1: we have labor shortages now because of the you know,
Speaker 1: because of the supplementary unemployment insurance, but that runs out
Speaker 1: in September. We're going to get a huge increase in
Speaker 1: supply of labor in September, right, and we had a
Speaker 1: three and a half percent unemployment rate before the pandemic
Speaker 1: with no wage inflation or no meaningful wage inflation. Why
Speaker 1: do we think we're going to get it now? What
Speaker 1: do we think has changed in the labor market well
Speaker 1: during the pandemic, which means certainly workers have all this
Speaker 1: bartling power, they're going to get all these wage increases. Yes,
Speaker 1: we get headline stories now. Absolutely. In the summer we
Speaker 1: talked about sign on bonuses and shortage of workers. But
Speaker 1: as the unemployment insurance runs out in September, you're going
Speaker 1: to see that supply of labor come back and suddenly
Speaker 1: you're not going to have sign on bonuses and you're
Speaker 1: not going to have wage increases in the same extent.
Speaker 1: So yeah, I mean, you're absolutely right on the rents
Speaker 1: and that's a huge problem for people. But this is
Speaker 1: where we come back to the stagflation and stag like whatever.
Speaker 1: Just a champ in medium rents in New York. And
Speaker 1: I understand New York's not America, but medium it's in
Speaker 1: New York with down, But this is the distinction between
Speaker 1: big cities that have gotten slammed indiosyncratically by the pandemic,
Speaker 1: and some suburban areas that have gotten their prices increased
Speaker 1: to record highs and it record paces. But you make
Speaker 1: up good point. It's not consistent across the board, and
Speaker 1: people can move if they so choose. But Lee, honestly,
Speaker 1: you raise actually a very controversial point, which is the
Speaker 1: gap in how quickly people are coming back online, the
Speaker 1: low participation rate, despite the fact that the economy does
Speaker 1: seem to be going back, and the fact that a
Speaker 1: lot of companies say that we need workers, we want
Speaker 1: to hire people. Is it really just that simple that
Speaker 1: the enhanced unemployment benefits will roll off and that people
Speaker 1: will go back and see their kids go back to
Speaker 1: school and kumbaya, It's solved. I think. So, I mean,
Speaker 1: where are the six point eight million people gone that
Speaker 1: do they not need to work anymore? You know, once
Speaker 1: the unemployment insurance has rolled off? And you make a
Speaker 1: good point about childcare, because I think that's been a
Speaker 1: factor as well, is childcare, and that this sub nervous
Speaker 1: there's still about COVID quite rightly with the delta varian.
Speaker 1: But the fact is those six point eight million people
Speaker 1: who are working pre pandemic still need to work. And
Speaker 1: we could argue that some might have retired, et cetera.
Speaker 1: But but but even so, there's a large number of
Speaker 1: people who aren't working now who were working before the pandemic.
Speaker 1: Why do we think they're not going to need a job.
Speaker 1: They're going to need a job when the unemployment insurance
Speaker 1: runs out. How do you think the FED views all
Speaker 1: of this week? I think the FED views this that
Speaker 1: you know, they haven't got a clear picture yet. I
Speaker 1: think the Freed views is that we're going to have
Speaker 1: to wait until later this year and maybe even the
Speaker 1: first part of next year to get a clear picture
Speaker 1: of the labor market and what's going on. And the
Speaker 1: labor market is the key thing for the FED now.
Speaker 1: I mean, you know, powers told us this over and
Speaker 1: over again, but they don't know what's happened in the
Speaker 1: labor market yet none of us do because of these
Speaker 1: uncertainties we're talking about now, it's probably November December data,
Speaker 1: maybe even into two before we start to get some
Speaker 1: sort of clear picture of the labor market. I mean,
Speaker 1: you mentioned before about the consensus risk in Q four
Speaker 1: and and you're the uncertainty there and the absolutely right.
Speaker 1: And the same goes for the picture in the labor market.
Speaker 1: So while there are still so many known unknowns while
Speaker 1: we try and figure out what the trajectory of monetary
Speaker 1: policy is going to look like, the resurgence of COVID
Speaker 1: nighteen in the delta area is going to look like.
Speaker 1: How do you construct a portfolio? How defensive would you
Speaker 1: recommend being here? I wouldn't be that defensive at all.
Speaker 1: I'd be absolutely honest, because we're still getting a hundred
Speaker 1: and twenty billion dollars a month of liquidity. You know,
Speaker 1: we're still hitting all time highers and equity markets. I
Speaker 1: think there are certain areas you can be more defensive.
Speaker 1: I mean, clearly emerging markets are more of a challenge
Speaker 1: perhaps that than a lot of people think they should be,
Speaker 1: because valuations are more attractive. But the thing is that
Speaker 1: we're still seeing you know, exty markets hit all time
Speaker 1: highs because we've still got a huge amount of liquidity.
Speaker 1: Now what we're seeing is the duration trade, the sort
Speaker 1: of cap that the high tech sort of large cap
Speaker 1: high tech stops. They're the ones doing well now, whereas
Speaker 1: you sort of rustle two thousands your meatcaps, which is more.
Speaker 1: The reflation trade of certainly underperformed over the last few months,
Speaker 1: and I think that's sort of duration that Nastack over
Speaker 1: Russell trade is probably the one that's going to continue
Speaker 1: over the next couple of months. We have these growth fears,
Speaker 1: but we have the liquidity. But you know, it's too
Speaker 1: soon to be defensive, I think. I mean, once we
Speaker 1: get a clarity on taper and how fast it will be,
Speaker 1: I think it will be very gradually. One starts will
Speaker 1: probably early next year. You can't sit on the sidelines
Speaker 1: with add billion dollars a month being printed. A lot
Speaker 1: of people feel that way. Lee gonna catch our buddy
Speaker 1: as always, Lee Farage, their State Street, head of macro
Speaker 1: Strategy for North America. Some news out this morning from
Speaker 1: the Washington Post. That story published in the last couple
Speaker 1: of hours. Lisa, here's the quote that's going to get
Speaker 1: a lot of runtime today. Vaccinated people infected with the
Speaker 1: data variant may be able to spread the virus as
Speaker 1: easily as unvaccinated people. This according to unpublished data cited
Speaker 1: in a federal presentation obtained by the Post. And the
Speaker 1: question I have is why did the federal government not
Speaker 1: really least this data publicly when they were reimplementing mask mandates.
Speaker 1: The idea here recommending masks, you could get people to
Speaker 1: do it if they understood what the logic was behind it.
Speaker 1: If that's the case, why isn't there more clarity on
Speaker 1: this chart? Well, let's try and get some clarity now.
Speaker 1: Andy Pekhos joins us Jones Hopkins University, Bloomberg School, public
Speaker 1: health professor and virologists and he got to catch you
Speaker 1: up as always, and how for me to get you
Speaker 1: to comment on an internal document that you haven't seen either?
Speaker 1: But does this reconcile with your experience at the moment
Speaker 1: as well? Well? What we've been hearing anecdotally is that
Speaker 1: you know, there have been cases of delta in vaccinated people.
Speaker 1: I think the other thing to emphasize is as case
Speaker 1: numbers increase, the number of exposures that vaccinated people have
Speaker 1: to Delta virus increases as well, So we would expect
Speaker 1: to see some slight increase in cases and vaccinated people. Now.
Speaker 1: The critical thing that we're learning now though, is just
Speaker 1: how much more are dangerous the delta variant is compared
Speaker 1: to others other variant strains, And it really does seem
Speaker 1: like the data that was first coming out and unvaccinated
Speaker 1: people is really being amplified in that population, and that
Speaker 1: is that this virus is incredibly more contagious. Um, if
Speaker 1: you get infected, you get more virus in your system
Speaker 1: after infection, and what follows from that is that you
Speaker 1: become more contagious. So even if vaccinated people have a
Speaker 1: tend to a hundredfold lower amount of virus in their system,
Speaker 1: that still may push them over the limit of when
Speaker 1: they could be showing symptoms or spreading the virus. So, Andy,
Speaker 1: I wonder what this would mean for restrictions, because just
Speaker 1: because you can spread it as easily as the unvaccinated,
Speaker 1: it doesn't mean that you are necessarily more likely to
Speaker 1: be infected by it. Of course that's not the case.
Speaker 1: It's so so, Wendy, what do you think this would
Speaker 1: make for restrictions. Yeah, I think it's it's it's a
Speaker 1: cause for concern. So I've got my mask on again.
Speaker 1: Here today, our hospital complex today just want reinstituted masking policies,
Speaker 1: even among vaccinated people, simply because we as an institution
Speaker 1: need to be much more careful about potential infections and
Speaker 1: the spread of infections. Here, So I think this is
Speaker 1: all going to go back to what's your local situation
Speaker 1: look like. If you're in a place where Delta is
Speaker 1: really really spreading fast, then extra precautions need to be
Speaker 1: put in place. But but let's be clear, if we
Speaker 1: had a higher vaccinated population in this country, these concerns
Speaker 1: would be released, and that comes back to the core issue.
Speaker 1: Masking vaccinated people helps. The critical thing would be to
Speaker 1: increase the number of vaccinated people in this country and
Speaker 1: to do it rapidly. Andy, what's the latest on the
Speaker 1: efficacy rate of preventing infection among vaccinated individuals from the
Speaker 1: various vaccines. So the numbers that I've seen so far
Speaker 1: is that the efficacy has dropped from about to somewhere
Speaker 1: in the seventy percentage range with delta variant. But again
Speaker 1: that data is a couple of weeks old, and we
Speaker 1: know that the virus has been surging, so we're waiting
Speaker 1: to see some more reports there. Efficacy against severe disease
Speaker 1: is still maintained relatively high in vaccinated populations, which again
Speaker 1: is a good sign. So I think that the emergence
Speaker 1: of Delta shouldn't make people more hesitant about getting the vaccine.
Speaker 1: In fact, just the opposite. It's it's the best tool
Speaker 1: that we have right now to prevent infections, and so
Speaker 1: DELTA should be a warning to people more of a
Speaker 1: motivation than anything else to get the vaccine. Andrew, Andrew,
Speaker 1: what can we learn from the other regions of the
Speaker 1: world that have already seen this happen? In India, you
Speaker 1: saw a big spike in DELTA cases that then went
Speaker 1: way lower. You're seeing the same thing playing out in
Speaker 1: the UK. Now, is there any reason to believe that
Speaker 1: the US will not follow that path? We absolutely will.
Speaker 1: The question becomes what's the magnitude of the number of
Speaker 1: cases UM infections like this spread in peaks and valleys.
Speaker 1: UM vaccines and other public health interventions can help lower
Speaker 1: of that peak so that we don't have as many
Speaker 1: serious cases and deaths UM. And that's where we're trying
Speaker 1: to sort of work with some of these masking policies
Speaker 1: right now. Lower that peak, don't let it get to
Speaker 1: the to a to an uncontrolled stage, and then we
Speaker 1: can recover faster and have less UM cases and less
Speaker 1: of a strain in our hospital systems. And he just quickly.
Speaker 1: The original goal, of course, was to protect the most
Speaker 1: at risk in society and in doing so, protect the
Speaker 1: healthcare system, not just in this country, but our swhere.
Speaker 1: Israel has really led the way on vaccine distribution over
Speaker 1: the last year or so. They're going on now to
Speaker 1: give a third shot to the over sixties. Do you
Speaker 1: think we're going to see more of that now, swear?
Speaker 1: I really do. I haven't seen the data yet, but
Speaker 1: if everything continues on the trends here, what we're probably
Speaker 1: going to see is that the elderly are going to
Speaker 1: have a more waning of the antibody responses induced by vaccination,
Speaker 1: and with a more suscept more more transmissible virus, that
Speaker 1: population becomes the most important one for us to focus on.
Speaker 1: So it wouldn't surprise me if we see a vaccination
Speaker 1: or a booster vaccination come out specifically targeting those high
Speaker 1: risk populations. Interesting. Andy, it's good to catch up. As always,
Speaker 1: It's good to see you and thanks for your heart work, sir,
Speaker 1: Andy peckos that Johns Hopkins University, Bloomberg School of Public
Speaker 1: Health professor and virologists Terry Haines joined us now Pangea
Speaker 1: Policy found it. Terry, it's great a catch up, Lisa
Speaker 1: forwarded on your note. I should have read it. I've
Speaker 1: read it now. Five chance that we get infrastructure in October.
Speaker 1: Just walking through the timeline for you and which bill
Speaker 1: is which? Good morning, all there are four. The reason
Speaker 1: why it's October is that there are for for for
Speaker 1: final action. Is there are four things going on that
Speaker 1: then that will all sort of collide um and at
Speaker 1: the end of the fiscal year, the end of September,
Speaker 1: which is why I pick October. You have two things
Speaker 1: that absolutely have to happen. The federal government has to
Speaker 1: be funded, and we have to deal with the debt
Speaker 1: limit or debt ceiling, which needs to be extended or
Speaker 1: or suspended. Uh. Then we get to the physical infrastructure bill,
Speaker 1: which is almost ready almost based. But the fourth thing
Speaker 1: is there's really a intro war, intermural war among Democrats
Speaker 1: about this human infrastructure piece, which hasn't really even been
Speaker 1: defined yet, much less speed been given a budget top
Speaker 1: line or a maximum spending amount, and Democrats are gonna
Speaker 1: have to fight among themselves for quite a while to
Speaker 1: figure out exactly how much they want to spend and
Speaker 1: what's going to be in that My view is very simple. UH,
Speaker 1: work expands to fill the time allotted. Uh. The time
Speaker 1: allotted is the end of the fiscal year, when all
Speaker 1: this other stuff has to happen. Uh. And what I
Speaker 1: think happens is we get funded, we get a debt ceiling,
Speaker 1: We almost certainly get infrastrated with the physical infrastructure bill.
Speaker 1: But what ends up happening is uh, the human infrastructure
Speaker 1: piece I think is only about likely in any form
Speaker 1: right now. Terry, the idea of this infrastructure plan being
Speaker 1: market positive, as you say, is interesting to me, and
Speaker 1: loot of the fact that it's five fifty billion dollars,
Speaker 1: which is substantially low the numbers being thrown around earlier
Speaker 1: this year. Why is this a market positive when people
Speaker 1: had expected so much more earlier? To me, Lisa, Uh,
Speaker 1: And I think it's a perfectly valid point. Uh. To me,
Speaker 1: it's a market positive and sentiment more than anything else. Uh.
Speaker 1: There's an awful lot of talking up about how how
Speaker 1: this is going to help stimulate the economy and move
Speaker 1: things forward and help fix our infrastructure problem. Uh. Frankly,
Speaker 1: you know, I think there's truth to all of that,
Speaker 1: but I think it's a great deal overblown. Uh. In others,
Speaker 1: you know, there's no urgency about how this money is
Speaker 1: going to get spent, or when road projects take years
Speaker 1: to start, much less to finish. My favorite example, this
Speaker 1: is a forty mile stretch near my UH, near my
Speaker 1: UH the place where I grew up in Pennsylvania. Let's
Speaker 1: take in ten years to UH to to become permitted
Speaker 1: dolfed and it's still not finalized. UH. You know, this
Speaker 1: is gonna take a long time, and I think the
Speaker 1: economic impact UH is overblown. But that said, market sentiment
Speaker 1: being what it is, this is a positive terry. You
Speaker 1: mentioned earlier the fact that we're going to have to
Speaker 1: deal with the debt ceiling in the fall in September October,
Speaker 1: even though it expires tomorrow. And something else that expires
Speaker 1: tomorrow is the eviction moratorium. And yet Joe Biden, the President,
Speaker 1: waited until yesterday to actually say something about it and
Speaker 1: ask Congress to act. Is there any likelihood that something
Speaker 1: can be done by tomorrow? Hi? Kaylee. Two things. One,
Speaker 1: the debt limit is everyone on this program knows certainly
Speaker 1: UH does expire tomorrow, But Treasury usually employs this thing
Speaker 1: they call extraordinary circumstances in other words, you know, shoveling
Speaker 1: the additional amounts of coal under the fire to keep
Speaker 1: things going for as long as possible, so that in
Speaker 1: real in reality, the debt ceiling is gonna is gonna
Speaker 1: end up hitting uh in late September, early October, maybe
Speaker 1: even November, recording the Congressional Budget Office. Uh. The other
Speaker 1: thing is on on the eviction moratorium. Um. What I'm
Speaker 1: hearing and understand is that the president's last minute ask
Speaker 1: uh certainly didn't help martial forces behind it. Number one.
Speaker 1: Number two, there's a lot of people in the House
Speaker 1: that want to do this. Number three, it's gonna be
Speaker 1: very difficult to pass in the Senate, so I tend
Speaker 1: to think it it probably doesn't happen, uh, and I
Speaker 1: think people ought to prepare for that. Uh. They may
Speaker 1: end up sticking something in the infrastructure bill if it
Speaker 1: goes very well and ends up and ends up getting
Speaker 1: passed by next week, which is a possibility, although I
Speaker 1: think it's a little murky right now. Uh. But other
Speaker 1: than that, I don't think I would look for smoother
Speaker 1: quick action here on Congress's part. Terry, go ahead from me,
Speaker 1: sir as always, thank you, Terry hins that Pantia policy
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