Speaker 1: Welcome to Bloomberg Opinion on Vonny Quinn this week. There
Speaker 1: is no way these numbers suggest inflation is licked. John
Speaker 1: Authors and Jonathan Levin on inflation volatility. Also the generic ballot,
Speaker 1: people ask you intend to vote for a Democrat or
Speaker 1: Republican for the House, that question is basically tied right now.
Speaker 1: Republicans had opened up, but smallly the mats dissipated. Jonathan
Speaker 1: Bernstein on the weekend Politics, and later we speak with
Speaker 1: Any Trivetti and Dubai on the changing centers of the
Speaker 1: financial universe. First though, to the markets following the Consumer
Speaker 1: Price Index data and John Authors, So, John, CPI still
Speaker 1: up eight and a half percent. Markets ripped after the number.
Speaker 1: But it's not exactly a low inflation print. No, it isn't.
Speaker 1: And if we've been told this was going to be
Speaker 1: the number for July six months ago, even we had
Speaker 1: been horrified. And it's important not to ignore that it
Speaker 1: is true that the number came in better than the
Speaker 1: month before, and that it was better than virtually any
Speaker 1: expectation in terms of what really mattered. A lot of
Speaker 1: the really extreme price moves that were labeled transitory when
Speaker 1: they began to get going in earnest early last year,
Speaker 1: now dramatically reversing again. So things like car rental prices,
Speaker 1: used prices, they're coming down very sharply, and that helps
Speaker 1: the overall headline number. What I think needs to be
Speaker 1: addressed very carefully, however, is that if you look at
Speaker 1: core prices. There are various technical ways you can do this,
Speaker 1: but the trimmed mean is a popular one. Exclude the
Speaker 1: most and the least rising inflation components and take the
Speaker 1: average of the rest. That's got to seven percent. And
Speaker 1: it did rise, it rose less than usual, but it's
Speaker 1: not actually peaked yet. Similarly, the Atlanta FED looks at
Speaker 1: sticky prices, which takes you a while to change, compared
Speaker 1: flexible prices that can move all over the place. And
Speaker 1: initially this was all about flexible prices, and at the moment,
Speaker 1: flexible price inflation is coming down and sticky price inflation
Speaker 1: is still going up, which brings us to the question
Speaker 1: of whether it takes the impetus for a seventy five
Speaker 1: basis point hike away. We will have another CPI round
Speaker 1: and another jobs report. If you look at FED funds
Speaker 1: contract for the next meeting, it shot up on non
Speaker 1: farm payrolls. You went from in round numbers from a
Speaker 1: forty two about a seventy seventy chance of seventy bits
Speaker 1: rather than and it went straight back to exactly where
Speaker 1: it was before the non farm payrolls. After inflation, it's
Speaker 1: almost exactly a fifty fifty shot whether we get seventy
Speaker 1: five or or fifty. So a surprisingly strong employment number
Speaker 1: gave the Fed more cover a more recent to hike,
Speaker 1: and this inflation number gives them more reason not to
Speaker 1: hike if they don't feel like it politically, they don't
Speaker 1: want to hike in immediately before the mid terms if
Speaker 1: they can avoid it. They have a better shot of
Speaker 1: doing that if they hike by seventy five bits next time.
Speaker 1: And there is no way these numbers suggest inflation is licked.
Speaker 1: Headline inflation, including those extreme moves in oil, it would
Speaker 1: be very disappointing of the peak isn't in for that,
Speaker 1: but that's not something the FED can actually control that directly.
Speaker 1: The stuff that the Fed is trying to control is
Speaker 1: not clearly peaking yet. We're going to talk about the
Speaker 1: Fed potentially making a mistake in a few minutes with
Speaker 1: Jonathan Levin. But if the Fed moves seventy five or fifty,
Speaker 1: how immediate of a mistake would that be if it
Speaker 1: were the wrong number. Wouldn't there be time to turn
Speaker 1: it around? Monetary policy work works with a lag, so
Speaker 1: it's not as though the economy would immediately tank after
Speaker 1: it happened, But the market, I mean the markets might.
Speaker 1: September is often a time when a lot of the
Speaker 1: Great Market Crisis get going in September history, and so yes,
Speaker 1: you can you can imagine. I think also in terms
Speaker 1: of American politics, there is the fact that these mid
Speaker 1: terms now do look as though they could be interesting,
Speaker 1: and that will feed into some degree of volatility. Certainly,
Speaker 1: if the Democrats held onto the House, that would be
Speaker 1: a very big surprise, which at least is now conceivable.
Speaker 1: So yes, the chances of greater volatility in September there
Speaker 1: we do have Jackson hole. Between now and then, we
Speaker 1: have Jackson hole, and Powell is going to have to
Speaker 1: be so careful at exactly and another CPI and another
Speaker 1: non farm payrolls. If they haven't managed to get their
Speaker 1: messaging straight so that they can do whatever they do
Speaker 1: without shocking anyone, that would be bad management by the Fed.
Speaker 1: I'm not too worried about that myself. I mean, they
Speaker 1: don't have much more visibility than we do, and they
Speaker 1: won't have much more visibility by Jackson Hole either. So
Speaker 1: it's difficult to know what Powell will make a speech about.
Speaker 1: It will have to be something very an adyna well, yes,
Speaker 1: whether whether he wants to just say forget about the
Speaker 1: speech I made two years ago when he was going
Speaker 1: to be an inverse Vulka, but he did say that
Speaker 1: he was going to try to raise inflation, and boyd
Speaker 1: did these succeeds on that one. We can at least
Speaker 1: give him some credit for that one. Just one point
Speaker 1: before we continue on. You've pointed out this week that
Speaker 1: profit margins are an expotential pain point. I think that's
Speaker 1: consensus pretty much. Well companies be able to manage them.
Speaker 1: This is the interesting point. This is I have been
Speaker 1: skeptical about the equity market rally. The one big point
Speaker 1: that gives me pause as to whether stocks really do
Speaker 1: deserve to be rising is that margins held up much
Speaker 1: better than many had expected in the second quarter, and
Speaker 1: that does feed into quite a concerning combination. The good
Speaker 1: news if you're a shareholder, obviously, is that your companies
Speaker 1: can absorb higher costs and pass them on to consumers.
Speaker 1: The bad news for your consumer, or if you're a
Speaker 1: central banker, is that that means inflation is likely to
Speaker 1: continue to go up. It also feeds into a narrative
Speaker 1: that could be pretty bad for public companies and their shareholders.
Speaker 1: I that the inflation is being driven by corporate greed
Speaker 1: and rapacity. That would be one of the many reasons
Speaker 1: why inflation is going up. And they could be very
Speaker 1: very nice to the rest of us and helping price
Speaker 1: inflation come back down by voluntarily probits. But you know,
Speaker 1: it's just just to make clear that if you're complaining
Speaker 1: about them, this is what you want them to do.
Speaker 1: But it is a real issue, and a good populist
Speaker 1: politician can make a lot of hay with it. And
Speaker 1: the populist politicians are on both wings of politics as
Speaker 1: long as they're not getting funded by these same companies. Well,
Speaker 1: there is that. We're also now joined by Jonathan Levin. Okay,
Speaker 1: so Jonathan Levin has joined us in studio. Jonathan. One
Speaker 1: of your columns this week or several of your columns,
Speaker 1: talked about inflation volatility and how that's actually the more
Speaker 1: important thing to watch. It's also very difficult to compute. Yeah, exactly.
Speaker 1: The problem with high inflation isn't necessarily that it's high,
Speaker 1: but inflation that tends to be high also tends to
Speaker 1: be unpredictable. The models stopped working very well when we're
Speaker 1: in a regime like this. You know, in a perfect world,
Speaker 1: if I told you, Vanni, that inflation was going to
Speaker 1: be five percent next year, then you could adjust the
Speaker 1: cost of your goods and services accordingly. You could raise
Speaker 1: wages for all of your workers by five percent, and
Speaker 1: everybody would go about their business and it would be
Speaker 1: no big deal. But when the models work as badly
Speaker 1: as they're working today, and you know, I don't mean
Speaker 1: to pick on anybody, the Wall Street models have stunk,
Speaker 1: the FEDS models have stunk, and just in general, the
Speaker 1: way that we go about understanding inflation has not worked
Speaker 1: very well for more or less the last eighteen months.
Speaker 1: So what does this mean? These hard decisions for households
Speaker 1: and businesses, they're taking them without very much visibility at all. Well,
Speaker 1: and Donald there is pipe. Sandra's team did have another
Speaker 1: piece about inflation politility this weekend. It's high, they say,
Speaker 1: it's as high as levels of the nine seventies and
Speaker 1: nineteen eighties. Does it matter for real activity, as Jonathan evince,
Speaker 1: as it does. Yes, it does, because metaphor often used it.
Speaker 1: It throws sand in the wheels. It adds an extra
Speaker 1: layer of uncertainty, which more or less requires that you
Speaker 1: meet it with some degree of of wastage. It's in
Speaker 1: the same way that if you're nervous about a storm coming,
Speaker 1: you're just going to have to have more in inventory
Speaker 1: than you'd you'd prefer to have to be safe. If
Speaker 1: you're really not sure where prices are going to be
Speaker 1: in another six twelve months, your behavior is going to
Speaker 1: be less predictable and it's almost certainly going to be
Speaker 1: less efficient. So we should take confident in the fact
Speaker 1: that New York Beds inflation expectations data showed that they're
Speaker 1: coming they're coming down a little bit at least on
Speaker 1: the part of the average consumer. But we're waiting for
Speaker 1: you Michigan data to tell us a little bit more
Speaker 1: about that. But that plays very much into overall inflation volatility. Right.
Speaker 1: Jonathan wrote a great column on Michigan expectation. It's a
Speaker 1: little bit like deciding presidential elections by getting galloped, go
Speaker 1: away into a pull and tell us who one do
Speaker 1: you think those inflation expectations surveys really merit the weight
Speaker 1: that's put on them now. Well, the trouble is that
Speaker 1: a lot of economic research about inflation over probably the
Speaker 1: past twenty years has has found that inflation expectations are very,
Speaker 1: very important. We just don't know how to measure them.
Speaker 1: We have very little confidence in our ability to understand
Speaker 1: how consumers and households form their inflation expectations and to
Speaker 1: measure those expectations in real time. And yet that was
Speaker 1: the whole impetus for the fed's last move. So the
Speaker 1: question is to what extent is the FED still flying blind?
Speaker 1: Jonathan Levin, I think they were playing relatively blind. I mean, look,
Speaker 1: the situation is that we've had good reports in the past.
Speaker 1: Right in the summer of one, it really looked like
Speaker 1: we had turned to the corner. But one good report
Speaker 1: does not a trend make. Frankly, three good reports does
Speaker 1: not trend and make. I will take one and I
Speaker 1: will hope for the best. You know, two or three
Speaker 1: or four months from now. I would say at least
Speaker 1: the FED cat now takes some degree of confidence that
Speaker 1: the really extreme transitory effects that followed the pandemic are
Speaker 1: now dying down. Having been somewhat less transitory than everyone
Speaker 1: had hoped, they have still been transitory. So there's maybe
Speaker 1: one area of unpredictability that's been taken out of the situation.
Speaker 1: But I think the critical point, I think it is
Speaker 1: very likely that the headline inflation peak is in because
Speaker 1: of all those extreme oil and transport related things. So
Speaker 1: that's not what really matters. It's how quickly does it
Speaker 1: come down. If it's still at four and a half
Speaker 1: five percent at the turn of the year, everybody's going
Speaker 1: to be demanding much more in the way of wage
Speaker 1: rises than they would be if it was two and
Speaker 1: a half percent at the end of the year. Is
Speaker 1: it fair to say, and I'm asking you both that
Speaker 1: recession is the base case for the treasury market and
Speaker 1: still is still with an you know, that's one reading
Speaker 1: of the yield curve. Another reading of the yield curve,
Speaker 1: as my colleague Bob Burgess pointed out, is that the
Speaker 1: Fed is going to get the job done right and
Speaker 1: and and that's why tenure yields are significantly lower than say,
Speaker 1: two year yields. You know, for me, for six to
Speaker 1: twelve months, my base case has been if there's going
Speaker 1: to be a recession, is going to be because of
Speaker 1: the FED. Right, So on the margin, if you think
Speaker 1: that this lower is your probability distribution that they're going
Speaker 1: to go higher this this most recent report, then you
Speaker 1: know the probability of a recession has dropped slightly in
Speaker 1: in the past twenty four hours. And the possibility of
Speaker 1: a soft landing, which I hit ticked down to pretty
Speaker 1: much zero at one point, is I still don't think
Speaker 1: it's likely, but it's possible again now. But Burgess's column,
Speaker 1: as you mentioned, Jonathan Evan also though, ask the question
Speaker 1: of whether the yield curves predictability has been diminished, john Authors,
Speaker 1: would you say that that might be the case these days?
Speaker 1: Like inflation expectations, Another number that's incredibly important but totally
Speaker 1: impossible to measure in real time is the term premium.
Speaker 1: Most sensible measures of the term premium, the degree of
Speaker 1: uncertainty you factor into your future prices, suggest that the
Speaker 1: term premium has never been lower, which would in turn
Speaker 1: imply that people really aren't worried at all, which suggests
Speaker 1: in turn that something very strange isn't he going on
Speaker 1: in the bond market, because that's not the case there.
Speaker 1: They're plainly are some very strange liquidity issues going on
Speaker 1: with the bond market. That said, of all the markets
Speaker 1: that are out there, the one I would be least
Speaker 1: confident betting against would be the bond market. You don't
Speaker 1: dismiss it lightly, even if you do say, well, maybe
Speaker 1: this isn't as strong and indicator as it appears. It
Speaker 1: could be an indication of safe haven flows though known
Speaker 1: Jonathan Levin this low term premium, Yeah, certainly. I mean
Speaker 1: there's a lot of risk out there well, and managers
Speaker 1: have to do something with their portfolios it well, yeah,
Speaker 1: and and and also there's there's a shortage of safe assets.
Speaker 1: Particularly Eurozone bonds would have been regarded as interchangeable with
Speaker 1: treasuries fifteen twenty years ago, post their sovereign debt crisis.
Speaker 1: Whatever the rating agencies say, you're one degree more nervous
Speaker 1: about BTPs or French bonds than you are about treasuries,
Speaker 1: so they have more scarce the value because there are
Speaker 1: fewer apparently risk free assets out there. I guess we'll
Speaker 1: finish with this one John Authors, How does policy change
Speaker 1: affect the inflation picture? So we have the Infrastructure Plan
Speaker 1: but also the Inflation Reduction Act now, but it's been
Speaker 1: touted as inflationary and anti inflationary, depending on where you're standing.
Speaker 1: I personally doubt in the short term you'll have minimal
Speaker 1: impact on inflation. In the long term, if the money
Speaker 1: is really well invested, then in the very long term
Speaker 1: it will indeed reduce inflation. If it's wasted, it will
Speaker 1: increase it. Their politicians and they call it that. I
Speaker 1: don't think it's a particularly relevant concern. I think geo
Speaker 1: political issues really matters. So if the Ukraine Russia war,
Speaker 1: which is steadily convinced us that we can forget about
Speaker 1: it in the last month or two, flares up again,
Speaker 1: that's an issue. And obviously some of the scenarios coming
Speaker 1: into the Taiwan Street would change things profoundly. John Authors
Speaker 1: and Jonathan live in Well. The data is in New York, London,
Speaker 1: Hong Kong. They may not be the centers of the
Speaker 1: financial universe anymore. We're joined from Dubai by a junta
Speaker 1: Vetti and Janie. You looked at the data and found
Speaker 1: people are actually feeling quite differently these days about the
Speaker 1: so called traditional financial hubs. Tell us a little bit
Speaker 1: about what you found in traditional financial hubs of New York, London,
Speaker 1: and Hong Kong top the list of financial centers as
Speaker 1: the historics we have because they have deep capital markets,
Speaker 1: regulatory infrastructure of financial plumbing, and they've created an ecosystem
Speaker 1: of workers around it. Now, the ecosystem of workers that
Speaker 1: get paid relatively well also means that the costs of
Speaker 1: living in next in these places goes up relative sil
Speaker 1: go up, schooling, everything else around it. Generally costs are However,
Speaker 1: when you look at the flips out of that on
Speaker 1: the quality of living in deex events very low. And
Speaker 1: that's always been the case. And my conclusion from this
Speaker 1: is really that over the last two or three years,
Speaker 1: as they've lived to COVID works from home, people have
Speaker 1: realized they don't need to be people even commuting to
Speaker 1: the city or doing various things. They don't necessarily want
Speaker 1: to do that, and they don't necessarily feel the need
Speaker 1: to do it. And therefore we've seen things like mass
Speaker 1: trends and employment or other unemployment of the Great Resignation,
Speaker 1: and increasingly people want to be in different places and
Speaker 1: care about the way we live and want to live
Speaker 1: better live. Yeah, and interestingly, we have seen movements of
Speaker 1: certain firms. You know, they've been moves to Nashville by
Speaker 1: some firms, even their h Q. And then there's been
Speaker 1: office openings in places like Miami and West Palm Beach
Speaker 1: and in Britain outskirts cities like Birmingham. But it's not
Speaker 1: clear yet whether these cities will be able to handle
Speaker 1: the influx of these financial workers right or is it well,
Speaker 1: it isn't clear. But I think more broadly we need
Speaker 1: to be ready for and what employers and businesses need
Speaker 1: to be ready for that. You know, we need to
Speaker 1: have more spread out centers. You can't have a concentration
Speaker 1: of workers because that's just not going to work. And
Speaker 1: how you manage that in terms of you know, would
Speaker 1: you rather have employees leave and then have a cost
Speaker 1: of rehiring in the cost of looking to the talent again,
Speaker 1: or do we accommodate people workers across different areas. And
Speaker 1: this doesn't mean that people need to be going and
Speaker 1: working on a beach. You know, they can be in
Speaker 1: places where there's enough potacity a center of gravity in
Speaker 1: those regions. Is it the case that finance brings some
Speaker 1: of these problems with us it does? You know? I
Speaker 1: mean that is the caveat There are licensing and registration
Speaker 1: and all these issues that you know are constraints. However
Speaker 1: those can also mean depending on the city you choose,
Speaker 1: in the places you choose, those can be worked around.
Speaker 1: And I think ultimately it really comes down to understanding
Speaker 1: flexibility in its true sense. It doesn't have to me
Speaker 1: a black or white issue. It doesn't have to be
Speaker 1: always work from home and never work from home. But
Speaker 1: I think our understanding of the workplace has gotten better
Speaker 1: and I do think there's advantage would be in the office.
Speaker 1: That said, which is why I think, you know, if
Speaker 1: it's more convenient and if people can work in teams
Speaker 1: and being offices, there needs to be different types of
Speaker 1: arrangements and I think it also depends on new sectors
Speaker 1: and finance it can work well. Interestingly, we saw a
Speaker 1: sort of many example of this post Brexit, right we
Speaker 1: were wondering if firms would leave London, if they would
Speaker 1: need to leave London, and we definitely saw a move
Speaker 1: towards places like Frankford and other places where regulators are based,
Speaker 1: but London still held onto its status, at least so far,
Speaker 1: especially in the FX world. For example, you're in a
Speaker 1: place now which might be a burgeoning financial center. Tell
Speaker 1: us a little bit about Dubai and now, Dubai is
Speaker 1: one of those places where if they've maintained being commercial
Speaker 1: through the pandemic, they've maintained air travel very well. They've
Speaker 1: had plenty of housing, plenty of schools. It's kind of
Speaker 1: developed with the times, as you will, and while it
Speaker 1: has its own set of shortcomings, I think the more
Speaker 1: and more speak to people who've been here for the
Speaker 1: last ten years or who were here twenty years ago,
Speaker 1: it's become clear that has places attract talent, those places
Speaker 1: become central to how we think about them. So, you know,
Speaker 1: if we have more financed professionals who's been in many
Speaker 1: other places here, the quality of human capital close offs,
Speaker 1: if you will, Will it become the foremost financial center. Unlikely,
Speaker 1: because we're still competing with the life of New York
Speaker 1: and London. And London you know facts, as you mentioned,
Speaker 1: it's the center of the world. It has the deepest
Speaker 1: capital markets, but it's still had its issues in that right.
Speaker 1: People have still been able to arbitrage that and get
Speaker 1: around that. So it's the question of how we think
Speaker 1: about it. You know, regulatory oversight is also very very
Speaker 1: valid and important. It's a fairly vague framework. Well, you
Speaker 1: looked at the mercer quality of living in the and
Speaker 1: found that thanks to sky high rents and so on,
Speaker 1: which continue to go up. And it's not just New York,
Speaker 1: it's all over the United States. New York was forty
Speaker 1: four on the list, London was forty one on the list,
Speaker 1: and the city's the top of the list for places
Speaker 1: like Vienna and Zurich, and they're very developed places, but
Speaker 1: polity of living is extremely high. So why wouldn't it
Speaker 1: be an option. I would ask employers and businesses to
Speaker 1: have a small huts there. No one saying have the
Speaker 1: headquarters there. But you know those those are things that
Speaker 1: people need to consider. The regulators need to think about
Speaker 1: it and to work in trandom with businesses to see
Speaker 1: what can be set up. The things do need to develop,
Speaker 1: and of course we need guardrails in place. However, it
Speaker 1: is the time for us to reassess if we want
Speaker 1: to keep people in the workforce, then this is perhaps
Speaker 1: of time to be thinking about how to make things
Speaker 1: better and keep the workforce productive on Janet Travetti. By
Speaker 1: the way, do get in touch. Comments and opinions always
Speaker 1: welcome at Vonley Quinn on Twitter or email v Quinn
Speaker 1: at Bloomberg dot net. Now to Jonathan Bernstein and the
Speaker 1: Weekend Paul Tics. So, Jonathan, we're definitely going to talk
Speaker 1: about the primaries, but with all of the theater this week,
Speaker 1: it would be a miss not to begin with Mara
Speaker 1: Lago and also the pleading of the fifth by the
Speaker 1: former president just theater or may this have some kind
Speaker 1: of an impact on voting on people's preferences? You know,
Speaker 1: my tendency is to guess that things like this will
Speaker 1: not wind up having electoral effects. People vote for all
Speaker 1: sorts of reasons, don't vote for all sorts of reasons,
Speaker 1: And it's it seems unlikely to me that something that
Speaker 1: happened to Trump the former president in early August is
Speaker 1: going to have a major effect on whether people choose
Speaker 1: to vote or not. I would guess that things like
Speaker 1: gasoline prices and the pandemic and inflation and jobs more
Speaker 1: generally and highly sailing, and issues like abortion this year
Speaker 1: are going to have more effect on voting than this
Speaker 1: kind of thing. It's very important. There's all kinds of
Speaker 1: important things about what's happening with Trump and the law.
Speaker 1: I'm not sure that it's going to have effects on
Speaker 1: elections or for that matter, perhaps elections right, and we
Speaker 1: are seeing abortion rights becoming more of an issue at
Speaker 1: the polls. But just to tie an in other aspect
Speaker 1: of things, is the picture getting any less muddy about
Speaker 1: whether the former president might actually see charges, whether Mary
Speaker 1: Garland will actually prosecute. I try to not speculate too much.
Speaker 1: I would say it does appear that justice from it
Speaker 1: is taking the entire range of things that Trump has
Speaker 1: been doing pretty seriously. He also has the issue down
Speaker 1: in the Georgia judicial system where he's under saw. Of
Speaker 1: course that the thing in New York State, which is
Speaker 1: now a civil procedure not a criminal one. There's a
Speaker 1: lot of trouble that he's in and couldn't indictments absolutely well,
Speaker 1: at the very least. It has to be taking a
Speaker 1: lot of his time, right. I mean, there's a lot
Speaker 1: of chatter about whether he will announce, should be announcing,
Speaker 1: is about to announce, will not announce, But he's spending
Speaker 1: a lot of his times and meetings with lawyers. That's true.
Speaker 1: You know. The truth is Donald trumpson running for president
Speaker 1: every day since he announced in He never stopped running
Speaker 1: between when he was president. He in fact, you know,
Speaker 1: formally announced right when he became president. But formal decisions
Speaker 1: about that kind of thing are not that important. What
Speaker 1: matters is what is the candidate actually doing, and Donald
Speaker 1: Trump has been doing all the things that presidential candidates do.
Speaker 1: The political scientist Josh Putnam calls it, he's running four.
Speaker 1: We don't know yet whether he'll be running in Yes,
Speaker 1: putting In that said, we got another round of primaries,
Speaker 1: and it does seem like the picturer is getting uddier
Speaker 1: in the sense that it's not going to be a
Speaker 1: slam dunk now for Republicans like we might have thought.
Speaker 1: In the House, Yeah, the Republicans are almost certainly going
Speaker 1: to wind up with a House majority. Even now when
Speaker 1: there's a democratic president, Republicans do well in mid arms
Speaker 1: and vice versa. It's very rare to get otherwise. And
Speaker 1: if you add to that a president who is not
Speaker 1: popular and Biden's right around approval rating which is very low.
Speaker 1: But even if he got up to the incumbent party
Speaker 1: usually loses seats at the mid terms. There's some reasons
Speaker 1: to think that this might not be a particularly good
Speaker 1: year for Republicans. They were hoping that it would be.
Speaker 1: It still may very well be, but there's some indications
Speaker 1: the other way. So the generic ballot, people ask do
Speaker 1: you intend to vote for a Democrat or Republican for
Speaker 1: the House, or sometimes they ask would you rather have
Speaker 1: the Democrats or Republicans have the House majority? That question
Speaker 1: is basically tied right now. Republicans had opened up a
Speaker 1: small lead than that's dissipated, perhaps because of the abortion decision.
Speaker 1: It's certainly coincides in time with the abortion decision, so
Speaker 1: that's an indication that Democrats may not be doing that badly.
Speaker 1: We look at the last couple of special elections for
Speaker 1: House vacancies, one in Minnesota and Nebraska a couple of
Speaker 1: weeks ago, and the Democratic candidate beat the partisanship of
Speaker 1: the district probably by four or five six points in
Speaker 1: both of them. It's hard to be certain. We don't
Speaker 1: have absolute numbers of how partisan the district is. It
Speaker 1: depends on which elections you count and over how many years,
Speaker 1: So it's it's not always easy to assess. You know,
Speaker 1: we know that in the Minnesota district Republican one by
Speaker 1: four percentage points. We know, you know how Trump did
Speaker 1: in the last election there, we know how the last
Speaker 1: House race went. But how do I add it all
Speaker 1: up to a real partisan balance is more art than
Speaker 1: science in some ways. How big should the Republican lead
Speaker 1: have been? Maybe around ten points but perhaps last Yes,
Speaker 1: very hard to know. And also we're still very early
Speaker 1: days and can't forget that. Yeah, the more extreme Republicans
Speaker 1: that are winning their primaries. Is it possible to come
Speaker 1: to a conclusion and whether this is a good thing
Speaker 1: for Democrats or a a little thing for Democrats? Oh,
Speaker 1: I think that there's no question that Republicans are nominating
Speaker 1: a bunch of very risky candidates, mostly in statewide races.
Speaker 1: And in fact, it looks like the Republicans could very
Speaker 1: well be giving away Senate majority because they've nominated a
Speaker 1: series of Trumpists and extreme candidates, and in Arizona, in
Speaker 1: Pennsylvania and Georgia and a few others, they've just done
Speaker 1: a terrible job in either who the voters chose out
Speaker 1: of the choice available, or more to the point, who
Speaker 1: ran in the first place, with a lot of mainstream
Speaker 1: candidates who most experts thought would have been strong candidates
Speaker 1: decided not to run at all. Yeah, it's difficult to
Speaker 1: know what the g o B is doing right now.
Speaker 1: What the plan is? Is this plan? Well, I think
Speaker 1: you know, you take Trump, who has strong beliefs about
Speaker 1: maintaining his influence in the party, and that translates for
Speaker 1: him these days into running on the idea that the
Speaker 1: the twenty election was rigged, which is not true and
Speaker 1: which most voters don't care. Voters care about price of guests,
Speaker 1: they care about whether they have jobs or not. They
Speaker 1: really don't care about, you know, these crazy stories of
Speaker 1: how fraud supposedly happened in even if it really had happened.
Speaker 1: Unfortunately for Democrats, most voters don't care about the opposite things.
Speaker 1: They don't care that Trump tried to overturn the election,
Speaker 1: even if they were to believe Trump's lies about it,
Speaker 1: that's not what's on the top of their mind. So
Speaker 1: that hurts Republicans. And then more generally, you know, if
Speaker 1: you think about the reasons that people run for office
Speaker 1: and want to be politicians, the Repolican party doesn't respond
Speaker 1: to most of those things, but they're probably party right now.
Speaker 1: Is is a whole bunch of people who want to
Speaker 1: go on Fox News and you know, become famous in
Speaker 1: that sort of media world, and people who are willing
Speaker 1: to do what Donald Trump tells them to do. And
Speaker 1: you know, there's not that many people who want to
Speaker 1: be politicians who want those things, and a lot of
Speaker 1: them aren't particularly good politicians begin with. So if you
Speaker 1: think of like motivations, why did somebody get in voluming politics, Well,
Speaker 1: there's something they see in the world that they care
Speaker 1: about changing, typically for Republicans, and something like you have
Speaker 1: Tom DeLay's origin story that he was an exterminator and
Speaker 1: he was really upset about government regulations that made his
Speaker 1: business hard to do in his view, and that got him,
Speaker 1: you know, involved in politics in order to lessen government regulations.
Speaker 1: That's a reason people get involved, you know, because they
Speaker 1: want to change policy. But the Republican Party isn't really
Speaker 1: about policy. It's about crazy stories about voter fraud that
Speaker 1: didn't even happen. Another reason people get involved in politics,
Speaker 1: it's actually a good reason, is because they want power.
Speaker 1: They want to be in charge of things, and the
Speaker 1: problem is in the Republican Party. Now, in order to
Speaker 1: get anywhere, you have to first go down to wherever
Speaker 1: Trump is and get on your knees and then beg him.
Speaker 1: And most people who want power don't really enjoy doing
Speaker 1: that sort of thing. No, that said, you know, you
Speaker 1: just mentioned policy. We have had a huge amount of
Speaker 1: policy actually enacted in recent weeks. Obviously there was the
Speaker 1: Infrastructure Bill, but also now we have the Inflation Reduction Act,
Speaker 1: which came a little bit out of the blue, given
Speaker 1: that we thought it was older and it's it's essentially
Speaker 1: Joe mentions bill. I mean, he sort of chose what
Speaker 1: got put in there. In Christian cinema had a bit
Speaker 1: to do with it at the end as well. I mean,
Speaker 1: a positive thing for American democracy, Oh absolutely. I mean, look,
Speaker 1: it's not my job to say whether it's a good
Speaker 1: bill or not, whether it's good public policy. But the
Speaker 1: fact that the Democratic Party in this case, it was
Speaker 1: just Democrats are negotiating our cunning deals, are responding to
Speaker 1: points of view, you know, at the points of view
Speaker 1: are are not popular ones, and coming together to address
Speaker 1: important problems in the world. That's good that the system
Speaker 1: actually can work that way. And we saw that not
Speaker 1: only in the I can't take the name seriously, it's
Speaker 1: the Climate Health Bill, but also Joe Biden signed into
Speaker 1: law this week the burn Pit Bill for Veterans benefits
Speaker 1: and the Chips and Science Bill, which supports the semiconductor
Speaker 1: industry and funds basic science. And both of those got
Speaker 1: some Republican support in the Senate. They weren't sort of
Speaker 1: true bipartisan bills because they didn't have a majority of
Speaker 1: both parties, but the ten Republicans who were necessary to
Speaker 1: support in order to defeat the Republican filibuster did so.
Speaker 1: And we also had a real bipartisan bill, NATO expansion.
Speaker 1: The Senate had two Republicans didn't vote yes on that one.
Speaker 1: So there's been quite a bit of legislating going on.
Speaker 1: It could do something Congress. It's actually one of the
Speaker 1: most productive of Congress is in the last fifty years.
Speaker 1: Maybe not the most, but it's among those that. Yeah, yeah,
Speaker 1: there's a lot of fights about, well, what counts as
Speaker 1: a big accomplishment. You know, it's interesting though, Jonathan, we
Speaker 1: don't even ask anymore, what will bump to President Biden's rating.
Speaker 1: Yeah know, there has not been a real correlation over
Speaker 1: time between whether voters approved of the president and how
Speaker 1: much legislation gets done or how much policy gets done. Generally,
Speaker 1: people care about if the price of gas is high,
Speaker 1: they care about that. If jobs aren't plentiful, they care
Speaker 1: about that. They don't really pay a whole lot of
Speaker 1: attention to things that passed in Washington, even if it
Speaker 1: winds up affecting their lives. You know, a lot of
Speaker 1: people are going to get healthcare subsidies within the marketplace plans.
Speaker 1: They were established earlier in the Button presidency, and now
Speaker 1: they're going to be extended by this last till people
Speaker 1: have just moved past that, and that's not what people
Speaker 1: base their votes on. Jonathan Bernstein there, We are now
Speaker 1: choosing to end all conversations not with you, though, as
Speaker 1: always we'd love to hear from you at vaney quint
Speaker 1: on Twitter, or send your thoughts to v Quinn at
Speaker 1: Bloomberg dot net. And don't forget we're also available as
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Speaker 1: to get your podcast on. We're produced, as always by
Speaker 1: Eric mollow Till next time on Bloomberg Opinion, The Belove