Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: Searched Bloomberg clovel News. It was the shot scene around
Speaker 1: the world. One year ago today, Sandra Lindsay, the director
Speaker 1: of patient care at Northwill Health Long Island Jewish Medical Center,
Speaker 1: became the first person in the US to get the
Speaker 1: COVID nineteen vaccine. We all watched or saw the video
Speaker 1: right after it happened, and Tim that press conference of
Speaker 1: the event said to be viewed by some six billion
Speaker 1: people at that time or shortly thereafter. Yeah, I mean
Speaker 1: it was monumental. I remember, right, we were all working
Speaker 1: up to the vaccine and then to finally see it
Speaker 1: being put in healthcare workers arm was. It was a
Speaker 1: big deal. It was a big deal, and it's sort
Speaker 1: of I think a lot of people would be fair
Speaker 1: to say that this isn't really where we thought we'd
Speaker 1: see ourselves in a year. Apple asking people to put
Speaker 1: masks back on hospitalizations in New York? Uh are you
Speaker 1: know are up significantly after the holidays? And Governor Cathy
Speaker 1: Hicle saying she's frustrated by this need for new restrictions.
Speaker 1: All right, so let's see what Michael Dowling President and
Speaker 1: see you at Northwell Health, which is the largest healthcare
Speaker 1: provider and private employer in New York State. He's also
Speaker 1: written several books. He joins us on the phone from
Speaker 1: Long Island, New York. Michael, thank you so much. You
Speaker 1: have been so gracious always throughout the pandemic and find
Speaker 1: you so much appreciate it anytime. Thank you so much.
Speaker 1: I appreciate well we do too. How are things going?
Speaker 1: What are you seeing front and center when it comes
Speaker 1: to where we are in the pandemic? Well, compon points
Speaker 1: I want to make is one this is as you mentioned,
Speaker 1: this is a very special day and it's also important
Speaker 1: to a member the success that has a called sense.
Speaker 1: Then we're in a most better position today than we
Speaker 1: were a year ago. But everybody has to understand that
Speaker 1: this as a marathon. Uh, it's not a sprint. We
Speaker 1: still have a lot of work to do before we
Speaker 1: completely exit this pandemic crisis, and people have to be
Speaker 1: have to be a little bit patient and have to
Speaker 1: put up with some inconvenience and some disruption, and we
Speaker 1: have if we are willing to win the war against
Speaker 1: the COVID, then we have to do what is right
Speaker 1: to do. So today, um, we have three COVID patients
Speaker 1: in our hospitals. That's about double what it was prior
Speaker 1: to Thanksgiving. And we do anticipate now that we're going
Speaker 1: into the Christmas week that we will see another up
Speaker 1: in hospitalizations post Christmas. We don't know exactly what the
Speaker 1: numbers would be like, but we're anticipating that we will
Speaker 1: see an increase. So the positivity rates are going up,
Speaker 1: but they are the hospitalizations, at least in the city
Speaker 1: in down State. While they are increasing, we do not
Speaker 1: have in any in any situation a disasters circumstances. We're
Speaker 1: easily able to handle it. The volume is not too
Speaker 1: much we're handling it is different than what's happening upstate
Speaker 1: and in other places around the country. Well, Michael tell us,
Speaker 1: if you can um how many of those patients you
Speaker 1: are in the hospital right now are are people who
Speaker 1: are vaccinated, less than twenty are vaccinated. All that means
Speaker 1: over of the people in the hospital are people that
Speaker 1: are unvaccinated. So in many ways, we have an unvaccinated crisis,
Speaker 1: a crisis of unvaccinated people. And that's the issue. That's
Speaker 1: that's what that's disturbing because we we we know the
Speaker 1: vaccine works, we know it can dramatically reduce the illness
Speaker 1: and dramatically prevent hospitalizations. And the fact that people are
Speaker 1: still out there making all sorts of arguments that they
Speaker 1: shouldn't get vaccinated, in my view, makes appolutely no sense.
Speaker 1: Um so um that the if there are people the
Speaker 1: people who are in the hospital that have been vaccinated
Speaker 1: and and have covie it and and I was sick,
Speaker 1: which are few and not few in number, but these
Speaker 1: are people that most in most cases have other major
Speaker 1: medical issues that they're suffering from the vaccine. If you
Speaker 1: get the vaccine, it will it will limit the illness,
Speaker 1: and it will in all likehood dramatically limited any hospitalization.
Speaker 1: So it definitely has proven to be to be successful.
Speaker 1: Younger older. Is there something interesting in terms of the
Speaker 1: people are well, they're older, um, and especially the paper
Speaker 1: holding the I c O went quite sick um, but
Speaker 1: they are the sickest ones are the ones that are unvaccinated.
Speaker 1: Let's also talk a little bit about gun safety, because
Speaker 1: something that you're doing, Michael, and that you've been doing
Speaker 1: at Northwell Health for the last three years, has been
Speaker 1: the Gun Violence Prevention Forum. UM investor Susan rice Is
Speaker 1: is going to be headlining it. I'm wondering about how
Speaker 1: that fits into our idea of public safety, especially during
Speaker 1: the pandemic. Well I you know, in many ways you
Speaker 1: could argue we have two pandemics. We have the COVID
Speaker 1: pandemic and we have a pandemic of gun violence. I mean,
Speaker 1: we've had over six hundred mass shootings this year, a
Speaker 1: long during COVID going ownership increase, the sale of guns increased, etcetera, etcetera.
Speaker 1: And we just obviously on Michigan last week with that,
Speaker 1: with that fifteen year old, we have a real crisis here.
Speaker 1: So we've been working on this for a couple of
Speaker 1: years and my my my position is that we have
Speaker 1: to look at gun violence as a public health issue
Speaker 1: because we see the results of it in our emergency
Speaker 1: rooms and outside wards in you know, the dislocation of
Speaker 1: families and the disruption of families, etcetera. We see the
Speaker 1: medical and psychological issues as a result of gon violence.
Speaker 1: So it's a public health issue. And I believe large
Speaker 1: health care organizations have the broadened concept of health. It's
Speaker 1: a lot more than just a provision of provision of
Speaker 1: medical care. So we have to be we have to
Speaker 1: be out there as catalysts and advocates to look much
Speaker 1: more broadly, and gun violence is one of those issues.
Speaker 1: So tomorrow do we We do have our fun national
Speaker 1: meeting and Susan Rice is one of the headline ers.
Speaker 1: We do have a big meeting in Washington on those
Speaker 1: that night where we have a demo with a lot
Speaker 1: of to keep people from around the country, and we've
Speaker 1: developed a learning collaborative. I've been trying very hard to
Speaker 1: get a lot of the health systems around the country
Speaker 1: to stand up and basically say this is in our lane,
Speaker 1: this is what we should be working on. This is
Speaker 1: a public health issue and we've got to deal with
Speaker 1: it well well said another pandemic and an important public
Speaker 1: health issue as well. Michael, thank you so much. Happy
Speaker 1: holidays and and be well and stay safe. Michael Darling
Speaker 1: his presidency. You at north Well Health, as we said,
Speaker 1: home to the first vaccine that we got in the
Speaker 1: United States one year ago. Today, you're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. We know you know the FED
Speaker 1: has a dual mandate keeping Asian in check and also
Speaker 1: reach maximum employment. The thing is that's not so easy
Speaker 1: to do, especially if Fed cher J. Pale sticks to
Speaker 1: his plan of max employment for all. Tim. There's also
Speaker 1: this element of modifiers, broad based and inclusive. Matthew Bosler
Speaker 1: writes all about it. He's Federal Reserve reporter at Bloomberg News.
Speaker 1: His story is featured in the upcoming issue of Bloomberg
Speaker 1: Business Week magazine. You can read it now on the
Speaker 1: Bloomberg Terminal and at Bloomberg dot com slash business Week.
Speaker 1: Joel Weber is editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studio. This was a
Speaker 1: perfect story for today as we think about what's going
Speaker 1: on with the Fed, Joel. Uh. But it also includes
Speaker 1: so much, so so many parts of the questions that
Speaker 1: we've been asking, which are really what what is full
Speaker 1: employment today? And how does the FED define that? Big time?
Speaker 1: And and we're gonna you know this being kind of
Speaker 1: Fed Fed week here at Bloomberg, Well we will we
Speaker 1: will find out more soon enough. Uh. Not a job
Speaker 1: that I would want, um, and Placio j peal and
Speaker 1: navigates it. Um. So So, Matt, what's on your list?
Speaker 1: What are the things that they were all going to
Speaker 1: be watching for? Yeah, so, you know, speaking broadly about
Speaker 1: the meeting tomorrow, Joel, Um, the two big things that
Speaker 1: we're expecting are for the Fed to um accelerate the
Speaker 1: wine down of its bond buying program and you know,
Speaker 1: look to conclude that by the end of the first
Speaker 1: quarter of next year, and then also signal more interest
Speaker 1: rate increases in the forecast for next year then they
Speaker 1: had previously been signaling. And of course those two things
Speaker 1: are linked. If they wind down the bond buying program earlier,
Speaker 1: and that clears the deck for earlier interest rate increases,
Speaker 1: and of course this is all coming at a time
Speaker 1: when UM inflation has accelerated over the last few months
Speaker 1: to UM the highest levels in nearly forty years, and
Speaker 1: the FED is facing a lot of political pressure from
Speaker 1: both sides of the aisle to do something about it.
Speaker 1: You mentioned the inflation, We're there and I'm wondering how
Speaker 1: that runs into inclusive employment UM and and and the
Speaker 1: dual mandate for that matter, Like, how has that changed
Speaker 1: the conversation from from just a two months ago. Well, yeah,
Speaker 1: it's really interesting because if you go back to last year, UM,
Speaker 1: we were kind of in the middle of a national
Speaker 1: reckoning on race, right with both the pandemic and of
Speaker 1: course the killing of George Floyd that led to protests
Speaker 1: across the country against police brutality, and a lot of
Speaker 1: institutions came out UM and made pledges, uh, you know,
Speaker 1: to do their part to try to fix this. And
Speaker 1: for the Fed's part, UM, its pledge was to consider
Speaker 1: racial disparities in the labor market when it's trying to
Speaker 1: make its assessments of how close the economy is the
Speaker 1: maximum employment and therefore you know, what to do with
Speaker 1: interest rates and so UM. That was clearly top of
Speaker 1: mind a year ago. And like you said, the FED
Speaker 1: has two mandates. Now, obviously inflation is kind of taking
Speaker 1: center stage politically, and um, the FED you know, isn't
Speaker 1: necessarily you know, getting that sort of prodding from Democrats
Speaker 1: on the employment issue. Um that it was a year ago.
Speaker 1: And so this is become less of a partisan debate.
Speaker 1: You know, should the FED prioritize employment broad based or
Speaker 1: should it prioritize inflation. Um, you've kind of got both
Speaker 1: sides wanting it to deal with inflation first and foremost,
Speaker 1: just the way the political wins are shifting behind it.
Speaker 1: So is there a chance not that the FED won't
Speaker 1: be able to achieve its goal of broad based and inclusive?
Speaker 1: And and what do we know about the definition of
Speaker 1: broad based and inclusive because you run through some numbers
Speaker 1: here that show that there's a long way to go
Speaker 1: when it comes to certain parts of the American population
Speaker 1: getting back to work. Right that So this is the
Speaker 1: most interesting part, right because you know, some you know,
Speaker 1: a lay person might say, well, broad based and inclusive employment,
Speaker 1: maybe that means the black and the white unemployment rates
Speaker 1: are equal and there isn't this big gap between them.
Speaker 1: Like exists now. Right, Black unemployment is six point seven
Speaker 1: white unemployment is three point seven percent. That doesn't obviously
Speaker 1: meet uh, you know, a lay person's definition of broad
Speaker 1: based and inclusive. But the FED has been very careful
Speaker 1: not to put numbers on this, not to define what
Speaker 1: they mean. And so when it comes to this question of,
Speaker 1: you know, will they be able to meet their goal
Speaker 1: of broad based and inclusive employment, what we're kind of
Speaker 1: seeing is they've got plenty of latitude um that they've
Speaker 1: given themselves to sort of redefine that goal. And that's
Speaker 1: kind of what people are increasingly expecting them to do. Uh,
Speaker 1: you know, if not tomorrow, then in the coming months
Speaker 1: as inflation increasingly becomes a bigger priority. It's one of
Speaker 1: those things you do wonder, right, you figure out, you
Speaker 1: do your modeling because you're asking the question, you're asking
Speaker 1: your story, Matt. How much more could the black white
Speaker 1: unemployment gap now if the economy were allowed to run
Speaker 1: hot for longer? Right, We just don't know, and it
Speaker 1: would have to be an experiment in real time. And
Speaker 1: maybe the gap does get reduced and things do improve
Speaker 1: for black unemployment. Maybe it doesn't. Yeah, And this is
Speaker 1: another great aspect of this whole conversation because the FED
Speaker 1: has essentially thrust itself into this very long running political
Speaker 1: debate in America over what are the true causes of this?
Speaker 1: Right on one side, um, you know, going back decades
Speaker 1: and decades, it's always been about education. We need to um,
Speaker 1: you know, expand educational opportunities and job training for these
Speaker 1: underserved communities and you know, position them to uh succeed
Speaker 1: uh better in the workforce. The other side has often said, well, no,
Speaker 1: it's really not about um, you know, training for these jobs.
Speaker 1: It's about are these jobs available in the first place.
Speaker 1: And so that kind of gets to this question of,
Speaker 1: you know, is the answer not just the government needs
Speaker 1: to spend more money via fiscal policy, the Federal Reserve
Speaker 1: needs to run the economy hot or via monetary policy,
Speaker 1: and these things are going to start to sort themselves
Speaker 1: out on their own in the private sector or labor markets.
Speaker 1: And we got a little bit of a taste of that,
Speaker 1: you know, before the pandemic UM in the years leading
Speaker 1: up to it, UM, with the unemployment rate getting solo,
Speaker 1: you did see employers starting to um increasingly higher into
Speaker 1: these um you know, underserved communities tap into these labor pools,
Speaker 1: and you started to see some movement there, but of
Speaker 1: course it was truncated by the pandemic. And so in
Speaker 1: some sense, you know what, a lot of people wanted
Speaker 1: to kind of get back to that place where we can,
Speaker 1: um at least get back to running that experiment. Um.
Speaker 1: But in the meantime, uh, you know, we've got some
Speaker 1: other issues to deal with that are still being driven
Speaker 1: by the pandemic, perhaps, like inflation. Genuine question, how many
Speaker 1: balls can JP juggle at one moment time? That's a
Speaker 1: great question, you know, hopefully at least two because that's uh,
Speaker 1: I think it's given like four more and see what happened. Hey,
Speaker 1: I just wanted to end Matt very briefly with talking
Speaker 1: about the idea of looking at some other metrics here
Speaker 1: because you spoke to David Wilcox here at Bloomberg Economics.
Speaker 1: He has a US economic research for Bloomberg Economics. What
Speaker 1: about the other data that we get just in about
Speaker 1: thirty seconds. Sure, so you know a lot of people
Speaker 1: are playing to job opening, fast wage growth, um. And
Speaker 1: you know survey measures that suggests the labor market is
Speaker 1: very tight. This is really interesting rerun of the conversation
Speaker 1: we had in the wake of the Great Recession in
Speaker 1: the years like two thousand nine. So it's kind of
Speaker 1: following a similar pattern. Even those circumstances are very different.
Speaker 1: Who wants to change places with j Pal's your hand,
Speaker 1: but he's raising their in mattout Bosler, Thank you so much.
Speaker 1: Matt Bosler is Federal Reserve reporter at Bloomberg News, joining
Speaker 1: us on the phone from New York City. Check out
Speaker 1: his story. It's going to feature in the upcoming issue
Speaker 1: of Bloomberg Business Week magazine. You can read it now
Speaker 1: on the Bloomberg terminal, also at Bloomberg dot com slash
Speaker 1: business Week. It's it's it's tricky. It's tricky, especially when
Speaker 1: there's so many questions out there in the economy. By
Speaker 1: the way, Matt's going to be I assume watching closely
Speaker 1: tomorrow and perhaps asking a question or two. Yeah, he's
Speaker 1: on a plane headed to uh, Mexico. I think did
Speaker 1: everybody go to Mexico right now? Joe Weber, of course,
Speaker 1: the editor of Bloomberg Business Week, he's in our studio.
Speaker 1: Al right, stick around, you're listening to Bloomberg Radio. This
Speaker 1: is Bloomberg Business Way with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. So we're just under
Speaker 1: twenty three hours away from the last decision here, it's
Speaker 1: like sixty minutes. That's that's what we're doing. Um, probably
Speaker 1: not an easy one for the US Central Bank this
Speaker 1: time around, considering the long list of uncertainties and questions
Speaker 1: and really pressures that face FED chair J. Powell and company.
Speaker 1: So we thought we would get a strategy play on
Speaker 1: the FED with the perfect, perfect go to voice for this.
Speaker 1: It's Dr Stephen Skanky. He's chief Economic advisor at keel Point,
Speaker 1: also former U S Treasury and White House National Security
Speaker 1: Council staff member. He is with us after what a
Speaker 1: two year break since we've seen him in the Bloomberg studios.
Speaker 1: It is really great to have you with us, Dr Skanky,
Speaker 1: How are you. I'm great, Thanks, and it's wonderful to
Speaker 1: be back here. It's exciting to be back in your studio. Okay,
Speaker 1: So tell us right now, what the what the Federal
Speaker 1: Reserve officials are thinking. What is what's going through the
Speaker 1: mind of J. Powell. They're trying to figure out how
Speaker 1: they're going to lay this out in an effective way
Speaker 1: that doesn't spook the market, restores confidence and shows that
Speaker 1: they're not behind the curve. Uh. Is that possible? I
Speaker 1: think it is. I mean, it's it's a big challenge that.
Speaker 1: The good news is that j. Powell had a very
Speaker 1: bad experience in UH December of when he badly miscommunicated
Speaker 1: to the market, and he understands the response and uh,
Speaker 1: and that was about taper UH and reducing liquidity in
Speaker 1: the economy. And so he gets that and how sensitive
Speaker 1: the market is to that. And so that's what we're
Speaker 1: talking about for tomorrow, speeding up the rate of taper UH,
Speaker 1: probably ending it by by the end of March. So
Speaker 1: they have plenty of room than to do whatever they
Speaker 1: want to do about interest rates. All right, so help
Speaker 1: me out here, price stability, full employment or maximum employment. Uh.
Speaker 1: No market tantrums. That's not part of their mandage exactly.
Speaker 1: But they do keep a close watch on the markets. Oh, absolutely,
Speaker 1: because it's spills over into the economy. It affects consumer confidence,
Speaker 1: business confidence. And we actually got some good news this
Speaker 1: morning with the small business optimism and tell me, yeah,
Speaker 1: talk to us about this, because small business right back
Speaker 1: gone of our economy what what did you glean from
Speaker 1: that report? Well, I want to be honest, I was
Speaker 1: surprised because these small businesses are are on the receiving
Speaker 1: end of higher costs for services, higher costs for intermediate
Speaker 1: goods in their production. You know, you saw the producer
Speaker 1: price index out this morning up nine point six percent
Speaker 1: for final demand. Big impact on small business, and yet
Speaker 1: they came out with a moderate increase in their optimism.
Speaker 1: That's very encouraging. UH. They're also on the hiring end,
Speaker 1: and so they're very much affected negatively by all the
Speaker 1: unfilled jobs as they're trying to expand and build their businesses.
Speaker 1: And and we know that for every job that's available,
Speaker 1: there's less than one person available to fill that job.
Speaker 1: So does the information that we're getting and I think
Speaker 1: that Small Business Optimism report was a big one too.
Speaker 1: I agree with you. Um, does it give the FED
Speaker 1: you talked about the importance of their messaging and how
Speaker 1: they put it out there, Steve, does it give them
Speaker 1: more room to be a little bit more hawkish or
Speaker 1: do they just stay the course at this point? From
Speaker 1: what we last heard from j Pow when he's really
Speaker 1: up before UH congressional lawmakers, they are going to be
Speaker 1: more hawkish. They want to come across as more hawkish,
Speaker 1: but they don't want to sound panicked and uh and
Speaker 1: so the small Business Optimism index that helps consumer confidence
Speaker 1: from the Michigan survey earlier this week is up a
Speaker 1: little bit. That also takes away some of the um
Speaker 1: anxiety and fear in what they're doing, so it it
Speaker 1: gives them some breathing space. Also, energy prices are down some,
Speaker 1: food prices are down some. It makes it easier for
Speaker 1: them to be hawkish without look like with looking like
Speaker 1: their way behind the curve and scrammedy catch up what
Speaker 1: do you think is baked in and starts expectations go?
Speaker 1: You did say that you expect to see tapering probably
Speaker 1: ending by by the end of March. Um what spooks
Speaker 1: the market though tomorrow? What well? What spoots the market
Speaker 1: if they get something that doesn't look like that? Number one,
Speaker 1: if the if the Fed doesn't change the rate of
Speaker 1: taper from UH fifteen billion a month to say thirty
Speaker 1: which we get them finished up by the end of March,
Speaker 1: then they look like they're out of touch. If they
Speaker 1: try to do something too much, or if they actually
Speaker 1: talk about their target for raising interest rates in two
Speaker 1: that would spook the market all of a sudden. They said, Okay, hey,
Speaker 1: we were thinking maybe in June or something right exactly whatever,
Speaker 1: because that that that sounds hum scrambling, sounds desperate. Uh.
Speaker 1: And if they can just be out there and say, hey,
Speaker 1: you know, look, we've you know, Powill set the stage
Speaker 1: with his November thirty testimony, if he can just allow
Speaker 1: up with that, and and remember we talked about the
Speaker 1: minutes a couple of weeks ago. They are ready to
Speaker 1: increase the rate of taper. So if they just go
Speaker 1: along with that, and it sounds business as usual, we
Speaker 1: are on course. We understand where it is. We're comfortable
Speaker 1: with that. Market will love it. Um. It doesn't doesn't
Speaker 1: mean it won't sell off some but but but but
Speaker 1: it's not going to be a panic. This is the
Speaker 1: first this will be the first meeting in the first
Speaker 1: time we hear j pol questioned by journalists who cover
Speaker 1: him since he essentially banned the word transitory or said that,
Speaker 1: you know, that's not a term we should use anymore.
Speaker 1: Is there anything about what he says about inflation that
Speaker 1: could that could spook people? The idea that it has
Speaker 1: become something that is more persistent, or is that or
Speaker 1: do we know that with all the data that we've
Speaker 1: been getting. I think he put that out on the
Speaker 1: table on November thirty. Uh. Now since then we've had
Speaker 1: the November c p I UH six point eight and
Speaker 1: the November pp A Producer Price Index at nine points,
Speaker 1: so that those higher numbers are out there. But but
Speaker 1: he's already been clear. Well, I like, you know, David
Speaker 1: Weston talking with Brian Moynahans EO Bank of America. Come on, folks,
Speaker 1: we know that there's inflation out there. How possible is it, Steve?
Speaker 1: I mean, if you think about the last year and
Speaker 1: a half or since the pandemic started, right, the economy
Speaker 1: shut down, right, and then all of a sudden, you know,
Speaker 1: we came back as things started to reopen and we
Speaker 1: found our way, we saw that inflation takeoff. How likely
Speaker 1: is it possible that all of a sudden inflation has
Speaker 1: more people come back to work or supply chain start
Speaker 1: to get more normal, that inflation drops again. Could we
Speaker 1: see a quick drop like that? Absolutely, and in fact
Speaker 1: we will see inflation drop, but just from the energy
Speaker 1: prices coming down that will have an impact on on
Speaker 1: December inflation numbers that come out in in January as
Speaker 1: people come back to work, depending on what China does,
Speaker 1: is it going to double down on the omicron variant
Speaker 1: or is it going to continue to increase production. That's
Speaker 1: a huge part of the supply chain. And if they
Speaker 1: really tighten up there, that'll be uh, that'll just exacerbate
Speaker 1: the problem we have with prices here. So j Pal
Speaker 1: comes out and said, listen, folks, we know inflation is
Speaker 1: going to get back to a much more normalized rates.
Speaker 1: I mean, I think he's talked about that already, Like
Speaker 1: we get that. Will the markets respect that if he
Speaker 1: says this is why we have to continue to go
Speaker 1: slowly because we're not necessarily looking at normalized rates yet.
Speaker 1: I think that they will. And what what helps so
Speaker 1: much is that we still I mean, we're going to
Speaker 1: see GDP growth in the fourth quarter somewhere in the
Speaker 1: six and a half to eight and a half percent range.
Speaker 1: I know that the New York Fed is still projecting
Speaker 1: fourth quarter GDP growth of annualized rate of eight point
Speaker 1: four percent, and we probably have six to six and
Speaker 1: a half percent baked in for one. So you've got
Speaker 1: that out there and that of course drives top line
Speaker 1: revenue drops to the bottom. Law Mine company has been
Speaker 1: able to pass along prices well enough that there's not
Speaker 1: really an earning squeeze going on, or not much of
Speaker 1: a material one. So we're going to turn in the
Speaker 1: record fourth cord quarter earnings reports again in January. That
Speaker 1: that will just continue to boil the market. So why
Speaker 1: do I feel like I'm living a dream? Are like
Speaker 1: a weird Why does it feel so bizarro world? Well,
Speaker 1: because it could make a surprise negative turn. Uh, that
Speaker 1: that is the real It's too early to use the
Speaker 1: R word. I think it's too early to use the
Speaker 1: R word. But but but if we had a really
Speaker 1: negative development on the COVID front, that certainly could be
Speaker 1: the case. If if other countries shut down production again, Um,
Speaker 1: it almost doesn't matter what we're trying to do in
Speaker 1: the United States because of the supply chain and the
Speaker 1: impact on prices and the impact on production and employment here,
Speaker 1: we could certainly move in that direction. That that's the word. Yeah, No,
Speaker 1: you're not going anywhere. Put your seatbelt on. Um. I'm wondering,
Speaker 1: doctor Skanky about the how the how the labor market
Speaker 1: sorts itself. Out because we're Carol described it as this
Speaker 1: bizarre world, right, It's this idea that you know, there
Speaker 1: are not enough people for the jobs that we have available.
Speaker 1: Um our companies are somewhat raising raising wages to try
Speaker 1: to attract and retain people. But but where does the
Speaker 1: FED come in and actually trying to resolve this and
Speaker 1: how can they resolve this? Well, the FT has a
Speaker 1: conundrum because they really wanted to see employment to unemployment
Speaker 1: far below where it is right now. They wanted to
Speaker 1: see it back down at three and a half percent,
Speaker 1: which is how you get the broad distribution of jobs
Speaker 1: to the minority and disaffected labor groups. This is the
Speaker 1: broad and inclusive part of the mandate that is exactly right,
Speaker 1: and that's very hard and and it sort of begs
Speaker 1: the question of their credibility. If you're having eight GDP
Speaker 1: growth in the fourth quarter, six percent to six and
Speaker 1: a half for all of the year, and then you've
Speaker 1: got inflation out here at you know, pick pick your number,
Speaker 1: whether it's personal consumption core or cp I headline. Uh,
Speaker 1: it's in the it's in the range of six plus percent.
Speaker 1: Uh And uh so they can't lose credibility by ignoring
Speaker 1: that reality with robust economic growth and a phenomenon within
Speaker 1: the labor force of just people not coming back. And
Speaker 1: yet we every day here at Bloomberg, and I really
Speaker 1: commend our team here because are very smart about reminding
Speaker 1: us of the gaps that are out there. And if
Speaker 1: you're in you know, Tim and I laugh about you know,
Speaker 1: you're looking at your four O n K. Because it's
Speaker 1: been a remarkable couple of years. Um, yet there are
Speaker 1: people who who are barely making it or not making
Speaker 1: it at all. So what is the FED? It's the
Speaker 1: Fed's responsibility to that, and just got about seconds or well,
Speaker 1: the FED certainly wants to address that, but but they've
Speaker 1: got this tough balancing act of how do they do
Speaker 1: that effectively when you've you've got inflation above expectations developing
Speaker 1: to be a problem and not wanting to look like
Speaker 1: you're behind the curve. So they're they're more likely to
Speaker 1: air on putting on the brakes a little too much,
Speaker 1: a little too soon, than they are to wait and
Speaker 1: let it get out of control. And that will be
Speaker 1: the really interesting question as to how they what they
Speaker 1: announced tomorrow and how J Powell fields the press questions
Speaker 1: try seconds. What would you ask J Powell at that
Speaker 1: press conference? Pressure is hons? Where are you happy with
Speaker 1: the unemployment rate and the distribution of jobs and why
Speaker 1: do you think that we continue to have so many
Speaker 1: less jobs and less participation in the labor force in
Speaker 1: what is really a robust economic growth cycle. It's the
Speaker 1: ston It's like spot on. It's so great. Thank you
Speaker 1: so much. What a delight. Thank you really great to
Speaker 1: have you in studio and just be here. Dr Steve Skanky,
Speaker 1: chief economic adviser of at keel Point, former US Treasuring
Speaker 1: and White House National Security Council staff member based in Washington,
Speaker 1: but he made his way to our interactive broker studio.
Speaker 1: Thank you so much. I'm bro Yeah, I bet you
Speaker 1: let me drive. Oh no, no, no, no, this is
Speaker 1: not a hole. I'll do good revels. I want to drive.
Speaker 1: It's a good question. Good drive. This is the drive
Speaker 1: to the Globe on Bluebird Radio. All right, just about
Speaker 1: ten minutes left in today's trading session. Uh, we are
Speaker 1: on FED decision eve. Yeah, that's last Fed decision of
Speaker 1: the year. To be a fly on the wall, right,
Speaker 1: Oh my gosh, can you I mean, we get the minutes,
Speaker 1: but yeah, a few weeks later and then we I
Speaker 1: guess we are Then we are there? Ye, alright, we
Speaker 1: are nerds. Having said that, you heard Charlie bricken down
Speaker 1: the trade here, we're definitely off our loads of the session.
Speaker 1: But we're seeing some selling, uh, particularly when it comes
Speaker 1: to some of those tech names. Let's see what Jimmy
Speaker 1: Lee has to say. He is founder and chief executive
Speaker 1: officer of the Wealth Consulting Group. He joins us on
Speaker 1: the phone from Mexico. They are, by the way, an
Speaker 1: independent wealth management firm, a registered investment advisory firm that
Speaker 1: has about two point seven billion in assets under management.
Speaker 1: And he is on the phone from Mexico. How are
Speaker 1: you great? How are you doing? Okay? I feel like
Speaker 1: I have more questions and answers in this environment. Uh.
Speaker 1: And having said that, despite even when we see some
Speaker 1: pullbacks when it comes to the equity trade, you know,
Speaker 1: let's not forget we're pretty much near record levels. Um,
Speaker 1: how do you what's your read on this financial market situation? Well,
Speaker 1: I think what you just said is very important. We're
Speaker 1: at near record levels. So through last Friday, my record show,
Speaker 1: according to LPL Research, S and T was up over
Speaker 1: so if you combine that with the returns from last year.
Speaker 1: I mean, we've had we've had a nice, nice two
Speaker 1: years in a row. So getting a little bit of
Speaker 1: a pullback on potentially you know, a more hawky ish
Speaker 1: FED is something that I think is very expected and
Speaker 1: what I think will continue to happen, as we've seen
Speaker 1: all throughout this year, is that investors buying the dip.
Speaker 1: And of course we really haven't had any large dip shet,
Speaker 1: we haven't had a real correction, and if we did,
Speaker 1: I think that investors would would go heavy, and especially
Speaker 1: in the sectors I think that have been beaten up
Speaker 1: recently with the idea that the economy is going to
Speaker 1: shut down again, you know what what kind of dip though,
Speaker 1: because like you said, we haven't really had you know,
Speaker 1: significant dip, especially when you put it in the context
Speaker 1: of the rise in in the SMP bounder that we
Speaker 1: see this year and we're likely see this year, and
Speaker 1: that we saw last year, apart from you know, of
Speaker 1: course March when it was like you know, the dip
Speaker 1: of a generation, right right. I do believe there are
Speaker 1: some companies that have corrected um pretty you know, pretty
Speaker 1: pretty good off their highs, but overall, the market in
Speaker 1: general has been you know, staying very high because of
Speaker 1: the big, big tech names that are being hit today.
Speaker 1: They've rallied and they've done a you know, had some
Speaker 1: really great returns. The big you know, megacap technology stocks
Speaker 1: that people were climbing into during the pandemic, they're rallying
Speaker 1: again as of late, carrying the big indexes like sp
Speaker 1: backup to record levels. And so I think we've had
Speaker 1: this you know rotation of when we get negative news
Speaker 1: about covid uh selling off of the stocks that are
Speaker 1: in the travel and leisure industries, the cyclical stocks, you know,
Speaker 1: and then people rotate back into the big tech Obviously,
Speaker 1: today that's not happening, and um, you know, we're getting
Speaker 1: a little bit of sell off all over the place.
Speaker 1: But I would say that overall, you know, I don't
Speaker 1: think I don't think we're gonna get a dip of
Speaker 1: er cent or more. I actually wish that we did,
Speaker 1: so we could put be more aggressive. A lot of
Speaker 1: people on the sidelines wish that. I really wished we did,
Speaker 1: but I don't think we'll get it because I think
Speaker 1: at the three five seven type range you'll get heavy
Speaker 1: buying because while while the said will potentially taper quicker
Speaker 1: um depending on the data about inflation, it's still accommodative.
Speaker 1: We're still they're still buying bonds. Interest rates are still
Speaker 1: you know, at all time lows. So I would say
Speaker 1: that's a very good environment for equities. Okay, so you
Speaker 1: know we're we're seeing you know, the nastack down more
Speaker 1: than one point one percent right now? Do you think this?
Speaker 1: So you're you're essentially saying this isn't the start of
Speaker 1: any sort of potential sell off that that couldrake are
Speaker 1: some sort of opportunity to buy You think that the
Speaker 1: diet buyers Russian already to prevent that. I do. I
Speaker 1: wish it was like I said, but I don't think
Speaker 1: it's going to happen, and so maybe we end up,
Speaker 1: you know, with a little bit of a setback and
Speaker 1: maybe a little bit of a standard clause rally. I
Speaker 1: don't know, UM obviously for traders, um any news regarding
Speaker 1: inflation or if you know, Powell changes his tone, which
Speaker 1: I don't think he will. I think they've learned our
Speaker 1: lesson um the fet has in terms of not not
Speaker 1: doing it the way the old bernankey days where we
Speaker 1: would guess like which hand is briefcase was in to
Speaker 1: see what the sentiment was gonna be. Right when he
Speaker 1: was walking up Cavil Head, Yeah, walking into the Federal Research.
Speaker 1: It's not about the wrong chairman, but yeah it was.
Speaker 1: It was a green span and uh, we have a
Speaker 1: we used to have a chief economist who used to
Speaker 1: work with the German greenspan. He passed away, but he
Speaker 1: would tell us a lot about green spans philosophy around that.
Speaker 1: But anyway, Um, the idea now that they're gonna signal
Speaker 1: weyne advans and not surprise the market, which I think
Speaker 1: this FET has done a really good job of. So
Speaker 1: I don't think we're gonna see anything surprising. Of course,
Speaker 1: we get some surprising data on inflation, because you know,
Speaker 1: maybe there's a sentence or two that says we may
Speaker 1: we make taper a little quicker, but I think investors
Speaker 1: a price that in already honestly well. And I think
Speaker 1: what's safe to say, Jimmy, is that you know we've
Speaker 1: been it's been pretty remarkable in terms of corporate profits
Speaker 1: and how well they've stood up not only corporate profits
Speaker 1: but top line growth and margin growth or margin expansion.
Speaker 1: Does that continue, because that's going to be interesting, I
Speaker 1: think are the most important potentially for what investors do
Speaker 1: in terms of where they make their market bets. Does
Speaker 1: that continue? Um in two? In your view? I hope so,
Speaker 1: and I think that we may get away. But doesn't
Speaker 1: I hope so too. And I'm sure there's a lot
Speaker 1: of bullish market watchers, but ken it are we. Do
Speaker 1: you think the fundamentals will be there for that to happen, Yes,
Speaker 1: they do. I think again a lot of that is
Speaker 1: to do with low inchest rates. We may get we
Speaker 1: may get an initial sake kike towards the second half
Speaker 1: of next year, but still very logious rates. And every quarter,
Speaker 1: I can't remember the last quarter, I looked at the
Speaker 1: results of earnings, corporate earnings and said, wow, unbelievable. How
Speaker 1: well companies are performing, you know, in this environment. And
Speaker 1: I think that's going to continue to happen. I think
Speaker 1: that the companies that are short on labor you need,
Speaker 1: it's been very difficult to fill jobs. I think that's
Speaker 1: going to change to the better. I think this supply
Speaker 1: situation is going to change for the better. So we're
Speaker 1: gonna see some of the prices of some of the
Speaker 1: areas that have gone up the most, home building, for example.
Speaker 1: I think that's gonna end up getting better towards the
Speaker 1: latter part of next year. UM. And so I think
Speaker 1: there are some things that are going to improve on
Speaker 1: the supply side that will help out with inflation data
Speaker 1: and the jobs, the jobs. I think, you know, I
Speaker 1: think the job situation is going to be great. I
Speaker 1: think to continue to do well, and I really think
Speaker 1: it's gonna be important to be active. Um. Certain sectors
Speaker 1: of the commun will do much better next year than others.
Speaker 1: All Right, we gotta run. Hey, thank you so much.
Speaker 1: Jimmy Lee, founder and CEO at the Wealth Consulting Group,
Speaker 1: registered investment advisory firm with two point seven billion in
Speaker 1: assets under management. Thanks for listening to Bloomberg Business Week.
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