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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim

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Speaker 1: Fox along with my co host Lisa Abramowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P L Podcast

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Speaker 1: on iTunes, SoundCloud and at Bloomberg dot com. All right,

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Speaker 1: let's just bring in Stephen Dennis, who is our Bloomberg

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Speaker 1: Senate reporter, and he has been following the confirmation hearings

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Speaker 1: that are being held in Washington today. We know that

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Speaker 1: Rex Tillerson, former chief executive of Exxon Mobile attampt to

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Speaker 1: be the next Secretary of State. Stephen Dennis, So anything

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Speaker 1: stand out to you in the in the questioning or

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Speaker 1: is it pretty much standard Democrats going after Rex Tillerson

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Speaker 1: and his ties and his business experience in Russia and

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Speaker 1: the Republicans UH supporting Rex Chillensen. Actually, I think it's

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Speaker 1: pretty bipartisan. The tough questioning senators like Marco Rubio are

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Speaker 1: going after Tillerson very hard on his ties to Putin

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Speaker 1: and also on Putin's record of having uh of his

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Speaker 1: dissidents disappearing and getting murdered on the death of civilians

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Speaker 1: and Aleppo, which Rubio charges the Russian the Russians with

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Speaker 1: perpetrating crimes against Aleppo civilians. And uh So, it's been

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Speaker 1: very tough on Tillerson, I think, except for Tillerson has

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Speaker 1: sort of said, sort of deflected everything and basically said

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Speaker 1: that he needs to know more information and needs no

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Speaker 1: classified information, which he won't have until he's confirmed, and

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Speaker 1: then he'll give advice. Um So, I think Tillerson is

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Speaker 1: basically hopes that he can get through on that sort

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Speaker 1: of basis of just sort of trying to deflect as

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Speaker 1: much as he can. And uh and it's gonna be

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Speaker 1: a real question now for people like Rubio, McCain and

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Speaker 1: Lindsey Graham whether they're gonna ultimately vote for Tillerson if

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Speaker 1: he loses though that that trio, he will not be

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Speaker 1: there's a big chance he will not be confirmed. He

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Speaker 1: needs to get some Democratic support. Um So, this might

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Speaker 1: be the most interesting nominee as far as whether this

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Speaker 1: nominee can get confirmed ultimately. Everybody expects that he will,

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Speaker 1: but you know, he's got to. He's got to make

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Speaker 1: these Republicans hawks on Russia happy and there's certainly been

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Speaker 1: more and more about Russia, and we're certainly going to

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Speaker 1: hear a lot of from Trump about whether he has

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Speaker 1: ties to Russia. He keeps denying that on Twitter. You know,

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Speaker 1: I expect he'll probably deny it, and with questions when

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Speaker 1: questions are asked about the leaked report that came out yesterday,

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Speaker 1: and also about his own personal finances, he still hasn't

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Speaker 1: really detailed everything that he owns, and also how all

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Speaker 1: of his loan I wonder if they'll ask about whether

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Speaker 1: he will release his tax returns. I would I would

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Speaker 1: expect something along those lines, and also how he had

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Speaker 1: will extricate himself from his business. And you know, he

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Speaker 1: promised a press conference in December on this very topic

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Speaker 1: until hasn't happened talking about that. Why is he holding

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Speaker 1: a press conference now at the same time as a

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Speaker 1: hearing for one of his cabinet nominees. Well, you know,

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Speaker 1: I think now it's probably as good a time as

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Speaker 1: any you know, I mean when he was going to

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Speaker 1: have it, Uh, you know, you want to do it

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Speaker 1: in the middle of the week, get maximum attention. And

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Speaker 1: you know to the extent that Tillerson is the one

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Speaker 1: pick who may be in the most danger, along with

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Speaker 1: possibly the Treasury Secretary pick Stephen manutian Um and maybe

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Speaker 1: a few others. Uh, you might you might as well

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Speaker 1: have your press conference, have the the big bully pulpit

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Speaker 1: um to try and bluster things away. Is there any

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Speaker 1: evidence that any of the nominees feel that they are

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Speaker 1: going to be unfairly treated as part of the hearings

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Speaker 1: because this is not something that is brand new to

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Speaker 1: Washington and many of the people, at least as far

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Speaker 1: as the Senators are concerned. But for many of the nominees,

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Speaker 1: this is really their first interaction with the way Washington works. Yeah.

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Speaker 1: I mean, there are a couple of things that are

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Speaker 1: different about this cabinet. You know that it's the richest

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Speaker 1: cabinet by far. You have billionaires in this cabinet. Just

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Speaker 1: dealing with a paperwork when you're a billionaire is an

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Speaker 1: order of magnitude different than if you're just you know,

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Speaker 1: Joe Q citizen. So people like Wilbur Ross and Betty

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Speaker 1: de Voss, who who are very wealthy and are in

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Speaker 1: this cabinet, you know, their paperwork is taking a while. Um.

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Speaker 1: But also these are people by and large who have

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Speaker 1: never been in government before, so being in a hearing

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Speaker 1: is is a new experience. Now Rex Stillerson's testified before

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Speaker 1: Congress before is ex ce Jeff Sessions, who was at

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Speaker 1: his first very marathon hearing yesterday, is certainly experienced as

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Speaker 1: a before the Judiciary Committee for Attorney General, right and

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Speaker 1: and and so Sessions sort of kind of anticipated where

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Speaker 1: the questions were going and kind of knew how to

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Speaker 1: dance around most of the questions. Uh, this will be

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Speaker 1: an interesting thing to see whether Stephen Manuchian, the Treasury

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Speaker 1: Secretary pick, when he has his hearing in the future, um,

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Speaker 1: and some of these other picks who have not really

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Speaker 1: been before Congress, that they're really going to be under

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Speaker 1: the gun and the Democrats are really going to go

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Speaker 1: after them because they want to show that the populist

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Speaker 1: Trump is not how Trump is governing. He's picking plutocrats

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Speaker 1: in their eyes who don't really have the interests of

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Speaker 1: working people at heart. And you know you're going to

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Speaker 1: see them go. They're already going very hard after Mr

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Speaker 1: Poster the well Elaine, I just want to mention Elaine.

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Speaker 1: Elaine Chow, who's the nominee for Secretary Transportation, is the

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Speaker 1: only Trump appointee who has previously worked at the cabinet level.

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Speaker 1: If you know, I wanted just to break in, I

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Speaker 1: mean about the press conference that we're going to be watching.

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Speaker 1: I wanted to understand kind of the process of how

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Speaker 1: it usually goes down. I mean, how long should president

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Speaker 1: elector or does a president elect usually speak for? And

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Speaker 1: then how much time is usually allotted to questions. You know,

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Speaker 1: I wouldn't be surprised to see this go on a

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Speaker 1: little bit longer since there hasn't been a press conference

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Speaker 1: in an unprecedented period of time since the election, and

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Speaker 1: there are frankly, so many questions out there. But it

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Speaker 1: really depends on Trump, you know. He he can bluster

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Speaker 1: at the beginning for a few minutes and then open

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Speaker 1: it up to questions. Uh. Typically you get six eight

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Speaker 1: ten questions at a at a scheduled press conference like

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Speaker 1: this with the President Obama. Uh. Trump could go longer

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Speaker 1: than that or not. And the other thing is that

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Speaker 1: the reporters, you know, keep in mind, these reporters have

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Speaker 1: have not had access to Trump and large they might

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Speaker 1: try to ask three and four part questions because there

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Speaker 1: are so many unanswered questions. You know, he tweets uh,

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Speaker 1: little details and and never really interacts with the press

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Speaker 1: in a meaningful three or four part way. This is

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Speaker 1: the first real opportunity beyond the few interviews that he's

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Speaker 1: done with UH, with sort of adversarial press course. So

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Speaker 1: this is going to be very interesting to watch how

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Speaker 1: he interacts, whether he tries to be marker garious or combative.

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Speaker 1: And after yesterday UH and the tweets were seeing in

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Speaker 1: all caps this morning decrying fake news and dismissing this

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Speaker 1: report as total fiction, I expect he'll probably be very

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Speaker 1: compative and very critical of the press for not treating

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Speaker 1: him fairly. Stephen Dennis is our Bloomberg Senate reporter and

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Speaker 1: he's with us. You know, I was just looking at

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Speaker 1: the schedule of hearing is You're gonna be kind of

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Speaker 1: busy nine thirty tomorrow morning when Washington James maddis the

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Speaker 1: nominee for Secretary of Defense. He'll be testifying before the

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Speaker 1: were inveted. He'll be questioned by the Senate Armed Services Committee.

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Speaker 1: Then you have Ben Carson. I believe he'll be before

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Speaker 1: the Senate Committee on Banking, Housing and Urban Affairs. That's

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Speaker 1: a ten am. Yeah. I think Mattis is probably a

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Speaker 1: slam dunk. He's a favorite of John McCain, who's no

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Speaker 1: friend of Trump most days. Um. But you know, that

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Speaker 1: could be interesting if Maddis Rebuke has a different position

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Speaker 1: than Trump on Isis on torture, on a number of things.

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Speaker 1: So that's something to watch for. You know, Ben Carson,

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Speaker 1: that could be a very entertaining hearing. He's a guy

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Speaker 1: who previously said he doesn't have much experience in government

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Speaker 1: and had there was a real question whether he wanted

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Speaker 1: to even be an administration and so I think the

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Speaker 1: Democrats are going to try and test whether he really

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Speaker 1: has the knowledge to handle that that department. And uh,

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Speaker 1: Wilbur Ross also he's up at ten am tomorrow as

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Speaker 1: well in Washington's before the Commerce, Science, and Transportation uh committee. Yeah,

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Speaker 1: now Ross is sort of interesting, obviously well known on

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Speaker 1: Wall Street billionaire. UM. I think the real question with

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Speaker 1: him is how he's going to handle conflicts of interest

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Speaker 1: um and that sort of thing. But you know that

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Speaker 1: there's no real expectation that his his nominee is nomination

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Speaker 1: is going to be in trouble. And you know, part

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Speaker 1: of the thinking I think is, you know, you don't

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Speaker 1: really want to get a billionaire mad Yeah, well so,

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Speaker 1: uh so that that'll be uh someone interesting for you know,

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Speaker 1: people who watch Wall Street to see how he handles

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Speaker 1: handles himself. But I think that will probably be pretty standard.

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Speaker 1: Fair Stephen, have you heard about Republican and frankly or

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Speaker 1: Democratic senators getting together before these hearings and trying to

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Speaker 1: come up with a game plan, because it does feel

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Speaker 1: like there has been some I don't know conflict if

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Speaker 1: in turn to seeing conflicts certainly between some Republicans. Now absolutely,

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Speaker 1: I think the Republicans and Democrats sort of treat these

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Speaker 1: things by and large as teams, and they sort of

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Speaker 1: dole out who's gonna ask which line of questioning, who's

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Speaker 1: gonna you know, with the Jeff Sessions, who was going

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Speaker 1: to defend him on X and who was going to

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Speaker 1: defend him on why? There there wasn't a whole lot

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Speaker 1: of Republicans who really wanting to go after Jeff Sessions,

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Speaker 1: and the Democrats you know, went after him a little bit,

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Speaker 1: but they didn't go after him as hard as they

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Speaker 1: potentially could have. You know, he's a he's a colleague,

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Speaker 1: he's going to win confirmation. You've got to deal with

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Speaker 1: him as Attorney General. So uh, he didn't really go

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Speaker 1: that hard at the allegations of racism as they could

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Speaker 1: have um in his past. And uh so that we're

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Speaker 1: going to see more of that today. I mean the

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Speaker 1: unprecedented spectacle of Corey Booker going after UM Jeff Sessions,

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Speaker 1: a fellow senator that's basically on heard of, and it

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Speaker 1: could be something that sets up Corey Booker to potentially

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Speaker 1: run help him run for president four years from now. Um.

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Speaker 1: You know, he's one of the rising stars in the

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Speaker 1: on the Democratic side, and they're looking at the party

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Speaker 1: spaces looking for fighters right now, and they see him

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Speaker 1: as one. I just want to mention that I mentioned

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Speaker 1: Wilbur Ross. He's not going to be uh at the

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Speaker 1: hearing tomorrow. It'll be January. Stephen Dennis, thank you so

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Speaker 1: much for joining us. Steven Dennis Blueberg, SENEC reporter. It

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Speaker 1: is the big debate. It is the debate that is

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Speaker 1: keeping up people at night and is keeping bond. King's

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Speaker 1: going at each other with the numbers. I want to

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Speaker 1: get a number from Mike materas So, Senior Vice president

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Speaker 1: and co chair of Franklin Templeton's Fixed Income Policy Committee.

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Speaker 1: Mike thank you so much for joining us. Do you

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Speaker 1: think that there is a certain threshold, a certain number

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Speaker 1: for US ten year yields to climb above at which

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Speaker 1: we can say goodbye to the thirty five year bond

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Speaker 1: bull market? Um? Well, is there a number? I don't

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Speaker 1: know if there's specifically a number, but uh, we're of

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Speaker 1: the opinion that we we could see yields move as

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Speaker 1: high as three percent this year, probably more towards the

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Speaker 1: end of the year, but that wouldn't necessarily mean that

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Speaker 1: that the bull the bull bond market has has ended.

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Speaker 1: I think that there are a lot of demographic trends

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Speaker 1: globally that are in place that will keep UH global

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Speaker 1: growth as well as inflation under control over the intermediate

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Speaker 1: to possibly even longer than that. That's a that's an

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Speaker 1: important point. In other words, even if the if the

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Speaker 1: yields on ten year treasuries to does climb, do climb

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Speaker 1: above three percent, there still could be potentially a plateauing

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Speaker 1: from there, in your view, I think, I think so.

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Speaker 1: I think that uh there that higher interest rates at

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Speaker 1: some point will will choke off economic growth and slow

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Speaker 1: slow US the U S economy down as well as

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Speaker 1: other economies, and with that UH not see inflation rise

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Speaker 1: and UM and UH interest rates rise as well. Mike,

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Speaker 1: could you comment on municipal bonds because I was reading

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Speaker 1: a story today about how corporate tax cuts could actually

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Speaker 1: reduce demand for municipal bonds from banks and insurance companies

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Speaker 1: because lower rates make municipals less attractive compared with taxable investments.

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Speaker 1: How does that work out? Well, I think it's more

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Speaker 1: a matter of depending upon how the tax code ends up,

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Speaker 1: but it will make UH corporate bonds and even treasuries

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Speaker 1: more attractive, especially if you go with the Republican UH proposal,

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Speaker 1: which I think is a sixteen and a half percent

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Speaker 1: tax UH paid by individuals UM so, so I don't

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Speaker 1: think it has an impact per se on municipal rates,

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Speaker 1: but it gives provides more competition for municipal bonds. Having

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Speaker 1: said that, I think it's important to realize that a

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Speaker 1: ten year double A municipal bond right now has a

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Speaker 1: yield of about a hundred and fifteent higher than the

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Speaker 1: ten year treasury, so it has a spread over treasuries

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Speaker 1: to begin with. So I think that it will provide

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Speaker 1: more competition, but not necessarily be apparel for the municipal

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Speaker 1: bond market. Mike, you know one question that I have

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Speaker 1: given your prediction that ten year treasure yields will climb

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Speaker 1: above three percent this year, I have to wonder what,

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Speaker 1: I'm sorry, approach three not approach okay, approach three percent

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Speaker 1: this year? What does that mean for corporate bonds. I

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Speaker 1: know that we've seen the fastest pace of issuance of

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Speaker 1: investment grade bonds to start the year. UH and meanwhile,

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Speaker 1: yields on junk bonds have climbed to the lowest in

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Speaker 1: two thousand and fourteen, leaving a pretty all cushion of

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Speaker 1: extra spread to sort of absorb that kind of increase. Yeah,

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Speaker 1: that's sort of the quandary that fixed income investors are

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Speaker 1: in right now. I think that with a lot of

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Speaker 1: the proposals UH that of the Republicans and Trump administration,

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Speaker 1: if if they're passed, I think it extends the business cycle,

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Speaker 1: which is good for for corporations. At the same time, though,

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Speaker 1: a lot of the a lot of that positive news,

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Speaker 1: and potentially I think it's important. Not necessarily it's not

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Speaker 1: necessarily going to be passed, but a lot of it

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Speaker 1: is already reflected in UH in yields on corporate investment

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Speaker 1: grade corporate bonds as as well as high yield. So

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Speaker 1: we are we're positive on credit, less positive on relative value.

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Speaker 1: Right now we would in other words, what does that

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Speaker 1: mean in terms of a trade? Oh? Sure, So what

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Speaker 1: it means is that, uh, given womans and most would

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Speaker 1: say that we are in the latter stages of the

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Speaker 1: business cycle. Fiscal policy that will be passed to the

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Speaker 1: extent that it's past, it's passed later on this year

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Speaker 1: will probably extend the business cycle. That's positive for corporate credit.

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Speaker 1: That when that the prospects of a recession are further off.

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Speaker 1: At the same time, though, spreads have come in on

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Speaker 1: investment ary corporate bonds probably about thirty thirty basis points

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Speaker 1: over the last few months, and even more so on

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Speaker 1: high yield, so they're spread to treasuries. The risk premium

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Speaker 1: has shrunk. Should there be any disappointments where risk premiums

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Speaker 1: rise on these on these sectors of the markets, we

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Speaker 1: would look at look at that as an opportunity to

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Speaker 1: buy because we feel the business cycle will be longer.

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Speaker 1: But current levels were just moderately we find corporate bonds

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Speaker 1: and high you'll just moderately attractive, just moderately attractive for

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Speaker 1: high you because I note that the inflows into et

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Speaker 1: f s exchange traded funds, particularly for a high yield debt,

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Speaker 1: added about a billion and a quarter. I was gonna say,

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Speaker 1: a tremendous, tremendous influence a very and it's a very

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Speaker 1: efficient way of getting exposure to the high yield market.

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Speaker 1: I shares seven to ten year treasury bonding TF had

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Speaker 1: the biggest outflows. Is this an indication of what we

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Speaker 1: can expect if indeed we get some kind of fiscal

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Speaker 1: spending bill passed by the Congress. Well, typically it's interest

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Speaker 1: rates are rising because business prospects are getting better, and

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Speaker 1: that's good for corporate credit. And that's the reason why

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Speaker 1: individuals are buying corporate bonds is there they feel comfortable

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Speaker 1: with the credit quality. And in that type of environment

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Speaker 1: of rising treasury rates, corporate bond yields are going to rise,

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Speaker 1: but not as much as treasury yields will rise, So

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Speaker 1: it gives you some some protection to the downside. Mike,

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Speaker 1: what's your greatest conviction call on the markets? Uh? This year?

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Speaker 1: I mean, do you have any sort of contrarian bets

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Speaker 1: that you're making on either a recovery or a big loss. Yeah,

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Speaker 1: I would say probably the more. In the In the

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Speaker 1: near term first half of the year, I think that

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Speaker 1: we could see a bit of a disappointment and growth

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Speaker 1: given that interest rates have risen, that oil prices have risen, UH,

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Speaker 1: the dollar has risen, and I think all of these

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Speaker 1: are our headwinds to the US economy and the global

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Speaker 1: econ We've had a global manufacturing rebound in the second

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Speaker 1: half of this year and that probably will taper off

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Speaker 1: in the first half of the neck of the of

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Speaker 1: of this year last year's rebound UH, and I think

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Speaker 1: that we may see see a little bit of disappointment

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Speaker 1: instead of I think in the near term treasury yields

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Speaker 1: can can rise, probably from maybe upport around the two

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Speaker 1: and three quarter area. But I think that we could

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Speaker 1: see a declining yields in the first half of the

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Speaker 1: year based on growth disappointment, only then to see in

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Speaker 1: the second half of the year are rebound as more

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Speaker 1: as more of the fiscal policy UH is discussed and

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Speaker 1: hopefully passed, which will have a positive effect on two

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Speaker 1: thousand and eighteen growth. So look possibly lower yields in

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Speaker 1: the first half of the year rather than higher yields.

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Speaker 1: I think that's a contrary of you. I want to

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Speaker 1: thank you very much for spending time with us. Mike

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Speaker 1: Matta Rosso is the senior vice president and co chair

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Speaker 1: of Franklin Templeton's Fixed Income Policy Committee. Now let's turn

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Speaker 1: our attention to an ongoing story which has to do

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Speaker 1: with an unsubstantiated intelligence reports involving Russia and the President elect.

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Speaker 1: And here to tell us more as Chris Strom, he

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Speaker 1: is Justice Department reporter for Bloomberg News. Chris, what can

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Speaker 1: you tell us about this report and is there any

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Speaker 1: veracity in it? Is it truthful at all? Well, this

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Speaker 1: is a thirty five page report that is just full

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Speaker 1: of multiple allegations that are unsubstantiated. However, some of them

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Speaker 1: appear to be rooted in reality to a degree. For example,

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Speaker 1: there's there's indications in the report that the that there

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Speaker 1: have been UH questions about business dealings by UH by

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Speaker 1: Trump associates. Now we know from our reporting that the

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Speaker 1: FBI has already been looking into UH possible corruption UH

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Speaker 1: tied to Donald Trump's X campaign chief Paul Manafort over

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Speaker 1: in Ukraine. Now, there are multiple, multiple allegations in these

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Speaker 1: thirty five pages. They're also I just so, I just

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Speaker 1: want to mention and having looked at the documents that

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Speaker 1: you're talking about, there are multiple grammatical mistakes, there are

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Speaker 1: multiple repetition, there's multiple repetition. Uh, it doesn't seem like

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Speaker 1: a coherent document. It just seems grammatical and substantive mistakes. Yeah,

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Speaker 1: and it just seems it doesn't seem like a document

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Speaker 1: that was prepared by any um, I guess, substantiated organization.

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Speaker 1: Where does this come from? Well, the the belief at

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Speaker 1: this point is that it came from a former m

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Speaker 1: I six intelligent agents over in Great Britain and his

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Speaker 1: intelligence team put it together. UM. We are still trying

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Speaker 1: to verify exactly where the report came from and what

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Speaker 1: in it might actually have any sense of credibility. What

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Speaker 1: we do know is that there was a a two

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Speaker 1: or three page summary that was attached to the briefing

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Speaker 1: that the intelligence agencies gave Donald Trump in President Obama

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Speaker 1: last week, and we have not seen what is in that.

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Speaker 1: It's that very slim down version, and questions remain whether

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Speaker 1: the intelligence agencies in that, in that very condensed version

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Speaker 1: only presented information that seems to have uh, you know,

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Speaker 1: some sense of credibility or some additional independent sources verifying

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Speaker 1: what was in it. But certainly the document as a

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Speaker 1: whole contains all kinds of unsubsidiated allegations. Aside from this document,

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Speaker 1: that we've heard that the Russia is suspected of hacking

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Speaker 1: the Republican National Committee as well as the d n C,

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Speaker 1: and that they're holding material that could potentially be damning

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Speaker 1: for President elect Trump and that they could you know,

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Speaker 1: use is basically a bargaining chip that they have some

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Speaker 1: leverage when it comes to negotiations. Is there anything in

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Speaker 1: this memo that was attached to Adassier given to us,

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Speaker 1: allegedly given to President elected Trump. Is there anything that

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Speaker 1: sort of seems like the most possible thought er for

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Speaker 1: UH leverage or or that the Russians could use to

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Speaker 1: just sort of get President elect Trump to do something

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Speaker 1: that perhaps uh might not be And there's nothing, there's

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Speaker 1: nothing that I can say right now that that we

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Speaker 1: have any indication that it is going to be something, uh,

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Speaker 1: something that is verified incredible that could be used to

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Speaker 1: blackmail Donald Trump. UM. I think that there's concern now

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Speaker 1: uh between among lawmakers in Congress that this needs to

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Speaker 1: be looked at in in in detail to find out

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Speaker 1: if there is anything. But it's also important to remember

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Speaker 1: that that, you know, Trump has sent out tweets saying

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Speaker 1: that this is fake news and that there's nothing. He

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Speaker 1: saying that the Russians and the Russians have also But

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Speaker 1: it's important to remember the Russians also denied hacking, as

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Speaker 1: you know, they denied hacking as well. And I think,

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Speaker 1: you know, the intelligence agencies have pretty fortunately come out

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Speaker 1: with you know, the uh, you know, back backing up

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Speaker 1: the idea that that the Russian government was hacking the

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Speaker 1: DNC and other political groups. Well, we're just going to

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Speaker 1: mention that. In one of Donald Trump's tweets earlier, he

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Speaker 1: asked if these leaks, the leaks of this dossier or

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Speaker 1: this document of he described dirt, meant that we are

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Speaker 1: quote living in Nazi Germany, says he prepares to hold

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Speaker 1: his first I mean this this memo, you know, it's

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Speaker 1: I mean, it's it's it's a bomb that just went

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Speaker 1: off last night, and we're all trying to's we're all

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Speaker 1: kind of scrambling now to try and figure out what

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Speaker 1: it means, what might be in it that has any

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Speaker 1: you know any any substance so far. Is there anything

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Speaker 1: that sort of stood out to you? One thing? I

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Speaker 1: can't say if there's anything that jumped out to me, Um,

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Speaker 1: I I don't want to. I don't want to identify

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Speaker 1: anything in particular that that you know that we don't have,

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Speaker 1: that we don't have. You know that we haven't been

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Speaker 1: able to independently verify your back up yet. That's fair enough.

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Speaker 1: I respect that. Thank you so much for joining us.

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Speaker 1: Chris Strom, Justice Department reporter for Blueburg New speaking to

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Speaker 1: us from Washington, d C. Talking about how markets are

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Speaker 1: trying to find direction ahead of the Ahead of the

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Speaker 1: press conference by President elected Trump, James Crombie, an editor

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Speaker 1: of Boomer Briefs, has been talking with economists about their

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Speaker 1: predictions regardless of what President elect Trump may say or

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Speaker 1: tweet today. James, must be a particularly difficult time to

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Speaker 1: sort of nail down the top forecasters given the political uncertainty.

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Speaker 1: What struck out, what was stood out to you as

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Speaker 1: sort of the most notable uh IDEA Well, we ranked

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Speaker 1: the best forecast is in the fourth quarter for a

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Speaker 1: variety of US indicators, and we talked to a lot

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Speaker 1: of the top ranked forecasts, and what really stood out

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Speaker 1: for us in terms of surprises were that one headline

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Speaker 1: growth could be higher potentially, although not as high anywhere

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Speaker 1: near as what what Trump suggested four percent when he

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Speaker 1: was campaigning. UM. But a lot of people were also

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Speaker 1: saying that the you know, the Trump effect, that what

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Speaker 1: one described as Trump flation may not be anywhere near

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Speaker 1: as much as as what some people were expecting, and

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Speaker 1: also not happen in the short term, so it could

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Speaker 1: deliver at the end of next year. For example. UM.

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Speaker 1: The other big thing unemployment, as you mentioned earlier, will four.

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Speaker 1: We had one of our top forecast is suggesting that

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Speaker 1: it could get to four point one percent by the

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Speaker 1: end of next year, which is very low. UM. And UM,

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Speaker 1: you know that really implies that the Fed has to

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Speaker 1: move more quickly than probably is priced into the market

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Speaker 1: right now. The other thing inflation, UM two percent at

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00:26:33,960 --> 00:26:36,720
Speaker 1: some point this year. PC could hit two percent by

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00:26:36,720 --> 00:26:40,600
Speaker 1: mid year. UM. That's the Fed's key indicator. Again, that

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00:26:40,640 --> 00:26:43,080
Speaker 1: means the FED may have to move. When we asked

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00:26:43,080 --> 00:26:44,800
Speaker 1: one of the forecast is what that means in terms

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00:26:44,840 --> 00:26:47,440
Speaker 1: of hikes next year, he said, if you held the

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00:26:47,440 --> 00:26:49,840
Speaker 1: gun to his head, he'd say more more four than two,

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00:26:50,119 --> 00:26:52,880
Speaker 1: which is surprising and it's certainly not priced in um.

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00:26:53,200 --> 00:26:56,040
Speaker 1: And the other thing that stood out fed transition. You know,

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00:26:56,200 --> 00:26:59,919
Speaker 1: will Trump replace the current line up with a lot

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00:26:59,920 --> 00:27:02,880
Speaker 1: of hawks. Um, certainly policy will change in some way

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00:27:02,880 --> 00:27:04,840
Speaker 1: that can you imagine somebody actually holding a gun to

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00:27:04,880 --> 00:27:07,360
Speaker 1: somebody's head and saying, you know, come on, how many

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00:27:07,400 --> 00:27:12,240
Speaker 1: FED hikes next year? Anyway? Um? No, I hope not. James.

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00:27:12,880 --> 00:27:16,879
Speaker 1: Just want to get your thoughts on accelerated inflation because

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00:27:16,920 --> 00:27:20,840
Speaker 1: I was looking today and JM. Smucker talking about raising

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00:27:20,880 --> 00:27:24,919
Speaker 1: coffee prices six percent and another note, looking at the

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00:27:24,920 --> 00:27:30,000
Speaker 1: grains market specifically soybeans and wheat, and those prices are

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00:27:30,280 --> 00:27:34,480
Speaker 1: trending higher. What is the outlook for inflation? Well, I

453
00:27:34,480 --> 00:27:36,080
Speaker 1: think you know we're seeing it all over and not

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00:27:36,160 --> 00:27:39,919
Speaker 1: just in commodities. But um, you know, if there is

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00:27:39,960 --> 00:27:44,199
Speaker 1: this big fiscal push, then that will obviously have some

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00:27:44,240 --> 00:27:48,600
Speaker 1: inflationary impact. If there is a bad for bonds, good

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00:27:48,640 --> 00:27:51,760
Speaker 1: for stocks possibly. But markets are moving in strange ways

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00:27:51,800 --> 00:27:54,280
Speaker 1: as you as you as you probably watched the moment. Well,

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00:27:54,320 --> 00:27:56,160
Speaker 1: I was just looking at the ten ure. For example,

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00:27:56,160 --> 00:27:58,199
Speaker 1: in the yield there is two point three eight percent

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00:27:58,240 --> 00:27:59,679
Speaker 1: a little bit of a sell off and in the

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00:27:59,720 --> 00:28:02,480
Speaker 1: third year two point nine seven and that's kind of

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00:28:02,480 --> 00:28:05,680
Speaker 1: hovering around that three percent level, which I believe. Jeffrey

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00:28:05,720 --> 00:28:09,080
Speaker 1: good Lack at the double line and Bill Gross at

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00:28:09,160 --> 00:28:13,080
Speaker 1: Jonas Uh they mentioned very specific levels I think to

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00:28:13,280 --> 00:28:16,960
Speaker 1: six and three saying the bond bull market is over. Yeah.

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00:28:16,960 --> 00:28:20,199
Speaker 1: I mean, I'm curious, James, when you talked with some

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00:28:20,280 --> 00:28:23,480
Speaker 1: of these forecasters, was there more hemming and hiring more.

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00:28:23,960 --> 00:28:25,720
Speaker 1: I don't know what's going to happen. Then you've heard

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00:28:25,720 --> 00:28:28,320
Speaker 1: in the past. Um, I think all of them, you know,

471
00:28:28,320 --> 00:28:30,119
Speaker 1: they've been doing this a long time. They see Trump

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00:28:30,200 --> 00:28:32,320
Speaker 1: as a lot of noise. In lots of cases, they've

473
00:28:32,920 --> 00:28:34,439
Speaker 1: some of them have said that they've become a bit

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00:28:34,440 --> 00:28:36,840
Speaker 1: more nimble. They've made their models smaller and easier to

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00:28:36,880 --> 00:28:40,200
Speaker 1: adjust because of the new political situation. Um. But they're

476
00:28:40,280 --> 00:28:42,480
Speaker 1: you know, they're still forecasting, and they're still you know,

477
00:28:42,520 --> 00:28:44,240
Speaker 1: they need to make calls. They need to see through

478
00:28:44,240 --> 00:28:46,440
Speaker 1: that noise. And Dave, you know, just sort of to

479
00:28:46,600 --> 00:28:49,520
Speaker 1: that point at people still need to make calls, but

480
00:28:49,560 --> 00:28:52,840
Speaker 1: not necessarily right ahead of a Trump press conference. It

481
00:28:52,840 --> 00:28:54,840
Speaker 1: seems like, you know, you spoke about how there isn't

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00:28:54,840 --> 00:28:56,640
Speaker 1: a lot of direction that people are kind of waiting.

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00:28:56,640 --> 00:28:58,320
Speaker 1: I mean, do you have a sense from volumes or

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00:28:58,400 --> 00:29:02,040
Speaker 1: just sort of a certain activity of just how sort

485
00:29:02,040 --> 00:29:04,920
Speaker 1: of how much traders are with bated breath right now

486
00:29:05,200 --> 00:29:07,000
Speaker 1: waiting to get a sense of what direction we're going

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00:29:07,040 --> 00:29:09,520
Speaker 1: to head in. Well, just taking a quick look at

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00:29:09,920 --> 00:29:12,720
Speaker 1: the first half hour or so trading, I mean, it

489
00:29:12,760 --> 00:29:15,080
Speaker 1: was pretty much in line with what we saw yesterday

490
00:29:15,120 --> 00:29:19,080
Speaker 1: when you look at NYC and NAZAC listed stocks. So

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00:29:19,280 --> 00:29:21,160
Speaker 1: I mean there's a big mo just looking at a

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00:29:21,240 --> 00:29:25,719
Speaker 1: big board. Volume is down right now, I touch, you know,

493
00:29:25,920 --> 00:29:28,920
Speaker 1: not much and as much as anything, you know, it

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00:29:28,960 --> 00:29:31,880
Speaker 1: becomes a matter of where we go from here. And

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00:29:32,120 --> 00:29:34,600
Speaker 1: I would just note since you're talking about inflation that

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00:29:34,960 --> 00:29:37,560
Speaker 1: you know, we got numbers out of Super Value grocery

497
00:29:37,640 --> 00:29:41,200
Speaker 1: chain and their earnings came up well short of estimates

498
00:29:41,200 --> 00:29:44,479
Speaker 1: and the stocks down eight percent, So you know, and

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00:29:44,520 --> 00:29:47,520
Speaker 1: that's an area, particularly when you talk about food, that

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00:29:48,040 --> 00:29:50,479
Speaker 1: you know there's a concern that you know that the

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00:29:50,520 --> 00:29:54,400
Speaker 1: grocery chains and everyone sort of alongal line may suffer

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00:29:54,480 --> 00:29:58,640
Speaker 1: because prices are falling rather than rising. Within that piece

503
00:29:58,680 --> 00:30:01,400
Speaker 1: of the inflation puzzle, one it doesn't necessarily get a

504
00:30:01,440 --> 00:30:03,600
Speaker 1: lot of attention because if you think about cord inflation,

505
00:30:03,680 --> 00:30:07,520
Speaker 1: it excludes food as well as energy drives or takes

506
00:30:07,760 --> 00:30:11,200
Speaker 1: any kind of vehicle or really eats foods about volatility,

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00:30:11,200 --> 00:30:14,720
Speaker 1: PIM clearly, thanks very much. Dave Wilson, Bloomberg stocks Commas

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00:30:15,200 --> 00:30:17,560
Speaker 1: appreciate it. Just send Dave an email at d Wilson

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00:30:17,600 --> 00:30:19,880
Speaker 1: at Bloomberg dot net and sign up for his daily

510
00:30:19,920 --> 00:30:23,240
Speaker 1: free email newsletter. Our thanks alson James Crumbie. He is

511
00:30:23,280 --> 00:30:32,600
Speaker 1: the editor of Bloomberg Briefs. Thanks for listening to the

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00:30:32,600 --> 00:30:36,000
Speaker 1: Bloomberg pen L podcast. You can subscribe and listen to

513
00:30:36,040 --> 00:30:41,280
Speaker 1: interviews at iTunes, SoundCloud, or whatever podcast platform you prefer.

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00:30:41,560 --> 00:30:44,840
Speaker 1: I'm Pim Fox. I'm out there on Twitter at pim Fox.

515
00:30:45,160 --> 00:30:47,840
Speaker 1: I'm out there on Twitter at Lisa Abramo. It's one

516
00:30:48,120 --> 00:30:50,840
Speaker 1: before the podcast. You can always catch us worldwide on

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00:30:50,920 --> 00:31:00,120
Speaker 1: Bloomberg Radio. It