WEBVTT - Debt Limit Latest, Gen Z Financial Independence 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.000 --> 0:00:23.040 Pretty group to Paul Sweeney here in the Bloomberg Interactive 0:00:23.040 --> 0:00:26.720 Brooker's Studio, Gretty just feels like with the debt ceiling 0:00:27.120 --> 0:00:30.200 issue essentially put to bed, we still got a couple 0:00:30.320 --> 0:00:33.120 more moves to go. Seems like focus is back on 0:00:33.120 --> 0:00:35.760 some of the macroeconomic issues out there and some of 0:00:35.800 --> 0:00:39.640 the economic data points, starting with nonfarm payrolls tomorrow. 0:00:39.920 --> 0:00:43.040 Yeah, payrolls, and you got the labor numbers in terms 0:00:43.040 --> 0:00:45.760 of kind of wages. Then you have the Chinese growth 0:00:45.840 --> 0:00:47.879 numbers that are weighing on the markets a lot. Not 0:00:47.920 --> 0:00:49.480 to mention an additional FED hike. 0:00:49.760 --> 0:00:50.159 Where did that. 0:00:50.200 --> 0:00:52.839 Relief rally go that we were supposed to get? That 0:00:52.880 --> 0:00:55.440 seems to be exactly how this is playing out. 0:00:55.480 --> 0:00:57.840 All right, Let's check in with someone who kind of 0:00:57.840 --> 0:01:01.480 follows this stuff as well. Doctor Lori to Murray, President 0:01:01.680 --> 0:01:06.960 of the Committee on Economic Development from the Conference Board. Laurie, 0:01:06.959 --> 0:01:09.160 thanks so much for joining us here. What are you 0:01:09.280 --> 0:01:11.800 focusing on here, because a lot of folks are really 0:01:11.800 --> 0:01:14.039 trying to put all the crosswinds together and get a 0:01:14.040 --> 0:01:15.880 sense of maybe where this fet is going, where this 0:01:16.000 --> 0:01:18.600 economy is going. What are the data points that you're 0:01:18.600 --> 0:01:19.040 looking at? 0:01:20.160 --> 0:01:23.920 Okay, well, the first and foremost, Paul, the most important 0:01:24.080 --> 0:01:26.319 data point is the one we just crossed last night, 0:01:26.800 --> 0:01:30.000 which was the House passage of this bill. So it's 0:01:30.040 --> 0:01:34.760 important to recognize that that we have just avoided a 0:01:34.880 --> 0:01:39.600 major economic catastrophe. So data point one, we avoided an 0:01:39.600 --> 0:01:43.600 economic catastrophe. So we can go back and reset and 0:01:43.640 --> 0:01:46.800 look at the economy. And we're still expecting at the 0:01:46.800 --> 0:01:50.520 Conference Board a short, short and shallow recession that will 0:01:50.640 --> 0:01:52.640 likely end by the end of the year. But there's 0:01:52.680 --> 0:01:55.040 a luxury to be able to say that, because again, 0:01:55.080 --> 0:01:57.920 as they said, last night's vote was really significant and 0:01:59.040 --> 0:02:01.919 historic for the economy this year and going forward. 0:02:02.160 --> 0:02:05.520 So doctor, just to build on that the nitty gritty 0:02:05.600 --> 0:02:07.760 of this bill, as we talked about fiscal spending caps 0:02:07.800 --> 0:02:11.320 for the next two years, I think so January first, 0:02:11.400 --> 0:02:13.960 twenty twenty five, which, by the way, Paul, the new president, 0:02:14.000 --> 0:02:17.079 is going to have a real, really horrible first day 0:02:17.560 --> 0:02:19.280 in the office or first day of the year. I 0:02:19.280 --> 0:02:22.120 have to say, but doctor, talk to us about kind 0:02:22.120 --> 0:02:24.480 of the nitty gritty of the bill in the context 0:02:24.480 --> 0:02:27.560 of staring down a recession in terms of the budget. 0:02:27.680 --> 0:02:32.040 Did we do good here? Oh, it is definitely a victory. 0:02:32.120 --> 0:02:35.280 It is a victory for America, and it's a victory 0:02:35.280 --> 0:02:38.520 consequently for the world, given the role that the American 0:02:38.520 --> 0:02:43.200 economy plays in the world. The accomplishments are we have 0:02:44.000 --> 0:02:49.480 held spending at the twenty twenty three levels. We're looking 0:02:49.520 --> 0:02:52.079 at the next two years of only one percent increase. 0:02:52.160 --> 0:02:56.640 The CBO the Congressional Budget Office says over ten years 0:02:56.639 --> 0:02:59.640 will actually saved one point five trillion dollars. This is 0:02:59.720 --> 0:03:04.760 really significant progress, but I want to underscore that it's 0:03:04.840 --> 0:03:08.320 really only affecting fifteen percent of the budget. We're at 0:03:08.320 --> 0:03:11.800 thirty one point four trillion dollars in debt and going up. 0:03:12.080 --> 0:03:14.519 It suspends the debt limit for those two years, doesn't 0:03:14.520 --> 0:03:19.400 set another cap, and fortunately it also puts a cap 0:03:19.440 --> 0:03:22.080 on spending for the next two years. But what we 0:03:22.160 --> 0:03:23.880 have to look at is that this is only on 0:03:23.919 --> 0:03:28.160 the non discretionary, on the discretionary non defense spending, so 0:03:28.240 --> 0:03:30.720 that's fifteen percent of the budget. We have a lot 0:03:30.760 --> 0:03:33.680 more to do here. Congress and the administration have a 0:03:33.720 --> 0:03:35.720 lot of work ahead of them if we're going to 0:03:35.720 --> 0:03:39.320 move towards fiscal health. But this is a very very 0:03:39.320 --> 0:03:40.280 important first step. 0:03:40.880 --> 0:03:43.640 So, I mean, it all kind of ties in, you know, 0:03:43.720 --> 0:03:47.040 to the national debt here and that larger discussion here. 0:03:48.040 --> 0:03:51.360 What's your view of that and maybe how should our 0:03:51.400 --> 0:03:55.600 government view this our growing national debt, you know, to 0:03:55.640 --> 0:03:57.800 what degree does it really need to be addressed aggressively? 0:03:59.160 --> 0:04:02.640 So the bottom line here is debt really matters, and 0:04:02.680 --> 0:04:07.280 it's become an even more important issue with inflation because 0:04:07.360 --> 0:04:10.800 as we are dealing with inflation, and the Conference Board 0:04:10.800 --> 0:04:14.840 doesn't expect inflation to go away anytime soon. In terms 0:04:14.920 --> 0:04:19.080 of these rates that we have now, we're hoping to 0:04:19.080 --> 0:04:22.320 see them hold and possibly come down, but inflation is 0:04:22.360 --> 0:04:25.800 not going to go away right now. In terms of 0:04:25.839 --> 0:04:30.479 the budget, the servicing the debt now is costing as 0:04:30.560 --> 0:04:34.480 much as defense, which is about eight hundred plus billion dollars. 0:04:34.839 --> 0:04:38.360 That's just debt servicing so that's having a major impact 0:04:38.360 --> 0:04:41.200 on how we are spending or can spend their national 0:04:41.240 --> 0:04:44.560 dollars to meet both their defense and non defense NEETs 0:04:44.600 --> 0:04:48.040 as a nation. So that in and of itself makes 0:04:48.080 --> 0:04:54.920 it absolutely extremely important that we deal with this overwhelming 0:04:55.279 --> 0:04:59.359 explosion of debt in terms of particularly the debt ratio 0:04:59.400 --> 0:05:03.400 to GDP, which is now our debt ratio is equal 0:05:03.440 --> 0:05:05.719 to GDP instead one hundred percent. 0:05:06.760 --> 0:05:09.800 In terms of kind of the work requirements with some 0:05:09.880 --> 0:05:14.440 of those social programs, Medicaid, Medicare, et cetera, any read 0:05:14.520 --> 0:05:17.720 through on kind of fiscal spending from that perspective, we 0:05:17.760 --> 0:05:19.680 know that was one of the sticking points in the deal. 0:05:21.200 --> 0:05:23.800 So I just want to want to point out that 0:05:23.920 --> 0:05:28.640 Medicare and Medicaid were not included in the work requirements. 0:05:28.720 --> 0:05:32.440 Work requirements are really the Food program and the Temporary 0:05:32.440 --> 0:05:37.839 Assistance for Needy Families program. And while the requirements have expanded, 0:05:38.400 --> 0:05:41.120 particularly in terms of the age that has covered, the 0:05:41.160 --> 0:05:44.640 age has been raised to fifty five years old for 0:05:44.680 --> 0:05:48.600 the SNAP program, there have been exemptions, and so it's 0:05:48.640 --> 0:05:54.960 going to take veterans homeless have been exempted from these 0:05:55.000 --> 0:05:57.160 work requirements. So it's going to take a little bit 0:05:57.160 --> 0:06:01.280 of budget maneuvering and analysis to figure route whether it's 0:06:01.279 --> 0:06:04.839 a save or it's actually going to cost more. Right 0:06:04.880 --> 0:06:09.320 now quick analysis, most analysts are seeing it as a wash. 0:06:10.000 --> 0:06:13.480 We're speaking with doctor Lorii Esposito Murray, President the Committee 0:06:13.480 --> 0:06:17.559 for Economic Development for the Conference Board. So doctor Murray, 0:06:17.560 --> 0:06:21.880 I mean, I guess the political reality is this debt 0:06:21.920 --> 0:06:24.560 ceiling limit in some of the spending issues, the budget 0:06:24.920 --> 0:06:27.040 kind of kicked down the road, kicked the can down 0:06:27.040 --> 0:06:29.240 the road for a couple of years. But I guess 0:06:29.279 --> 0:06:31.320 from markets perspective, that's probably the best we could have 0:06:31.320 --> 0:06:31.680 hoped for. 0:06:33.400 --> 0:06:35.240 You know, it is the best we could have hoped for. 0:06:35.760 --> 0:06:39.920 But it also is a pretty good start. Is it 0:06:40.000 --> 0:06:43.440 is a bipartisan vote three fourteen to one seventeen. You 0:06:43.480 --> 0:06:45.960 had one hundred and forty nine Republicans in the House 0:06:46.040 --> 0:06:51.640 voting for this bill. It's an incredible accomplishment for Speaker McCarthy, 0:06:51.680 --> 0:06:54.039 who just a couple of months ago we saw go 0:06:54.080 --> 0:06:58.600 through a fifteen vote series before it could become speaker. 0:06:59.200 --> 0:07:04.159 He's really destrating leadership in the House and also demonstrating 0:07:05.279 --> 0:07:09.720 with his Republican colleagues that Republicans can actually govern, which 0:07:09.760 --> 0:07:13.920 I think is really significant in terms of the Republican Party, 0:07:13.960 --> 0:07:15.560 in terms of the Speaker's leadership. 0:07:16.440 --> 0:07:18.840 So doctor, let's step away from from the debt story 0:07:18.960 --> 0:07:21.320 for a moment to talk about these recessionary calls. The 0:07:21.360 --> 0:07:24.280 consensus seems to be that by the end of this 0:07:24.360 --> 0:07:27.160 year we will have a recession on our hands in 0:07:27.200 --> 0:07:31.080 the US shallow deep consensus of shallow right now, what 0:07:31.080 --> 0:07:32.960 would change that point of view? 0:07:34.560 --> 0:07:38.240 Well, according to the conference board where we're looking at 0:07:38.320 --> 0:07:40.239 it is that it will be short in a shallow 0:07:40.280 --> 0:07:42.880 recession by the end of the year, likely by the 0:07:42.960 --> 0:07:45.480 end of the year. The main drivers of the recession 0:07:45.520 --> 0:07:48.840 or inflation and high interest rates. So dealing with inflation 0:07:49.240 --> 0:07:57.240 is absolutely critical in terms of tempering that recession and 0:07:57.520 --> 0:07:58.360 coming out of it. 0:08:00.440 --> 0:08:02.920 On to that end, I mean, I guess a reasonable 0:08:03.000 --> 0:08:05.240 call could be made that, you know, with the variable 0:08:05.320 --> 0:08:08.200 lag long and variable lag, that the Fed should in 0:08:08.240 --> 0:08:10.480 fact pause here for a while. That five hundred and 0:08:10.480 --> 0:08:13.960 twenty five basis points is enough to kind of cool inflation. 0:08:15.240 --> 0:08:17.520 Are you in that camp that they should pause and 0:08:17.520 --> 0:08:19.600 see how things shake out? O. 0:08:19.560 --> 0:08:24.720 Well, we're expecting them to pause in terms of the 0:08:24.840 --> 0:08:29.960 hike in either probably in June, but then expecting one 0:08:30.040 --> 0:08:33.200 or more twenty five basis point hikes later on the summer. 0:08:34.600 --> 0:08:37.719 Should we be get all worried about treasury issuance now 0:08:37.760 --> 0:08:39.640 that seem to be one of the concerns in the 0:08:39.720 --> 0:08:43.520 lead up to as this deal was getting figured out. 0:08:44.040 --> 0:08:46.760 How do we view the treasury? 0:08:47.320 --> 0:08:50.120 So, you know, one of event is really important here 0:08:50.200 --> 0:08:53.800 in terms of this agreement and the whole death ceiling 0:08:53.840 --> 0:08:57.480 debate in general, is you know, given the significant and 0:08:58.440 --> 0:09:01.959 dominant role that the US economy plays in the global economy, 0:09:02.559 --> 0:09:06.840 and the importance of treasury securities being a safe haven 0:09:07.240 --> 0:09:11.440 which also underpins our economy. You know, again coming back 0:09:11.440 --> 0:09:13.600 to this deal, coming back to the fact that it 0:09:13.679 --> 0:09:16.000 looks like that if this this is going to get 0:09:16.000 --> 0:09:19.360 through the Senate and on the President's desk in time 0:09:19.920 --> 0:09:23.400 for the X date of June fifth, it's it's so 0:09:23.720 --> 0:09:29.920 important in terms of our credibility and Treasury's credibility globally 0:09:30.520 --> 0:09:33.640 that we maintain that role and Treasury securities maintained that 0:09:33.720 --> 0:09:35.000 role in the global economy. 0:09:35.320 --> 0:09:38.480 All right, Our thanks to doctor Lori Esposito Murray, President 0:09:38.920 --> 0:09:42.360 Committee for Economic Development for the Conference Board talking about 0:09:42.400 --> 0:09:46.480 getting this debt deal done and getting it, as doctor 0:09:46.559 --> 0:09:49.199 Esposita Murray said, getting it through the Senate presumably in 0:09:49.200 --> 0:09:52.240 the next day or two, and then on the President's 0:09:52.240 --> 0:09:54.800 desk and you know by Saturday, right, yeah, I mean 0:09:54.800 --> 0:09:57.720 it's you know, it's cutting it close here. But again 0:09:57.960 --> 0:10:01.160 that's where it seems to be now, and the expectation 0:10:01.520 --> 0:10:03.800 is it should get through the Senate fairly quickly without 0:10:03.880 --> 0:10:07.120 much drama, and then of course the President has indicated 0:10:07.120 --> 0:10:10.000 that he will sign it. So that's kind of kind 0:10:10.000 --> 0:10:11.600 of where we are. And again up to that June 0:10:11.640 --> 0:10:14.800 fifth or sixth, kind of New X date, if you will, 0:10:14.840 --> 0:10:17.640 then when the US will run out of money presumably, 0:10:17.800 --> 0:10:18.640 so good news there. 0:10:19.960 --> 0:10:23.320 You're listening to the Team Ken's Are Live program Bloomberg 0:10:23.440 --> 0:10:26.800 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:10:26.880 --> 0:10:30.040 the iHeartRadio app and the Bloomberg Business App, or listen 0:10:30.080 --> 0:10:32.199 on demand wherever you get your podcasts. 0:10:33.920 --> 0:10:36.440 It seems like since China's reopened, Curtty, a lot of 0:10:36.559 --> 0:10:39.760 US CEO's have been making a way to China to 0:10:39.800 --> 0:10:41.440 kind of check in on things. Tim Cook from Apple 0:10:41.480 --> 0:10:44.280 and just this week you had Jamie Diamond, JP Morgan 0:10:44.480 --> 0:10:47.800 Chase elon Musk was there trying to get a sense 0:10:47.840 --> 0:10:50.520 of where that economy is, where that market is in 0:10:50.600 --> 0:10:53.360 terms of opportunity. So we want to get some insight. 0:10:53.400 --> 0:10:56.440 We go to Brendan Ahearn, CIO of Crane Shares, does 0:10:56.440 --> 0:10:59.920 a lot of work in China with the markets there. Brenda, 0:11:00.920 --> 0:11:05.360 this accelerated China reopening is I don't know it. It's good. 0:11:05.400 --> 0:11:08.280 It's We've got a lot of CEOs making their way 0:11:08.320 --> 0:11:11.440 back over to China to kind of reignite some discussions here. 0:11:11.840 --> 0:11:15.559 How do you view China right now as a economic 0:11:15.679 --> 0:11:21.000 player and as a potential partner trading partner with the US. 0:11:21.760 --> 0:11:24.640 Yeah, yeah, I'm point out of NA Video's Jensen Huang 0:11:25.200 --> 0:11:28.440 mentioned that he'll be visiting China next month. We don't 0:11:28.440 --> 0:11:31.800 have the exact dates, but joined Jamie Diamond, Elon Musk, 0:11:32.040 --> 0:11:35.400 Franklin Templeton, a whole host of executives. But yeah, I 0:11:35.440 --> 0:11:40.960 think we're you're seeing a reopening economy that is growing 0:11:41.160 --> 0:11:48.120 incrementally incrementally slowly. Some of the historical drivers of China's economy, 0:11:48.640 --> 0:11:54.079 export driven manufacturing, has been barely lacklustered due to the 0:11:54.120 --> 0:11:59.079 global economy slowing. You also have their property market has 0:11:59.080 --> 0:12:03.839 been very lackluster that historically see a lot of infrastructure stimulus, 0:12:03.840 --> 0:12:08.680 are not seeing it, which really leads the domestic consumption story, 0:12:09.080 --> 0:12:14.199 which really requires consumer confidence to build. And we are 0:12:14.320 --> 0:12:18.320 seeing those green shoots. It just it's happening slower, and 0:12:18.640 --> 0:12:22.760 investors want to see policy makers step on that stimulus 0:12:22.800 --> 0:12:23.480 gas pedal. 0:12:24.160 --> 0:12:26.800 Well, Brendan, speaking of that stimulus gas pedal, where does 0:12:26.800 --> 0:12:29.000 the PBOC stand in all this? I feel like one 0:12:29.000 --> 0:12:30.839 of the highlights of the last couple of years has 0:12:30.880 --> 0:12:35.360 been this divergence between most of the world's central banks 0:12:35.440 --> 0:12:38.200 and then the PBOC going in the opposite direction. Do 0:12:38.280 --> 0:12:43.640 we see some sort of whatever the opposite of a divergences, convergence, convergence. 0:12:43.720 --> 0:12:47.800 Do we see a convergence? You know, you know unlikely 0:12:48.040 --> 0:12:52.520 that that China's your central banks, your great great observation, 0:12:52.760 --> 0:12:55.280 just you know, you see central banks globally following the 0:12:55.320 --> 0:13:00.200 FED higher the pbocs going the opposite direction, you know, 0:13:00.520 --> 0:13:03.960 and that's led you know c n H right now, 0:13:04.120 --> 0:13:09.480 China's offshore Ambia seven eleven so off versus the dollar, 0:13:10.200 --> 0:13:15.080 and and I think that's where you see them incrementally easing. 0:13:15.520 --> 0:13:19.240 You know, we're very likely we'll see a bank reserve 0:13:19.320 --> 0:13:24.640 requirement ratio cut, potentially the loan prime rate or the 0:13:24.679 --> 0:13:28.480 intra bank lending rate cut next month. It's just more 0:13:28.520 --> 0:13:31.160 of you know, investors are kind of in a you know, 0:13:31.559 --> 0:13:33.640 show me now, you know, you know, I kind of 0:13:33.640 --> 0:13:36.040 called it the where's the beef? You know, you know, 0:13:36.080 --> 0:13:40.959 they're getting anxious, and capital is flowing within Asia, within 0:13:41.120 --> 0:13:45.880 em in the short run to areas like Japan to India, 0:13:46.679 --> 0:13:50.280 just because they're you know, gotten very impatient on policy 0:13:50.400 --> 0:13:53.079 support from the PBOC and the central government. 0:13:53.720 --> 0:13:56.640 So Brendan on the consumer side of the economy, talk 0:13:56.640 --> 0:14:00.599 to us about the unemployment in China, particularly team unemployment. 0:14:00.640 --> 0:14:03.880 We know that we've heard that continues to be stubbornly high. 0:14:03.880 --> 0:14:05.480 And what does that tell you? 0:14:06.640 --> 0:14:09.959 Yeah, you know, if you think about young, younger people, 0:14:11.040 --> 0:14:13.440 you know, I have to describe it that way as 0:14:13.640 --> 0:14:17.199 as as I get older, but recent college graduates, you 0:14:17.200 --> 0:14:19.600 know a lot of these folks end up working in 0:14:19.640 --> 0:14:23.800 the service sector that you know, could be hotels, could 0:14:23.840 --> 0:14:28.560 be restaurants, airlines, and you know, et cetera. So so 0:14:28.920 --> 0:14:32.080 you know, you had with the removal of zero COVID 0:14:32.800 --> 0:14:36.480 COVID run rampant in China in the latter part of 0:14:36.720 --> 0:14:39.480 Q four of last year the beginning of Q one 0:14:39.560 --> 0:14:42.800 of this year, so that that really weighed on a 0:14:42.840 --> 0:14:48.080 lot of this service sector jobs. And as domestic travel 0:14:48.160 --> 0:14:51.360 has picked up, you're seeing you know, you had Air China. 0:14:51.800 --> 0:14:55.000 You know they're hiring one thousand new flight attendants. You know, 0:14:55.480 --> 0:15:00.320 as people start traveling more domestically, your hotels going to 0:15:00.400 --> 0:15:03.200 need more people. So so that the US unemployment I 0:15:03.200 --> 0:15:08.200 think will slowly come down. It's just it's it's just 0:15:08.320 --> 0:15:11.400 in the short run it is quite high because of 0:15:11.920 --> 0:15:15.240 the knock on effect of COVID running rampant, the effect 0:15:15.240 --> 0:15:15.920 on the consumer. 0:15:16.200 --> 0:15:18.840 Brandy. We started this discussion noting how so many high 0:15:18.840 --> 0:15:21.760 profile US CEO's ranking the way to China over the 0:15:21.800 --> 0:15:26.200 last several weeks. Reality is China investible? I mean what 0:15:26.360 --> 0:15:27.840 I if I can I go to my board and 0:15:27.840 --> 0:15:30.160 say we need to build a plant in China or 0:15:30.560 --> 0:15:33.080 make big investments, multi year investments in China. I just 0:15:33.080 --> 0:15:35.320 don't know what the government is going to do. 0:15:37.080 --> 0:15:39.960 Well is that the US government or the Chinese government. 0:15:40.000 --> 0:15:43.120 I think that's that's probably little boat a little bit 0:15:43.120 --> 0:15:47.120 of both. And and I think I think, you know, uh, 0:15:47.360 --> 0:15:50.720 these flurry of executives and and and and you've seen 0:15:50.760 --> 0:15:54.840 it from European executives as well. You know, a whole 0:15:54.880 --> 0:15:57.720 host of Europeans actually been in China year to date. 0:15:58.240 --> 0:16:01.640 You know, business people are getting on airplanes and meeting, 0:16:01.800 --> 0:16:06.640 having meals with one another. The politicians aren't. And I 0:16:06.680 --> 0:16:11.360 think you know, during COVID, you know, you had COVID babies, 0:16:11.360 --> 0:16:14.120 but you also had COVID divorces. And the US China 0:16:14.200 --> 0:16:18.080 political relationship has very much frayed due to a lack 0:16:18.200 --> 0:16:21.960 of travel diplomatically if you think about. You know, China's 0:16:22.040 --> 0:16:26.880 Commerce secretary just met with Gina Romando and US Trade 0:16:26.920 --> 0:16:31.880 rep side just last week. He's the first senior Chinese 0:16:31.960 --> 0:16:36.560 official to visit the United States in four years. At 0:16:36.560 --> 0:16:40.640 the same time, no senior US official has been in 0:16:40.800 --> 0:16:44.920 China in four years. So I think hopefully the politicians 0:16:44.920 --> 0:16:47.840 can take a lead from what we're seeing from the 0:16:47.920 --> 0:16:51.840 corporate world, which is these two economies are very very 0:16:52.360 --> 0:16:53.480 entwined with one another. 0:16:54.120 --> 0:16:56.360 Well, Brendan and our in our last minute or so here, 0:16:56.800 --> 0:17:00.480 let's take step back. We have a listener question asking 0:17:00.520 --> 0:17:04.800 about when the market views views a pause or potentially 0:17:04.840 --> 0:17:08.120 a cut state side in the US as a negative. 0:17:08.160 --> 0:17:10.919 Given you your financial expertise, talk to us about your 0:17:11.000 --> 0:17:11.639 view on that. 0:17:13.160 --> 0:17:15.320 For US, I mean, I think the you know, the 0:17:16.119 --> 0:17:19.320 the viewing increasingly as you do you have this June 0:17:19.560 --> 0:17:22.480 hike or not or certainly July. You know, I you know, 0:17:22.640 --> 0:17:26.720 Larry Fink of Blackrock obviously has a tremendous insights. You know, 0:17:26.800 --> 0:17:28.960 he thought that you had June July and we're done. 0:17:29.080 --> 0:17:32.240 So I think I think that could be for non 0:17:32.440 --> 0:17:36.959 US investors, EM investors, China investors. The dollar strength has 0:17:37.000 --> 0:17:40.480 been such a headwind and if we get you know, 0:17:40.600 --> 0:17:42.960 one or two done, get a bit of a pause, 0:17:43.480 --> 0:17:46.760 I think it brings brings a lot of potential for 0:17:46.800 --> 0:17:49.359 the dollar to maybe weaken a little bit, which would 0:17:49.359 --> 0:17:52.480 be a great tail wind for our investments in emerging 0:17:52.480 --> 0:17:53.320 markets in China. 0:17:53.960 --> 0:17:56.320 All right, Brendan, thank you so much for joining us 0:17:56.320 --> 0:17:59.320 Brendan to hearn see io of Crane Shares, giving us 0:17:59.320 --> 0:18:02.680 a little overview of what's happening in China here as 0:18:02.880 --> 0:18:07.440 they continue to reopen from a very severe COVID lockdown, 0:18:07.440 --> 0:18:10.199 and now a lot of the US and other and 0:18:10.320 --> 0:18:12.760 European CEOs making the way to China to see you 0:18:12.880 --> 0:18:15.040 kind of get a first hand look at the business 0:18:15.200 --> 0:18:18.360 environment in China these days as it relates to their 0:18:18.400 --> 0:18:22.320 businesses and potentially future investment. So Elon Musk was there 0:18:22.400 --> 0:18:25.199 this week. Jamie Diamond, JPMorgan Chase was there. They had 0:18:25.240 --> 0:18:28.720 a big, big investor conference there, so perhaps a little 0:18:28.760 --> 0:18:29.359 falling there. 0:18:29.600 --> 0:18:32.720 You're listening to the tape Cat's are live program Bloomberg 0:18:32.760 --> 0:18:36.359 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:18:36.440 --> 0:18:39.640 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:18:39.680 --> 0:18:42.520 You can also listen live on Amazon Alexa from our 0:18:42.520 --> 0:18:46.920 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:18:48.720 --> 0:18:50.960 I want to get right to our next guest, David Diets. 0:18:51.200 --> 0:18:54.840 He's managing principal and senior portfolio manager at Peepack Private 0:18:54.960 --> 0:18:58.440 Wealth Management. David, thanks so much for joining us here. 0:18:58.880 --> 0:19:00.920 Looks like we're going to get this debt ceiling done, 0:19:00.960 --> 0:19:04.320 so I guess that removes one worry for the market here. 0:19:04.760 --> 0:19:07.040 What do you think the market should be focusing on 0:19:07.280 --> 0:19:08.159 and going forward. 0:19:09.400 --> 0:19:11.840 I think one thing that the market is focusing on 0:19:11.920 --> 0:19:15.560 now is not just that we're getting agreement on suspending 0:19:15.600 --> 0:19:18.760 the debt gap ceiling, but the implications of how that 0:19:18.800 --> 0:19:22.720 agreement was reached, not only where there's no new spending, 0:19:23.080 --> 0:19:27.680 but basically the current administration's promise of raising taxes and 0:19:27.760 --> 0:19:30.399 d in corporations from twenty one percent to twenty eight 0:19:30.440 --> 0:19:32.679 percent the wealthy is from thirty seven to thirty nine 0:19:32.720 --> 0:19:35.760 and six seems to have gone completely off the board 0:19:36.000 --> 0:19:39.080 and seems to be iced until after the next presidential election. 0:19:39.400 --> 0:19:43.680 I don't think investors at first Blush were focusing on that. Increasingly, 0:19:43.720 --> 0:19:46.560 I think that is a very important issue that people 0:19:46.600 --> 0:19:47.800 are now starting to take note. 0:19:48.680 --> 0:19:51.320 What does that look like then? In terms of the trade, 0:19:51.400 --> 0:19:53.280 One thing that I've been thinking about a lot is 0:19:53.359 --> 0:19:54.520 downside to the dollar. 0:19:54.640 --> 0:19:55.320 What else should I. 0:19:55.320 --> 0:19:58.600 Be thinking about, Well, you know, the other thing is 0:19:58.600 --> 0:20:02.080 probably you know, lower interest rates and so forth, because 0:20:02.160 --> 0:20:05.439 if there's no new spending, that's a bit deflationary. And 0:20:05.520 --> 0:20:08.119 the other risk, of course for investors going forward is 0:20:08.440 --> 0:20:11.399 if we do, as many indicators seem to suggest, go 0:20:11.520 --> 0:20:15.840 into a recession mild or otherwise, we cannot expect any 0:20:15.880 --> 0:20:18.879 fiscal stimulus to help get us out of that. And 0:20:18.920 --> 0:20:21.159 so as a result, I think that coupled with some 0:20:21.320 --> 0:20:24.920 lower inflation readings I'm starting to detect here, plus less 0:20:25.200 --> 0:20:29.560 fiscal firepower, interest rates could start to roll over at TAD. 0:20:30.280 --> 0:20:33.560 So we're going to have the Fed on June fourteenth 0:20:33.680 --> 0:20:36.000 kind of let us know where they are with their rates. 0:20:36.320 --> 0:20:40.520 Are you looking for them to pause? Pivot? What are 0:20:40.520 --> 0:20:41.000 you looking for? 0:20:42.480 --> 0:20:45.760 So what I think has really juiced its rally today 0:20:46.000 --> 0:20:48.720 is just this week there's been a complete flip between 0:20:49.000 --> 0:20:52.720 expectations for a hike to now expectations for a pause 0:20:52.840 --> 0:20:54.479 or a skip or whatever you want to call it. 0:20:55.400 --> 0:20:58.479 And I think what's really important here is, although the 0:20:58.560 --> 0:21:02.160 labor market is staying wrong, when you start looking at 0:21:02.440 --> 0:21:06.800 more leading indicators. So for example, we saw the seventh 0:21:06.800 --> 0:21:10.200 month in a row down on the manufacturing index, important 0:21:10.240 --> 0:21:14.960 index of course of producer prices encompassed in that also down, 0:21:15.200 --> 0:21:18.639 and of course unit labor growth costs coming down. You 0:21:18.680 --> 0:21:21.760 know your labor numbers are your most lagging indicator, but 0:21:21.880 --> 0:21:25.560 the more forward looking indicators suggests less and less price pressure. Now, 0:21:25.600 --> 0:21:30.560 mind you, all eyes will be on tomorrow's May jobless numbers. 0:21:30.600 --> 0:21:33.400 That could change all the betting. But increasingly it seems 0:21:33.480 --> 0:21:35.400 like the Fed is starting to get the job done, 0:21:35.480 --> 0:21:37.720 and we really should look for a pause or skip 0:21:37.800 --> 0:21:38.680 or whatever you want to call. 0:21:38.600 --> 0:21:41.679 It, and just to go even more micro than that. 0:21:41.840 --> 0:21:44.960 In your note you mentioned advanced auto parts. What does 0:21:45.240 --> 0:21:49.320 the advanced autopart story tell you about how the FEDS 0:21:49.640 --> 0:21:52.880 impact with ray hikes has been going. 0:21:54.920 --> 0:21:57.840 So certainly, to look at it a little bit more broadly, 0:21:57.880 --> 0:22:00.800 we're seeing a number of retailers, where that be Target, 0:22:00.840 --> 0:22:03.359 whether that be Macy's, whether that be some of the 0:22:03.400 --> 0:22:07.119 dollar stores, that seem to have really reduced their forecast 0:22:07.520 --> 0:22:11.800 in coming in overall with results that are less than expected. 0:22:12.000 --> 0:22:15.280 Of course, you know the disaster the jury yesterday was 0:22:15.320 --> 0:22:19.359 Advanced Autoparts. It's hard to tell down nearly forty percent 0:22:19.400 --> 0:22:21.520 from where it was at the start of the week, 0:22:21.560 --> 0:22:25.639 whether that is company specific or has bigger implications for 0:22:25.680 --> 0:22:28.360 the whole economy. We saw some of its competitors, for example, 0:22:28.400 --> 0:22:32.439 genuine Parts also declined too, so it's hard to know. 0:22:32.680 --> 0:22:35.320 I guess one thing that one takeaway, of course, is 0:22:35.359 --> 0:22:38.000 don't believe every analyst out there, because they all had 0:22:38.040 --> 0:22:40.360 it wrong. And now they're rushing this morning to mark 0:22:40.359 --> 0:22:42.560 down their forecasts and so forth. And I guess they 0:22:42.560 --> 0:22:45.600 saw something with a thirty five percent decline, seventy percent 0:22:45.720 --> 0:22:49.240 slash in profits and seventy percent plus slash and dividends 0:22:49.280 --> 0:22:49.919 that they didn't like. 0:22:51.280 --> 0:22:54.119 So, David, you know, it just seemed like just a 0:22:54.119 --> 0:22:56.520