WEBVTT - Bloomberg Surveillance TV: May 13th, 2026 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordernt. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 2>live on Bloomberg Television weekday mornings from six to nine

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business App.

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<v Speaker 3>We've got a problem in the UK.

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<v Speaker 2>Political uncertainty in the country pushing guilt yields to their

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<v Speaker 2>highest levels in decades. According to the Times of London.

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<v Speaker 2>Just moments ago, a rival to UK Prime Minister Kirs

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<v Speaker 2>Stamer preparing to trigger a leadership contest. Kit jukes of

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<v Speaker 2>self gen right in the following Increased spending and higher

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<v Speaker 2>taxes are a given layer that, on top of rising

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<v Speaker 2>energy costs and falling growth forecast, there isn't much to

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<v Speaker 2>make anyone feel good about the pound. Kit joins us

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<v Speaker 2>now for more. Kit Welcome to the program. Lisa said

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<v Speaker 2>it yesterday, said it again this morning. Is this the

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<v Speaker 2>new normal for UK assets?

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<v Speaker 4>It's been the normal for a little while.

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<v Speaker 5>Now.

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<v Speaker 4>We are stuck in a world of governments that don't

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<v Speaker 4>focus enough on growth and have lots of other things

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<v Speaker 4>that are more interested in the result of that is

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<v Speaker 4>you either have you are constrained on spending or you

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<v Speaker 4>have to raise taxes and you're probably going to be

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<v Speaker 4>on popular somewhere in the middle of it. And around

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<v Speaker 4>we go and the adults in the room is the

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<v Speaker 4>bond market or the referee is the bond market because

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<v Speaker 4>funding this requires a country with a massive current account

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<v Speaker 4>deficit dependent on foreign investors to come in and buy

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<v Speaker 4>guilt guilt yield spike and the and the government does

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<v Speaker 4>or doesn't fall and doesn't or doesn't respect the bond

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<v Speaker 4>market and get its act together. And we've done this

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<v Speaker 4>a few times and we don't look like escaping this

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<v Speaker 4>until someone comes in and says we need more growth.

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<v Speaker 3>Okay.

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<v Speaker 2>Outside of the UK, investors might not be familiar with

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<v Speaker 2>names like West Street inc. Anti Burnham, Anti Burnham of

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<v Speaker 2>course the mayor of Manchester West Street in the House Secretary.

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<v Speaker 2>There was a moment ago, about ten to fifteen minutes

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<v Speaker 2>ago we had a report from the Times of London

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<v Speaker 2>suggesting that maybe the House Secretary might consider triggering a

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<v Speaker 2>leadership election, a leadership contest and ultimately quit the government

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<v Speaker 2>in the next twenty four hours. Kid what could come next?

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<v Speaker 2>Can you help people understand what the next government, the

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<v Speaker 2>next leadership might look like.

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<v Speaker 4>So it depends on where we go. So we have

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<v Speaker 4>factions that he's not part of the biggest faction, that's

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<v Speaker 4>the Burnham faction, but it represents certainly a shift to

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<v Speaker 4>the left politically. And then if he were to win

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<v Speaker 4>a vote for example, which is possible but at this

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<v Speaker 4>point unlikely, you would have a messy kind of situation

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<v Speaker 4>going forwards from there, where you see what you can do.

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<v Speaker 4>If it gets to one candidate turns into lots of candidates,

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<v Speaker 4>then we see the Mayor of Manchester has to has

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<v Speaker 4>to find himself a seat in Parliament and that'll take time.

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<v Speaker 4>And the last round of voting that we saw in

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<v Speaker 4>the local elections didn't suggest that a lot of people

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<v Speaker 4>are voting labor at the moment, so that's quite messy.

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<v Speaker 4>So it's all going to be quite drawn out. And

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<v Speaker 4>if we got to an end conclusion, we would still

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<v Speaker 4>have a labor government, and we would still have a

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<v Speaker 4>labor government that at the moment is fixated on lots

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<v Speaker 4>of things that don't include growing the economy more quickly

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<v Speaker 4>and increasing tax revenues through that method to includes highest

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<v Speaker 4>taxation or reduced spending, depending on where you sit. So

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<v Speaker 4>the problem doesn't go away.

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<v Speaker 6>How much is this a specifically a UK problem and

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<v Speaker 6>how much is this a broader representation of the issue

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<v Speaker 6>facing all of Europe and frankly on the margins the

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<v Speaker 6>United States with debt levels at a very high level

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<v Speaker 6>relative to growth and a potential pushback in an inflationary

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<v Speaker 6>environment from pond investors.

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<v Speaker 4>Well, so firstly, we're at the I guess we're at

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<v Speaker 4>the pointy end of the problem. So the problem starts

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<v Speaker 4>if the United States is higher yields because people are

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<v Speaker 4>concerned about the inflation fighting credibility of the federal reserve

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<v Speaker 4>and are concerned about the size of the deficit, spending

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<v Speaker 4>on the war and anything else. If we get ourselves

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<v Speaker 4>into that, then you get treasury yields if you like

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<v Speaker 4>wandering up to four and we wanted ours up to five,

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<v Speaker 4>and we can add some numbers.

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<v Speaker 3>To each of those.

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<v Speaker 4>We have a bigger current account deficit presented of GDP

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<v Speaker 4>than pretty much anybody else. So we're dependent on foreign

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<v Speaker 4>investment coming in. We have slow growth and the only

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<v Speaker 4>thing that keeps our currency stable is having interest rates

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<v Speaker 4>that are high or higher than the rest of Europe.

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<v Speaker 4>That doesn't get our growth story at So yeah, if

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<v Speaker 4>ten youre noteyilds were at two and a half percent

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<v Speaker 4>in the US, the world would be a much easier place. Unfortunately,

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<v Speaker 4>because it isn't. We're the kind of the We're the

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<v Speaker 4>place where the pain starts being felt, and it's on

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<v Speaker 4>the UK government. Given where we are, the size of

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<v Speaker 4>our deficit, the size of our current account deficit to

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<v Speaker 4>be responsible. The only advantage we have over the United

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<v Speaker 4>States is we have a very credible central bank, an

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<v Speaker 4>inflation targeting central bank whose independence isn't in question at all.

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<v Speaker 4>But but that on that on its own isn't going

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<v Speaker 4>to be enough to finance the deficits to come.

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<v Speaker 6>What would it take kit for you to get bullish

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<v Speaker 6>on the pound?

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<v Speaker 4>On the pound, I'm only slowly, but that the support

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<v Speaker 4>the pound has is that everybody's bearished, So it doesn't

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<v Speaker 4>take me much good news to make me optimistic but

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<v Speaker 4>I would like a government with a clear and coherent

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<v Speaker 4>plan for growth, and then I probably would be barished

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<v Speaker 4>because at that margin, if I thought that, you know,

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<v Speaker 4>that we could put in a program that would have

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<v Speaker 4>the UK growing one percent faster perannum than the rest

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<v Speaker 4>of Europe, which isn't which isn't a very big bar

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<v Speaker 4>to get over, then then the pound, I think, could.

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<v Speaker 3>Could start getting stronger.

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<v Speaker 4>But its value in real terms is going is being

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<v Speaker 4>eroded because we're consistently running higher inflation in the rest

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<v Speaker 4>of Europe, so it's getting more expensive every day, and

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<v Speaker 4>that's why nominal terms, the currency is going to have

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<v Speaker 4>to weaken at some point if we don't turn that around.

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<v Speaker 2>Stay with us more Bloomberg surveillance coming up after this.

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<v Speaker 2>Seth competenter of Morgan Stanley writing disinflation resumes in the

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<v Speaker 2>second half of the year, allowing the Fed to cut

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<v Speaker 2>rights twice in the first half of twenty seven. Seth

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<v Speaker 2>joins us now for more. Seth welcome goes be over.

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<v Speaker 2>Chicago thinks we've got an inflation problem. Do you disagree?

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<v Speaker 2>I don't disagree.

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<v Speaker 5>You know, our baseline forecast, as you just showed, is

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<v Speaker 5>that inflation should start to trend down. We do think

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<v Speaker 5>we're around pete tariff effects on core goods inflation, and

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<v Speaker 5>that should start to come off. I think we got

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<v Speaker 5>a sign of that from the CPI data just just yesterday.

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<v Speaker 5>The way you just had the clip with Kevin Hassett

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<v Speaker 5>pointing out that historically energy price shocks like this have

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<v Speaker 5>gone through the headline but not to core and then

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<v Speaker 5>it ends up being temporary. So if everything goes according

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<v Speaker 5>to that baseline plan, then then the inflation problem isn't

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<v Speaker 5>as bad as it might otherwise. Look, however, and this

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<v Speaker 5>is I think a really important however, we're in a

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<v Speaker 5>really really unusual situation here. The FED has missed its

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<v Speaker 5>inflation target for over five years. To the upside, we're

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<v Speaker 5>still about a percentage point above target. That longevity of

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<v Speaker 5>the inflation myss. At some point, I don't know when,

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<v Speaker 5>probably starts to affect the psychology of consumers in terms

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<v Speaker 5>of what they expect and what they accept for prices.

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<v Speaker 5>It probably starts to affect businesses as they're setting prices

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<v Speaker 5>trying to understand how much they can or can't pass

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<v Speaker 5>through costs.

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<v Speaker 7>We don't think we're at a tipping point, but I.

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<v Speaker 5>Do believe that the risks now are heightened relative to history.

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<v Speaker 5>This energy shock has proved to be very difficult to forecast,

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<v Speaker 5>and I think it's an open question right now how

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<v Speaker 5>temporary is the energy shock. Our baseline assumption when we

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<v Speaker 5>did our forecast was that we would get some resolution,

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<v Speaker 5>We would get oil prices down to call it ninety

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<v Speaker 5>dollars a barrel at the end of the year. So

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<v Speaker 5>coming off the peak coming down, we could easily be

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<v Speaker 5>wrong there, and just the headlight headlines overnight show that

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<v Speaker 5>there's all sorts of risks that there's prices stay elevated.

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<v Speaker 7>Seth.

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<v Speaker 2>I's the inflation data we've had so far within the

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<v Speaker 2>report of yesterday, are the elements within that that do

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<v Speaker 2>give you pause that maybe you think could become a

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<v Speaker 2>bigger headwind to your base case.

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<v Speaker 5>So you know, we saw, for example, in core, we

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<v Speaker 5>saw a rebound in shelter inflation.

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<v Speaker 7>We were expecting that.

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<v Speaker 5>I think a lot of people were expecting that that

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<v Speaker 5>looked like there was noisy tick down in that category.

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<v Speaker 5>And so the tick back up makes a lot of

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<v Speaker 5>sense as long as that's all it is, is sort

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<v Speaker 5>of a bump in the road along the same trajectory

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<v Speaker 5>we were on before. It's fine, but you really have

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<v Speaker 5>to start to wonder is there something else going on

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<v Speaker 5>in core at the fundamentals of the economy are actually

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<v Speaker 5>pretty solid.

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<v Speaker 7>We've got an unemployment rate that's pretty low.

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<v Speaker 5>The last jobs report showed that the weakness in hiring

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<v Speaker 5>we had very much seen last year has probably bottomed

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<v Speaker 5>out and start to pick up. So I think we

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<v Speaker 5>have to be on heightened alert. But I wouldn't say

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<v Speaker 5>there's any single component that's sort of standing out.

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<v Speaker 6>Is this truly an oil price shock if we stay

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<v Speaker 6>where we are based on inflation adjusted fuel prices over.

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<v Speaker 5>History, Well, I mean, I think that's that's a good question.

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<v Speaker 5>If you compare where we are now to say, twenty

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<v Speaker 5>twenty one twenty twenty two, where we ended up following

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<v Speaker 5>the Russian invasion of Ukraine, nominal prices of oil are

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<v Speaker 5>not as high right now as they were then, And

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<v Speaker 5>then if you compare it to the average price level,

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<v Speaker 5>so the CPI index, it makes it seem like less

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<v Speaker 5>of a of a price shock now than it was then.

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<v Speaker 5>So in that sense, you know, it's a bit more mild.

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<v Speaker 5>And that's the reason why we maintain our constructive baseline view.

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<v Speaker 5>I think the challenge here and the risk is what

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<v Speaker 5>happens a week from now, what happens a month from now,

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<v Speaker 5>what happens two months from now. My colleague Martin rats

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<v Speaker 5>Over in London, who's our commodities and energy specialist, has

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<v Speaker 5>great charts about what's going going on with US exports,

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<v Speaker 5>and US exports of distilled products like gasoline. Inventories are

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<v Speaker 5>coming down being shipped away just as we're about to.

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<v Speaker 7>Get to prime driving season.

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<v Speaker 5>So if there's no resolution, if we still see this

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<v Speaker 5>shortfall in terms of supply flowing to the global market

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<v Speaker 5>in a month or two, could we see physical shortages

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<v Speaker 5>where things are just running dry. I think that's a

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<v Speaker 5>real risk that everyone should consider.

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<v Speaker 7>SETH.

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<v Speaker 6>We also are looking, as John pointed out earlier, to

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<v Speaker 6>cheer economy, where you've got the AI trade and you've

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<v Speaker 6>got everything else in The AI trade seems somewhat independent

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<v Speaker 6>of some fundamental macroeconomics and is fueling a wealth effect

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<v Speaker 6>that keeps consumers spending. At what point has the traditional

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<v Speaker 6>channel of disinflation broken down because of the AI cycle

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<v Speaker 6>that's been super imposed.

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<v Speaker 3>On top of it.

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<v Speaker 7>I think that's a great question.

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<v Speaker 5>And as we wrote our Midjiar outlook and we were

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<v Speaker 5>thinking about various scenarios, those are the two themes that

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<v Speaker 5>we matter. What's going on with the energy shock and

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<v Speaker 5>then what's going on with AI. I think there's no

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<v Speaker 5>two ways about it. In the short run, AI boosts

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<v Speaker 5>aggregate demand, boost aggregate demand for investment spending, for construction,

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<v Speaker 5>and then the wealth effect that you're talking about is

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<v Speaker 5>absolutely critical to keep upper income, upper income and higher

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<v Speaker 5>wealth household spending, and they're the real drivers of what's

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<v Speaker 5>been going on. Will that lead to more fundamental underlying

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<v Speaker 5>inflation you know, so far not clear, but I think

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<v Speaker 5>there's another risk. And so what we try to illustrate

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<v Speaker 5>is what happens if we are you optimistic but not

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<v Speaker 5>sufficiently optimistic, and consumer spending actually picks up from here

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<v Speaker 5>because of the wealth effects and because broader hiring seems

0:11:43.600 --> 0:11:47.800
<v Speaker 5>like it's stabilizing. What if that spending, along with the

0:11:47.840 --> 0:11:51.440
<v Speaker 5>AI spending, allows businesses across the economy to start to

0:11:51.480 --> 0:11:53.080
<v Speaker 5>engage in cappex spending.

0:11:53.120 --> 0:11:57.000
<v Speaker 7>So far it's only been essentially AI capax. What if it's.

0:11:56.880 --> 0:12:00.280
<v Speaker 5>Broader that kind of aggregate demand scenario where things really

0:12:00.320 --> 0:12:02.640
<v Speaker 5>pick up from here, that's the scenario you need to

0:12:02.720 --> 0:12:05.680
<v Speaker 5>really see the FED shift gears start to think about

0:12:05.760 --> 0:12:08.600
<v Speaker 5>hiking interest rates, and as you pointed out, I think

0:12:08.640 --> 0:12:12.120
<v Speaker 5>earlierly the market starting to put some probability on that outcome.

0:12:12.400 --> 0:12:13.920
<v Speaker 5>I really do think we want to pay a lot

0:12:13.920 --> 0:12:16.760
<v Speaker 5>of attention to where that generalized demand in the economy

0:12:16.800 --> 0:12:19.040
<v Speaker 5>is going, because it could lead to that scenario of

0:12:19.040 --> 0:12:20.040
<v Speaker 5>the FED hiking.

0:12:20.480 --> 0:12:24.000
<v Speaker 2>Stay with us more Bloomberg surveillance coming up after this.

0:12:33.240 --> 0:12:35.720
<v Speaker 2>Here's the take from Terry Weisman of Macquarie Rights in

0:12:35.720 --> 0:12:37.880
<v Speaker 2>the following There seems to be a divergence between a

0:12:37.920 --> 0:12:40.480
<v Speaker 2>high year end inflation outlook and a FED that is

0:12:40.520 --> 0:12:43.400
<v Speaker 2>expected to keep the policy rate on hold through year end.

0:12:43.640 --> 0:12:46.960
<v Speaker 2>Terry Johns snappermore Terry good Mornic. How do we reconcile

0:12:47.040 --> 0:12:48.200
<v Speaker 2>resolve that tension?

0:12:48.520 --> 0:12:50.400
<v Speaker 3>Well, it's going to have to be with a policy move.

0:12:50.440 --> 0:12:54.000
<v Speaker 1>I suspect the Federal Reserve, unfortunately, is going to meet

0:12:54.440 --> 0:12:56.400
<v Speaker 1>in June, and that feels like such a long time

0:12:56.440 --> 0:13:00.120
<v Speaker 1>from now, given how much inflation data, how bad the

0:13:00.160 --> 0:13:02.440
<v Speaker 1>data has been in the last two days. But ultimately

0:13:02.440 --> 0:13:04.840
<v Speaker 1>it's going to have to be with some recognition that

0:13:04.920 --> 0:13:07.360
<v Speaker 1>a certainly an easing bias is the wrong thing to do.

0:13:07.440 --> 0:13:10.040
<v Speaker 1>I'm shocked that they haven't removed that already. In the

0:13:10.040 --> 0:13:14.240
<v Speaker 1>April meeting, J. Powell hinted that they would, But even

0:13:14.280 --> 0:13:16.640
<v Speaker 1>that doesn't feel like enough right at this point. What's

0:13:16.760 --> 0:13:20.240
<v Speaker 1>enough enough is probably moving towards a right high and

0:13:20.360 --> 0:13:24.439
<v Speaker 1>being explicit here and even signaling that through a tightening

0:13:24.440 --> 0:13:25.560
<v Speaker 1>bias at the next meeting.

0:13:25.720 --> 0:13:26.800
<v Speaker 3>I think that's appropriate.

0:13:27.000 --> 0:13:29.200
<v Speaker 1>Look, I think at the heart of the matter here

0:13:29.240 --> 0:13:31.360
<v Speaker 1>is that all wars are inflationary. You can go back

0:13:31.360 --> 0:13:32.800
<v Speaker 1>to the US Civil War, you can look at World

0:13:32.840 --> 0:13:34.199
<v Speaker 1>War Two, you can look at World War One. You

0:13:34.200 --> 0:13:36.640
<v Speaker 1>can probably even look at the Spanish American War. I haven't,

0:13:36.679 --> 0:13:39.320
<v Speaker 1>but I'm guessing that it was inflationary. The Vietnam War

0:13:39.320 --> 0:13:41.880
<v Speaker 1>certainly was. Why are we shocked that we have a

0:13:41.920 --> 0:13:43.320
<v Speaker 1>war and we have inflation?

0:13:43.679 --> 0:13:45.840
<v Speaker 6>If this FED does not move to a tightening bias,

0:13:46.080 --> 0:13:47.880
<v Speaker 6>what is the market response likely to be?

0:13:48.800 --> 0:13:50.920
<v Speaker 1>Well, I think we're already seeing it. It's the long

0:13:51.000 --> 0:13:54.160
<v Speaker 1>end of the curve. It's the presumption that they don't

0:13:54.160 --> 0:13:55.760
<v Speaker 1>do something soon, they're going to have to do a

0:13:55.800 --> 0:13:57.760
<v Speaker 1>lot more later, that they have to nip it in

0:13:57.760 --> 0:13:58.240
<v Speaker 1>the butt.

0:13:58.360 --> 0:13:59.240
<v Speaker 3>The longer they wait.

0:13:59.360 --> 0:14:01.920
<v Speaker 1>The longer, we're going to see the long end of

0:14:01.920 --> 0:14:03.160
<v Speaker 1>the curve they yields, and the long end of the

0:14:03.200 --> 0:14:06.160
<v Speaker 1>curve move up and the curve effectively steepen. That will

0:14:06.160 --> 0:14:07.840
<v Speaker 1>not be good for housing, let's say, it will not

0:14:07.880 --> 0:14:09.720
<v Speaker 1>be good for other sectors in the economy that are

0:14:09.760 --> 0:14:11.160
<v Speaker 1>sensitive to the long end of the curve.

0:14:11.440 --> 0:14:13.439
<v Speaker 3>But that's exactly why the FED needs to start moving.

0:14:13.480 --> 0:14:16.160
<v Speaker 1>I think by signaling that they will high rates, you

0:14:16.200 --> 0:14:18.880
<v Speaker 1>will stabilize, effectively stabilize the long end of the curve

0:14:18.880 --> 0:14:20.160
<v Speaker 1>they yield at the long end of the curve, because

0:14:20.160 --> 0:14:22.000
<v Speaker 1>you'll be singing to the market, to the market that

0:14:22.000 --> 0:14:24.000
<v Speaker 1>we're dealing with this issue, that we're not going to

0:14:24.040 --> 0:14:27.400
<v Speaker 1>delay it and ultimately have to raise rates a lot

0:14:27.440 --> 0:14:28.600
<v Speaker 1>more in the future.

0:14:28.960 --> 0:14:32.080
<v Speaker 6>Arkably, some people would say that typically these price increases

0:14:32.120 --> 0:14:34.680
<v Speaker 6>are transitory. They don't want to curtail the slowdown that

0:14:34.680 --> 0:14:37.720
<v Speaker 6>you're seeing in certain sectors of the economy. Do you

0:14:37.720 --> 0:14:39.880
<v Speaker 6>think that it would become more of a liability if

0:14:39.920 --> 0:14:42.840
<v Speaker 6>they signaled at least staying on hold for a longer

0:14:42.840 --> 0:14:44.240
<v Speaker 6>period of time. Do you think that you would see

0:14:44.240 --> 0:14:46.560
<v Speaker 6>a dramatic weakening in the dollar. Do you think that

0:14:46.600 --> 0:14:51.120
<v Speaker 6>you would see the bond vigilantes come back, Yes.

0:14:51.000 --> 0:14:51.280
<v Speaker 3>I do.

0:14:51.360 --> 0:14:53.120
<v Speaker 1>I mean, it depends on the tone that they use

0:14:53.200 --> 0:14:55.480
<v Speaker 1>when they submit that they're going to keep it on

0:14:55.520 --> 0:14:56.680
<v Speaker 1>hold for a very long time.

0:14:56.720 --> 0:14:57.200
<v Speaker 3>I don't think.

0:14:57.320 --> 0:14:59.320
<v Speaker 1>But that in itself is a commitment, right, that's the

0:14:59.400 --> 0:15:01.280
<v Speaker 1>problem to say that you're going to keep it on hold,

0:15:01.320 --> 0:15:03.040
<v Speaker 1>and definitely is a commitment to keep it on hold.

0:15:03.040 --> 0:15:05.280
<v Speaker 1>And if the market continues to show us that inflation

0:15:05.400 --> 0:15:06.600
<v Speaker 1>is going to be high, that is not going to

0:15:06.640 --> 0:15:09.120
<v Speaker 1>seem like enough. I'd rather they err on the side

0:15:09.120 --> 0:15:11.000
<v Speaker 1>of doing a little bit too much at this point.

0:15:11.120 --> 0:15:11.800
<v Speaker 3>And I'll tell you why.

0:15:11.840 --> 0:15:13.360
<v Speaker 1>If you look at the if you look at the

0:15:13.360 --> 0:15:16.880
<v Speaker 1>inflation swap curve right now, it is not predicting that

0:15:16.880 --> 0:15:18.880
<v Speaker 1>inflation is going to come back down to even three

0:15:18.920 --> 0:15:19.880
<v Speaker 1>percent by the end of the year.

0:15:19.920 --> 0:15:22.160
<v Speaker 3>In fact, I suspected after the numbers this morning it's

0:15:22.200 --> 0:15:22.840
<v Speaker 3>higher than that.

0:15:23.120 --> 0:15:25.960
<v Speaker 1>It is also predicting that in April that's already in

0:15:26.000 --> 0:15:27.840
<v Speaker 1>the main inflation print, we're going to get something on

0:15:27.880 --> 0:15:31.000
<v Speaker 1>the order of four point three percent for CPI year

0:15:31.000 --> 0:15:34.640
<v Speaker 1>every year, very high. So the market is already very

0:15:34.680 --> 0:15:36.680
<v Speaker 1>doubtful that the Fed can get this under control by

0:15:36.880 --> 0:15:40.440
<v Speaker 1>effectively pricing in a forward curve for inflation, that this

0:15:40.480 --> 0:15:42.640
<v Speaker 1>is not converging back down to anything.

0:15:42.400 --> 0:15:43.720
<v Speaker 3>Near the target by the end of this year.

0:15:43.760 --> 0:15:45.680
<v Speaker 2>What does that confidence that we do converge to taka?

0:15:45.760 --> 0:15:48.360
<v Speaker 2>Where does that confidence come from after they've missed it

0:15:48.480 --> 0:15:49.000
<v Speaker 2>for five years?

0:15:49.000 --> 0:15:50.040
<v Speaker 3>What does that confidence come from?

0:15:50.080 --> 0:15:52.080
<v Speaker 1>Well, it's going to have to come from a much

0:15:52.160 --> 0:15:55.960
<v Speaker 1>more explicit commitment on the part of the FED to

0:15:56.680 --> 0:15:58.840
<v Speaker 1>tighten if they need to to put a priority on

0:15:58.880 --> 0:16:01.560
<v Speaker 1>priced ability. Problem John, of course, is that we don't

0:16:01.560 --> 0:16:04.280
<v Speaker 1>have a FED share incoming FED cheer who has made

0:16:04.320 --> 0:16:06.400
<v Speaker 1>that sort of commitment in the past. This is part

0:16:06.440 --> 0:16:08.080
<v Speaker 1>of the problem. And by the way, this is this

0:16:08.120 --> 0:16:09.760
<v Speaker 1>is part of the reason why we might not have

0:16:09.960 --> 0:16:11.160
<v Speaker 1>seen a.

0:16:11.080 --> 0:16:12.720
<v Speaker 3>Neutral bias in the April meeting.

0:16:12.760 --> 0:16:15.240
<v Speaker 1>It might be that too many members of the FOMC

0:16:15.360 --> 0:16:20.960
<v Speaker 1>were too deferential to the incoming chair and not as

0:16:21.000 --> 0:16:24.840
<v Speaker 1>opposed to the opposite. That's very possible, and I suspect

0:16:24.920 --> 0:16:27.400
<v Speaker 1>that Kevin Warts is going to have a problem, certainly

0:16:27.400 --> 0:16:29.120
<v Speaker 1>a bigger problem now he needs if he's going to

0:16:29.160 --> 0:16:32.200
<v Speaker 1>try to convince the rest of the members of the

0:16:32.640 --> 0:16:34.480
<v Speaker 1>FOMC to keep rates on hold. I think some of

0:16:34.520 --> 0:16:37.200
<v Speaker 1>them are going to want to move that bias towards Titan.

0:16:38.000 --> 0:16:41.520
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0:16:41.560 --> 0:16:44.880
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