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Speaker 1: Broadcasting live to New York, Kiolberg eleventh Yo to Washington,

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Speaker 1: d C, Bloomberg nine one to Boston, Bloomberg twelve linders

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Speaker 1: to San Francisco, Bloomberg nine six to the country Serious

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Speaker 1: at SAM General one ninety and around the glow the

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Speaker 1: Bloomberg Radio Plus Appen Bloomberg dot com. This is Bloomberg Surveillance.

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Speaker 1: Good Morning, Young Karen Moscow along with Tom Keene and

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Speaker 1: Michael McKee and the opening Vale brought to you by SEI.

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Speaker 1: Recognized as a fintech pioneer, SEI continues its legacy of

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Speaker 1: innovation by helping asset managers to compete in a changing world.

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Speaker 1: Explore SCI's next gen ideas at se i C dot com.

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Speaker 1: Slash i m S stocks are higher at the open.

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Speaker 1: The S and P five hundred is of a quarter

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Speaker 1: percent or five points to five the down Johnes Industrial

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Speaker 1: Average up to tens per center thirty points to seventeen thousand,

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Speaker 1: four hundred sixty six, the NASDAC of four tens per

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Speaker 1: center nineteen points to forty seven thirty one Tenure Treasury

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Speaker 1: down to thirty seconds. The yield one eight five percent,

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Speaker 1: the yield on the two year point eight nine percent

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Speaker 1: nomax scrude oil that pi tenth of upper center five

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Speaker 1: cents to a barrel Comic schoold is a four ten

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Speaker 1: percent or four dollars ninety cents at twelve ounce the

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Speaker 1: euro at dollar twelve thirty five the N one ten

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Speaker 1: point three zero, Tom and Mike Karen, thank you very much. Well,

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Speaker 1: it's something we don't want to face the possibility of,

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Speaker 1: but the markets are, to a certain extent price did

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Speaker 1: and that is the idea of another recession coming up

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Speaker 1: sometime in the near future. What to do when monetary

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Speaker 1: policy is all but impotent these days, Well, fiscal policy

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Speaker 1: is the way to go. But can we get fiscal

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Speaker 1: policy right? That's the subject of a new report put

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Speaker 1: together by Princeton University economics professor Alan Blinder, the former

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Speaker 1: vice Chairman of the Federal Reserves. So somebody with experience

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Speaker 1: on the monetary policy side and now giving advice on

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Speaker 1: the fiscal side, looking at the allen history of fiscal

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Speaker 1: efforts in the past, finding some things wanting and some

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Speaker 1: things worked. You you have a now agenda that policymakers

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Speaker 1: could follow. Things that you say will help I do,

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Speaker 1: And I think the simplest way to summarize it is

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Speaker 1: by looking very quickly at the main reasons why people

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Speaker 1: have denigrated fiscal policy in the past, and they don't

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Speaker 1: even think about that, and they are in a nutshell

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Speaker 1: that it's too slow and too political. That won't sound

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Speaker 1: unfamiliar to anybody, and there's some truth to it. So

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Speaker 1: the basic kind of remedies that I'm pointing to in

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Speaker 1: this paper are to try to do things that make

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Speaker 1: the response more automatic. That'll make it faster. Of course

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Speaker 1: that's tautological. If it's automatic, it's very fast. But also

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Speaker 1: make it less political because it just happens and you

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Speaker 1: don't have to push legislation through Congress. What's the what's

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Speaker 1: at the top of your list? I would put at

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Speaker 1: the top increasing food stamps and unemployment insurance. And why

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Speaker 1: do I say that, Because those are two sorts of

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Speaker 1: transfer programs whose recipients we know from evidence spend what

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Speaker 1: they get very quickly. The food stamp people we call

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Speaker 1: it snap these days, but most of us still call

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Speaker 1: it food stamps. The food stamps people are literally living

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Speaker 1: hand to mouth, and they spend it really fast. The

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Speaker 1: people that receive unemployment benefits have lost their jobs, maybe

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Speaker 1: recently lost their jobs and are sort of used to

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Speaker 1: living at a higher living standard, and so both a

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Speaker 1: priori reasoning and evidence suggest that they would have been

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Speaker 1: quite a bit of it pretty fast. Respectfully suggest Professor

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Speaker 1: Blinder that people writing out tuition checks to Princeton are

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Speaker 1: living food handimouth just as well. I don't even want

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Speaker 1: to ask what that we should cause your Steam school, UH,

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Speaker 1: congratulations on your work. Is this a platform for President Clinton?

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Speaker 1: The younger? Is this? Is this an effort by the

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Speaker 1: Hamilton's Project to frame a fiscal platform for President Clinton.

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Speaker 1: I'm not sure if that's specific. It is an effort

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Speaker 1: by the Hamilton's Project. That's why they asked me to

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Speaker 1: engage in this the same of fiscal program as you say,

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Speaker 1: not specifically for UH President Clinton. I certainly hope it

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Speaker 1: will be UH for President Clinton. And frankly, I see

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Speaker 1: no reason on earth to think that Donald Trump would

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Speaker 1: pay any attention to any of this. The food stamps

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Speaker 1: and UH and unemployment insurance you mentioned are automatic stabilizers,

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Speaker 1: so spending in theory you should go up. What are

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Speaker 1: you what are you talking about in terms of fiscal policy?

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Speaker 1: You talk about immediately going to emergency extent of those programs. Yeah,

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Speaker 1: so well on the UI, on the unemployment insurance, to

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Speaker 1: make it automatic. The the extensions that we generally get

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Speaker 1: in recessions, we always get in recessions. Uh uh come

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Speaker 1: mostly from acts of Congress. Some of it's automatic, but

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Speaker 1: mostly it comes from acts of Congress. So you could

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Speaker 1: just speed that process. Uh. The Obama administration has made

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Speaker 1: a concrete proposal. I couldn't give you chapter and verse

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Speaker 1: right off the top of my head, but for a

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Speaker 1: stage increase, staged increases in thirteen week increments that would

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Speaker 1: happen automatically. So that's a good, uh starting point for

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Speaker 1: thinking about this, but it needs to be legislated. It's

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Speaker 1: not in the law now. Similarly, on the food stamps,

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Speaker 1: I would like to see um increases, cyclical increases in

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Speaker 1: the generosity of the food stamps, get more money in

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Speaker 1: the form of food stamps to the people that needed. Okay,

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Speaker 1: but that is not the tone that you know. The

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Speaker 1: tone are is there going to be a thirteenth edition

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Speaker 1: of your classic textbook? Uh? The answer is there'll be

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Speaker 1: a fourteenth is out right now. Excuse me, I'm sorry

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Speaker 1: I lose there. Now. I would suggest, professor that the

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Speaker 1: politics of this nation and tone of our legislative branch

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Speaker 1: is a little different versus the third edition in the

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Speaker 1: fourteenth edition of Blinder. So with that said, is any

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Speaker 1: of this feasible or is this just keeping you in

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Speaker 1: your ilk at the Hamilton's Project busy? I mean, can

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Speaker 1: you get this through? If you ask me, can we

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Speaker 1: get this through the current Congress, the answer is no.

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Speaker 1: In fact, that's the same answer to anything. You've taken

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Speaker 1: anything through the current Congress. I've sometimes joked with Congress

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Speaker 1: past the Bill of Rights if it came up now,

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Speaker 1: which is why you are Elen Blinder, that's just great

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Speaker 1: my jumping. Please, But there will be another Congress. We

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Speaker 1: are going to having a election in November. I think

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Speaker 1: there's reasonable chance that the Democrats will win control of

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Speaker 1: the Senate and a very very outside chance that they

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Speaker 1: will win control of the House. I certainly wouldn't bet

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Speaker 1: on that, but the the numbers should change, and in

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Speaker 1: any case, we know from history whether it's the Democrats

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Speaker 1: are Republicans. If a president wins with a sweeping majority

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Speaker 1: on a serious mandate, Congress pays attention. Uh, this is

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Speaker 1: gonna sound like a stupid question, but um, the the

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Speaker 1: objection is not always that it's too The objection to

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Speaker 1: fiscal policy from the intelligence is that it's too slow.

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Speaker 1: The objection from the people in Washington is that you're

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Speaker 1: spending money and you're running up the deficit. What do

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Speaker 1: you say to people like that? What I say to

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Speaker 1: people like that is it's sort of where you started.

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Speaker 1: The piece that if the economy needs stimulus and it

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Speaker 1: can't come from monetary policy, or most of it can't

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Speaker 1: come from monetary policy, which seems likely to be the

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Speaker 1: case the next time, whenever the next time, is that

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Speaker 1: it must come from fiscal policy, and that means increasing

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Speaker 1: the deficit. But and this is another important point that

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Speaker 1: I emphasized in the paper, we ought to pay a

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Speaker 1: much more attention in designing fiscal packages to the so

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Speaker 1: called bang for the buck picks of things that relatives

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Speaker 1: to what they do to the deficit have a lot

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Speaker 1: of spending punch behind them. And that's another thing that

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Speaker 1: leads me to the things I was just speaking about.

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Speaker 1: Nolan Blinder, whether us we're going to continue this conversation

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Speaker 1: with a former vice chairman and do it. We're honored

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Speaker 1: to have Professor Blinder with us today after the vice chairman.

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Speaker 1: Stanley Fisher spoke for Michael Woodford yesterday. It is school

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Speaker 1: to the North. What many people don't know is some

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Speaker 1: of Michael woodford seminal work was done down the hallways

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Speaker 1: of Blinder's Princeton. We'll talk to Alan Blinder about interest, prices,

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Speaker 1: h and the lack of money is found in Michael

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Speaker 1: Woodford's work. Is Stanley Fisher brilliantly highlighted yes to say

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Speaker 1: this is a real treat coming up Alan Blinder on

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Speaker 1: Michael Woodford. The doll up seventy one seventeen thousand, five

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Speaker 1: oh seven. This hour of surveillance is brought to you

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Speaker 1: dot com. Here's Michael Barr with news headline, My Tom,

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Speaker 1: thank you very much. Greece's defense minister says some of

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Speaker 1: the airplane debris that's been spotted in the Mediterranean consists

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Speaker 1: of two seats, suitcases and a body part. The items

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Speaker 1: responded to day after egypt Air eight oh four plunged

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Speaker 1: into the sea while on its way from parents to Cairo.

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Speaker 1: Egypt's president has expressed deep sadness and extreme regret over

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Speaker 1: the deaths of the sixty six people aboard. Donald Trump

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Speaker 1: will speak today before the National Rifle Association's annual conference

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Speaker 1: in Louisville, Kentucky. Former political organizer for the n r A,

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Speaker 1: Richard Feldman says Trump has been all over the map

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Speaker 1: on the Second Amendment, but a lot of the n

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Speaker 1: r a's membership is pro Trump. Former Mexican president sent A.

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Speaker 1: Fox says Donald Trump is creating enemies where they do

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Speaker 1: not exist. Fox has budded heads with Trump's views, especially

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Speaker 1: after the presumptive Republican presidential nominee proposed building a wall

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Speaker 1: at the Mexican border and having Mexico pay for it.

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Speaker 1: This guy seems to be looking for enemies under the

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Speaker 1: stones and everywhere, looking for building this phantom and telling

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Speaker 1: U s citizens watch out, I need to build walls.

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Speaker 1: I need to protect you. Who is he to protect

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Speaker 1: this great nation? Back in February, when I asked about

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Speaker 1: Trump's wall, comments said quote, I'm not going to pay

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Speaker 1: for that blanking wall. Global News twenty four hours a day,

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Speaker 1: powered by were twenty four hundred journalists more than hundred

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Speaker 1: fifty news bureaus around the world. Michael bark He didn't

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Speaker 1: say blanking, but yeah, it was a lot stronger than

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Speaker 1: Michael Barr choosing his words carefully. Thank you so much,

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Speaker 1: Michael dalup seventy two points for an Alan Blinder of

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Speaker 1: Princeton University. Bloomberg Surveillance. Bloomberg Surveillance is brought to you

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Speaker 1: your radio. This is a Bloomberg Business flash and I'm

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Speaker 1: covering Moscow. This updates brought to you by Carbonite. You

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Speaker 1: to get two three months with offer code broadcast. US

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Speaker 1: stocks are rising, with the S and P five hundred

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Speaker 1: bouncing from a seven week low, but by gains in

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Speaker 1: commodity producers amid ebbing anxiety over the potential for higher

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Speaker 1: interest rates as early as next month. To check the

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Speaker 1: markets every fifteen minutes throughout the trading day on Bloomberg,

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Speaker 1: the S and P five hundred is up half per

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Speaker 1: cent or nine points to forty nine Dow Jones Industrial

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Speaker 1: average of four tenths percent or sixty eight points to

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Speaker 1: seventeen thousand, five hundred three and as to accept seven

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Speaker 1: tens per cent or thirty four points to forty seven

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Speaker 1: forty six ten. Your Treasury down one thirty second. The

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Speaker 1: yeld one point eight five percent yield than the two

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Speaker 1: year point eight eight percent nim X screwed oil left

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Speaker 1: two tents per cent or eight cents to forty eight

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Speaker 1: twenty one of Barrow comes Gold up two tens percent

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Speaker 1: or two dollar sixty cents at twelve fifty seven sixty ounce.

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Speaker 1: The euro a dollar twelve thirty three. The N one

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Speaker 1: ten point three nine Deer End Company down three percent

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Speaker 1: after the world's biggest farm equipment manufacturer lowered its fiscal

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Speaker 1: four year profit outlook. Foot Locker is down six percent

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Speaker 1: after first quarter comparable store sales and missed analysts estimates,

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Speaker 1: and IF five Materials is up more than thirteen percent

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Speaker 1: after it forecast third quarters sales that may beat ENA

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Speaker 1: lists estimates. That's a Bluemberg business flash. Tom and Mike

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Speaker 1: Cara Mosca thank you so very much. We are talking

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Speaker 1: with Princeton University's Alan Blind, their former vice chairman of

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Speaker 1: the Federal Reserve, and we would be remiss Alan if

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Speaker 1: we didn't ask you what you make of the FED

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Speaker 1: seeming about face this week? At least the markets are

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Speaker 1: taking that way in terms of when they're going to

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Speaker 1: raise interest rates. Well, I think you put it right

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Speaker 1: at the nail and have you say the markets are

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Speaker 1: taking it this way. I don't think it was an

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Speaker 1: about face. The FED has long considered June UH an

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Speaker 1: open possibility, not foreclosed the possibility. The markets foreclosed it

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Speaker 1: a long time ago. Now they've reopened it. Well, but

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Speaker 1: I don't I don't think it's much of a change

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Speaker 1: on the part of the fed. U. Bill Dudley said,

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Speaker 1: if if the data develop as his forecast suggests, then

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Speaker 1: he sees a June move. Do you expect the data

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Speaker 1: to develop along those lines? I do, But I'm a

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Speaker 1: little skeptical about the June move. You know, I think

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Speaker 1: the markets have it maybe roughly right. I think the

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Speaker 1: last time I looked at we're putting like a probability

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Speaker 1: on a June move as opposed to negligible. Yeah, some

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Speaker 1: weeks ago. And the reason I say that, uh, even

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Speaker 1: if the data come in the way Dudley and others

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Speaker 1: are expecting it is you've got the specter of the

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Speaker 1: Brexit vote one week after the f O m C meeting.

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Speaker 1: So I could imagine, I don't know that this will happen,

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Speaker 1: but I can imagine an f o MC meeting with

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Speaker 1: it's kind of a consensus to move up another basis points,

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Speaker 1: but there's a decision. Let's just wait see if the

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Speaker 1: Brexit vote goes badly, and if it does, if that

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Speaker 1: was a financial chaos that talks about actual progress and

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Speaker 1: data dependency the phrase let's just wait. You are the

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Speaker 1: privilege of working with Michael Woodford at Princeton before you

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Speaker 1: escape north to a small college in your city. Vice

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Speaker 1: Chairman Fisher's paper Folks is my mustery to the weekend.

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Speaker 1: It is exquisite a along the monetary theory that Ellen

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Speaker 1: Blinder knows so well to Michael Woodford's iconic book. Within

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Speaker 1: that is the idea that Michael Woodford's theory is still

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Speaker 1: a theory that can be used. Is this fed flying

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Speaker 1: by the seat of its pants? Unlike the Blinder fed

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Speaker 1: of years ago, No, I don't think so. I think

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Speaker 1: when when you think of two of the things, uh,

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Speaker 1: two of the things that we associate with Mike Woodford

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Speaker 1: the most. There are many others and a lot of

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Speaker 1: his very technical, way too technical for radio, even on Bloomberg.

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Speaker 1: We do it on TV but not radio oiler functions.

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Speaker 1: But one of the things he emphasized he didn't originate

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Speaker 1: this idea, but he really emphasized that had made it dominant,

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Speaker 1: help make it dominant, is that what matters for monetary policy,

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Speaker 1: what monetary policy is doing to the economy is the

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Speaker 1: difference between the interest rate and what is variously called

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Speaker 1: the natural radio the neutral rate. Do you hear this

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Speaker 1: all the time and this is become a central part

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Speaker 1: of the FEDS thinking and of the markets thinking about

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Speaker 1: the Fed that where is the interest rate relative to

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Speaker 1: the neutral? Right? This idea is you know, goes back

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Speaker 1: to the nineteenth century to excel. But we went through

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Speaker 1: a long time in the economics profession focusing on the

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Speaker 1: money supply right in the interest rate. But was a

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Speaker 1: principal person bringing the focus back to that. But is

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Speaker 1: the orthodox theory of Blinder and Woodford and for that matter,

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Speaker 1: John Taylor of Stanford still applicable given where negative rates are,

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Speaker 1: and well that it's not for exactly the reason, uh

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Speaker 1: that you said that this theory was never meant to

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Speaker 1: apply to pushing the interest rate down to zero. But

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Speaker 1: let me put an important codssile to that. This is

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Speaker 1: a theory about the real interest rate, so psenomenal interest

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Speaker 1: rate minus the inflation rate. So we've now got that

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Speaker 1: negative not as negative as it needs to be. So

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Speaker 1: you can still think of the basic ideas that in

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Speaker 1: the in the depressed economy, the equilibrium or natural or neutral,

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Speaker 1: whatever name you want to use it, real interest rate

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Speaker 1: was quite negative and we couldn't get it negative enough.

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Speaker 1: That leads to negative interest rates paid by the central bank,

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Speaker 1: which I've advocated for a long time. Um, that's what

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Speaker 1: also leads to suggestions like Paul Krugman made a long

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Speaker 1: time ago about promising to cause inflation in the future,

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Speaker 1: which the Japanese are trying to do. Now. This is

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Speaker 1: all consistent with the kind of Woodford and even also

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Speaker 1: Taylor framework. We have to leave it there. Allen Blinder,

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Speaker 1: thank you so much, most generous you. I don't blind

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Speaker 1: to the former vice chairman of the FED, and with

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Speaker 1: Princeton University. We now turn more most importantly to an

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Speaker 1: imposing physical specimen, big and powerful. That would be David Popadopoulos,

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Speaker 1: a surveillance bookie. You wrote an May about out work.

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Speaker 1: I don't even know if it works running in the

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Speaker 1: Preakness this time run race do what's gonna happen? Well?

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Speaker 1: Race two is gonna for starters. Think they're gonna get

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Speaker 1: a lot of rain, a lot of rain forecasts in

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Speaker 1: the Baltimore area tomorrow, um, which could possibly set up

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Speaker 1: well for a horse that I think has a shot

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Speaker 1: at upsetting Nike wist, Mike McKeith Nyquist. I know Mike

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Speaker 1: McKee is all being on Nike with Exaggerator who is

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Speaker 1: a mud loving fool and and uh I should hopefully

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Speaker 1: they were such a good Yeah, my loving fools was

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Speaker 1: upset in with them. Uh. It is an interesting theory

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Speaker 1: that you write about that Niquist. We don't know how

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Speaker 1: Niquist is going to react to the Mud. And this

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Speaker 1: is a different kind of race because it's gonna be

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Speaker 1: a speed race. You got a lot of uh, fast

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Speaker 1: breaking horses. Although interesting you put a lot of fast

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Speaker 1: breaking horses into the mud, But that's gonna either create

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Speaker 1: some traffic for ni Quist and he's gonna get mundys,

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Speaker 1: or he's gonna have to run out and try to

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Speaker 1: keep up the pace. Yeah, it is a damned if

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Speaker 1: you do, damned if you don't situation. And there are

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Speaker 1: any number of handicappers out there who who really don't

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Speaker 1: make much of this whole notion of what's going to

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Speaker 1: happen when a horse for the first time in his

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Speaker 1: life runs behind other horses. I think they're all fools.

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Speaker 1: I think it's like if you talk to horsemen, it's

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Speaker 1: enormously important. It doesn't come natural to a thoroughbred to

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Speaker 1: run through the storm, the cloud of of dirt and debris. Now,

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Speaker 1: when you're running on a on a wet racetrack behind

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Speaker 1: other horses, it's like the best comparison. It's like driving

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Speaker 1: behind an eighteen wheeler in a downpour, right, and it's

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Speaker 1: just it's very daunting. What what do they have on

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Speaker 1: their hoofs given the mudd, I mean, the mud is

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Speaker 1: not like an inch of mud, it's like four inches.

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Speaker 1: So they'll often they have the plugs on their feet.

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Speaker 1: They're called mud cocks that they'll put on their It's

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Speaker 1: a special kind of shoe that they'll use on a

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Speaker 1: track like this. It's essentially got a pair a teeth

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Speaker 1: on him. As I said, she just need help. So

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Speaker 1: at the end of the race, I mean, guys like

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Speaker 1: you are totally focused on the opening and I get

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Speaker 1: all that when they ring the bell at the end

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Speaker 1: of the race and they go and they come to

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Speaker 1: the fun whatever the stretch so funny. What do you

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Speaker 1: watch for given rain, mud and all that. What's different

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Speaker 1: now versus the derby? Well, I just think in the

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Speaker 1: in the end, it's just, uh, you know who's got

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Speaker 1: who's got enough? You know horse at the end? You

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Speaker 1: know what we were. What really is is a better

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Speaker 1: tell is around the turn and you're watching your jockey

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Speaker 1: and you're trying to figure it out your jockey's got

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Speaker 1: horse or not. And if you've got if you're at

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Speaker 1: a horse already like outwork was in the derby, and

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Speaker 1: I will pay you back that money you lost. I know,

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Speaker 1: Uh it's discovered working, um, but you're just hoping you

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Speaker 1: still have horse at the top of the stretch. And

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Speaker 1: then as kent this Sormo the rider on Exaggerator, once

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Speaker 1: they didn't you ask them for their life down the

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Speaker 1: stretch and you hope it works out. Exaggerator has lost

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Speaker 1: four row to tonight. This is the lost. But here's

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Speaker 1: here's the one here. You say, I have a ni

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Speaker 1: Quist fan, and I probably if I you off I

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Speaker 1: had to put money on it, would put money on it,

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Speaker 1: even though I know the odds are you know, he's

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Speaker 1: also his portfolios and treasury bonds exactly. But no, I

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Speaker 1: I'm intrigued by STRATIVERI this horse has not run in

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Speaker 1: did not run in the Derby, hasn't run at all.

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Speaker 1: I mean it just had three races, but one twice

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Speaker 1: by eleven and a quarter and fourteen. This horse is

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Speaker 1: the goods. I mean, this horse could seriously good and

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Speaker 1: you gotta wonder if maybe there's a surprise, if a surprise,

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Speaker 1: he's he's really good. I just worry he might be

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Speaker 1: to an experience. But he is a seriously good race.

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Speaker 1: Can you give me a fifteen second answer to this.

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Speaker 1: You're gonna bet Exaggerator, and you're also gonna exactly Exaggerator,

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Speaker 1: But why not just box it because if Nike Wist wins,

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Speaker 1: you can still collect some cash because there's just no vobt.

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Speaker 1: I I'm not gonna play. I can't encourage that price

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Speaker 1: that the odds on night wish us, but at least

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Speaker 1: if come up with it. Now you you play that exaggerator.

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Speaker 1: I have no idea what you're talking about. This is

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Speaker 1: like Michael So you brought the Greek and to speak Greek.

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Speaker 1: This is like Michael Woodford's oiler functions. David Papadopolas, thank

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Speaker 1: you so much, the preetness. When is it Saturday? Sunday?

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Speaker 1: Saturday Saturday, Thank you, David. It's been a wonderful week

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Speaker 1: thanks to our team. We greatly appreciate what a bunch

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Speaker 1: of interesting guests today. We are produced at Least Till

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Speaker 1: the preeknes Is by Hyu n ken Felio under