WEBVTT - Debt Ceiling, DHL, TikTok, Commodities, and Ukraine (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.280 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 moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.960 --> 0:00:24.200 All right, let's check in on this federal reserve. You know, 0:00:24.640 --> 0:00:26.320 I mean I hate to talk to Arad Jersey because 0:00:26.320 --> 0:00:28.680 then he just want to talk soccer, soccer, soccer. You 0:00:28.680 --> 0:00:30.920 want to talk to Manchester United. You know, they just 0:00:30.960 --> 0:00:33.160 won the Premiership, but we're going to try to focus 0:00:33.240 --> 0:00:35.960 them back a little bit on rates here. So I 0:00:36.000 --> 0:00:39.400 we're getting a lot of ego data this week. I 0:00:39.400 --> 0:00:41.760 don't know how you're feeling about the debt ceiling. Let's 0:00:41.800 --> 0:00:45.040 assume it kind of gets done with that backdrop, How 0:00:45.080 --> 0:00:47.320 do you think your your feederal reserve is feeling these days? 0:00:47.640 --> 0:00:50.240 Well, first, let's before you get a lot of angry 0:00:50.280 --> 0:00:52.600 tweets and emails. If it's Manchester City. 0:00:52.320 --> 0:00:54.320 The Manchester City, okay, thank you. 0:00:54.360 --> 0:00:57.760 Manchester United is fighting for a Champions League place right now? 0:00:57.960 --> 0:01:01.040 Okay, But you're not a fan of either Manchester. 0:01:00.720 --> 0:01:03.840 Team, right, So my son is actually a very big 0:01:03.960 --> 0:01:06.880 United supporter, but yeah, I'm not a fan of city 0:01:07.000 --> 0:01:08.080 at all. 0:01:08.720 --> 0:01:09.320 And what's your team? 0:01:09.319 --> 0:01:11.000 By the way, aston Villa? 0:01:11.920 --> 0:01:13.840 Why would it be aston Villa? Where'd you pick that 0:01:13.880 --> 0:01:14.240 one up? 0:01:14.400 --> 0:01:17.160 I I when I did a postgraduate degree at the 0:01:17.240 --> 0:01:20.199 University of Birmingham, which is very close to aston Villa. 0:01:20.240 --> 0:01:21.759 So a bunch of Villa matches. 0:01:21.800 --> 0:01:23.560 All right, there you go. Everybody's got to see. 0:01:24.160 --> 0:01:27.319 Yeah, so let's assume that the dead ceiling gets raised, 0:01:27.360 --> 0:01:29.840 because they probably will raise it, and if they don't, 0:01:29.959 --> 0:01:33.360 there's so many disaster scenarios that could potentially come around 0:01:33.400 --> 0:01:35.160 that that, you know, we'd rather not kind of think 0:01:35.160 --> 0:01:37.600 about it at the moment. It's we've spent way too 0:01:37.680 --> 0:01:40.600 much gray matter on thinking about it. I think that 0:01:41.080 --> 0:01:43.360 you know that the Federal Reserve is contending with kind 0:01:43.360 --> 0:01:45.600 of two competing forces at the moment. So one is 0:01:46.040 --> 0:01:48.320 inflation coming down as quickly as they want. You know, 0:01:48.800 --> 0:01:52.520 some of the data that we've seen, the the jobs 0:01:52.560 --> 0:01:55.000 data continues to deteriorate a little bit, but we're still 0:01:55.040 --> 0:01:57.559 creating a lot of jobs and there's still very tight 0:01:57.640 --> 0:02:00.560 labor markets. But then on the other side, you know 0:02:00.600 --> 0:02:02.240 that I think the FED will be a little bit 0:02:02.280 --> 0:02:04.800 reluctant to hike because they're worried about what might happen 0:02:04.880 --> 0:02:08.000 to some of the banking sectors. Right, so we obviously 0:02:08.600 --> 0:02:11.440 all know what happened back in March, and I don't 0:02:11.480 --> 0:02:14.040 think that the FED Reserve wants to be the impetus 0:02:14.080 --> 0:02:17.720 for additional bank failures and bank runs, especially since they've 0:02:17.720 --> 0:02:20.760 already raised interest rates five hundred basis points. So our 0:02:20.800 --> 0:02:22.840 base case remains that the Fed is going to be 0:02:22.880 --> 0:02:26.480 on hold that they might job try to talk the 0:02:26.560 --> 0:02:30.880 market out of pricing for interest rate cuts later this year. 0:02:31.600 --> 0:02:34.280 But I think that that the bulk of the Committee 0:02:34.320 --> 0:02:36.360 is not going to agree with James Bullard saying that 0:02:36.400 --> 0:02:38.799 we're going to hike interest rates another twenty five or 0:02:38.840 --> 0:02:41.840 fifty basis points. I think that most people on the 0:02:41.840 --> 0:02:43.680 Committee want to take a little bit of a wait 0:02:43.720 --> 0:02:44.760 and see attitude from now. 0:02:45.080 --> 0:02:47.800 Hey, Ira, I'm looking at the four week Treasury bills 0:02:47.800 --> 0:02:50.280 and how they're hovering around five point four percent, So 0:02:50.320 --> 0:02:52.800 that would basically bring their rise since the beginning of 0:02:52.840 --> 0:02:55.400 May to more than sixty basis points. I'm wondering what 0:02:55.480 --> 0:02:58.359 kind of movement are you expecting to see Indy bond 0:02:58.400 --> 0:03:02.440 market on which hopefully be a potential deal soon here. 0:03:03.080 --> 0:03:05.239 Yeah, so I think that some of those bills that 0:03:05.280 --> 0:03:08.880 are trading super cheap right now will we'll come back 0:03:08.919 --> 0:03:14.200 into line with kind of the market expectation. So the 0:03:14.280 --> 0:03:17.040 thing to look at for, you know, the real market 0:03:17.080 --> 0:03:19.440 expectations for what the Fed is going to do in June, 0:03:19.520 --> 0:03:21.720 would be looking at the overnight interest rate swap market. 0:03:21.800 --> 0:03:24.920 So these are short term derivative instruments that are based 0:03:24.960 --> 0:03:28.320 on the Federal Funds effective rate. So so that that 0:03:28.360 --> 0:03:31.080 will be a much better gauge than looking at treasury bills, 0:03:31.120 --> 0:03:34.040 because treasury bills right now, even the one month treasury bills, 0:03:34.040 --> 0:03:36.560 are being very skewed by the debt ceiling ancs that 0:03:36.600 --> 0:03:40.080 are that are going on. So we are pricing some 0:03:40.160 --> 0:03:43.600 probability of an interest rate hike by the Fed at 0:03:43.640 --> 0:03:45.720 the June meeting. And when we look at these overnight 0:03:45.720 --> 0:03:50.680 index swaps for the next Fed meeting, what we wind 0:03:50.720 --> 0:03:53.800 up seeing is that we are pricing for you know, 0:03:53.880 --> 0:03:56.560 more or less a thirty thirty five percent chance that 0:03:56.640 --> 0:04:00.640 the Federal Reserve does another twenty five basis point interest increase. Now, 0:04:00.640 --> 0:04:02.240 I think as we get closer to that and as 0:04:02.280 --> 0:04:05.400 we get more data. Uh So, we get the pc 0:04:05.720 --> 0:04:09.160 data this week for the month of April, and that's 0:04:09.280 --> 0:04:12.280 that's the measure that that the Federal Reserve really likes 0:04:12.320 --> 0:04:16.760 and is their preferred gauge of inflation. You know, if 0:04:16.760 --> 0:04:18.640 that comes out as expected, then I think that you 0:04:18.720 --> 0:04:23.359 wind up probably with the with uh that price that 0:04:23.520 --> 0:04:26.640 pike being priced out of the market at least at 0:04:26.720 --> 0:04:28.719 least in the near term until we get the CPI report, 0:04:28.760 --> 0:04:32.360 which we get very soon before the June meeting. 0:04:32.720 --> 0:04:36.479 So again you mentioned on a Friday, get the PCE data, 0:04:36.560 --> 0:04:39.200 and as you mentioned, the core deflator, which is kind 0:04:39.200 --> 0:04:42.839 of the preferred metric for the Fed month on month 0:04:42.880 --> 0:04:45.320 of consensus is zero point three percent. That's even with 0:04:45.480 --> 0:04:49.080 last month. On an annualized basis, that's four point six percent, 0:04:49.200 --> 0:04:52.760 even with with last month. Those numbers just that I 0:04:52.839 --> 0:04:56.599 just quoted, they feel sticky to me, number one, and 0:04:57.200 --> 0:04:59.080 but number two, I guess that four point six is 0:04:59.080 --> 0:05:01.520 that the number they want to see Closer to two percent? 0:05:02.560 --> 0:05:05.680 Yeah, it is, and it's not getting there very quickly, 0:05:05.760 --> 0:05:08.080 which is the reason why I think that the the 0:05:08.760 --> 0:05:12.239 you know, J. Powell mentioned this even in his little 0:05:12.279 --> 0:05:14.680 round table discussion last week when he was on with 0:05:14.800 --> 0:05:19.600 former chair Ben Bernanki that the Federal Reserve is not 0:05:19.640 --> 0:05:24.039 going to be cutting interest rates anytime soon, and especially 0:05:24.040 --> 0:05:26.560 when you continue to get kind of zero point three 0:05:26.600 --> 0:05:31.960 percent core core deflator or headline deflator measures. So think 0:05:32.000 --> 0:05:34.359 about what zero point three is, Paul, because if you 0:05:34.440 --> 0:05:37.960 annualize that, then you're talking about three point nine percent inflation. 0:05:38.080 --> 0:05:38.240 Right. 0:05:38.279 --> 0:05:40.960 It's a pretty simple calculation, right, or three point six 0:05:41.000 --> 0:05:43.440 Excuse me, I can't do math today. Three point six 0:05:43.480 --> 0:05:46.039 percent inflation, and three point six percent is still well 0:05:46.080 --> 0:05:50.320 above the Fed's two percent measure. You know, I think 0:05:50.360 --> 0:05:52.480 the Feds kind of box themselves into a corner a 0:05:52.520 --> 0:05:55.719 little bit because focusing in on two percent, we want 0:05:55.720 --> 0:05:58.000 to get inflation back to two percent. Paul. You and 0:05:58.120 --> 0:06:00.159 I grew up in this industry back and then in 0:06:00.200 --> 0:06:02.800 the eighties and nineties when we had inflation that was 0:06:02.839 --> 0:06:05.920 above three percent, but wages were growing above three percent, 0:06:05.960 --> 0:06:09.800 and no one was you know, consumer confidence was reasonably good. 0:06:09.839 --> 0:06:13.720 People weren't unhappy about their employment situation because jobs were 0:06:13.720 --> 0:06:16.839 reasonably plentiful and people were getting four percent pay raises 0:06:16.880 --> 0:06:19.960 every year when inflation was three percent, so that wasn't 0:06:20.000 --> 0:06:22.080 the worst thing in the world. And I think if 0:06:22.120 --> 0:06:24.200 we fall back into an environment like that, it's going 0:06:24.279 --> 0:06:26.400 to be difficult at this point for the FED to 0:06:26.440 --> 0:06:30.159 pivot back to saying, well, maybe three percents not so 0:06:30.240 --> 0:06:33.840 bad for inflation, right. And I think that that's the 0:06:34.320 --> 0:06:37.719 challenge with having these inflation targets, like a lot of 0:06:37.720 --> 0:06:40.360 central banks have, is that moving away from them ends 0:06:40.440 --> 0:06:43.200 up being disrupted to the markets and confusing from a 0:06:43.480 --> 0:06:44.719 communications perspective. 0:06:44.760 --> 0:06:47.160 And Ira, you're bringing up the CPI report, I was 0:06:47.200 --> 0:06:49.800 looking at the schedule. It's actually coming out on June thirteenth, 0:06:49.839 --> 0:06:52.480 so that would be day one of the fed's next meeting, 0:06:52.480 --> 0:06:55.600 and the decision is on June fourteenth. I was curious 0:06:55.640 --> 0:06:58.520 what we do hear from Obviously, as you know, tons 0:06:58.520 --> 0:07:00.440 of Feds speak this week. We just heard from James 0:07:00.440 --> 0:07:03.040 Bullard yesterday talking about trying to get in potentially two 0:07:03.080 --> 0:07:05.839 more rate hikes because of the labor market being strong. 0:07:06.080 --> 0:07:08.360 How much whenever we do have FED speak like that, 0:07:08.400 --> 0:07:10.680 do you see those types of potential changes there in 0:07:10.720 --> 0:07:13.400 the bond market or even just pricing in those expectations 0:07:13.440 --> 0:07:16.480 for potentially another rate cut or rate rise rather at 0:07:16.480 --> 0:07:17.160 the next meeting. 0:07:17.640 --> 0:07:17.840 Yeah. 0:07:17.880 --> 0:07:19.440 Well, I think that's one reason why you saw two 0:07:19.480 --> 0:07:22.200 year yields move, and you certainly saw the overnight index 0:07:22.240 --> 0:07:24.160 swop market and some of the derivatives market move a 0:07:24.200 --> 0:07:28.840 little bit after after President Bullard spoke yesterday. You'll still 0:07:28.880 --> 0:07:33.080 see volatility around that. And one people have focused very 0:07:33.120 --> 0:07:36.280 much on James Bullard's cycle in particular because he was 0:07:36.320 --> 0:07:39.320 pretty early in being one of the more hawkish members 0:07:39.400 --> 0:07:43.120 that that basically, you know, was kind of the southsayer 0:07:43.360 --> 0:07:49.800 for for the FED hiking and inflation remaining high and sticky. 0:07:49.920 --> 0:07:52.160 You know, I'm not sure that his colleagues on the 0:07:52.160 --> 0:07:54.960 FED agree with him. So, you know, as we hear 0:07:55.320 --> 0:07:58.200 from other speakers, you know, maybe we you know, hear 0:07:58.240 --> 0:08:00.520 from a couple of governors for example, this week, and 0:08:00.600 --> 0:08:03.040 if they're they found a little bit more dubbish than Billard, 0:08:03.240 --> 0:08:05.440 then maybe we'll, you know, that will be the impetus 0:08:05.480 --> 0:08:07.640 for us to take some of those hikes out of 0:08:07.640 --> 0:08:08.080 the market. 0:08:08.120 --> 0:08:10.400 All right, Ira, thanks so much for joining us. As always, 0:08:10.640 --> 0:08:14.280 Ira Jersey, chief US interest rate strategists for Bloomberg Intelligence. 0:08:14.320 --> 0:08:18.080 He's also the resident Aston Villa uber fan, so we 0:08:18.120 --> 0:08:21.240 appreciate getting some of his thoughts again fed front and 0:08:21.280 --> 0:08:22.680 center as usual. 0:08:24.120 --> 0:08:27.520 You're listening to the team Ken's are Live program Bloomberg 0:08:27.600 --> 0:08:31.000 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:08:31.040 --> 0:08:34.160 the iHeartRadio app and the Bloomberg Business App, or listen 0:08:34.240 --> 0:08:36.360 on demand wherever you get your podcasts. 0:08:38.520 --> 0:08:41.640 Jess, we are so fortunate. I think here at Bloomberg 0:08:41.640 --> 0:08:46.560 we've got, you know, seventeen hundred reporters and bi analysts 0:08:46.559 --> 0:08:49.040 around the world that are experts at what they do, 0:08:49.760 --> 0:08:52.360 and for the most part, they're very friendly. And if 0:08:52.400 --> 0:08:53.800 you call them up and say, hey, can you help 0:08:53.880 --> 0:08:56.319 us out on Bloomberg Radio, more times than not they 0:08:56.400 --> 0:08:58.160 say yes. And that is just a treat for us 0:08:58.200 --> 0:09:01.000 and for our audience. And boy, this round table takes 0:09:01.000 --> 0:09:03.000 the cake because we want to talk about this debt ceiling. 0:09:03.000 --> 0:09:04.920 I'm going to call a dilemma. I don't know what's 0:09:04.920 --> 0:09:06.600 going on at there. I assume it's going to get them, 0:09:06.640 --> 0:09:08.560 but what do I know. But a couple of our 0:09:08.600 --> 0:09:10.520 guests are really smart and they can help us shine 0:09:10.559 --> 0:09:13.280 some light on it. Liz McCormick, Chief correspondent for Global 0:09:13.320 --> 0:09:16.040 Macro markets with Bloomberg News. She joins us as well 0:09:16.040 --> 0:09:19.360 as Cameron Christ macro strategists with Bloomberg News as well. 0:09:19.400 --> 0:09:21.439 So we get a couple smart minds here. They've got 0:09:21.440 --> 0:09:23.680 some experience, they've got some perspective. Liz, let's start with 0:09:23.720 --> 0:09:26.720 you. You know, I'm just an equity guy, and I don't 0:09:26.720 --> 0:09:29.480 see I got my equity indexes up this year. It 0:09:29.480 --> 0:09:31.840 doesn't seem like the equity market's too worried about it. 0:09:31.840 --> 0:09:33.679 If I were to look deeply in the bond market 0:09:33.679 --> 0:09:36.040 when I see some tension, some growing tension in the 0:09:36.080 --> 0:09:39.640 bond market about a potential debt issue. 0:09:40.600 --> 0:09:44.120 Yeah, exactly. There's like two worlds going on. So it 0:09:44.160 --> 0:09:47.800 seems right between stocks and the fixed income market. But yeah, 0:09:47.800 --> 0:09:50.080 and that's kind of the fixed income market's job front 0:09:50.080 --> 0:09:52.560 and center early on to do a read on this 0:09:52.600 --> 0:09:55.880 debt ceiling issue, and you're seeing it. You're seeing treasury 0:09:55.880 --> 0:09:59.080 bills that mature around now. Janet Yelling was out I 0:09:59.080 --> 0:10:02.120 believe it was yesterday, just yesterday, with a new letter 0:10:02.200 --> 0:10:05.160 to Congress saying she thinks there's a lot of risk 0:10:05.240 --> 0:10:07.400 they could run out of capacity to pay all the 0:10:07.400 --> 0:10:10.400 bills as early as June one, she's you know, that's 0:10:10.480 --> 0:10:13.920 highly likely. So the treasury market, there's you know, kind 0:10:13.960 --> 0:10:17.880 of a buffer range maybe through early June. Treasury investors 0:10:17.880 --> 0:10:20.760 are kind of weary of buying treasury bills that mature 0:10:20.800 --> 0:10:23.120 around that time. So you're seeing those bills with very 0:10:23.160 --> 0:10:27.120 high rates, well over five percent, and those rates are 0:10:27.160 --> 0:10:30.000 higher than those with longer maturities, which usually have a 0:10:30.080 --> 0:10:33.400 higher rate. So people are avoiding that. You're seeing credit 0:10:33.440 --> 0:10:37.000 to caul swamps, their costs go up as people buy 0:10:37.040 --> 0:10:40.600 some insurance, and just a level of angst in the marketplace. 0:10:40.640 --> 0:10:42.160 But yeah, I mean the stock market. There's a lot 0:10:42.200 --> 0:10:44.760 of people say until the stock market really kind of 0:10:45.080 --> 0:10:48.160 takes it hard, maybe politicians won't, you know, step off 0:10:48.200 --> 0:10:50.800 the face of getting a deal. But that's another topic. 0:10:50.880 --> 0:10:53.199 I guess, you know, Cameron, I wanted to bring you 0:10:53.280 --> 0:10:56.640 to this conversation. Who we call Macroman at Bloomberg so 0:10:56.720 --> 0:10:58.560 is so exciting. I know, you just put out a 0:10:58.600 --> 0:11:01.600 column that the head line is where the yield curve 0:11:01.760 --> 0:11:05.079 thinks the neutral rate may be. What do you find here? 0:11:07.440 --> 0:11:11.559 Yeah, I mean, unsurprisingly it's lower than where we are. 0:11:12.360 --> 0:11:15.160 I mean, listen, taking a step back, the whole idea 0:11:15.400 --> 0:11:19.760 of neutrality is like an economist dream because they get 0:11:19.800 --> 0:11:26.600 to make very complicated models with lots of Greek letters. 0:11:26.720 --> 0:11:30.199 But what we also find is that they tend to 0:11:30.240 --> 0:11:33.480 be revised a lot, and they're not necessarily terribly accurate. 0:11:33.640 --> 0:11:36.800 So my approach was just, well, let's just look at 0:11:36.840 --> 0:11:39.120 what the old curve says, because we know that when 0:11:39.120 --> 0:11:41.360 the yield curve is very steep, it's basically saying that 0:11:41.440 --> 0:11:43.800 rates are easy, and when the yeld curve is very inverted, 0:11:44.120 --> 0:11:47.560 it's saying that rates are restrictive, and obviously the curve 0:11:47.640 --> 0:11:50.439 is very restrictive. The curve is very inverted at the moment, 0:11:50.760 --> 0:11:54.480 saying that rates are restrictive, and the best I can 0:11:54.520 --> 0:11:56.720 tease out, it's saying that in the US at least, 0:11:56.720 --> 0:11:59.319 the neutral level of rates is about three point six 0:11:59.360 --> 0:11:59.959 percent at the moment. 0:12:01.080 --> 0:12:05.120 So Cameron, for your perspective, I don't know, are you 0:12:05.200 --> 0:12:07.679 gaming out at all yet? Have you pre written a 0:12:07.679 --> 0:12:10.600 column about we just defaulted on our debt? I mean, 0:12:10.760 --> 0:12:11.800 how are you thinking about it? 0:12:12.160 --> 0:12:12.240 No? 0:12:12.480 --> 0:12:14.559 I haven't because I hope it doesn't come to that. 0:12:14.760 --> 0:12:16.920 I mean, I mean honest with you, I feel like 0:12:17.320 --> 0:12:19.439 I'm at the circus just watching a bunch of clowns. 0:12:20.080 --> 0:12:21.960 I wish I had a bag of peanuts I could throw, 0:12:22.080 --> 0:12:24.880 you know, I could throw at them. I think the 0:12:24.960 --> 0:12:29.880 assumption is pretty prevalent in the market that when push 0:12:29.920 --> 0:12:34.400 comes to shove, nobody wants their name on a default, 0:12:34.960 --> 0:12:37.199 and that they at the very least they will come 0:12:37.240 --> 0:12:39.600 to some agreement to kick the can down the road 0:12:40.640 --> 0:12:46.040 a few months to allow for more robust negotiations. I 0:12:46.120 --> 0:12:49.559 suspect that the Republicans would like the issue to become 0:12:49.640 --> 0:12:54.000 front and center again early next year with the presidential campaign, 0:12:54.920 --> 0:12:58.480 and I'm equally sure that the White House would prefer 0:12:58.559 --> 0:13:02.240 that not to be the case. So there's still you know, 0:13:02.320 --> 0:13:07.800 there's still some political considerations there. But you know, nobody 0:13:07.840 --> 0:13:12.040 comes out with their reputation enhanced by a government default, 0:13:12.080 --> 0:13:14.240 and I think we have to operate on the on 0:13:14.280 --> 0:13:16.240 the notion, at the end of the day, the sole goal, 0:13:16.480 --> 0:13:18.280 or the primary goal of every politician is to be 0:13:18.320 --> 0:13:18.840 re elected. 0:13:19.440 --> 0:13:21.160 Liz, I know you've been looking at how the US 0:13:21.280 --> 0:13:24.480 Treasury thirty year yield hit four percent for the first 0:13:24.480 --> 0:13:27.440 time since March. Whenever you're speaking with your sources, what 0:13:27.480 --> 0:13:30.400 are they thinking as far as what we could see 0:13:30.559 --> 0:13:33.920 happen in the bond market once there hopefully would be 0:13:34.000 --> 0:13:35.400 a deal coming soon. 0:13:37.000 --> 0:13:38.880 Well, I think if there's a deal, and I think 0:13:38.960 --> 0:13:41.160 Cameron is right, there's a lot of us who are like, 0:13:41.240 --> 0:13:43.560 can we turn this movie off? We've seen it before, 0:13:43.640 --> 0:13:46.240 can we just get it, get the deal. We're tired 0:13:46.320 --> 0:13:48.680 of it. Don't tell my boss that now. I'm just kidding, 0:13:49.240 --> 0:13:54.040 but I think, yeah, I think if we get a deal, 0:13:54.280 --> 0:13:57.560 the bond market reverts its focus, which hasn't forgotten, but 0:13:57.640 --> 0:14:01.280 it's all about the economy and the and like you 0:14:01.320 --> 0:14:04.480 guys were talking earlier with IRA, we did have some 0:14:04.520 --> 0:14:08.280 hawker speakers yesterday that doesn't seem to jive with what 0:14:08.600 --> 0:14:11.080 Chairman Palell said, who kind of seemed to lay the 0:14:11.120 --> 0:14:14.600 case for a pause in June. So I think, you know, 0:14:14.760 --> 0:14:17.280 whereas maybe the stocks, even though they haven't gotten beaten 0:14:17.360 --> 0:14:19.720 up too much, there's folks that say they see immediate 0:14:19.760 --> 0:14:22.320 relief rally if there's a dead ceiling deal, I think 0:14:22.360 --> 0:14:25.120 bond yields can creep higher because there has been no 0:14:25.280 --> 0:14:27.880 kind of indications. In fact, some of the easing that 0:14:28.040 --> 0:14:30.080 was priced in the second half of the year from 0:14:30.160 --> 0:14:32.880 the swats traders has kind of paired back a little. 0:14:33.320 --> 0:14:35.680 So I think the market needs to see some you know, 0:14:35.760 --> 0:14:39.640 strong information signaling a recession is really coming soon, or 0:14:39.680 --> 0:14:43.440 that the Fed is not only ready to for sure pause, 0:14:43.520 --> 0:14:46.640 but pivot, which they clearly have not indicated. There's a 0:14:46.680 --> 0:14:48.680 lot of people who think there could be some move 0:14:48.800 --> 0:14:51.120 higher in rates. So, like you said, Jess, we saw 0:14:51.160 --> 0:14:54.760 the thirty year ago about four percent. The whole curve 0:14:54.880 --> 0:14:57.440 is have greats higher today, with the short end even 0:14:57.520 --> 0:14:59.920 higher than the long end. So I think, yeah, that's 0:15:00.040 --> 0:15:03.080 kind of filtering back into the system. What happens next? 0:15:04.040 --> 0:15:04.320 Right? 0:15:04.400 --> 0:15:06.880 So, Lis you mentioned earlier credit default swaps, and I 0:15:06.880 --> 0:15:09.760 think all of us, you know, learned a lot about 0:15:09.800 --> 0:15:12.080 credit the fault swaps back in a great financial crisis 0:15:12.080 --> 0:15:14.400 when we're looking at all these banks and all that. 0:15:15.400 --> 0:15:17.280 So you're telling us there are credit default swaps on 0:15:17.320 --> 0:15:19.720 the US government, and if so, what are they telling 0:15:19.760 --> 0:15:20.200 us today? 0:15:21.680 --> 0:15:24.880 Yeah, it's it's kind of crazy, right, And let's just 0:15:24.880 --> 0:15:27.640 say which I know Cameron would I would think agree 0:15:27.680 --> 0:15:30.880 with me. It's a very thinly traded market. There's always 0:15:30.920 --> 0:15:33.280 kind of a lot of people who are suspect. Let's 0:15:33.280 --> 0:15:35.760 not read too much into this because you know, it's 0:15:35.800 --> 0:15:39.240 not a huge market, but the cost to buy them 0:15:39.320 --> 0:15:42.000 has gone up the very short maturities like a year, 0:15:42.720 --> 0:15:45.560 which at least shows you some broad signal that there, 0:15:45.720 --> 0:15:47.880 you know, people are a little bit worried or doing 0:15:47.920 --> 0:15:50.960 some hedging that there could be a default. But by 0:15:51.000 --> 0:15:53.760 all means that it's a more actively traded market and 0:15:53.840 --> 0:15:59.240 emerging markets where unfortunately defaults have in some countries been commonplace. 0:15:59.400 --> 0:16:01.640 But yeah, I mean it's definitely something we look at. 0:16:01.640 --> 0:16:03.840 If you look at Alex Harrison nineteen, who does this 0:16:03.920 --> 0:16:07.400 great little debt ceiling tracker, you know she has that 0:16:07.480 --> 0:16:09.680 in there. It's just important to kind of keep on 0:16:09.720 --> 0:16:11.560 your radar screen of what's going on. 0:16:11.720 --> 0:16:14.920 Yeah, Cameron, I know you've been keeping a close eye 0:16:14.960 --> 0:16:19.840 on real yields. What are they telling us right now, Well. 0:16:19.880 --> 0:16:25.240 They're telling us that that if you are long gold, 0:16:25.360 --> 0:16:27.360 or if you are long stocks, maybe you want to 0:16:27.360 --> 0:16:29.720 be a little worried because they've been they've been taking 0:16:29.800 --> 0:16:32.920 higher two. Your real yields are basically at their highs 0:16:32.960 --> 0:16:36.880 of the entire cycles. So this sort of rebound in 0:16:36.880 --> 0:16:40.040 interest rates that we've seen over the last couple of 0:16:41.040 --> 0:16:43.960 weeks has not been the market pricing and more inflation 0:16:44.080 --> 0:16:47.840 moving forward, essentially the market pricing and tighter policy settings 0:16:48.080 --> 0:16:52.320 or tighter effective policy settings moving forward. And that is 0:16:52.600 --> 0:16:57.520 not a particularly positive one for assets that are dependent 0:16:57.640 --> 0:17:01.960 on kind of free money or the ample liquidity and 0:17:02.360 --> 0:17:04.800 there we were thinking of gold, or we're thinking of 0:17:04.880 --> 0:17:09.440 the sort of infinite maturity or infinite durationtech dot complex. 0:17:09.480 --> 0:17:10.680 It has done so well this year. 0:17:11.200 --> 0:17:13.760 Hey, Keim, just about thirty seconds here. Are you surprised 0:17:13.880 --> 0:17:16.760 that the nasdak's up twenty one percent, the NASDAK one 0:17:16.800 --> 0:17:20.560 hunters up twenty six percent, the SMP's up nine percent? 0:17:20.600 --> 0:17:22.520 You're surprised that these moves in the equity. 0:17:22.119 --> 0:17:26.159 Markets over the course of the year. Yeah, I mean, yes, 0:17:26.440 --> 0:17:26.800 very much. 0:17:26.840 --> 0:17:26.919 So. 0:17:27.359 --> 0:17:30.120 I mean, to some extent, you can sort of post 0:17:30.160 --> 0:17:33.320 hawk explain it via the move in interest rates, but 0:17:33.680 --> 0:17:37.240 it looks to me a lot like equity investors trying 0:17:37.280 --> 0:17:39.800 to convince themselves that they get all the benefit of 0:17:39.840 --> 0:17:42.720 low rates without any of the pain that causes the 0:17:42.760 --> 0:17:43.240 said to. 0:17:43.160 --> 0:17:45.919 Cut All right, guys, really appreciate getting some time from 0:17:45.960 --> 0:17:49.280 both of you. Cameron christ Macro Strategists, Bloomberg News End. 0:17:49.320 --> 0:17:53.200 Liz McCormick, chief correspondent covering the global macro markets. Two 0:17:53.280 --> 0:17:57.879 seasoned reporters and observers of these markets, and they are 0:17:57.880 --> 0:18:00.800 both graduates. So two of my favorite institutes of higher learning. 0:18:01.080 --> 0:18:05.000 Liz McCormick of the Rutgers University, the State University of 0:18:05.040 --> 0:18:08.000 New Jersey, and Camera Christ, a little school down in Durmoruth, 0:18:08.000 --> 0:18:09.399 Carolina known as Duke. 0:18:09.760 --> 0:18:12.840 You're listening to the tape Kent's are live program Bloomberg 0:18:12.960 --> 0:18:16.560 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:18:16.600 --> 0:18:19.840 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:18:19.880 --> 0:18:22.679 You can also listen live on Amazon Alexa from our 0:18:22.720 --> 0:18:27.840 flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 0:18:28.400 --> 0:18:31.320 All right, let's talk delivering stuff boxes. Now when you 0:18:31.359 --> 0:18:33.000 get home tonight, just how many boxes are gonna be 0:18:33.040 --> 0:18:34.680 in front of your door? Probably? 0:18:34.800 --> 0:18:37.320 I mean, my birthday was last week, so I have 0:18:37.359 --> 0:18:37.640 a lot. 0:18:37.560 --> 0:18:40.600 Of people been sending me some things, so I hope 0:18:40.720 --> 0:18:42.600 that there are more boxes waiting for me. 0:18:42.640 --> 0:18:45.360 You get, It's just it's unbelievable how the world's changed here. 0:18:45.400 --> 0:18:47.280 So let's break it all down with Mike Para. He's 0:18:47.280 --> 0:18:50.359 the CEO for the Americas at DHL Express joining us 0:18:50.400 --> 0:18:53.160 live here in our Bloomberg Interactive Broker studio. So, Mike, 0:18:53.240 --> 0:18:55.240 thanks so much for joining us here. Appreciate you coming. 0:18:55.280 --> 0:18:57.080 And you got a whole bunch of notes with you, 0:18:57.119 --> 0:18:59.160 but this is a note free studio. See, I got nothing. 0:18:59.280 --> 0:19:02.320 I just kind of for four of it talk to 0:19:02.400 --> 0:19:05.080 us about your business here. I'm gonna ask you to 0:19:05.119 --> 0:19:07.439 go back and tell us, you know, a minute or 0:19:07.440 --> 0:19:09.359 so what the pandemic was like for you guys, and 0:19:09.400 --> 0:19:10.879 then we'll go to kind of where you are today. 0:19:11.280 --> 0:19:13.199 Yeah, So, first of all, thank you for having me 0:19:13.280 --> 0:19:15.639 and thank you for having us. You know, the pandemic 0:19:15.680 --> 0:19:18.960 for us was a blessing and obviously it was a curse. 0:19:19.000 --> 0:19:21.879 First of all, on the curse side, we lost forty 0:19:21.920 --> 0:19:24.600 two employees here in the Americas, and that was the 0:19:24.640 --> 0:19:27.159 curse side. That was the difficult side for us. The 0:19:27.200 --> 0:19:30.520 blessing side of it was that workers absolutely. 0:19:30.600 --> 0:19:31.280 Yeah. 0:19:31.280 --> 0:19:35.399