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Speaker 1: Charlie Pellott, the DAL, the SMP, NEZ stack all moving
Speaker 1: Laura as a decline in trading revenue at JP Morgan
Speaker 1: Chase sends bank shares Laura. JP Morgan Chase shares. They're
Speaker 1: now down by two and a half percent. SMP five
Speaker 1: hundred Index down six to twenty four oh six, a
Speaker 1: drop of three tenths of one percent. The Dow is
Speaker 1: down fifty three, also a drop of three tenths of
Speaker 1: one percent, while nestank is down twenty seven a drop
Speaker 1: of point four percent. The Tenure up three thirty second,
Speaker 1: Zeal there two point two percent, Gold up six ninety
Speaker 1: the Ounce to twelve sixty nine. That's a gain of
Speaker 1: six tenths of one percent, and West Texas Intermedia Crew
Speaker 1: down two point six percent to forty eight dollars thirty
Speaker 1: four cents of arrow. I'm Charlie Pellott, and that's a
Speaker 1: Bloomberg business flash. Thank you very much. Charlie Pellet. You're
Speaker 1: listen to Bloomberg Markets, Bloomergradio and in the basebook little
Speaker 1: seller instead of a page, Scott Brown is gonna help
Speaker 1: us figure out what's in the bag book. They're learning
Speaker 1: about the economy with this from Ford today. Scott Brown is,
Speaker 1: of course the chief economist at Raymond, James and Joins
Speaker 1: is right now from Florida, presumably Sonny, Florida through Sat
Speaker 1: penn ad place to be. Um Uh, Scott, what do
Speaker 1: you see when you look at his Facebook? Anything uh
Speaker 1: jump out surprising you? Nothing really surprising, very similar to
Speaker 1: the previous one. Growth still generally described as modest to moderate.
Speaker 1: Labor markets getting tighter, that's the key driver for FED policy.
Speaker 1: Um Inflation pressure is not really there. That still give
Speaker 1: them plenty of time to raise rates. They don't have
Speaker 1: to be in any rush. So I think it's all
Speaker 1: consistent with another move in in June. We still have
Speaker 1: a little bit more data. I ask them manufacturing tomorrow
Speaker 1: and then the May employment bers on Friday, but that's
Speaker 1: very unlikely I think to really turn over the apple
Speaker 1: cart ahead of the mid June policy meeting. Hey, Scott.
Speaker 1: The conversation this week among fed UH speakers has seemed
Speaker 1: to gravitate towards inflation very much talking about UH price indexes.
Speaker 1: So what do we need to be in tune to
Speaker 1: going into our June meeting here as it regards as
Speaker 1: it pertains to inflation, We're gonna get anything here, uh
Speaker 1: as far as UH clarity for that picture, because that
Speaker 1: seems like it's definitely in the focus. Well, uh, you know,
Speaker 1: the numbers are are generally you know, choppy a bit
Speaker 1: in the first part of the month. A lot of
Speaker 1: firms will try to raise prices at the beginning of
Speaker 1: the year and see if they stick. You've had a
Speaker 1: lot of talk about a reflation trade, you know, following
Speaker 1: the election and improving global economy, and there's sort of
Speaker 1: mixed pressures on on commodity prices, but nothing that's really
Speaker 1: gonna really lead to higher inflation. By the time you
Speaker 1: get to the consumer. Uh, if you look at the
Speaker 1: consumer price index over the last year, you're still not
Speaker 1: really seeing you know, any inflation at all and stuff,
Speaker 1: you know, the ex food and energy. Just look at
Speaker 1: the commodities part um, that's that's actually trending negative still
Speaker 1: year over year. The pressure has really become in in services,
Speaker 1: notably rents and healthcare, which have been rising faster than
Speaker 1: overall inflation. But you know, you look at the sort
Speaker 1: of the pressures within the pipeline and nothing too unsettling.
Speaker 1: You know, despite the type job market, we're not seeing
Speaker 1: a lot of wage pressure. He've had some increases in
Speaker 1: the minimum wage and at a state level um, but
Speaker 1: nothing that's that we've you know, the kind of wage
Speaker 1: inflation that we've seen in the past. Uh So it's
Speaker 1: you know, it's still the same old story for the Fed.
Speaker 1: You know, they're they're trying to get towards a more
Speaker 1: neutral policy position. The low inflation numbers suggests that they
Speaker 1: need not be in any hurry to do that. We
Speaker 1: want of these consumer numbers are getting to be troubling.
Speaker 1: We've seen a lot of the retail results, but we
Speaker 1: see this dismensie here. The consumer spending is slow and
Speaker 1: I wonder, you know, indeed that it's softened to use
Speaker 1: the director word from the baseball and I wonder what
Speaker 1: you make of that. We've you know, like I said,
Speaker 1: we've seen that in some corporate results as well. It's
Speaker 1: not a good thing. Yeah, in particular, you know, you
Speaker 1: just came through the Memorial Day holiday, which you know,
Speaker 1: you get a lot of sales promotions. And I went
Speaker 1: to the mall this weekend and it was pretty dead.
Speaker 1: Yeahn So you know, people, you know, consumers have been
Speaker 1: been sort of you know, geared to buy stuff on
Speaker 1: sale over the last couple of decades, and they've been
Speaker 1: concreasingly shopping at that you know, Walmart and and km
Speaker 1: Art and so on. But uh, the malls really aren't
Speaker 1: aren't quite where where it's at. And I think you know,
Speaker 1: when you look at the middle class, there's still a
Speaker 1: lot of constraints. Uh. You know, if you don't own
Speaker 1: your home, you're renting, You're you're paying higher rents um
Speaker 1: than you did before. Um, you know, healthcare costs. I mean,
Speaker 1: one of the things about the Affordable Care Act is
Speaker 1: that it led to more health care consumption. So people
Speaker 1: might go and find that they had a condition that
Speaker 1: they had to treat with, you know, a pill on
Speaker 1: a regular basis, and you know that that takes out
Speaker 1: of some of their disposable income to you know that
Speaker 1: they would normally spend another thing, so that all those
Speaker 1: things could be a factor. But there's this real mix,
Speaker 1: and you see it in things like the Michigan consumer
Speaker 1: sentiment numbers where you start drilling down and you find
Speaker 1: there's still a huge difference between Uh, Democrats and Republicans.
Speaker 1: Those are leading Democrats are expecting a recession. Those that
Speaker 1: are leaning Republican tend to see nonecomic boom ahead. UH.
Speaker 1: And you know that that's a very wide difference. We
Speaker 1: tend to think of workers being more in line with
Speaker 1: the Democrats and business owners more in line with the
Speaker 1: Republican party, and so you get more business fixed investment
Speaker 1: and maybe a little bit tighter reigns on on consumer
Speaker 1: spending growth. Um Scott, if we use the economic data
Speaker 1: as sort of are in a hypothetical scenario in which
Speaker 1: our investors and the only input we have to make
Speaker 1: decisions is the economic data, because I want to try
Speaker 1: and phase out the sort of Trump stuff and whatnot. Um,
Speaker 1: is it clear what's happening in markets is reflective of
Speaker 1: the data where you have near highs in SMP five hundred,
Speaker 1: and then you have also overall the trend is in
Speaker 1: the past month or so has been stronger bond prices
Speaker 1: as well. I mean, what here within the economic side
Speaker 1: tells that story or does it move beyond that do
Speaker 1: we have to bring in the other stuff? Well, a
Speaker 1: lot of it is expectations, particularly after the election. Um,
Speaker 1: you know, stock market has been fueled by you know,
Speaker 1: the Trump agenda that we're gonna roll back regulations, we're
Speaker 1: gonna have this broad tax reform, we're gonna have a
Speaker 1: major infrastructure spending, and I think even with the one
Speaker 1: party rule in Washington, it's gonna be very, very difficult
Speaker 1: to get that agenda through. Certainly, broad tax reform is
Speaker 1: nearly impossible because nobody wants to give up their particular
Speaker 1: deductions and be at all those deductions up is about
Speaker 1: you know, one and a half trillion dollars per year,
Speaker 1: So you may not get the broad tax or from it.
Speaker 1: At least you can cut tax rates at some point
Speaker 1: down the line, maybe later this year or departed next year.
Speaker 1: So uh, I think people sort of factoring in that
Speaker 1: full Trump agenda are going to be disappointed because even
Speaker 1: even if it were fully enacted, you know, you're still
Speaker 1: looking at the labor market constraints which are really gonna
Speaker 1: be binding growth from here on out. You know, this
Speaker 1: is a different world where we're in now compared to
Speaker 1: previous decades where you had the baby broom generation coming in,
Speaker 1: you had a female participation in the labor force increasing.
Speaker 1: Those trends are well behind us. You're looking at the
Speaker 1: underlying pace of growth in the labor force less than
Speaker 1: a third of what it was before. And now you're
Speaker 1: talking about possibly limiting immigration as well, which is unhelpful.
Speaker 1: A lot of things up in the air. Scott brown
Speaker 1: thanks so much for joining us to sift through a
Speaker 1: Scott Brownie's the chief economist at Raymond James A lot here.
Speaker 1: Even though it's a quiet day, we still got Beige
Speaker 1: Book and feeling some good conversations about the economy. Here.
Speaker 1: I'm Oliver Rennick and Bloomberg Core Johnson in San Francisco.
Speaker 1: This is Bloomberg Markets