1 00:00:00,120 --> 00:00:06,800 Speaker 1: Boom, Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,920 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,479 Speaker 2: Terminal and the Bloomberg Business app. Sarah Hunt of Alpine 10 00:00:37,520 --> 00:00:40,560 Speaker 2: Saxon Woods, writing this, we still see a land grab 11 00:00:40,880 --> 00:00:43,960 Speaker 2: and a spending boom on the backbone of the AI infrastructure. 12 00:00:43,960 --> 00:00:46,479 Speaker 2: With valuations at high levels, there will need to be 13 00:00:46,600 --> 00:00:50,680 Speaker 2: further evidence that spending does not pause. Sarah joins us 14 00:00:50,680 --> 00:00:52,479 Speaker 2: now for more. Sarah, good morning. It's good to see you. 15 00:00:52,520 --> 00:00:53,000 Speaker 3: Good morning. 16 00:00:53,120 --> 00:00:54,960 Speaker 2: Are you nervous about what we might hear from some 17 00:00:55,000 --> 00:00:57,080 Speaker 2: of their customers later this earning season. 18 00:00:57,600 --> 00:00:59,200 Speaker 4: I think we're still in a player. I mean, it's 19 00:00:59,200 --> 00:01:01,480 Speaker 4: interesting because I saw it. Note that I think Goldman 20 00:01:01,560 --> 00:01:04,160 Speaker 4: put out on the fact that maybe they were spending 21 00:01:04,200 --> 00:01:05,959 Speaker 4: too much and I'm thinking, how do you say that 22 00:01:06,040 --> 00:01:07,600 Speaker 4: right now? It's a little bit early to say you're 23 00:01:07,600 --> 00:01:09,560 Speaker 4: spending too much. It reminds me of, you know, just 24 00:01:09,600 --> 00:01:12,080 Speaker 4: to date myself, the dark fiber discussion in two thousand 25 00:01:12,080 --> 00:01:13,679 Speaker 4: about we're putting in too much dark fiber. 26 00:01:13,840 --> 00:01:16,000 Speaker 5: Well, the Internet absorbed it all. So the question is 27 00:01:16,319 --> 00:01:16,679 Speaker 5: what is. 28 00:01:16,720 --> 00:01:18,600 Speaker 4: Enough infrastructure And I don't think we have the answer 29 00:01:18,680 --> 00:01:20,880 Speaker 4: to that yet. It's just a lot of large numbers problem. 30 00:01:20,760 --> 00:01:23,240 Speaker 2: Now to build on that shit. We reward the Apples. 31 00:01:23,600 --> 00:01:26,280 Speaker 2: This was ultimately Golden and Cole for having some big 32 00:01:26,319 --> 00:01:28,840 Speaker 2: stock buy back or reward those that are investing all 33 00:01:28,880 --> 00:01:31,720 Speaker 2: this money in the future, some big, big outlays that 34 00:01:31,760 --> 00:01:33,840 Speaker 2: were seeing of the likes of Mets or other names too. 35 00:01:34,160 --> 00:01:35,880 Speaker 4: I think that's a little bit just trying to split 36 00:01:35,920 --> 00:01:37,800 Speaker 4: the reality of you're rewarding the companies that have a 37 00:01:37,840 --> 00:01:39,720 Speaker 4: lot of cash, what they do with that cash, as 38 00:01:39,720 --> 00:01:42,920 Speaker 4: long as it's not something that seems absolutely ridiculous. Is 39 00:01:42,959 --> 00:01:44,720 Speaker 4: still we have a lot of cash, and that's where 40 00:01:44,760 --> 00:01:46,520 Speaker 4: I want to be. So I think that, you know, 41 00:01:46,560 --> 00:01:48,480 Speaker 4: for Apple, that makes more sense for them right now, 42 00:01:48,760 --> 00:01:50,400 Speaker 4: and for the other companies it makes sense to do 43 00:01:50,440 --> 00:01:52,360 Speaker 4: what they're doing so I don't think unless it's you know, 44 00:01:52,480 --> 00:01:55,080 Speaker 4: it's not some acquisition of something that's making no money 45 00:01:55,160 --> 00:01:56,600 Speaker 4: or something along those lines. 46 00:01:56,680 --> 00:01:58,640 Speaker 1: What do you make of us Constraang his argument that 47 00:01:58,760 --> 00:02:01,920 Speaker 1: essentially there is a very positive story to tell with 48 00:02:01,960 --> 00:02:04,040 Speaker 1: a lot of these AI companies and the sort of 49 00:02:04,080 --> 00:02:08,000 Speaker 1: big techniqus, but sentiment has gotten so overinflated and people 50 00:02:08,040 --> 00:02:11,040 Speaker 1: are expecting such big beats that in the near term 51 00:02:11,120 --> 00:02:14,440 Speaker 1: it just seems nearly impossible for them to exceed those 52 00:02:14,480 --> 00:02:15,600 Speaker 1: to the same degree. 53 00:02:15,840 --> 00:02:16,520 Speaker 5: Do you agree. 54 00:02:16,639 --> 00:02:18,880 Speaker 4: I think this is the difficult part right now, because 55 00:02:18,880 --> 00:02:21,320 Speaker 4: there will come a point where all the spending on 56 00:02:21,400 --> 00:02:24,639 Speaker 4: infrastructure will slow down, or the delta will go negative, 57 00:02:25,000 --> 00:02:27,560 Speaker 4: and or you haven't got enough use cases for the 58 00:02:27,600 --> 00:02:30,400 Speaker 4: other companies that are supposed to start getting more profitable 59 00:02:30,400 --> 00:02:32,720 Speaker 4: on the back of AI. And I think when that happens, 60 00:02:32,720 --> 00:02:34,840 Speaker 4: and I think it may happen, then you're going to 61 00:02:34,840 --> 00:02:37,079 Speaker 4: start to see people really worry about valuations. I don't 62 00:02:37,080 --> 00:02:38,560 Speaker 4: think that we're there yet because I think that you're 63 00:02:38,560 --> 00:02:40,400 Speaker 4: still spending a lot of money, but I think that 64 00:02:40,440 --> 00:02:43,160 Speaker 4: the concern will be, Okay, we've built in all this 65 00:02:43,240 --> 00:02:45,480 Speaker 4: infrastructure serve like the dark far argument, we have all 66 00:02:45,520 --> 00:02:47,440 Speaker 4: this stuff, but we can't use it enough yet. But 67 00:02:47,520 --> 00:02:49,880 Speaker 4: it will get used and it will ultimately. I think, 68 00:02:50,280 --> 00:02:52,200 Speaker 4: just not sure the use cases are what we're thinking 69 00:02:52,200 --> 00:02:52,880 Speaker 4: about right now. 70 00:02:52,960 --> 00:02:55,400 Speaker 1: It feels like it's almost easier to speculate on whether 71 00:02:55,440 --> 00:02:57,240 Speaker 1: AI is a bubble or not a bubble and what 72 00:02:57,280 --> 00:02:59,639 Speaker 1: the potential is, rather than talk about the other four 73 00:02:59,680 --> 00:03:01,960 Speaker 1: hundred ninety three names and how hinge they are to 74 00:03:02,000 --> 00:03:03,800 Speaker 1: an economic cycle that's really questionable. 75 00:03:04,000 --> 00:03:06,280 Speaker 5: I want to go back to Delta. You mentioned Delta. 76 00:03:06,560 --> 00:03:08,720 Speaker 1: It was supposed to be the darling of a cycle 77 00:03:08,840 --> 00:03:11,480 Speaker 1: that benefited people who have the money to fly around 78 00:03:11,520 --> 00:03:14,200 Speaker 1: the world and are doing so in record numbers. Is 79 00:03:14,240 --> 00:03:16,600 Speaker 1: that sort of a signal to you that there is 80 00:03:16,639 --> 00:03:20,600 Speaker 1: some fundamental problem in consumers that will percolate to a 81 00:03:20,600 --> 00:03:23,320 Speaker 1: broader number of potentially consumer facing companies. 82 00:03:23,639 --> 00:03:25,079 Speaker 4: Well, I'd love to look at the release because I 83 00:03:25,120 --> 00:03:27,000 Speaker 4: didn't get a chance to go through it very carefully. 84 00:03:27,000 --> 00:03:29,480 Speaker 4: But is the problem the revenue line is the problem? 85 00:03:29,560 --> 00:03:32,160 Speaker 4: The cost line you mentioned earlier, the extra costs. This 86 00:03:32,200 --> 00:03:34,560 Speaker 4: has been the question about what happens when inflation comes 87 00:03:34,560 --> 00:03:36,720 Speaker 4: down to margins start to get squeezed. If this is 88 00:03:36,720 --> 00:03:38,440 Speaker 4: more of an issue of margin squeeze, and it's not 89 00:03:38,480 --> 00:03:40,800 Speaker 4: a problem on the economic front. It's more a problem 90 00:03:40,800 --> 00:03:43,080 Speaker 4: on an individual company front because everyone's got to figure 91 00:03:43,080 --> 00:03:44,840 Speaker 4: out how to deal with their costs. A lot of 92 00:03:44,880 --> 00:03:47,040 Speaker 4: cost labor costs went up in the last couple of years. 93 00:03:47,160 --> 00:03:49,080 Speaker 4: Those contracts are only starting to come through. I think 94 00:03:49,120 --> 00:03:51,440 Speaker 4: that's part of it. So they might be blaming it 95 00:03:51,480 --> 00:03:54,680 Speaker 4: on cutting too much capacity, But having flown recently, I 96 00:03:54,720 --> 00:03:56,600 Speaker 4: don't see any excess capacity anywhere. 97 00:03:56,840 --> 00:03:58,640 Speaker 2: Who asks price in power right now? 98 00:03:58,640 --> 00:03:59,960 Speaker 3: Why'd you see that? If you can pick it into 99 00:04:00,040 --> 00:04:00,560 Speaker 3: stream right now? 100 00:04:00,560 --> 00:04:03,480 Speaker 2: Who has pricing power? We mentioned Costco earlier today putting 101 00:04:03,520 --> 00:04:05,840 Speaker 2: up membership fees. Where do you see that pricing power? 102 00:04:06,080 --> 00:04:07,720 Speaker 4: I think the pricing power is coming through in the 103 00:04:07,760 --> 00:04:10,480 Speaker 4: technology space. I think that Nvidia is getting better prices 104 00:04:10,520 --> 00:04:12,040 Speaker 4: than they were getting before because they're the. 105 00:04:12,080 --> 00:04:12,920 Speaker 5: Only ones who have it. 106 00:04:13,160 --> 00:04:15,360 Speaker 4: I think any place where something is in short supply, 107 00:04:15,480 --> 00:04:17,400 Speaker 4: you have some pricing power, and I think on the 108 00:04:17,480 --> 00:04:19,760 Speaker 4: technology side you have more pricing power. I would argue 109 00:04:19,760 --> 00:04:21,839 Speaker 4: that the airlines do have pricing power, having paid for 110 00:04:21,880 --> 00:04:24,279 Speaker 4: airline tickets, but I would also say that it depends 111 00:04:24,320 --> 00:04:26,599 Speaker 4: on where you're going, and it depends on the timing 112 00:04:26,640 --> 00:04:29,160 Speaker 4: of that. But I think that in the end, any 113 00:04:29,240 --> 00:04:31,760 Speaker 4: place where there is any kind of capacity constraint, you 114 00:04:32,360 --> 00:04:33,239 Speaker 4: have pricing power. 115 00:04:33,240 --> 00:04:34,880 Speaker 2: What is it about airlines that everyone just left the 116 00:04:34,920 --> 00:04:36,760 Speaker 2: rants about. I mean, I could join you too. It's 117 00:04:36,800 --> 00:04:39,960 Speaker 2: cust a fortune and it's miserable. Why is it always miserable. 118 00:04:39,960 --> 00:04:41,960 Speaker 4: Because we are at a point where so many people 119 00:04:42,000 --> 00:04:45,040 Speaker 4: are flying that even as they're increasing capacity the airlines, 120 00:04:45,240 --> 00:04:46,680 Speaker 4: the airports can't handle it. 121 00:04:46,760 --> 00:04:48,960 Speaker 5: The airlines can't handle it. There's nowhere to sit. It's hot. 122 00:04:49,000 --> 00:04:50,640 Speaker 5: I mean, I can go on and on. 123 00:04:50,680 --> 00:04:52,800 Speaker 1: I remember when I was a KIAUS to go to 124 00:04:53,040 --> 00:04:55,880 Speaker 1: the Midwest frequently because my family lived there. We flew 125 00:04:55,920 --> 00:04:59,599 Speaker 1: on Midwest Express which they had you know, glass little 126 00:04:59,600 --> 00:05:01,680 Speaker 1: salt upper shakers and home baked. 127 00:05:01,920 --> 00:05:03,000 Speaker 6: It was a very nice experience. 128 00:05:03,000 --> 00:05:04,680 Speaker 1: Everything was first class and it went out of business. 129 00:05:04,680 --> 00:05:07,400 Speaker 1: But you raise this question about how much you end 130 00:05:07,480 --> 00:05:10,279 Speaker 1: up with cost structures that are. 131 00:05:10,080 --> 00:05:11,919 Speaker 5: Only now getting bigger. 132 00:05:12,520 --> 00:05:15,120 Speaker 1: Do you think that people are under mess estimating the 133 00:05:15,160 --> 00:05:18,880 Speaker 1: margin compression that we could potentially see this cycle, because yeah, 134 00:05:18,920 --> 00:05:21,880 Speaker 1: the pricing power is in Nvidia, but it's not necessarily 135 00:05:22,160 --> 00:05:24,640 Speaker 1: in Delta. I mean it kind of is, but we 136 00:05:24,680 --> 00:05:26,520 Speaker 1: thought it was, but it isn't. Necessarily it's some of 137 00:05:26,560 --> 00:05:29,400 Speaker 1: these other areas that are also dealing with fundamentally higher 138 00:05:29,440 --> 00:05:30,719 Speaker 1: costs that haven't come down. 139 00:05:31,040 --> 00:05:33,600 Speaker 4: I think that is we were concerned that there was 140 00:05:33,640 --> 00:05:35,880 Speaker 4: going to be a margin compression earlier than there has been, 141 00:05:36,120 --> 00:05:37,719 Speaker 4: So it might just be that there's a lag on 142 00:05:37,720 --> 00:05:40,479 Speaker 4: that margin compression because the costs haven't really caught up yet. 143 00:05:40,760 --> 00:05:41,240 Speaker 5: Everything. 144 00:05:41,360 --> 00:05:43,600 Speaker 4: You know, we're such immediate people the price changes today. 145 00:05:43,600 --> 00:05:46,640 Speaker 4: We can see this today in business cycles, things take longer, 146 00:05:46,640 --> 00:05:48,680 Speaker 4: contracts take longer to play out, It takes longer for 147 00:05:48,720 --> 00:05:51,200 Speaker 4: people to figure out exactly what their cost structure is 148 00:05:51,200 --> 00:05:52,880 Speaker 4: going to look like. Fuel prices have come down, that 149 00:05:52,880 --> 00:05:54,760 Speaker 4: should have been a help to them, but it also 150 00:05:54,880 --> 00:05:57,279 Speaker 4: might be that because they were using fuel that they'd 151 00:05:57,279 --> 00:05:59,280 Speaker 4: bought at higher prices, it won't come down until the 152 00:05:59,279 --> 00:06:00,920 Speaker 4: third quarter. So I think that there's a lot of 153 00:06:01,320 --> 00:06:04,400 Speaker 4: rolling cost situations that we can't see because we're not 154 00:06:04,480 --> 00:06:07,560 Speaker 4: those corporations and we're looking at things from that Wall 155 00:06:07,560 --> 00:06:09,960 Speaker 4: Street immediacy level of I need to know today what's 156 00:06:09,960 --> 00:06:12,359 Speaker 4: happening tomorrow, And I think that that's something that is 157 00:06:12,400 --> 00:06:14,440 Speaker 4: going to have to play out in the next several months, 158 00:06:14,440 --> 00:06:16,560 Speaker 4: and we're starting to see whether or not that's going 159 00:06:16,600 --> 00:06:18,720 Speaker 4: to happen. I don't know if Delta is a bellweather 160 00:06:18,839 --> 00:06:20,360 Speaker 4: or if that's just a one off for them. 161 00:06:20,440 --> 00:06:22,599 Speaker 1: What are you more interested in today, CPI or the 162 00:06:22,600 --> 00:06:24,320 Speaker 1: president's press conference at five point thirty. 163 00:06:24,920 --> 00:06:29,480 Speaker 5: Yes, I think that both of them are important, right. 164 00:06:29,520 --> 00:06:31,760 Speaker 4: I think that you had a guest on earlier today 165 00:06:31,800 --> 00:06:34,400 Speaker 4: who said that one number isn't the most important thing. Well, 166 00:06:34,400 --> 00:06:36,880 Speaker 4: it's not the most important thing unless it goes very 167 00:06:36,960 --> 00:06:38,880 Speaker 4: much in the wrong direction, right, So CPI went very 168 00:06:38,960 --> 00:06:40,320 Speaker 4: much in the wrong direction, it would be the most 169 00:06:40,360 --> 00:06:42,760 Speaker 4: important thing. I think that there has been chaos since 170 00:06:42,760 --> 00:06:44,800 Speaker 4: the original debate, and I don't think that that chaos 171 00:06:44,839 --> 00:06:45,400 Speaker 4: is yet over. 172 00:06:45,640 --> 00:06:47,680 Speaker 5: I think all the discussions you were having earlier. 173 00:06:47,480 --> 00:06:49,200 Speaker 4: I mean, none of what anybody is saying is makes 174 00:06:49,240 --> 00:06:51,720 Speaker 4: sense except tell me something I want to hear, And 175 00:06:51,800 --> 00:06:53,480 Speaker 4: until I hear what I want to hear, I'm not 176 00:06:53,520 --> 00:06:56,000 Speaker 4: believing what you're saying. And so that's where we seem 177 00:06:56,040 --> 00:06:57,640 Speaker 4: to be. I don't know that that's going to make 178 00:06:57,640 --> 00:06:59,640 Speaker 4: the press conference today is going to make that any different. 179 00:06:59,640 --> 00:07:02,400 Speaker 4: I don't think to the extent I mean, it's it's unfortunate, 180 00:07:02,440 --> 00:07:04,120 Speaker 4: But I don't think to the extent that you know, 181 00:07:04,200 --> 00:07:05,919 Speaker 4: it's not wrong that age is not something you. 182 00:07:05,960 --> 00:07:08,320 Speaker 2: Can take away noise or news. Do you think it's 183 00:07:08,360 --> 00:07:11,440 Speaker 2: real news for this market the considerations that are percolating 184 00:07:11,480 --> 00:07:14,480 Speaker 2: over the last few weeks, to the to the. 185 00:07:14,480 --> 00:07:16,760 Speaker 4: Extent that we've seen both of these people as president, 186 00:07:16,800 --> 00:07:18,640 Speaker 4: and the market has reacted well to both. I think 187 00:07:18,640 --> 00:07:21,640 Speaker 4: I understand why people say whoever's president is noise, but 188 00:07:22,040 --> 00:07:24,680 Speaker 4: political chaos is not just noise. And if it gets 189 00:07:24,680 --> 00:07:27,240 Speaker 4: too chaotic, I think that that is going to take 190 00:07:27,280 --> 00:07:30,040 Speaker 4: people's risk appetite down to some degree. But we don't 191 00:07:30,080 --> 00:07:31,840 Speaker 4: know that yet, and we don't know what kind of 192 00:07:32,000 --> 00:07:34,160 Speaker 4: you know, decisions people are facing right now. 193 00:07:34,280 --> 00:07:35,760 Speaker 5: We know where one side of the ledger is. 194 00:07:35,800 --> 00:07:37,120 Speaker 4: We don't yet know where the other side of the 195 00:07:37,160 --> 00:07:39,160 Speaker 4: ledger is, even though he keeps saying he is that 196 00:07:39,200 --> 00:07:40,920 Speaker 4: side of the ledger, and nobody seems to believe him. 197 00:07:40,920 --> 00:07:42,160 Speaker 3: We're waiting for him to make a decision. 198 00:07:42,200 --> 00:07:44,920 Speaker 2: Sarah, you know that, Sarah Hunt a vampid snackson words, Sarah, 199 00:07:44,920 --> 00:07:56,080 Speaker 2: It's going to see it. I'm Maris in Washington with 200 00:07:56,200 --> 00:07:59,640 Speaker 2: a special guest, the Democratic congresswoman Haidie Stevens of Michigan. 201 00:07:59,720 --> 00:08:00,760 Speaker 3: I am as I see you. 202 00:08:01,960 --> 00:08:06,160 Speaker 7: Thank you so much, John, and Congresswoman Miss Stevens, you're 203 00:08:06,160 --> 00:08:09,240 Speaker 7: also going to be in Michigan tomorrow with Biden. Yes, 204 00:08:09,280 --> 00:08:11,480 Speaker 7: I am a starch supporter of him, and you're not 205 00:08:11,600 --> 00:08:12,240 Speaker 7: backing down. 206 00:08:12,760 --> 00:08:13,120 Speaker 6: Why. 207 00:08:13,720 --> 00:08:16,240 Speaker 8: I'm really enthusiastic about this campaign and what we've built 208 00:08:16,280 --> 00:08:19,560 Speaker 8: in Michigan. I've been rigorously on it since the beginning 209 00:08:19,640 --> 00:08:22,480 Speaker 8: of the year. Detroit is at its lowest levels of 210 00:08:22,560 --> 00:08:26,640 Speaker 8: unemployment and fifty years we have manufacturing growth. I have 211 00:08:26,680 --> 00:08:31,280 Speaker 8: a really popular governor, Gretchen Whitmer, who's endorsed this president, 212 00:08:31,360 --> 00:08:34,000 Speaker 8: who's a co chair of his campaign, who's met with 213 00:08:34,120 --> 00:08:37,040 Speaker 8: him since some of the debate fallout and is sticking 214 00:08:37,080 --> 00:08:37,560 Speaker 8: by him. 215 00:08:37,640 --> 00:08:39,280 Speaker 3: And the commitment to stand up for. 216 00:08:39,320 --> 00:08:43,920 Speaker 8: Women's reproductive rights, to tackle our gun violence epidemic that 217 00:08:43,960 --> 00:08:46,480 Speaker 8: has hit us pretty hard in Michigan, and. 218 00:08:46,440 --> 00:08:47,840 Speaker 5: There's a team right. 219 00:08:47,920 --> 00:08:51,880 Speaker 8: We have built an incredible ground operation and it's hard 220 00:08:51,920 --> 00:08:54,200 Speaker 8: work with persuasion voters, with turnout. 221 00:08:54,640 --> 00:08:55,439 Speaker 6: I don't want to. 222 00:08:55,360 --> 00:08:57,680 Speaker 8: Turn away from this though now I want to keep going. 223 00:08:58,120 --> 00:09:01,319 Speaker 8: Fifteen some weeks left, bring this over the finish line, 224 00:09:01,360 --> 00:09:04,680 Speaker 8: and I believe and know that the Biden Hearris ticket 225 00:09:05,080 --> 00:09:06,640 Speaker 8: is the one to get this done for us. 226 00:09:06,840 --> 00:09:09,280 Speaker 7: Do you think he's the best candidate though, I do. 227 00:09:09,400 --> 00:09:13,199 Speaker 7: You see the polling today from Washington Post ABC, more 228 00:09:13,240 --> 00:09:16,920 Speaker 7: than fifty six Democrats say six and ten independents that 229 00:09:17,000 --> 00:09:19,720 Speaker 7: he should step beside. Is it that he's the best 230 00:09:19,760 --> 00:09:23,959 Speaker 7: candidate at this moment or there's concern about basically telling 231 00:09:23,960 --> 00:09:25,640 Speaker 7: a sitting president, the leader. 232 00:09:25,400 --> 00:09:26,800 Speaker 5: Of the party, that it's. 233 00:09:26,640 --> 00:09:27,160 Speaker 7: Time to go. 234 00:09:27,320 --> 00:09:30,600 Speaker 8: Look, the stakes are high. The other thing that the 235 00:09:30,679 --> 00:09:34,760 Speaker 8: polling is showing you is that people are freaked out 236 00:09:35,080 --> 00:09:39,000 Speaker 8: about Donald Trump coming back, what that means for young women, 237 00:09:39,559 --> 00:09:42,640 Speaker 8: what that means for our economy that spiraled out of 238 00:09:42,679 --> 00:09:46,679 Speaker 8: control when he was president during a global pandemic that 239 00:09:46,840 --> 00:09:48,920 Speaker 8: was not well handled by him. 240 00:09:49,559 --> 00:09:54,200 Speaker 7: And the polling also shows people think Trump would be 241 00:09:54,200 --> 00:09:56,520 Speaker 7: better when it comes to things like the economy, which 242 00:09:56,520 --> 00:09:58,520 Speaker 7: our polling shows is still the number one issue. 243 00:09:58,600 --> 00:10:01,360 Speaker 8: It is the number one issue, and it's not just 244 00:10:01,440 --> 00:10:04,440 Speaker 8: look at the facts today. Look, pulling is absolutely important. 245 00:10:04,840 --> 00:10:06,800 Speaker 8: I have to look at pulling. And I have had 246 00:10:06,880 --> 00:10:09,560 Speaker 8: polls that have led me down a path of success, 247 00:10:09,559 --> 00:10:12,440 Speaker 8: and I've had polls that have led me wrong before. 248 00:10:12,520 --> 00:10:16,640 Speaker 8: But what I know is that people are concerned about Trump. 249 00:10:16,800 --> 00:10:19,520 Speaker 8: I mean, I hear that on the ground in Oakland County, Michigan. 250 00:10:19,640 --> 00:10:24,240 Speaker 8: It is pulpable. People want to win. These stakes are high. Obviously, 251 00:10:24,520 --> 00:10:28,400 Speaker 8: when President Biden was gathering his delegate votes and campaigning 252 00:10:28,800 --> 00:10:31,400 Speaker 8: in the small primary that he had earlier this year, 253 00:10:31,679 --> 00:10:34,200 Speaker 8: it wasn't one hundred percent clear every step of the 254 00:10:34,200 --> 00:10:36,719 Speaker 8: way that Trump was going to be the nominee. Now 255 00:10:36,760 --> 00:10:39,439 Speaker 8: he's hiding in mar A Lago. We don't see him 256 00:10:39,480 --> 00:10:43,240 Speaker 8: really very much. He's come to Michigan maybe once or twice, 257 00:10:43,640 --> 00:10:46,960 Speaker 8: a few surrogates here and there. Pretty quiet from him. 258 00:10:47,320 --> 00:10:49,960 Speaker 8: And in part we've got a president who's governing, who's 259 00:10:50,080 --> 00:10:54,320 Speaker 8: leading NATO, who's got the backing of international leaders who 260 00:10:54,360 --> 00:10:57,720 Speaker 8: support his plan. We have, by the way, a major 261 00:10:57,760 --> 00:11:00,640 Speaker 8: foreign aid package that got done in a divice government. 262 00:11:00,880 --> 00:11:02,840 Speaker 8: That's exactly what Joe Biden asked. 263 00:11:03,000 --> 00:11:04,719 Speaker 7: I think the concern is not so much can he 264 00:11:04,880 --> 00:11:07,439 Speaker 7: lead right now? It's what does the next four years mean? 265 00:11:07,480 --> 00:11:10,040 Speaker 7: And you mentioned Governor Whitmer. She was on CNN last 266 00:11:10,080 --> 00:11:12,199 Speaker 7: night and she was asked should he take a cognitive test? 267 00:11:12,520 --> 00:11:15,040 Speaker 7: Her answer was it wouldn't hurt, do you agree with 268 00:11:15,080 --> 00:11:15,520 Speaker 7: the governor. 269 00:11:15,679 --> 00:11:18,800 Speaker 8: Yeah, well, Trump joked around about his own cognitive tests 270 00:11:18,840 --> 00:11:21,280 Speaker 8: and you know that he was some super genius and 271 00:11:21,440 --> 00:11:24,080 Speaker 8: was spouting off things. Look, anything the president needs to 272 00:11:24,120 --> 00:11:28,640 Speaker 8: do to reassure people. I have been recently with him 273 00:11:28,760 --> 00:11:32,400 Speaker 8: when he announced tariffs on Chinese evs and critical minerals. 274 00:11:32,440 --> 00:11:34,280 Speaker 8: I was in the Oval office with him for an 275 00:11:34,280 --> 00:11:37,720 Speaker 8: extended period of time. I haven't seen one decision coming 276 00:11:37,760 --> 00:11:41,840 Speaker 8: out of this administration under his leadership that concerns me. 277 00:11:42,240 --> 00:11:45,520 Speaker 8: I also know that we have got a message for 278 00:11:45,600 --> 00:11:48,880 Speaker 8: the next four years. It's clear people are spooked. It's 279 00:11:48,920 --> 00:11:52,480 Speaker 8: also clear, though, people are united to do whatever it 280 00:11:52,520 --> 00:11:54,880 Speaker 8: takes to beat Donald Trump, and we've got the campaign 281 00:11:54,960 --> 00:11:55,280 Speaker 8: to do it. 282 00:11:55,440 --> 00:11:56,040 Speaker 6: We really do. 283 00:11:56,160 --> 00:11:58,720 Speaker 7: You've spent time with him recently, You're going to be 284 00:11:58,760 --> 00:11:59,720 Speaker 7: with him tomorrow. 285 00:12:00,080 --> 00:12:01,480 Speaker 5: You said, there's not a. 286 00:12:01,400 --> 00:12:05,560 Speaker 7: Decision that makes you rethink this that's coming from President Biden. 287 00:12:05,600 --> 00:12:08,080 Speaker 7: Not a decision you see that concerns you. But what 288 00:12:08,200 --> 00:12:12,560 Speaker 7: about his speech, the way he walks actual deterioration is health. 289 00:12:12,679 --> 00:12:13,720 Speaker 3: Have you seen any of that? 290 00:12:15,080 --> 00:12:15,160 Speaker 9: Not? 291 00:12:15,280 --> 00:12:17,079 Speaker 8: Really, to be honest with you, I mean, look, I 292 00:12:17,440 --> 00:12:19,400 Speaker 8: can't tell people to unsee what they saw on the 293 00:12:19,400 --> 00:12:23,360 Speaker 8: debate I thought he answered it. Honestly, Look, it's not 294 00:12:23,559 --> 00:12:27,440 Speaker 8: news that he is the age that he is. I 295 00:12:27,520 --> 00:12:31,640 Speaker 8: look at this and I see flawless execution from this administration, 296 00:12:32,240 --> 00:12:35,880 Speaker 8: COVID relief, infrastructure dollars, not just bills that have gotten passed, 297 00:12:36,240 --> 00:12:40,080 Speaker 8: but things that are being executed flawlessly, like the Chips Act, 298 00:12:40,080 --> 00:12:43,840 Speaker 8: which is so important to our Michigan manufacturing economy. Something 299 00:12:43,840 --> 00:12:47,840 Speaker 8: that President Biden has championed his campaign message is let's 300 00:12:47,840 --> 00:12:48,640 Speaker 8: finish the job. 301 00:12:48,800 --> 00:12:49,840 Speaker 5: There is more to do. 302 00:12:50,120 --> 00:12:54,000 Speaker 8: It's promises made, promise is kept. There are more things 303 00:12:54,040 --> 00:12:56,800 Speaker 8: that we need to accomplish here that are on the horizon. 304 00:12:57,160 --> 00:13:01,760 Speaker 8: Paid leave, funding for our public schools, support for our educators, 305 00:13:01,800 --> 00:13:05,480 Speaker 8: the next generation. This is a real campaign. And look, 306 00:13:05,520 --> 00:13:08,400 Speaker 8: this is a tough moment. It's been quiet. We've had 307 00:13:08,440 --> 00:13:11,560 Speaker 8: twenty four to seven Trump TV and his convictions and 308 00:13:11,600 --> 00:13:14,439 Speaker 8: all that insanity. I don't want to go back to that. 309 00:13:14,520 --> 00:13:17,000 Speaker 8: My voters in Michigan are terrified of going back to that. 310 00:13:18,040 --> 00:13:22,440 Speaker 8: The former president pretends that he supports unions, goes to 311 00:13:22,520 --> 00:13:26,520 Speaker 8: a non union shop. We worked for the UAW, we 312 00:13:26,600 --> 00:13:30,160 Speaker 8: got the UAW endorsement. We've had this whole process here 313 00:13:30,200 --> 00:13:31,320 Speaker 8: where weeks out from. 314 00:13:31,200 --> 00:13:32,080 Speaker 3: Our own convention. 315 00:13:32,520 --> 00:13:35,040 Speaker 8: We got to stand up to this Trump leaders. 316 00:13:35,040 --> 00:13:37,600 Speaker 7: Our concerned Washington Post this morning, there was a behind 317 00:13:37,600 --> 00:13:41,680 Speaker 7: the scenes meeting yesterday Sean Fain. President Biden went and 318 00:13:41,679 --> 00:13:43,880 Speaker 7: stood on a picket line with this man. He is 319 00:13:43,920 --> 00:13:45,440 Speaker 7: now voicing his concerns. 320 00:13:46,080 --> 00:13:47,960 Speaker 5: So when you're in Michigan. 321 00:13:47,520 --> 00:13:50,160 Speaker 7: And you're here from union leaders, Trump is chipping away 322 00:13:50,160 --> 00:13:55,600 Speaker 7: at these people Michigan, potentially Biden can lose. That's what congressman' 323 00:13:55,600 --> 00:13:57,440 Speaker 7: Slockin even said on a recent donor call. 324 00:13:57,960 --> 00:14:01,839 Speaker 8: Yeah, look, we want the win campaign and our union 325 00:14:01,880 --> 00:14:07,520 Speaker 8: leaders they're deploying their members to knockdoors to evangelize this effort. 326 00:14:07,640 --> 00:14:10,800 Speaker 8: And that's what you do in closed door meetings. You 327 00:14:11,280 --> 00:14:13,240 Speaker 8: do say hey, what's our plan, how we're going to 328 00:14:13,320 --> 00:14:17,760 Speaker 8: do this. We're the Democratic Party, you know, differing opinions, 329 00:14:17,760 --> 00:14:22,040 Speaker 8: expression of opinions. I've had four to five Republican members 330 00:14:22,080 --> 00:14:25,040 Speaker 8: of Congress from Michigan who've either left their party, impeached 331 00:14:25,040 --> 00:14:26,280 Speaker 8: the former president, or. 332 00:14:26,240 --> 00:14:27,160 Speaker 5: Got voted out. 333 00:14:27,480 --> 00:14:30,280 Speaker 8: I mean, give me a break, Like, this is how 334 00:14:30,800 --> 00:14:33,240 Speaker 8: it works in our party. It's a good and healthy thing. 335 00:14:33,280 --> 00:14:35,000 Speaker 8: And I'm going to tell you something else that I 336 00:14:35,040 --> 00:14:38,040 Speaker 8: know about Joe Biden. He is the ultimate comeback king. 337 00:14:38,400 --> 00:14:43,200 Speaker 8: He's the most underestimated individual in American politics. He always 338 00:14:43,240 --> 00:14:46,200 Speaker 8: has been. He's got a good north star. He's tapped 339 00:14:46,200 --> 00:14:49,320 Speaker 8: into his faith, He's been through things that have tested 340 00:14:49,400 --> 00:14:53,560 Speaker 8: him for this moment. And yes, he's our older, wiser president. 341 00:14:53,760 --> 00:14:55,920 Speaker 8: He has not steered us wrong, and he has got 342 00:14:55,960 --> 00:14:59,200 Speaker 8: a vision alongside this amazing team that he has to 343 00:14:59,240 --> 00:15:00,800 Speaker 8: continue to win the future for US. 344 00:15:00,960 --> 00:15:03,600 Speaker 7: Commerceman Haley Stevens, thank you so much for your time. 345 00:15:13,000 --> 00:15:15,000 Speaker 2: With us around the table. Steve for Shudo of Missoo, 346 00:15:15,000 --> 00:15:18,040 Speaker 2: I'm still with us. David Kelly of JP Morgan Asset Management. 347 00:15:18,120 --> 00:15:20,520 Speaker 2: David just got this from Neil Data of Renmack. The 348 00:15:20,560 --> 00:15:23,120 Speaker 2: Doves have what they need. It's time to cut get 349 00:15:23,160 --> 00:15:24,880 Speaker 2: on with it. Do you agree? 350 00:15:25,640 --> 00:15:27,160 Speaker 3: No, I think they should go in September. 351 00:15:27,480 --> 00:15:30,480 Speaker 9: I think they just need to be steady as they 352 00:15:30,520 --> 00:15:33,480 Speaker 9: do this because if they rush it, it's going to 353 00:15:33,480 --> 00:15:36,160 Speaker 9: actually look like they're scared about something. And I mean, 354 00:15:36,160 --> 00:15:37,480 Speaker 9: I don't think they should have gone this high in 355 00:15:37,480 --> 00:15:39,600 Speaker 9: the first place, but now they're here, just us take 356 00:15:39,640 --> 00:15:43,480 Speaker 9: it down easily. So I still think September, December, March 357 00:15:43,600 --> 00:15:47,080 Speaker 9: June September December sixth rade cuts one and a half years. 358 00:15:47,080 --> 00:15:47,920 Speaker 3: Think that's what they should do. 359 00:15:48,000 --> 00:15:50,880 Speaker 2: Poulin, Central Portugal sent a strong labor market, gives them 360 00:15:51,080 --> 00:15:53,160 Speaker 2: some time, the luxury of time. Do you think he 361 00:15:53,200 --> 00:15:54,560 Speaker 2: has that time as well? 362 00:15:55,600 --> 00:15:56,640 Speaker 3: Yeah, I think so. 363 00:15:56,800 --> 00:16:00,280 Speaker 9: I mean there could be some cracks in private that 364 00:16:00,320 --> 00:16:02,640 Speaker 9: could be some craxy and regional banks. I mean, we 365 00:16:02,680 --> 00:16:04,840 Speaker 9: are concerned about things that are not set up for 366 00:16:04,880 --> 00:16:07,600 Speaker 9: normal interest rates. But remember long term interistrates are kind 367 00:16:07,600 --> 00:16:10,200 Speaker 9: of at normal levels here. A normal business ought to 368 00:16:10,240 --> 00:16:13,600 Speaker 9: be able to operate here. So I think it's if 369 00:16:13,600 --> 00:16:17,920 Speaker 9: it's shows the economy a little bit by not accelerating this, okay, 370 00:16:18,000 --> 00:16:19,920 Speaker 9: but I'd rather they take their. 371 00:16:19,800 --> 00:16:21,960 Speaker 3: Time and I'll rush. 372 00:16:21,720 --> 00:16:25,440 Speaker 9: This because once they start rushing rate coats, then it's 373 00:16:25,440 --> 00:16:26,240 Speaker 9: going to scare people. 374 00:16:26,360 --> 00:16:27,640 Speaker 5: See what's your impression. 375 00:16:27,640 --> 00:16:29,560 Speaker 1: I know that you've been on the Maybe they shouldn't 376 00:16:29,600 --> 00:16:33,000 Speaker 1: cut at all. What about given how much inflation has 377 00:16:33,000 --> 00:16:33,560 Speaker 1: come down. 378 00:16:33,840 --> 00:16:37,240 Speaker 10: Again, you've had an inflection point in the economy. We 379 00:16:37,280 --> 00:16:39,560 Speaker 10: went from three point three percent last year with an 380 00:16:39,560 --> 00:16:42,200 Speaker 10: economy that was clearly growing too strong, an inflation was 381 00:16:42,240 --> 00:16:44,680 Speaker 10: not going down. You had to shift to a slower 382 00:16:44,720 --> 00:16:47,880 Speaker 10: growth economy. This year two point two two point three percent. 383 00:16:48,080 --> 00:16:49,720 Speaker 10: You've had some benefits of that in terms of a 384 00:16:49,760 --> 00:16:52,920 Speaker 10: higher unemployment rate, a lower level of inflation. Is the 385 00:16:52,960 --> 00:16:55,520 Speaker 10: economy going to stay a trend or is it going 386 00:16:55,600 --> 00:16:56,640 Speaker 10: beyond that? 387 00:16:56,640 --> 00:16:58,640 Speaker 6: That's now the question they have to answer. 388 00:16:58,840 --> 00:17:01,040 Speaker 10: They also have to worry about the risk because, as 389 00:17:01,160 --> 00:17:04,280 Speaker 10: David mentioned quite clearly, the concern is if they move 390 00:17:04,359 --> 00:17:07,400 Speaker 10: too quickly, the expectational set in the market could get 391 00:17:07,400 --> 00:17:10,040 Speaker 10: ahead of themselves. You know, you've already seen one or 392 00:17:10,040 --> 00:17:12,560 Speaker 10: two of strategists on the streets saying they're going to 393 00:17:12,640 --> 00:17:15,639 Speaker 10: cut rates eight times next year. So you've got this 394 00:17:15,840 --> 00:17:19,440 Speaker 10: environment where if the market goes too far, they then 395 00:17:19,600 --> 00:17:22,320 Speaker 10: have to think about well they then have to reverse policy. 396 00:17:22,800 --> 00:17:24,600 Speaker 10: So the dots have kind of put them in a 397 00:17:24,640 --> 00:17:26,600 Speaker 10: bit of a tricky box for themselves. 398 00:17:26,880 --> 00:17:30,080 Speaker 6: So they really can't do a hawkish cut. 399 00:17:30,520 --> 00:17:32,479 Speaker 10: All they could do here is do a cut that 400 00:17:32,560 --> 00:17:35,240 Speaker 10: fulfills the dots and the markets are likely to go 401 00:17:35,359 --> 00:17:36,240 Speaker 10: well beyond that. 402 00:17:36,359 --> 00:17:38,960 Speaker 1: Okay, pause, this is something that people used to talk about. 403 00:17:39,080 --> 00:17:41,679 Speaker 1: We have just gotten thirty seven record highs on the 404 00:17:41,800 --> 00:17:42,080 Speaker 1: S and. 405 00:17:42,040 --> 00:17:43,920 Speaker 5: P five hundred this year. 406 00:17:44,400 --> 00:17:48,120 Speaker 1: Why is that not potentially problematic enough for them? 407 00:17:48,640 --> 00:17:49,600 Speaker 6: Why is that welcome? 408 00:17:49,640 --> 00:17:50,399 Speaker 5: You think it should be. 409 00:17:50,520 --> 00:17:53,280 Speaker 10: It should be, But this is a different FED. You 410 00:17:53,359 --> 00:17:55,600 Speaker 10: have to take a look at the people at this FED. 411 00:17:56,160 --> 00:17:59,359 Speaker 10: These are a bunch of political economists. They're not the 412 00:17:59,560 --> 00:18:04,359 Speaker 10: old school anti inflation hawks. The political economists want to 413 00:18:04,359 --> 00:18:07,879 Speaker 10: play with the levers. They've written their dissertations on playing 414 00:18:07,880 --> 00:18:10,400 Speaker 10: with the levers. They want to play with the levers. 415 00:18:10,600 --> 00:18:13,760 Speaker 10: They're gonna play with the levers. We're not arguing about 416 00:18:13,880 --> 00:18:17,200 Speaker 10: if we're arguing about when and how the market will 417 00:18:17,240 --> 00:18:20,359 Speaker 10: react to it. They think that they can control the 418 00:18:20,400 --> 00:18:23,120 Speaker 10: market's behavior, and to a certain extent, they've done that, 419 00:18:23,480 --> 00:18:25,840 Speaker 10: and they've gotten a great hand. Let's be honest. They're 420 00:18:25,880 --> 00:18:28,280 Speaker 10: getting everything to want. The economy looks as if it's slowing, 421 00:18:28,440 --> 00:18:30,520 Speaker 10: the labor market looks as if it's coming back to normal. 422 00:18:30,680 --> 00:18:33,200 Speaker 10: Inflation looks as it's coming down. To me, this is 423 00:18:33,240 --> 00:18:35,200 Speaker 10: a winning hand. Why would you toss it out by 424 00:18:35,240 --> 00:18:36,920 Speaker 10: doing something stupid in July? 425 00:18:37,280 --> 00:18:38,960 Speaker 6: They wouldn't. You'd sit back and wait. 426 00:18:39,160 --> 00:18:40,000 Speaker 3: The other thing about it. 427 00:18:40,040 --> 00:18:42,280 Speaker 9: You know, if there are parts of the markets which 428 00:18:42,359 --> 00:18:44,720 Speaker 9: are over exuberant, it is entirely the full to the 429 00:18:44,720 --> 00:18:47,800 Speaker 9: federal reserve for going ten years with raids at zero. 430 00:18:47,920 --> 00:18:50,440 Speaker 9: I mean, if you make the carrying cost of crazy zero, 431 00:18:51,080 --> 00:18:52,560 Speaker 9: then people do crazy things. 432 00:18:53,000 --> 00:18:54,199 Speaker 3: And so we saw that. 433 00:18:54,320 --> 00:18:57,879 Speaker 9: We saw then we've got momentum going in bitcoin and 434 00:18:57,920 --> 00:18:58,880 Speaker 9: meme stalks and. 435 00:18:58,800 --> 00:19:00,879 Speaker 3: Even the mag seven. 436 00:19:01,320 --> 00:19:03,560 Speaker 9: And what's happening now is you've got a stable economy 437 00:19:03,560 --> 00:19:04,040 Speaker 9: and people just. 438 00:19:03,960 --> 00:19:05,439 Speaker 3: Doubling down on the best that have worked. 439 00:19:05,640 --> 00:19:09,520 Speaker 9: But we want to see more fundamental investing rather than 440 00:19:09,600 --> 00:19:12,879 Speaker 9: momentum investing. But they already they've sort of caused this 441 00:19:12,960 --> 00:19:16,679 Speaker 9: momentum investing environment by keeping rate solo so long that 442 00:19:16,720 --> 00:19:18,480 Speaker 9: you could get all these irrational bets going. 443 00:19:18,600 --> 00:19:19,920 Speaker 3: And now the problem is, well, how do you get 444 00:19:19,920 --> 00:19:20,240 Speaker 3: out of that? 445 00:19:20,280 --> 00:19:23,320 Speaker 9: And I think you just returned to rational interest rates, 446 00:19:23,560 --> 00:19:26,920 Speaker 9: which makes sense based on the economic fundamentals, and then 447 00:19:27,000 --> 00:19:30,360 Speaker 9: over time markets can return to that rather than trying 448 00:19:30,400 --> 00:19:33,879 Speaker 9: to manipulate markets by moving industrates too quickly. 449 00:19:33,920 --> 00:19:36,000 Speaker 1: Steve, what do you make of that argument that essentially 450 00:19:36,040 --> 00:19:37,879 Speaker 1: if they adjust policy, that will help some of the 451 00:19:37,960 --> 00:19:41,359 Speaker 1: names that haven't participated in the euphoria we're seeing Russell 452 00:19:41,400 --> 00:19:44,480 Speaker 1: two thousand, which is underperformed, actually outperforming at rate kind 453 00:19:44,480 --> 00:19:48,320 Speaker 1: of expectations, not necessarily in Nvidia, I. 454 00:19:48,240 --> 00:19:50,720 Speaker 10: Think there has been an environment in here in which 455 00:19:50,800 --> 00:19:54,240 Speaker 10: basically the underperformance has been a function of the fact 456 00:19:54,240 --> 00:19:56,560 Speaker 10: that earnings for a lot of these companies haven't been good. 457 00:19:56,880 --> 00:19:58,680 Speaker 10: And the reason why earnings for a lot of these 458 00:19:58,680 --> 00:20:01,120 Speaker 10: companies haven't been good is because their costs have gone up, 459 00:20:01,520 --> 00:20:03,720 Speaker 10: and not only that, because of the discount or the 460 00:20:03,760 --> 00:20:06,480 Speaker 10: slower growth environment that we've seen coming into this year, 461 00:20:06,800 --> 00:20:09,119 Speaker 10: it's harder for them to pass those prices on, so 462 00:20:09,160 --> 00:20:10,080 Speaker 10: they're getting squeezed. 463 00:20:10,359 --> 00:20:12,560 Speaker 6: The question is what is the next reaction to it. 464 00:20:12,840 --> 00:20:14,800 Speaker 10: I think the answer is if the Federal Reserve begins 465 00:20:14,800 --> 00:20:17,960 Speaker 10: to cut interest rates and the market goes very aggressively, 466 00:20:18,000 --> 00:20:20,720 Speaker 10: which I think the market will do. The market will 467 00:20:20,760 --> 00:20:23,200 Speaker 10: overstate what the Fed is going to do because every 468 00:20:23,200 --> 00:20:25,239 Speaker 10: time they cut, they go to zero. I guarantee you 469 00:20:25,480 --> 00:20:27,480 Speaker 10: as soon as they cut, you are going to see 470 00:20:27,560 --> 00:20:29,520 Speaker 10: zero hedge and you're gonna see a lot of news 471 00:20:29,560 --> 00:20:31,560 Speaker 10: stories out there about there must be a collapse in 472 00:20:31,560 --> 00:20:34,200 Speaker 10: the real estate market, there's something going on in the economy. 473 00:20:34,280 --> 00:20:36,080 Speaker 10: The Fed knows something we don't know. We're going to 474 00:20:36,160 --> 00:20:39,200 Speaker 10: be talking about zero levels of interest rates. Once that happens, 475 00:20:39,480 --> 00:20:41,359 Speaker 10: they're going to be faced with a very different situation. 476 00:20:41,480 --> 00:20:44,000 Speaker 10: This is why equity analysts have been unwilling to cut 477 00:20:44,000 --> 00:20:48,000 Speaker 10: their earnings because they know that basically whenever the Fed cuts, 478 00:20:48,040 --> 00:20:50,200 Speaker 10: they go to zero. So we're expecting it to cut. 479 00:20:50,320 --> 00:20:52,359 Speaker 10: We're expecting to go to zero. So why would i 480 00:20:52,359 --> 00:20:53,960 Speaker 10: have cut my earnings numbers. I'm going to have a 481 00:20:53,960 --> 00:20:54,880 Speaker 10: real bullish economy. 482 00:20:55,200 --> 00:20:57,000 Speaker 9: The most data's time for the economy is usually when 483 00:20:57,000 --> 00:20:58,399 Speaker 9: the federal reserve sides are going to help us. 484 00:20:59,280 --> 00:21:01,119 Speaker 2: It's just the point you'll make it just on the 485 00:21:01,119 --> 00:21:03,280 Speaker 2: timing that they wouldn't go in July because it would 486 00:21:03,280 --> 00:21:03,919 Speaker 2: spook people. 487 00:21:04,560 --> 00:21:06,520 Speaker 3: Yes, I mean I think that. I think there is 488 00:21:06,560 --> 00:21:07,120 Speaker 3: a cadence. 489 00:21:07,440 --> 00:21:09,440 Speaker 9: You know, there are four big meetings so they put 490 00:21:09,440 --> 00:21:11,800 Speaker 9: out new sumary of Economic projections and four smaller meetings 491 00:21:11,800 --> 00:21:15,040 Speaker 9: when they don't and I think a cadence of cutting 492 00:21:15,119 --> 00:21:18,520 Speaker 9: rates at every as Summary of Economic Projections meeting, so 493 00:21:18,520 --> 00:21:19,800 Speaker 9: this is September December. 494 00:21:19,880 --> 00:21:20,959 Speaker 3: It makes it predictable. 495 00:21:21,160 --> 00:21:23,680 Speaker 9: And you also get down to look our termal rate 496 00:21:23,720 --> 00:21:26,720 Speaker 9: here is essentially a normal rate of about four percent 497 00:21:26,800 --> 00:21:28,480 Speaker 9: or so in the federal funds rate. That's where we're 498 00:21:28,480 --> 00:21:31,480 Speaker 9: headed until the economy actually need or financial markets in 499 00:21:31,480 --> 00:21:34,040 Speaker 9: the economy need us to do something, but they shouldn't. 500 00:21:33,720 --> 00:21:35,720 Speaker 3: Try and micro manage the economy. 501 00:21:35,240 --> 00:21:38,840 Speaker 9: And because what they end up doing is causing bubbles 502 00:21:38,840 --> 00:21:40,440 Speaker 9: and busts in asset prices. 503 00:21:40,480 --> 00:21:41,760 Speaker 2: I'd like the view from both of you on the 504 00:21:41,760 --> 00:21:45,840 Speaker 2: following question. Are there political considerations at playing hair Do 505 00:21:45,880 --> 00:21:46,439 Speaker 2: you think there are? 506 00:21:47,160 --> 00:21:51,800 Speaker 9: I believe they try very hard not to not to 507 00:21:52,280 --> 00:21:55,480 Speaker 9: interact or make political decisions or virtually political decisions, because 508 00:21:55,480 --> 00:21:57,119 Speaker 9: they don't want to come in back at them. You know, 509 00:21:57,440 --> 00:22:00,440 Speaker 9: deep down, I know they prefer a government that lets 510 00:22:00,480 --> 00:22:02,800 Speaker 9: them do their job because while I don't always agree 511 00:22:02,800 --> 00:22:04,520 Speaker 9: with what they do, I think we would be infinitely 512 00:22:04,560 --> 00:22:07,040 Speaker 9: worse if we had people from the other side of 513 00:22:07,040 --> 00:22:08,959 Speaker 9: Washington telling them what to do. That would only make 514 00:22:08,960 --> 00:22:11,720 Speaker 9: the situation much worse. Side much all the Fed make mistakes, 515 00:22:11,720 --> 00:22:13,399 Speaker 9: but there are all those mistakes they make on their 516 00:22:13,440 --> 00:22:16,159 Speaker 9: road with the best intentions for the country, rather than 517 00:22:16,240 --> 00:22:19,000 Speaker 9: have the other side of Washington make the decisions for them. 518 00:22:19,160 --> 00:22:21,840 Speaker 10: Safe well, I think the answer is they want to 519 00:22:21,840 --> 00:22:24,280 Speaker 10: maximize social welfare. We can argue is to the right 520 00:22:24,320 --> 00:22:27,000 Speaker 10: way to maximize social welfare. The inflation hawks would say 521 00:22:27,200 --> 00:22:29,520 Speaker 10: keep inflation at two percent on a sustained level. Let 522 00:22:29,560 --> 00:22:32,560 Speaker 10: the economy find its own equilibrium on the real growth side. 523 00:22:32,720 --> 00:22:35,040 Speaker 10: This Federal Reserve, on the other hand, wants to maximize 524 00:22:35,040 --> 00:22:38,399 Speaker 10: social welfare by keeping unemployment very, very low. There's a 525 00:22:38,400 --> 00:22:40,800 Speaker 10: big difference in the fundamental profile. And that's the reason 526 00:22:40,800 --> 00:22:43,360 Speaker 10: why I'm sitting here saying it's nuts if they cut 527 00:22:43,400 --> 00:22:43,880 Speaker 10: interest rates. 528 00:22:43,920 --> 00:22:46,360 Speaker 6: They run a lot of risk if they will cut interest. 529 00:22:46,200 --> 00:22:47,720 Speaker 10: Rates, and they may have to reverse it down the 530 00:22:47,760 --> 00:22:51,480 Speaker 10: road because they've created this instinctive response in the marketplace. 531 00:22:51,880 --> 00:22:53,760 Speaker 10: But I also think you have to keep in mind 532 00:22:53,960 --> 00:22:57,560 Speaker 10: this Federal Reserve has been itching to cut rates. I 533 00:22:57,600 --> 00:23:00,400 Speaker 10: think they'd be crazy to go in July and open 534 00:23:00,440 --> 00:23:03,119 Speaker 10: issue as to whether or not we could talk about September. 535 00:23:03,160 --> 00:23:06,360 Speaker 10: It's always been about not if, but when, and we'll 536 00:23:06,359 --> 00:23:08,280 Speaker 10: see what the data shows us between now and then. 537 00:23:08,560 --> 00:23:11,240 Speaker 1: So what you're just saying is that essentially the most 538 00:23:11,240 --> 00:23:14,159 Speaker 1: important number for them is the employment number, not necessarily 539 00:23:14,200 --> 00:23:15,080 Speaker 1: the inflation number. 540 00:23:15,240 --> 00:23:15,880 Speaker 6: Is that correct. 541 00:23:16,119 --> 00:23:19,280 Speaker 10: They don't want to see a rise in unemployment, No, 542 00:23:19,520 --> 00:23:21,119 Speaker 10: they don't want to see it. Keep in mind, the 543 00:23:21,200 --> 00:23:23,520 Speaker 10: rise in unemployment we've had today goes back to something 544 00:23:23,600 --> 00:23:26,080 Speaker 10: David said earlier, which is basically, the household employment is 545 00:23:26,080 --> 00:23:29,359 Speaker 10: dipping and the payroll employment, Oh it isn't. The reality is, 546 00:23:29,720 --> 00:23:32,920 Speaker 10: whenever you re benchmark these two series, guess what, it's 547 00:23:32,960 --> 00:23:36,200 Speaker 10: the household employment that suggested to payroll. So the payroll 548 00:23:36,240 --> 00:23:39,360 Speaker 10: is the better coincident indicator of what's happening. So you've 549 00:23:39,359 --> 00:23:41,720 Speaker 10: had to dip down in household employment, You've had an 550 00:23:41,760 --> 00:23:44,119 Speaker 10: increase in the participation rate, and the unemployment rate has 551 00:23:44,160 --> 00:23:47,119 Speaker 10: gone up. You've had very few layoffs according to that 552 00:23:47,160 --> 00:23:50,600 Speaker 10: same Household survey, so you actually have an environment here 553 00:23:50,640 --> 00:23:53,159 Speaker 10: in which people aren't losing their jobs. So to me, 554 00:23:53,320 --> 00:23:55,960 Speaker 10: the labor market is actually still tighter, and that is 555 00:23:56,000 --> 00:23:56,919 Speaker 10: what they're paying attention. 556 00:23:57,040 --> 00:23:59,159 Speaker 9: Well, I think it's I think it's it's almost like 557 00:23:59,160 --> 00:24:02,280 Speaker 9: we've seen a micro economic change in the labor market 558 00:24:02,400 --> 00:24:04,760 Speaker 9: rather than a macroeconomic change. Because if you go back 559 00:24:04,800 --> 00:24:06,760 Speaker 9: to where we hit a trough back in April of 560 00:24:07,119 --> 00:24:10,040 Speaker 9: twenty three, if you could fog a mirror, you've got 561 00:24:10,040 --> 00:24:11,800 Speaker 9: a job. And frankly, there are a lot of people 562 00:24:11,800 --> 00:24:14,919 Speaker 9: in America who shouldn't be employed. And what's happened is 563 00:24:14,920 --> 00:24:16,959 Speaker 9: if you look at what's actually happened with the unemployment 564 00:24:17,040 --> 00:24:21,000 Speaker 9: numbers from the Household Survey, it's. 565 00:24:20,800 --> 00:24:24,119 Speaker 3: The long term unemployed. They've gone up. And that's really interesting. 566 00:24:24,160 --> 00:24:25,640 Speaker 3: In an economy we've got to eight million. 567 00:24:25,440 --> 00:24:27,680 Speaker 9: Job buildings, there are people who after fifteen weeks, after 568 00:24:27,680 --> 00:24:31,240 Speaker 9: twenty six weeks, cannot find a job. That's not about 569 00:24:31,240 --> 00:24:34,920 Speaker 9: the economy, that's about the you know, are these people employable? 570 00:24:35,160 --> 00:24:36,600 Speaker 9: And so I think what's happened is we've actually I 571 00:24:36,640 --> 00:24:38,600 Speaker 9: think Chairman Pal's right, we have actually returned to a 572 00:24:38,680 --> 00:24:41,680 Speaker 9: kind of normal labor markets. At four point one percent unemployment. 573 00:24:41,960 --> 00:24:43,320 Speaker 9: I don't think there's anything wrong with that. I don't 574 00:24:43,320 --> 00:24:45,560 Speaker 9: think it's a sign of great macroeconomic weakness. I would 575 00:24:45,560 --> 00:24:48,320 Speaker 9: take issue with one thing, though, I am concerned that 576 00:24:48,480 --> 00:24:50,920 Speaker 9: Payroll Survey may be overestimating things because when I look 577 00:24:50,960 --> 00:24:55,040 Speaker 9: at business formation data, it's suggesting that we're creating all 578 00:24:55,040 --> 00:24:57,480 Speaker 9: these businesses, and if that's feeding into their birth stats model, 579 00:24:57,840 --> 00:24:59,720 Speaker 9: they may be getting a little bit wrong because I 580 00:24:59,760 --> 00:25:00,760 Speaker 9: think I think there's a lot. 581 00:25:00,640 --> 00:25:01,640 Speaker 3: Of churn in businesses. 582 00:25:01,800 --> 00:25:04,879 Speaker 9: I don't think this has a much business new business 583 00:25:04,920 --> 00:25:06,840 Speaker 9: creation as some of the data would suggest. 584 00:25:07,080 --> 00:25:09,439 Speaker 1: Just want to offer this up fed funds futures have 585 00:25:09,560 --> 00:25:12,320 Speaker 1: just readjusted to about eighty five percent chance of September. 586 00:25:12,400 --> 00:25:14,440 Speaker 1: So that sounds like it's a bit more in line 587 00:25:14,440 --> 00:25:16,919 Speaker 1: with what I would expect given what we're seeing. 588 00:25:17,400 --> 00:25:19,000 Speaker 5: I'm curious, Steve, given. 589 00:25:18,920 --> 00:25:21,119 Speaker 1: What you're talking about, how you would see some of 590 00:25:21,119 --> 00:25:24,080 Speaker 1: the earnings that we got today that indicated a real 591 00:25:24,160 --> 00:25:27,639 Speaker 1: reduction in consumer spending and definitely less pricing power. 592 00:25:27,640 --> 00:25:28,480 Speaker 6: More broadly, I. 593 00:25:28,440 --> 00:25:32,440 Speaker 10: Think it indicated more the less broader pricing power environment. Beginning, 594 00:25:32,440 --> 00:25:34,720 Speaker 10: we're still running an inflation rate well above two percent 595 00:25:34,800 --> 00:25:37,520 Speaker 10: even with these numbers, so we're still a percentage point above. 596 00:25:37,520 --> 00:25:39,320 Speaker 10: And if we're going to say, oh gee, the deceleration 597 00:25:39,359 --> 00:25:41,720 Speaker 10: from three percent to two percent is a big movement 598 00:25:41,720 --> 00:25:44,359 Speaker 10: on growth, okay, the movement from three percent to two 599 00:25:44,400 --> 00:25:46,560 Speaker 10: percent on inflation has to be considered a big movement. 600 00:25:46,640 --> 00:25:49,400 Speaker 6: Though, So we're still in that environment. 601 00:25:49,400 --> 00:25:51,520 Speaker 10: So I think that the realities when we balance it 602 00:25:51,560 --> 00:25:53,879 Speaker 10: and we look back at the data in general, we 603 00:25:53,960 --> 00:25:56,640 Speaker 10: take a look, they're still well above their target on inflation, 604 00:25:56,880 --> 00:25:59,000 Speaker 10: and there's still maybe a trend growth. 605 00:25:59,160 --> 00:26:02,080 Speaker 6: Okay, where we go from here? I think the reality 606 00:26:02,200 --> 00:26:02,879 Speaker 6: is that you're. 607 00:26:02,760 --> 00:26:06,880 Speaker 10: Seeing an environment where cost pressures are squeezing companies and 608 00:26:06,960 --> 00:26:09,760 Speaker 10: that's really their problem, and they will if you cut 609 00:26:09,800 --> 00:26:13,240 Speaker 10: interest rates and you have a sharp rebounded economic activity, 610 00:26:13,560 --> 00:26:17,520 Speaker 10: they will pass those price increases along and when that happens, 611 00:26:17,640 --> 00:26:20,080 Speaker 10: then it becomes a problem for them. This is why 612 00:26:20,200 --> 00:26:23,399 Speaker 10: go slow, take your time. You've got a winning hand. 613 00:26:23,800 --> 00:26:27,679 Speaker 10: Why would you do anything today or potentially September to 614 00:26:27,840 --> 00:26:29,280 Speaker 10: destroy that winning hand. 615 00:26:29,400 --> 00:26:30,919 Speaker 6: It makes no sense to me. 616 00:26:31,119 --> 00:26:33,119 Speaker 2: I just wanted to know if FuG and Merits was 617 00:26:33,160 --> 00:26:34,840 Speaker 2: on the job description at JP Morgan. 618 00:26:34,880 --> 00:26:35,680 Speaker 6: That's all I want to know that. 619 00:26:35,840 --> 00:26:37,359 Speaker 5: I wanted to know what he was talking about. 620 00:26:37,440 --> 00:26:38,720 Speaker 1: Is it that you get close to it and. 621 00:26:38,680 --> 00:26:43,399 Speaker 2: Go yeah, yeah, yeah, you're checking. 622 00:26:44,800 --> 00:26:46,880 Speaker 5: Okay, okay, thank you, thank you. I'm just. 623 00:26:48,600 --> 00:26:48,879 Speaker 6: Watching. 624 00:26:48,920 --> 00:26:51,840 Speaker 2: They shout up to David Kelly of JP Morgan to 625 00:26:51,960 --> 00:26:54,639 Speaker 2: both if you, thank you, Jent. It's just fantastic. This 626 00:26:54,880 --> 00:26:59,359 Speaker 2: is the Bloomberg Seventans podcast, bringing you the best in markets, economics, 627 00:26:59,400 --> 00:27:02,360 Speaker 2: anchient pol. You can watch the show live on Bloomberg 628 00:27:02,400 --> 00:27:05,560 Speaker 2: TV weekday mornings from six am to nine am Eastern. 629 00:27:05,840 --> 00:27:09,200 Speaker 2: Subscribe to the podcast on Apple, Spotify or anywhere else 630 00:27:09,240 --> 00:27:11,879 Speaker 2: you listen, and as always on the Bloomberg Terminal and 631 00:27:11,960 --> 00:27:13,160 Speaker 2: the Bloomberg Business app.