WEBVTT - Surveillance: Afghanistan With Adm. Stavridis 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferroll and Lisa A. Brawnwitz Jaily. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.239 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg 0:00:23.360 --> 0:00:29.960 dot com, and of course on the Bloomberg terminal. There 0:00:30.000 --> 0:00:33.879 are seventeen miles of corridor in the Pentagon, and the 0:00:33.920 --> 0:00:36.240 distance between the second and the fourth floor and the 0:00:36.280 --> 0:00:39.840 acclaimed e ring where the fancy people said it's maybe 0:00:39.840 --> 0:00:44.240 thirty ft. James Travitis on September eleventh, two thousand one, 0:00:44.640 --> 0:00:46.800 was on the fourth floor. Is a plane hit the 0:00:46.800 --> 0:00:51.080 second floor? He was directly involved in that rescue effort, 0:00:51.560 --> 0:00:55.080 and of course went on to a longer tenure on 0:00:55.200 --> 0:00:58.800 a rock and on Afghanistan than literally any officer in 0:00:58.840 --> 0:01:02.640 the American military forces. He joins us now off of 0:01:02.760 --> 0:01:07.240 an extraordinary essay in Time magazine. Um At Musterrvidas, I 0:01:07.360 --> 0:01:10.760 just congratulate you on the clearest statement from all the 0:01:10.880 --> 0:01:15.400 experts weighing in on this debacle. Let's start with the 0:01:15.560 --> 0:01:20.080 simple idea. When you constructed that essay, what was the 0:01:20.200 --> 0:01:26.080 greatest mystery about where we are now in Afghanistan. I 0:01:26.160 --> 0:01:29.040 think the mystery for all of us has been the 0:01:30.000 --> 0:01:34.200 sudden complete collapse of the Afghan military. And to me, 0:01:35.120 --> 0:01:38.120 you can pull a lot of different threads together. But 0:01:38.440 --> 0:01:41.160 I spent a good deal of my four years as 0:01:41.200 --> 0:01:44.400 Supreme a life commander of NATO, that's of course Afghanistan 0:01:44.480 --> 0:01:48.280 NATO mission training the Afghan security forces. I would have 0:01:48.360 --> 0:01:51.080 bet they could have held on for a long time 0:01:51.240 --> 0:01:55.160 if we had continued to supply them and resource them. 0:01:55.200 --> 0:02:00.200 So this sudden collapse with a shock to me, must 0:02:01.120 --> 0:02:04.400 we have to get x thousands of people out. You 0:02:04.480 --> 0:02:08.760 are expert at deploying helicopters, planes, whatever to do it. 0:02:09.000 --> 0:02:11.200 I guess we're not going to deploy boats and ships 0:02:11.200 --> 0:02:13.560 to get people out. How do we get them out? 0:02:13.560 --> 0:02:17.440 Admiral Yeah, three miles to the sea, that's not a 0:02:17.480 --> 0:02:21.880 good option. Landlocked country. Um, we have the technology to 0:02:21.880 --> 0:02:24.200 get them out. The challenge is going to get them in. 0:02:24.960 --> 0:02:27.720 By that, I mean getting them into the airport. We've 0:02:27.760 --> 0:02:31.760 got to find a mechanism to bring in, first and 0:02:31.800 --> 0:02:35.280 foremost the American citizens, but also the interpreters. The allies 0:02:35.280 --> 0:02:38.799 who worked with us are are native partners. Um, there 0:02:38.840 --> 0:02:41.399 are tens of thousands of people who need to get out. 0:02:41.560 --> 0:02:45.120 The Taliban are around that airport. I think the only 0:02:45.200 --> 0:02:48.440 path forward to get the people in is going to 0:02:48.520 --> 0:02:51.440 be through the Taliban. No one likes that, but we're 0:02:51.440 --> 0:02:54.799 going to have to have a very direct dialogue with them, 0:02:55.600 --> 0:02:59.600 offering them some carrots and some sticks to open up 0:02:59.639 --> 0:03:02.480 the doors and let the people in who want to leave. 0:03:03.000 --> 0:03:06.920 A weal what do you make of this Taliban two 0:03:06.960 --> 0:03:09.200 point oh? As some folks who are calling it they've 0:03:09.200 --> 0:03:12.760 seen too on their initial press conference say everything that 0:03:12.800 --> 0:03:15.760 a Westerner would want to hear. What did you make 0:03:15.800 --> 0:03:19.200 of that Taliban two point oh? And I've been using 0:03:19.240 --> 0:03:23.080 that phrase for quite a while. Um is taliban one 0:03:23.120 --> 0:03:27.760 point oh with really good media training and and and 0:03:27.840 --> 0:03:31.440 I for one do not believe they are going to 0:03:31.560 --> 0:03:34.360 change their stripes. They're not going to suddenly listen to 0:03:34.400 --> 0:03:36.640 their better rangels. They are not going to be kind 0:03:36.680 --> 0:03:39.080 of a gentler. And even in the last couple of days, 0:03:39.120 --> 0:03:43.480 we've seen shootings, beatings, their reports from out in the provinces, 0:03:44.160 --> 0:03:48.000 out from under the side of Western media of girls 0:03:48.120 --> 0:03:50.800 being taken away from their homes. I don't look for 0:03:50.880 --> 0:03:54.600 big improvements. Unfortunately, all right, Adam, given where we are, 0:03:54.640 --> 0:03:56.600 and it's it's easy to obviously keep focusing on the 0:03:56.680 --> 0:03:58.760 video that we see on our news shows over the 0:03:58.840 --> 0:04:02.080 last several days, but you've got the perspective of the 0:04:02.200 --> 0:04:05.080 longer term as you look back over the last twenty years. Here, 0:04:05.240 --> 0:04:07.480 what are your thoughts as you see these events of 0:04:07.600 --> 0:04:11.640 unfolding on the screen. I think there's three vectors of 0:04:11.800 --> 0:04:17.559 failures here. Uh One is the Afghan government and in 0:04:17.640 --> 0:04:22.160 that sense, the people of Afghanistan. They did not buy into, 0:04:22.400 --> 0:04:25.440 by and large, the vision that we had for the country. 0:04:25.520 --> 0:04:30.240 I think a second vector is ourselves, our belief, our 0:04:30.360 --> 0:04:34.920 hubris in believing that we could create a kind of 0:04:35.279 --> 0:04:41.080 highly democratic, very Western oriented structure, train a national army. 0:04:41.600 --> 0:04:46.120 Um we believe too much in our own mission. And 0:04:46.120 --> 0:04:48.920 then thirdly, you've got to give credit to the Taliband here. 0:04:49.000 --> 0:04:52.919 That's the third vector. They've been very successful and have 0:04:53.520 --> 0:04:57.560 found ways to maneuver around us. And well, I've got 0:04:57.880 --> 0:05:00.760 about forty two more questions, paulse we need tells me 0:05:00.839 --> 0:05:04.480 with fifty more questions, But here's the single final question 0:05:04.520 --> 0:05:08.240 on this morning, and it's just simply, isn't it to 0:05:08.320 --> 0:05:13.840 the benefit of the Taliban. They're pushed in their tribe. 0:05:14.520 --> 0:05:18.039 They've got their own rules set. Don't they want all 0:05:18.040 --> 0:05:22.640 those elites to leave cobble. Isn't it your best interest 0:05:23.040 --> 0:05:27.159 to get the elites out? It is, and frankly, not 0:05:27.279 --> 0:05:29.960 just the elites they want to get In my view, 0:05:30.080 --> 0:05:33.279 they ought to want to get all of these people out. 0:05:34.000 --> 0:05:38.480 The question is what's their appetite for vengeance as opposed 0:05:38.520 --> 0:05:42.320 to their rational calculus. Let's hope they land on the 0:05:42.400 --> 0:05:45.359 ladder almost tribus. Thank you so much for joining us. 0:05:45.400 --> 0:05:47.279 We've barely had time to touch on my Book of 0:05:47.320 --> 0:05:50.400 the Summer two thousand thirty four, a novel of the 0:05:50.480 --> 0:05:54.240 next World War. It is a different novel than what 0:05:54.360 --> 0:05:57.279 we've been talking about, but I can't say enough about it. 0:05:57.279 --> 0:06:01.320 It is. It is just a phenomenal read. I'd also 0:06:01.360 --> 0:06:05.799 mentioned Thomas Barfield's one volume in Afghanistan. Paul just superb, 0:06:06.080 --> 0:06:15.120 just superb on this stew We go macro. We do 0:06:15.200 --> 0:06:19.240 that with George gun Comvas with m u f G Securities, 0:06:19.320 --> 0:06:22.960 America's head of US macro strategy. George, I want you 0:06:23.040 --> 0:06:28.280 to fold the g d P guestimates into the dynamics 0:06:28.320 --> 0:06:33.159 of the market. You are acclaimed it yield dynamics. How 0:06:33.160 --> 0:06:36.320 do you fold a movable feast of g d P 0:06:36.600 --> 0:06:41.000 guesses into that? You don't, tom, I mean, and that's 0:06:41.040 --> 0:06:44.640 really the bottom line. We've been really divorced from these 0:06:44.640 --> 0:06:47.960 fundamentals for you know, going on five ten years. And 0:06:47.960 --> 0:06:51.240 this is something that you know, I think most rate 0:06:51.279 --> 0:06:54.760 forecasters have been kind of struggling with is trying to 0:06:54.839 --> 0:06:56.640 go back to what, you know, what does growth and 0:06:56.680 --> 0:06:59.520 inflation really mean for what should be captured within an 0:06:59.520 --> 0:07:02.680 interest rate forecast? And I think that's that's you know, 0:07:02.839 --> 0:07:04.760 that's the way the way things go. I mean, the 0:07:04.800 --> 0:07:08.719 bomb market trades more and more on price and on momentum. 0:07:08.800 --> 0:07:11.040 It trains almost like a commodity in many, many regards, 0:07:11.040 --> 0:07:13.240 where yield becomes like a second thought until yields get 0:07:13.280 --> 0:07:15.360 too low and then people start saying, wait, why am 0:07:15.400 --> 0:07:18.040 I buying it? There's a lot of carry. George Lason 0:07:18.080 --> 0:07:20.520 brought up a quote yesterday from Bank America that I 0:07:20.560 --> 0:07:22.800 think it's really important. I was talking about it as well. 0:07:23.240 --> 0:07:25.520 Bank America suggested we were at the threshold of a 0:07:25.560 --> 0:07:28.040 major bifurcation of scenarios. They could say, you know, it's 0:07:28.080 --> 0:07:29.720 go to north of two percent by the end of 0:07:29.760 --> 0:07:31.600 the year, south of one percent by the end of 0:07:31.640 --> 0:07:33.880 the year. Do you think things are that funny balanced 0:07:34.000 --> 0:07:38.280 right now. I mean, maybe not that finally balanced, but 0:07:38.440 --> 0:07:40.360 I do think that there is a break potentially coming 0:07:40.440 --> 0:07:42.800 up soon and that and that is definitely true. And 0:07:42.880 --> 0:07:44.400 I think you kind of in your intro kind of 0:07:44.480 --> 0:07:46.840 alluded to these things that on the one hand, the 0:07:46.840 --> 0:07:48.560 FETE is not gonna get boxed in. I mean, we 0:07:48.800 --> 0:07:51.160 saw from the RB and Z you know, if you know, 0:07:51.160 --> 0:07:52.880 the delta virus were to get worse, or if we 0:07:53.040 --> 0:07:54.680 get any sort of kind of slow downs beyond what 0:07:54.760 --> 0:07:57.640 we're being projected, or or the concerns of like this 0:07:57.720 --> 0:08:00.440 kind of peak growth gets you know, further in trenched, 0:08:00.800 --> 0:08:03.800 and that factors into a slower end of the year, 0:08:03.800 --> 0:08:05.640 and it's the early part of Q one. The fact 0:08:05.680 --> 0:08:07.920 can just kind of always push back. That's that's that's 0:08:07.920 --> 0:08:10.400 what they'll always do. They're never gonna pull forward tightening, 0:08:10.440 --> 0:08:12.800 They're always gonna push it back. And of course these 0:08:12.840 --> 0:08:15.200 global factors matter too. And so even if we were 0:08:15.200 --> 0:08:17.280 to handle the delta virus better in the US, if 0:08:17.320 --> 0:08:20.200 the rest of the world either has a more lockdowns. 0:08:20.200 --> 0:08:23.040 That's that's an issue. Plus this China growth dynamic, if 0:08:23.120 --> 0:08:26.200 if that starts a really way on commodities and overall 0:08:26.800 --> 0:08:29.920 just kind of economic financial conditions, the Fed's going to 0:08:30.000 --> 0:08:31.760 take that into account as well. When you say the 0:08:31.760 --> 0:08:34.000 FED won't get boxed in in other words, they don't 0:08:34.000 --> 0:08:37.360 want to necessarily commit to tapering. There is an issue 0:08:37.600 --> 0:08:41.280 of harmful effects of their carrying on with their programs 0:08:41.280 --> 0:08:43.440 the way they are for a longer period of time, 0:08:43.559 --> 0:08:47.400 especially as we do see inflationary pressures. Yes, they're idiosyncratic 0:08:47.400 --> 0:08:49.760 with respect to supply chain issues, but also on the margin, 0:08:50.000 --> 0:08:52.839 if we do get a rebound like Goldban, Sachs thinks 0:08:52.880 --> 0:08:54.800 it could be that much bigger if the FED keeps 0:08:54.840 --> 0:08:58.480 pumping money into the financial system. How much are you 0:08:58.559 --> 0:09:01.520 concerned that the FED is drugging off some of these 0:09:01.600 --> 0:09:05.120 dill interious effects of their continuing of monetary stimulus at 0:09:05.120 --> 0:09:08.640 this point, Oh, I'm concerned. I mean, as we all know, 0:09:08.679 --> 0:09:10.080 it's all not what we want the FED to do, 0:09:10.200 --> 0:09:11.600 or we think to fetch should do. It's what they 0:09:11.600 --> 0:09:13.280 will do, right, so we're always trying to forecast that. 0:09:14.160 --> 0:09:15.439 I mean, I do think that they should be in 0:09:15.480 --> 0:09:18.040 the process of tapering and maybe they've overstayed there their 0:09:18.120 --> 0:09:21.280 Q we welcome for from quarters now potentially and they maybe, 0:09:21.320 --> 0:09:22.880 you know, we should have been starting sooner. But you 0:09:22.960 --> 0:09:25.760 know that's that's my my opinion, not necessarily what they're 0:09:25.800 --> 0:09:28.079 gonna do. Well, well, let's go with that. Then what's 0:09:28.240 --> 0:09:31.320 the negative consequence of that that you're willing to bet 0:09:31.360 --> 0:09:33.280 on or that you're gaming out in terms of your 0:09:33.320 --> 0:09:36.800 market call. Yeah, so right now, like the concern is 0:09:36.840 --> 0:09:39.679 and we're seeing it manifests itself in the r RP 0:09:39.800 --> 0:09:42.280 in the reverse repot program and how there's too much liquidity. 0:09:42.360 --> 0:09:44.520 Even in the minutes yesterday, Uh, you know, there was 0:09:44.600 --> 0:09:47.280 referenced that potentially as we headed to a debt ceiling 0:09:47.520 --> 0:09:49.480 with all this liquidity, with the Fed not tapering yet, 0:09:49.520 --> 0:09:52.000 potentially uh you know, most likely, I don't think they're 0:09:52.000 --> 0:09:53.840 going to do it in September unless things really perfectly 0:09:53.880 --> 0:09:56.400 line up in terms of tapering announcement any even that 0:09:56.440 --> 0:09:58.760 they do that, they're not gonna start in September. So 0:09:58.800 --> 0:10:00.840 there's gonna be a lot of liquidity still flows in 0:10:00.840 --> 0:10:03.800 the system into this very acute period of excess liquidity, 0:10:04.840 --> 0:10:06.640 and so that you know, causes an intertal potentially for 0:10:06.640 --> 0:10:09.360 the money market. So there's definitely a science that you know, 0:10:09.400 --> 0:10:10.960 they need to be tapering and they need to get 0:10:11.000 --> 0:10:13.199 out of this que business. You've spent a long time 0:10:13.240 --> 0:10:15.720 with Japanese banks, George. The reason I bring that up 0:10:15.800 --> 0:10:17.520 is because you've got a lot of experience looking at 0:10:17.559 --> 0:10:21.359 the Japanese bond market. I want to understand from your perspective, 0:10:21.400 --> 0:10:23.600 because some people raise this question just because I'm asking 0:10:23.600 --> 0:10:25.440 it doesn't mean I believe it's going to happen. I 0:10:25.440 --> 0:10:27.520 think it's a question we need to be asking. Do 0:10:27.520 --> 0:10:29.840 you think we could replicate what we've seen type place 0:10:29.840 --> 0:10:33.160 in Japan over the last twenty years, which ultimately Europe 0:10:33.160 --> 0:10:35.040 took over in the last ten Do you think that 0:10:35.120 --> 0:10:39.840 could happen in America? So Europe is still struggling with 0:10:39.920 --> 0:10:43.040 believing that there's a Japanification going on within their bond market. 0:10:43.080 --> 0:10:45.880 But when you have negative rates and you have just 0:10:46.040 --> 0:10:48.640 low activity overall in Europe, I think the Europe looks 0:10:48.640 --> 0:10:51.200 a lot more like Japan than the US will for 0:10:51.240 --> 0:10:53.199 the most part. But I think that you know, yeah, 0:10:53.200 --> 0:10:55.319 that we talk about always like these breaks and markets 0:10:55.360 --> 0:10:57.360 for the next quarter, but the real breaks is trying 0:10:57.400 --> 0:11:00.200 to understand the next three or five years, if the 0:11:00.280 --> 0:11:02.240 U S can really get it back into a growth 0:11:02.240 --> 0:11:05.160 trend that would prevent us from falling into like this 0:11:05.240 --> 0:11:09.480 Japan scenario. I would say, I would say, we're not there. 0:11:09.640 --> 0:11:11.920 It's not clear yet. I agree m u f G 0:11:12.200 --> 0:11:21.080 Securities Matt Cross, head of US MACROI Strategy. He is optimistic. 0:11:21.280 --> 0:11:24.880 His name is Neil Datta, and he is courageously carved 0:11:25.000 --> 0:11:29.480 an optimistic tone on the classic g DP formula. He 0:11:29.600 --> 0:11:32.360 joins us down on a day of a multiple set 0:11:32.440 --> 0:11:37.640 of glooms. Neil, within the GDP formula, what's gonna come 0:11:37.679 --> 0:11:40.760 to the rescue? Is it the consumer? Is it investment, 0:11:40.840 --> 0:11:44.320 net exports? What comes to the rescue to give us 0:11:44.320 --> 0:11:49.400 a better than good outcome? Well, I think it's inventories. Uh. 0:11:49.600 --> 0:11:53.200 You know when you look at UM, the last I 0:11:53.400 --> 0:11:58.560 s M number, the customer inventories index that looks at UM, 0:11:58.559 --> 0:12:00.760 you know respondents that are saying their current level of 0:12:00.800 --> 0:12:05.280 inventories are too low compared to too high, and it's 0:12:05.320 --> 0:12:09.680 basically at a record. So basically manufacturing UM survey respondents 0:12:09.720 --> 0:12:12.480 are telling you the inventory levels are too low. Basically, 0:12:12.480 --> 0:12:15.720 what that means is they're going to be um, you know, 0:12:15.800 --> 0:12:18.240 working to fill those inventories. Right. They need to get 0:12:18.280 --> 0:12:22.040 inventories into line with final demand. And while inventories, you know, 0:12:22.120 --> 0:12:25.080 over long periods of time kind of net out to zero, 0:12:25.320 --> 0:12:27.319 they do in the short run contribute a lot to 0:12:27.400 --> 0:12:30.800 cyclical swings and growth. And that's gonna put manufacturing production 0:12:31.920 --> 0:12:34.160 into overdrive. So you know, when you look at things 0:12:34.200 --> 0:12:37.520 like Philly fed at nineteen point four, that's still a 0:12:37.559 --> 0:12:41.360 pretty healthy number. Uh. And so you know, manufacturing production 0:12:41.400 --> 0:12:44.080 is going to be a talent for economic activity. And 0:12:44.120 --> 0:12:46.600 as those inventories catch up to final demand, that's gonna 0:12:46.600 --> 0:12:48.760 be a big tale went for overall GDP. I just 0:12:48.800 --> 0:12:52.720 took Philadelphia fed photos off my terminal. You're uh back 0:12:52.800 --> 0:12:55.439 fifteen years and Neil's right, it's nicely above the long 0:12:55.559 --> 0:12:58.480 term moving average. Neil Dudda, what is your g DP 0:12:58.800 --> 0:13:02.199 for two thousand tow you one? We're seeing everybody market 0:13:02.240 --> 0:13:05.400 and market down. Where are you for the economic growth 0:13:05.480 --> 0:13:09.520 of the nation for this calendar year? Yeah, I mean, 0:13:09.559 --> 0:13:12.360 I think like six and a half seven percent is 0:13:12.400 --> 0:13:15.640 not beyond the realm of expectations. And I understand that 0:13:15.679 --> 0:13:18.560 people are taking their their forecast down for the third quarter. 0:13:18.640 --> 0:13:21.200 I think that's largely just a mechanical adjustment to what's 0:13:21.200 --> 0:13:24.160 going on with the delta variants. So you have increasing 0:13:24.200 --> 0:13:26.840 COVID spread. People are taking matters into their own hands 0:13:26.840 --> 0:13:31.000 and staying away from restaurants, their travel hotels, these sort 0:13:31.040 --> 0:13:34.480 of high touch services. But you know, I mean the 0:13:34.520 --> 0:13:37.480 people that I talked to have a time horizon that 0:13:37.559 --> 0:13:42.120 extends beyond three weeks, and um, you know, when I 0:13:42.200 --> 0:13:45.760 look further out the twelve to eighteen month outlook, can 0:13:45.800 --> 0:13:49.520 anyone really say that that's materially changed. Um. If anything, 0:13:49.920 --> 0:13:52.800 you're seeing more activity getting pushed into that into that 0:13:52.840 --> 0:13:55.600 time frame. Is such an important point, if you allow 0:13:55.640 --> 0:13:58.040 me to jump in, We've been talking about your point 0:13:58.080 --> 0:14:01.720 through this morning. For you and other it's recovery delayed, 0:14:01.920 --> 0:14:04.720 not derailed. That any growth we lose in this quarter, 0:14:05.480 --> 0:14:08.600 we gain regain in the in the next quarter in 0:14:08.600 --> 0:14:11.600 the year after that. Now, what's the difference between a 0:14:11.640 --> 0:14:15.240 recovery that's delayed in the recovery that's derailed. What distinguishes 0:14:15.240 --> 0:14:17.640 the two things. Well, I'm just saying there's not as 0:14:17.720 --> 0:14:21.160 much structural, um, you know, changes in consumer behavior than 0:14:21.200 --> 0:14:26.160 people are expecting right now. So just extrapolating what's going on, UM, 0:14:26.200 --> 0:14:29.080 and you know in August isn't necessarily going to tell 0:14:29.080 --> 0:14:30.960 you much about what's going to happen next August. It 0:14:31.080 --> 0:14:33.680 may well be John that we're trading a bit more 0:14:33.760 --> 0:14:38.080 COVID risk now for a lot less COVID risk later. UM. Certainly, 0:14:38.120 --> 0:14:40.800 if you look at UM, you know, some of the 0:14:41.120 --> 0:14:44.240 data on coronavirus, it looks like cases will probably start 0:14:44.240 --> 0:14:47.280 to peak sometime in the next week and case growth 0:14:47.320 --> 0:14:49.560 will begin to moderate. To the extent that COVID is 0:14:49.560 --> 0:14:52.960 an issue, I think it's more of an issue in 0:14:52.960 --> 0:14:57.840 the Asia Pacific economies, right Australia, New Zealand, UM, certainly Vietnam, 0:14:58.360 --> 0:15:00.080 you know you're seeing and so maybe that's going to 0:15:00.480 --> 0:15:03.000 exacerbate some supply chain issues. But at the end of 0:15:03.000 --> 0:15:04.520 the day, I don't think it's going to matter much 0:15:04.520 --> 0:15:06.720 for the U S housing situation. Well, but you know, 0:15:07.120 --> 0:15:08.880 there does seem to be a one to punch here. 0:15:08.920 --> 0:15:12.640 On one hand, I mean, I'm just throwing this out there. 0:15:12.840 --> 0:15:17.160 Aren't you tired of being wrong? For the last skeptical 0:15:17.360 --> 0:15:20.800 I'm not making a market call, honestly, it's honestly trying 0:15:20.840 --> 0:15:23.560 to come up to look around corners. Wow, you come 0:15:23.560 --> 0:15:26.120 out with gloves on. Um, bear with me while I 0:15:26.200 --> 0:15:28.880 try to ask my question. But like just this one 0:15:28.920 --> 0:15:32.240 two punch of supply chain disruptions that are causing higher 0:15:32.280 --> 0:15:35.960 input costs in addition to a FED that's being that 0:15:36.040 --> 0:15:39.280 much more patient because of some of the headwinds that 0:15:39.400 --> 0:15:43.360 the economy is is experiencing. I mean, does this contribute 0:15:43.400 --> 0:15:47.480 to higher inflation on the margins down the line than 0:15:47.600 --> 0:15:52.120 otherwise would happen? Well, I think it's not so much 0:15:52.160 --> 0:15:54.080 about the inflation in my view, it's about what the 0:15:54.120 --> 0:15:56.160 FED is gonna do about it, right, I mean, so, 0:15:56.400 --> 0:15:58.720 I mean I conceive that point. I mean, you have 0:15:59.000 --> 0:16:01.960 had a little bit of you could say, stagflation light 0:16:02.600 --> 0:16:05.080 concerns coming to the market. Growth has weakened. I mean 0:16:05.120 --> 0:16:07.200 even the FED staff took down their growth outlook and 0:16:07.240 --> 0:16:09.120 revised up their inflation outlook. We saw it in the 0:16:09.200 --> 0:16:13.680 minutes yesterday. Um. But again I think that's probably going 0:16:13.720 --> 0:16:18.320 to be uh temporary and certainly, um, you know you 0:16:18.360 --> 0:16:20.800 have seen things like use car prices come down. I mean, 0:16:20.840 --> 0:16:23.880 if anything, in the July data, the supply chain issues 0:16:23.880 --> 0:16:26.120 are becoming less prevalent, right. I mean, if you look 0:16:26.120 --> 0:16:28.960 at building unit housing units under construction still going up, 0:16:29.000 --> 0:16:32.360 completions going up, so even as starts moderated, right, So 0:16:32.400 --> 0:16:34.640 that tells you that buildings are working through those backlogs 0:16:34.840 --> 0:16:38.120 and similar we had a nice popping manufacturing production driven 0:16:38.240 --> 0:16:41.640 by h autos motor vehicles. Neil, Can I ask you 0:16:41.640 --> 0:16:44.640 a question, does it what does it make you upset 0:16:44.720 --> 0:16:47.640 to hear people try to come up with the potential 0:16:47.680 --> 0:16:50.520 barish counterpoints at a time where there still is a 0:16:50.560 --> 0:16:52.800 lot of pain in the economy. I mean, yes, it 0:16:52.840 --> 0:16:57.320 has been my right. My job, Lisa is to take 0:16:57.360 --> 0:17:00.920 an economics call and help investors turned that into some 0:17:01.000 --> 0:17:04.440 kind of a market call. In other words, make them 0:17:04.480 --> 0:17:08.040 help help them make money. So if I wanted to 0:17:08.040 --> 0:17:10.520 be bearish, I would tell people to pile I mean, 0:17:10.600 --> 0:17:11.919 at the end of the day, it's not about what 0:17:11.960 --> 0:17:17.159 GDP is. It's irrelevant. It's using that two and translating 0:17:17.200 --> 0:17:18.800 it into a market call. So if you want to 0:17:18.800 --> 0:17:21.080 go head first and buy utilities hand over first, be 0:17:21.160 --> 0:17:23.240 my guest, but I will I'll be telling people to 0:17:23.280 --> 0:17:27.440 do something else. Uh. And that's ultimately how business economics 0:17:27.480 --> 0:17:30.639 market economics That's why it's important. A GDP call on 0:17:30.640 --> 0:17:33.119 its own is irrelevant. What matters is taking that GDP 0:17:33.240 --> 0:17:37.480 call and translating into some kind of market outlook. So uh, 0:17:37.600 --> 0:17:39.760 you know, if if I'm looking at it and I'm 0:17:39.760 --> 0:17:42.000 telling people are saying you want to be raising cash 0:17:42.000 --> 0:17:47.040 for the last twelve months, it's ridiculous. So um, I 0:17:47.040 --> 0:17:50.119 think the cyclical trade is probably taking a temporary break. 0:17:50.200 --> 0:17:53.040 But this is essentially my view of consolidation within an 0:17:53.080 --> 0:17:55.199 ongoing up trend in the market. You two should have 0:17:55.240 --> 0:17:58.960 to run, could just sit, I could just take a break, 0:17:59.400 --> 0:18:01.879 nail dust, Nanny's gonna catch up. Appreciate your time and 0:18:01.960 --> 0:18:11.360 nice research had of US economic research. This is an 0:18:11.359 --> 0:18:17.080 important conversation because Jennifer news Oh reads the research. Jennifer 0:18:17.160 --> 0:18:21.720 news O The New York Times has a standout article 0:18:22.480 --> 0:18:26.680 on these silly plastic barriers that have invaded our lives 0:18:27.160 --> 0:18:32.520 That includes JOHNS Hopkins University research which say death screens 0:18:32.640 --> 0:18:38.280 could actually give us an increased risk versus intelligent use 0:18:38.440 --> 0:18:42.200 of mass. Can you help us with the plastic that's 0:18:42.240 --> 0:18:47.200 engulfed us. I am hermetically sealed from Lisa and John. 0:18:47.359 --> 0:18:53.080 I haven't hugged Lisa in like eighteen months. I mean, 0:18:53.160 --> 0:18:56.880 help me, Jennifer. I think Lisa nets out rotten out home. 0:18:57.280 --> 0:18:59.320 Can you watch the ductor about a question? I missed 0:18:59.320 --> 0:19:02.600 you guys so much. Jennifer, Please on the plastic screen. 0:19:04.600 --> 0:19:07.280 Somebody reach over and hog Tom. He really needs it. 0:19:07.480 --> 0:19:11.080 Go ahead. I mean, you know, listen. Uh. We don't 0:19:11.119 --> 0:19:12.880 have a lot of evidence for a lot of these things. 0:19:12.920 --> 0:19:15.560 I think intuitively, there are probably some environments in which 0:19:15.600 --> 0:19:18.440 it makes sense. It's, for instance, toll both operators people 0:19:18.440 --> 0:19:21.159 who have a lot of exposure with the public. Putting 0:19:21.200 --> 0:19:25.399 another barrier between those people and the people they're serving, 0:19:25.440 --> 0:19:26.879 I think makes a lot of sense. But when you 0:19:26.920 --> 0:19:28.679 see people sitting at a desk and they have like 0:19:28.680 --> 0:19:31.880 a three foot um, you know, plexiglass between them, it's 0:19:31.960 --> 0:19:34.080 it's not clear what that does, if anything, and it 0:19:34.119 --> 0:19:37.280 sounds like it could potentially cause harm. The bottom line 0:19:37.400 --> 0:19:39.479 is UM probably not going to be as protective as 0:19:39.480 --> 0:19:41.840 a mask. Although you know, we always try to layer 0:19:41.960 --> 0:19:44.920 these interventions, but UM, you know, I think the most 0:19:44.920 --> 0:19:47.080 egregious example of the plastic was that one of the 0:19:48.119 --> 0:19:51.439 vice presidential debate, those tiny little things that UM separated 0:19:51.760 --> 0:19:55.520 m vice presidential candidates not going to do much help 0:19:55.600 --> 0:19:58.440 me with then the need to get vaccinated. What is 0:19:58.480 --> 0:20:02.200 the last forty hour show you within all your reading 0:20:02.200 --> 0:20:07.360 and research about the getting vaccinated, that has not changed. 0:20:07.400 --> 0:20:10.600 If we do anything to put ourselves back to normal, 0:20:10.640 --> 0:20:12.639 to go to back to our lives, it is to 0:20:12.760 --> 0:20:16.199 get vaccinated. There is nothing new in the data that 0:20:16.320 --> 0:20:20.240 suggests otherwise. Heard a lot of news yesterday about the 0:20:20.240 --> 0:20:23.119 potential need for a third dose. I will tell you 0:20:23.200 --> 0:20:26.600 most people, including myself, think that the data aren't quite 0:20:26.600 --> 0:20:28.720 there to suggest that most people need it. There are 0:20:28.760 --> 0:20:33.320 clearly some small groups of people that absolutely need extra help, 0:20:33.359 --> 0:20:36.120 and that's the immune compromise, and they're already able to 0:20:36.160 --> 0:20:40.040 access a third dose. But as far as people broadly, uh, 0:20:40.080 --> 0:20:42.080 you know, we're not yet convinced that that's happened. The 0:20:42.080 --> 0:20:44.679 bottom line is the vaccines are still doing exactly what 0:20:44.720 --> 0:20:46.600 they need them to do. They prevent us from getting 0:20:46.840 --> 0:20:49.000 still enough to get in the hospital, which again, if 0:20:49.000 --> 0:20:50.879 this virus can't do it, we'd never hear of it. 0:20:50.960 --> 0:20:52.880 Dr Newts. So then when do we stop caring whether 0:20:52.920 --> 0:20:55.320 we get infected? Because right now I'll tell you, I'll 0:20:55.359 --> 0:20:57.399 be honest, it is a vaccinated individual who has a 0:20:57.480 --> 0:20:59.320 child at home, and I sound like a broken record 0:20:59.320 --> 0:21:02.280 who is not needed. I care as much about getting 0:21:02.320 --> 0:21:05.879 infected as I do about getting very sick, just simply 0:21:05.960 --> 0:21:08.440 because this will affect the people who I care about. 0:21:08.480 --> 0:21:11.439 So when does when does that change? Sure? So I 0:21:11.440 --> 0:21:14.640 think that's exactly a potential off ramp for caring about 0:21:14.680 --> 0:21:18.159 getting infected. UM. I have also unvaccinated kids at home 0:21:18.160 --> 0:21:21.560 because they're too young, and hopefully when vaccines become available 0:21:21.600 --> 0:21:24.040 for them, that'll that will lessen those worries. But getting 0:21:24.040 --> 0:21:26.640 a third dose doesn't necessarily prevent you from getting infected 0:21:26.640 --> 0:21:29.159 in the first place, so that's unfortunately not going to 0:21:29.280 --> 0:21:31.359 use those worries for you. Dr needs. There have been 0:21:31.400 --> 0:21:34.199 reports about new antibody therapies coming out of China that 0:21:34.240 --> 0:21:36.880 have actually been somewhat promising. How much does that potentially 0:21:37.320 --> 0:21:40.440 provide a game changer here where we can actually combat 0:21:40.440 --> 0:21:43.280 this and treat it more like a regular illness. I 0:21:43.320 --> 0:21:45.800 think that's, you know, one of the missing areas that 0:21:46.280 --> 0:21:49.560 we need more progress on it is treatments because you 0:21:49.600 --> 0:21:51.640