WEBVTT - Constance Hunter Talks Core CPI

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<v Speaker 1>Bloomberg Audio Studios. Podcasts.

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<v Speaker 2>Radio. News.

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<v Speaker 3>Huge reaction in the market here. The 10-year real yield

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<v Speaker 3>explodes out five basis points. It was out seven moments ago, 2.70. Damian,

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<v Speaker 3>price down and yield up dramatically, particularly that two-year. I

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<v Speaker 3>guess lock it in, rate lift December 9th.

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<v Speaker 1>Well, I mean, a lot of people called the softness

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<v Speaker 1>in used cars and trucks. We saw that. But I mean,

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<v Speaker 1>OER and shelter, I mean, I think we saw a

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<v Speaker 1>pretty big number. Constance, remind me if I'm wrong here,

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<v Speaker 1>last month, And I don't know. I mean, I'm trying

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<v Speaker 1>to find the data here. I mean, what do we

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<v Speaker 1>look like here?

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<v Speaker 3>Yeah.

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<v Speaker 2>So, I mean, we look at shelter of 0.3 month

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<v Speaker 2>over month. Again, that annualizes out to about a 3.3

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<v Speaker 2>percent rate, so higher than the Fed's desired level. But

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<v Speaker 2>look at transportation services. We are still passing through energy

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<v Speaker 2>costs to the services economy. And then one other thing

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<v Speaker 2>I would say, and it's not, I have to get

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<v Speaker 2>into the detail of the report that's not in the

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<v Speaker 2>BLS release, but, you know, AI prices are a concern.

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<v Speaker 2>And the upshot of the of the election is that

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<v Speaker 2>there's going to be some slowdown in the build-up. So

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<v Speaker 2>less supply and same demand equals higher prices.

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<v Speaker 3>Did I just hear you get a special report from BLS?

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<v Speaker 3>Only Constance Hunter of EIU? Did you get a special?

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<v Speaker 3>If only.

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<v Speaker 2>No, just going back into the later pages here and

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<v Speaker 2>all the details and sort of parsing through it all.

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<v Speaker 2>So let me get into that.

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<v Speaker 3>Across America, she's looking at the data. What she's saying is, hey,

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<v Speaker 3>wise guy, say something and let me read it. The report,

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<v Speaker 3>the advantage of the Bloomberg is it all piles in

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<v Speaker 3>here in real time, plus she's got her own sources,

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<v Speaker 3>which we don't have. Red on the screen here, markets

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<v Speaker 3>pull back a little bit. The VIX was, oh, 20.3.

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<v Speaker 3>It's now 20.7. Yields go up. The two-year explodes out

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<v Speaker 3>13 basis points. And what does this mean for the

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<v Speaker 3>rest of the world? Damian, your expertise here We mentioned

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<v Speaker 3>Indonesia and the Philippines flat on their back.

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<v Speaker 1>Well, what I look at is the components, and the

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<v Speaker 1>two components that matter for emerging markets are food and energy.

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<v Speaker 1>And if you look at month-over-month rate rise in food,

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<v Speaker 1>I think 0.5% here in the U.S., if that's any

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<v Speaker 1>indication of what's going on in emerging markets, that's not

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<v Speaker 1>very good. And then energy, I mean, energy is still rising. Look,

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<v Speaker 1>we've seen, obviously, you know, the November print will probably

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<v Speaker 1>reflect what we've seen in Brent crude prices, you know,

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<v Speaker 1>of late. But still, energy prices up 0.7%. This is a.

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<v Speaker 3>Critical observation in that oils come in from 117 Brent

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<v Speaker 3>down beneath 100 Brent. But we're still a ginormous level

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<v Speaker 3>above where we were 12 months ago.

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<v Speaker 1>Right, Damian? That's right. And look, I mean, just from

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<v Speaker 1>my vantage point, whether or not what we saw with

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<v Speaker 1>the midterms and it becoming more difficult for data centers

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<v Speaker 1>and AI and all that kind of stuff, how does

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<v Speaker 1>that kind of translate into prices here for the average U.S. consumer?

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<v Speaker 1>I mean, we know that delinquencies are rising. We know

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<v Speaker 1>the housing market here in the U.S. is on its back. Yeah,

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<v Speaker 1>it's interesting.

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<v Speaker 3>Constance Hunter with us. She dives into the data. What

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<v Speaker 3>do you see there, Constance?

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<v Speaker 2>She squints.

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<v Speaker 3>Do you see glasses? I'm just blind, and she can

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<v Speaker 3>read the fine print. What do you see?

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<v Speaker 2>Well, I have contact lenses that are helping me correct

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<v Speaker 2>for that, so I don't have to take glasses on

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<v Speaker 2>and off. But I'm still squinting because this is a

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<v Speaker 2>small print. But, you know, two things we were watching

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<v Speaker 2>last month were telephone, telephone, cell phone bills. And that

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<v Speaker 2>is still fairly elevated.

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<v Speaker 1>Really?

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<v Speaker 3>Yes.

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<v Speaker 2>0.6 percent last month, 0.5 percent this month. And then

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<v Speaker 2>the other thing was was education, which, again, 0.9 percent

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<v Speaker 2>mother of month last month, 0.5.

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<v Speaker 3>Right.

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<v Speaker 2>So. So, yes, things that we all experience.

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<v Speaker 1>Not shocked.

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<v Speaker 2>Right. But the idea was that they might dissipate somewhat

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<v Speaker 2>this month. They did a little, but not enough.

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<v Speaker 3>This is why we love having Constance Hunter and Phil

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<v Speaker 3>Newhart with us here in a moment. Your inflation is

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<v Speaker 3>the real inflation our listeners and viewers exist every day.

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<v Speaker 3>That's not the same inflation of Chairman Warsh, is it?

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<v Speaker 2>Well, I'm not sure that that's true. I think that

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<v Speaker 2>Chairman Warsh has presided over a Fed that hiked once,

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<v Speaker 2>that has said they're going to hike another time. I

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<v Speaker 2>think that Warsh is concerned about the fact that for

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<v Speaker 2>everyday Americans, prices are going up.

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<v Speaker 1>Well, I mean, medical care also here. I mean, these

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<v Speaker 1>are the important factors. I mean, 0.3%. These are real

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<v Speaker 1>life inflation. And yeah, I mean, look, on the whole,

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<v Speaker 1>I mean, we haven't seen many sectors, you know, actually

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<v Speaker 1>seeing inflation come down month over month in October. So,

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<v Speaker 1>you know, yeah, we still are seeing inflationary pressures. Yes,

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<v Speaker 1>Chair Waller's comments about a hike in December. Yeah, I mean,

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<v Speaker 1>I guess it makes sense, but only two through the

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<v Speaker 1>end of next year. I mean, obviously, you know, markets

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<v Speaker 1>are expecting inflation.

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<v Speaker 3>Well, let's get, Constance, where are you on this right now?

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<v Speaker 3>One rate increase, December, whatever, 9th. And then what from there?

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<v Speaker 2>Well, I think some of it depends on what happens

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<v Speaker 2>in the equity market, right? And we have to think

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<v Speaker 2>about the fact that, you know, people like Dan Ives

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<v Speaker 2>are saying that if Jensen Huang leaves NVIDIA, we're looking

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<v Speaker 2>at a 30% price decline there. Now, the market's not

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<v Speaker 2>betting that he's going to leave. I'm not sure that's

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<v Speaker 2>the correct bet. But I think we're in for some

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<v Speaker 2>volatility in the background that could temper the pace of

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<v Speaker 2>the Fed's rate hike.

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<v Speaker 3>Constance Hunter, thank you so much. With the EIU and

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<v Speaker 3>macro policy perspectives, thank you so much.