WEBVTT - Global Markets on Alert for Potential Biden Exit 0:00:02.480 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Asia podcast. I'm Doug Prisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories, making news and moving 0:00:16.680 --> 0:00:19.560 markets in the Apec region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.120 the Bloomberg Terminal, and the Bloomberg Business App. 0:00:27.280 --> 0:00:31.440 Joining us is Billy House, Bloomberg Congressional reporter. So we've 0:00:31.480 --> 0:00:35.239 seen a lot of reports this morning about eroding support 0:00:35.320 --> 0:00:38.640 for President Biden on Capitol Hill, and we also saw 0:00:38.760 --> 0:00:41.560 the governor as the Democratic governors come out and basically 0:00:41.960 --> 0:00:44.440 kind of back him up a little bit. So I'm 0:00:44.479 --> 0:00:46.360 not sure if we have stacis, but is there a 0:00:46.400 --> 0:00:50.360 catalyst that might be looming on this, Billy Well. 0:00:50.200 --> 0:00:53.280 I think what we're building up to our several public 0:00:53.320 --> 0:00:58.200 events that the president is set to take part in, 0:00:58.200 --> 0:01:02.600 including an ABC interview in time on Friday and some 0:01:02.640 --> 0:01:04.440 other public events. I think those are going to be 0:01:04.480 --> 0:01:07.640 the big tests for all these to shore up support 0:01:07.680 --> 0:01:11.320 from all these wavering congressional members, rank and file Democrats 0:01:11.319 --> 0:01:15.440 who are saying, you know, they wonder if he should 0:01:15.840 --> 0:01:19.640 just leave step down and let somebody else run for president. 0:01:19.800 --> 0:01:22.720 So the next few days appear to be critical ones, 0:01:22.760 --> 0:01:25.920 even as Biden is publicly saying he's not resigning. 0:01:26.680 --> 0:01:29.240 Billy a wise man once told me, if you can 0:01:29.280 --> 0:01:32.479 measure it, you can manage it. We get the Morning 0:01:32.560 --> 0:01:36.440 Console poll, the Bloomberg Morning Console Poll, I think Friday morning. 0:01:37.000 --> 0:01:39.840 If there is an erosion in support in the polling 0:01:39.920 --> 0:01:43.880 data for the president, does that necessarily move the needle? 0:01:43.880 --> 0:01:44.360 Do you think? 0:01:45.200 --> 0:01:47.800 Well, it's interesting you say that because the Biden campaign 0:01:47.800 --> 0:01:54.320 itself anticipating some erosion, sit to Democratic members of Congress 0:01:54.360 --> 0:01:57.600 today a memo saying, hey, there could be a dip 0:01:57.640 --> 0:01:59.960 in the next few days and some of these polls, 0:02:00.560 --> 0:02:04.520 but that's just a snapshot in time, and overall it 0:02:04.560 --> 0:02:06.960 remains within it. He remains within the margin of error. 0:02:07.000 --> 0:02:09.760 It's still competitive, and and ask them sort of to 0:02:09.880 --> 0:02:10.880 keep their powder drt. 0:02:12.320 --> 0:02:15.440 So there are a number of possible outcomes here. The 0:02:15.480 --> 0:02:21.400 president could could decide to stay in office but not run. 0:02:22.240 --> 0:02:25.640 He could also resign. He could resign inside health or 0:02:25.760 --> 0:02:30.720 or something like that. And is the compromise maybe that 0:02:31.120 --> 0:02:33.240 he doesn't have to resign while he's in office. He 0:02:33.320 --> 0:02:36.200 just serves out this term and then says that he 0:02:36.680 --> 0:02:38.960 believes he might be a little too old to run again, 0:02:39.440 --> 0:02:44.200 and then the Democratic National Committee could could find, you know, 0:02:44.680 --> 0:02:48.320 someone to run, like Kamala Harris or or whatever. Are 0:02:48.360 --> 0:02:50.880 you hearing anything that might indicate which of those two 0:02:50.919 --> 0:02:51.560 are more likely? 0:02:52.720 --> 0:02:54.919 Oh, I think I think the idea that he would 0:02:54.960 --> 0:02:56.760 stick it out for the rest of his term is 0:02:56.800 --> 0:03:01.480 far more likely. I think the issue is whether he 0:03:01.520 --> 0:03:05.160 would withdraw from the presidential race. And I think that 0:03:05.560 --> 0:03:08.040 in discussions, and we don't know, we're not in the 0:03:08.080 --> 0:03:14.520 private discussions, but there are discussions about whether his vice 0:03:14.560 --> 0:03:17.400 president would be the party's choice to replace him on 0:03:17.440 --> 0:03:22.960 the ballot. I think that he is angling, although he's 0:03:23.000 --> 0:03:26.000 not saying he's going to leave that if he does 0:03:26.160 --> 0:03:29.120 decide to leave, that he wants his vice president at 0:03:29.120 --> 0:03:32.799 the top. That's anything but a given. As you suggested, 0:03:33.120 --> 0:03:35.840 there's a lot of differences within the party about Kamala Harris. 0:03:36.400 --> 0:03:39.360 What do we know about the other camp, the Trump camp? 0:03:39.520 --> 0:03:42.080 And I was reading the other day that he is 0:03:42.160 --> 0:03:46.120 now delaying the announcement of his running mate until he 0:03:46.480 --> 0:03:49.080 sees how the dust settles out on the Democratic side. 0:03:49.120 --> 0:03:49.520 Is that right? 0:03:50.960 --> 0:03:51.160 Yeah? 0:03:51.200 --> 0:03:54.160 Well, I don't think he wants that buried so much 0:03:54.200 --> 0:03:58.400 that he that's his little jewel to unveil pillback, so 0:03:59.480 --> 0:04:03.520 also doesn't want to interrupt what has been at least 0:04:03.560 --> 0:04:06.400 first glance, good news for him. Though you got to 0:04:06.480 --> 0:04:11.000 wonder if, really, if the polls show him beating Biden, 0:04:11.040 --> 0:04:13.880 whether in the long run a replacement is necessarily good 0:04:13.920 --> 0:04:15.120 news for the former president. 0:04:15.880 --> 0:04:19.800 What would be the process for if President Biden decided 0:04:19.839 --> 0:04:23.599 to step aside, or was in effect forced to step aside. 0:04:24.200 --> 0:04:27.000 What would be the process then for having a race 0:04:27.080 --> 0:04:30.400 to see who would be on the on the nominee position. 0:04:31.600 --> 0:04:33.480 That's all over the board, and it's not certain there 0:04:33.520 --> 0:04:39.000 is a set process. I think some in the Biden 0:04:39.040 --> 0:04:41.760 camp just want him to be able to pick probably 0:04:41.880 --> 0:04:46.120 Harrister on Others want a sort of a mini primary. 0:04:46.279 --> 0:04:49.640 However that would be held, and whether it be at 0:04:49.640 --> 0:04:52.839 the convention in August or it'd have to be way 0:04:52.880 --> 0:04:56.160 before then. Somehow, there's really no set pattern for how 0:04:56.200 --> 0:04:58.320 to do this, and I think that's part of the 0:04:58.320 --> 0:05:02.360 confusion and what Biden is kind of waiting into if 0:05:02.400 --> 0:05:04.320 you met does decide to leave Billy. 0:05:04.360 --> 0:05:05.760 A lot has been written, as you know, on the 0:05:05.800 --> 0:05:08.480 influence that the family has over the president. Is that 0:05:08.839 --> 0:05:10.960 what we really need to pay attention to. I mean 0:05:11.760 --> 0:05:14.960 Jill Biden and the immediate family members and maybe some 0:05:15.120 --> 0:05:16.440 very very close advisors. 0:05:17.560 --> 0:05:20.960 I think that's absolutely correct. Maybe not so much Hunter Biden, 0:05:21.000 --> 0:05:24.000 though he is described as being in the room nowadays 0:05:24.000 --> 0:05:27.000 with the president. But Jill Biden, I think does carry 0:05:27.560 --> 0:05:30.760 a great amount of weight and what he does obviously, 0:05:30.800 --> 0:05:33.279 and I think that she is also helping to guide 0:05:34.120 --> 0:05:38.039 the potential paths ahead. We'll have to wait and see, 0:05:38.040 --> 0:05:40.360 but I think there's no doubt that she's been very 0:05:40.360 --> 0:05:42.559 instrumental in some of the discussions taking place. 0:05:43.640 --> 0:05:46.240 You know, if we were to look forward and talk 0:05:46.279 --> 0:05:51.400 about some sort of competition between Kamala Harris, maybe Governor 0:05:51.480 --> 0:05:57.440 Newsom from California, Wes Moore from Maryland, and Gretchen Whitner 0:05:57.440 --> 0:06:00.880 in Michigan, what do you hear from people? I mean, 0:06:01.080 --> 0:06:04.800 are there you know, sort of in back room discussions. 0:06:04.800 --> 0:06:07.600 Are you hearing that anyone sort of stands at the top. 0:06:08.640 --> 0:06:11.360 Well, I think Biden's favored obviously as his vice president, 0:06:11.400 --> 0:06:15.440 But there is polling no matter whose opinion is. There 0:06:15.480 --> 0:06:18.920 has been some polling about a backup candidate, and it 0:06:18.960 --> 0:06:22.880 does show kind of a resurgence or of Harris popularity 0:06:22.920 --> 0:06:27.760 that might surprise some. But Boodagij Whitmer knew some more 0:06:28.040 --> 0:06:32.680 from Maryland, others there in there too, So I think 0:06:32.720 --> 0:06:35.800 that focus would become greater on each of these potential 0:06:36.040 --> 0:06:38.279 candidates if something were to break. 0:06:39.400 --> 0:06:50.760 Billy, thank you, Billy Howes Bloombergy, Congressional reporter. Adrian Zerker, 0:06:50.960 --> 0:06:54.840 CIO and head of Global Asset Allocation at UBS Global 0:06:54.880 --> 0:06:58.000 Wealth Management. Adrian, thank you for coming in the studios. 0:06:58.000 --> 0:07:00.440 I think I heard your heart start to be faster 0:07:00.520 --> 0:07:03.520 when I mentioned we'd be talking about President Biden and 0:07:03.600 --> 0:07:07.400 what's happening with that whole saga at the moment. I'll 0:07:07.400 --> 0:07:11.280 give you a few moments to maybe anticipate a question there. 0:07:11.360 --> 0:07:12.920 Let's talk first about the Fed. 0:07:13.360 --> 0:07:16.640 It seems like now and this was not reflected in 0:07:16.680 --> 0:07:20.119 the minutes because that was last month, but it seems 0:07:20.160 --> 0:07:24.000 like now there is recognition that you are seeing growth 0:07:24.040 --> 0:07:28.200 moderating and we are seeing this inflation kind of take hold. 0:07:28.840 --> 0:07:32.080 Do you agree and you expect that the Fed will 0:07:32.120 --> 0:07:33.440 alter its commentary soon. 0:07:34.320 --> 0:07:36.520 Well, it's a very good question, and I think we 0:07:36.560 --> 0:07:41.520 have seen Powell or her Powell in Cintra talking relatively dorbishly, 0:07:41.840 --> 0:07:46.080 much more dorbash than doing the FMC meetings, and that's 0:07:46.120 --> 0:07:48.400 a reflection. I think what the FED has done over 0:07:48.440 --> 0:07:50.920 the last couple of months. They were looking in the 0:07:51.000 --> 0:07:54.280 rare mirror and driving straight forward and the rare mirroad. 0:07:54.680 --> 0:07:57.480 Looking at data that are coming from the past that 0:07:57.760 --> 0:08:02.040 still showing inflation pressure has been probably a bit misleading. 0:08:02.320 --> 0:08:04.520 If you look at most of the economic models that 0:08:04.520 --> 0:08:06.960 the FED is actually looking at, they only should cut 0:08:07.000 --> 0:08:10.160 interest rates, and therefore I think it's just a matter 0:08:10.240 --> 0:08:14.920 of time until some certain factors like shelter particular oeer 0:08:16.520 --> 0:08:19.280 rents or inflation is actually coming off. Then we had 0:08:19.280 --> 0:08:22.320 some eadiosyncratic factor like car insurance, but that has now 0:08:22.320 --> 0:08:25.240 peaked out. It's rolling over an ear ear basis and 0:08:25.280 --> 0:08:26.840 also on amounts on months basis. 0:08:27.080 --> 0:08:29.480 So I think we get this evidence. 0:08:29.000 --> 0:08:32.880 Of inflationy pressure or this inflationary pressure that will open 0:08:32.960 --> 0:08:35.720 up the room for cuts to lie. Probably too early, 0:08:35.920 --> 0:08:37.880 let's see what's coming out of the non vae pay roll. 0:08:37.960 --> 0:08:41.280 But I guess JU lies too early. But September definitely life. 0:08:41.320 --> 0:08:43.520 Speaking of being too early, I'm wondering if it's too 0:08:43.559 --> 0:08:46.960 early to begin anticipating how the market may react to 0:08:47.480 --> 0:08:52.200 a Trump presidency. Tax cuts, tariffs. I mean that would 0:08:52.240 --> 0:08:54.120 be both of those I think would be a huge 0:08:54.160 --> 0:08:56.160 negative for the bond market, wouldn't you agree. 0:08:57.400 --> 0:08:59.320 It's a very complex mix at the moment. 0:09:00.120 --> 0:09:03.920 Clearly can see that there's pressure also on depth sustainability. 0:09:04.840 --> 0:09:07.880 But we also think Trump is very aware that inflation 0:09:08.040 --> 0:09:10.760 has been a key factor he actually got elected. I 0:09:10.800 --> 0:09:15.559 think mister Biden is probably a very unpopular president because inflation, 0:09:15.600 --> 0:09:18.280 if you look at the employment rates, very very low, 0:09:18.600 --> 0:09:19.600 the economic. 0:09:19.280 --> 0:09:21.040 Factor is actually relatively strong. 0:09:21.320 --> 0:09:25.520 So the key factor for Trump to get elected is 0:09:25.559 --> 0:09:28.840 the inflation factor, which is definitely a huge headwind. And 0:09:29.040 --> 0:09:34.680 so increasing tariffs, spending a lot will create more inflation, 0:09:34.840 --> 0:09:38.600 and that's probably something even mister Trump will anticipate, and 0:09:38.679 --> 0:09:41.120 therefore we are not sure how quickly it will happen. 0:09:41.360 --> 0:09:44.320 So the risk is definitely for higher rates, but we 0:09:44.400 --> 0:09:46.600 will have to see until he really gets elected and 0:09:46.640 --> 0:09:48.480 then also how the Senate looks like. 0:09:48.960 --> 0:09:53.439 Adrian, do you feel that President Biden is wrongfully maligned 0:09:53.720 --> 0:09:54.440 for inflation? 0:09:57.240 --> 0:09:59.800 In one hand, yes, I mean go back in twenty 0:09:59.840 --> 0:10:03.960 two any we had an unprecedented situation, and to get 0:10:04.000 --> 0:10:07.360 out of this unprecedented situation, you had to print money. 0:10:07.440 --> 0:10:09.520 You had to throw everything on this economy that you 0:10:09.559 --> 0:10:12.040 actually were able to put and that's what they did. 0:10:12.920 --> 0:10:16.199 And the Fed was very data dependent. There are four 0:10:16.280 --> 0:10:19.800 hundred PhD economists haven't seen what's happening to inflation. It's 0:10:19.800 --> 0:10:24.480 sky rocked. They were behind basically the inflation pattern. They 0:10:24.480 --> 0:10:27.160 had to increase interest rates very aggressively, but it came 0:10:27.200 --> 0:10:31.079 too late, and that's a reflection. So it's difficult to 0:10:31.120 --> 0:10:34.959 blame Biden. But we also have seen fiscal deficit is 0:10:35.080 --> 0:10:38.719 still extended, and so it's a mix of course that 0:10:38.760 --> 0:10:40.000 we have to take into account. 0:10:40.040 --> 0:10:42.360 Would you be betting Adrian that we're going to see 0:10:42.640 --> 0:10:45.000 a lot more in the way of dollar weakness right 0:10:45.040 --> 0:10:49.120 now or is there too early to make that call. 0:10:49.200 --> 0:10:51.640 So it's quite a tricky situation. We think the dollars 0:10:51.640 --> 0:10:54.120 should weaken. We actually do think the Fed will cut 0:10:54.360 --> 0:10:57.000 in September and they will also cut in December. I 0:10:57.000 --> 0:11:00.400 think we get more indication even from the labor market looking. 0:11:00.240 --> 0:11:02.120 At the latest Charles data. 0:11:03.120 --> 0:11:06.040 But then mister Trump could be actually positive for the 0:11:06.120 --> 0:11:11.040 US doll at least temporarily so purely macroeconomic environment, we 0:11:11.120 --> 0:11:13.880 think the dollar is too expensive, it will weaken. The 0:11:13.960 --> 0:11:17.079 FED is basically the last major central bank that will 0:11:17.080 --> 0:11:20.000 cut interest rate, which is quite unique, and therefore there 0:11:20.040 --> 0:11:22.320 should be weakness coming through. And then we have a 0:11:22.360 --> 0:11:26.560 political situation which might give temporary support for the wist dollar, 0:11:26.800 --> 0:11:28.439 but probably not a long term support. 0:11:28.640 --> 0:11:31.480 So here we are in a situation where we're about 0:11:31.559 --> 0:11:33.959 ready to see a change in government in the UK, 0:11:34.679 --> 0:11:39.120 possibly in France, and quite possibly in the United States. 0:11:39.600 --> 0:11:41.880 On the one hand, that makes me nervous if I'm 0:11:41.920 --> 0:11:43.840 in the market, and the other end, we just had 0:11:43.920 --> 0:11:47.480 Dan Ives and Gene Munster on the program, just lauding 0:11:47.559 --> 0:11:51.800 the prospects for artificial intelligence, which one of those themes 0:11:52.200 --> 0:11:54.720 will dominate markets more over the next year too. 0:11:55.160 --> 0:11:55.360 Well. 0:11:55.360 --> 0:11:58.360 I do think usually political markets are quite short lived, 0:11:58.440 --> 0:12:01.719 have short legs. That's a quick pricing in. I think 0:12:01.760 --> 0:12:04.800 the UK election, even the French election, will be more 0:12:04.800 --> 0:12:09.120 temporary concern for the markets we have seen. Trump is 0:12:09.160 --> 0:12:12.400 a different story, particularly the trade war situation. Of course, 0:12:12.760 --> 0:12:15.360 we'll have to see how aggressive Trump will be eventually, 0:12:15.679 --> 0:12:18.200 how quickly he will act on that part, so that 0:12:18.280 --> 0:12:21.600 might resonate a little bit longer, but I do think 0:12:21.640 --> 0:12:24.440 that the AI story is definitely one of the key aspects. 0:12:24.440 --> 0:12:26.200 And looking a bit more shorter and we going. 0:12:26.040 --> 0:12:29.240 To earning seasons, we have still seen very strong AI 0:12:29.800 --> 0:12:35.360 KPAX related kpax basically over the last couple of months. 0:12:35.400 --> 0:12:38.960 We actually do think that this could drive markets higher. 0:12:39.000 --> 0:12:42.200 We see the fat probably cutting interest rates more evidence 0:12:42.240 --> 0:12:44.160 for that. So I do think we actually have a 0:12:44.200 --> 0:12:47.720 relatively solid market environment until we get a bit closer 0:12:47.760 --> 0:12:48.600 to the November. 0:12:48.880 --> 0:12:51.240 Before we let you go, can we get your view 0:12:51.280 --> 0:12:54.360 on Japan the PBOC, the degree to which they may 0:12:54.480 --> 0:12:59.800 be behind the curve a little bit and bog I'm sorry, 0:13:00.679 --> 0:13:03.560 and the degree to which they really need to make 0:13:03.720 --> 0:13:07.360 a decision this month in July to Titan. 0:13:08.720 --> 0:13:12.600 Well, looking at the macrocanomic environment, inflation where it coulds going, 0:13:13.160 --> 0:13:16.440 there's no real pressure for the BOJA to actually increase 0:13:16.520 --> 0:13:21.880 interest rates and to increase interests. Therefore, we also see 0:13:21.880 --> 0:13:25.280 the Japanese yet and still suffering, going above one hundred 0:13:25.320 --> 0:13:28.000 and sixty and maybe even heading to one hundred and seventy. 0:13:28.400 --> 0:13:29.840 So it's a cheap currency. 0:13:30.280 --> 0:13:33.760 But the macricanomic environment, there's a lot of structural changes 0:13:33.760 --> 0:13:36.880 that are coming through, but currently in this cycle, we 0:13:36.960 --> 0:13:39.880 actually don't really see the BOHA has a huge pressure 0:13:39.920 --> 0:13:43.800 to increase interest rates, and therefore there's probably more weakness 0:13:43.840 --> 0:13:45.320 in the store for the Japanese yet. 0:13:45.880 --> 0:13:48.400 And because the PBOC is also in the news, I 0:13:48.400 --> 0:13:52.040 got to ask you about that and borrowing bonds from 0:13:52.280 --> 0:13:55.880 several key banks. Do you like that plan to perhaps 0:13:55.960 --> 0:14:00.280 so way in to kind of keep to you know, 0:14:00.360 --> 0:14:02.680 shore up and get in front of the rally. 0:14:03.040 --> 0:14:06.120 I do think the people actually should cut interest rates, 0:14:06.440 --> 0:14:10.920 should become more aggressive, probably even going down sort of 0:14:10.960 --> 0:14:15.240 the power of what Western central banks have done doing 0:14:15.320 --> 0:14:19.440 QE to reactivate basically the economy. 0:14:19.600 --> 0:14:20.720 We're going to plan them. 0:14:20.760 --> 0:14:24.280 I don't have a big expectations, but I do think 0:14:24.320 --> 0:14:27.200 they actually should lower interest rates and not stabilize them. 0:14:27.280 --> 0:14:29.800 Yeah, it makes it. It's a little easier, isn't it. Adrian, 0:14:29.800 --> 0:14:32.960 thank you for joining us. Adrian Zirker, cio and head 0:14:32.960 --> 0:14:43.640 of Global Asset Allocation at UBS Global Wealth Management. Let's 0:14:43.680 --> 0:14:46.680 take a look at markets here with Chris Carey, portfolio manager, 0:14:46.800 --> 0:14:50.840 Carnegie Investment Counsel, Carnegie as we would say in the States, 0:14:50.840 --> 0:14:54.640 and Carnegie as yeah exactly. Yeah, good to have you 0:14:54.680 --> 0:14:57.440 here on the program. Well, I'm kind of all ginned 0:14:57.520 --> 0:14:59.920 up here on AI because we just had Dan ives 0:15:00.120 --> 0:15:04.960 Gene Munster on allotting the prospects and we didn't have 0:15:05.000 --> 0:15:08.000 a rebound in in Nvidia. The thing is, we haven't 0:15:08.120 --> 0:15:12.240 had any negative warnings from in video or Broadcom, and 0:15:12.440 --> 0:15:15.080 we haven't had anybody really talking about channel checks that 0:15:15.120 --> 0:15:18.880 were disappointing. So is it still all systems go? Or 0:15:18.960 --> 0:15:20.080 should we be careful here? 0:15:21.280 --> 0:15:25.560 I still think for the meantime it's all systems go. 0:15:26.160 --> 0:15:27.440 You know as well. 0:15:27.360 --> 0:15:29.120 As anyone that the next stage of this is really 0:15:29.160 --> 0:15:31.640 going to see. You know, they made all this investment, 0:15:32.040 --> 0:15:33.840 how are we going to be able to actually monetize this? 0:15:33.920 --> 0:15:36.840 And you know, we've start to see some examples of that, 0:15:37.000 --> 0:15:40.160 but that's probably going to be you know, hopefully we'll 0:15:40.160 --> 0:15:43.200 get a hint of that in this coming earning season, 0:15:43.920 --> 0:15:48.280 which should kick off, I believe, beginning next Friday. But 0:15:48.680 --> 0:15:55.040 I think that the level of exuberance and enthusiasm is 0:15:55.040 --> 0:15:56.119 is well warranted. 0:15:56.680 --> 0:15:59.440 Yeah, it's interesting. I remember reading some research a short 0:15:59.440 --> 0:16:02.160 while back talking about the degree to which AI could 0:16:02.160 --> 0:16:06.600 transform the financial services industry, the banking industry. I mean 0:16:06.600 --> 0:16:09.920 there could be significant job losses here as the result 0:16:09.920 --> 0:16:13.400 of artificial intelligence. But let's talk more broadly about the banks. 0:16:13.520 --> 0:16:16.760 They do kick off earning season. We know what the 0:16:16.840 --> 0:16:19.040 rates environment looks like these days. How do you think 0:16:19.040 --> 0:16:20.800 the banks will come out in earning season. 0:16:22.160 --> 0:16:25.320 I think that the guidance is going to be something 0:16:25.360 --> 0:16:28.760 that we'll really like to see. Again, we have rates 0:16:28.800 --> 0:16:31.520 still at five percent, so these guys are earning net 0:16:31.520 --> 0:16:35.760 interest margins that are, you know, above what is usual, 0:16:36.920 --> 0:16:39.000 and you know that's why it pays to own the 0:16:39.000 --> 0:16:43.400 best of breeds banks like JP Morgan for instance. That's 0:16:43.440 --> 0:16:48.480 where we are positioned. And it's going to be interesting 0:16:48.520 --> 0:16:54.080 to see the commentary, especially with regards to any any 0:16:54.080 --> 0:16:59.160 comments on an activity, as well as any further updates 0:16:59.160 --> 0:17:01.600 we're seeing on that corporate real estate side. 0:17:02.640 --> 0:17:04.679 And I guess the eight hundred pound gorilla in the 0:17:04.760 --> 0:17:09.000 room really is is what happens with the presidency. Is 0:17:09.040 --> 0:17:12.960 that something that has the potential to play big into 0:17:13.040 --> 0:17:16.000 markets or are you sort of in the camp that says, 0:17:17.119 --> 0:17:18.600 you know, we'll get by either way. 0:17:19.600 --> 0:17:22.000 I'm I'm in the camp of what the data says 0:17:22.280 --> 0:17:24.639 and the data never lies, which is that regardless of 0:17:24.680 --> 0:17:27.199 what president is in office, the market does all right. 0:17:28.160 --> 0:17:32.000 It doesn't matter if you're a Republican or a Democrat. 0:17:33.040 --> 0:17:36.000 At the end of the day, these America still runs 0:17:36.040 --> 0:17:39.320 on a capitalist system. These corporate America is very good 0:17:39.359 --> 0:17:42.080 at making sure that they can maintain their margins. And 0:17:42.200 --> 0:17:45.560 you know, we're investing in the biggest and best companies 0:17:46.560 --> 0:17:49.240 within you know, the S and P five hundred and 0:17:49.280 --> 0:17:51.720 so it doesn't really concern us. Are there going to 0:17:51.760 --> 0:17:56.560 be certain sectors that will rally or falter as a result? Sure, 0:17:56.680 --> 0:18:00.280 there always are, you know, private prisons were we're doing 0:18:00.320 --> 0:18:05.320 well after Thursday's debate. But for the average investor, for 0:18:05.520 --> 0:18:09.080 how we think about allocating our funds, you know that 0:18:10.000 --> 0:18:12.040 we invest for the decade. So this really is just 0:18:12.880 --> 0:18:14.840 you know, short term, short term noise. 0:18:14.920 --> 0:18:17.159 Really okay, but maybe there's a little bit of signal 0:18:17.160 --> 0:18:20.119 here when it comes to the possibility of tariffs and 0:18:20.240 --> 0:18:23.360 tax cuts. I mean both of those, Well, the tariffs 0:18:23.440 --> 0:18:26.320 issue would point to rising inflation. Tax cuts. The bond 0:18:26.400 --> 0:18:29.560 market is not going to like a worsening fiscal situation, 0:18:29.800 --> 0:18:31.960 So this could play out in the bond market. 0:18:33.040 --> 0:18:36.800 Yeah, and you know, we saw today that the ten 0:18:36.880 --> 0:18:40.800 years are nicely and it's America's birthday tomorrow, but today 0:18:40.880 --> 0:18:43.679 is the second birthday of the your cut curve and version, 0:18:43.760 --> 0:18:46.120 and where finally looks like we're seeing a bit of steepening, 0:18:46.960 --> 0:18:49.200 which is which is good. But you know, you're right, 0:18:49.280 --> 0:18:54.320 the fiscal deficit problem in the United States is one 0:18:54.359 --> 0:18:57.199 that is becoming harder and harder to ignore on our 0:18:57.240 --> 0:19:00.440 service for cost for servicing, the debt is geting much 0:19:00.480 --> 0:19:03.159 higher than it is for you know, our defense budget. 0:19:03.359 --> 0:19:06.760 And this is something that even you're seeing j Powell 0:19:06.760 --> 0:19:09.000 start to even though citizen weigh in on fiscal policy, 0:19:09.040 --> 0:19:11.720 he's trying to He talked about that in Portugal the 0:19:11.720 --> 0:19:14.320 other day, where it's becoming more and more of a concern. 0:19:14.480 --> 0:19:18.800 And I think that you know, this is probably problems 0:19:18.800 --> 0:19:21.080 getting harder to ignore, and it it will have to 0:19:21.119 --> 0:19:25.879 be addressed by either administration whoever happens to get into 0:19:27.760 --> 0:19:28.439 into power. 0:19:29.400 --> 0:19:31.359 In the short term, we're about to head into a 0:19:31.400 --> 0:19:33.840 period where there are going to be some that worry 0:19:33.840 --> 0:19:37.200 about a rapid falloff in growth versus the others who 0:19:37.240 --> 0:19:42.359 think this is a comfortable moderating Where do you sit 0:19:42.400 --> 0:19:42.639 on that? 0:19:44.000 --> 0:19:46.399 I think I'm more in the in the camp and 0:19:46.520 --> 0:19:49.880 it's a we're in a comfortable, moderating place. But I'll 0:19:49.960 --> 0:19:53.480 admit I'm a bit purtued by the Federal Reserve and 0:19:53.600 --> 0:19:58.200 they're you know, hesitance still to want to get more data. 0:19:58.200 --> 0:20:00.960 They are slaves to high frequency data. Every time we 0:20:01.000 --> 0:20:02.560 hear them, it's like, oh, we need more data, Oh 0:20:02.560 --> 0:20:05.000 we need more data. But the fact is that, you know, 0:20:05.040 --> 0:20:08.600 the unemployment rate has climbed to you know, four percent, 0:20:09.040 --> 0:20:12.080 that's that's up point six percent since April of twenty 0:20:12.080 --> 0:20:16.800 twenty three. We're seeing the core inflation has called if 0:20:16.840 --> 0:20:19.680 you look at inflation as a whole, we've had twelve 0:20:19.720 --> 0:20:23.000 months stretch under four percent. That's great if you consider 0:20:23.119 --> 0:20:26.680 why we were previously. And you also have the fact 0:20:26.720 --> 0:20:30.520 that the labor market is starting to cool down. If 0:20:30.520 --> 0:20:34.480 you look at a beverage curve, how much more can 0:20:34.520 --> 0:20:40.679 we let the labor market call before we see unemployment 0:20:41.080 --> 0:20:46.600 start to climb. I think that the Fed is really 0:20:46.640 --> 0:20:48.200 needs to wake up. 0:20:48.440 --> 0:20:49.080 And you know, J. 0:20:49.200 --> 0:20:53.200 Powell himself said that you can't really pull a significance 0:20:53.200 --> 0:20:55.720 from the US economy from a twenty five basis point cup, 0:20:55.920 --> 0:20:57.160 So why not start now? 0:20:57.440 --> 0:21:08.200 Chris? Thank you. Chris Carey from Carnegie Investment counsel. Well, 0:21:08.200 --> 0:21:10.480 the pressure on Joe Biden to drop out of the 0:21:10.560 --> 0:21:14.600 US presidential race has intensified. Let's get to Ed Baxter 0:21:14.760 --> 0:21:16.320 in San Francisco with the story. 0:21:16.480 --> 0:21:16.520 Ed. 0:21:16.960 --> 0:21:19.959 Yeah, that's right, Brian. The drum beat for the Democratic 0:21:19.960 --> 0:21:22.520 Party to find its path forward has increased today, as 0:21:22.560 --> 0:21:24.720 you say, and it appears to be moving in two 0:21:24.840 --> 0:21:28.000 directions right now. We'll go through it and get some context. 0:21:28.240 --> 0:21:30.679 The latest says a governor's meeting with a president. We 0:21:30.800 --> 0:21:35.560 have several governors coming out saying, like Governor Wes Moore Maryland, 0:21:35.560 --> 0:21:38.639 he says president is in in a to win it. 0:21:38.920 --> 0:21:42.320 Minnesota Governor Tim Wall saying the president is fit. Joining 0:21:42.359 --> 0:21:46.560 us live is Christian Hall Bloomberg, Government Congressional reporter, Christian, 0:21:46.560 --> 0:21:49.960 thank you so much for being with us. Does that 0:21:50.080 --> 0:21:54.320 seem what governors Waltz and more are saying? Does that 0:21:54.320 --> 0:21:57.240 seem to be the consensus of that meeting coming out? 0:21:58.359 --> 0:22:00.760 Look, I mean, I think we have to realize that 0:22:00.840 --> 0:22:03.960 the stakes are very high for President Biden right now 0:22:04.320 --> 0:22:07.760 after that meeting with the governors, his top goal is 0:22:07.800 --> 0:22:12.480 to project confidence and ensure that you know, he can 0:22:12.520 --> 0:22:16.000 continue the job as president. But the stakes are incredibly 0:22:16.080 --> 0:22:19.320 high for him right now. Over the next couple of days. 0:22:19.400 --> 0:22:22.360 He's going to have to make sure that his appearances 0:22:22.760 --> 0:22:25.679 over the next few days are very strong, and he 0:22:25.760 --> 0:22:29.760 has to really instill in lawmakers key donors that he 0:22:29.840 --> 0:22:31.960 has what it takes to run again. 0:22:32.760 --> 0:22:35.360 Yeah, at good points. And the governors are not directly 0:22:35.400 --> 0:22:38.560 involved in the down ballot race is as closely as 0:22:38.560 --> 0:22:41.920 House members and what we've been seeing bloombergo all day, 0:22:41.920 --> 0:22:44.080 and I know you're seeing it and reporting it. It's 0:22:44.119 --> 0:22:46.440