WEBVTT - Bloomberg Surveillance: Peak Restrictions Not Reached 0:00:05.160 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:08.520 --> 0:00:12.360 with Jonathan Farrow and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.800 for insight from the best and economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.079 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:30.440 the Bloomberg Terminal, and the Bloomberg Business app. This is 0:00:30.440 --> 0:00:33.600 a joy, and it's particularly a Matthew joy because Carl 0:00:33.640 --> 0:00:38.560 Ricadatta of the Aerospace Engineering Persuasion knows the glide paths 0:00:38.680 --> 0:00:41.879 that are out there. The glide pass and economics are 0:00:42.040 --> 0:00:47.360 usually described through adverbs. In a paragraph in his recent report, 0:00:47.360 --> 0:00:50.360 he really nails this. He's a BMP Perry Boner, chief 0:00:50.479 --> 0:00:57.000 US Economists. You nail this strange word sufficiently. We are 0:00:57.120 --> 0:01:03.120 sufficient We are getting there. Inflation is now sufficiently entrant. 0:01:03.480 --> 0:01:07.920 Describe this sufficiently that your own power has to confront Wednesday. 0:01:08.240 --> 0:01:12.240 Sure, well, there's a tension there, but on the sufficiently side, 0:01:12.640 --> 0:01:17.200 we're seeing evidence of sufficiently restrictive monetary policy and that 0:01:17.240 --> 0:01:21.160 we're not just seeing disinflation or deflation. Important distinction. You 0:01:21.280 --> 0:01:23.360 drew earlier on the program, not just seeing it in 0:01:23.520 --> 0:01:27.319 energy prices. We've seen that spread into goods prices, which 0:01:27.360 --> 0:01:30.160 tells us a little bit about supply chain healing. But 0:01:30.280 --> 0:01:33.680 now importantly we're seeing it where it really counts, and 0:01:33.720 --> 0:01:36.080 that means we're seeing it on the service side of 0:01:36.120 --> 0:01:39.560 the CPI, both in rents and finally, just in the 0:01:39.640 --> 0:01:42.040 last couple of months, we're seeing this in what now 0:01:42.120 --> 0:01:46.399 has been called super core inflation, which is core services X, 0:01:46.560 --> 0:01:48.280 housing and shelter costs. 0:01:48.320 --> 0:01:51.120 We yearn for an X and to get out front 0:01:51.520 --> 0:01:56.040 Fed Belogney, there's no evidence of that since biblical history. 0:01:56.080 --> 0:01:59.440 Their ex post how far behind are they going to 0:01:59.520 --> 0:02:03.560 be when they get the sufficient courage up to accommodate. 0:02:03.920 --> 0:02:06.880 Well, I don't think they have the courage just yet, 0:02:06.960 --> 0:02:09.760 and because the factor in the back of their minds 0:02:09.760 --> 0:02:12.480 that's haunting them is the mistakes made in the nineteen 0:02:12.560 --> 0:02:16.320 seventies under Arthur Burns, and that was a FED that 0:02:16.440 --> 0:02:20.600 knew what prescription was needed, but lacked the conviction to 0:02:20.720 --> 0:02:24.440 keep the bitter medicine in place for long enough. And 0:02:24.480 --> 0:02:27.320 as the Fed's determining whether policy has been restrictive for 0:02:27.440 --> 0:02:31.160 long enough, I think they think that it's sufficiently restrictive. Now, 0:02:31.160 --> 0:02:33.600 it's just a matter of keeping that policy in place 0:02:33.680 --> 0:02:37.880 for a sufficiently long time. We'll use those adverbs you highlighted, Tom, 0:02:38.600 --> 0:02:40.840 And the thing that's haunting them is the fact that 0:02:40.919 --> 0:02:45.000 wage inflation is not back towards kind of what would 0:02:45.000 --> 0:02:48.800 be a two percent consistent level for broader inflation. And 0:02:48.840 --> 0:02:51.680 whether we look at the ECI or last Friday's average 0:02:51.680 --> 0:02:55.640 hour of the earnings numbers, we're simply not moving in 0:02:55.720 --> 0:02:59.320 the right direction swiftly enough to say, sure thing, let's 0:02:59.360 --> 0:03:01.800 start accommodating policy sooner. 0:03:01.880 --> 0:03:03.639 Why didn't j Powell push back more. 0:03:03.520 --> 0:03:07.399 Than I think he has pushed back in recent comments. 0:03:07.560 --> 0:03:10.320 He said it was premature to be thinking about the 0:03:10.320 --> 0:03:13.320 timing of rate cuts with any amount of conviction. So 0:03:13.320 --> 0:03:15.640 it was a bit of a diplomatic answer, But I 0:03:15.639 --> 0:03:19.440 think we'll see those kind of hawkish undertones in both 0:03:19.440 --> 0:03:23.640 the communicate and also the press conference later this week. 0:03:23.720 --> 0:03:25.440 You have to think in the back of your mind, 0:03:25.800 --> 0:03:29.680 Jerome Powell has been someone very focused on financial conditions. 0:03:29.960 --> 0:03:34.880 Financial conditions have eased tremendously, and that restricts the amount 0:03:35.400 --> 0:03:38.680 or the degree to which the Fed can pivot towards 0:03:38.720 --> 0:03:42.200 a more moderate tone. They have to keep some vestige 0:03:42.200 --> 0:03:46.480 of this tightening bias or hawkish concerns about inflation in place. 0:03:46.520 --> 0:03:48.800 This week, let's get away from predicting what they may 0:03:48.880 --> 0:03:50.800 or may not say or do and talk about the 0:03:50.840 --> 0:03:54.600 actual economic backdrop. There is a question about whether they 0:03:54.600 --> 0:03:56.680 are going to be late and whether this is going 0:03:56.720 --> 0:04:00.240 to essentially cause a recession. Whether the bias now to 0:04:00.360 --> 0:04:03.680 not go to the transitory debacle means that we're going 0:04:03.720 --> 0:04:06.000 to get a recession just by virtue of them not 0:04:06.360 --> 0:04:10.400 cutting rates in response to disinflation and to weakness. Is 0:04:10.440 --> 0:04:12.920 that your base case at this point, just because we 0:04:13.040 --> 0:04:16.480 are seeing a tightening and financial conditions, we are seeing 0:04:16.520 --> 0:04:19.200 people start to push back a little bit, and the 0:04:19.200 --> 0:04:21.200 theory is at this point you could actually start to 0:04:21.200 --> 0:04:24.039 see higher rates bite in a warming and meaningful way. 0:04:24.200 --> 0:04:27.599 We definitely are seeing higher interest rates bite in a 0:04:27.680 --> 0:04:29.560 more meaningful way as you highlight, and I think we'll 0:04:29.600 --> 0:04:32.159 see that in the retail sales numbers on Thursday. We're 0:04:32.200 --> 0:04:34.760 looking for about a zero point five decline at the 0:04:34.760 --> 0:04:35.919 headline in retail sales. 0:04:35.960 --> 0:04:36.080 Now. 0:04:36.120 --> 0:04:38.760 Part of that is lower energy prices and whatnot. But 0:04:38.760 --> 0:04:41.839 if you pay attention to what's happening to consumers. The 0:04:41.880 --> 0:04:45.599 excess saving story is largely washed out for lower and 0:04:45.680 --> 0:04:48.960 middle income households. At the same time, higher rates. We 0:04:49.000 --> 0:04:51.000 may have come off of the peaks on tenure yields 0:04:51.040 --> 0:04:53.960 and whatnot, but if you look at what households are 0:04:54.080 --> 0:04:58.440 diverting towards interest payments, so yes, most households locked in 0:04:58.480 --> 0:05:00.880 those low mortgage rates during the pandem, But if you 0:05:00.880 --> 0:05:03.919 look at everything else, whether it's car loans or helocks 0:05:04.080 --> 0:05:08.080 or credit cards or whatnot, the interest coverage for those 0:05:08.200 --> 0:05:11.560 is increasing pretty appreciably. That tells you that FED policy 0:05:11.680 --> 0:05:13.880 is still kind of working its way through the system 0:05:13.880 --> 0:05:16.520 and we haven't felt peak restriction now in terms of 0:05:16.520 --> 0:05:19.840 getting the pivot right. Monetary policy acts with a long 0:05:19.880 --> 0:05:24.200 and variable lag. That LAG's probably twelve months, and that 0:05:24.240 --> 0:05:25.760 means it's going to be very hard to kind of 0:05:25.800 --> 0:05:26.560 stick the landing. 0:05:26.680 --> 0:05:28.400 So sounds like he's from Chicago. 0:05:28.560 --> 0:05:31.080 Maybe not recession, maybe not recession next year, but I 0:05:31.120 --> 0:05:35.239 think the landing could be bumpier than people are anticipating. 0:05:35.080 --> 0:05:37.720 Bumpier from a GDP basis or bumpier from race because 0:05:37.720 --> 0:05:40.440 what's in the zeitgeist's weekend is Yeah, they're gonna come 0:05:40.520 --> 0:05:44.280 down disinflation. Oops, we reverse and we have a reflation. 0:05:45.400 --> 0:05:47.720 Well, that's the scenario they want to avoid, and the 0:05:47.760 --> 0:05:50.360 evidence pointing in that direction would be those sticky wage 0:05:50.400 --> 0:05:51.600 pressures that haven't improved. 0:05:51.680 --> 0:05:51.800 Jet. 0:05:51.880 --> 0:05:53.520 I think it's just ali about the job mark. 0:05:53.720 --> 0:05:56.320 It's about the job market, but also the inflation numbers, 0:05:56.360 --> 0:06:00.120 and we've gotten used to this very immaculate disinflation the 0:06:00.200 --> 0:06:04.280 course of Q three up Q four. I think that 0:06:04.440 --> 0:06:07.120 the inflation is going to look a lot less immaculate 0:06:07.320 --> 0:06:09.240 in Q one. In other words, Q one could look 0:06:09.240 --> 0:06:11.360 a bit like the mirror image of Q three of 0:06:11.440 --> 0:06:14.520 last year, and that we see slower growth and more 0:06:14.640 --> 0:06:17.800 persistent inflation pressures. I'm not saying that the trend is reversing. 0:06:17.839 --> 0:06:21.040 It's still moving broadly lower. But I think over the 0:06:21.160 --> 0:06:24.680 last few months it looked more like two percent ish inflation, 0:06:24.839 --> 0:06:27.360 and I think it'll look more three percent ish over 0:06:27.400 --> 0:06:28.080 the next few months. 0:06:28.240 --> 0:06:30.840 Slow down is sort of the perfect scenario that a 0:06:30.880 --> 0:06:32.680 lot of people are looking for who are bullish on 0:06:32.839 --> 0:06:36.040 risk assets. Is that basically what you're pointing to is 0:06:36.160 --> 0:06:39.000 just a pause to allow things to cool and then 0:06:39.040 --> 0:06:41.440 everybody can get going again, which is essentially the bull 0:06:41.520 --> 0:06:43.520 case that we keep hearing from Eddie Ardenny and others. 0:06:43.880 --> 0:06:48.240 We need slower growth to continue to rein in those 0:06:48.320 --> 0:06:51.520 imbalances in the economy and in turn the wage pressure story, 0:06:52.320 --> 0:06:55.080 and for that to play out perfectly in the first 0:06:55.120 --> 0:06:57.880 half of the year, I think is a possible scenario, 0:06:58.000 --> 0:07:00.760 but not necessarily the most plausible, since so I think 0:07:00.760 --> 0:07:04.360 there will be some tough sledding, some bumpiness there as 0:07:04.400 --> 0:07:07.920 a FED makes it clear that we're not in the 0:07:08.279 --> 0:07:10.400 you know, we're not free and clear yet to start 0:07:10.840 --> 0:07:14.800 reducing interest rates as swiftly as maybe market participants think. 0:07:14.800 --> 0:07:18.280 And I think we'll see some imbalances in the labor market, 0:07:18.400 --> 0:07:21.520 some challenges on the growth front. And as you think 0:07:21.520 --> 0:07:24.720 about the overall earnings trajectory, right, it's ultimately a function 0:07:24.880 --> 0:07:28.480 of top line growth and pricing power. And if you're 0:07:28.480 --> 0:07:32.240 talking about a moderating pace of economic activity and cooling 0:07:32.280 --> 0:07:35.760 inflation pressures, that's still a challenging dynamic for earnings. 0:07:35.840 --> 0:07:38.520 This is a sufficiently good interview, Carl Ricodona, Thank you 0:07:38.640 --> 0:07:38.960 so much. 0:07:40.240 --> 0:07:40.520 Perry. 0:07:40.560 --> 0:07:47.840 Body in shock is Sarah Hunt, chief market strategist at 0:07:47.840 --> 0:07:50.280 Alpine Sex's Woods, but you and I we follow that 0:07:50.400 --> 0:07:52.200 your Jenny for years and this is what he does 0:07:52.560 --> 0:07:57.200 with an economics and investment He extends out the X axis. 0:07:57.240 --> 0:08:00.760 Do you have the visibility to go out pass forth. 0:08:00.600 --> 0:08:01.600 Of July next year? 0:08:02.600 --> 0:08:04.280 I think it's tough to have the visibility to go 0:08:04.360 --> 0:08:06.120 out that far, to be honest, I think it really 0:08:06.320 --> 0:08:09.080 is going to depend a lot on how we start 0:08:09.120 --> 0:08:11.360 the beginning of next year. The equity markets got very 0:08:11.440 --> 0:08:14.240 excited at the end of September in the beginning of October, thinking, 0:08:14.560 --> 0:08:16.120 you know what the Fed has done. Rates are going 0:08:16.200 --> 0:08:17.560 to come down, and that's going to solve a lot 0:08:17.600 --> 0:08:18.880 of problems. I mean, you've got a story in the 0:08:18.880 --> 0:08:21.520 Bloomberg this morning about how fast rates have to come 0:08:21.560 --> 0:08:23.040 down because a lot of companies are going to be 0:08:23.080 --> 0:08:25.600 starting to refinance in twenty four and twenty five. And 0:08:25.720 --> 0:08:27.960 the question is, even if you started in June, you're 0:08:28.000 --> 0:08:29.840 not going to start with two percent down. You're going 0:08:29.920 --> 0:08:32.040 to start if you start a little bit. I'm not 0:08:32.120 --> 0:08:33.640 sure we're going to start in June. I think that 0:08:33.720 --> 0:08:35.599 that's I think that's a big question. And then you 0:08:35.640 --> 0:08:38.040 get into the political calendar, so the question of timing 0:08:38.160 --> 0:08:40.800 becomes an issue and you still have all these people 0:08:40.880 --> 0:08:43.680 waiting for lower rates, and that's been very positive for equities. 0:08:44.280 --> 0:08:44.959 Dovetail. 0:08:45.320 --> 0:08:47.760 What we heard from Sarah House of Wells Fargo, which 0:08:47.840 --> 0:08:51.720 is a cautious view on real GDP with the enthusiasm 0:08:51.840 --> 0:08:54.679 of corporations are going to move forward, move on to 0:08:54.840 --> 0:08:57.280 a greater bull market. Can you have a greater bull 0:08:57.360 --> 0:09:00.400 market if you get subdued economical. 0:09:00.559 --> 0:09:02.160 I don't think you can. And I think that's the 0:09:02.200 --> 0:09:04.760 biggest question of twenty twenty four is where growth is 0:09:04.840 --> 0:09:07.439 going to go? And can earnings really hold up or 0:09:07.600 --> 0:09:10.160 grow eleven percent or twelve percent? In twenty twenty four 0:09:10.440 --> 0:09:13.240 when we have that come down of inflation where some 0:09:13.360 --> 0:09:15.760 of the earnings that were higher were because of higher 0:09:15.760 --> 0:09:17.960 revenues because of inflation, you had this sort of rolling 0:09:18.160 --> 0:09:21.960 and rolling global recession or rolling global slow down, rolling 0:09:22.000 --> 0:09:24.360 slow down in sectors in the US. Now China's on 0:09:24.440 --> 0:09:26.880 the slower and if they stimulate, is that going to help? 0:09:26.960 --> 0:09:29.959 Is it enough to change the process of next year? 0:09:30.000 --> 0:09:31.600 And can we keep margins where they are? I think 0:09:31.679 --> 0:09:33.560 all these questions are unanswered, so I think. 0:09:33.440 --> 0:09:33.800 That that's it. 0:09:34.080 --> 0:09:37.120 It's tough to roll into an idea of where earnings 0:09:37.160 --> 0:09:38.400 are going to be. When you don't know the answer 0:09:38.440 --> 0:09:39.320 to questions with. 0:09:39.400 --> 0:09:41.080 The outlook that you just put out there, it makes 0:09:41.120 --> 0:09:43.280 me think maybe you're rotating out of stocks and going 0:09:43.360 --> 0:09:44.080 more into bonds. 0:09:45.080 --> 0:09:46.760 I think there's a real place for bonds, and I 0:09:46.840 --> 0:09:48.920 think the question of how fast rates come down, I 0:09:49.040 --> 0:09:51.120 mean a lot of investors are more interested in having 0:09:51.160 --> 0:09:52.640 more of a balanced portfolio than they were. 0:09:52.720 --> 0:09:53.160 You've got this. 0:09:53.559 --> 0:09:55.079 This goes back to the tension of are we going 0:09:55.120 --> 0:09:57.400 back to a pre financial crisis world where rates can 0:09:57.520 --> 0:10:00.640 have some sort of meaningful aspect in your portfolio. 0:10:01.080 --> 0:10:02.840 Where they settle is going to be the question. 0:10:03.000 --> 0:10:04.719 But we're not going back to zero. And I think 0:10:04.760 --> 0:10:07.000 the equity markets are getting excited that rates are coming down, 0:10:07.160 --> 0:10:08.960 and maybe they're coming down a lot further than people 0:10:09.000 --> 0:10:10.920 expect them to. I don't really know where that. 0:10:10.960 --> 0:10:11.559 Answer is yet. 0:10:11.559 --> 0:10:12.480 I don't think anybody does. 0:10:12.559 --> 0:10:14.280 One of your highest convictions this year has been the 0:10:14.440 --> 0:10:17.040 energy stop trade, and right now we're looking at a 0:10:17.080 --> 0:10:20.800 sort of surprise decline and price, which is particularly surprising 0:10:20.880 --> 0:10:24.360 given the disruption that we've seen and the Hamas Israel war. 0:10:24.800 --> 0:10:27.079 How much do you still lean into that? Do you 0:10:27.160 --> 0:10:29.880 still think that oil companies are goodbye here. 0:10:30.400 --> 0:10:32.440 So I think the biggest issue for this year has 0:10:32.480 --> 0:10:35.319 been much bigger supply than anybody was expecting. I think 0:10:35.320 --> 0:10:37.120 Paul Sanki did a great job talking about that a 0:10:37.160 --> 0:10:40.199 couple of days ago. The fact that everybody expected more 0:10:40.240 --> 0:10:42.160 battles to come off the market, both from Russia and 0:10:42.200 --> 0:10:44.439 Iran and the fact that they really didn't, and then 0:10:44.559 --> 0:10:48.040 other people increased supply. Robust demand has been fairly robust. 0:10:48.120 --> 0:10:49.760 If you get a really big slowdown, that's going to 0:10:49.840 --> 0:10:51.880 hit the demand side. So it's tough. But I still 0:10:51.880 --> 0:10:54.679 think longer term, you've got good dividend yields and you've 0:10:54.679 --> 0:10:56.920 got a longer tail on hydrocarbons, and that is going 0:10:57.000 --> 0:10:57.560 to be meaningful. 0:10:58.320 --> 0:11:00.640 I look at the hydrocarbons, I'm okay, they had a 0:11:00.679 --> 0:11:02.679 bad month, they had a bad week. I look at 0:11:02.679 --> 0:11:04.719 the banks, and I guess we could talk forever about that. 0:11:05.320 --> 0:11:09.079 All anybody's talking about are these super growers we have 0:11:09.240 --> 0:11:11.880 with thirty, forty and fifty multiples on them. 0:11:11.920 --> 0:11:13.319 That's not the textbooks? Is it? 0:11:13.760 --> 0:11:14.120 Do they do? 0:11:14.320 --> 0:11:16.560 Year two is the biggest surpriser. They just keep going. 0:11:17.200 --> 0:11:19.280 I think it's well, it's those kind of multiples are 0:11:19.320 --> 0:11:21.079 not in the textbook, No, but they really did have 0:11:21.240 --> 0:11:24.079 fantastic earnings this year, and Cameron Dawson's been quick to 0:11:24.120 --> 0:11:26.319 point that out right like how fast they were growing. 0:11:26.600 --> 0:11:28.920 The question then becomes can they keep that up? And 0:11:29.000 --> 0:11:31.360 if the delta is negative, if I'm growing, but I'm 0:11:31.360 --> 0:11:34.679 growing more by delta's negative way to change, if the 0:11:34.760 --> 0:11:36.920 rate of change is negative, so that I'm growing, but 0:11:36.960 --> 0:11:41.520 I'm growing less fast. Somebody briefer, I'm growing less fast. 0:11:41.720 --> 0:11:45.040 Do I deserve that thirty or fifty multiple? And I 0:11:45.080 --> 0:11:46.760 don't know the answer to that question because it depends 0:11:46.760 --> 0:11:48.440 on how fast we grow. I don't see it that fast. 0:11:48.720 --> 0:11:50.959 I like that you're just honest about this, and we've 0:11:51.000 --> 0:11:53.040 seen all these projections about you know, this is what 0:11:53.160 --> 0:11:55.199 we expect to happen in twenty twenty four, this is 0:11:55.240 --> 0:11:56.839 what we expect to happen in twenty twenty five. And 0:11:56.880 --> 0:11:58.360 it's almost the curse of having to come out with 0:11:58.440 --> 0:12:01.520 a full year's strategy. But if you had to, what 0:12:01.600 --> 0:12:04.079 would you be looking at towards the end of next year. 0:12:05.960 --> 0:12:08.439 I think one of the things that's been surprising is 0:12:08.480 --> 0:12:10.440 that with the strength of the labor market, you haven't 0:12:10.480 --> 0:12:13.640 seen wages increasing as fast as people predicted that they would. 0:12:13.920 --> 0:12:16.040 So when people say the labor market is still is 0:12:16.080 --> 0:12:19.199 still very strong, yes, but wages aren't increasing that much. 0:12:19.280 --> 0:12:21.480 If we can keep a labor market with an unemployment 0:12:21.520 --> 0:12:23.240 rate that's fairly low and I don't want what that 0:12:23.440 --> 0:12:26.040 number is, and you don't see as much wage acceleration, 0:12:26.400 --> 0:12:28.200 then that's going to help on the margin side. It's 0:12:28.280 --> 0:12:30.040 not going to help on the consumer side, right, because 0:12:30.040 --> 0:12:32.040 there's attention to that because people aren't getting paid as 0:12:32.120 --> 0:12:34.600 much and you go look at food. You know, inflation 0:12:34.720 --> 0:12:36.120 may be coming down, but going to the super market 0:12:36.120 --> 0:12:38.360 doesn't feel any better for anybody. And so I think 0:12:38.400 --> 0:12:40.000 that those are the kinds of things that make it 0:12:40.080 --> 0:12:42.680 difficult to say spending is going to be completely robust 0:12:42.720 --> 0:12:43.760 on the consumer side next year. 0:12:43.800 --> 0:12:47.199 Can I just say thank you because she knows. Sarah 0:12:47.280 --> 0:12:50.040 knows that I like the smell of pine trees when 0:12:50.080 --> 0:12:52.360 I walk by, So she got me pine tree. 0:12:52.720 --> 0:12:54.480 You didn't get those in pine Tree, Vermont. 0:12:54.520 --> 0:12:57.920 This weekend I'm going to share with you and you know, 0:12:58.160 --> 0:13:01.440 light our candles the general and think about what the head. 0:13:01.360 --> 0:13:02.720 Until place they did White Christmas. 0:13:02.760 --> 0:13:06.480 This weekend, I heard saw Rosemary Clooney. 0:13:07.600 --> 0:13:08.760 So there are you going to. 0:13:08.800 --> 0:13:11.199 Unwrap them so we can smell the pine, so the 0:13:11.240 --> 0:13:12.800 audience can sell the pine. Yes, we'll do that. 0:13:12.880 --> 0:13:14.440 Yes that in the next episode. 0:13:14.480 --> 0:13:17.400 We can smell it on TV dot Radio. Sarah Hunt, 0:13:17.440 --> 0:13:19.920 Thank you so much. Elpine, saxon what's here. 0:13:30.120 --> 0:13:33.479 In December and onto a new January of Iowa caucuses 0:13:33.559 --> 0:13:36.880 and New Hampshire primaries. Greg Villier briefs this morning she 0:13:37.040 --> 0:13:40.959 fires policy strategist at AGF Greg, Lisa wants to talk 0:13:41.000 --> 0:13:44.240 about the various and sundry wars we're in. I need 0:13:44.320 --> 0:13:46.040 to talk to you about the war that's coming in 0:13:46.120 --> 0:13:50.719 the presidential election. Is it that Trump's ahead or is 0:13:50.760 --> 0:13:52.040 it that Biden's behind. 0:13:54.000 --> 0:13:57.199 I think it's more the latter than anything else. Just 0:13:57.360 --> 0:13:59.920 listening to the sound bites over the weekend, Tom would 0:14:00.360 --> 0:14:04.640 cringe inducing really from both Biden and Trump. If we're 0:14:04.679 --> 0:14:09.200 in for another eleven months of this, this is cruel 0:14:09.240 --> 0:14:12.640 and unusual punishment for the American voter who still thinks 0:14:12.920 --> 0:14:14.360 there's a chance for somebody else. 0:14:14.679 --> 0:14:17.000 There's somebody else out there, but it's not going to 0:14:17.040 --> 0:14:20.280 be decided, I would believe at the Iowa caucus the 0:14:20.720 --> 0:14:24.200 New Hampshire primary as well. Where are we in February 0:14:24.360 --> 0:14:26.640 after those January political events. 0:14:27.720 --> 0:14:30.920 Well, Trump will win, obviously in Iowa, but maybe not 0:14:31.160 --> 0:14:35.200 by quite as much as people had expected. I think 0:14:35.280 --> 0:14:38.320 that he will be the presumptive nominee by the middle 0:14:38.360 --> 0:14:41.080 of the spring. That's not a real courageous call on 0:14:41.240 --> 0:14:44.920 my part. But with the Democrats, I still think there 0:14:44.960 --> 0:14:48.680 could be a surprise. Maybe this guy from Minnesota, this 0:14:48.800 --> 0:14:51.920 House member, he's way behind, but he's different, he's new. 0:14:52.760 --> 0:14:56.880 Even Robert Kennedy, who's pretty exotic in his views, has 0:14:57.080 --> 0:15:02.480 attracted some attention. I sense a lot of Democrats, not 0:15:02.680 --> 0:15:06.080 just David Axelrod, who are desperately looking for someone else. 0:15:06.440 --> 0:15:08.600 Greg your language is really colorful, the supporting cruel and 0:15:08.680 --> 0:15:11.280 unusual punishment for the American people at this has to continue, 0:15:11.640 --> 0:15:14.840 and the exotic views of a representative Kennedy. I am 0:15:14.920 --> 0:15:19.360 wondering how much you think the likelihood of President Biden 0:15:19.680 --> 0:15:22.600 stepping aside for another candidate is tied into some of 0:15:22.680 --> 0:15:25.360 the military conflicts that the US is currently supporting or 0:15:25.400 --> 0:15:25.840 involved with. 0:15:26.800 --> 0:15:29.360 Well, there's two big stories so that you allude to. 0:15:29.520 --> 0:15:32.960 Number one is the trouble that Trump will have with 0:15:33.160 --> 0:15:33.600 his son. 0:15:34.080 --> 0:15:35.520 This is going to go on and on, and. 0:15:35.560 --> 0:15:39.360 It's an embarrassment. It's a distraction. It's a plus for Trump. 0:15:40.160 --> 0:15:43.640 But the other big story is who lost Ukraine. I 0:15:43.720 --> 0:15:48.080 think that could be a devastating story for the Washington 0:15:48.160 --> 0:15:50.800 in general if we can't get money for Ukraine, and 0:15:50.920 --> 0:15:54.120 it looks unlikely this week. Maybe they'll get a pittance, 0:15:54.760 --> 0:15:57.400 maybe they'll get a haircut, but I don't see a 0:15:57.600 --> 0:16:01.720 huge chunk of money coming for you, and Vladimir Putin 0:16:01.800 --> 0:16:03.400 has to be very happy. 0:16:03.680 --> 0:16:06.840 Vladimir Zelenski is coming to Washington, DC this week, I believe, 0:16:06.880 --> 0:16:09.800 on Wednesday, to talk directly with Congress members, including how 0:16:09.880 --> 0:16:12.240 Speaker Johnson, to try to plead his case. 0:16:12.520 --> 0:16:13.520 Over the weekend, there. 0:16:13.480 --> 0:16:15.760 Was a lot of discussion about how essentially this comes 0:16:15.800 --> 0:16:18.800 down to funding and if Ukraine doesn't get funded, they're 0:16:18.880 --> 0:16:20.560 going to lose, and that was what a lot of 0:16:20.600 --> 0:16:23.440 people were talking about, especially because Russia is putting about 0:16:23.480 --> 0:16:25.520 forty percent of its budget into the military. Do you 0:16:25.600 --> 0:16:27.160 agree with that assessment that this is sort of the 0:16:27.200 --> 0:16:30.640 turning point where if Ukraine doesn't get aid, it kind 0:16:30.680 --> 0:16:31.080 of ends. 0:16:32.520 --> 0:16:34.520 I guess I say it all depends on the definition 0:16:34.640 --> 0:16:37.040 of lose. I don't think Ukraine is going to lose 0:16:37.520 --> 0:16:40.920 the war anytime soon, but they're clearly on the defensive. 0:16:41.040 --> 0:16:45.840 They're backpedaling, They've not had a good winter, they lack supplies. 0:16:46.360 --> 0:16:49.320 So I would say that the momentum right now is 0:16:49.480 --> 0:16:53.120 with Russia. And if that's true, what does Vladimir Putin 0:16:53.200 --> 0:16:57.400 think about Estonia, Lithuania, Latvia? Does he think about other 0:16:57.520 --> 0:17:01.360 Central European countries that might be next greg The news. 0:17:01.240 --> 0:17:05.480 Over the weekend on Gaza was just absolutely grim. 0:17:06.080 --> 0:17:07.720 There's no other way to put it. 0:17:07.760 --> 0:17:10.359 It's a point where it's almost subsued within the media 0:17:10.480 --> 0:17:13.760 because of just the weight of the grimness as well. 0:17:14.320 --> 0:17:17.360 What is the action the administration can do this week? 0:17:19.240 --> 0:17:21.879 I don't see a lot. I don't see much that 0:17:22.000 --> 0:17:25.320 we can do. We could send more aid, but I 0:17:25.359 --> 0:17:28.359 think if it's tied to Ukraine, that's not going to 0:17:28.400 --> 0:17:30.840 happen until after the new year begins. 0:17:31.200 --> 0:17:31.240 No. 0:17:32.400 --> 0:17:34.520 I do think though, that in terms of the Arab 0:17:34.600 --> 0:17:37.480 street and the world in general, the Israelis maybe only 0:17:37.560 --> 0:17:42.040 have a few weeks left before they totally lose support. 0:17:42.400 --> 0:17:45.000 I think the window is starting to close on the Israelis. 0:17:45.000 --> 0:17:46.960 They've got to wrap this up pretty. 0:17:46.760 --> 0:17:49.240 Quickly at least to jump in here. Please. 0:17:49.359 --> 0:17:51.800 Well, I'm just curious there was so much discussion over 0:17:51.840 --> 0:17:54.560 the weekend about the university of presidents, the potential resignation 0:17:55.200 --> 0:17:59.000 of Harvard's president after what we saw from UPenn. I'm 0:17:59.080 --> 0:18:02.080 just curious. We're hearing that a lot of conservatives are 0:18:02.119 --> 0:18:05.080 saying we told you so, and that universities have been 0:18:05.160 --> 0:18:07.879 constraining freedom of speech for a long time, and that 0:18:07.960 --> 0:18:10.800 this is just one example. How much do you actually 0:18:10.840 --> 0:18:14.080 see Democrats joining with that versus sort of voyeuristic arguments 0:18:14.119 --> 0:18:16.399 being made around this, and. 0:18:16.560 --> 0:18:21.240 Good work voyeuristic. I don't see anything that's going to 0:18:21.359 --> 0:18:25.440 change the political landscape quickly, but it is an embarrassment 0:18:25.560 --> 0:18:27.959 for the Ivy League, and I think that will persist 0:18:28.240 --> 0:18:30.960 for a while. One other thing, really quickly, the abortion 0:18:31.160 --> 0:18:34.879 fight in Texas has long term implications. I think that 0:18:35.359 --> 0:18:38.160 more and more people will be looking at this saying 0:18:38.600 --> 0:18:39.320 this is not right. 0:18:39.560 --> 0:18:40.439 Greg. Thank you so much. 0:18:40.480 --> 0:18:43.120 Greg Valier with a Monday Eclectic Brief. There are many 0:18:43.200 --> 0:18:48.080 many different topics here, including what we see in Ukraine 0:18:52.640 --> 0:18:55.359 joining us now with the biggest shoes to fill on 0:18:55.440 --> 0:18:58.760 Wall Street. Max Layton with Jeff Curry at Gold and 0:18:58.840 --> 0:19:01.760 Sachs and now we've had more. It's City Group, global 0:19:01.840 --> 0:19:04.840 head of Commodity Research, Max. I'm going to cut to 0:19:04.920 --> 0:19:08.359 the chase. You and mister Morris. Doctor Morris had the 0:19:08.440 --> 0:19:12.560 call of the year. Everybody was looking for oil resiliency, 0:19:13.200 --> 0:19:14.159 oil higher. 0:19:14.800 --> 0:19:19.040 You guys went south? How far south from Brent seventy five? 0:19:19.560 --> 0:19:22.800 Can we now head? Sure? 0:19:23.400 --> 0:19:25.800 We think overall a lot of the move is done. 0:19:26.880 --> 0:19:30.720 And you know OPEC plus is doing some work to 0:19:30.920 --> 0:19:33.320 rebalance the market in the first quarter, and you know 0:19:33.400 --> 0:19:36.800 our base cases they'll be successful in doing that. The 0:19:36.920 --> 0:19:40.600 pressure increases for them to roll these cuts forward through 0:19:40.720 --> 0:19:43.600