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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Looking

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Speaker 1: forward to this conversation as I do every single Pain

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Speaker 1: Rops Friday, Alan Krueger Princeton's very young and one of

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Speaker 1: the finest labor market economists on the planet. Allan, you

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Speaker 1: would never say that about yourself, So I set for you.

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Speaker 1: Good morning, Good morning, er Market Chairman pausaid, it's very strong.

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Speaker 1: Is that your conclusion? I see it the same way. Uh,

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Speaker 1: the indicators are quite robust for the job market. ADP

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Speaker 1: report was strong. I suspect we'll get another strong job

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Speaker 1: market port this morning. Payrose growth is strong. Wage growth

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Speaker 1: is starting to come through. What's fascinating about this is

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Speaker 1: the wider market is pricing out federal reserve action through nineteen.

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Speaker 1: The wider market is repricing inflation expectations at a time

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Speaker 1: when the labor market it's kind of getting better and

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Speaker 1: better around it, not worse. You know, the market moves

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Speaker 1: in mysterious ways. And I think when you have an

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Speaker 1: administration which isn't clear on its goals, not clear on

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Speaker 1: its messaging, that just adds to the volatility. You sound terrible.

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Speaker 1: I mean, are you gonna go Do they have doctors

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Speaker 1: in Princeton or you have to come up to Manhattan

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Speaker 1: to see an m D. Okay, I think I'll make

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Speaker 1: it through the day. Okay, make we I had to

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Speaker 1: plague about a week and a half ago, and you

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Speaker 1: know they they fixed it for me. It's amazing. You know,

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Speaker 1: we take for grimm and all these wonder drugs, but

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Speaker 1: they fixed it for what? What do you recommend, Tim,

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Speaker 1: because ten year? I wouldn't go with the twelve years,

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Speaker 1: ten years more direct Seriously, the miracles of our antibiotic

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Speaker 1: industry seem to work for this. Uh, Like Professor Krueger.

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Speaker 1: That's great, except all my mail disagrees with you. Here's

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Speaker 1: the key question. And I don't know if it's gaussy

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Speaker 1: and I don't know what distribution. Shouldn't you want to use?

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Speaker 1: I'll let you use it? Okay. Wages are up three

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Speaker 1: percent or is it all in ten or twenty or

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Speaker 1: thirty percent of the public and the other seventy or

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Speaker 1: eighty percent really aren't seeing a wage game well. Certainly

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Speaker 1: for the last thirty years, the growth has been at

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Speaker 1: the top. And I understand completely and agree with the

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Speaker 1: mail that you're getting because for a very long time

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Speaker 1: the job market has not worked well. It's only because

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Speaker 1: this recovery has gone on for such long So to

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Speaker 1: translate here, there's people listening or getting five and six

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Speaker 1: and seven percent wage increases, and there's a whole heck

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Speaker 1: of a lot of people getting that onesie twosie thing going.

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Speaker 1: A lot of people don't get an increase at all. Um.

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Speaker 1: It has been the case over the last three or

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Speaker 1: four years that the bottom has started to do better

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Speaker 1: and we're seeing more broadly shared gains, which is what

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Speaker 1: you expect when the economy is very strong. Can we

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Speaker 1: talk about the potential for job losses in the order sector,

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Speaker 1: job losses potentially in the all sector as well, potentially

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Speaker 1: big job losses again, and how do you factor that

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Speaker 1: into your thinking, not just for today's number, but over

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Speaker 1: the next several months, the next few quarters. You know,

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Speaker 1: I think that this is about as good as it gets.

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Speaker 1: The economy was expanding when President Trump came to office.

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Speaker 1: Then it went on a sugar high, and I think

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Speaker 1: partly what the markets reacting to is this is the

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Speaker 1: end of the sugar high coming back down the ground.

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Speaker 1: And I think what we're seeing the announcement at GM,

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Speaker 1: for example, as a harbinger of what's likely to follow.

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Speaker 1: Is it the rate of change that is concerning people

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Speaker 1: as we go back towards trend growth or is it

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Speaker 1: the expectation, the fear that we're not going back towards

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Speaker 1: trend growth, we're going back to somewhere worse. Well, trend

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Speaker 1: growth is very low, trend growth is probably below two percent,

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Speaker 1: and you don't always stay right on trend. You pop

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Speaker 1: around that trend. So I think it's realization. And I think,

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Speaker 1: um many investors probably should have known this all along,

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Speaker 1: that we were just in this temporary sugar high because

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Speaker 1: of the unsustainable tax cuts and the extra spending that

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Speaker 1: took place over the last year. The speed at which

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Speaker 1: we get there, I think is going to be critical

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Speaker 1: to how markets respond to it. How does this work

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Speaker 1: just in terms of an economy getting a fiscal high

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Speaker 1: extra stimulus three handle four handle on g d P,

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Speaker 1: Then what and how quickly does that change? Well? You know,

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Speaker 1: I think John Williams said yesterday that managing us soft

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Speaker 1: landing is the real challenge, and it's like landing an

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Speaker 1: airplane in very turbulent weather, and even worse. Because we've

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Speaker 1: landed lots and lots of airplanes, we have lots of

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Speaker 1: indicators on the plane. When it comes to the economy,

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Speaker 1: we're flying a bit more unknown. You have a textbook

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Speaker 1: at Princeton, my guy named Blinder in the arch William Bauma,

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Speaker 1: the late Bill Obama, and it's gone through four thousand.

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Speaker 1: I think it's the twelve fourth thing addition, whatever it is,

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Speaker 1: and in there I would respectfully suggest Professor Krueger is

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Speaker 1: a fed always in every way, really afraid not to

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Speaker 1: make the right decision. The number one thing that don't

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Speaker 1: want to do is to make a decision and then

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Speaker 1: I have to bring it back and say, oops, we

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Speaker 1: were wrong. How big is that emotion right now? How

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Speaker 1: big is the oops we don't want to be wrong tone?

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Speaker 1: To me, it's huge. You know. It looks to me

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Speaker 1: like they're going through reconsideration. They have some new blood

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Speaker 1: on the committee. People are bringing in different perspectives. The

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Speaker 1: economy has changed, and I think they're using this as

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Speaker 1: a moment to think about whether they want to pause

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Speaker 1: or change their outlook. And we started the week with

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Speaker 1: Vice Chairman Clarida, and you're one of the few out

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Speaker 1: there that can keep up with the dynamics of Girdler

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Speaker 1: and Clarida and Gali and DSGE and the rest of

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Speaker 1: the fancy UH mathematics. Great, do the models work right now? Certainly?

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Speaker 1: Vice Chairman Clarida has a new humility through the financial

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Speaker 1: crisis to the models work now? Are we model building

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Speaker 1: or are we guessing building? You know, the problem with

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Speaker 1: the economy is the model is not stable. So the

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Speaker 1: parameters that will estimate they move around, and I think

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Speaker 1: some things you can count on, but you don't know

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Speaker 1: when you can count on them. And the unit labor costs,

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Speaker 1: how does labor fold into the instability of a three

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Speaker 1: ratio productivity study? Well, I think the real question, in

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Speaker 1: rich Clara to raise it is are we seeing a

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Speaker 1: supply side effect? Are we seeing a more uh permanent

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Speaker 1: increase in productivity growth? I don't think that that's likely

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Speaker 1: to happen. I could be wrong about that. We'll see,

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Speaker 1: but I think that's the big question for the FED

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Speaker 1: right now. Alan Krueger, get some rest after your start

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Speaker 1: tour here at Bloomberg. Allen Cruery is a professor of

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Speaker 1: economics at Princeton University, the former chairman of the President's

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Speaker 1: Council of Economic Advisors for the previous Like the super

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Speaker 1: bald and he's pulled a muscle. You know, it's that

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Speaker 1: big everything a month, you know, it says Stott your

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Speaker 1: voice on Payrolls Friday. It's cruel. You know. I gotta say,

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Speaker 1: this is my first time in your new studio. Can

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Speaker 1: I'm very impressed. I feel like I'm in a space

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Speaker 1: capsule here. Uh. And the other thing I was gonna say,

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Speaker 1: because of the rumors about the chief of staff is

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Speaker 1: I worked for four different chiefs of staff, and the

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Speaker 1: saying that they all have among themselves is it's more

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Speaker 1: of staff than chief. It's a very difficult job. What

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Speaker 1: give us some color in that. What is the greatest

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Speaker 1: burden of the chief of staff to any given president. Well,

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Speaker 1: there's you know, people who take that job, work long

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Speaker 1: hours and they know that they're not going to see

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Speaker 1: their family for a long time. Some are like Dennis

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Speaker 1: McDonough who had small kids. Um really threw himself into it. Um,

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Speaker 1: and that's just the way he runs his life. I

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Speaker 1: think it's that you have so many different personalities you

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Speaker 1: have to manage. You don't have line authority. Uh, you're

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Speaker 1: speaking for the president, and if you lose the confidence

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Speaker 1: of the president, you really don't have anything to to

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Speaker 1: move the members of the cabinet or the rest of

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Speaker 1: the administration. In a general for marine corps, not having

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Speaker 1: line authority is a unique original experience, I'm sure. Alan Krueger,

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Speaker 1: thank you so much. My market observation was just to

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Speaker 1: be absolutely stunned yesterday see the two year yield down

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Speaker 1: by ten basis points at one point in the session,

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Speaker 1: and wondering how could that be when we already had

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Speaker 1: such dobbish pricing for the federal reserve and surely there

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Speaker 1: would be limited downside on two year yields. That didn't

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Speaker 1: seem to matter in yesterday's session. We will raise some

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Speaker 1: of that move by the clothes, but I thought it

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Speaker 1: was really interesting and want to find fascinating at the

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Speaker 1: moment is the extent to which this market is willing

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Speaker 1: to price out both inflation and federal reserve action through

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Speaker 1: nineteen to literally nothing. And also good December in play

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Speaker 1: I mean, are we really considering that the Federal Reserve

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Speaker 1: may not raise interest rates? Cop I'm willing to say

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Speaker 1: it is a discussion point of media types and their guests,

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Speaker 1: but it's really mentally not on the table yet. Well,

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Speaker 1: the market types, the markets. The market is pricing it out.

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Speaker 1: I want to bring it, Jim Glassman, And there was

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Speaker 1: an ambiguity to that nod. The mayde is discussing it, Jim.

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Speaker 1: But the market is pricing it. Why yeah, Um, I

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Speaker 1: personally think they go ahead and it'll feel devish because

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Speaker 1: they will acknowledge it's now that as as Pal said

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Speaker 1: last week, we're now on the low end of their

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Speaker 1: range of they but they think is neutral. So uh,

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Speaker 1: the closer you get to what you think neutral is,

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Speaker 1: the more cautious you're going to be. And and to me,

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Speaker 1: the new news, the important news in the last several

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Speaker 1: months has really been the inflation trend is not is

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Speaker 1: actually moderating a bit. And what's important about this is

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Speaker 1: when you think about where we were at the beginning

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Speaker 1: of the year, all this burst of activity that was

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Speaker 1: going on in the economy, people thought, oh my gosh,

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Speaker 1: are overheating and there's nothing you're saying that makes you

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Speaker 1: feel like you're overheating. So I think that was an

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Speaker 1: important change in the mindset, and I think that's what's

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Speaker 1: making the FED a little more cautious, a little more

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Speaker 1: open minded. You could be more careful. You don't have

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Speaker 1: to be in such a rush when you're not that

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Speaker 1: far from where you think neutral is. Yeah, but Jim,

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Speaker 1: that's not rushing. And then the standing still, the market

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Speaker 1: stomping serprice standing still in Yeah, that's probably uh, you

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Speaker 1: know in the moment that that probably it reflects the

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Speaker 1: psychology of what's going on right now with the acting

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Speaker 1: market down and people worried about an oil down, and

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Speaker 1: you know, people we tend to exaggerate the impact of that.

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Speaker 1: But at some point you start looking at the underlying

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Speaker 1: trends in the economy. Economy is doing fine, as Pale says,

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Speaker 1: the job market is really strong. At some point it

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Speaker 1: makes sense to keep work, inching your way towards some

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Speaker 1: level that you don't think it's going to cause the

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Speaker 1: problem for financial systems. So I think this is why

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Speaker 1: I think the market will Actually, the market has been

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Speaker 1: on the right side of this. Actually for the last

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Speaker 1: couple of years, they've been pricing in cautious, and it

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Speaker 1: turns out that that's been the right idea compared to

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Speaker 1: what many of us economists have thought. Well, let's take

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Speaker 1: the economist view. CFC is the function on the Bloomberg

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Speaker 1: where you can get this snapshot quickly capture the median

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Speaker 1: estimate of economists forecasts for various countries. I've picked up

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Speaker 1: on the United States, and here are the forecast for

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Speaker 1: nineteen median estimate GDP two point six unemployment essentially lower

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Speaker 1: than it is now. That's the median forecast for from

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Speaker 1: the street three point six percent where people think unemployment

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Speaker 1: will be. So that's pretty much been the view basically

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Speaker 1: in line. Yeah, that's been the view all year. Really

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Speaker 1: hasn't changed. Back to trend growth on GDP, not because

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Speaker 1: unemployment coming lower means we're predicting slightly fair to growth,

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Speaker 1: so just slightly above train growth, but back towards trend growth.

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Speaker 1: I think is one here. None of that sounds dreadful.

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Speaker 1: Look the corporate forecast profits we're talking about high single

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Speaker 1: digit profit growths are an all time record has so

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Speaker 1: this is what it's not the growth that may are

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Speaker 1: so much. We're at full employment with a very highly

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Speaker 1: profit share. But you know, I think the market is

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Speaker 1: obsessed with the right of change. It is how quickly

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Speaker 1: do we get calculus? I know people people always focus

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Speaker 1: on the wrong derivative. Thank you. If you took calculus,

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Speaker 1: you would sort of you get the idea what this is.

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Speaker 1: This is sort of embedded in our thought process at

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Speaker 1: the FED. Sometimes the growth rate matters, sometimes it doesn't,

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Speaker 1: depends on where you are in the rhythm of relative

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Speaker 1: to full employment. So to me, here's the big idea. See,

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Speaker 1: here's the problem. When you look at history, what it

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Speaker 1: tells you is that when we get to full employment,

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Speaker 1: we don't stay there more than a year or two.

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Speaker 1: So in my mind, what we are all are predicting

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Speaker 1: is like the ideal set up, because what you don't

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Speaker 1: want to see is an economy running hot when you

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Speaker 1: get to full employment. So there's nothing wrong with slow

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Speaker 1: down growth and and and Jim, I hope you tune

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Speaker 1: into John Ferrell's property the Real Yield where they always

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Speaker 1: do calculus. What is that John? When does this queue up?

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Speaker 1: It'll besion it will be recorded and played out through

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Speaker 1: the way A team times this weekend clay over class.

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Speaker 1: This has been an ongoing issue. Well, you know, we're

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Speaker 1: looking at the tenure yield here oil the gyrations. The

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Speaker 1: mother of all gyrations was a certitude of experts that

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Speaker 1: we would grow per month non farm payrolls one twenty

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Speaker 1: one fifty. There was gloom and doom one ten whatever.

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Speaker 1: Why did that not happen? We were getting these phenomenal

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Speaker 1: hundred eighty two thousand, two hundred sixteen thousand moving averages.

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Speaker 1: You know, I think people forget there are these pockets

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Speaker 1: of hidden unemployment out there that stiff. I think people thought, well,

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Speaker 1: we're back to full employment, there's what can you do.

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Speaker 1: The underlying growth in the working age populations about seventy

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Speaker 1: five thou a month, and that's what making people think

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Speaker 1: that's got to be normal. But the truth is, we

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Speaker 1: have pockets of hidden unemployment. We still have that four

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Speaker 1: year old. Uh folks coming back in. But I suspect

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Speaker 1: it's these things are a lot more fluid, and I

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Speaker 1: think when you have a burst of activity, there are

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Speaker 1: people who you can pull back in. So I really think, uh,

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Speaker 1: we're all mystified by why the labor Americans still growing

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Speaker 1: as rapidly as it is. But the truth is, when

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Speaker 1: you think about it. We've got seven million jobs out there.

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Speaker 1: We can't feel We've got to get to the inflation dynamic,

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Speaker 1: and energy has been a big part of that crew.

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Speaker 1: Catching a little bit of a bit on w t

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Speaker 1: I on a report from Reuter's that Iran has agreed

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Speaker 1: to an opaque deal. Some conflicts though in terms of reporting,

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Speaker 1: and this always happens to be in our Austria because

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Speaker 1: it is actually just absolute chaos and of the next

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Speaker 1: how whereveryone will try and work everything out. But as

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Speaker 1: far as we understand, according to Iranian delegate, Iran has

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Speaker 1: not reached an agreement with OPEC. The OPEC talks are

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Speaker 1: on going. They're focused on the wording of the deal

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Speaker 1: at the moment. But look, we're reaching that point, Tom,

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Speaker 1: where the chaos comes into the room and everyone tries

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Speaker 1: to work out do we have a deal, what's in

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Speaker 1: the deal, what's the wording of that agreement? So it's

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Speaker 1: going to take a little while for this to spill,

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Speaker 1: but it looks like we're reaching that point where we're

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Speaker 1: going to get some news. Tom, m to me, it's bizarre.

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Speaker 1: It was chaos. You've seen the room, Marie reported, she

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Speaker 1: you know what was great about Anne Marie Is. It

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Speaker 1: is a dired hockey fan. She was getting bounced around,

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Speaker 1: and yesterday she she put an elbow up. It was

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Speaker 1: like she was spinning around the front. It is our

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Speaker 1: Bloomberg TV reporter over in Vienna, Austria. She put she

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Speaker 1: put an elbow in somebody's chin. It was great the residency.

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Speaker 1: So the Iranian delegates says, lots of hackling still over.

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Speaker 1: The language of the deal sounds like Central Bank communications.

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Speaker 1: I'm like John, I'm like all Americans. I'm like, what's

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Speaker 1: the damn price? What is this going to cost me?

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Speaker 1: You know, John Tucker has a hummer too. That's all

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Speaker 1: John cares about. What's the price At the Helix in

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Speaker 1: New Jersey. At the moment, the price of a barrel

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Speaker 1: is getting a little bit more expensive. We're up about

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Speaker 1: sixty six on w T. Jim Glass were head. Yeah,

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Speaker 1: But Jim, so it doesn't it doesn't tend it last night,

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Speaker 1: it doesn't matter when you and I were dreaming of

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Speaker 1: owning a VW rabbit rabbit diesel. What you're worried about

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Speaker 1: was gonna get the gas. Yeah, it's being line. Was

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Speaker 1: his Thursday or Friday? Can I get in line to

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Speaker 1: get gas, and John, what's a leader of gas? What's

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Speaker 1: a gallon of gas in London? Well again, I think

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Speaker 1: pound pound fifty might do it. I don't know. I

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Speaker 1: have to check for you. Pound fifty Michael Barr, that's British.

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Speaker 1: Remember the imperial gallon back and now, yeah that was

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Speaker 1: I couldn't figure that out. We're shulled to bring in now,

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Speaker 1: Michael Darter, here's MKM Advisors does a terrific synthesis of

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Speaker 1: economics into market participation right now. Uh, Michael, let us

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Speaker 1: stay on the jobs report for a bit. Here. I

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Speaker 1: guess there's wage growth. I guess it was on plan.

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Speaker 1: But done of my listeners believe it's a buoyant wage economy.

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Speaker 1: Are they wrong? No, Tom, They're not totally wrong. But

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Speaker 1: we are seeing a subtle, subtle, uh strengthening on a

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Speaker 1: year over year basis. So most of for most of

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Speaker 1: the economic expansion, hourly wage growth was around two. You know,

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Speaker 1: we're running just above three year over year. That is

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Speaker 1: above the rate of inflation anyway you measure it. So

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Speaker 1: we are getting some real wage growth. It's not robust,

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Speaker 1: but you know what, productivity has been weak, and that's

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Speaker 1: ultimately going to be the driver of real wage growth.

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Speaker 1: So we're getting real wage growth that's low but essentially

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Speaker 1: in line with you know, fairly weak productivity. Shut into

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Speaker 1: the Bloomberg screen, Michael, I know you're working quickly there

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Speaker 1: oil elevated of vienna headlines. Uh, the OPEC headlines that

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Speaker 1: also note the two stents spread really pretty stay is Michael,

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Speaker 1: let's launch across the good time that we have with

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Speaker 1: you into a broader discussion. The December nine FED meanings

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Speaker 1: seems to be unusually important. Let's start with first principles.

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Speaker 1: Why does December matter? Well, it doesn't matter so much

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Speaker 1: in and of you know, the fact that the market

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Speaker 1: still expects the FED to to tighten, to to raise

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Speaker 1: rates in other twenty five basis points where it could

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Speaker 1: be much more meaningful would be whether you know it's

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Speaker 1: a it's a dubbish hike or a hawkish hike, or

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Speaker 1: there's simply no guidance at all. I think the FED

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Speaker 1: is going to need to start moving in the direction

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Speaker 1: of maximum flexibility for next year. You know, the macro

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Speaker 1: data has been pretty strong. This was a softer report,

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Speaker 1: no doubt about it. But you know, the market indicators

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Speaker 1: and forget the stock market for a moment, Credit market, inflation, expectation,

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Speaker 1: yield curves, money growth are all telling the FED that

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Speaker 1: it's much closer to neutral. And you know this, this

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Speaker 1: idea of overshooting neutral, which the FED had been propounding

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Speaker 1: in recent months, really needs to be taken off the

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Speaker 1: table unless we want to face a policy. Okay, what's

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Speaker 1: he's going to do that in the next block, But

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Speaker 1: we're doing in this block with Michael Dard and we're

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Speaker 1: thrilled to do that. Michael, you cut your teeth on

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Speaker 1: real and nominal analysis of our g d P and

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Speaker 1: of what it means for everybody listening here. Nominal, folks,

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Speaker 1: is the actual growth plus the inflation change, and then

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Speaker 1: everybody in Michael's trade goes to real goes to inflation

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Speaker 1: adjusted analysis. John Williams, I think two speeches ago really

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Speaker 1: leaned in the efficacy of a nominal analysis. Do you agree?

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Speaker 1: I do agree. I mean, ultimately that's what monetary policy

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Speaker 1: controls nominal variables. Monetary policy does not control real variables

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Speaker 1: over the long run, but over the short term because

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Speaker 1: the sticky wages, nominal shocks have real effects. That's why

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Speaker 1: we have business cycles when the said makes a policy mistake.

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Speaker 1: So I do think that's correct. I think it's a

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Speaker 1: bit regret utible that Mr Williams sort of through this

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Speaker 1: whole idea of the our star overboard. Um. You know,

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Speaker 1: the idea initially was the FED, you know, basically just

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Speaker 1: moves to neutral and then stops. In recent months, we've

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Speaker 1: been hearing more about this idea of overshooting neutral, going

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Speaker 1: into a more restrictive zone to lean against easy credit

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Speaker 1: market conditions, the push from fiscal policy, and what someone

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Speaker 1: the FED believe is unsustainably low unemployment. Well, I would

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Speaker 1: say each of those has been reversed now, credit market

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Speaker 1: conditions tightening. I think it's pretty obvious that whatever the

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Speaker 1: push from fiscal policy is, it's probably been overestimated, and

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Speaker 1: no one really knows what the sustainable rate of unemployment is.

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Speaker 1: Should should the non sophisticates assume the system is broken?

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Speaker 1: If we have a FED that should remain accommodative with

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Speaker 1: minimal real yields out there. I mean, it's a fiction

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Speaker 1: that there's actual real yields out there, and yet they're

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Speaker 1: trying to target nominal growth. What you're suggesting to me

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Speaker 1: is a multi four percentage is isn't it. Yeah, I

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Speaker 1: think we need to just forget about, you know, whatever

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Speaker 1: the specific level of real yields is and focus more

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Speaker 1: on what the policy goal is. So if nominal GDP

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Speaker 1: growth right now it's five and a half percent year

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Speaker 1: every year, that's pretty hot. But forward looking markets are

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Speaker 1: telling us it's going to be more four percent is

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Speaker 1: next year? Well that's perfect. That's a soft landing. That's

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Speaker 1: not a rate of nominal GDP that's going to generate

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Speaker 1: much above two percent inflation. And whatever the yield real

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Speaker 1: yield is, then so be it. So the goal should

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Speaker 1: be focused on the nominal economy and the forward looking Okay,

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Speaker 1: how's the nominal economy? What's the MKM partners? Is it

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Speaker 1: a two point is it a two point x percent

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Speaker 1: plus inflation? What does that come out to? Well, next

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Speaker 1: year is going to be slower, Tom, I think, you know,

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Speaker 1: probably around four, maybe somewhat below four. So that's a

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Speaker 1: slowdown from where we are now at five and a

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Speaker 1: half percent. Michael, Michael, nobody can get reelected with a

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Speaker 1: three point eight percent American economy, doesn't matter what party

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Speaker 1: they are. So they're gonna beg Chairman Powell to what

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Speaker 1: stop the rate hikes after December nineteenth. They'll give him

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Speaker 1: the safe face of December nineteenth, and then that's it. Well,

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Speaker 1: I you know, Tom, I think so. I mean, look,

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Speaker 1: if we're on a glide pack path back to trend growth,

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Speaker 1: the FED mission accomplished. Essentially. You know, what is the

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Speaker 1: point of tightening pond monetary policy. It's essentially to slow

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Speaker 1: the economy back to trend. If forward looking markets are

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Speaker 1: telling us that that's already been accomplished, we don't really

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Speaker 1: see it in the data so far, but we will.

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Speaker 1: Then the key is going to be not to overshoot,

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Speaker 1: so forward looking that's the mission. Um, let's link this

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Speaker 1: over to get started at our next section. Michael Darda

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Speaker 1: with the equity markets twenty four thousand on the Dow.

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Speaker 1: I guess we've had a correction, and of course the

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Speaker 1: volatility has been absolutely extraordinary. That we see future is

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Speaker 1: flat right now, which is a recovery from where we've been.

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Speaker 1: But is there a new opportunity because of a repricing

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Speaker 1: of quality stocks? I think so, Tom, I mean, this

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Speaker 1: has been a correction that's felt like a bear market

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Speaker 1: because of the you know, the pronounced weakness and cyclical groups,

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Speaker 1: you know, many of which have fallen more technical definition

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Speaker 1: of a bear market. The rally in the defensive sectors

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Speaker 1: has propped up the overall market. So this correction certainly feels,

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Speaker 1: who investors a lot worse than the one we had

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Speaker 1: in January and February and then again in April. So

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Speaker 1: I do think is assuming that the Fed does call

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Speaker 1: it quit soon enough, and there's no recession, simply a

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Speaker 1: slowdown and return to trend growth, then there should be opportunities,

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Speaker 1: particularly in some of these areas that have just been

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Speaker 1: taken to the woodshed. Emerging markets down almost thirty from

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Speaker 1: the high year, home builders down around forty. So assuming

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Speaker 1: there's no recession out there next year, meaning the sad

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Speaker 1: stops in time, there's some good opportunities for investors. This

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Speaker 1: dart speaks about change in what we see. Lisa Brahm

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Speaker 1: Wood's alongside Paul Sweeney of Bloomberg Intelligence, so happy to

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Speaker 1: have you here today. A lot going on, a lot

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Speaker 1: going on, and um, great, great, great to be here.

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Speaker 1: There's a lot going on, not just in media space,

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Speaker 1: but just across the market, with obviously the jobs and

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Speaker 1: oil and all across the energy spectrum. We are being

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Speaker 1: joined by Margaret Brennan of course she Uh. She hosts

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Speaker 1: Face the Nation Sunday at two pm in New York, Washington,

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Speaker 1: d C. And now Bloomberg one six one Boston, Newburyport.

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Speaker 1: That's Face the Nation this Sunday. Margaret, thank you so

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Speaker 1: much for being with us. So who is your guest

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Speaker 1: on Sunday? And how much do you think it really

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Speaker 1: matters that John Kelly is expected to resign? Well, we

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Speaker 1: have not only an on sort of news, we have

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Speaker 1: a lot of newsmakers on this show. So if we

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Speaker 1: do see that that take up in staffing and the

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Speaker 1: replacement the chief of staff, which has been rumored for

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Speaker 1: a good year now, Um, we have some some good

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Speaker 1: perspective on it from Senator John Thoon, who is now

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Speaker 1: in the very top runs of Republican leadership on Capitol Hill. Uh.

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Speaker 1: Capitol Hill looked to John Kelly uh as sort of

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Speaker 1: a source of stability Um in managing the president's relationship

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Speaker 1: with Capitol Hill. Uh. What will Nick Ayers if he

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Speaker 1: is indeed the replacements vice president? The current chief of

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Speaker 1: status to the Vice President, Nick Ayers uh is rumored

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Speaker 1: to be the replacement there for Kelly. Um. We're also

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Speaker 1: going to talk about these convulsions in the global markets

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Speaker 1: with Christine Lagarde, the director of the i m f UH,

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Speaker 1: the trade dispute with China, what's the future of it.

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Speaker 1: Senator Marco Rubio, who has been pushing legislation to try

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Speaker 1: to block Chinese telecom firms from functioning here in the US,

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Speaker 1: is also going to be joining me, and get ready

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Speaker 1: for a slew of headlines from the Special Council today

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Speaker 1: as that finally happens UH this afternoon, we'll get more

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Speaker 1: details of who he is working with UM and exactly

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Speaker 1: what Michael Cohen, the President's personal attorney, has provided in

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Speaker 1: terms of evidence. So Adam Schiff, who is going to

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Speaker 1: be a key position on House Intel, will be joining

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Speaker 1: us to connect those dots for us as well. Margaret,

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Speaker 1: that sounds like an extraordinarily busy agenda for your show.

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Speaker 1: Sticking with it with the news, the news of the

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Speaker 1: day with John Kelly. What's the expectation in Washington for

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Speaker 1: the for the type of replacement that that the president

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Speaker 1: may be looking for. UM. You know, John Kelly initially

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Speaker 1: was thought as a as you mentioned, if someone brings

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Speaker 1: some stability and discipline to the White House. What is

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Speaker 1: the expectation for the type of replacement that the president

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Speaker 1: may be looking for. Well, look, the President often likes

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Speaker 1: to make multiple headlines in one day, so we we

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Speaker 1: do have to focus on a number of things today.

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Speaker 1: This may be a distraction from the Muller probe, but

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Speaker 1: this is a plan that the President has been um

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Speaker 1: really talking about for a while here in terms of

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Speaker 1: shaking up his own staff. Yes, he had said publicly

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Speaker 1: that John Kelly would stay until twenty twenty, but we're

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Speaker 1: hearing that departure may be as soon as today, and

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Speaker 1: that's the most likely replacement would be the Vice president

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Speaker 1: Chief of Staff, Nick Airs. Nick is an interesting choice.

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Speaker 1: He's young, up and comer in the Republican Party, a

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Speaker 1: key UH fundraiser as well. He worked for Tim Paul Lenty.

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Speaker 1: He has worked for UH, then Governor Produces, now UH

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Speaker 1: the Agriculture Secretary. So he's got some intimate UH experience

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Speaker 1: in terms of the internals of Republican politics, but more

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Speaker 1: traditional ones, not Trumpian ones. Or whether or not he

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Speaker 1: can institute order. You know, that's been sort of the

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Speaker 1: the wish of so many Republicans on Capitol Hill that

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Speaker 1: they'll see a more traditional president. I don't think that's

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Speaker 1: a realistic expectation, but perhaps he can manage the relationships

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Speaker 1: with Republican leaders on Capitol Hill a bit more, uh,

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Speaker 1: in terms of helping to broker any kind end of

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Speaker 1: legislation in the new Congress of the Democratic majority in

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Speaker 1: the House. Margaret, just thirty seconds here, how much does

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Speaker 1: Capitol Hell care about the market term? While we've seen

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Speaker 1: it's gotten, it's certainly gotten attention on Capitol Hill. But

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Speaker 1: these concerns about the telecom companies like quawe um have

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Speaker 1: been up concern to those on the Senate Intelligence Committee, uh,

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Speaker 1: like Marco Rubio, like Mark Warner, a Democrat as well,

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Speaker 1: because they believe that they are not just a threat

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Speaker 1: to American businesses, but a threat to US national security.

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Speaker 1: And that's what we're going to dig into on Sunday.

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Speaker 1: Margaret Brennan, thank you so much for being with us.

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Speaker 1: You can hear Margaret Brennon this weekend on Bloomberg Radio.

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Speaker 1: Listen to Face the Nation Sunday at two pm in

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Speaker 1: New York, Washington, d C. And now Bloomberg Win US

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Speaker 1: six one Boston Newbury Report. That's Face the Nation this

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00:28:48,320 --> 00:28:56,360
Speaker 1: Sunday at two on Bloomberg Radio. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

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00:29:01,000 --> 00:29:06,880
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

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Speaker 1: on Twitter at Tom Keene before the podcast. You can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio