WEBVTT - Surveillance: Stern Says Fed Committed to Data-Dependency 0:00:00.320 --> 0:00:04.160 Who you put your trust in matters. Investors have put 0:00:04.200 --> 0:00:07.640 their trust in independent registered investment advisors to the tune 0:00:07.640 --> 0:00:12.240 of four trillion dollars. Why learn more and find your 0:00:12.240 --> 0:00:27.240 independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 0:00:27.280 --> 0:00:31.320 I'm Tom Keane. Always with Michael McKee. Daily we bring 0:00:31.360 --> 0:00:35.280 you insight from the best in economics, finance, investment, and 0:00:35.360 --> 0:00:41.519 international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, 0:00:41.560 --> 0:00:48.640 and of course on the Bloomberg Well. The big bet is, 0:00:48.760 --> 0:00:52.479 of course on the central bank trade these days, and 0:00:52.520 --> 0:00:55.840 the bet has been that ever more stimulus will be 0:00:55.880 --> 0:00:58.920 coming our way. Now the Fed ready to meet next week, 0:00:59.000 --> 0:01:02.840 seems to be leaning the other direction. Ellen Zentner is 0:01:02.920 --> 0:01:05.920 the chief US econist at Morgan Stanley, and she's been 0:01:06.040 --> 0:01:08.800 nice enough coming at this early hour tell us that 0:01:09.240 --> 0:01:13.040 she predicted this all along. Yeah, it's not nice to gloat, Mike, 0:01:13.840 --> 0:01:16.080 but Tom's doing here. You can gloat. It's okay, good, 0:01:16.160 --> 0:01:19.039 good good, because he would tamp that down quickly. But 0:01:19.160 --> 0:01:22.240 I think you know, even we have to acknowledge, or 0:01:22.240 --> 0:01:24.480 have had to acknowledge over the past couple of weeks 0:01:24.480 --> 0:01:27.600 that the probability of a December rate hike has risen. 0:01:27.640 --> 0:01:30.240 I mean, the rhetoric was clearly moving in that direction. 0:01:30.640 --> 0:01:33.760 Policymakers feeling more comfortable with the progress they're making on 0:01:33.800 --> 0:01:37.160 their mandates. They're getting stir crazy. They don't like going 0:01:37.160 --> 0:01:39.959 a full year without hiking rates. Certainly that was not 0:01:40.000 --> 0:01:44.000 the definition of gradual they had in mind. Um Yet 0:01:44.040 --> 0:01:46.360 the data in just the past week, and Janet Allen 0:01:46.400 --> 0:01:48.880 said that to the extent that the data continue to 0:01:48.920 --> 0:01:53.040 confirm the outlook, another rate hike could be warranted. But 0:01:53.520 --> 0:01:56.520 the data looks pretty questionable going into this meeting, and 0:01:56.760 --> 0:01:59.480 unfortunate timing going into the September meeting. But I think 0:01:59.520 --> 0:02:02.400 markets are right to have lowered the probability that they 0:02:02.600 --> 0:02:05.840 hike in September. Your call has been no move until 0:02:06.000 --> 0:02:09.960 two thousand seventeen. Everybody focuses on that. The FED folks 0:02:09.960 --> 0:02:12.280 out in Jackson Hole, we're all saying that's the wrong 0:02:12.280 --> 0:02:14.520 way to look at it. It doesn't matter when we 0:02:15.040 --> 0:02:18.360 raise rates unless we wait forever. But it's the path, 0:02:18.720 --> 0:02:21.920 it's the it's the how fast we get to where 0:02:21.919 --> 0:02:26.160 we're going that really should matter to the economy and 0:02:26.200 --> 0:02:29.080 to bond mark well, and they're absolutely right. UM. And 0:02:29.120 --> 0:02:31.920 I've spent a good deal of time with our clients 0:02:31.919 --> 0:02:35.519 and emerging markets uh a few weeks ago. UM and 0:02:35.639 --> 0:02:38.640 emerging markets are are laser focused on what the FED does, 0:02:38.840 --> 0:02:43.640 and they're not necessarily uh nervous about an imminent hike 0:02:44.280 --> 0:02:46.160 if it comes with a promise that the FED is 0:02:46.160 --> 0:02:49.560 not tone deaf and the path will be lower, slower 0:02:50.080 --> 0:02:52.360 to a lower end game, if you will. And I 0:02:52.400 --> 0:02:55.040 think that the FED will start to set up for 0:02:55.120 --> 0:02:58.840 that UM at this September meeting. I think we not 0:02:58.960 --> 0:03:01.760 only get some mark to market of their growth forecast 0:03:01.840 --> 0:03:04.239 this year because the poor first half is going to 0:03:04.320 --> 0:03:09.639 pull those numbers down, but uh, several very important policy 0:03:09.680 --> 0:03:13.840 makers have you know, been laying the ground for work 0:03:13.880 --> 0:03:17.880 for Look, there are structural issues or persistent headwinds that 0:03:17.919 --> 0:03:21.720 are persisting longer than we thought UM, and potential growth 0:03:21.840 --> 0:03:24.160 is probably lower and therefore you need to lower your 0:03:24.240 --> 0:03:28.960 associated neutral rate uh that that would be associated with 0:03:28.960 --> 0:03:31.240 that lower potential growth, And so I think they do 0:03:31.400 --> 0:03:35.640 show us a lower slower path. This will also be 0:03:35.680 --> 0:03:39.240 interesting because the first time we can get twenty nineteen forecasts. 0:03:39.520 --> 0:03:42.120 Have you even thought about twenty nine? Does anyone have 0:03:42.160 --> 0:03:44.240 any clue what's going to happen in twenty and where 0:03:44.240 --> 0:03:47.520 are we going? I don't know. ECB actually gave some 0:03:48.160 --> 0:03:51.760 pretty discouraging forecast for eighteen because they had to lower 0:03:51.800 --> 0:03:53.720 inflation was I think one point seven, but they had 0:03:53.720 --> 0:03:57.480 to lower their growth forecasts overall. Ellen, do we just 0:03:57.640 --> 0:03:59.880 look at the markets and if the markets don't price 0:04:00.000 --> 0:04:03.400 in a FED hike that it means it won't happen? Well, 0:04:03.440 --> 0:04:06.160 I think there that's always the chicken and egg question. 0:04:06.720 --> 0:04:09.520 Uh So the FED is data dependent um and the 0:04:10.240 --> 0:04:12.440 market is looking at the same data the FED is, 0:04:12.760 --> 0:04:14.880 then the FED just has to be careful that they 0:04:14.920 --> 0:04:18.240 communicate around what the data mean to them. If the 0:04:18.279 --> 0:04:20.520 market sees the data the same way the FED does, 0:04:21.000 --> 0:04:24.120 then it should lead market probabilities higher or lower, depending 0:04:24.120 --> 0:04:26.080 on the EBB and flow of the data. And only 0:04:26.120 --> 0:04:28.159 in less the market has it wrong, than does the 0:04:28.200 --> 0:04:32.039 FED push back. And we have not seen pushback on 0:04:32.200 --> 0:04:34.880 the low probability the market is placed on September because 0:04:34.880 --> 0:04:37.280 the data has just not been definitive. Only half of 0:04:37.320 --> 0:04:40.800 the members we knew from the July minutes said that 0:04:40.880 --> 0:04:44.240 the conditions warranted another hike. The other half weren't yet convinced, 0:04:44.240 --> 0:04:46.839 and I'm not sure that we've gotten enough data since 0:04:46.920 --> 0:04:49.159 July to convince them to go at this meeting. Well, 0:04:49.320 --> 0:04:51.840 you mentioned that they're getting antsy because more and more 0:04:51.839 --> 0:04:54.159 of them are coming out and saying maybe there are 0:04:54.240 --> 0:04:59.160 some issues with financial market distortions, but if the markets 0:04:59.160 --> 0:05:01.200 don't let them move, they can't fix that, and it's 0:05:01.279 --> 0:05:04.240 the market's interest for them not to move. Yeah, but 0:05:04.279 --> 0:05:07.039 I don't think this is the markets not letting them move. 0:05:07.200 --> 0:05:10.360 I think it's the markets have read the data correctly. 0:05:10.800 --> 0:05:14.600 I mean, the probabilities have risen for a December hike, 0:05:15.120 --> 0:05:18.000 and I'm not sure that they'll get to froth on 0:05:18.160 --> 0:05:21.600 December until we get past election uncertainty. I think that 0:05:21.600 --> 0:05:24.640 that will hold back markets betting for a rate hike 0:05:24.680 --> 0:05:28.040 in December. But I think the markets have raised the 0:05:28.080 --> 0:05:30.400 probability and heard the Fed that you would like to 0:05:30.440 --> 0:05:32.800 go this year, and it's just does the data help 0:05:32.839 --> 0:05:35.640 the Fed get that open door or not. And we 0:05:35.680 --> 0:05:39.400 saw quite a big move in treasuries, especially the longer 0:05:39.800 --> 0:05:43.279 maturities yesterday on the back of ECB. Do you worry 0:05:43.520 --> 0:05:45.960 that bond traders are a little bit complacent of what 0:05:46.080 --> 0:05:50.800 happens to Fed from now until December. I'm not so 0:05:50.839 --> 0:05:55.599 worried about complacency for this year. I think like Dudley, UM, 0:05:55.880 --> 0:05:59.760 I would worry about complacency of the overall path. I 0:05:59.760 --> 0:06:02.839 mean the Fed. The Fed doesn't see eye to eye 0:06:02.880 --> 0:06:05.680 with markets on what the future path of rates is. 0:06:05.720 --> 0:06:08.440 The Fed has been coming down down down to the 0:06:08.480 --> 0:06:11.920 more pessimistic view of the market in terms of how 0:06:12.000 --> 0:06:15.159 much they can get done. But I think that's where 0:06:15.960 --> 0:06:18.680 when Dudley talked about the markets being complacent, I think 0:06:18.720 --> 0:06:20.559 it was more that he was talking about the path 0:06:20.839 --> 0:06:24.120 priced in through the end of seventeen, not necessarily about 0:06:24.160 --> 0:06:27.040 a rate hike this year. Uh. And so I think 0:06:27.080 --> 0:06:29.200 that's more of what worries the Fed, that the market 0:06:29.279 --> 0:06:30.880 is just never going to price in that they're going 0:06:30.920 --> 0:06:32.840 to be able to do anymore. Yeah, but do they 0:06:32.880 --> 0:06:34.800 have a credibility problem because they keep coming out and 0:06:34.880 --> 0:06:37.560 saying we're getting closer to raising rates and and then 0:06:37.600 --> 0:06:41.479 something always happens and they don't. Well, so that is 0:06:41.839 --> 0:06:46.480 the air drawbacks their benefits and drawbacks to being data dependent. Um. 0:06:46.520 --> 0:06:50.080 Being data dependent means that that you're naked, right, and 0:06:50.120 --> 0:06:55.080 if the data is overwhelmingly positive. Uh. Then it's it's 0:06:55.120 --> 0:06:58.080 obvious that that you must move in the bond market 0:06:58.080 --> 0:07:01.760 will give you that open door because probably abilities will rise. 0:07:01.800 --> 0:07:05.960 But it also means that anytime the data bobbles Uh, 0:07:06.000 --> 0:07:07.880 it also is going to make it very difficult for 0:07:07.920 --> 0:07:11.520 markets to get fraud about expecting another rate hike because 0:07:11.600 --> 0:07:14.600 the data isn't uniformly good. I think in the slow 0:07:14.680 --> 0:07:19.800 growth environment, data depends dependency can be very tough. Well, 0:07:20.040 --> 0:07:23.280 you don't take very quickly that maybe at one rate 0:07:23.320 --> 0:07:26.000 move would send a message to the markets that you 0:07:26.040 --> 0:07:28.680 can't take us for granted. That's just not how the 0:07:28.680 --> 0:07:33.240 FED operates, right, The Fed, uh will hike rates to 0:07:33.360 --> 0:07:37.960 tighten financial conditions. You don't want more tightening than you 0:07:38.080 --> 0:07:42.760 bargained for and surprising the markets in that case, well, 0:07:42.800 --> 0:07:45.280 I think that it would just be bizarre. It would 0:07:45.400 --> 0:07:49.160 be absolutely bizarre move that the that the Fed would 0:07:49.200 --> 0:07:51.880 surprise markets without preparing them for a rate hike. They 0:07:51.880 --> 0:07:54.560 would push back and basically say you're wrong, there's a 0:07:54.600 --> 0:07:57.240 better chance that we go, and then the markets would 0:07:57.320 --> 0:08:00.760 raise the probability ahead of the meeting. Still, she's the 0:08:00.880 --> 0:08:04.119 chief US economist at Morgan Stanley and she's been making 0:08:04.120 --> 0:08:06.640 the point that this is a dated dependent FED and 0:08:06.680 --> 0:08:10.480 the data have not been good of late. But does 0:08:10.520 --> 0:08:13.840 that mean the US economy is in trouble? Ellen, with 0:08:13.960 --> 0:08:16.400 a disappointing jobs report and the I S M numbers 0:08:16.440 --> 0:08:19.480 as you mentioned that didn't go so well, I wouldn't 0:08:19.560 --> 0:08:22.760 characterize as an economy and trouble. Um. I think that 0:08:23.280 --> 0:08:27.240 growth this year is tracking lower than expectations. It's more 0:08:27.240 --> 0:08:29.080 in line with the ours, but we tend to be 0:08:29.200 --> 0:08:32.360 lower than than consensus. Is certainly tracking lower than the 0:08:32.360 --> 0:08:36.080 Fed's expectations. Um. But I think what the what the 0:08:36.160 --> 0:08:38.760 more hawk is on the committee, let's say, could could 0:08:38.760 --> 0:08:42.120 hold on to is you know, okay, let's shut the 0:08:42.120 --> 0:08:45.320 door on first half growth. So it averaged around one 0:08:45.360 --> 0:08:49.160 percent growth. There were some transitory factors in their energy 0:08:49.240 --> 0:08:52.040 drag dollar drag that are probably coming off in the 0:08:52.080 --> 0:08:54.600 second half to some extent. So let's just look at 0:08:54.679 --> 0:08:58.160 third quarter tracking UH and beyond which is which is 0:08:58.720 --> 0:09:01.560 looking pretty strong for quarter. That could get some of 0:09:01.600 --> 0:09:05.400 the more hawkish members UH on the f O m 0:09:05.440 --> 0:09:09.040 C to use that argument to say, let's get another 0:09:09.200 --> 0:09:13.080 rate hike in UH this year. The data EBB and 0:09:13.120 --> 0:09:15.559 flow right and so all we know is that over 0:09:15.600 --> 0:09:17.880 the past week, with auto sales rolling over, is s 0:09:18.080 --> 0:09:23.079 M s declining? Uh jobs not so great report. Um, 0:09:23.120 --> 0:09:25.320 you know that it's just the EBB and flow. None 0:09:25.320 --> 0:09:27.280 of that looks too good. Maybe it just means that 0:09:27.320 --> 0:09:32.320 we started off uh spicy, to use Peter's term from 0:09:32.320 --> 0:09:36.360 earlier on on Bloomberg surveyan surveillance. Maybe we started off 0:09:36.360 --> 0:09:39.360 the quarter spicy and we fizzled a bit. Um. But 0:09:39.440 --> 0:09:41.760 I certainly wouldn't call it an economy in trouble. None 0:09:41.800 --> 0:09:44.720 of the leading indicators say that, you know, we're we're 0:09:44.720 --> 0:09:48.560 headed south per se. It's just the economy is sluggish 0:09:48.600 --> 0:09:50.839 and it doesn't look like it's overheating. In The inflation 0:09:50.920 --> 0:09:54.640 data continues to run below the Fed's goal with with 0:09:54.960 --> 0:09:58.360 very very lower, record low inflation expectations, and there's just 0:09:58.480 --> 0:10:02.160 nothing there that that would tell me that would make 0:10:02.200 --> 0:10:06.760 me prescribe another great hike to them. But Ellen, how 0:10:06.760 --> 0:10:09.960 do you look at the labor market, because actually that's 0:10:10.040 --> 0:10:14.040 pretty strong, um, you know, and and it's difficult to 0:10:14.040 --> 0:10:18.600 reconcile lower inflation with with a strong labor market. Yeah, 0:10:18.640 --> 0:10:21.040 so I think the labor market, um, you know, the 0:10:21.080 --> 0:10:24.319 FEDS Labor Market Conditions Index sort of takes all the 0:10:24.360 --> 0:10:27.080 pieces from the employment report, all the labor market data, 0:10:27.120 --> 0:10:29.560 and puts it into one nifty index so we can say, well, 0:10:29.760 --> 0:10:31.640 wasn't a good report or was it a bad report? 0:10:32.080 --> 0:10:34.560 Do we say it's good just because there's headline job 0:10:34.640 --> 0:10:38.160 growth and and the that labor Market Conditions Index has 0:10:38.200 --> 0:10:41.960 now declined in seven of the past eight months. So 0:10:42.040 --> 0:10:45.760 while we get strong headline job growth, the overall rate 0:10:45.800 --> 0:10:50.320 of hiring is still very sluggish compared to the prior cycles. Uh. 0:10:50.559 --> 0:10:53.520 You know, layoffs remain low, which are helping that net 0:10:53.600 --> 0:10:56.880 job gain that we get each month look good. Um, 0:10:56.960 --> 0:10:58.880 but I but I think there's still some room to 0:10:59.000 --> 0:11:02.120 go there. But that's not what what you know rubs 0:11:02.200 --> 0:11:05.319 policymakers the wrong way. Right. They're pretty confident on the 0:11:05.400 --> 0:11:08.920 labor market front. They think they've been making great progress 0:11:08.960 --> 0:11:12.640 on that front. It's the inflation front. When inflation expectations 0:11:12.640 --> 0:11:16.240 are falling and core inflation is low, it strikes terror 0:11:16.320 --> 0:11:20.400 in the hearts of policymakers. Every prescription they've learned, every 0:11:20.440 --> 0:11:23.839 theory they've learned, tells them you do not touch rates 0:11:23.880 --> 0:11:27.720 in that environment. Are the theories right. I mean seven 0:11:27.760 --> 0:11:33.640 years on, still extraordinary stimulus rates essentially still almost zero 0:11:34.000 --> 0:11:38.120 and there's no inflation. Why not try something different? Is 0:11:38.160 --> 0:11:41.200 a theory that if you raise rates that instills confidence 0:11:41.240 --> 0:11:45.200 in the economy and UH increases return on capital to businesses, 0:11:45.240 --> 0:11:48.160 which then might invest in then you might get something else. Yeah, 0:11:48.200 --> 0:11:49.880 but I think there's this perception that the FED just 0:11:50.000 --> 0:11:52.640 does not want to raise rates. They want to raise rates, 0:11:52.640 --> 0:11:56.560 but they want the conditions to warrant a rate hike um. 0:11:56.640 --> 0:12:00.240 And with growth so sluggish, it keeps them constantly back 0:12:00.280 --> 0:12:02.839 footed UM. And so I don't think they're going to 0:12:02.960 --> 0:12:06.920 buy into that UM theory that you know, you raise 0:12:07.600 --> 0:12:10.160 raise rates and and it will come. The sort of 0:12:10.480 --> 0:12:13.600 build it and they will come theory. Um. You know. 0:12:13.760 --> 0:12:16.160 I think what we do with policy makers oftentimes as 0:12:16.240 --> 0:12:19.080 we give them this halo effect and we think they 0:12:19.120 --> 0:12:22.000 just have the answers and know everything, and none of 0:12:22.040 --> 0:12:24.800 them have practiced in the post financial crisis world. All 0:12:24.840 --> 0:12:27.600 of them are trying to put monetary policy theory into practice, 0:12:27.600 --> 0:12:29.560 and they're feeling their way in the sand with their 0:12:29.600 --> 0:12:33.120 toes UH, and some of those decisions go well and 0:12:33.200 --> 0:12:35.280 some don't. But they're just doing the best that they 0:12:35.320 --> 0:12:39.800 can um and we've seen with Jackson Hole. You were there, Mike. 0:12:39.880 --> 0:12:42.880 The theme at Jackson Hole was let's rethink all of this. 0:12:43.040 --> 0:12:46.120 Maybe we need new policy frameworks. And so I think 0:12:46.160 --> 0:12:49.640 it does niggle them that maybe this is, you know, 0:12:50.240 --> 0:12:53.880 unprecedented times and we need unprecedented monetary policy. But policy 0:12:53.880 --> 0:12:57.520 makers move at a glacial pace. Well unfortunately fresh for 0:12:57.559 --> 0:13:00.400 out of time, but unfortunately having Ellen's at hern is 0:13:00.440 --> 0:13:03.960 not unprecedented, and she will be back. But thank you 0:13:04.000 --> 0:13:06.240 for coming in this morning. Ellen Setner is the chief 0:13:06.320 --> 0:13:09.000 US economist at Morgan Stanley and that she has not 0:13:09.120 --> 0:13:13.559 been someone who forecast safe FED rate move any time soon. 0:13:24.840 --> 0:13:28.840 Let me cattell is pimco's executive vice president, keeps track 0:13:28.920 --> 0:13:31.240 of all things politics. But let me you know where 0:13:31.240 --> 0:13:34.959 I'm going. I absolutely we are going. We are going 0:13:35.000 --> 0:13:38.720 to with Thursday Night Football, the opening of the football, 0:13:38.760 --> 0:13:41.400 did you stay up and watch? I did? I did? 0:13:42.880 --> 0:13:44.240 I was. I was debating when I was going to 0:13:44.320 --> 0:13:47.800 wear a thirteen jersey or twenty two jersey because C J. 0:13:47.840 --> 0:13:51.240 Anderson had a great night, but Travisan was was did 0:13:51.240 --> 0:13:54.160 a great job and definitely exceeded expectations. I had to 0:13:54.280 --> 0:13:56.520 I had to sleep, so I missed. I woke up 0:13:56.520 --> 0:14:00.160 to Muhammad al Arian uh is sending me message is 0:14:00.160 --> 0:14:06.840 going great comeback. It's like for which teams? So Denver, Broncos, 0:14:07.840 --> 0:14:11.160 Carolina Pathers twenty. Now we have covered that. Are you 0:14:11.440 --> 0:14:14.240 one more question? Are you satisfied with Trevor Simeon as 0:14:14.280 --> 0:14:18.840 the Broncos replacement for Peyton Manning? I I I am, 0:14:18.880 --> 0:14:21.600 I am. I think he again exceeded expectations. I think 0:14:21.600 --> 0:14:24.040 he looked really good. He can also run the ball too, 0:14:24.120 --> 0:14:27.720 So I um, I was impressed early days. But but 0:14:27.720 --> 0:14:30.640 but definitely a good a good opening early days. And 0:14:30.640 --> 0:14:34.200 there's a transition line for you. Um. In terms of 0:14:34.240 --> 0:14:38.760 exceeding expectations, the Republican nominee for president seems to be 0:14:38.840 --> 0:14:42.560 doing that right now. He has some no no discernible 0:14:42.640 --> 0:14:46.000 foreign policy or domestic policy plans. He seems to backtrack 0:14:46.040 --> 0:14:49.440 on all of his proposals on an almost daily basis now, 0:14:49.440 --> 0:14:53.280 and yet has closed the gap with Hillary Clinton. What's 0:14:53.320 --> 0:14:56.680 going on? Yeah? Seek In terms of the national pooling, 0:14:56.720 --> 0:15:01.520 it's not necessarily surprising that the the gap has narrowed. 0:15:01.920 --> 0:15:06.040 She had really almost a historically high post convention bounce, 0:15:06.200 --> 0:15:09.440 and it didn't look like it was necessarily going to, um, 0:15:09.520 --> 0:15:12.880 you know, be sustainable. I think that the question though, 0:15:13.000 --> 0:15:15.720 is it will continue to narrow or will it plateau 0:15:15.840 --> 0:15:18.720 around sort of a three to four percent lead, which 0:15:18.720 --> 0:15:20.680 she has, which she has right now. I think in 0:15:20.680 --> 0:15:23.880 addition to national polling, we're looking at state polling because 0:15:23.920 --> 0:15:27.480 as you know, this this presidency and this race is 0:15:27.520 --> 0:15:30.360 going to be dictated just by a number of swing states. UM. 0:15:30.760 --> 0:15:33.680 So I think that even become more pressing, probably from 0:15:33.680 --> 0:15:36.320 the Clinton perspective, are the recent numbers that are coming 0:15:36.320 --> 0:15:39.120 out of Ohio and Florida. She still has commanding leads 0:15:39.120 --> 0:15:42.280 and key swing states such as Pennsylvania and North Carolina 0:15:42.280 --> 0:15:45.360 and Michigan. UM. But she's she's definitely gonna be focusing 0:15:45.400 --> 0:15:48.240 on Ohio Florida because those are must wins for Trump. UM, 0:15:48.280 --> 0:15:50.440 and she's going to try to obviously take that away 0:15:50.480 --> 0:15:53.600 from from him. Well, somebody said, if this election is 0:15:53.600 --> 0:15:56.520 about Donald Trump, she wins, it's about Hillary Clinton. He 0:15:56.560 --> 0:16:00.080 could win. So what's it about right now? Yeah, And 0:16:00.200 --> 0:16:03.120 I think you know it's um. She obviously there was 0:16:03.280 --> 0:16:07.000 the reserve a flew of negative news around her UM. 0:16:07.040 --> 0:16:09.280 In August she was quite quiet because she was you know, 0:16:09.280 --> 0:16:11.840 fundraising and he and he's gotten to be, you know, 0:16:11.920 --> 0:16:15.040 much more disciplined. I think that the next inflection point 0:16:15.440 --> 0:16:18.920 from a market's perspective, from the public's perspective, is going 0:16:18.960 --> 0:16:21.720 to be the debates, and the first debate is septembery. 0:16:22.760 --> 0:16:26.480 Unlike this, you know, the recent UM forum that was 0:16:26.520 --> 0:16:30.080 on nb on NBC, this will be a ninety minute, 0:16:30.200 --> 0:16:33.640 uninterrupted debate where you know, the candidates will really have 0:16:33.760 --> 0:16:36.400 to dive into two policy details. I think to your 0:16:36.440 --> 0:16:39.600 earlier point, we haven't really seen a lot from Donald 0:16:39.600 --> 0:16:42.720 Trump and he won't be able to sort of rely 0:16:42.840 --> 0:16:46.280 on the commercial breaks UM or the sort of the 0:16:46.280 --> 0:16:49.120 headlines in order to evade, you know, really serve substance 0:16:49.120 --> 0:16:52.080 to policy questions. So I think that the next inflection 0:16:52.120 --> 0:16:54.320 point September twenty six, and so watch them, watch the 0:16:54.360 --> 0:16:57.400 pools after that UM and see through how they come out, 0:16:57.480 --> 0:17:00.000 because I think that that should be much more revealing. 0:17:00.000 --> 0:17:02.560 And then what we're seeing now Frenzy Lakwa in London 0:17:02.640 --> 0:17:06.880 and Michael McKee in New York, Tom Keane taking a 0:17:06.920 --> 0:17:10.200 couple of days off. Thank you for lending him your 0:17:10.280 --> 0:17:12.960 day's friend. Very nice. I hope he's rested when he 0:17:13.000 --> 0:17:19.840 comes back Tan, rested and ready. He's probably trying to 0:17:19.920 --> 0:17:23.320 save his strength for the political campaign. Had sixty days 0:17:23.359 --> 0:17:26.480 to go, and I'm sure most Americans think that's fifty 0:17:26.560 --> 0:17:30.320 nine and a half too many. Libby Cantrill is the 0:17:30.440 --> 0:17:34.960 executive vice president and political analyst for Pacific Investment Management Company, 0:17:35.000 --> 0:17:37.680 and she is with us today and before the break, 0:17:37.720 --> 0:17:41.240 Lebby we were talking about the importance of the debates, 0:17:42.000 --> 0:17:46.800 and I wonder to a certain extent how important they 0:17:46.800 --> 0:17:48.879 are in the sense that are there a lot of 0:17:48.920 --> 0:17:52.280 people who are yet to be convinced who could be 0:17:52.320 --> 0:17:54.960 maybe convinced to vote for Donald Trump? Or is his 0:17:55.000 --> 0:17:58.200 support you know, really hard among those people who will 0:17:58.240 --> 0:18:00.679 vote for him. And the real story is can Hillary 0:18:00.760 --> 0:18:04.960 get her supporters out to vote? Yeah? I think that 0:18:04.960 --> 0:18:07.680 that that's definitely a dynamic. But I also I mean 0:18:07.680 --> 0:18:11.000 it's it's quite surprising to us given how well we 0:18:11.040 --> 0:18:14.400 think we know these candidates, but the number of undecided 0:18:14.480 --> 0:18:18.679 voters this election cycle is actually quite high. Just if 0:18:18.760 --> 0:18:21.480 you look at you know, recent um compared to recent 0:18:21.480 --> 0:18:26.359 election cycles, so ten of voters are undecided, which means 0:18:26.400 --> 0:18:29.359 that the point could be more volatile, but that the 0:18:29.480 --> 0:18:32.960 things like the debates actually could make quite a big difference. 0:18:33.000 --> 0:18:34.879 So y as to me, is is this going to 0:18:34.920 --> 0:18:37.760 be Hillary's task to try to convince some of those 0:18:37.760 --> 0:18:41.040 maybe moderate Republicans who feel uneasy with Donald Trump to 0:18:41.119 --> 0:18:43.080 come over and vote for her. But I think more 0:18:43.119 --> 0:18:45.440 importantly it's going to be trying to convince those independents 0:18:45.440 --> 0:18:48.160 who really haven't made a decision yet. Um. Even if 0:18:48.240 --> 0:18:50.560 that that might be amazing to some of us, given 0:18:50.600 --> 0:18:52.960 how well we feel like we know these candidates. Well, 0:18:53.040 --> 0:18:55.280 how does it It's been a lot of talk about 0:18:55.359 --> 0:18:58.680 Hillary working on the ground game and Donald Trump not 0:18:58.760 --> 0:19:01.200 working on the ground game, but he had a ground game. 0:19:01.280 --> 0:19:04.680 He hadn't had to get out the vote effort at all. 0:19:06.359 --> 0:19:09.800 Does it really matter? Yeah, I mean that is he is. 0:19:10.080 --> 0:19:14.560 He's definitely calling sort of conventional wisdom into question and 0:19:14.640 --> 0:19:18.320 lots of different respects. I mean, from a ground game perspective, 0:19:18.359 --> 0:19:22.560 from sort of a state infrastructure field office, um, registering 0:19:22.560 --> 0:19:25.680 people to vote. I mean, he his members are really poultry. 0:19:25.680 --> 0:19:27.560 And I think it's the latest is he has eight 0:19:27.680 --> 0:19:31.520 eight field offices and swing states versus Hillary Clinton, who 0:19:31.560 --> 0:19:34.840 has almost three hundred. So Um, he hasn't really built 0:19:34.840 --> 0:19:37.160 out that state infrastructure. You know, he hadn't really done 0:19:37.160 --> 0:19:39.359 that for the primaries either, and and Ted Cruz of 0:19:39.359 --> 0:19:42.359 course had and that didn't really prove to be decisive. 0:19:42.600 --> 0:19:44.919 I mean that the general elections a little bit different 0:19:45.320 --> 0:19:47.600 because the primaries are already speaking to folks who are 0:19:47.640 --> 0:19:50.800 already galvanized to vote, whereas you know, the general election 0:19:50.880 --> 0:19:53.440 voters and especially some of the folks that Donald Trump 0:19:53.480 --> 0:19:55.880 is appealing to, they may not even be registered voters, 0:19:55.880 --> 0:19:58.560 so they this is the you know, getting them registered, 0:19:58.600 --> 0:20:01.240 getting them to be early voter is going to maybe 0:20:01.280 --> 0:20:03.960 even be more critical. Um, and we haven't seen him 0:20:04.040 --> 0:20:07.160 and make those make those investments. But I think that 0:20:07.160 --> 0:20:11.119 the lesson I have learned is you can't underestimate Donald Trump. 0:20:11.119 --> 0:20:13.280 And I think a lot of folks who follow Washington 0:20:13.720 --> 0:20:16.120 have you know, sort of constantly underestimated him and then 0:20:16.240 --> 0:20:20.359 you know, have been sort of surprised. That's probably the Yeah, 0:20:20.359 --> 0:20:23.400 that's absolutely spot on. My problem is that I'm fed 0:20:23.480 --> 0:20:25.920 up with knowing about the candidates. I want to listen 0:20:25.960 --> 0:20:28.199 to policy. I want to really make sure that I 0:20:28.320 --> 0:20:31.600 understand what they're standing for. When is that going to 0:20:31.680 --> 0:20:35.479 come through yeah, and this is really Hillary Clinton's strength, 0:20:35.640 --> 0:20:39.040 right If you go to her website, she has policy 0:20:39.080 --> 0:20:41.920 position papers and white papers, and she wants to talk 0:20:41.920 --> 0:20:44.600 about the policies. I think she was getting frustrated with 0:20:44.640 --> 0:20:47.040 Matt lower a few days ago because you know, she 0:20:47.080 --> 0:20:49.560 didn't feel like he was allowing her to do that. Um. 0:20:49.640 --> 0:20:52.560 Donald Trump doesn't really have a policy operation. I think 0:20:52.560 --> 0:20:54.760 that's sort of the other thing that is used to 0:20:54.840 --> 0:20:57.560 being conventional wisdom. UM. A lot of his folks in 0:20:57.600 --> 0:21:02.000 his policy shops have reportedly or not work with him anymore. So. UM, 0:21:02.040 --> 0:21:04.600 I think that the debates again will really shine a 0:21:04.680 --> 0:21:09.600 spotlight on on potentially that deficiency. But again, don't underestimate 0:21:09.640 --> 0:21:11.720 Donald Trump. But those are the debates are really going 0:21:11.720 --> 0:21:15.280 to allow for the candidates to get into the details 0:21:15.480 --> 0:21:19.160 of their policy positions. UM. And so you should hopefully 0:21:19.160 --> 0:21:22.960 be sort of fatiated come September after the first debate, 0:21:23.000 --> 0:21:26.240 which is on September twenty six. Libby. When I'm so, 0:21:26.320 --> 0:21:29.240 I'm sitting here in London, how do Americans vote? We 0:21:29.320 --> 0:21:31.800 have very strict rules in London about how much you 0:21:31.800 --> 0:21:34.320 can spend on the campaign. When you can start campaigning 0:21:34.560 --> 0:21:37.879 in a general election, do people in the US vote 0:21:37.920 --> 0:21:41.280 on personality, do they vote on policy or is twenty 0:21:41.320 --> 0:21:44.560 six team just different? Yeah, I mean it's a really 0:21:45.000 --> 0:21:49.280 difficult thing to say. Um, you know, I think that 0:21:49.359 --> 0:21:53.080 you know, don't underestimate Americans. Americans do care about the policies. 0:21:53.119 --> 0:21:56.520 They don't just you know, they don't just care about personality. 0:21:56.600 --> 0:22:00.679 But personality is important. I think one of the reasons 0:22:00.680 --> 0:22:05.560 why George W. Bush beat Al Gore, although very very 0:22:05.600 --> 0:22:08.640 marginally in two thousand, was because people have this perception 0:22:08.680 --> 0:22:11.760 that George W. Bush Bush could get a beer with um. So, 0:22:11.840 --> 0:22:15.119 you know, personality definitely matters, but people want to feel 0:22:15.520 --> 0:22:18.919 comfortable with their commander in chief that these folks have 0:22:18.960 --> 0:22:22.280 the nuclear codes, they're making incredibly important policy decisions through 0:22:22.280 --> 0:22:24.480 the statement of the obvious, and that they are you 0:22:24.480 --> 0:22:26.800