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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg terminal. Right now, a

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Speaker 1: really really important conversation not long agoing far away, but

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Speaker 1: a number of years ago, in my book of the Summer,

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Speaker 1: was a sleeper. I did not expect the excellence of

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Speaker 1: stewardship by John S. Taft. He is bared vice chairman.

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Speaker 1: Of course, a legacy of this American politics in this

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Speaker 1: Wall Street as well, and it was a primal call

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Speaker 1: by John Taft about the state of Wall Street. We're

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Speaker 1: thrilled that we could revisit with John Taft on stewardship

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Speaker 1: in the time of free John. A year ago or so,

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Speaker 1: I opened the Wall Street Journal and one page was

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Speaker 1: free trading, and the next page was free trading, and

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Speaker 1: the page after that was free trading. Everything's free now.

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Speaker 1: And look at the mess we're in with order flow.

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Speaker 1: How do we extract ourselves from all the disaster we've

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Speaker 1: seen from order flow back to something or forward to

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Speaker 1: something more normal. Well, you're talking about payment for order flow,

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Speaker 1: which is the engine that powers a lot of these

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Speaker 1: quote unquote free retail trading platforms, and tom I've always

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Speaker 1: had uh I felt the payment for order flow was

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Speaker 1: a smelly practice. It's legal. Um, it has to be

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Speaker 1: married with all sorts of controls and assurances that you're

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Speaker 1: getting best execution. But if you're selling off customer order

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Speaker 1: flow and getting paid for that, how does that not

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Speaker 1: create a conflict with your obligation to get the best

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Speaker 1: execution for your clients. UM. I think you're seeing, on

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Speaker 1: the part of our new very capable, very aggressive SEC Chairman,

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Speaker 1: Gary Gensler, a commitment to look at that along with

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Speaker 1: many of the other troubling UH issues surrounding retail trading.

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Speaker 1: Would you suggest that the leadership of law Strata, which

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Speaker 1: certainly you're a voice of and part of, support Mr Gensler,

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Speaker 1: and let's get to this to get some confidence back

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Speaker 1: in trading away from the meme stucks. Absolutely. I I

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Speaker 1: think very highly of the SEC chairman. He's certainly one

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Speaker 1: of the most knowledgeable, game ready SEC chairman we have had,

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Speaker 1: and he's already laid out pretty clearly what his agenda

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Speaker 1: is all makes sense to me. Greater transparency around UH

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Speaker 1: short selling, greater trans parency around the use of total

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Speaker 1: return swaps UH and UH payment for order flow gamification.

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Speaker 1: They're all on his radar, And yes, I think we

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Speaker 1: should get it all of this because Tom, what we

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Speaker 1: found in the past, that we've seen it over and

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Speaker 1: over and over against. Partly what stewardship is about is

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Speaker 1: that our industry has a habit of of taking legitimate

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Speaker 1: practices that that do make a positive difference in the

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Speaker 1: world and and running them to excess. And every time

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Speaker 1: we do that, we get in trouble, and our clients

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Speaker 1: and customers get in trouble, and society gets in trouble.

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Speaker 1: And you can see some some indications here of commercial

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Speaker 1: excesses or reappearing in the financial markets, and I find

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Speaker 1: those troubling and I look for regulators to try to

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Speaker 1: tamp those down before they cause a big problem. John,

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Speaker 1: the focus right now is shifting away from some of

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Speaker 1: the trading activity to why there hasn't been more lending

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Speaker 1: in the banking sector. And as someone who is perfect

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Speaker 1: to speak to the nexus between banking and politics, given

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Speaker 1: your great grandfather being the president of the United States.

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Speaker 1: There is a question here of how banks will shape

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Speaker 1: themselves going forward. As the lenders as helping to generate

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Speaker 1: some of the recovery through UH through some of the

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Speaker 1: extensions to main street, how do you expect that to

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Speaker 1: be transformed in terms of the lack of lending demand,

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Speaker 1: the lack of demand from borrowers to where we are now, well,

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Speaker 1: a couple of things are going on. Obviously, the post

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Speaker 1: COVID softness in the economy led to a decline in

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Speaker 1: demand for traditional lending. But Lisa, one of the things

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Speaker 1: that we've seen going on is there there's plenty money

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Speaker 1: available to be lent. It's just being lent out of

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Speaker 1: the non bank or shadow financial sector. Private equity funds,

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Speaker 1: hedge funds are are lending. And part of the reason

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Speaker 1: for that is that during the financial crisis, the focus

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Speaker 1: was legitimately inappropriately on making sure that banks didn't behave

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Speaker 1: in ways that that almost brought a systemic meltdown, and

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Speaker 1: as a result, all sorts of capital requirements and restrictions

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Speaker 1: were put on regulated financial institution. Just like squeezing a balloon,

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Speaker 1: you squeeze it at one end. Uh, it grows at

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Speaker 1: the other end. And so we've seen capital available for

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Speaker 1: lending moving out of the regulator to the unregulated banking sector.

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Speaker 1: What I would like to see is uh, and you're

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Speaker 1: and and there is some of this going on or

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Speaker 1: was let me put it during the Trump administration remains

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Speaker 1: to be seen. What happens during the Biden administration is

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Speaker 1: for regulators to take a take a deep breath, say, Okay,

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Speaker 1: we actually here, UH oversaw a success story. We oversaw uh,

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Speaker 1: the rebooting of the financial sector. We put it on

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Speaker 1: sounder footing, safer, sounder, more stable than it's been in

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Speaker 1: a long time. Can we takes the steps to make

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Speaker 1: it easier for regulated financial institutions for you to do

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Speaker 1: the job that society wants them to do. Are we

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Speaker 1: being too restrictive? And that's sort of a counter intuitive

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Speaker 1: to the regulators in place now under the Biden administration,

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Speaker 1: But I think that's what's needed at this point. It's

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Speaker 1: sort of a relook at DoD Frank, not a not

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Speaker 1: a reinstitution of DoD Frank. So on the flip side,

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Speaker 1: do you think that systemic risk has built up in

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Speaker 1: the shadow banking system? Yeah, certainly, a lot of people

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Speaker 1: are worried about that, and yes, I think that, um uh,

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Speaker 1: there are indications that, as there always are, risk taking

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Speaker 1: is UH being pushed to dangerous levels in some areas

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Speaker 1: of the unregulated financial sector that you just saw one

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Speaker 1: UH in the explosion of our articles, and UH what

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Speaker 1: was the risk being aken there while it was embedded

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Speaker 1: in total return swaps around which there isn't the same

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Speaker 1: transparency and there aren't the same disclosure obligations as there

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Speaker 1: are with with normal UH stock positions, major stock positions

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Speaker 1: and publicly traded companies, and those kinds of holes in

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Speaker 1: the system UH sometimes can can destabilize the financial system.

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Speaker 1: And I wasn't big enough banks took heavy losses, but

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Speaker 1: you know they weren't. They weren't system threatening, weren't even

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Speaker 1: institution threatening. But yes, I worry about excess as building up.

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Speaker 1: They always do. We have a number of organizations like

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Speaker 1: f stock and various research capabilities that we didn't have

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Speaker 1: going into the financial institution supposed to be scanning for risk.

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Speaker 1: Are they, Let's hope. So you know, I was reading

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Speaker 1: Jonah story yesterday about Representative Tom Swaltzney from New York,

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Speaker 1: a case pushing for two and a half percent levy

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Speaker 1: on wealth of more than fifty million in dollars. He

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Speaker 1: says it's a one off, but we know how those

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Speaker 1: things go. Interestingly, your great grandfather was a champion of

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Speaker 1: the sixteenth Amendment, brought in the federal income tax for

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Speaker 1: for really the first time, UM in nineteen thirteen. What

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Speaker 1: do you think about now transitioning to or adding on

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Speaker 1: a wealth tax. Boy, it never fails. You get me

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Speaker 1: to talk about politics on on surveillance. You know, my

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Speaker 1: my peer people say, don't talk about politics, don't don't,

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Speaker 1: don't talk about your Republican legacy. I guess here, here's

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Speaker 1: the way I feel. I'm uh, and I think a

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Speaker 1: lot of a lot of Americans and people in financial

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Speaker 1: services industry feel this way is we're we think taxes

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Speaker 1: UH can make sense if they are used to invest

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Speaker 1: in productive assets in the real economy that makes the

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Speaker 1: economy grow faster, Let's face it, unless you want to

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Speaker 1: look at something like long term inflation. UH. The only

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Speaker 1: uh viable way out of the hole we've dug ourselves

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Speaker 1: in the course of the last three or four years

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Speaker 1: is to grow our way out of it. And if

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Speaker 1: raising taxes and putting that money to work in a solid,

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Speaker 1: uh legitimate infrastructure package is something that Congress can find

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Speaker 1: their way to do, then that's great. If, on the

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Speaker 1: other hand, wealth taxes being used to fund more social spending,

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Speaker 1: then we're just digging the hole we're in deeper. And

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Speaker 1: so it really depends what is going to be the

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Speaker 1: use of a tax increase, uh, whether it's one time

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Speaker 1: or capital gains or ongoing income tax increase. I would

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Speaker 1: just point out that William Howard Taff, though his his

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Speaker 1: focus was on corporate income tax it's not personal income taxes.

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Speaker 1: John Taff, thank you so much. With Betarter, their vice chairman,

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Speaker 1: they're on order flow and on some of the moments

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Speaker 1: we've seen such as articles this morning. He is again

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Speaker 1: with Beard right now. This is a really important conversation,

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Speaker 1: Sarah Hunt, with us with el Pinewood's Capital investors, and

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Speaker 1: what's so great about it. This is in the trenches

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Speaker 1: of portfolio construction versus sort of the econo babble that's

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Speaker 1: out there right now. Sarah Hunt, I am absolutely fascinated

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Speaker 1: with how you perceived big tech. We saw the Apple

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Speaker 1: surge yesterday. Is this big tech unloved or are we

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Speaker 1: just climbing on board the mega move that we saw

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Speaker 1: of eighteen months ago. Well, I think you had a

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Speaker 1: long pause in some of those big tech stocks, and

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Speaker 1: you look at Apple, you go back to September of

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Speaker 1: last year, and you were basically at levels that were

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Speaker 1: just around where we are now. So that's had some

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Speaker 1: time to digest that fact that it was higher for

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Speaker 1: they had a huge swing up, and then everything sort

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Speaker 1: of slowed down and paused on the big tech side

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Speaker 1: while people went and looked at what else is happening

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Speaker 1: in the economy, So they started looking at cyclicals, I

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Speaker 1: started looking in other areas. I think what you're seeing

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Speaker 1: now is the realization that rates now starting to back

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Speaker 1: off after reaching a high I think one seventy five

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Speaker 1: on the tenure or the other day, or a couple

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Speaker 1: of weeks ago, that you're starting to see people go

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Speaker 1: back to those tech docs because the growth is still there.

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Speaker 1: And in the end, I think that's what really matters,

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Speaker 1: because as much as we can look at the different

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Speaker 1: parts of the economy, there's still everything we have is

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Speaker 1: more and more involved with tech. There's semiconductors in almost

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Speaker 1: every single thing we buy these days, so I don't

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Speaker 1: see that the tech space is not a good beneficiary

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Speaker 1: of whatever is happening in the economy, as long as

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Speaker 1: that's good news for the economy. Sarah, where is the

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Speaker 1: greatest degree of undoe complacency and markets right now? Wow,

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Speaker 1: that's a tough one. I think that. I think, you know,

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Speaker 1: go back to your FED discussion. What do we what

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Speaker 1: is the FED going to do? And how does that

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Speaker 1: play into everything else? It has benefed driven market. All

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Speaker 1: this liquidity has definitely been pushing people out of fixed

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Speaker 1: income and lamentations of fixed income managers and has been

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Speaker 1: pushing towards equities and other higher risky assets. How does

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Speaker 1: that play out? How does the FED back away from that?

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Speaker 1: I think that's going to be, to your point Lisa earlier,

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Speaker 1: a very big question. And we don't know how that's

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Speaker 1: going to play out just yet. I think the odds

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Speaker 1: that it actually just ends up continuing in a more

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Speaker 1: quiet way are pretty high to me. But in the end,

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Speaker 1: at some point they're going to have to do something

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Speaker 1: that's a little bit different than that, and how our

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Speaker 1: markets going to take that? How our markets going to

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Speaker 1: take that? And I wonder though, Sarah, whether that's so

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Speaker 1: far afield in the future right now, any sort of

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Speaker 1: normalization that we can continue down this road with regards

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Speaker 1: to the pricing that we're seeing inequities, the pricing that

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Speaker 1: we're seeing in fixed income, and the pricing that we're

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Speaker 1: seeing frankly in some of these alternative assets. Well, I

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Speaker 1: think if you'd asked anybody four or five years ago,

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Speaker 1: even before the pandemic, you would have said, no, the

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Speaker 1: Fed's going to have to exit their strategy and this

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Speaker 1: is this can't continue forever. And here we are, you

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Speaker 1: know how, many years after financial crisis, still with some

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Speaker 1: very unusual monetary measures globally. And I think that just

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Speaker 1: the rates coming down again in Europe also makes the

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Speaker 1: US look more attractive. I mean, the German tenure got

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Speaker 1: up to I think negative ten basis points and now

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Speaker 1: is back lower than that. So I think the US

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Speaker 1: does look better relatively speaking, but it's still really tough

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Speaker 1: and I think it's going to be difficult to see

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Speaker 1: how we get out of this. But at the same time,

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Speaker 1: to your point, I think we could keep going with

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Speaker 1: this a lot longer than people think we can. Sarah,

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Speaker 1: do you have any earnings visibility fifteen days to June thirty,

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Speaker 1: we regroup, ALCOHOLA comes out JP more Gon will start

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Speaker 1: the bank earnings. Sara, do you have any visibility on

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Speaker 1: what earnings look like coming up? I think this has

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Speaker 1: been such an unusual time frame for so many reasons

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Speaker 1: that it's very difficult to see earnings visibility. I was

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Speaker 1: looking back at some of the banking earnings and what

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Speaker 1: the estimates were and what they came out with were

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Speaker 1: so wildly different. You know, some things are more easier,

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Speaker 1: more simple to predict than banking earnings, which I think

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Speaker 1: are very tough to predict. But in the scheme of things, no,

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Speaker 1: I think it's very tough to say we know what

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Speaker 1: earnings are going to be accepted right now. People are

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Speaker 1: out there spending money, so they're going to be higher.

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Speaker 1: The question is how much and for how long? Sarah,

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Speaker 1: Thank you so much. Sarah hunt with us today with

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Speaker 1: Alpine Woods Capital on a portfolio construction in the view

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Speaker 1: four or he has seen this before. Michael Holland joins

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Speaker 1: usself from Holland and Company, looking at the idea of

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Speaker 1: careful securities analysis, listening to managements, and moving forward with

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Speaker 1: a more calm and stable approach than the trading. Michael Holland,

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Speaker 1: let's start with the mean trading. Now, when does this

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Speaker 1: go away? Or are we gonna live with mean trading forever?

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Speaker 1: Likely not for every time that we're good to see

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Speaker 1: the three of you. Uh. The reality is that that

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Speaker 1: all of these things do go away, but you just

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Speaker 1: don't know how long they take to go away. So

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Speaker 1: I wouldn't I wouldn't be real fast to get out

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Speaker 1: of your cash position and start shorting things. Starts right now.

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Speaker 1: So Michael, you just are saying music to Tom's ears.

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Speaker 1: Why do you think that people ought to be holding

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Speaker 1: some cash right now given the fact that there's extreme

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Speaker 1: accommodation from central banks and ongoing fiscal spending at listen

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Speaker 1: the uh the history of the time talks about the

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Speaker 1: decades I've been What happens is when you get to

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Speaker 1: this point where the complacency is is actually pretty well

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Speaker 1: earned because the Federal Reserve right now is doing what

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Speaker 1: it's doing. And listen to Carl Weinberg in his testimony

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Speaker 1: in the last couple of days, I think you have

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Speaker 1: very smart people saying things can be pretty good for

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Speaker 1: an extended period of time because of the Fed. Having

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Speaker 1: said that, Tom said earlier in the show, thirty nine

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Speaker 1: percent increase over the last twelve months, name trading stocks, SPACs, ETCeteras,

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Speaker 1: and all the stuff that the bears talk about. Both

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Speaker 1: both camps have very smart people in them. Either or

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Speaker 1: both could be right for some period of time. Having

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Speaker 1: said that, I really like an all weather portfolio so

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Speaker 1: that when things go in the direction no one expects.

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Speaker 1: You're saying, I'm still okay. I'd like to be a

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Speaker 1: survivor in these markets. All right, Well, let's talk about

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Speaker 1: that survival here. I am curious, Michael, why would anyone

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Speaker 1: buy into the case here that the FED can sort

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Speaker 1: of orchestrate. That's verbial soft landing. I don't think you

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Speaker 1: buy in remain a hundred percent. That's exactly the right question.

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Speaker 1: In fact, the soft landing may not happen, and it

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Speaker 1: may happen. I think it's it's probably in the school.

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Speaker 1: It probably could be a little messy, but but I

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Speaker 1: have no reason to thank my prediction would be any

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Speaker 1: good or as good as the three of yours or

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Speaker 1: Carl Weinberg's or anyone else's. So nobody knows the answer

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Speaker 1: to that. Will it be a soft landing? Having said that,

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Speaker 1: it might be, which means that to have a percent

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Speaker 1: triple leverage is probably not the preferred position in the

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Speaker 1: stock market. On the other hand, having some cash in

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Speaker 1: case it's wrong, you're you'll feel better at the end

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Speaker 1: of the day because you will survive. Michael Holland when

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Speaker 1: you look at the accounting statements of these companies, it

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Speaker 1: speaks of fundamental analysis. Does fund fundamental analysis have a

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Speaker 1: value here? Securities analysis have a value here when you

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Speaker 1: see the ratios we're living with abs salutely Tom, Because

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Speaker 1: when you get to a time like this, if if

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Speaker 1: you are going to inch back into the equity market

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Speaker 1: sometime in the next decade, what you want to have

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Speaker 1: as managements who have financial statements that tell you, as

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Speaker 1: in the case of JP Morgan for example, you referred

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Speaker 1: to them earlier in the show. UH, they show you

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Speaker 1: why they have fortress like balance sheets, what the prospects

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Speaker 1: are for their trading revenues, uh having been so great

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Speaker 1: in the past. There's a there's a gold mine of

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Speaker 1: information in those financial statements, and that's part of why

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Speaker 1: I've been able to survive myself. By paying attention to

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Speaker 1: things just like that, you can those are kind of

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Speaker 1: immutable things that facts are stubborn things. Ass as it's

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Speaker 1: consented Michael. There's a spectrum of risk and return, and

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Speaker 1: the idea here of there are times to go hard

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Speaker 1: into risk for that return of their times to accept

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Speaker 1: very little return for not being very risky. I don't

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Speaker 1: need to tell you this, but where are you right

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Speaker 1: now on that spectrum? Perfect question, LESA, because so trees ago,

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Speaker 1: a very successful investor named Rochild said, bye, when there's

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Speaker 1: blood in the streets, we're certainly not seeing blood in

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Speaker 1: the streets right now. We're seeing the opposite. We're seeing

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Speaker 1: a federal reserve which is given a pass to anyone

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Speaker 1: who wants to see uh, assets of any kind go up.

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Speaker 1: So it's a time to have some cash. As you

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Speaker 1: said before. So in the risk spect I'm saying, you know,

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Speaker 1: you're tilding over the middle to the to the to

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Speaker 1: the area where you have to show some caution lights

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Speaker 1: for sure. Yeah, yeah, but I mean showing caution. Let's

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Speaker 1: say you don't want to necessarily go into cash, remove

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Speaker 1: a large allocation into cash here, you want to stay

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Speaker 1: invested in the market, and hopefully I'll take part on

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Speaker 1: whatever upside might actually be left here. Is there safety

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Speaker 1: to be found in that thinking? Yeah right. I think

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Speaker 1: Tom's question earlier about fundamental analysis is related to to

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Speaker 1: the answer to your question, um Oracle is going to

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Speaker 1: report after the close tonight. I saw that the stock

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Speaker 1: there a few months ago, trading it quite low multiple

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Speaker 1: the prospects for the company management that has shown itself

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Speaker 1: over the years to get it right. And my guess

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Speaker 1: is what they're doing. They have a report, and maybe

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Speaker 1: there'll be a lousy report and it'll go straight down.

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Speaker 1: But I think there are companies JP more going to

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Speaker 1: be in that category. General Mortis with Mary Barrett, I

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Speaker 1: think that there are there are places in the market

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Speaker 1: where you can find opportunities, but you have to work

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Speaker 1: at it. Like Holland, thank you so much, greatly, greatly

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Speaker 1: appreciated this morning. With Holland and Company, the chairman and

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Speaker 1: the founder there. Joseph's song joins working with Bank of

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Speaker 1: America's their US economists with Ethan Harrison the team. Joseph,

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Speaker 1: thank you so much for joining us. I like the

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Speaker 1: Bank of America tweaks your g d P numbers. You

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Speaker 1: go from a first quarter of prosperity to the boom.

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Speaker 1: You know, a little bit of an adjustment here of

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Speaker 1: the second quarter. What does the clarity that you and

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Speaker 1: Michelle Meyer have on third quarter? G d P Thank me. Um. Look,

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Speaker 1: we're still very bullish on the US economy right now.

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Speaker 1: You know, we're still looking for seven percent growth this year. Obviously,

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Speaker 1: today's retail sales report was definitely on the weaker side,

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Speaker 1: but we were expecting that. We were expecting negative prints

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Speaker 1: for all the major aggregates, um, but we still see

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Speaker 1: strength in the consumer. If you look at our car data,

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Speaker 1: everything outside of retail sales, you know, group were roughly

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Speaker 1: around six percent on a month or a month basis.

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Speaker 1: So all that service, it's all that spending. Is that

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Speaker 1: happening on the service side. We saw a lot of

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Speaker 1: strength uh the end of the month in May around

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Speaker 1: Memorial Day with lodging, travel, restaurant spending really really picking

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Speaker 1: up momentum. And early in June we're seeing that carry

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Speaker 1: you do, so you get through June thirty, you go

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Speaker 1: to Q three, I've got question marks on it for

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Speaker 1: radio and TV. How do you guys frame up Q three?

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Speaker 1: Is it a is it a better tone than where

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Speaker 1: you were ninety days ago? Well, you know, we don't

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Speaker 1: think that the strength that we've seen in the second

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Speaker 1: core will necessarily continue, will be sustaining that at the

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Speaker 1: very extraordinary levels that we're expecting, and Q two we're

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Speaker 1: looking for double digit GDP growth, it will it will

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Speaker 1: soften a bit, but I will still be well well

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Speaker 1: above trend suggesting the consumer is spending. And remember there's

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Speaker 1: actually more fiscal aid coming online in Q three with

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Speaker 1: the child tax credits, so a lot of middleton lower

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Speaker 1: income households will have more dollars to spend. Joseph, let's

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Speaker 1: talk about the pendulum of stagflation, as Tom so elegantly

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Speaker 1: put this question of whether people are less inclined to

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Speaker 1: spend as prices go up. Are we seeing signs of

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Speaker 1: that or is this to add a completely irrelevant to

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Speaker 1: that based on this changing of the of the composition

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Speaker 1: of spending. Yeah, I think Mike is correct and that

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Speaker 1: it's it's tough to suss out what is the demand

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Speaker 1: and supply effects going on right now. Um, you know,

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Speaker 1: obviously there is probably some effect with higher prices in

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Speaker 1: the good sector, but you know, when we look at

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Speaker 1: our car data, real spending is still up double digits

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Speaker 1: relative to twenty nineteen levels. So even if there's some

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Speaker 1: softening in the good sector, clearly those dollars are being

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Speaker 1: shifted over to areas where they're still really strong demand.

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Speaker 1: All right, Yeah, I mean as we look at these

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Speaker 1: uh main numbers here, Joseph, I mean we should point

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Speaker 1: out these April numbers ticket revised higher here on a

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Speaker 1: month over month number. Of course, we were pretty much

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Speaker 1: flat on the previous reading that's being revised to up

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Speaker 1: point nine percent. I am curious that when you look

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Speaker 1: at the numbers that we've had here on the retail side,

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Speaker 1: retail sales side, and the come down that we're having, now,

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Speaker 1: how much are you factoring in the government support and

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Speaker 1: the potential pullback of some of that support, meaning the

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Speaker 1: expanded unemployment benefits And I guess you can sort of

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Speaker 1: fold in some of the fiscal stimulus that may or

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Speaker 1: may not be coming down the pipe. Yeah, I mean

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Speaker 1: that that is um partially in our kind of slowdown

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Speaker 1: in Q three. But remember that as these unemployment insuranceets

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Speaker 1: get uh get gets pulled back, you'll see more workers

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Speaker 1: we entered the labor market, and they're actually entering a

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Speaker 1: labor record that is very hot right now. And wages

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Speaker 1: are starting to climb higher, so there actually may not

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Speaker 1: be such a major fiscal cliff where they're losing their

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Speaker 1: benefits and not seeing the same sort of comparable wage levels.

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Speaker 1: There actually might be just you know, substituting benefits for

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Speaker 1: you know, wage wages. So um, you know, income may

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Speaker 1: soften a bit from here on out, but we still

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Speaker 1: are very constructive on the consumer and the behind the

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Speaker 1: household balance. Okay, Well, unfortunately then that sort of circles

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Speaker 1: me back to sort of the half glass half empty

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Speaker 1: scenario here where if fails, uh, if those wage pressures

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Speaker 1: continue higher and that does pull people back into the

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Speaker 1: labor market, then then do we have to then start

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Speaker 1: talking about those inflationary pressures and what kind of dragged

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Speaker 1: that might mean for economic activity. Yeah, so, you know,

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Speaker 1: and in the fall, you know, we think that those

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Speaker 1: kind of labor supply contraints will start to ease, So

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Speaker 1: the higher wages that we're seeing today, we won't continue

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Speaker 1: to keep climbing higher. Right, Well, we'll reach kind of

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Speaker 1: city equilibrium where there's more workers that enter a labor

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Speaker 1: market as unemployment insurance expires. Also, care has been a

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Speaker 1: major issue during the pandemic and we've heard from a

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Speaker 1: lot of major school districts that they'll be going back

431
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Speaker 1: to traditional in person learning, so childcare will be baked

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Speaker 1: in for a lot of parents, which will allow them

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Speaker 1: to re enter the labor markets as well. So that's

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Speaker 1: gonna we think that you know that that will lead

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00:24:15,800 --> 00:24:18,280
Speaker 1: to great US apply in the labor market, and that

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00:24:18,359 --> 00:24:21,439
Speaker 1: will have at least a temporarily a cooling effect our wages,

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00:24:21,560 --> 00:24:25,080
Speaker 1: which will keep inflation well well kept. Joseph Song, thank

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Speaker 1: you so much, greatly appreciated with Bank of America. This

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Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us

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00:24:32,000 --> 00:24:35,159
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Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six

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Speaker 1: to nine am for insight from the best in economics, finance, investment,

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Speaker 1: and international relations. And subscribe to the Surveillance podcast on

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Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

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Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg