Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,
Speaker 1: and of course on the Bloomberg terminal. Right now, a
Speaker 1: really really important conversation not long agoing far away, but
Speaker 1: a number of years ago, in my book of the Summer,
Speaker 1: was a sleeper. I did not expect the excellence of
Speaker 1: stewardship by John S. Taft. He is bared vice chairman.
Speaker 1: Of course, a legacy of this American politics in this
Speaker 1: Wall Street as well, and it was a primal call
Speaker 1: by John Taft about the state of Wall Street. We're
Speaker 1: thrilled that we could revisit with John Taft on stewardship
Speaker 1: in the time of free John. A year ago or so,
Speaker 1: I opened the Wall Street Journal and one page was
Speaker 1: free trading, and the next page was free trading, and
Speaker 1: the page after that was free trading. Everything's free now.
Speaker 1: And look at the mess we're in with order flow.
Speaker 1: How do we extract ourselves from all the disaster we've
Speaker 1: seen from order flow back to something or forward to
Speaker 1: something more normal. Well, you're talking about payment for order flow,
Speaker 1: which is the engine that powers a lot of these
Speaker 1: quote unquote free retail trading platforms, and tom I've always
Speaker 1: had uh I felt the payment for order flow was
Speaker 1: a smelly practice. It's legal. Um, it has to be
Speaker 1: married with all sorts of controls and assurances that you're
Speaker 1: getting best execution. But if you're selling off customer order
Speaker 1: flow and getting paid for that, how does that not
Speaker 1: create a conflict with your obligation to get the best
Speaker 1: execution for your clients. UM. I think you're seeing, on
Speaker 1: the part of our new very capable, very aggressive SEC Chairman,
Speaker 1: Gary Gensler, a commitment to look at that along with
Speaker 1: many of the other troubling UH issues surrounding retail trading.
Speaker 1: Would you suggest that the leadership of law Strata, which
Speaker 1: certainly you're a voice of and part of, support Mr Gensler,
Speaker 1: and let's get to this to get some confidence back
Speaker 1: in trading away from the meme stucks. Absolutely. I I
Speaker 1: think very highly of the SEC chairman. He's certainly one
Speaker 1: of the most knowledgeable, game ready SEC chairman we have had,
Speaker 1: and he's already laid out pretty clearly what his agenda
Speaker 1: is all makes sense to me. Greater transparency around UH
Speaker 1: short selling, greater trans parency around the use of total
Speaker 1: return swaps UH and UH payment for order flow gamification.
Speaker 1: They're all on his radar, And yes, I think we
Speaker 1: should get it all of this because Tom, what we
Speaker 1: found in the past, that we've seen it over and
Speaker 1: over and over against. Partly what stewardship is about is
Speaker 1: that our industry has a habit of of taking legitimate
Speaker 1: practices that that do make a positive difference in the
Speaker 1: world and and running them to excess. And every time
Speaker 1: we do that, we get in trouble, and our clients
Speaker 1: and customers get in trouble, and society gets in trouble.
Speaker 1: And you can see some some indications here of commercial
Speaker 1: excesses or reappearing in the financial markets, and I find
Speaker 1: those troubling and I look for regulators to try to
Speaker 1: tamp those down before they cause a big problem. John,
Speaker 1: the focus right now is shifting away from some of
Speaker 1: the trading activity to why there hasn't been more lending
Speaker 1: in the banking sector. And as someone who is perfect
Speaker 1: to speak to the nexus between banking and politics, given
Speaker 1: your great grandfather being the president of the United States.
Speaker 1: There is a question here of how banks will shape
Speaker 1: themselves going forward. As the lenders as helping to generate
Speaker 1: some of the recovery through UH through some of the
Speaker 1: extensions to main street, how do you expect that to
Speaker 1: be transformed in terms of the lack of lending demand,
Speaker 1: the lack of demand from borrowers to where we are now, well,
Speaker 1: a couple of things are going on. Obviously, the post
Speaker 1: COVID softness in the economy led to a decline in
Speaker 1: demand for traditional lending. But Lisa, one of the things
Speaker 1: that we've seen going on is there there's plenty money
Speaker 1: available to be lent. It's just being lent out of
Speaker 1: the non bank or shadow financial sector. Private equity funds,
Speaker 1: hedge funds are are lending. And part of the reason
Speaker 1: for that is that during the financial crisis, the focus
Speaker 1: was legitimately inappropriately on making sure that banks didn't behave
Speaker 1: in ways that that almost brought a systemic meltdown, and
Speaker 1: as a result, all sorts of capital requirements and restrictions
Speaker 1: were put on regulated financial institution. Just like squeezing a balloon,
Speaker 1: you squeeze it at one end. Uh, it grows at
Speaker 1: the other end. And so we've seen capital available for
Speaker 1: lending moving out of the regulator to the unregulated banking sector.
Speaker 1: What I would like to see is uh, and you're
Speaker 1: and and there is some of this going on or
Speaker 1: was let me put it during the Trump administration remains
Speaker 1: to be seen. What happens during the Biden administration is
Speaker 1: for regulators to take a take a deep breath, say, Okay,
Speaker 1: we actually here, UH oversaw a success story. We oversaw uh,
Speaker 1: the rebooting of the financial sector. We put it on
Speaker 1: sounder footing, safer, sounder, more stable than it's been in
Speaker 1: a long time. Can we takes the steps to make
Speaker 1: it easier for regulated financial institutions for you to do
Speaker 1: the job that society wants them to do. Are we
Speaker 1: being too restrictive? And that's sort of a counter intuitive
Speaker 1: to the regulators in place now under the Biden administration,
Speaker 1: But I think that's what's needed at this point. It's
Speaker 1: sort of a relook at DoD Frank, not a not
Speaker 1: a reinstitution of DoD Frank. So on the flip side,
Speaker 1: do you think that systemic risk has built up in
Speaker 1: the shadow banking system? Yeah, certainly, a lot of people
Speaker 1: are worried about that, and yes, I think that, um uh,
Speaker 1: there are indications that, as there always are, risk taking
Speaker 1: is UH being pushed to dangerous levels in some areas
Speaker 1: of the unregulated financial sector that you just saw one
Speaker 1: UH in the explosion of our articles, and UH what
Speaker 1: was the risk being aken there while it was embedded
Speaker 1: in total return swaps around which there isn't the same
Speaker 1: transparency and there aren't the same disclosure obligations as there
Speaker 1: are with with normal UH stock positions, major stock positions
Speaker 1: and publicly traded companies, and those kinds of holes in
Speaker 1: the system UH sometimes can can destabilize the financial system.
Speaker 1: And I wasn't big enough banks took heavy losses, but
Speaker 1: you know they weren't. They weren't system threatening, weren't even
Speaker 1: institution threatening. But yes, I worry about excess as building up.
Speaker 1: They always do. We have a number of organizations like
Speaker 1: f stock and various research capabilities that we didn't have
Speaker 1: going into the financial institution supposed to be scanning for risk.
Speaker 1: Are they, Let's hope. So you know, I was reading
Speaker 1: Jonah story yesterday about Representative Tom Swaltzney from New York,
Speaker 1: a case pushing for two and a half percent levy
Speaker 1: on wealth of more than fifty million in dollars. He
Speaker 1: says it's a one off, but we know how those
Speaker 1: things go. Interestingly, your great grandfather was a champion of
Speaker 1: the sixteenth Amendment, brought in the federal income tax for
Speaker 1: for really the first time, UM in nineteen thirteen. What
Speaker 1: do you think about now transitioning to or adding on
Speaker 1: a wealth tax. Boy, it never fails. You get me
Speaker 1: to talk about politics on on surveillance. You know, my
Speaker 1: my peer people say, don't talk about politics, don't don't,
Speaker 1: don't talk about your Republican legacy. I guess here, here's
Speaker 1: the way I feel. I'm uh, and I think a
Speaker 1: lot of a lot of Americans and people in financial
Speaker 1: services industry feel this way is we're we think taxes
Speaker 1: UH can make sense if they are used to invest
Speaker 1: in productive assets in the real economy that makes the
Speaker 1: economy grow faster, Let's face it, unless you want to
Speaker 1: look at something like long term inflation. UH. The only
Speaker 1: uh viable way out of the hole we've dug ourselves
Speaker 1: in the course of the last three or four years
Speaker 1: is to grow our way out of it. And if
Speaker 1: raising taxes and putting that money to work in a solid,
Speaker 1: uh legitimate infrastructure package is something that Congress can find
Speaker 1: their way to do, then that's great. If, on the
Speaker 1: other hand, wealth taxes being used to fund more social spending,
Speaker 1: then we're just digging the hole we're in deeper. And
Speaker 1: so it really depends what is going to be the
Speaker 1: use of a tax increase, uh, whether it's one time
Speaker 1: or capital gains or ongoing income tax increase. I would
Speaker 1: just point out that William Howard Taff, though his his
Speaker 1: focus was on corporate income tax it's not personal income taxes.
Speaker 1: John Taff, thank you so much. With Betarter, their vice chairman,
Speaker 1: they're on order flow and on some of the moments
Speaker 1: we've seen such as articles this morning. He is again
Speaker 1: with Beard right now. This is a really important conversation,
Speaker 1: Sarah Hunt, with us with el Pinewood's Capital investors, and
Speaker 1: what's so great about it. This is in the trenches
Speaker 1: of portfolio construction versus sort of the econo babble that's
Speaker 1: out there right now. Sarah Hunt, I am absolutely fascinated
Speaker 1: with how you perceived big tech. We saw the Apple
Speaker 1: surge yesterday. Is this big tech unloved or are we
Speaker 1: just climbing on board the mega move that we saw
Speaker 1: of eighteen months ago. Well, I think you had a
Speaker 1: long pause in some of those big tech stocks, and
Speaker 1: you look at Apple, you go back to September of
Speaker 1: last year, and you were basically at levels that were
Speaker 1: just around where we are now. So that's had some
Speaker 1: time to digest that fact that it was higher for
Speaker 1: they had a huge swing up, and then everything sort
Speaker 1: of slowed down and paused on the big tech side
Speaker 1: while people went and looked at what else is happening
Speaker 1: in the economy, So they started looking at cyclicals, I
Speaker 1: started looking in other areas. I think what you're seeing
Speaker 1: now is the realization that rates now starting to back
Speaker 1: off after reaching a high I think one seventy five
Speaker 1: on the tenure or the other day, or a couple
Speaker 1: of weeks ago, that you're starting to see people go
Speaker 1: back to those tech docs because the growth is still there.
Speaker 1: And in the end, I think that's what really matters,
Speaker 1: because as much as we can look at the different
Speaker 1: parts of the economy, there's still everything we have is
Speaker 1: more and more involved with tech. There's semiconductors in almost
Speaker 1: every single thing we buy these days, so I don't
Speaker 1: see that the tech space is not a good beneficiary
Speaker 1: of whatever is happening in the economy, as long as
Speaker 1: that's good news for the economy. Sarah, where is the
Speaker 1: greatest degree of undoe complacency and markets right now? Wow,
Speaker 1: that's a tough one. I think that. I think, you know,
Speaker 1: go back to your FED discussion. What do we what
Speaker 1: is the FED going to do? And how does that
Speaker 1: play into everything else? It has benefed driven market. All
Speaker 1: this liquidity has definitely been pushing people out of fixed
Speaker 1: income and lamentations of fixed income managers and has been
Speaker 1: pushing towards equities and other higher risky assets. How does
Speaker 1: that play out? How does the FED back away from that?
Speaker 1: I think that's going to be, to your point Lisa earlier,
Speaker 1: a very big question. And we don't know how that's
Speaker 1: going to play out just yet. I think the odds
Speaker 1: that it actually just ends up continuing in a more
Speaker 1: quiet way are pretty high to me. But in the end,
Speaker 1: at some point they're going to have to do something
Speaker 1: that's a little bit different than that, and how our
Speaker 1: markets going to take that? How our markets going to
Speaker 1: take that? And I wonder though, Sarah, whether that's so
Speaker 1: far afield in the future right now, any sort of
Speaker 1: normalization that we can continue down this road with regards
Speaker 1: to the pricing that we're seeing inequities, the pricing that
Speaker 1: we're seeing in fixed income, and the pricing that we're
Speaker 1: seeing frankly in some of these alternative assets. Well, I
Speaker 1: think if you'd asked anybody four or five years ago,
Speaker 1: even before the pandemic, you would have said, no, the
Speaker 1: Fed's going to have to exit their strategy and this
Speaker 1: is this can't continue forever. And here we are, you
Speaker 1: know how, many years after financial crisis, still with some
Speaker 1: very unusual monetary measures globally. And I think that just
Speaker 1: the rates coming down again in Europe also makes the
Speaker 1: US look more attractive. I mean, the German tenure got
Speaker 1: up to I think negative ten basis points and now
Speaker 1: is back lower than that. So I think the US
Speaker 1: does look better relatively speaking, but it's still really tough
Speaker 1: and I think it's going to be difficult to see
Speaker 1: how we get out of this. But at the same time,
Speaker 1: to your point, I think we could keep going with
Speaker 1: this a lot longer than people think we can. Sarah,
Speaker 1: do you have any earnings visibility fifteen days to June thirty,
Speaker 1: we regroup, ALCOHOLA comes out JP more Gon will start
Speaker 1: the bank earnings. Sara, do you have any visibility on
Speaker 1: what earnings look like coming up? I think this has
Speaker 1: been such an unusual time frame for so many reasons
Speaker 1: that it's very difficult to see earnings visibility. I was
Speaker 1: looking back at some of the banking earnings and what
Speaker 1: the estimates were and what they came out with were
Speaker 1: so wildly different. You know, some things are more easier,
Speaker 1: more simple to predict than banking earnings, which I think
Speaker 1: are very tough to predict. But in the scheme of things, no,
Speaker 1: I think it's very tough to say we know what
Speaker 1: earnings are going to be accepted right now. People are
Speaker 1: out there spending money, so they're going to be higher.
Speaker 1: The question is how much and for how long? Sarah,
Speaker 1: Thank you so much. Sarah hunt with us today with
Speaker 1: Alpine Woods Capital on a portfolio construction in the view
Speaker 1: four or he has seen this before. Michael Holland joins
Speaker 1: usself from Holland and Company, looking at the idea of
Speaker 1: careful securities analysis, listening to managements, and moving forward with
Speaker 1: a more calm and stable approach than the trading. Michael Holland,
Speaker 1: let's start with the mean trading. Now, when does this
Speaker 1: go away? Or are we gonna live with mean trading forever?
Speaker 1: Likely not for every time that we're good to see
Speaker 1: the three of you. Uh. The reality is that that
Speaker 1: all of these things do go away, but you just
Speaker 1: don't know how long they take to go away. So
Speaker 1: I wouldn't I wouldn't be real fast to get out
Speaker 1: of your cash position and start shorting things. Starts right now.
Speaker 1: So Michael, you just are saying music to Tom's ears.
Speaker 1: Why do you think that people ought to be holding
Speaker 1: some cash right now given the fact that there's extreme
Speaker 1: accommodation from central banks and ongoing fiscal spending at listen
Speaker 1: the uh the history of the time talks about the
Speaker 1: decades I've been What happens is when you get to
Speaker 1: this point where the complacency is is actually pretty well
Speaker 1: earned because the Federal Reserve right now is doing what
Speaker 1: it's doing. And listen to Carl Weinberg in his testimony
Speaker 1: in the last couple of days, I think you have
Speaker 1: very smart people saying things can be pretty good for
Speaker 1: an extended period of time because of the Fed. Having
Speaker 1: said that, Tom said earlier in the show, thirty nine
Speaker 1: percent increase over the last twelve months, name trading stocks, SPACs, ETCeteras,
Speaker 1: and all the stuff that the bears talk about. Both
Speaker 1: both camps have very smart people in them. Either or
Speaker 1: both could be right for some period of time. Having
Speaker 1: said that, I really like an all weather portfolio so
Speaker 1: that when things go in the direction no one expects.
Speaker 1: You're saying, I'm still okay. I'd like to be a
Speaker 1: survivor in these markets. All right, Well, let's talk about
Speaker 1: that survival here. I am curious, Michael, why would anyone
Speaker 1: buy into the case here that the FED can sort
Speaker 1: of orchestrate. That's verbial soft landing. I don't think you
Speaker 1: buy in remain a hundred percent. That's exactly the right question.
Speaker 1: In fact, the soft landing may not happen, and it
Speaker 1: may happen. I think it's it's probably in the school.
Speaker 1: It probably could be a little messy, but but I
Speaker 1: have no reason to thank my prediction would be any
Speaker 1: good or as good as the three of yours or
Speaker 1: Carl Weinberg's or anyone else's. So nobody knows the answer
Speaker 1: to that. Will it be a soft landing? Having said that,
Speaker 1: it might be, which means that to have a percent
Speaker 1: triple leverage is probably not the preferred position in the
Speaker 1: stock market. On the other hand, having some cash in
Speaker 1: case it's wrong, you're you'll feel better at the end
Speaker 1: of the day because you will survive. Michael Holland when
Speaker 1: you look at the accounting statements of these companies, it
Speaker 1: speaks of fundamental analysis. Does fund fundamental analysis have a
Speaker 1: value here? Securities analysis have a value here when you
Speaker 1: see the ratios we're living with abs salutely Tom, Because
Speaker 1: when you get to a time like this, if if
Speaker 1: you are going to inch back into the equity market
Speaker 1: sometime in the next decade, what you want to have
Speaker 1: as managements who have financial statements that tell you, as
Speaker 1: in the case of JP Morgan for example, you referred
Speaker 1: to them earlier in the show. UH, they show you
Speaker 1: why they have fortress like balance sheets, what the prospects
Speaker 1: are for their trading revenues, uh having been so great
Speaker 1: in the past. There's a there's a gold mine of
Speaker 1: information in those financial statements, and that's part of why
Speaker 1: I've been able to survive myself. By paying attention to
Speaker 1: things just like that, you can those are kind of
Speaker 1: immutable things that facts are stubborn things. Ass as it's
Speaker 1: consented Michael. There's a spectrum of risk and return, and
Speaker 1: the idea here of there are times to go hard
Speaker 1: into risk for that return of their times to accept
Speaker 1: very little return for not being very risky. I don't
Speaker 1: need to tell you this, but where are you right
Speaker 1: now on that spectrum? Perfect question, LESA, because so trees ago,
Speaker 1: a very successful investor named Rochild said, bye, when there's
Speaker 1: blood in the streets, we're certainly not seeing blood in
Speaker 1: the streets right now. We're seeing the opposite. We're seeing
Speaker 1: a federal reserve which is given a pass to anyone
Speaker 1: who wants to see uh, assets of any kind go up.
Speaker 1: So it's a time to have some cash. As you
Speaker 1: said before. So in the risk spect I'm saying, you know,
Speaker 1: you're tilding over the middle to the to the to
Speaker 1: the area where you have to show some caution lights
Speaker 1: for sure. Yeah, yeah, but I mean showing caution. Let's
Speaker 1: say you don't want to necessarily go into cash, remove
Speaker 1: a large allocation into cash here, you want to stay
Speaker 1: invested in the market, and hopefully I'll take part on
Speaker 1: whatever upside might actually be left here. Is there safety
Speaker 1: to be found in that thinking? Yeah right. I think
Speaker 1: Tom's question earlier about fundamental analysis is related to to
Speaker 1: the answer to your question, um Oracle is going to
Speaker 1: report after the close tonight. I saw that the stock
Speaker 1: there a few months ago, trading it quite low multiple
Speaker 1: the prospects for the company management that has shown itself
Speaker 1: over the years to get it right. And my guess
Speaker 1: is what they're doing. They have a report, and maybe
Speaker 1: there'll be a lousy report and it'll go straight down.
Speaker 1: But I think there are companies JP more going to
Speaker 1: be in that category. General Mortis with Mary Barrett, I
Speaker 1: think that there are there are places in the market
Speaker 1: where you can find opportunities, but you have to work
Speaker 1: at it. Like Holland, thank you so much, greatly, greatly
Speaker 1: appreciated this morning. With Holland and Company, the chairman and
Speaker 1: the founder there. Joseph's song joins working with Bank of
Speaker 1: America's their US economists with Ethan Harrison the team. Joseph,
Speaker 1: thank you so much for joining us. I like the
Speaker 1: Bank of America tweaks your g d P numbers. You
Speaker 1: go from a first quarter of prosperity to the boom.
Speaker 1: You know, a little bit of an adjustment here of
Speaker 1: the second quarter. What does the clarity that you and
Speaker 1: Michelle Meyer have on third quarter? G d P Thank me. Um. Look,
Speaker 1: we're still very bullish on the US economy right now.
Speaker 1: You know, we're still looking for seven percent growth this year. Obviously,
Speaker 1: today's retail sales report was definitely on the weaker side,
Speaker 1: but we were expecting that. We were expecting negative prints
Speaker 1: for all the major aggregates, um, but we still see
Speaker 1: strength in the consumer. If you look at our car data,
Speaker 1: everything outside of retail sales, you know, group were roughly
Speaker 1: around six percent on a month or a month basis.
Speaker 1: So all that service, it's all that spending. Is that
Speaker 1: happening on the service side. We saw a lot of
Speaker 1: strength uh the end of the month in May around
Speaker 1: Memorial Day with lodging, travel, restaurant spending really really picking
Speaker 1: up momentum. And early in June we're seeing that carry
Speaker 1: you do, so you get through June thirty, you go
Speaker 1: to Q three, I've got question marks on it for
Speaker 1: radio and TV. How do you guys frame up Q three?
Speaker 1: Is it a is it a better tone than where
Speaker 1: you were ninety days ago? Well, you know, we don't
Speaker 1: think that the strength that we've seen in the second
Speaker 1: core will necessarily continue, will be sustaining that at the
Speaker 1: very extraordinary levels that we're expecting, and Q two we're
Speaker 1: looking for double digit GDP growth, it will it will
Speaker 1: soften a bit, but I will still be well well
Speaker 1: above trend suggesting the consumer is spending. And remember there's
Speaker 1: actually more fiscal aid coming online in Q three with
Speaker 1: the child tax credits, so a lot of middleton lower
Speaker 1: income households will have more dollars to spend. Joseph, let's
Speaker 1: talk about the pendulum of stagflation, as Tom so elegantly
Speaker 1: put this question of whether people are less inclined to
Speaker 1: spend as prices go up. Are we seeing signs of
Speaker 1: that or is this to add a completely irrelevant to
Speaker 1: that based on this changing of the of the composition
Speaker 1: of spending. Yeah, I think Mike is correct and that
Speaker 1: it's it's tough to suss out what is the demand
Speaker 1: and supply effects going on right now. Um, you know,
Speaker 1: obviously there is probably some effect with higher prices in
Speaker 1: the good sector, but you know, when we look at
Speaker 1: our car data, real spending is still up double digits
Speaker 1: relative to twenty nineteen levels. So even if there's some
Speaker 1: softening in the good sector, clearly those dollars are being
Speaker 1: shifted over to areas where they're still really strong demand.
Speaker 1: All right, Yeah, I mean as we look at these
Speaker 1: uh main numbers here, Joseph, I mean we should point
Speaker 1: out these April numbers ticket revised higher here on a
Speaker 1: month over month number. Of course, we were pretty much
Speaker 1: flat on the previous reading that's being revised to up
Speaker 1: point nine percent. I am curious that when you look
Speaker 1: at the numbers that we've had here on the retail side,
Speaker 1: retail sales side, and the come down that we're having, now,
Speaker 1: how much are you factoring in the government support and
Speaker 1: the potential pullback of some of that support, meaning the
Speaker 1: expanded unemployment benefits And I guess you can sort of
Speaker 1: fold in some of the fiscal stimulus that may or
Speaker 1: may not be coming down the pipe. Yeah, I mean
Speaker 1: that that is um partially in our kind of slowdown
Speaker 1: in Q three. But remember that as these unemployment insuranceets
Speaker 1: get uh get gets pulled back, you'll see more workers
Speaker 1: we entered the labor market, and they're actually entering a
Speaker 1: labor record that is very hot right now. And wages
Speaker 1: are starting to climb higher, so there actually may not
Speaker 1: be such a major fiscal cliff where they're losing their
Speaker 1: benefits and not seeing the same sort of comparable wage levels.
Speaker 1: There actually might be just you know, substituting benefits for
Speaker 1: you know, wage wages. So um, you know, income may
Speaker 1: soften a bit from here on out, but we still
Speaker 1: are very constructive on the consumer and the behind the
Speaker 1: household balance. Okay, Well, unfortunately then that sort of circles
Speaker 1: me back to sort of the half glass half empty
Speaker 1: scenario here where if fails, uh, if those wage pressures
Speaker 1: continue higher and that does pull people back into the
Speaker 1: labor market, then then do we have to then start
Speaker 1: talking about those inflationary pressures and what kind of dragged
Speaker 1: that might mean for economic activity. Yeah, so, you know,
Speaker 1: and in the fall, you know, we think that those
Speaker 1: kind of labor supply contraints will start to ease, So
Speaker 1: the higher wages that we're seeing today, we won't continue
Speaker 1: to keep climbing higher. Right, Well, we'll reach kind of
Speaker 1: city equilibrium where there's more workers that enter a labor
Speaker 1: market as unemployment insurance expires. Also, care has been a
Speaker 1: major issue during the pandemic and we've heard from a
Speaker 1: lot of major school districts that they'll be going back
Speaker 1: to traditional in person learning, so childcare will be baked
Speaker 1: in for a lot of parents, which will allow them
Speaker 1: to re enter the labor markets as well. So that's
Speaker 1: gonna we think that you know that that will lead
Speaker 1: to great US apply in the labor market, and that
Speaker 1: will have at least a temporarily a cooling effect our wages,
Speaker 1: which will keep inflation well well kept. Joseph Song, thank
Speaker 1: you so much, greatly appreciated with Bank of America. This
Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us
Speaker 1: live weekdays from seven to ten a m. Eastern on
Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six
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Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on
Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg