1
00:00:02,360 --> 00:00:06,720
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:11,640 --> 00:00:15,440
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

3
00:00:15,480 --> 00:00:18,680
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

4
00:00:18,720 --> 00:00:22,280
Speaker 2: for insight from the best in markets, economics, and geopolitics

5
00:00:22,400 --> 00:00:24,840
Speaker 2: from our global headquarters in New York City. We are

6
00:00:24,920 --> 00:00:27,680
Speaker 2: live on Bloomberg Television weekday mornings from six to nine

7
00:00:27,720 --> 00:00:31,280
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

8
00:00:31,320 --> 00:00:33,919
Speaker 2: anywhere else you listen, and as always on the Bloomberg

9
00:00:34,000 --> 00:00:37,280
Speaker 2: Terminal and the Bloomberg Business app. So here's the latest

10
00:00:37,320 --> 00:00:40,279
Speaker 2: this morning. The president leaning into the campaign promises he's

11
00:00:40,320 --> 00:00:43,400
Speaker 2: capped as new polling shows a dip in his approval rating,

12
00:00:43,479 --> 00:00:45,680
Speaker 2: and Libby Cantrell and Pimco joined us now from what

13
00:00:45,760 --> 00:00:46,920
Speaker 2: Liby good mornic good morning?

14
00:00:47,120 --> 00:00:48,639
Speaker 1: Is the hotel in Texas?

15
00:00:49,680 --> 00:00:52,920
Speaker 3: I mean, look, I think for good reason the GOP

16
00:00:53,040 --> 00:00:56,080
Speaker 3: is paying attention to it. Obviously, this is a red state,

17
00:00:56,160 --> 00:00:59,160
Speaker 3: a ruby red Senate district. The state Senate district that

18
00:00:59,320 --> 00:01:02,400
Speaker 3: flipped to to Democrats went from thirty one kind of

19
00:01:02,400 --> 00:01:04,720
Speaker 3: a swing of thirty one points from the twenty twenty

20
00:01:04,720 --> 00:01:07,240
Speaker 3: four election. It is still early days, but there are

21
00:01:07,280 --> 00:01:10,360
Speaker 3: other metrics in addition to these off cycle elections that

22
00:01:10,440 --> 00:01:13,760
Speaker 3: I think are warning signs for Republicans. The approval rating

23
00:01:13,920 --> 00:01:16,920
Speaker 3: is one of them. The generic ballots or generally, how

24
00:01:16,959 --> 00:01:19,880
Speaker 3: do the how does the population feel about Democrats over

25
00:01:19,920 --> 00:01:24,400
Speaker 3: Republicans or favoring Democrats right now by five points on average,

26
00:01:24,760 --> 00:01:27,840
Speaker 3: and then enthusiasm Democrats seem to be more enthusiastic. Those

27
00:01:27,880 --> 00:01:31,000
Speaker 3: are all we have a little mini midterm election model

28
00:01:31,000 --> 00:01:35,680
Speaker 3: that we built at PIMCO, and those all are statistically significant.

29
00:01:35,720 --> 00:01:39,520
Speaker 3: So in addition to Texas, the data is also pointing

30
00:01:39,560 --> 00:01:43,640
Speaker 3: to signs that, you know, like history, the Republicans are

31
00:01:43,680 --> 00:01:46,080
Speaker 3: probably poised to lose seats in November.

32
00:01:46,120 --> 00:01:47,240
Speaker 4: However, it is really early days.

33
00:01:47,240 --> 00:01:49,520
Speaker 3: It's still only even though it was a very long January,

34
00:01:49,960 --> 00:01:52,040
Speaker 3: it's only still nine months away, so a lot.

35
00:01:51,920 --> 00:01:53,800
Speaker 4: As we can. Republicans strategers said the same thing to

36
00:01:53,840 --> 00:01:56,520
Speaker 4: me last night, Amory, it's early days, you know, don't

37
00:01:56,520 --> 00:01:58,200
Speaker 4: look at Texas. We have to November. We have the

38
00:01:58,240 --> 00:02:00,600
Speaker 4: one big beautiful bill coming out. What the President going

39
00:02:00,640 --> 00:02:02,640
Speaker 4: to be focused on before November?

40
00:02:02,680 --> 00:02:05,240
Speaker 3: When I think Republicans do want show, not tell, right,

41
00:02:05,600 --> 00:02:08,040
Speaker 3: President Trump wants to tell folks obviously, and this is.

42
00:02:08,040 --> 00:02:09,600
Speaker 4: Sort of what Joe Biden did as well.

43
00:02:10,000 --> 00:02:12,560
Speaker 3: Understandably, he's proud of the things that he's accomplished in

44
00:02:12,600 --> 00:02:14,919
Speaker 3: twenty twenty five. I think Republicans on the hill, though,

45
00:02:14,960 --> 00:02:16,919
Speaker 3: do you want to pivot to showing and they're hoping

46
00:02:16,960 --> 00:02:19,880
Speaker 3: that these very large refunds that the househouseholds are going

47
00:02:19,919 --> 00:02:23,480
Speaker 3: to be getting, the fact that withholding tables are decreased,

48
00:02:23,520 --> 00:02:26,080
Speaker 3: and so big people are getting bigger paychecks. All of

49
00:02:26,080 --> 00:02:28,640
Speaker 3: this will you know, sort of booy sentiment. Now what

50
00:02:28,919 --> 00:02:31,840
Speaker 3: President Trump has talked about the sort of affordability agenda,

51
00:02:31,840 --> 00:02:33,840
Speaker 3: and I think again Republicans want him to pivot from

52
00:02:34,200 --> 00:02:39,160
Speaker 3: immigration back to the affordability agenda. Things like capping credit cards,

53
00:02:39,480 --> 00:02:43,919
Speaker 3: preventing institutional investors from buying single family homes. Those things

54
00:02:44,040 --> 00:02:46,440
Speaker 3: all need Congress, and I don't think we're going to

55
00:02:46,440 --> 00:02:48,960
Speaker 3: see Congress do anything honestly, on the fiscal side.

56
00:02:48,960 --> 00:02:51,040
Speaker 4: It's weird because Wall Street acts like some of this

57
00:02:51,160 --> 00:02:53,280
Speaker 4: is done, yeah, and I think, yeah, well yeah, I'm

58
00:02:53,280 --> 00:02:53,600
Speaker 4: not sure.

59
00:02:53,680 --> 00:02:55,160
Speaker 3: I mean, so this is the president, you know, and

60
00:02:55,280 --> 00:02:57,040
Speaker 3: might frustrate him understand them, I think, and to frustrate

61
00:02:57,080 --> 00:02:59,760
Speaker 3: other presidents as well. He only has limited authority in

62
00:03:00,040 --> 00:03:02,640
Speaker 3: terms of moving the needle. Right, the executive branch executes

63
00:03:02,680 --> 00:03:05,400
Speaker 3: existing law. It is the Congress that creates the laws,

64
00:03:05,480 --> 00:03:09,200
Speaker 3: and there is no law that gives the president authority

65
00:03:09,200 --> 00:03:11,320
Speaker 3: to do either of those things. What he can do

66
00:03:11,760 --> 00:03:14,079
Speaker 3: and Mary, which we've talked about before, is he can

67
00:03:14,200 --> 00:03:18,200
Speaker 3: direct Fanny and Freddy to buy more agency mortgage backed securities.

68
00:03:18,400 --> 00:03:21,280
Speaker 3: They have been doing that for several months. In the

69
00:03:21,400 --> 00:03:23,920
Speaker 3: end of twenty twenty five. We think they will continue

70
00:03:23,960 --> 00:03:26,079
Speaker 3: to lean into that. I think they read through for

71
00:03:26,160 --> 00:03:28,680
Speaker 3: maybe for investors. Not only is that good for sort

72
00:03:28,680 --> 00:03:32,440
Speaker 3: of mortgage spreads, mortgage rates, and potentially helping the economy

73
00:03:32,440 --> 00:03:35,320
Speaker 3: at least, you know, marginally, it also does decrease the

74
00:03:35,440 --> 00:03:39,320
Speaker 3: chances that the GSS go public. I think the President

75
00:03:39,400 --> 00:03:42,640
Speaker 3: understands he actually would much rather control the GSCs than

76
00:03:43,120 --> 00:03:44,160
Speaker 3: to issue them to the public.

77
00:03:44,160 --> 00:03:45,600
Speaker 1: Well, how much more do you see them actually buying?

78
00:03:45,640 --> 00:03:47,520
Speaker 5: I mean, how much can this be accelerated and become

79
00:03:47,600 --> 00:03:49,440
Speaker 5: a main story, particularly at the long end of the

80
00:03:49,480 --> 00:03:49,920
Speaker 5: Yeld curve.

81
00:03:50,080 --> 00:03:53,800
Speaker 3: Yeah, so it it's a good question. Right now, FHIFA

82
00:03:53,840 --> 00:03:57,200
Speaker 3: and Treasury have capped how much the GSS can hold

83
00:03:57,200 --> 00:03:59,720
Speaker 3: on their balance sheets, to four hundred and fifty billion

84
00:03:59,720 --> 00:04:02,320
Speaker 3: dollars collectively between Fanny and Freddy. Right now they have

85
00:04:02,320 --> 00:04:05,520
Speaker 3: about two hundred and fifty billion as of last filing, so.

86
00:04:05,440 --> 00:04:06,320
Speaker 4: They can still go up.

87
00:04:06,360 --> 00:04:08,360
Speaker 3: I mean the President has directed that two hundred billion

88
00:04:08,400 --> 00:04:11,760
Speaker 3: dollar gap to be filled. Now, interestingly, that four hundred

89
00:04:11,760 --> 00:04:13,960
Speaker 3: and fifty billion dollars, that is not a statutory limit,

90
00:04:14,000 --> 00:04:16,839
Speaker 3: I meaning the Congress doesn't have to get involved. FHFA

91
00:04:16,920 --> 00:04:19,480
Speaker 3: and Treasury. FHFA, the regulator of Fanny and Freddy, can

92
00:04:19,480 --> 00:04:21,880
Speaker 3: simply change that. So there's actually I think a lot

93
00:04:21,920 --> 00:04:25,600
Speaker 3: of runway here. If you go back to the financial crisis,

94
00:04:25,960 --> 00:04:27,960
Speaker 3: Fanny and Freddie owned up to one and a half

95
00:04:28,040 --> 00:04:30,200
Speaker 3: trillion dollars of mortgages. So are they going to go

96
00:04:30,240 --> 00:04:33,400
Speaker 3: back there? Probably not, but you know it is there

97
00:04:33,440 --> 00:04:35,400
Speaker 3: is still more runway. And I think the question though,

98
00:04:35,920 --> 00:04:38,200
Speaker 3: is on worsh in the balance you know, the FED

99
00:04:38,279 --> 00:04:40,880
Speaker 3: chair nominee worsh on the balance sheet, because of course

100
00:04:41,080 --> 00:04:44,680
Speaker 3: they're letting kind of mortgages run off, effectively selling mortgages,

101
00:04:45,440 --> 00:04:47,400
Speaker 3: and of course the other side of the administration is

102
00:04:47,400 --> 00:04:49,720
Speaker 3: buying mortgages to bring down. Right, So we'll see there's

103
00:04:49,720 --> 00:04:51,359
Speaker 3: a little bit of tension there, as there always is

104
00:04:51,440 --> 00:04:54,240
Speaker 3: between the fiscal policy makers and the monetary policy makers.

105
00:04:54,360 --> 00:04:55,960
Speaker 3: We'll sort of see if he's asked that in his

106
00:04:56,560 --> 00:04:57,359
Speaker 3: confirmation hearing.

107
00:04:57,400 --> 00:04:59,039
Speaker 5: I'm really glad that we haven't talked about a government

108
00:04:59,080 --> 00:05:01,799
Speaker 5: shutdown so far. Today evidently had ended and now we're fine,

109
00:05:01,920 --> 00:05:05,479
Speaker 5: except that potentially not so much in about nine days,

110
00:05:05,480 --> 00:05:07,720
Speaker 5: when TSA might get defunded and then we won't be

111
00:05:07,760 --> 00:05:10,400
Speaker 5: able to fly. And I'm just wondering, how likely is

112
00:05:10,440 --> 00:05:12,560
Speaker 5: that that TSA and the Coast Guard are going to

113
00:05:12,560 --> 00:05:14,599
Speaker 5: be what gets defunded in nine days, and so that

114
00:05:14,640 --> 00:05:16,000
Speaker 5: all of a sudden the airports are going to be

115
00:05:16,040 --> 00:05:19,800
Speaker 5: absolutely terrific or in a terrible way in the next

116
00:05:19,800 --> 00:05:20,320
Speaker 5: couple of weeks.

117
00:05:20,400 --> 00:05:23,279
Speaker 3: It just bothered you, so no, no, I know, I

118
00:05:23,320 --> 00:05:25,479
Speaker 3: understand obviously, this is that one of the ways that

119
00:05:25,520 --> 00:05:28,839
Speaker 3: people consume government services right is through the airports. I think,

120
00:05:28,920 --> 00:05:31,039
Speaker 3: happily we are not going to be talking about a

121
00:05:31,160 --> 00:05:36,160
Speaker 3: macro impactful shutdown until potentially September when Congress that has

122
00:05:36,200 --> 00:05:38,280
Speaker 3: to fun the FY twenty seven bill.

123
00:05:38,440 --> 00:05:40,400
Speaker 4: I think that's unlikely. Though we see a shutdown.

124
00:05:40,440 --> 00:05:42,240
Speaker 3: Usually folks don't like to shut down the government, right

125
00:05:42,240 --> 00:05:44,880
Speaker 3: before the midterms. But you're right that this one thing

126
00:05:44,920 --> 00:05:49,160
Speaker 3: that has not been funded. Funding for DHS does include TSA.

127
00:05:49,520 --> 00:05:52,680
Speaker 3: There's obviously this negotiation going on around ice limitations and

128
00:05:52,760 --> 00:05:54,640
Speaker 3: what have You will sort of see how that plays out.

129
00:05:54,760 --> 00:05:58,000
Speaker 3: But we could see that shutdown. I think more likely, though,

130
00:05:58,080 --> 00:06:01,400
Speaker 3: you might just see another cr to sort of build time.

131
00:06:01,520 --> 00:06:04,240
Speaker 3: I think that you know, shutdowns, you do quite well

132
00:06:04,240 --> 00:06:06,440
Speaker 3: politically on either side of the aisle, and I think

133
00:06:06,520 --> 00:06:10,000
Speaker 3: both parties have a vested interest and not seeing the

134
00:06:10,400 --> 00:06:11,000
Speaker 3: government shutter.

135
00:06:11,600 --> 00:06:15,120
Speaker 2: Stay with us more Bloomberg surveillance coming up after this,

136
00:06:24,560 --> 00:06:27,640
Speaker 2: South Korea's top diplomat meeting with Secretary of Saint Marco

137
00:06:27,760 --> 00:06:30,479
Speaker 2: Rubio as the country races to avoid a tariff hike.

138
00:06:30,680 --> 00:06:33,640
Speaker 2: Jean Saroka, the executive director of the Port of Los Angeles, writing,

139
00:06:33,680 --> 00:06:36,480
Speaker 2: tariffs continue to keep everyone on edge. I expect more

140
00:06:36,560 --> 00:06:39,320
Speaker 2: uncertainty ahead on the trade front. Jean joins us now

141
00:06:39,320 --> 00:06:41,040
Speaker 2: for more. Jane, Welcome to New York. Good morning, good

142
00:06:41,080 --> 00:06:42,560
Speaker 2: to see you. I'm going to see you, sir. Let's

143
00:06:42,560 --> 00:06:45,040
Speaker 2: get into the numbers. Talk about tough comps. I think

144
00:06:45,080 --> 00:06:47,160
Speaker 2: that's an understatement to say that you've got tough comps

145
00:06:47,240 --> 00:06:48,680
Speaker 2: relative to last year?

146
00:06:48,680 --> 00:06:49,960
Speaker 1: How much have things slowed down?

147
00:06:50,600 --> 00:06:53,760
Speaker 6: January over eight hundred thousand container units off by a

148
00:06:53,760 --> 00:06:56,560
Speaker 6: little bit more than ten percent. February looks to be

149
00:06:56,560 --> 00:06:59,200
Speaker 6: about the same. We've got a mid quarter lunar New

150
00:06:59,279 --> 00:07:02,800
Speaker 6: year March, we'll see a traditional drop off. If you

151
00:07:02,839 --> 00:07:05,200
Speaker 6: look at Q one versus last year, we'll probably be

152
00:07:05,279 --> 00:07:06,640
Speaker 6: down in double digit fashion.

153
00:07:06,960 --> 00:07:10,080
Speaker 5: How much is a reflection of consumers not buying and

154
00:07:10,080 --> 00:07:12,720
Speaker 5: how much this is a reflection of a lot of

155
00:07:12,720 --> 00:07:14,960
Speaker 5: different industry is not wanting to import because of the.

156
00:07:14,920 --> 00:07:18,119
Speaker 6: Tariffs, Lisa, Probably a combination of both. And here's why.

157
00:07:18,560 --> 00:07:20,640
Speaker 6: Last year and even going back to the campaign trail,

158
00:07:20,680 --> 00:07:22,440
Speaker 6: as we've discussed, you saw a lot of run ups

159
00:07:22,440 --> 00:07:24,920
Speaker 6: to try to build inventories ahead of tariffs and work

160
00:07:25,040 --> 00:07:29,160
Speaker 6: unit prices down. Secondly, while retailers are doing okay, holiday

161
00:07:29,200 --> 00:07:32,040
Speaker 6: sales not bad, Matt Chay says, we crossed a trillion

162
00:07:32,120 --> 00:07:36,480
Speaker 6: dollars according to the National Retail Federation. That's also inflation induced.

163
00:07:36,480 --> 00:07:39,119
Speaker 6: So the number of units moving at the retail level

164
00:07:39,360 --> 00:07:41,720
Speaker 6: a little bit lower, prices have gone up.

165
00:07:42,080 --> 00:07:44,239
Speaker 5: How much has there been a complete shift in terms

166
00:07:44,240 --> 00:07:47,360
Speaker 5: of where things are being sourced? That do come to

167
00:07:47,400 --> 00:07:49,760
Speaker 5: the port I'm just curious if there is sort of

168
00:07:49,880 --> 00:07:54,680
Speaker 5: a sense of favoring, say paces in South America over

169
00:07:54,760 --> 00:07:56,960
Speaker 5: say Southeast Asia. Have you seen that shift in a

170
00:07:56,960 --> 00:07:57,720
Speaker 5: material way.

171
00:07:57,880 --> 00:08:01,920
Speaker 6: It's noticeable, and companies are still looking. CEOs and executives

172
00:08:01,960 --> 00:08:04,480
Speaker 6: are telling me that their staff is spending a lot

173
00:08:04,560 --> 00:08:07,680
Speaker 6: more time both on simulation of what would happen next,

174
00:08:07,720 --> 00:08:09,880
Speaker 6: based on policy, where do I source from, how do

175
00:08:09,920 --> 00:08:12,280
Speaker 6: I get contracts in place? And just trying to keep

176
00:08:12,360 --> 00:08:15,560
Speaker 6: up with all this information. So for US, China was

177
00:08:15,640 --> 00:08:18,800
Speaker 6: sixty percent of our portfolio back in twenty eighteen. This

178
00:08:18,920 --> 00:08:21,920
Speaker 6: year it'll drop below forty percent. Yet we're still growing

179
00:08:22,000 --> 00:08:24,800
Speaker 6: because we've been chasing the freight. But trying to keep

180
00:08:24,840 --> 00:08:27,640
Speaker 6: your eye on what's next is going to be very interesting.

181
00:08:27,880 --> 00:08:31,559
Speaker 6: Tree deal with India yesterday, maybe some possibilities there.

182
00:08:31,680 --> 00:08:34,520
Speaker 4: Well, this is interesting because I didn't get a direct

183
00:08:34,559 --> 00:08:37,840
Speaker 4: answer from Ambassador Career in Davos about this. The transshipment,

184
00:08:37,920 --> 00:08:40,680
Speaker 4: how do you track it? Because China is still sending

185
00:08:40,679 --> 00:08:43,439
Speaker 4: to the hind stage, just not directly from Beijing. There

186
00:08:43,480 --> 00:08:44,320
Speaker 4: is a middle sting.

187
00:08:44,400 --> 00:08:45,480
Speaker 1: Yeah, yeah, a couple things.

188
00:08:45,920 --> 00:08:49,360
Speaker 6: Traditionally, supply chains at Asia were country to country, so

189
00:08:49,480 --> 00:08:52,360
Speaker 6: the buttons and plackets on a shirt made in China.

190
00:08:52,520 --> 00:08:54,600
Speaker 6: Go down to Vietnam, you make the whole shirt, sell

191
00:08:54,640 --> 00:08:57,560
Speaker 6: it to Macy's here on thirty fourth Street. Some bad

192
00:08:57,600 --> 00:09:00,439
Speaker 6: actors out there are trying to circumvent tariffs go lower

193
00:09:00,480 --> 00:09:04,200
Speaker 6: cost countries by transhipping. But China has announced in the

194
00:09:04,200 --> 00:09:07,560
Speaker 6: fifteenth five year Plan is not only exporting goods, they're

195
00:09:07,559 --> 00:09:13,160
Speaker 6: now manufacturing expertise exporters as well, so they're investing in

196
00:09:13,320 --> 00:09:17,440
Speaker 6: plants along the Pacific Rim and other locations around the world.

197
00:09:17,520 --> 00:09:19,200
Speaker 4: Do you think this administration will go after that?

198
00:09:19,559 --> 00:09:20,360
Speaker 1: Yeah? Probably so.

199
00:09:20,760 --> 00:09:22,200
Speaker 4: How challenging is that it's.

200
00:09:22,080 --> 00:09:26,040
Speaker 6: Really challenging because it's tough to get hard data on

201
00:09:26,160 --> 00:09:30,040
Speaker 6: where this supply chain starts and who's funding it and

202
00:09:30,040 --> 00:09:30,840
Speaker 6: who's funding it.

203
00:09:31,080 --> 00:09:33,880
Speaker 2: We've told lots with you about how much improved systems

204
00:09:33,880 --> 00:09:37,120
Speaker 2: and processing through the pandemic. How much have things slowed

205
00:09:37,160 --> 00:09:39,120
Speaker 2: down because of the tariffs. Can you give us an

206
00:09:39,120 --> 00:09:41,840
Speaker 2: idea of what that looks like now relative to where

207
00:09:41,880 --> 00:09:43,080
Speaker 2: it was the year before.

208
00:09:43,240 --> 00:09:47,320
Speaker 6: Well historically, compared to the numbers of containers we're moving

209
00:09:47,360 --> 00:09:49,840
Speaker 6: right now, we look pretty decent, but it's been super

210
00:09:49,960 --> 00:09:53,040
Speaker 6: choppy from COVID to a little bit of downturn based

211
00:09:53,080 --> 00:09:55,640
Speaker 6: on high inventories and then all this tariff build up.

212
00:09:55,880 --> 00:09:58,800
Speaker 6: It just looks different. But last year was our third

213
00:09:58,920 --> 00:10:01,720
Speaker 6: busiest on record in one hundred and eighteen years and

214
00:10:01,760 --> 00:10:04,240
Speaker 6: we didn't have one ship backed up. We're doing things

215
00:10:04,280 --> 00:10:07,960
Speaker 6: a little bit smarter, working together and information technology please

216
00:10:08,000 --> 00:10:09,320
Speaker 6: a huge role here, John.

217
00:10:09,240 --> 00:10:11,679
Speaker 2: That's super impressive. We can still see in the data though,

218
00:10:11,800 --> 00:10:14,319
Speaker 2: that are still problems. ICM Manufacturing came out in the

219
00:10:14,400 --> 00:10:16,200
Speaker 2: last couple of days and if you go through the

220
00:10:16,200 --> 00:10:17,959
Speaker 2: commentary Gene and thew ME. Just to go through the

221
00:10:18,000 --> 00:10:21,600
Speaker 2: commentary here trade TARFF uncertainty is creating volatility in the

222
00:10:21,600 --> 00:10:24,840
Speaker 2: supply chain. It's making long term planning point list. This

223
00:10:24,920 --> 00:10:28,240
Speaker 2: comes from a range of industries within manufacturing that continues

224
00:10:28,280 --> 00:10:31,520
Speaker 2: to be uncertainty and added costs through our global operations

225
00:10:31,559 --> 00:10:33,160
Speaker 2: at LEASTA. Just going through the details, it was a

226
00:10:33,160 --> 00:10:35,360
Speaker 2: great number, by the way, decent print, But you go

227
00:10:35,400 --> 00:10:37,840
Speaker 2: through the details and the commentary coming from various industries,

228
00:10:38,200 --> 00:10:38,760
Speaker 2: it's not good.

229
00:10:38,800 --> 00:10:39,959
Speaker 1: It's not good reading at all.

230
00:10:40,040 --> 00:10:40,199
Speaker 4: Well.

231
00:10:40,240 --> 00:10:42,520
Speaker 5: It creates this level of uncertainty and when you talk

232
00:10:42,600 --> 00:10:45,600
Speaker 5: to different CEOs, they say, we didn't price in a

233
00:10:45,600 --> 00:10:48,439
Speaker 5: lot of the tariffs last year because we had inventories

234
00:10:48,440 --> 00:10:52,560
Speaker 5: that we were pushing through. We don't have those inventories anymore,

235
00:10:52,640 --> 00:10:54,880
Speaker 5: so now we have to pass along the price increases

236
00:10:55,160 --> 00:10:56,679
Speaker 5: and how can they do that at a time where

237
00:10:56,720 --> 00:10:58,840
Speaker 5: the consumer is looking for value?

238
00:10:59,000 --> 00:11:01,480
Speaker 2: So last year we talked about this concept, this phrase

239
00:11:01,520 --> 00:11:03,760
Speaker 2: that Gym's out from Polo mentioned, and it was macro

240
00:11:03,880 --> 00:11:06,160
Speaker 2: paralysis that for a lot of companies that were just

241
00:11:06,200 --> 00:11:08,640
Speaker 2: sat still, they couldn't make decisions, didn't know what to do.

242
00:11:08,760 --> 00:11:10,840
Speaker 1: Do you see any of that? I do. Yeah.

243
00:11:10,960 --> 00:11:13,600
Speaker 6: We talked some time ago about people hitting the pause

244
00:11:13,640 --> 00:11:17,040
Speaker 6: button and their finger is still on it. Hiring is flat,

245
00:11:17,160 --> 00:11:21,480
Speaker 6: new jobs non existent, and realistically speaking, companies are not

246
00:11:21,640 --> 00:11:25,760
Speaker 6: looking at longer term horizons for planning purposes. And capital

247
00:11:25,760 --> 00:11:28,120
Speaker 6: investment also very soft.

248
00:11:28,360 --> 00:11:29,600
Speaker 4: Then how do you plan for that?

249
00:11:30,240 --> 00:11:34,520
Speaker 6: We have to invest through budget cycles, economic cycles, and

250
00:11:34,679 --> 00:11:38,200
Speaker 6: even election cycles. We've got about ten billion dollars worth

251
00:11:38,240 --> 00:11:41,400
Speaker 6: of projects on the capital side right now. New terminals

252
00:11:41,400 --> 00:11:43,480
Speaker 6: for the first time in a generation. We need a

253
00:11:43,520 --> 00:11:48,360
Speaker 6: new bridge crossing onto Terminal Island and outlining more rail

254
00:11:48,440 --> 00:11:52,199
Speaker 6: capacity as well as road connectors to keep this cargo flowing.

255
00:11:52,400 --> 00:11:54,840
Speaker 6: We'll see this, there'll be ups and downs, but long

256
00:11:54,920 --> 00:11:56,720
Speaker 6: term growth will take place.

257
00:11:56,480 --> 00:11:59,040
Speaker 5: If companies don't have inventory anymore and they don't want

258
00:11:59,040 --> 00:12:00,679
Speaker 5: to build too much in victory because they don't know

259
00:12:00,679 --> 00:12:02,960
Speaker 5: how things are going to change. How much are people

260
00:12:03,000 --> 00:12:06,320
Speaker 5: looking for much faster shipments and smaller shipments each time.

261
00:12:06,800 --> 00:12:09,560
Speaker 6: That's exactly what's focusing right now and what we saw

262
00:12:09,640 --> 00:12:12,480
Speaker 6: last year when the trade policy was softened and tariffs

263
00:12:12,559 --> 00:12:17,000
Speaker 6: came down during negotiations, importers had windows of opportunity to

264
00:12:17,040 --> 00:12:19,360
Speaker 6: get their cargo here and the fastest way was through

265
00:12:19,400 --> 00:12:22,800
Speaker 6: the Southern California Gateway. So while overall imports were down

266
00:12:22,840 --> 00:12:25,280
Speaker 6: in the country, we were up simply because of that

267
00:12:25,520 --> 00:12:28,400
Speaker 6: certainty and the fast pace that we gd a cargo

268
00:12:28,520 --> 00:12:30,200
Speaker 6: from Asia into the country.

269
00:12:30,720 --> 00:12:43,920
Speaker 2: Stay with us Mulplenberg. Savannan's coming up after this downside

270
00:12:43,960 --> 00:12:46,559
Speaker 2: surprise twenty two K. They expected number and US to

271
00:12:46,600 --> 00:12:48,839
Speaker 2: have a forty five thousand with us around the table.

272
00:12:48,920 --> 00:12:51,839
Speaker 2: James Echohoff of BNP parent bunch, James, good to see you.

273
00:12:51,840 --> 00:12:52,600
Speaker 1: Great to be backing.

274
00:12:52,679 --> 00:12:55,600
Speaker 2: We've seen some signs not here but elsewhether the labor

275
00:12:55,640 --> 00:12:57,839
Speaker 2: market was firming up a bit coming against the new year.

276
00:12:57,840 --> 00:13:00,160
Speaker 2: Would you put more way on that than this look.

277
00:13:00,160 --> 00:13:02,080
Speaker 7: We think the economy is at a great place this year,

278
00:13:02,160 --> 00:13:03,679
Speaker 7: but we're very optimistic about the.

279
00:13:03,600 --> 00:13:04,360
Speaker 1: Outlook with that.

280
00:13:04,400 --> 00:13:07,520
Speaker 7: We're looking for very strong growth that's driven by stimulative

281
00:13:07,520 --> 00:13:11,480
Speaker 7: fiscal policy, stimulative monetary policy, stimulative markets, and the early

282
00:13:11,640 --> 00:13:14,400
Speaker 7: signs of AI beginning to impact the economy.

283
00:13:14,600 --> 00:13:16,959
Speaker 1: We think there's a likelihood that some of that is.

284
00:13:16,880 --> 00:13:18,960
Speaker 7: Going to slash into the labor market, and it's support well,

285
00:13:18,960 --> 00:13:20,720
Speaker 7: we think has already been a pretty bersilient.

286
00:13:20,440 --> 00:13:23,560
Speaker 2: You've got an accounts for twenty six absolutely just explain

287
00:13:23,640 --> 00:13:24,240
Speaker 2: that for us.

288
00:13:24,559 --> 00:13:25,800
Speaker 1: We think the Fed is.

289
00:13:25,760 --> 00:13:27,560
Speaker 7: Going to react to the data, that it's going to

290
00:13:27,600 --> 00:13:30,880
Speaker 7: follow the economic outlook and its standard policy framework, regardless

291
00:13:30,880 --> 00:13:32,280
Speaker 7: of who leads it or for the course of the year.

292
00:13:32,720 --> 00:13:35,319
Speaker 7: So we think that Powell, I think is delivered the

293
00:13:35,360 --> 00:13:37,600
Speaker 7: easing he wants to deliver. We had earlier thought there

294
00:13:37,640 --> 00:13:39,760
Speaker 7: might be room for one last one, but the data

295
00:13:39,800 --> 00:13:41,480
Speaker 7: is just held up just so well.

296
00:13:41,360 --> 00:13:42,839
Speaker 1: That we've recently taken that out.

297
00:13:43,040 --> 00:13:45,200
Speaker 7: Beyond that, we think the data will tell the story,

298
00:13:45,640 --> 00:13:48,000
Speaker 7: and that the story of a strong economy and with

299
00:13:48,080 --> 00:13:50,040
Speaker 7: a stable labor market and with inflation that's a bit

300
00:13:50,080 --> 00:13:50,960
Speaker 7: higher than what then we think the.

301
00:13:50,960 --> 00:13:52,320
Speaker 5: FED is looking for Well, we're not going to get

302
00:13:52,360 --> 00:13:53,800
Speaker 5: the data on Friday, so we're not going to have

303
00:13:53,800 --> 00:13:56,400
Speaker 5: the data that actually proves that out. Yet, the data

304
00:13:56,400 --> 00:13:58,880
Speaker 5: that we are getting, this ADP number of twenty two thousand,

305
00:13:58,880 --> 00:13:59,200
Speaker 5: I mean.

306
00:13:59,080 --> 00:13:59,960
Speaker 1: It's pretty low.

307
00:14:00,000 --> 00:14:01,800
Speaker 5: Well, how do you look at this and explain to

308
00:14:01,800 --> 00:14:03,240
Speaker 5: people this is actually very good.

309
00:14:03,559 --> 00:14:05,120
Speaker 7: Well, this is the debate at the FED, and we

310
00:14:05,160 --> 00:14:07,800
Speaker 7: saw your Governor Waller dissent saying, look, zero job's growth

311
00:14:07,800 --> 00:14:09,960
Speaker 7: of a las year after we see expected revisions in

312
00:14:10,000 --> 00:14:12,840
Speaker 7: his estimation, that that's not a healthy labor market. And

313
00:14:12,880 --> 00:14:15,960
Speaker 7: you have others, including Shairpal saying, look, immigration policy has

314
00:14:16,040 --> 00:14:18,240
Speaker 7: changed a lot. There are a lot fewer people coming

315
00:14:18,240 --> 00:14:20,200
Speaker 7: to the country, a lot of people have left.

316
00:14:20,560 --> 00:14:24,040
Speaker 1: This may well be a full employment pace of job gains.

317
00:14:24,200 --> 00:14:26,040
Speaker 7: So our view is that the pace we'll see over

318
00:14:26,080 --> 00:14:28,480
Speaker 7: the coming year is something on the lines of fifty k.

319
00:14:28,560 --> 00:14:29,920
Speaker 7: So this is a little bit low the one that

320
00:14:29,960 --> 00:14:33,120
Speaker 7: we just off from ADP, but that ultimately is the

321
00:14:33,160 --> 00:14:36,160
Speaker 7: pace that can ourgue close to that pace that maintains

322
00:14:36,200 --> 00:14:38,239
Speaker 7: the labor market at this current level of unemployment.

323
00:14:38,320 --> 00:14:40,080
Speaker 5: One of the reasons why a number of people have

324
00:14:40,160 --> 00:14:42,440
Speaker 5: priced in at least two rate cuts for this year

325
00:14:42,520 --> 00:14:44,000
Speaker 5: is not because I think the economy is going to

326
00:14:44,000 --> 00:14:46,120
Speaker 5: fall off a cliff, but because they believe that any

327
00:14:46,160 --> 00:14:47,960
Speaker 5: kind of growth is going to come with disinflation. We

328
00:14:47,960 --> 00:14:50,920
Speaker 5: saw PEPSI, for example, cutting prices by ten to fifteen

329
00:14:50,960 --> 00:14:53,960
Speaker 5: percent in response to some of their efficiencies to try

330
00:14:53,960 --> 00:14:56,480
Speaker 5: to increase their customer volume.

331
00:14:56,720 --> 00:14:59,600
Speaker 1: How much do you see this as.

332
00:14:59,520 --> 00:15:01,880
Speaker 5: Likely a good backdrop for the FED to be cutting

333
00:15:02,040 --> 00:15:04,280
Speaker 5: because if you don't see any cuts, you don't buy

334
00:15:04,280 --> 00:15:05,840
Speaker 5: that disinflation story. Is that right?

335
00:15:06,040 --> 00:15:07,920
Speaker 7: Our view is that the AI boom is coming and

336
00:15:07,920 --> 00:15:10,080
Speaker 7: we're going to see a boost in productivity, but that

337
00:15:10,120 --> 00:15:13,120
Speaker 7: will also come with it a cyclical boom as well,

338
00:15:13,240 --> 00:15:15,520
Speaker 7: And part of that is because of the neutral rate

339
00:15:15,560 --> 00:15:17,840
Speaker 7: of rising over time, and part of that is because

340
00:15:17,840 --> 00:15:19,720
Speaker 7: of the existing level of stimulus that we're seeing from

341
00:15:19,720 --> 00:15:22,880
Speaker 7: fiscal monetary policy and from financial markets. So in addition

342
00:15:22,920 --> 00:15:25,280
Speaker 7: to seeing the boost, the disinflationary boost to growth that

343
00:15:25,320 --> 00:15:27,720
Speaker 7: you're referm to, we'll see a cyclical boost as well.

344
00:15:27,880 --> 00:15:29,840
Speaker 7: This is a similar story to the nineties, where the

345
00:15:30,120 --> 00:15:33,680
Speaker 7: green Span is widely heralded for not hiking during that period.

346
00:15:33,680 --> 00:15:35,360
Speaker 1: It wasn't that he cut into that. It was that

347
00:15:35,400 --> 00:15:36,800
Speaker 1: he delayed hikes to allow.

348
00:15:36,640 --> 00:15:38,840
Speaker 7: The productivity boom to play out, and we think that

349
00:15:38,840 --> 00:15:41,400
Speaker 7: that's a likely prospect ahead. Is that the federal standpad

350
00:15:41,800 --> 00:15:44,120
Speaker 7: while it sees strong growth and while it sees some

351
00:15:44,320 --> 00:15:45,640
Speaker 7: residual inflation pressure.

352
00:15:45,760 --> 00:15:50,479
Speaker 4: Well, you seeing the AI boom and productivity being inflationary

353
00:15:50,560 --> 00:15:51,840
Speaker 4: or disinflationary.

354
00:15:52,120 --> 00:15:55,280
Speaker 7: See productivity on its own being disinflationary. But it will

355
00:15:55,320 --> 00:15:58,120
Speaker 7: come with more So we'll see some growth from AI

356
00:15:58,480 --> 00:16:00,520
Speaker 7: and then we'll see even more growth. We think we're

357
00:16:00,560 --> 00:16:02,720
Speaker 7: set up for a very strong year of growth and

358
00:16:02,760 --> 00:16:05,040
Speaker 7: that that will come with it labor market strength and

359
00:16:05,080 --> 00:16:06,400
Speaker 7: with a bit more inflation.

360
00:16:06,000 --> 00:16:08,960
Speaker 4: When it comes to the AI build out, data centers, etc.

361
00:16:09,280 --> 00:16:13,360
Speaker 4: That is, to do you think inflationary electricity needed the

362
00:16:13,400 --> 00:16:14,320
Speaker 4: cost of building.

363
00:16:15,080 --> 00:16:17,760
Speaker 7: We think it's a moderate impact on the inflationary outlook.

364
00:16:18,000 --> 00:16:21,520
Speaker 7: Tech capex as a contribution to GDP isn't historically that high.

365
00:16:21,600 --> 00:16:24,120
Speaker 7: It just become a bit more concentrated. So we think

366
00:16:24,160 --> 00:16:27,240
Speaker 7: that that's ultimately a fairly modest impact on our growth

367
00:16:27,280 --> 00:16:30,080
Speaker 7: in our inflation forecast. What we think is mattered more

368
00:16:30,400 --> 00:16:33,600
Speaker 7: has been the overall booming business sentiment that has come

369
00:16:33,600 --> 00:16:36,640
Speaker 7: from AI. We saw eism earlier this week as a blowout.

370
00:16:36,880 --> 00:16:39,280
Speaker 7: We think that part of that is optimism from AI.

371
00:16:39,720 --> 00:16:42,040
Speaker 7: It's filtering through to the rest of the economy and

372
00:16:42,080 --> 00:16:44,800
Speaker 7: supporting activity that has a sick look proportent to it,

373
00:16:44,840 --> 00:16:46,960
Speaker 7: and we think that will help drive growth, help drive

374
00:16:47,040 --> 00:16:47,480
Speaker 7: labor market.

375
00:16:47,480 --> 00:16:49,760
Speaker 2: This I'm a trained by the rate on Kevin Wosh,

376
00:16:49,800 --> 00:16:51,200
Speaker 2: so let's develop that a little bit more.

377
00:16:51,280 --> 00:16:52,800
Speaker 1: Governor Myron sent this this week.

378
00:16:52,880 --> 00:16:54,520
Speaker 2: I'm probably looking for a little bit more than a

379
00:16:54,520 --> 00:16:57,240
Speaker 2: point of interest rate counts over the course of the year.

380
00:16:57,640 --> 00:17:01,880
Speaker 2: Why would chair Wash be that much different to Governor Myron.

381
00:17:02,320 --> 00:17:04,520
Speaker 7: So when I think about this, I often go back

382
00:17:04,520 --> 00:17:08,000
Speaker 7: to James Carvel's comment from the nineties when he's reincarnated,

383
00:17:08,040 --> 00:17:09,880
Speaker 7: he wants to come back as the bond market because

384
00:17:09,880 --> 00:17:13,560
Speaker 7: he can intimidate everybody. Ultimately, we think FED chairs face

385
00:17:13,640 --> 00:17:17,639
Speaker 7: fairly strong incentives to deliver pro growth, pro market outcomes.

386
00:17:17,960 --> 00:17:20,280
Speaker 7: Kevin Warsh is well known for being a very well

387
00:17:20,359 --> 00:17:23,439
Speaker 7: networked person among financial circles, and we think he will

388
00:17:23,480 --> 00:17:25,360
Speaker 7: follow the same asset price signals as as our FRED

389
00:17:25,400 --> 00:17:27,639
Speaker 7: chairs do and that will leave him, in our view,

390
00:17:28,040 --> 00:17:31,560
Speaker 7: following a fairly standard reaction function. We think he will

391
00:17:31,600 --> 00:17:33,520
Speaker 7: want to do that because that is what achieves the

392
00:17:33,520 --> 00:17:35,840
Speaker 7: best economic result, and we think he will face pressure

393
00:17:35,840 --> 00:17:37,199
Speaker 7: from the rest of the poblacy to do that as well.

394
00:17:37,240 --> 00:17:39,080
Speaker 2: At least it's not convinced. I can just say on

395
00:17:39,160 --> 00:17:41,240
Speaker 2: the ConA my eye, the Palmi wasn't convinced.

396
00:17:41,440 --> 00:17:43,040
Speaker 5: Well, No, I just think that if he talks to

397
00:17:43,080 --> 00:17:44,600
Speaker 5: people in the market, there are a lot of people

398
00:17:44,640 --> 00:17:47,199
Speaker 5: who actually agree with the FED potentially cutting rates at

399
00:17:47,240 --> 00:17:49,600
Speaker 5: least two times. I mean, the Wall Street isn't exactly

400
00:17:50,119 --> 00:17:52,720
Speaker 5: unified in what they think, and more people come on

401
00:17:52,720 --> 00:17:54,680
Speaker 5: the show thinks the FED should cut rights a couple

402
00:17:54,680 --> 00:17:57,320
Speaker 5: more times this year than not. So I guess that

403
00:17:57,320 --> 00:17:58,959
Speaker 5: that's the skepticism that I have.

404
00:17:59,160 --> 00:18:01,119
Speaker 1: Look, we're not hawked, we're bullish.

405
00:18:01,240 --> 00:18:03,720
Speaker 7: So we think the economy is going to be that

406
00:18:03,920 --> 00:18:04,959
Speaker 7: very very well this year.

407
00:18:06,240 --> 00:18:07,919
Speaker 1: Well, I just got to tell you our forecast.

408
00:18:07,920 --> 00:18:09,399
Speaker 7: So look, we think the economy is just going to

409
00:18:09,440 --> 00:18:10,920
Speaker 7: do a bit better. We think the people have been

410
00:18:10,960 --> 00:18:13,879
Speaker 7: really reluctant to give this economy credit for how strong

411
00:18:13,920 --> 00:18:16,520
Speaker 7: it is, for how strong the cyclical impulse is. The

412
00:18:16,600 --> 00:18:20,960
Speaker 7: FED is pulling teeth sometimes, but they've upgraded their forecast

413
00:18:21,000 --> 00:18:23,280
Speaker 7: of growth to solid. We think that growth is going

414
00:18:23,320 --> 00:18:25,680
Speaker 7: to be strong this year and that's going to have implication.

415
00:18:25,280 --> 00:18:25,840
Speaker 1: For the rate helple.

416
00:18:25,880 --> 00:18:28,720
Speaker 5: So you don't buy though that growth can be disinflationary,

417
00:18:28,960 --> 00:18:31,760
Speaker 5: that you that you can run stronger but not hotter. Right,

418
00:18:31,840 --> 00:18:35,639
Speaker 5: So you basically are rejecting that idea. Where is that

419
00:18:35,640 --> 00:18:37,760
Speaker 5: inflation going to come from if it's not coming from

420
00:18:37,760 --> 00:18:40,359
Speaker 5: housing and it's not coming from lazed potato chips.

421
00:18:40,920 --> 00:18:43,720
Speaker 7: Look, it's Look, you can have disinflation or growth. We

422
00:18:43,720 --> 00:18:46,000
Speaker 7: just don't think we're going to. We think the economy

423
00:18:46,040 --> 00:18:48,000
Speaker 7: is going to do so well that it's going to

424
00:18:48,040 --> 00:18:50,360
Speaker 7: sustain inflation. We think there's a bit more to run

425
00:18:50,400 --> 00:18:52,200
Speaker 7: on tariff pass through. We think that's not quite done.

426
00:18:52,200 --> 00:18:53,840
Speaker 7: We think we've got another year of that at least,

427
00:18:54,119 --> 00:18:56,040
Speaker 7: and we think that the services market is going to

428
00:18:56,040 --> 00:18:58,280
Speaker 7: hold up well. And the data we'll see today from

429
00:18:58,320 --> 00:19:00,639
Speaker 7: is some services will be people tell us some of

430
00:19:00,640 --> 00:19:02,200
Speaker 7: that story gain in the absence many out of data.

431
00:19:02,200 --> 00:19:04,480
Speaker 7: This week, we're above consensus for that print. We were

432
00:19:04,520 --> 00:19:06,639
Speaker 7: both consensus for US and manufacturing, which they noted was

433
00:19:06,680 --> 00:19:07,120
Speaker 7: a blowout.

434
00:19:07,320 --> 00:19:08,679
Speaker 1: So we're looking for another strong.

435
00:19:08,440 --> 00:19:10,439
Speaker 7: Print there and I think as we see the data

436
00:19:10,800 --> 00:19:13,159
Speaker 7: over the coming months, we will get the sense for

437
00:19:13,200 --> 00:19:15,480
Speaker 7: how well the economy is performing and the implication that

438
00:19:15,480 --> 00:19:17,280
Speaker 7: has for a modest uptick in inflation.

439
00:19:17,440 --> 00:19:21,000
Speaker 4: James, I'm also skeptical of Worsh not delivering any cuts,

440
00:19:21,000 --> 00:19:23,520
Speaker 4: and not just because to Lisa's point, everyone comes on

441
00:19:23,560 --> 00:19:25,960
Speaker 4: here and says, at least maybe two we're going to

442
00:19:25,960 --> 00:19:27,679
Speaker 4: get this year. How did you get the job? How

443
00:19:27,760 --> 00:19:30,399
Speaker 4: did he convine Trump to put him in that seat

444
00:19:30,560 --> 00:19:32,440
Speaker 4: If he's not going to deliver at least minimum one

445
00:19:32,480 --> 00:19:33,360
Speaker 4: cut this year.

446
00:19:33,240 --> 00:19:35,000
Speaker 7: Well, we think that the important thing here is the

447
00:19:35,080 --> 00:19:37,639
Speaker 7: relationship with the White House. That Kevin Walsh has a

448
00:19:37,680 --> 00:19:42,359
Speaker 7: longstanding personal, family, professional relationship with President Trump, and we

449
00:19:42,400 --> 00:19:44,359
Speaker 7: think that will be helpful to him in the seat

450
00:19:44,920 --> 00:19:48,840
Speaker 7: in establishing a more normal relationship between the Fed and

451
00:19:48,880 --> 00:19:50,960
Speaker 7: the White House. What we've seen over the past year

452
00:19:51,040 --> 00:19:54,159
Speaker 7: is not sustainable, it's not consistent with FED independence. That

453
00:19:54,359 --> 00:19:57,640
Speaker 7: Kevin Worsh turns a new page and should, in our view,

454
00:19:57,800 --> 00:20:02,080
Speaker 7: be able to run monetary policy with greater independence because

455
00:20:02,119 --> 00:20:05,199
Speaker 7: you will have that trust with the White House. We

456
00:20:05,280 --> 00:20:08,000
Speaker 7: think he will start the conversation with the balance sheet

457
00:20:08,480 --> 00:20:11,080
Speaker 7: and talking about how over time to reduce the balance

458
00:20:11,119 --> 00:20:13,359
Speaker 7: sheet that says where he's made his name over the

459
00:20:14,160 --> 00:20:14,960
Speaker 7: past few years.

460
00:20:15,520 --> 00:20:17,240
Speaker 1: We think there's a deal to be made at the FED.

461
00:20:17,320 --> 00:20:19,560
Speaker 7: I'm reducing the balance sheet over time, and the watch

462
00:20:19,560 --> 00:20:21,840
Speaker 7: word for us, whether Kevin Warish refers to the words

463
00:20:21,880 --> 00:20:25,560
Speaker 7: gradual and predictable. Ultimately we think the market would tolerate

464
00:20:25,640 --> 00:20:27,480
Speaker 7: is smaller FED balance sheets, so long as it's not

465
00:20:27,520 --> 00:20:29,560
Speaker 7: a surprise and it comes a.

466
00:20:30,200 --> 00:20:31,440
Speaker 1: Well communicated way.

467
00:20:31,760 --> 00:20:35,000
Speaker 7: The market is much less excited about big, big shocks,

468
00:20:35,480 --> 00:20:37,280
Speaker 7: and so a big taper tantrum we think would be

469
00:20:37,359 --> 00:20:40,840
Speaker 7: risk off. But a gradual and predictable transition of the

470
00:20:40,840 --> 00:20:42,800
Speaker 7: FED regime to a smaller ballo sheet we think would

471
00:20:42,800 --> 00:20:43,280
Speaker 7: be well taken.

472
00:20:43,320 --> 00:20:45,040
Speaker 2: That sound the interpretation of a lot of people and

473
00:20:45,080 --> 00:20:47,360
Speaker 2: precious meadows gone into the weekend after that announcement.

474
00:20:47,359 --> 00:20:49,680
Speaker 1: Just quickly, what should GENP number for this year? We're

475
00:20:49,680 --> 00:20:50,240
Speaker 1: in the mid two.

476
00:20:51,280 --> 00:20:54,840
Speaker 2: This is the Bloombergs Events podcast, bringing you the best

477
00:20:54,880 --> 00:20:58,200
Speaker 2: in markets, economics, angiot politics. You can watch the show

478
00:20:58,240 --> 00:21:01,520
Speaker 2: live on Bloomberg TV weekdays from six am to nine

479
00:21:01,560 --> 00:21:05,320
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

480
00:21:05,359 --> 00:21:07,960
Speaker 2: anywhere else you listen, and as always on the Bloomberg

481
00:21:08,040 --> 00:21:09,880
Speaker 2: Terminal and the Bloomberg Business app