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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 2: Terminal and the Bloomberg Business app. So here's the latest
Speaker 2: this morning. The president leaning into the campaign promises he's
Speaker 2: capped as new polling shows a dip in his approval rating,
Speaker 2: and Libby Cantrell and Pimco joined us now from what
Speaker 2: Liby good mornic good morning?
Speaker 1: Is the hotel in Texas?
Speaker 3: I mean, look, I think for good reason the GOP
Speaker 3: is paying attention to it. Obviously, this is a red state,
Speaker 3: a ruby red Senate district. The state Senate district that
Speaker 3: flipped to to Democrats went from thirty one kind of
Speaker 3: a swing of thirty one points from the twenty twenty
Speaker 3: four election. It is still early days, but there are
Speaker 3: other metrics in addition to these off cycle elections that
Speaker 3: I think are warning signs for Republicans. The approval rating
Speaker 3: is one of them. The generic ballots or generally, how
Speaker 3: do the how does the population feel about Democrats over
Speaker 3: Republicans or favoring Democrats right now by five points on average,
Speaker 3: and then enthusiasm Democrats seem to be more enthusiastic. Those
Speaker 3: are all we have a little mini midterm election model
Speaker 3: that we built at PIMCO, and those all are statistically significant.
Speaker 3: So in addition to Texas, the data is also pointing
Speaker 3: to signs that, you know, like history, the Republicans are
Speaker 3: probably poised to lose seats in November.
Speaker 4: However, it is really early days.
Speaker 3: It's still only even though it was a very long January,
Speaker 3: it's only still nine months away, so a lot.
Speaker 4: As we can. Republicans strategers said the same thing to
Speaker 4: me last night, Amory, it's early days, you know, don't
Speaker 4: look at Texas. We have to November. We have the
Speaker 4: one big beautiful bill coming out. What the President going
Speaker 4: to be focused on before November?
Speaker 3: When I think Republicans do want show, not tell, right,
Speaker 3: President Trump wants to tell folks obviously, and this is.
Speaker 4: Sort of what Joe Biden did as well.
Speaker 3: Understandably, he's proud of the things that he's accomplished in
Speaker 3: twenty twenty five. I think Republicans on the hill, though,
Speaker 3: do you want to pivot to showing and they're hoping
Speaker 3: that these very large refunds that the househouseholds are going
Speaker 3: to be getting, the fact that withholding tables are decreased,
Speaker 3: and so big people are getting bigger paychecks. All of
Speaker 3: this will you know, sort of booy sentiment. Now what
Speaker 3: President Trump has talked about the sort of affordability agenda,
Speaker 3: and I think again Republicans want him to pivot from
Speaker 3: immigration back to the affordability agenda. Things like capping credit cards,
Speaker 3: preventing institutional investors from buying single family homes. Those things
Speaker 3: all need Congress, and I don't think we're going to
Speaker 3: see Congress do anything honestly, on the fiscal side.
Speaker 4: It's weird because Wall Street acts like some of this
Speaker 4: is done, yeah, and I think, yeah, well yeah, I'm
Speaker 4: not sure.
Speaker 3: I mean, so this is the president, you know, and
Speaker 3: might frustrate him understand them, I think, and to frustrate
Speaker 3: other presidents as well. He only has limited authority in
Speaker 3: terms of moving the needle. Right, the executive branch executes
Speaker 3: existing law. It is the Congress that creates the laws,
Speaker 3: and there is no law that gives the president authority
Speaker 3: to do either of those things. What he can do
Speaker 3: and Mary, which we've talked about before, is he can
Speaker 3: direct Fanny and Freddy to buy more agency mortgage backed securities.
Speaker 3: They have been doing that for several months. In the
Speaker 3: end of twenty twenty five. We think they will continue
Speaker 3: to lean into that. I think they read through for
Speaker 3: maybe for investors. Not only is that good for sort
Speaker 3: of mortgage spreads, mortgage rates, and potentially helping the economy
Speaker 3: at least, you know, marginally, it also does decrease the
Speaker 3: chances that the GSS go public. I think the President
Speaker 3: understands he actually would much rather control the GSCs than
Speaker 3: to issue them to the public.
Speaker 1: Well, how much more do you see them actually buying?
Speaker 5: I mean, how much can this be accelerated and become
Speaker 5: a main story, particularly at the long end of the
Speaker 5: Yeld curve.
Speaker 3: Yeah, so it it's a good question. Right now, FHIFA
Speaker 3: and Treasury have capped how much the GSS can hold
Speaker 3: on their balance sheets, to four hundred and fifty billion
Speaker 3: dollars collectively between Fanny and Freddy. Right now they have
Speaker 3: about two hundred and fifty billion as of last filing, so.
Speaker 4: They can still go up.
Speaker 3: I mean the President has directed that two hundred billion
Speaker 3: dollar gap to be filled. Now, interestingly, that four hundred
Speaker 3: and fifty billion dollars, that is not a statutory limit,
Speaker 3: I meaning the Congress doesn't have to get involved. FHFA
Speaker 3: and Treasury. FHFA, the regulator of Fanny and Freddy, can
Speaker 3: simply change that. So there's actually I think a lot
Speaker 3: of runway here. If you go back to the financial crisis,
Speaker 3: Fanny and Freddie owned up to one and a half
Speaker 3: trillion dollars of mortgages. So are they going to go
Speaker 3: back there? Probably not, but you know it is there
Speaker 3: is still more runway. And I think the question though,
Speaker 3: is on worsh in the balance you know, the FED
Speaker 3: chair nominee worsh on the balance sheet, because of course
Speaker 3: they're letting kind of mortgages run off, effectively selling mortgages,
Speaker 3: and of course the other side of the administration is
Speaker 3: buying mortgages to bring down. Right, So we'll see there's
Speaker 3: a little bit of tension there, as there always is
Speaker 3: between the fiscal policy makers and the monetary policy makers.
Speaker 3: We'll sort of see if he's asked that in his
Speaker 3: confirmation hearing.
Speaker 5: I'm really glad that we haven't talked about a government
Speaker 5: shutdown so far. Today evidently had ended and now we're fine,
Speaker 5: except that potentially not so much in about nine days,
Speaker 5: when TSA might get defunded and then we won't be
Speaker 5: able to fly. And I'm just wondering, how likely is
Speaker 5: that that TSA and the Coast Guard are going to
Speaker 5: be what gets defunded in nine days, and so that
Speaker 5: all of a sudden the airports are going to be
Speaker 5: absolutely terrific or in a terrible way in the next
Speaker 5: couple of weeks.
Speaker 3: It just bothered you, so no, no, I know, I
Speaker 3: understand obviously, this is that one of the ways that
Speaker 3: people consume government services right is through the airports. I think,
Speaker 3: happily we are not going to be talking about a
Speaker 3: macro impactful shutdown until potentially September when Congress that has
Speaker 3: to fun the FY twenty seven bill.
Speaker 4: I think that's unlikely. Though we see a shutdown.
Speaker 3: Usually folks don't like to shut down the government, right
Speaker 3: before the midterms. But you're right that this one thing
Speaker 3: that has not been funded. Funding for DHS does include TSA.
Speaker 3: There's obviously this negotiation going on around ice limitations and
Speaker 3: what have You will sort of see how that plays out.
Speaker 3: But we could see that shutdown. I think more likely, though,
Speaker 3: you might just see another cr to sort of build time.
Speaker 3: I think that you know, shutdowns, you do quite well
Speaker 3: politically on either side of the aisle, and I think
Speaker 3: both parties have a vested interest and not seeing the
Speaker 3: government shutter.
Speaker 2: Stay with us more Bloomberg surveillance coming up after this,
Speaker 2: South Korea's top diplomat meeting with Secretary of Saint Marco
Speaker 2: Rubio as the country races to avoid a tariff hike.
Speaker 2: Jean Saroka, the executive director of the Port of Los Angeles, writing,
Speaker 2: tariffs continue to keep everyone on edge. I expect more
Speaker 2: uncertainty ahead on the trade front. Jean joins us now
Speaker 2: for more. Jane, Welcome to New York. Good morning, good
Speaker 2: to see you. I'm going to see you, sir. Let's
Speaker 2: get into the numbers. Talk about tough comps. I think
Speaker 2: that's an understatement to say that you've got tough comps
Speaker 2: relative to last year?
Speaker 1: How much have things slowed down?
Speaker 6: January over eight hundred thousand container units off by a
Speaker 6: little bit more than ten percent. February looks to be
Speaker 6: about the same. We've got a mid quarter lunar New
Speaker 6: year March, we'll see a traditional drop off. If you
Speaker 6: look at Q one versus last year, we'll probably be
Speaker 6: down in double digit fashion.
Speaker 5: How much is a reflection of consumers not buying and
Speaker 5: how much this is a reflection of a lot of
Speaker 5: different industry is not wanting to import because of the.
Speaker 6: Tariffs, Lisa, Probably a combination of both. And here's why.
Speaker 6: Last year and even going back to the campaign trail,
Speaker 6: as we've discussed, you saw a lot of run ups
Speaker 6: to try to build inventories ahead of tariffs and work
Speaker 6: unit prices down. Secondly, while retailers are doing okay, holiday
Speaker 6: sales not bad, Matt Chay says, we crossed a trillion
Speaker 6: dollars according to the National Retail Federation. That's also inflation induced.
Speaker 6: So the number of units moving at the retail level
Speaker 6: a little bit lower, prices have gone up.
Speaker 5: How much has there been a complete shift in terms
Speaker 5: of where things are being sourced? That do come to
Speaker 5: the port I'm just curious if there is sort of
Speaker 5: a sense of favoring, say paces in South America over
Speaker 5: say Southeast Asia. Have you seen that shift in a
Speaker 5: material way.
Speaker 6: It's noticeable, and companies are still looking. CEOs and executives
Speaker 6: are telling me that their staff is spending a lot
Speaker 6: more time both on simulation of what would happen next,
Speaker 6: based on policy, where do I source from, how do
Speaker 6: I get contracts in place? And just trying to keep
Speaker 6: up with all this information. So for US, China was
Speaker 6: sixty percent of our portfolio back in twenty eighteen. This
Speaker 6: year it'll drop below forty percent. Yet we're still growing
Speaker 6: because we've been chasing the freight. But trying to keep
Speaker 6: your eye on what's next is going to be very interesting.
Speaker 6: Tree deal with India yesterday, maybe some possibilities there.
Speaker 4: Well, this is interesting because I didn't get a direct
Speaker 4: answer from Ambassador Career in Davos about this. The transshipment,
Speaker 4: how do you track it? Because China is still sending
Speaker 4: to the hind stage, just not directly from Beijing. There
Speaker 4: is a middle sting.
Speaker 1: Yeah, yeah, a couple things.
Speaker 6: Traditionally, supply chains at Asia were country to country, so
Speaker 6: the buttons and plackets on a shirt made in China.
Speaker 6: Go down to Vietnam, you make the whole shirt, sell
Speaker 6: it to Macy's here on thirty fourth Street. Some bad
Speaker 6: actors out there are trying to circumvent tariffs go lower
Speaker 6: cost countries by transhipping. But China has announced in the
Speaker 6: fifteenth five year Plan is not only exporting goods, they're
Speaker 6: now manufacturing expertise exporters as well, so they're investing in
Speaker 6: plants along the Pacific Rim and other locations around the world.
Speaker 4: Do you think this administration will go after that?
Speaker 1: Yeah? Probably so.
Speaker 4: How challenging is that it's.
Speaker 6: Really challenging because it's tough to get hard data on
Speaker 6: where this supply chain starts and who's funding it and
Speaker 6: who's funding it.
Speaker 2: We've told lots with you about how much improved systems
Speaker 2: and processing through the pandemic. How much have things slowed
Speaker 2: down because of the tariffs. Can you give us an
Speaker 2: idea of what that looks like now relative to where
Speaker 2: it was the year before.
Speaker 6: Well historically, compared to the numbers of containers we're moving
Speaker 6: right now, we look pretty decent, but it's been super
Speaker 6: choppy from COVID to a little bit of downturn based
Speaker 6: on high inventories and then all this tariff build up.
Speaker 6: It just looks different. But last year was our third
Speaker 6: busiest on record in one hundred and eighteen years and
Speaker 6: we didn't have one ship backed up. We're doing things
Speaker 6: a little bit smarter, working together and information technology please
Speaker 6: a huge role here, John.
Speaker 2: That's super impressive. We can still see in the data though,
Speaker 2: that are still problems. ICM Manufacturing came out in the
Speaker 2: last couple of days and if you go through the
Speaker 2: commentary Gene and thew ME. Just to go through the
Speaker 2: commentary here trade TARFF uncertainty is creating volatility in the
Speaker 2: supply chain. It's making long term planning point list. This
Speaker 2: comes from a range of industries within manufacturing that continues
Speaker 2: to be uncertainty and added costs through our global operations
Speaker 2: at LEASTA. Just going through the details, it was a
Speaker 2: great number, by the way, decent print, But you go
Speaker 2: through the details and the commentary coming from various industries,
Speaker 2: it's not good.
Speaker 1: It's not good reading at all.
Speaker 4: Well.
Speaker 5: It creates this level of uncertainty and when you talk
Speaker 5: to different CEOs, they say, we didn't price in a
Speaker 5: lot of the tariffs last year because we had inventories
Speaker 5: that we were pushing through. We don't have those inventories anymore,
Speaker 5: so now we have to pass along the price increases
Speaker 5: and how can they do that at a time where
Speaker 5: the consumer is looking for value?
Speaker 2: So last year we talked about this concept, this phrase
Speaker 2: that Gym's out from Polo mentioned, and it was macro
Speaker 2: paralysis that for a lot of companies that were just
Speaker 2: sat still, they couldn't make decisions, didn't know what to do.
Speaker 1: Do you see any of that? I do. Yeah.
Speaker 6: We talked some time ago about people hitting the pause
Speaker 6: button and their finger is still on it. Hiring is flat,
Speaker 6: new jobs non existent, and realistically speaking, companies are not
Speaker 6: looking at longer term horizons for planning purposes. And capital
Speaker 6: investment also very soft.
Speaker 4: Then how do you plan for that?
Speaker 6: We have to invest through budget cycles, economic cycles, and
Speaker 6: even election cycles. We've got about ten billion dollars worth
Speaker 6: of projects on the capital side right now. New terminals
Speaker 6: for the first time in a generation. We need a
Speaker 6: new bridge crossing onto Terminal Island and outlining more rail
Speaker 6: capacity as well as road connectors to keep this cargo flowing.
Speaker 6: We'll see this, there'll be ups and downs, but long
Speaker 6: term growth will take place.
Speaker 5: If companies don't have inventory anymore and they don't want
Speaker 5: to build too much in victory because they don't know
Speaker 5: how things are going to change. How much are people
Speaker 5: looking for much faster shipments and smaller shipments each time.
Speaker 6: That's exactly what's focusing right now and what we saw
Speaker 6: last year when the trade policy was softened and tariffs
Speaker 6: came down during negotiations, importers had windows of opportunity to
Speaker 6: get their cargo here and the fastest way was through
Speaker 6: the Southern California Gateway. So while overall imports were down
Speaker 6: in the country, we were up simply because of that
Speaker 6: certainty and the fast pace that we gd a cargo
Speaker 6: from Asia into the country.
Speaker 2: Stay with us Mulplenberg. Savannan's coming up after this downside
Speaker 2: surprise twenty two K. They expected number and US to
Speaker 2: have a forty five thousand with us around the table.
Speaker 2: James Echohoff of BNP parent bunch, James, good to see you.
Speaker 1: Great to be backing.
Speaker 2: We've seen some signs not here but elsewhether the labor
Speaker 2: market was firming up a bit coming against the new year.
Speaker 2: Would you put more way on that than this look.
Speaker 7: We think the economy is at a great place this year,
Speaker 7: but we're very optimistic about the.
Speaker 1: Outlook with that.
Speaker 7: We're looking for very strong growth that's driven by stimulative
Speaker 7: fiscal policy, stimulative monetary policy, stimulative markets, and the early
Speaker 7: signs of AI beginning to impact the economy.
Speaker 1: We think there's a likelihood that some of that is.
Speaker 7: Going to slash into the labor market, and it's support well,
Speaker 7: we think has already been a pretty bersilient.
Speaker 2: You've got an accounts for twenty six absolutely just explain
Speaker 2: that for us.
Speaker 1: We think the Fed is.
Speaker 7: Going to react to the data, that it's going to
Speaker 7: follow the economic outlook and its standard policy framework, regardless
Speaker 7: of who leads it or for the course of the year.
Speaker 7: So we think that Powell, I think is delivered the
Speaker 7: easing he wants to deliver. We had earlier thought there
Speaker 7: might be room for one last one, but the data
Speaker 7: is just held up just so well.
Speaker 1: That we've recently taken that out.
Speaker 7: Beyond that, we think the data will tell the story,
Speaker 7: and that the story of a strong economy and with
Speaker 7: a stable labor market and with inflation that's a bit
Speaker 7: higher than what then we think the.
Speaker 5: FED is looking for Well, we're not going to get
Speaker 5: the data on Friday, so we're not going to have
Speaker 5: the data that actually proves that out. Yet, the data
Speaker 5: that we are getting, this ADP number of twenty two thousand,
Speaker 5: I mean.
Speaker 1: It's pretty low.
Speaker 5: Well, how do you look at this and explain to
Speaker 5: people this is actually very good.
Speaker 7: Well, this is the debate at the FED, and we
Speaker 7: saw your Governor Waller dissent saying, look, zero job's growth
Speaker 7: of a las year after we see expected revisions in
Speaker 7: his estimation, that that's not a healthy labor market. And
Speaker 7: you have others, including Shairpal saying, look, immigration policy has
Speaker 7: changed a lot. There are a lot fewer people coming
Speaker 7: to the country, a lot of people have left.
Speaker 1: This may well be a full employment pace of job gains.
Speaker 7: So our view is that the pace we'll see over
Speaker 7: the coming year is something on the lines of fifty k.
Speaker 7: So this is a little bit low the one that
Speaker 7: we just off from ADP, but that ultimately is the
Speaker 7: pace that can ourgue close to that pace that maintains
Speaker 7: the labor market at this current level of unemployment.
Speaker 5: One of the reasons why a number of people have
Speaker 5: priced in at least two rate cuts for this year
Speaker 5: is not because I think the economy is going to
Speaker 5: fall off a cliff, but because they believe that any
Speaker 5: kind of growth is going to come with disinflation. We
Speaker 5: saw PEPSI, for example, cutting prices by ten to fifteen
Speaker 5: percent in response to some of their efficiencies to try
Speaker 5: to increase their customer volume.
Speaker 1: How much do you see this as.
Speaker 5: Likely a good backdrop for the FED to be cutting
Speaker 5: because if you don't see any cuts, you don't buy
Speaker 5: that disinflation story. Is that right?
Speaker 7: Our view is that the AI boom is coming and
Speaker 7: we're going to see a boost in productivity, but that
Speaker 7: will also come with it a cyclical boom as well,
Speaker 7: And part of that is because of the neutral rate
Speaker 7: of rising over time, and part of that is because
Speaker 7: of the existing level of stimulus that we're seeing from
Speaker 7: fiscal monetary policy and from financial markets. So in addition
Speaker 7: to seeing the boost, the disinflationary boost to growth that
Speaker 7: you're referm to, we'll see a cyclical boost as well.
Speaker 7: This is a similar story to the nineties, where the
Speaker 7: green Span is widely heralded for not hiking during that period.
Speaker 1: It wasn't that he cut into that. It was that
Speaker 1: he delayed hikes to allow.
Speaker 7: The productivity boom to play out, and we think that
Speaker 7: that's a likely prospect ahead. Is that the federal standpad
Speaker 7: while it sees strong growth and while it sees some
Speaker 7: residual inflation pressure.
Speaker 4: Well, you seeing the AI boom and productivity being inflationary
Speaker 4: or disinflationary.
Speaker 7: See productivity on its own being disinflationary. But it will
Speaker 7: come with more So we'll see some growth from AI
Speaker 7: and then we'll see even more growth. We think we're
Speaker 7: set up for a very strong year of growth and
Speaker 7: that that will come with it labor market strength and
Speaker 7: with a bit more inflation.
Speaker 4: When it comes to the AI build out, data centers, etc.
Speaker 4: That is, to do you think inflationary electricity needed the
Speaker 4: cost of building.
Speaker 7: We think it's a moderate impact on the inflationary outlook.
Speaker 7: Tech capex as a contribution to GDP isn't historically that high.
Speaker 7: It just become a bit more concentrated. So we think
Speaker 7: that that's ultimately a fairly modest impact on our growth
Speaker 7: in our inflation forecast. What we think is mattered more
Speaker 7: has been the overall booming business sentiment that has come
Speaker 7: from AI. We saw eism earlier this week as a blowout.
Speaker 7: We think that part of that is optimism from AI.
Speaker 7: It's filtering through to the rest of the economy and
Speaker 7: supporting activity that has a sick look proportent to it,
Speaker 7: and we think that will help drive growth, help drive
Speaker 7: labor market.
Speaker 2: This I'm a trained by the rate on Kevin Wosh,
Speaker 2: so let's develop that a little bit more.
Speaker 1: Governor Myron sent this this week.
Speaker 2: I'm probably looking for a little bit more than a
Speaker 2: point of interest rate counts over the course of the year.
Speaker 2: Why would chair Wash be that much different to Governor Myron.
Speaker 7: So when I think about this, I often go back
Speaker 7: to James Carvel's comment from the nineties when he's reincarnated,
Speaker 7: he wants to come back as the bond market because
Speaker 7: he can intimidate everybody. Ultimately, we think FED chairs face
Speaker 7: fairly strong incentives to deliver pro growth, pro market outcomes.
Speaker 7: Kevin Warsh is well known for being a very well
Speaker 7: networked person among financial circles, and we think he will
Speaker 7: follow the same asset price signals as as our FRED
Speaker 7: chairs do and that will leave him, in our view,
Speaker 7: following a fairly standard reaction function. We think he will
Speaker 7: want to do that because that is what achieves the
Speaker 7: best economic result, and we think he will face pressure
Speaker 7: from the rest of the poblacy to do that as well.
Speaker 2: At least it's not convinced. I can just say on
Speaker 2: the ConA my eye, the Palmi wasn't convinced.
Speaker 5: Well, No, I just think that if he talks to
Speaker 5: people in the market, there are a lot of people
Speaker 5: who actually agree with the FED potentially cutting rates at
Speaker 5: least two times. I mean, the Wall Street isn't exactly
Speaker 5: unified in what they think, and more people come on
Speaker 5: the show thinks the FED should cut rights a couple
Speaker 5: more times this year than not. So I guess that
Speaker 5: that's the skepticism that I have.
Speaker 1: Look, we're not hawked, we're bullish.
Speaker 7: So we think the economy is going to be that
Speaker 7: very very well this year.
Speaker 1: Well, I just got to tell you our forecast.
Speaker 7: So look, we think the economy is just going to
Speaker 7: do a bit better. We think the people have been
Speaker 7: really reluctant to give this economy credit for how strong
Speaker 7: it is, for how strong the cyclical impulse is. The
Speaker 7: FED is pulling teeth sometimes, but they've upgraded their forecast
Speaker 7: of growth to solid. We think that growth is going
Speaker 7: to be strong this year and that's going to have implication.
Speaker 1: For the rate helple.
Speaker 5: So you don't buy though that growth can be disinflationary,
Speaker 5: that you that you can run stronger but not hotter. Right,
Speaker 5: So you basically are rejecting that idea. Where is that
Speaker 5: inflation going to come from if it's not coming from
Speaker 5: housing and it's not coming from lazed potato chips.
Speaker 7: Look, it's Look, you can have disinflation or growth. We
Speaker 7: just don't think we're going to. We think the economy
Speaker 7: is going to do so well that it's going to
Speaker 7: sustain inflation. We think there's a bit more to run
Speaker 7: on tariff pass through. We think that's not quite done.
Speaker 7: We think we've got another year of that at least,
Speaker 7: and we think that the services market is going to
Speaker 7: hold up well. And the data we'll see today from
Speaker 7: is some services will be people tell us some of
Speaker 7: that story gain in the absence many out of data.
Speaker 7: This week, we're above consensus for that print. We were
Speaker 7: both consensus for US and manufacturing, which they noted was
Speaker 7: a blowout.
Speaker 1: So we're looking for another strong.
Speaker 7: Print there and I think as we see the data
Speaker 7: over the coming months, we will get the sense for
Speaker 7: how well the economy is performing and the implication that
Speaker 7: has for a modest uptick in inflation.
Speaker 4: James, I'm also skeptical of Worsh not delivering any cuts,
Speaker 4: and not just because to Lisa's point, everyone comes on
Speaker 4: here and says, at least maybe two we're going to
Speaker 4: get this year. How did you get the job? How
Speaker 4: did he convine Trump to put him in that seat
Speaker 4: If he's not going to deliver at least minimum one
Speaker 4: cut this year.
Speaker 7: Well, we think that the important thing here is the
Speaker 7: relationship with the White House. That Kevin Walsh has a
Speaker 7: longstanding personal, family, professional relationship with President Trump, and we
Speaker 7: think that will be helpful to him in the seat
Speaker 7: in establishing a more normal relationship between the Fed and
Speaker 7: the White House. What we've seen over the past year
Speaker 7: is not sustainable, it's not consistent with FED independence. That
Speaker 7: Kevin Worsh turns a new page and should, in our view,
Speaker 7: be able to run monetary policy with greater independence because
Speaker 7: you will have that trust with the White House. We
Speaker 7: think he will start the conversation with the balance sheet
Speaker 7: and talking about how over time to reduce the balance
Speaker 7: sheet that says where he's made his name over the
Speaker 7: past few years.
Speaker 1: We think there's a deal to be made at the FED.
Speaker 7: I'm reducing the balance sheet over time, and the watch
Speaker 7: word for us, whether Kevin Warish refers to the words
Speaker 7: gradual and predictable. Ultimately we think the market would tolerate
Speaker 7: is smaller FED balance sheets, so long as it's not
Speaker 7: a surprise and it comes a.
Speaker 1: Well communicated way.
Speaker 7: The market is much less excited about big, big shocks,
Speaker 7: and so a big taper tantrum we think would be
Speaker 7: risk off. But a gradual and predictable transition of the
Speaker 7: FED regime to a smaller ballo sheet we think would
Speaker 7: be well taken.
Speaker 2: That sound the interpretation of a lot of people and
Speaker 2: precious meadows gone into the weekend after that announcement.
Speaker 1: Just quickly, what should GENP number for this year? We're
Speaker 1: in the mid two.
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