Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily 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 Longer going far Away.
Speaker 1: And Bill Dudley has been on fire recently as a
Speaker 1: former president of New York FED. There was Dudley uh
Speaker 1: and McKelvey at Goldben Sacks and had this guy out
Speaker 1: of Germany via Wisconsin, Madison and Oxford and I was like, uh, okay,
Speaker 1: and then he stopped the US market economy world with
Speaker 1: mortgage equity withdrawal. That's how he first came to my attention.
Speaker 1: Yea Nazis has gone on to Acclaim at Golden Sex,
Speaker 1: not only running economics but providing a view over investment
Speaker 1: research for the Acclaimed firm. And we're thrilled he could
Speaker 1: join us today in our studios. Yeah, and I want
Speaker 1: to go right to the time continuum OM investors really
Speaker 1: looking this is well. The X axis out for any
Speaker 1: FED chairman is always a challenge. What's the challenge for
Speaker 1: Chairman Powell right now is he looks out to two
Speaker 1: thousand twenty three. Well, I think there is a number
Speaker 1: of decisions that have to be made before that. When
Speaker 1: do they start to tap our QUEI they've said that
Speaker 1: they are not going to high grates until that process
Speaker 1: has has concluded or that is strongly implied it And
Speaker 1: that's also going to then determine what do you think
Speaker 1: when rates are going to start start rising at the moment,
Speaker 1: as you know, the dot plot is basically saying no
Speaker 1: hikes until the end of two thousand twenty three. But
Speaker 1: that's going to be on the table today and I
Speaker 1: think it's a close call. It's all the best guesses
Speaker 1: that they stick with what they said, with the message
Speaker 1: they're sending, but it could move forward. There's your b
Speaker 1: exlusive banner, folks, HOTSI has predicts boring meeting. Okay, forget
Speaker 1: about that. It's Latin, it's ex anti, it's ex post.
Speaker 1: After the fact, I'm Matt Besler with a really important question.
Speaker 1: Maybe he'll be in the press conference as well. Matt
Speaker 1: Bosler making very very clear that this is about the
Speaker 1: present base effect analysis versus the truly ex post inflation
Speaker 1: expectation game, which is it is this analysis of base
Speaker 1: effect dynamics or is it truly traditional FED analysis of
Speaker 1: inflation expectations? You mean, what what happens into the mystery
Speaker 1: of how we get out there to this in this
Speaker 1: new theory. I think that's going to be driven more
Speaker 1: by what you think about how type the labor market is,
Speaker 1: and really the traditional stuff, the neo charm. Inflation increases
Speaker 1: partly base effect, it's partly reopening effects, and of course
Speaker 1: it's these bottlenecks, which which which which Michael just talked about. Yeah,
Speaker 1: and before we get into just the granularity of inflation,
Speaker 1: I want to understand the granularity of tapering. People talk
Speaker 1: about it as though it's a monolith, and yet is it,
Speaker 1: as Michael Collins said, the FED getting to zero, getting
Speaker 1: to no bond purchases at all before they hike rates.
Speaker 1: That's our assumption. I mean, they haven't said that explicitly,
Speaker 1: but I would guess that they're going to get to
Speaker 1: zero and then there will be some time that will
Speaker 1: elapse before they start moving rates higher. And obviously that's
Speaker 1: going to depend on the data, but I would be
Speaker 1: surprised or not. Maybe shocked, but surprised if they were
Speaker 1: still planning to buy say twenty or forty billion dollars
Speaker 1: per month in perpetuity. It's not our expectations. So yeah,
Speaker 1: I guess I'm kind of struggling with the idea that
Speaker 1: they're buying the Federal Service buying more than a trillion
Speaker 1: dollars a year in its base case for continuing a
Speaker 1: monetary accommodation as it currently is laid out, it's it's
Speaker 1: balance she currently almost eight trillion dollars. It removes this accommodation.
Speaker 1: Do you really see that it's feasible for it to
Speaker 1: do so without disrupting financial markets in a way that
Speaker 1: stymies its effort to ever raise rates. I think there
Speaker 1: could certainly be some hiccups, especially if you're also seeing
Speaker 1: a slowdown in growth next year that's driven by the
Speaker 1: removal of some of the fiscal support. I do think
Speaker 1: that two thousand twenty two is going to be substantially
Speaker 1: slower on a fourth quarter to fourth quarter basis. We
Speaker 1: think basically two and a half percent after a real
Speaker 1: banner year of you know, seven point seven percent Q
Speaker 1: four to Q four in two thousand and twenty one,
Speaker 1: and So if that interacts with an environment in which
Speaker 1: the FED is is tapering bond purchases, you know, I
Speaker 1: think that could result in a in a growth scare. Yes,
Speaker 1: I do think we probably are going to have some
Speaker 1: nervousness in that environment. Well, let's talk a little bit
Speaker 1: more about some of the fiscal policies here, yeh, Because
Speaker 1: I mean, obviously there's a multi chillion dollar propos z
Speaker 1: all down at Washington sitting on someone's desk. It may
Speaker 1: not go anywhere, or it may end up being a
Speaker 1: lot smaller than, of course what the President proposed. But
Speaker 1: I'm wondering how much of that has to factor in
Speaker 1: right now to the glide path at the FIT is
Speaker 1: trying to chart out here. So I think the baseline
Speaker 1: should be that something gets past, maybe not the whole thing,
Speaker 1: but something large in terms of the headline number. But
Speaker 1: I think the key point is that this is a
Speaker 1: very different type of spending program relative to the American
Speaker 1: Rescue Plan Act that was very front loaded one point
Speaker 1: nine trillion dollars basically over a year or a little
Speaker 1: over a year, whereas this, uh, this this plan is
Speaker 1: going to be over ten years or whatever number you see.
Speaker 1: You have to divide them by ten and that's still
Speaker 1: going to me in a significant amount of fiscal drag
Speaker 1: in two thousand and twenty two. Right, that's a great point.
Speaker 1: It also means, of course, there's still got to be
Speaker 1: some additional treasury issuance. It does mean, of course there's
Speaker 1: a potential here for changes in tax policy as well.
Speaker 1: Yeahn how do you factor that in? I think that
Speaker 1: strengthens that point that it's not going to be as
Speaker 1: stimulative because, as you say, a significant part of the
Speaker 1: spending increase is going to be offset by tax increases.
Speaker 1: And you know, I think it would be somewhat simulative,
Speaker 1: but you know, much less so than the than the
Speaker 1: headline number, both because of the tenure horizon and because
Speaker 1: of the tax increases. I'm Bloomberg Radio and Bloomberg Television worldwide.
Speaker 1: Yeh us with us with Golden sex Or, chief economist
Speaker 1: and head of investment Research on this day before an
Speaker 1: important FED meeting. Young. Your your statistics there on the
Speaker 1: slowing of the American economy under three percent is really
Speaker 1: really important. I would suggest a huge body of Americans
Speaker 1: are not prepared for that. If we slow from a
Speaker 1: boom to a hot CEUs under three economy. We've never
Speaker 1: done that before. I mean, you and I remember the
Speaker 1: we've studied the fifties yearly fifties deflation. Do you anticipate
Speaker 1: such a shock there in GDP dynamics that we could
Speaker 1: get to a deflationary dynamic that Eisenhower new? I don't
Speaker 1: view it so negatively. I mean the right now, we're
Speaker 1: still a long ways away from full employment. There's still
Speaker 1: a lot of slack in the in the labor market.
Speaker 1: Despite the near term labor supply issues and strong growth
Speaker 1: this year is going to get to get us to
Speaker 1: something like full employment by two thousand and twenty two.
Speaker 1: At that point, you want to see slower growth because
Speaker 1: otherwise the economy is going to overheat. You do have
Speaker 1: to worry a lot more about persistent inflation, and ultimately
Speaker 1: that's not going to be a good environment. So I
Speaker 1: think you'll need to see a slowdown. I don't worry
Speaker 1: about deflation, but at the same time, I think the
Speaker 1: current inflation is probably largely transfer so much as a
Speaker 1: new economy in the overlay of technology on it. We
Speaker 1: partition it into goods dynamics inflation and service dynamic inflation.
Speaker 1: Parts the difference now is we look at a service
Speaker 1: sector dominant and goods producing as well, those inflation dynamics
Speaker 1: for our inflation expectations. Well, I think the surprise in
Speaker 1: two thousand and twenty one really has been on the
Speaker 1: good side. The acceleration and COVID sensitive sectors, that was
Speaker 1: very much expected. The base effects were very much expected.
Speaker 1: I think six months ago most economists would have been
Speaker 1: really surprised with the enormous surge in used car prices
Speaker 1: and other other durable goods like that, and that's really
Speaker 1: been been the key driver. They are outliers relative to
Speaker 1: the overall distribution of prices. Core PC is above three percent,
Speaker 1: probably will be above three percent for most of the
Speaker 1: rest of the year. But the if you if you
Speaker 1: look at trim mean measures or median measures that really
Speaker 1: capture more the distribution of prices, those are still pretty
Speaker 1: well behaved. So to me, that that screams uh, screams transitory.
Speaker 1: What about wages? That way just have been going up
Speaker 1: in particular sectors that have been more in demand, especially
Speaker 1: with the reopening husticky is that well, I think we've
Speaker 1: seen wage increases, especially at the bottom end of the
Speaker 1: pay scale leisure and hospitality in particular. I think the
Speaker 1: evidence suggests that the remaining COVID effects around fear of
Speaker 1: the pandemic, and maybe it's some childcare issues, but also
Speaker 1: the three dollar unemployment top up have weighed on labor supply.
Speaker 1: That's going to be true probably for a few months longer,
Speaker 1: but in the fall, I think we'll see a big
Speaker 1: increase in labor supply, and I think that's also probably
Speaker 1: going to lead to reduced wage increases in some of
Speaker 1: these sectors. Jhanna, we've got a headline at the FENS. J.
Speaker 1: Powell is planning to discuss the pandemic emergency lending program
Speaker 1: as well as the economic recovery at a House hearing
Speaker 1: on June twenty two. I am wondering about how concerned
Speaker 1: you are about the increasingly political nature of the Federal Reserve,
Speaker 1: not saying that they are political, but that they're getting
Speaker 1: increasing pressure to be political to finance the US debt
Speaker 1: and deficit, especially as the US plans to increase its
Speaker 1: deficit by so much. I think the there's always been
Speaker 1: political pressure and Congress congressional oversight, and you know, obviously
Speaker 1: jaw boning of Fed officials. I mean, if you go
Speaker 1: back to President Trump, there was a lot more overt
Speaker 1: pressure on the FED than than what we're seeing now.
Speaker 1: I think now we're more in a more normal historical
Speaker 1: environment where there was always, you know, always hearings like
Speaker 1: this and strong opinions expressed. But in the end, I
Speaker 1: think the FED is committed to the to the mandate,
Speaker 1: and the mandate obviously looks somewhat different now after the
Speaker 1: after the changes of last summer, but I don't think
Speaker 1: it's a dramatically different from where we've been over the
Speaker 1: long term. Well, but at least his point as well, though,
Speaker 1: it's sort of the shift in that mandate, or at
Speaker 1: least the tweaking of it, does sort of open the
Speaker 1: door for greater criticism here. As much as a fit
Speaker 1: will will, of course try to remain independent and preserve
Speaker 1: the perceptions of independence here, does the political landscape shift
Speaker 1: enough here, Yan or maybe that undermines some of the messaging. Look,
Speaker 1: I think the way that the mandate is being interpreted
Speaker 1: looks a little different. I think for for good reasons,
Speaker 1: it does make sense to try to average two percent.
Speaker 1: I don't think one point seven percent, which was the
Speaker 1: average before, is drammatically different from from two percent, So
Speaker 1: I don't think it's a it's a massive shift. But
Speaker 1: I do think that the changes that took place last
Speaker 1: summer at Jackson Hole, you know, do make sense. Is
Speaker 1: that going to be something that will you know, maybe
Speaker 1: raise more more questions, uh, and including questions from from
Speaker 1: policymakers on and electric officials. Probably, But I do think
Speaker 1: the the mandate is reasonably clear and we, you know,
Speaker 1: should over time find out more about exactly how it
Speaker 1: gets interpreted. NAIs, thank you for joining us today, greatly
Speaker 1: appreciate it. With Golden sex, very generous conversation here right now.
Speaker 1: We are absolutely honored to bring it from the Cannon Institute,
Speaker 1: their deputy director, William Palmerans in the United States of America.
Speaker 1: He is truly our expert on law in Russia, truly
Speaker 1: going back to Peter the Great in his important book
Speaker 1: of a few years ago. Professor Palmerence, thank you so
Speaker 1: much for joining us today. If you were to write
Speaker 1: a long telegram from Geneva today about this summit, what
Speaker 1: would you say or is there not enough to say?
Speaker 1: So it would be a Pomerans short telegram. I think
Speaker 1: it would be a very short telegram because we still
Speaker 1: need to see what actually the two leaders agree upon.
Speaker 1: We don't have any preliminary agreements, we have any preliminary agenda.
Speaker 1: So I think a lot will depend on the communication
Speaker 1: between the two leaders and what comes out of this meeting. UH.
Speaker 1: It is much heightened. It is recognized that the relations
Speaker 1: between the United States and Russia are at a low
Speaker 1: ebb um. But this is not the Cold War. I
Speaker 1: don't anticipate Mr Putin arriving like Mr Gobatrov and UH
Speaker 1: aving a surprise. I think it will be a business like,
Speaker 1: work in like meeting. UH. They'll agree to disagree on
Speaker 1: a lot of things, and they'll try to see where
Speaker 1: they can cooperate. Professor Primary, it's very importantly here and
Speaker 1: I think of the Soviet Union. How much of the
Speaker 1: Soviet Union tone or diplomacy is represented by Mr Putin
Speaker 1: or is Russia completely moved on from the legacy that
Speaker 1: you're expert in. I think that the deemer Putin does
Speaker 1: have certain Soviet tendencies. UH. In terms of international relations.
Speaker 1: He is not interested in joining the global order as
Speaker 1: it were. UH. He is interested in sovereignty and Russia's
Speaker 1: ability to x to UH, to a certain sovereignty in
Speaker 1: domestically and overseas. So I think that this is really
Speaker 1: the important aspect of Putin's foreign policy. UH. It's not
Speaker 1: overly ideological. UH. It is just to make sure that
Speaker 1: Russia is respected and has its sphere of influence. And
Speaker 1: this is not only a Soviet tendency. This goes back
Speaker 1: hundreds of years. William. Before this summit, a President Biden
Speaker 1: met with the allies and asked for their input about
Speaker 1: how to handle this meeting. I'm wondering how much is
Speaker 1: Biden talking to Vladimir Putin and how much is he
Speaker 1: talking to the allies in terms of supporting how they
Speaker 1: want their relationship with Russia to develop. I think coming
Speaker 1: out of the EU and the NATO summit, we have
Speaker 1: seen a resurgence in the role of the United States
Speaker 1: of the global leader, and its ability to talk and
Speaker 1: communicate with its allies. So I think that going into
Speaker 1: this UH the summit, UH, President Biden has listened to
Speaker 1: his allies. There were some important achievements UH out of
Speaker 1: the EU and NATO summits, both in terms of dealing
Speaker 1: with China and with dealing with Russia. And I think
Speaker 1: that one of the real victories forged Joseph Biden happened
Speaker 1: before the summit with Putin, and that is that he
Speaker 1: reasserted global leadership and reasserted the relationship and with with
Speaker 1: with our traditional allies. William we are expecting President Biden
Speaker 1: to arrive at this summit any minute, his motorcade on
Speaker 1: the way. There is a question though President Biden is
Speaker 1: toggling between a harder stance that domesticly is politically popular
Speaker 1: and then internationally is much more delicate. Given some of
Speaker 1: the trade relationships between Europe and Russia, and given the
Speaker 1: geographic proximity of those regions. How is President Biden toggling this?
Speaker 1: How much has the European view and frankly the US
Speaker 1: domestic political vision of Russia having a hardening line diverging
Speaker 1: at this point? I think leading up to the summit UH,
Speaker 1: President Biden has uh given Europe a tremendous victory in
Speaker 1: the sense that we have the United States is not
Speaker 1: going to sanction the owners of the North Stream to
Speaker 1: pipeline and that that is now going to most likely
Speaker 1: be completed. So in terms of listening to the United
Speaker 1: States and the European allies, I think President Biden has said,
Speaker 1: has demonstrated that he wants this relationship ship with our
Speaker 1: European allies, and he has decided that that is acceptable,
Speaker 1: even to the point of not fulfilling Congresses wishes to
Speaker 1: sanction owners of the North Stream two pipeline. So I
Speaker 1: think listening to European leaders, I think that they're trying
Speaker 1: to present the United Front. It's always difficult to unify
Speaker 1: Europe on foreign policy issues, but I think President Biden
Speaker 1: went a long way to healing the riffs that occurred
Speaker 1: during the Trump administration. Absolutely, And of course William though,
Speaker 1: I mean, we've been here before. We're actually watching on
Speaker 1: screen right now. I believe that is the motorcada of
Speaker 1: President Biden working its way through Geneva here, Uh Biden
Speaker 1: of Coors going into this meeting. But of course we've
Speaker 1: been here before, here with Trump, with Obama, with Bush.
Speaker 1: There's been a lot of attempts to sort of restart
Speaker 1: re kick off the relationship between the US and Russia. Here,
Speaker 1: is there any reason why outside observers looking at this
Speaker 1: should be more hopeful that this time around the outcome
Speaker 1: going to be different. In one word, now, um, I
Speaker 1: think President Putin has decided to go it alone in
Speaker 1: terms of international um for policy and geopolitical objectives. UH.
Speaker 1: So I think that there is not going to be
Speaker 1: a reset or anything like that. And Biden has asserted
Speaker 1: that he's not looking for a reset. UH. We are
Speaker 1: looking for ways to which to tone down the rhetoric.
Speaker 1: We are trying to identify areas where we can cooperate,
Speaker 1: which sounds like the reset. But I don't think his
Speaker 1: ambitious as a reset. I don't think that President Putin
Speaker 1: UH is going to change his political stripes and his
Speaker 1: geo political goals. UH. He has a go at alone strategy.
Speaker 1: He and he has asserted that both politically, geopolitically and UH.
Speaker 1: He has introduced various policies such as import substitution UH
Speaker 1: say acians UH, counter sanctions on food, on food, et cetera.
Speaker 1: That suggests that he's not interested in becoming part of
Speaker 1: the international global order. That Russia really believes that it
Speaker 1: needs to go it alone, and that is UM. That
Speaker 1: is the policy of the demur Putin. Well, let me
Speaker 1: reset here. Mr Palmeranson will come back to you in
Speaker 1: a moment. On radio and television. We we sat this morning.
Speaker 1: We welcome all of you worldwide and across this nation.
Speaker 1: William Palmerance with us with the Kennon Institute, their deputy director,
Speaker 1: absolutely honored that he could give us perspective here this
Speaker 1: morning on television the nineteenth century actually eighteenth century building,
Speaker 1: Villa Lagrange, where Mr Putin awaits the arrival of the
Speaker 1: President of the United States and rude. My major observation
Speaker 1: is the US motorcave was maybe going at a faster
Speaker 1: speed than the Russian motorc Yeah, Professor palmerans, Um, I
Speaker 1: think very important. Only here is what we've observed over
Speaker 1: the last number of days and many John Muirscheimer, Chicago.
Speaker 1: Richard has at the Council on Foreign Relations suggesting a
Speaker 1: NATO overreach. Did NATO reset in the last number of
Speaker 1: days their overreach of adding countries over the recent end
Speaker 1: of Cold War years? Was there a reset Tornato which
Speaker 1: could be in discussion today? Um, I don't think there's
Speaker 1: a reset to NATO. Obviously there is the addition in
Speaker 1: the communication of dealing with China, although there isn't really
Speaker 1: overwhelming agreement on how that should be done. So I
Speaker 1: don't think that we've had overreach uh in NATO. The
Speaker 1: second important reason why I don't think we have overreach
Speaker 1: is that President Biden yesterday issued a very strong statement
Speaker 1: that NATO is not going to have Ukraine joined it
Speaker 1: anytime soon. That Ukraine has to deal with it's domestic policies,
Speaker 1: it has to deal with corruption before it gets an
Speaker 1: action plan before it becomes a part of NATO, and
Speaker 1: that is an important objective of the deemer Putin. Putin
Speaker 1: does not want Ukraine to become a member of NATO.
Speaker 1: Uh and it appears now that Ukraine won't anytime soon
Speaker 1: become a member. So I don't see overreach. I see
Speaker 1: trying to deal with a post Cold War world. We're
Speaker 1: trying to play a bigger role. But I don't see
Speaker 1: that we're over that NATO is overreaching, And I think
Speaker 1: the best evidence of that is that it's going very
Speaker 1: slow in terms of inviting Ukraine to become a member.
Speaker 1: President Biden pulling up to Villa Grange and waiting here
Speaker 1: the Swiss authorities of waiting to greet the President of
Speaker 1: the United States, and I believe in side Mr Putin,
Speaker 1: and we'll get an image of the two leaders here
Speaker 1: in a number of minutes. William Pomer It's just so
Speaker 1: importantly to any of us is this word that the
Speaker 1: President of the United States you his autocrat. When we
Speaker 1: see that within the media, when we see that within
Speaker 1: international relations, how do you define the autocrat that Joseph
Speaker 1: Biden sees. I think that when we talk about an autocrat,
Speaker 1: and especially in the Russian sense, we deal with a
Speaker 1: leader who doesn't have to address uh domestic politics as
Speaker 1: a word, that Putin's word is the final word. Now,
Speaker 1: he has different issues that he has to deal with,
Speaker 1: but he doesn't have a legislature that is opposed to him.
Speaker 1: He doesn't have a judiciary that overrules him. Indeed, in
Speaker 1: the aftermath of all the constitutional amendments, this Putin has
Speaker 1: solidified his power. So when we talk about an autocrat,
Speaker 1: it's someone who doesn't have to really deal with the
Speaker 1: vicstitudes of politics. Power is is always in the hands
Speaker 1: of the autocrat, and in Russia's case, uh Putin's degrees,
Speaker 1: Putin's word can become law. So this is obviously very
Speaker 1: different from the American system of checks and balances and
Speaker 1: and separation of powers. But this is what the advantage
Speaker 1: of ladieber Putin is. He doesn't have to address Congress Uh,
Speaker 1: he doesn't have to address other consistencies. His word becomes law.
Speaker 1: William palmerans thank you this morning for joining us with
Speaker 1: the Kennon Institute. Just a spectacular brief there on this
Speaker 1: moment for Russia and the United States right now with
Speaker 1: global strategy off of this moment and certainly off the
Speaker 1: FED moment. This afternoon, we're thrilled that Brian Levin could
Speaker 1: join us. He's with Investco and their global market strategist. Brian,
Speaker 1: just a perfect day to speak to you as well.
Speaker 1: How does Investco reset it midyear? I don't know if
Speaker 1: we necessarily reset. I mean, I think the reality is
Speaker 1: it's an economy that's starting to move from recovery into
Speaker 1: an expansion phase. So from the large story, a better
Speaker 1: economic backdrop of FED that's on hold, it's still an
Speaker 1: environment that you want to favor stocks over bonds, you
Speaker 1: want to favor credit over treasuries. I think to the
Speaker 1: extent that you reset in an expansion phase is that
Speaker 1: you start to see more of the growth oriented parts
Speaker 1: of the market participate again. And so we had this
Speaker 1: pretty big value move, uh, from the fall of last
Speaker 1: year at the beginning of this year, and I think
Speaker 1: that continues in an improving economic backdrop, but you tend
Speaker 1: to see in the expansion phase your big growth stocks
Speaker 1: also start to perform quite well. Bryan, it will be
Speaker 1: a bigger surprise to markets today if the Fed does
Speaker 1: not bring forward their rate high expectations based on the
Speaker 1: dots to three, or if the Fed does. I think
Speaker 1: a bigger surprise to the market would be if they
Speaker 1: do bring it forward. I think that we're still going
Speaker 1: to be talking about a very gradual path of normalization,
Speaker 1: and so my expectation from the FED is to focus
Speaker 1: more on what they're gonna do with their asset purchases.
Speaker 1: I think the message is going to be, we're gonna
Speaker 1: start talking about talking about tapering asset purchases at some point,
Speaker 1: will bring forward. At some point we'll we'll move towards
Speaker 1: where rate expectations are going to be. But the reality is,
Speaker 1: this is a FED that's telegraphed this pretty well, and
Speaker 1: I think so far has done quite a good job,
Speaker 1: particularly if you look at inflation expectations three and five
Speaker 1: year out which are very much near their comfort zone,
Speaker 1: and so um I think the FED is going to
Speaker 1: continue on a gradual path. It's it's a supportive backdrop
Speaker 1: for markets, and you know, invest you should note even
Speaker 1: these early moves and FED policy tend to not be
Speaker 1: what ends the cycle. They may create some volatility along
Speaker 1: the way, but it's really the last rate hikes that matter,
Speaker 1: and we're a long ways away from that. Brian, Where
Speaker 1: do you see us right now in the economic cycle here,
Speaker 1: and particularly at that sort of dovetails with the positioning
Speaker 1: that we've seen in equity markets, that rotation two cyclicals
Speaker 1: and now over the past couple of weeks away from cyclicals. Well,
Speaker 1: it's a critical question, and I would say that we're
Speaker 1: still very early in the economic cycle. And the reason
Speaker 1: I say that, try and say that forcefully, is because
Speaker 1: I hear a lot of questions of is it ending soon?
Speaker 1: Is it too is there too much access? Is it
Speaker 1: too inflationary? Remember, we had a disastrous outcome. We're digging
Speaker 1: out of that outcome. If you look at it from
Speaker 1: a real GDP perspective, we're getting back to where we
Speaker 1: were at the end of But if you look at
Speaker 1: past cycles in the United States, you find that cycles
Speaker 1: have lasted on average around seven years. With the cumulative
Speaker 1: increase in real GDP so this idea that we're a
Speaker 1: year in and only just getting back to where we
Speaker 1: otherwise would have been suggested. It's very early in the
Speaker 1: cycle now that to me favors risk assets until it
Speaker 1: looks like the economy is going to roll over. The
Speaker 1: next question is directionally, where are we. We just had
Speaker 1: a great recovery phase with all the implications for markets.
Speaker 1: Now we move into a more expansion phase and an
Speaker 1: expansion phase. Um, you shouldn't expect interest rates up as
Speaker 1: much as they were. I think the dollar is still
Speaker 1: somewhat weaker. Commodity should continue to do well, Equity should
Speaker 1: do well within equities again shifting more to growth stocks.
Speaker 1: I got about eight ways to go here, Brian. Hey,
Speaker 1: having you on for what you're on for forty five
Speaker 1: minutes today, we need to get you on for three
Speaker 1: hours here. But you know, you know I'm gonna go
Speaker 1: here to what you just said, which is horse and cart.
Speaker 1: Is a week dollar the horse or is a week
Speaker 1: dollar the cart. Well, the weak dollar is a is
Speaker 1: a by product of a We're coming out of a
Speaker 1: very um strong dollar environment, where now in an environment
Speaker 1: where growth around the world maybe a bit more synchronized
Speaker 1: than it was in the aftermath of the global financial crisis,
Speaker 1: there's been a lot of policy support in the United
Speaker 1: States and the FEDS telling us that they're going to
Speaker 1: be on hold. So whether it's a horse or a card,
Speaker 1: I think what you're asking is, does that start to
Speaker 1: unlock some of the value that exists around the world.
Speaker 1: And I suspect that it does that. The challenge that
Speaker 1: investors had investing internationally over the last number yere has
Speaker 1: been a strong dollar environment, to the extent that the
Speaker 1: FEDS on hold policies relatively accommodative, and the rest of
Speaker 1: the world starts to participate more in this expansion than
Speaker 1: the dollars should be stable a weaker and international markets
Speaker 1: should perform well. Brian, let it thank you so much
Speaker 1: with invest Go today just really well timed. We're still
Speaker 1: degree the engineer Sean Donovan who's engineering a New York
Speaker 1: City mayoral candidacy looking for victory, and I haven't done
Speaker 1: this show, and I'm thrilled to have yon today because
Speaker 1: the most unusual vote of New York where second or
Speaker 1: third is a viable alternative. All of a sudden it
Speaker 1: is upon us explain how your day is different each
Speaker 1: because maybe nobody's trying to be number one, but they're
Speaker 1: trying to be number two or even number three in
Speaker 1: this ranked voting. Well, Tom, you're exactly right. This is
Speaker 1: a historic election because we're using rank choice voting for
Speaker 1: the first time in New York City, and that means
Speaker 1: you have to be able to get more than fifty
Speaker 1: of New Yorkers supporting you all across this city. And
Speaker 1: what it means is, and we've seen this in other
Speaker 1: places around the country, that rather than the kind of
Speaker 1: political attacks we've seen the mud slinging from the other
Speaker 1: candidates going into the final debate tonight, what really New
Speaker 1: Yorkers want at this moment is somebody that instead of politics,
Speaker 1: is talking about plans. And that's I think the thing
Speaker 1: that separates me in this election is I bring real
Speaker 1: change from the status quo of the last eight years
Speaker 1: New York has been headed in the wrong direction. But
Speaker 1: I also bring deep experience in the moments of crisis
Speaker 1: that have hit our city. Nine eleven, Sandy, the Great Recession,
Speaker 1: all of those I helped to rebuild New York from,
Speaker 1: and now is a moment you talked about the excitement
Speaker 1: of reopening, but it's as if we've just been hit
Speaker 1: by the hurricane. Now the hard work begins. We still
Speaker 1: have more than five hundred thousand New Yorkers out of work,
Speaker 1: and we need a mayor who really can lead the
Speaker 1: scene forward and has the experience in these moments of
Speaker 1: christis Sean. Let's dovetail the reality of the ranked voting
Speaker 1: and maybe a move to a centrist dialogue with what's
Speaker 1: clearly become the theme, which is crime in the New
Speaker 1: York Police Department. How do you dovetail a centrist vote
Speaker 1: with the responsibility of all constituencies and the New York
Speaker 1: Police Department. Tom's such an important question, And you know,
Speaker 1: if we step back and think about the work we
Speaker 1: did under Mayor Bloomberg that really helped to make New
Speaker 1: York City the leading city in the world in so
Speaker 1: many areas that rebuild growth in this city. It was
Speaker 1: really centered around the idea that in the modern economy,
Speaker 1: talent decides where to live and companies in capital follow.
Speaker 1: So quality of life, safe streets, clean streets, all of
Speaker 1: the things that make New York a good place to
Speaker 1: live are central to the economic success of the city.
Speaker 1: And so we need a mayor who really understands how
Speaker 1: to keep New York safe. Part of that is getting
Speaker 1: guns off the street. Having a mayor who can work
Speaker 1: with President Biden, with other mayors and governors. I have
Speaker 1: those relationships, we could stop guns coming into our city.
Speaker 1: We also have to recognize though we're seeing a mental
Speaker 1: health epidemic playing out on our streets. Homelessness is exploded.
Speaker 1: We're seeing people pushed on our subways. UH. Knife attacks,
Speaker 1: anti Asian hate crimes all connected to this epidemic of
Speaker 1: mental health. And that's work I've done for thirty years
Speaker 1: is breaking that cycle, providing housing, getting folks off our streets,
Speaker 1: in addition to the work I've done on public safety
Speaker 1: and policing that we need to bring those together under
Speaker 1: the next mayor to help New York City start growing
Speaker 1: again and to put those more than five thousand folks
Speaker 1: back to work. Okay, and of course, in addition to safety,
Speaker 1: here sean a lot of folks UH also looking at affordability,
Speaker 1: housing affordability. This is a tough city to live in
Speaker 1: for a lot of folks. You are UH, basically housing
Speaker 1: affordability nerds. You've spent a good portion of your career
Speaker 1: doing this here. What's the solution though for New York City,
Speaker 1: because a lot of people have tried to address this
Speaker 1: before and have failed spectacularly. Look, the first thing we
Speaker 1: need to do is help keep people in their homes.
Speaker 1: New York City was the hardest hit city in the
Speaker 1: world a year ago. We still have more than half
Speaker 1: a million hours. We're on the verge of the worst
Speaker 1: eviction crisis our lifetimes. And instead of having a mayor
Speaker 1: who will demonize and divide us go after the private sector.
Speaker 1: We need to bring billions of dollars of aid that's
Speaker 1: available right now, get it quickly to our renters, but
Speaker 1: also to our landlords to keep them afloat and make
Speaker 1: sure that we avoid that crisis. Second, we need a
Speaker 1: mayor who can work effectively between public sector and private
Speaker 1: sector to grow our economy and to create more housing.
Speaker 1: We have a desperate shortage of housing that is pushing
Speaker 1: up prices all across the city. And so what I
Speaker 1: would do is, just as I did when I was
Speaker 1: Housing Commissioner, work to make more housing affordable, to grow
Speaker 1: New York City, but also to make sure we're using
Speaker 1: all of our tools to create a lot more affordability,
Speaker 1: and one of those is homeownership. You know, we've learned
Speaker 1: that the best way to stop people being pushed out
Speaker 1: of their neighborhoods is give them a piece of the pie,
Speaker 1: help them own. And that's kind of the forgotten strategy
Speaker 1: in affordable housing in New York City the last day years.
Speaker 1: I would bring that back and make sure that we're
Speaker 1: creating wealth and growing opportunity in the city for affordable housing.
Speaker 1: We're out of time, valuable time, it has been Seawn Donovan.
Speaker 1: Thank you so much, New York City, Mayor of Canneda.
Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listen. Join
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Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg