WEBVTT - Surveillance: Policy Mistakes with Chiavarone (Podcast)

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<v Speaker 1>Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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<v Speaker 1>with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you

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<v Speaker 1>insight from the best and economics, finance, investment, and international relations.

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<v Speaker 1>To find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,

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<v Speaker 1>and of course on the Bloomberg terminal. Steve Shumaron is

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<v Speaker 1>taking notes. Had a Multi Assis Solutions Federated MS right now, Steve,

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<v Speaker 1>what have you changed here? I mean the dynamics now,

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<v Speaker 1>the new genus we have this panel today, but really

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<v Speaker 1>the economic data tomorrow, how is Federated tweaked the sixty

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<v Speaker 1>allocation significantly. Um. You know, we've been sellers really since

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<v Speaker 1>last September UM, and we took the opportunity with last

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<v Speaker 1>week's rally, you know, growth and popped about ten percent

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<v Speaker 1>and we reduced. We reduced so we're one percent overweight equities,

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<v Speaker 1>which is you know equities right now, which is the

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<v Speaker 1>lowest overweight time that we've had really since two thousand

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<v Speaker 1>and eight, two thousand nine. As you know, along with

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<v Speaker 1>Steve Off in phil Orlando, we've been one of the

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<v Speaker 1>most bullish shops on the street really for the last

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<v Speaker 1>decade plus UM. But we're as as low in our

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<v Speaker 1>allocation equities as we've been, and we mirror that on

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<v Speaker 1>the fixed income side. We are underweight almost every major

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<v Speaker 1>category of credit, in fact, not almost every major category

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<v Speaker 1>of credit, and that's really only the third time in

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<v Speaker 1>the last fifteen years. Help our radio and TV audiences

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<v Speaker 1>that are saying, okay, underweight, translate that does that mean

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<v Speaker 1>go to cash? It does um to a certain extent.

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<v Speaker 1>So we've been you know, our neutral allocation to cash

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<v Speaker 1>and at sixty is roughly three. You know, we're sitting

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<v Speaker 1>at eight, which is you know, darnier. Three times are

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<v Speaker 1>a normal cash weight, so almost a triple levered cash

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<v Speaker 1>on the full. But I think, you know, there's gonna

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<v Speaker 1>be a time to buy longer dated treasuries as as

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<v Speaker 1>the recession, which we think is more and more likely,

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<v Speaker 1>comes into view. The problem is, I think the rally

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<v Speaker 1>of the last couple of weeks and treasuries is still premature.

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<v Speaker 1>I still think you're gonna have upside surprises to inflation

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<v Speaker 1>of FED that's hawkish in a ten year that ultimately

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<v Speaker 1>moves back to that three and a half percent rate.

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<v Speaker 1>So we would look to add on treasuries as we move,

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<v Speaker 1>as we saw a more because I think you're gonna

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<v Speaker 1>want those longer dated treasuries when you get into kind

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<v Speaker 1>of worse growth periods. But right now we think cash

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<v Speaker 1>is king. Steve, let's take a step back and understand

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<v Speaker 1>the framing of your parishness and put on your federal

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<v Speaker 1>reserve suggish hat in terms of commentating, So if you

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<v Speaker 1>said before you came on that you think that they're

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<v Speaker 1>in the midst of the biggest policy air going back

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<v Speaker 1>to the nineteen thirties, what exactly is their policy are? Yeah?

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<v Speaker 1>I mean, and to Tom's point, I think it's very

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<v Speaker 1>understandable how they got there, But I don't think this

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<v Speaker 1>is malfeasance. But when when you woke up in March

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<v Speaker 1>and interest rates for zero inflation was eight percent and

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<v Speaker 1>the you know hood was still buying bonds, I don't

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<v Speaker 1>care how you got there. That's policy here, um, and

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<v Speaker 1>that has now forced them into a position right now

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<v Speaker 1>where you know, they're hiking aggressively and they need to

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<v Speaker 1>into a slowing economy. And I think what they missed,

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<v Speaker 1>and Tom you might find this interesting, what they missed

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<v Speaker 1>is a longer term structural change in the economy. We

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<v Speaker 1>were in this kind of new normal, sub two percent growth,

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<v Speaker 1>sub two percent inflation, sub two percent rate environment for

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<v Speaker 1>a decade, new normal, if you will. And just in time,

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<v Speaker 1>inventories are no longer just good enough, so companies are

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<v Speaker 1>reorienting their uh their supply chains. Chinese working age population

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<v Speaker 1>is set to decline over the next twenty years, and

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<v Speaker 1>the US population growth is set to go from two

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<v Speaker 1>percent growth to eight percent growth over that same period.

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<v Speaker 1>And so and at the same time, you've you've undermined

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<v Speaker 1>the three pillars at least for the short run of globalization.

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<v Speaker 1>The free movement of goods really kind of peaked with

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<v Speaker 1>the trade war, the free movement of people peaked with COVID,

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<v Speaker 1>and the free movement of finance may have peaked with

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<v Speaker 1>this with this kind of economic war with Russian So

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<v Speaker 1>I think you're headed to a scenario at the other

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<v Speaker 1>side of a recession where you have hired US growth,

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<v Speaker 1>but it's less efficient. You're gonna get more inflation per

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<v Speaker 1>unit of growth. That's a different world. Steve. This a

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<v Speaker 1>lot of people would agree on, at least in the

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<v Speaker 1>short term, but in terms of what happens next is

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<v Speaker 1>the question and there was a belief in the market

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<v Speaker 1>perhaps last week that the Fed would ease off on

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<v Speaker 1>rate heikes when they saw dampening in some of the

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<v Speaker 1>growth expectations and frankly, uh the underlying economy. We just

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<v Speaker 1>heard from Laurid Domester of the Cleveland Federal Reserve. She

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<v Speaker 1>doesn't see that happening, and she still sees a FED

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<v Speaker 1>funds rate well over four percent when it comes to

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<v Speaker 1>next year. Do you think the market is miss pricing that?

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<v Speaker 1>Do you think that the turmoil that will ensue from

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<v Speaker 1>that will confirm your parishness and the reason why you're

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<v Speaker 1>not ready to go full throttle into longer duration yet. Yeah,

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<v Speaker 1>I think the market has kind of contorted itself and

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<v Speaker 1>had complacency multiple times over the course of the last

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<v Speaker 1>next months where it's looking for peak inflation and peak hawkishness,

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<v Speaker 1>which you know, and I know you guys were talking

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<v Speaker 1>about this yesterday, But if infletion goes from eight to seven,

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<v Speaker 1>that's not a victory lap. You really need to get

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<v Speaker 1>that number, you know, down, even if it's not quite

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<v Speaker 1>to two, certainly you know, pretty darn close to it.

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<v Speaker 1>And so I think defense still has a lot of

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<v Speaker 1>work to do in order to do that, because you've

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<v Speaker 1>got service price inflation that's operating around eight nine on

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<v Speaker 1>a three month basis and wages are high. For that

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<v Speaker 1>to come down, unemployment needs to rise, and I think

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<v Speaker 1>they're gonna have to go for some time. UM. And

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<v Speaker 1>if they do slow, Tom, I think they're slowing because

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<v Speaker 1>it's abundantly clear that we've got, you know, a significant

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<v Speaker 1>decline in growth, if not an outright procession. How fast

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<v Speaker 1>does the employment dynamic changed? Your own pulse said we

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<v Speaker 1>have a strong economy in this testimony two cups of

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<v Speaker 1>coffee ago. We've done a lot of work on this

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<v Speaker 1>as part of our recession dashboard, and you can go

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<v Speaker 1>effective on average. It's a series of indicators that we

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<v Speaker 1>look at that I mean, there's no perfect formula to

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<v Speaker 1>understand when a recession is coming, but there's guide trades

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<v Speaker 1>that you can look at. You try to understand UM

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<v Speaker 1>on average, you can go from the cycle low and

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<v Speaker 1>claims to a recession within twelve months. We hit a

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<v Speaker 1>cycle lowan claims three months ago. So there's no historic

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<v Speaker 1>relationship between how strong the labor market is coming in

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<v Speaker 1>in terms of how fast they can deteriorate. UM and

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<v Speaker 1>so it's a fickle It's a fickle friend to rely

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<v Speaker 1>solely on a strong labor, of course, and we may

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<v Speaker 1>find that the excess inventory that we have this cycle

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<v Speaker 1>was employment in certain sectors. And I think we've seen

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<v Speaker 1>some of the tech guys already say we over hired,

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<v Speaker 1>whether that's Amazon or or or Meta or some of

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<v Speaker 1>the other folks that have said that. So I think, look,

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<v Speaker 1>this idea that you're going to get through this by

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<v Speaker 1>only making job openings this appear that's a comforting thought,

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<v Speaker 1>but I think it's ultimately going to prove to be

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<v Speaker 1>really optimistic. Steve. I just want to wake out something

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<v Speaker 1>you said earlier in the interview. If people aren't familiar

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<v Speaker 1>with your work, to hear this from you from Steve

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<v Speaker 1>Orth from Phil Orlando, it's quite something. You know, forgive

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<v Speaker 1>the snark, but it's like Marko Klanovitch a JP Morgan

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<v Speaker 1>coming out this morning and going Max Bearish, you used

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<v Speaker 1>to make fun of me for my snark around that. Stay,

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<v Speaker 1>thank you. Stay Chevaron Federate. By way into the General

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<v Speaker 1>Mills piece there the nine year piece. Back then it

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<v Speaker 1>was a ten year piece at a one oh two.

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<v Speaker 1>I'm enjoying it this morning at one and studied you'll

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<v Speaker 1>got it right greatly. Jones here, so I can yell

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<v Speaker 1>at her because she told me to get spawns there.

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<v Speaker 1>She fixed income strategist at Charles Schwab, Cathy, that's the reality,

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<v Speaker 1>not a bunch of bonds strategists talking about spreads and

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<v Speaker 1>credit quality. People listening and watching bought a piece at

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<v Speaker 1>par and they're enjoying it a one or eighty two

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<v Speaker 1>like the General Mills two and a quarter of thirty one.

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<v Speaker 1>What do you do if you own that bond, Well,

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<v Speaker 1>you have two choices. Tom One is you hold it

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<v Speaker 1>to maturity and it goes back to part because that's

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<v Speaker 1>what bonds do unless there's a default, or you sell it. Now,

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<v Speaker 1>take your tax loss and replace it with a higher

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<v Speaker 1>yielding box, Kathy, When does the concern start to creep

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<v Speaker 1>in that we're not seeing issueans really pick up? And

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<v Speaker 1>then a lot of companies can choose not to now,

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<v Speaker 1>but maybe in six months and certainly in twelve months,

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<v Speaker 1>it'll be less of an option. Yeah, you know, I

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<v Speaker 1>think right now, corporate balance sheets are still among the

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<v Speaker 1>investment grade community is still pretty strong, and they don't

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<v Speaker 1>they did load up on debt at lower yields UM.

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<v Speaker 1>So they're in pretty good shape, but we'll probably see

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<v Speaker 1>issuance pick up. There's always going to be a window

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<v Speaker 1>uh oh been um. You know later on in the year,

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<v Speaker 1>as we get into next year, that will have to

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<v Speaker 1>be some refinancing that takes place. I think a lot

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<v Speaker 1>of the issuance now is just waiting for yields to

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<v Speaker 1>come back down. Do you think that they will? I mean,

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<v Speaker 1>that's the issue. If they don't come back down, they're

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<v Speaker 1>looking at financing costs that are double what they were

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<v Speaker 1>potentially just a couple of years ago. How much does

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<v Speaker 1>the need for it to come down really determine the

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<v Speaker 1>next to fault cycle? Well, I think when you're talking

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<v Speaker 1>about high yield are certainly bank loans UM. Then you

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<v Speaker 1>have a problem with short rates moving up, particularly in

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<v Speaker 1>the bank loan sector, because they adjust the durations very short,

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<v Speaker 1>they adjust very rapidly, and for those companies which are

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<v Speaker 1>basically junk companies UM, their cost of financing is going

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<v Speaker 1>to jump, and that there's one reason we're not big

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<v Speaker 1>fans of bank loans right now. I think it will

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<v Speaker 1>also hit the low end of the high yield market,

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<v Speaker 1>because you know, spreads have moved up a bit here,

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<v Speaker 1>but they're probably gonna move up some more. We think

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<v Speaker 1>there's a high risk of recession, particularly of the goes

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<v Speaker 1>really hard and fast the way they're talking about, and

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<v Speaker 1>that's not going to be good for the hyold market.

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<v Speaker 1>What is the unexpected if the Fed moves seeps in

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<v Speaker 1>July or onward. Well, I think it does translate into

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<v Speaker 1>the FX market. Obviously, if the Fed goes, that's built

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<v Speaker 1>into the market, and I think a fair amount of

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<v Speaker 1>tightening is built into the market. If the Loretto Master

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<v Speaker 1>gets her four percent next year, then I think that

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<v Speaker 1>we're seeing an inverted yield curve. All else being equal,

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<v Speaker 1>would be very difficult with the economic indicators rolling over

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<v Speaker 1>to see yields move up from there, I think you've

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<v Speaker 1>seen inverted curve, and that translates when we look at

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<v Speaker 1>say the Japanese bond market and where the yen is

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<v Speaker 1>and what's happening in Europe. That's going to translate into

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<v Speaker 1>a pretty stiff global tightening cycle and that's when things break. Kathy,

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<v Speaker 1>thank you, you wanted the best. I love hearing from you.

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<v Speaker 1>Kathy Jones there to us. Thank you joint to get

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<v Speaker 1>snabas founder and CEOM of ex Sante Data. You're let's

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<v Speaker 1>start here, President a Guard, Chairman Pal, Governor Baudi. What's

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<v Speaker 1>your number one question? Going into that a little bit

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<v Speaker 1>later this morning, I would say what matters more growth

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<v Speaker 1>or inflation? Right? We had a totally different cycle than

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<v Speaker 1>we've seen for the last forty years, right, that even

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<v Speaker 1>if we have recession fears, the central banks are a

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<v Speaker 1>very very tricky spot, right because inflation is way above

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<v Speaker 1>target and they can really focus on growth as much

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<v Speaker 1>as they've done in the past. And I think if

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<v Speaker 1>you look at what's going on in the market, right,

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<v Speaker 1>we've we've clearly had the recession focused over the last

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<v Speaker 1>couple of weeks, right. And nevertheless, BONDI bond deals are

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<v Speaker 1>close to the highs. Right. It used to be the

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<v Speaker 1>case the lesson for the last four years was as

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<v Speaker 1>soon as there was any weakening in growth, you just

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<v Speaker 1>had to close your eyes and by bonds. And this

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<v Speaker 1>cycle is totally different, right, because it is an inflation

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<v Speaker 1>cycle as opposed to just still growth cycle. I look

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<v Speaker 1>yand it's the path of inflation. And this will be

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<v Speaker 1>my question today to these bankers and it's a really

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<v Speaker 1>a steam panel to say at least folks, so I

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<v Speaker 1>really pay attention to that. YenS to me, inflation is

0:12:20.960 --> 0:12:24.560
<v Speaker 1>by part and then there's an easy path down. Core

0:12:24.720 --> 0:12:28.920
<v Speaker 1>comes down, and then it gets way way more difficult.

0:12:29.040 --> 0:12:32.480
<v Speaker 1>Where do you perceive the level of inflation where it

0:12:32.640 --> 0:12:37.400
<v Speaker 1>really becomes heavy lifting for these central bankers. Yes, I

0:12:37.400 --> 0:12:42.360
<v Speaker 1>think we probably have a period where goods prices and

0:12:42.480 --> 0:12:46.520
<v Speaker 1>commodity prices are gonna come down over the next year,

0:12:47.400 --> 0:12:50.920
<v Speaker 1>and that really hasn't not much to do with central

0:12:50.960 --> 0:12:54.400
<v Speaker 1>bank policy, right. And then the question is if the

0:12:54.480 --> 0:13:00.640
<v Speaker 1>wages and the services prices stay elevated so that a

0:13:00.760 --> 0:13:03.560
<v Speaker 1>drop in in those other prices don't really get the

0:13:03.600 --> 0:13:07.600
<v Speaker 1>overall inflation numbers down that much, then the central banks

0:13:08.120 --> 0:13:11.480
<v Speaker 1>are gonna do the heavy heavy lifting and really get tight.

0:13:12.040 --> 0:13:16.560
<v Speaker 1>Don't forget we're talking about the FED having overdone it.

0:13:17.640 --> 0:13:21.880
<v Speaker 1>How many months have they actually been hiking? A couple

0:13:21.880 --> 0:13:24.560
<v Speaker 1>of months? We're a couple of months in here, right

0:13:25.240 --> 0:13:27.920
<v Speaker 1>and uh and and that's the discussion already, right. So

0:13:28.800 --> 0:13:30.840
<v Speaker 1>the real tricky bit will be if they have to

0:13:30.880 --> 0:13:34.120
<v Speaker 1>go to free and then considering going to five, that's

0:13:34.160 --> 0:13:37.320
<v Speaker 1>when then the pain on the economy will be well,

0:13:37.360 --> 0:13:40.320
<v Speaker 1>be severe right. Right now, we're really discussing about getting

0:13:40.320 --> 0:13:43.760
<v Speaker 1>to neutralish a little bit above but not really tight.

0:13:44.559 --> 0:13:47.320
<v Speaker 1>It's not a volcal cycle yet, right, but that would

0:13:47.360 --> 0:13:49.840
<v Speaker 1>come into play if the weights keep going, if the

0:13:49.920 --> 0:13:53.079
<v Speaker 1>services prices keep going, even beyond the point where the

0:13:53.720 --> 0:13:56.480
<v Speaker 1>supply issues has been fixed. Yeah, it's just real quickly

0:13:56.559 --> 0:14:01.360
<v Speaker 1>here to your point. Lauramester this morning in CenTra said,

0:14:01.400 --> 0:14:03.600
<v Speaker 1>the FED is just at the beginning of raising rates,

0:14:03.840 --> 0:14:05.720
<v Speaker 1>and these rates going to three and a half percent

0:14:05.760 --> 0:14:07.520
<v Speaker 1>by the end of this year and a little above

0:14:07.600 --> 0:14:13.640
<v Speaker 1>four percent next year. Has the market adequately priced at it, No, So,

0:14:13.640 --> 0:14:17.199
<v Speaker 1>so we were at the moment especially Yeah, last week

0:14:17.240 --> 0:14:19.160
<v Speaker 1>we got to an extreme point where the market is

0:14:19.200 --> 0:14:23.960
<v Speaker 1>actually pricing significant cuts in two thousand and twenty three, right,

0:14:24.600 --> 0:14:26.880
<v Speaker 1>so essentially priced that we're gonna have a nine month

0:14:27.400 --> 0:14:30.880
<v Speaker 1>tightening cycle and then we're gonna start cutting, right. So

0:14:31.840 --> 0:14:34.840
<v Speaker 1>obviously the hikes are up prices bigger than its normal

0:14:34.880 --> 0:14:36.760
<v Speaker 1>for a cycle, right because we're talking about fifty and

0:14:36.760 --> 0:14:40.960
<v Speaker 1>seventy based upon steps. But nevertheless, we were pricing hiking

0:14:41.000 --> 0:14:43.600
<v Speaker 1>cycle that was going to be essentially a year and

0:14:43.640 --> 0:14:46.080
<v Speaker 1>then the cuts were going to start that I think

0:14:46.160 --> 0:14:49.960
<v Speaker 1>is what's very questionable. Um, I think we're gonna have

0:14:50.000 --> 0:14:52.440
<v Speaker 1>a situation where the services prices are going to be

0:14:52.560 --> 0:14:55.400
<v Speaker 1>sticky and it's going to be very very hard for

0:14:55.440 --> 0:14:58.720
<v Speaker 1>the FED to to switch to cutting mode. It might

0:14:58.760 --> 0:15:00.400
<v Speaker 1>be the case that we're not gonna be talk about

0:15:00.480 --> 0:15:03.040
<v Speaker 1>seventy five basis points forever. Maybe we're gonna go to

0:15:03.160 --> 0:15:05.680
<v Speaker 1>a more slow pace of up tightening. Maybe we're gonna

0:15:05.720 --> 0:15:08.200
<v Speaker 1>plateau at a high level of rights. But this notion

0:15:08.640 --> 0:15:11.560
<v Speaker 1>that the FED is gonna flip from super hawkers to

0:15:11.640 --> 0:15:14.520
<v Speaker 1>getting ready to cut within a year, that I think

0:15:14.600 --> 0:15:17.720
<v Speaker 1>is too early. And I think we're gonna push that

0:15:17.760 --> 0:15:20.360
<v Speaker 1>out and and that's not priced yet, Ian Tilson, to

0:15:20.400 --> 0:15:21.880
<v Speaker 1>get your view on things, and so why it's a

0:15:21.880 --> 0:15:25.000
<v Speaker 1>bit of reality check from human Extant tainst norfic that

0:15:29.400 --> 0:15:32.640
<v Speaker 1>Greg Villier with us on the elections on what we learned,

0:15:33.120 --> 0:15:35.200
<v Speaker 1>and I guess it was, no, it's not the first

0:15:35.240 --> 0:15:37.320
<v Speaker 1>Tuesday of June. We're late in June, and he was,

0:15:37.360 --> 0:15:40.600
<v Speaker 1>we had an election with some results, Greg, I want

0:15:40.600 --> 0:15:43.720
<v Speaker 1>to go to what the Democrats need to do to

0:15:44.320 --> 0:15:48.920
<v Speaker 1>not focus inside the Beltway and have a Democratic Party

0:15:49.040 --> 0:15:53.680
<v Speaker 1>strategy across this nation. Kate Zernk in The New York

0:15:53.720 --> 0:15:58.400
<v Speaker 1>Times destroyed the Democrats this weekend, saying they've simply failed

0:15:58.440 --> 0:16:03.320
<v Speaker 1>to go across the nation an organization. Yeah, you would

0:16:03.320 --> 0:16:05.320
<v Speaker 1>think they'd be doing a lot better time on so

0:16:05.440 --> 0:16:08.160
<v Speaker 1>many issues. I think that there is a need for

0:16:08.240 --> 0:16:12.200
<v Speaker 1>something more unified. Maybe the abortion issue will finally get

0:16:12.240 --> 0:16:16.480
<v Speaker 1>the party together. It's given them a catalyst. But you

0:16:16.720 --> 0:16:20.120
<v Speaker 1>and she and her piece are right. It's there's a

0:16:20.240 --> 0:16:23.800
<v Speaker 1>lack of unity and strategy. A single sentence in your

0:16:23.840 --> 0:16:27.760
<v Speaker 1>note this morning on the governor of California. What does

0:16:27.760 --> 0:16:31.720
<v Speaker 1>good Mr Newsom need to do well? I think he's running.

0:16:31.720 --> 0:16:34.120
<v Speaker 1>He's starting to run some ads. I think he's making

0:16:34.200 --> 0:16:37.760
<v Speaker 1>noise like he may run. You know, everybody's frozen in

0:16:37.840 --> 0:16:41.080
<v Speaker 1>place right now because of Joe Biden. If if Biden

0:16:41.360 --> 0:16:44.560
<v Speaker 1>announces he's going to seek a second term, which I doubt,

0:16:44.920 --> 0:16:47.480
<v Speaker 1>but if he does, that changes everything. If he doesn't,

0:16:47.720 --> 0:16:50.280
<v Speaker 1>I think Newsome runs, and believe it or not, don't

0:16:50.320 --> 0:16:53.280
<v Speaker 1>shoot the messenger here. I think Hillary Clinton may give

0:16:53.280 --> 0:16:56.400
<v Speaker 1>thought to one last run. Wait what say that one

0:16:56.400 --> 0:17:01.040
<v Speaker 1>more time? Greg? Yes, I can't let that. Yeah, I

0:17:01.080 --> 0:17:03.520
<v Speaker 1>mean I do. There's been a lot of speculation in

0:17:03.560 --> 0:17:06.800
<v Speaker 1>the last few days that if Biden doesn't run and

0:17:06.880 --> 0:17:10.080
<v Speaker 1>the Democrats don't have any clear favorite, that she might

0:17:10.160 --> 0:17:13.080
<v Speaker 1>hop into the RACI seventy four that makes her, you know,

0:17:13.160 --> 0:17:16.800
<v Speaker 1>fairly young by today's standards, But I do I don't

0:17:16.880 --> 0:17:21.320
<v Speaker 1>rule out one last run by her if Biden doesn't run. Well,

0:17:21.320 --> 0:17:23.919
<v Speaker 1>there's a lot to go on that particular line of

0:17:24.000 --> 0:17:26.320
<v Speaker 1>questioning Greg But I do want to go back to

0:17:26.800 --> 0:17:29.920
<v Speaker 1>the task at hand for all legislators right now, which

0:17:29.920 --> 0:17:33.000
<v Speaker 1>is trying to deal with inflation, which is the primary

0:17:33.040 --> 0:17:36.280
<v Speaker 1>concern for a lot of investors, and social issues creeping

0:17:36.400 --> 0:17:39.520
<v Speaker 1>up in terms of priorities for some voters. But is

0:17:39.520 --> 0:17:43.200
<v Speaker 1>there any chance that this Congress could really take action

0:17:43.480 --> 0:17:46.120
<v Speaker 1>in a material way from a legislative stance in terms

0:17:46.160 --> 0:17:49.720
<v Speaker 1>of financing different kinds of programs or offsetting some of

0:17:49.720 --> 0:17:53.080
<v Speaker 1>the inflationary pressures given the lack of unity, and given

0:17:53.119 --> 0:17:56.640
<v Speaker 1>the polarization that you're just talking about, Logically, you would

0:17:56.680 --> 0:17:59.600
<v Speaker 1>think the answer would be yes, they will. But logic

0:17:59.640 --> 0:18:02.800
<v Speaker 1>does not dominate Washington. And I think that while there's

0:18:02.840 --> 0:18:06.280
<v Speaker 1>a lot of talk about terrorists, a lot of talk

0:18:06.359 --> 0:18:09.600
<v Speaker 1>about other programs that might help a little at the

0:18:09.640 --> 0:18:13.400
<v Speaker 1>margin on inflation. I don't see it. I think I frankly,

0:18:13.440 --> 0:18:16.119
<v Speaker 1>I think Ukraine is more important. And as long as

0:18:16.200 --> 0:18:20.440
<v Speaker 1>this war continues, that we're gonna have high energy prices

0:18:20.480 --> 0:18:23.439
<v Speaker 1>at high food prices. I think that's the bigger factor.

0:18:23.800 --> 0:18:26.000
<v Speaker 1>So Greg, if that does spur some sort of recession,

0:18:26.080 --> 0:18:31.800
<v Speaker 1>where is the fiscal impulse to respond, typically doing the

0:18:31.840 --> 0:18:35.199
<v Speaker 1>exact wrong thing at the exact wrong time, You're going

0:18:35.240 --> 0:18:38.200
<v Speaker 1>to see Congress now get very frugal, not a lot

0:18:38.240 --> 0:18:42.000
<v Speaker 1>of spending Republicans will take the house. They're not. They

0:18:42.000 --> 0:18:43.960
<v Speaker 1>don't want to spend a lot of money. So just

0:18:44.080 --> 0:18:47.000
<v Speaker 1>when you have monetary policy tightening, you're going to see

0:18:47.000 --> 0:18:51.000
<v Speaker 1>fiscal policy tightening as well. Gregg frame it for me.

0:18:51.160 --> 0:18:56.360
<v Speaker 1>A Sunday evening the end of March, Lyndon Baines Johnson,

0:18:56.600 --> 0:19:01.240
<v Speaker 1>overwhelmed by Vietnam, among others, said I not gonna run again.

0:19:01.359 --> 0:19:03.720
<v Speaker 1>I was sitting on the couch, remember clear as a

0:19:03.800 --> 0:19:08.960
<v Speaker 1>belle a nation stunt. What is Biden waiting for or

0:19:08.960 --> 0:19:11.960
<v Speaker 1>does he have to wait for March of two thousand

0:19:12.080 --> 0:19:16.359
<v Speaker 1>twenty four. Well, the March that you refer to with

0:19:16.520 --> 0:19:19.920
<v Speaker 1>LBJ occurs on November eight here in the US. That's

0:19:19.920 --> 0:19:22.760
<v Speaker 1>the election, and if the House flips, which I still

0:19:22.800 --> 0:19:25.520
<v Speaker 1>think is likely. Said it is a tougher call now

0:19:25.640 --> 0:19:28.880
<v Speaker 1>because of abortion, but you know that could slip as well.

0:19:29.320 --> 0:19:32.359
<v Speaker 1>I think that would be the catalyst to push Biden out.

0:19:33.320 --> 0:19:36.480
<v Speaker 1>It's not just his age, it's his polling numbers and

0:19:36.560 --> 0:19:39.239
<v Speaker 1>the elections on November eight, Greg, we've got to talk

0:19:39.280 --> 0:19:42.720
<v Speaker 1>about the other ticket, just briefly. That testament yesterday. I

0:19:42.760 --> 0:19:45.960
<v Speaker 1>wouldn't you a view on this. Does that change the

0:19:46.000 --> 0:19:48.440
<v Speaker 1>support that the former president gets and does that open

0:19:48.480 --> 0:19:51.080
<v Speaker 1>the door a little bit wider for the governor from Florida.

0:19:52.080 --> 0:19:56.240
<v Speaker 1>John June of the year two will be remembered as

0:19:56.280 --> 0:19:59.800
<v Speaker 1>the month that pretty much finished off Donald Trump. It's

0:20:00.000 --> 0:20:02.600
<v Speaker 1>it's not just that he may get indicted. It's not

0:20:02.720 --> 0:20:05.520
<v Speaker 1>just that he has lost some altitude in the party.

0:20:05.840 --> 0:20:07.760
<v Speaker 1>It's the near fact that more and more of his

0:20:07.880 --> 0:20:12.400
<v Speaker 1>own supporters are telling poll takers that one terms enough,

0:20:12.520 --> 0:20:15.800
<v Speaker 1>we really are not excited about him running again. And

0:20:15.840 --> 0:20:18.560
<v Speaker 1>that's his own supporters who are now starting to say

0:20:18.560 --> 0:20:20.680
<v Speaker 1>that that's the one to watch for show. Greg. Thank you,

0:20:21.720 --> 0:20:26.480
<v Speaker 1>Jeff Investments. This is the Bloomberg Surveillance Podcast. Thanks for listening.

0:20:26.800 --> 0:20:30.160
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0:20:30.400 --> 0:20:34.440
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0:20:34.480 --> 0:20:39.760
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