1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,200 Speaker 2: Terminal and the Bloomberg Business App. Dan joins us now 10 00:00:37,360 --> 00:00:39,080 Speaker 2: for more, Dan, It's good to see you, greed b. 11 00:00:39,200 --> 00:00:41,520 Speaker 2: Let's start with that cloud revenue number, so that disappointed, 12 00:00:41,560 --> 00:00:43,440 Speaker 2: and then we started to hear a little bit more 13 00:00:43,720 --> 00:00:47,120 Speaker 2: the contribution from AI's picking up. We're going to see 14 00:00:47,200 --> 00:00:50,000 Speaker 2: that softness continue in the current quarter, but then reaccelerate. 15 00:00:50,040 --> 00:00:52,080 Speaker 2: Things start to pick up again in the back half 16 00:00:52,120 --> 00:00:54,640 Speaker 2: of fiscal twenty twenty five. Can you just frame the 17 00:00:54,640 --> 00:00:57,000 Speaker 2: second piece of this for us? What do you think 18 00:00:57,040 --> 00:00:59,320 Speaker 2: that is so much more important than what we're seeing 19 00:00:59,320 --> 00:01:00,000 Speaker 2: play out this morning? 20 00:01:00,280 --> 00:01:02,840 Speaker 3: The words heard around the world and I think around 21 00:01:02,880 --> 00:01:07,280 Speaker 3: the street when Nadella and Amy talked about the acceleration 22 00:01:07,600 --> 00:01:10,440 Speaker 3: for a Zure in the second half and that AI 23 00:01:10,600 --> 00:01:15,840 Speaker 3: monitorization that actually starts for real in January. And that's 24 00:01:16,080 --> 00:01:18,360 Speaker 3: look ultimate. You go back to last week the knee 25 00:01:18,440 --> 00:01:21,840 Speaker 3: jerk in terms of the white knuckle moment. Alphabet Street 26 00:01:22,000 --> 00:01:26,640 Speaker 3: needed to hear about validation monization for AI. They heard 27 00:01:26,680 --> 00:01:29,520 Speaker 3: it from the Deella on that call, bullish, not just 28 00:01:29,560 --> 00:01:31,440 Speaker 3: from Microsoft for the broader tack socket. 29 00:01:31,240 --> 00:01:33,040 Speaker 2: And you find it out that the sucks down this morning. 30 00:01:33,280 --> 00:01:35,240 Speaker 3: Oh, I mean, in my opinion, and we were tall 31 00:01:35,400 --> 00:01:37,640 Speaker 3: last night. I mean, I think there's stock that goes 32 00:01:37,720 --> 00:01:40,040 Speaker 3: green in terms of I can't say today, but this 33 00:01:40,120 --> 00:01:43,160 Speaker 3: isn't stick to I be shocked if it sticks because 34 00:01:43,200 --> 00:01:47,040 Speaker 3: anyone that heard that conference call, you come out more 35 00:01:47,200 --> 00:01:52,280 Speaker 3: bullish on Microsoft rather than any sort of skepticism because 36 00:01:52,320 --> 00:01:56,720 Speaker 3: of the acceleration for Azure, because of monization, because of 37 00:01:56,880 --> 00:01:59,760 Speaker 3: commercial booking, Sean and I expect. And that's how it 38 00:01:59,760 --> 00:02:03,480 Speaker 3: looks knee jerk. The haters come out. They've been negative 39 00:02:03,520 --> 00:02:06,240 Speaker 3: on Microsoft the last one hundred and fifty points. It 40 00:02:06,400 --> 00:02:09,679 Speaker 3: all is about the AI revolution, AI monization, validation. 41 00:02:09,800 --> 00:02:12,760 Speaker 2: Why did you sound to Lisa than talking about he like. 42 00:02:12,680 --> 00:02:14,600 Speaker 1: He's like the haters over here who have been talking 43 00:02:14,639 --> 00:02:17,399 Speaker 1: down this story forever, Lisa, now listen this. I don't 44 00:02:17,400 --> 00:02:19,680 Speaker 1: think it sounded like people were the haters who were 45 00:02:19,720 --> 00:02:22,000 Speaker 1: actually skeptical of these numbers. They weren't coming out and 46 00:02:22,040 --> 00:02:25,320 Speaker 1: saying AI is bogus and then everything is wrong and 47 00:02:25,320 --> 00:02:28,160 Speaker 1: they're going to tank. It was that they weren't surprised 48 00:02:28,320 --> 00:02:31,079 Speaker 1: dramatically to the upside, and the actual gains that we've 49 00:02:31,120 --> 00:02:35,600 Speaker 1: seen on the stock imply significant profit gains going forward. 50 00:02:35,760 --> 00:02:38,680 Speaker 1: Here's one investor. It was really about the cloud services number. 51 00:02:39,000 --> 00:02:41,560 Speaker 1: It needed to just be a little higher. What do 52 00:02:41,600 --> 00:02:43,280 Speaker 1: you make of that? Just sort of how people have 53 00:02:43,360 --> 00:02:45,680 Speaker 1: priced in the forward growth rate and whether they've gotten 54 00:02:45,720 --> 00:02:47,080 Speaker 1: over their skis in terms of the pace. 55 00:02:47,560 --> 00:02:50,600 Speaker 3: Look, it's a great point, and that's why the most 56 00:02:50,680 --> 00:02:55,160 Speaker 3: important thing here is show that monization's coming. Show that 57 00:02:55,440 --> 00:02:58,320 Speaker 3: you're now going to have growth rates on cloud in 58 00:02:58,360 --> 00:03:01,720 Speaker 3: the thirty percent. Ultimately, if you trajector it out in 59 00:03:01,840 --> 00:03:06,560 Speaker 3: incremental fifteen to twenty billion for Microsoft, you're not going 60 00:03:06,639 --> 00:03:09,600 Speaker 3: to see that right away. What Bates in the Dell 61 00:03:09,680 --> 00:03:12,440 Speaker 3: in Microsoft showed this is coming and we're going to 62 00:03:12,560 --> 00:03:15,120 Speaker 3: guide to it. So I think that was the most 63 00:03:15,120 --> 00:03:18,400 Speaker 3: important thing for the call, despite in terms of the 64 00:03:18,440 --> 00:03:22,040 Speaker 3: actual quarter being strong but not a wow pop the 65 00:03:22,160 --> 00:03:23,000 Speaker 3: Champagne quarter. 66 00:03:23,240 --> 00:03:25,680 Speaker 1: There's also this issue of who's going to benefit the 67 00:03:25,680 --> 00:03:29,560 Speaker 1: most as some of the big the big tech names 68 00:03:30,000 --> 00:03:33,480 Speaker 1: build out their cloud provisions and build out some of 69 00:03:33,520 --> 00:03:35,200 Speaker 1: their AI capacities. 70 00:03:35,480 --> 00:03:36,440 Speaker 2: Were both really. 71 00:03:36,280 --> 00:03:40,640 Speaker 1: Struck by AMD overnight actually seeming to gaining share. Do 72 00:03:40,640 --> 00:03:42,200 Speaker 1: you think this is a game changer in terms of 73 00:03:42,240 --> 00:03:43,680 Speaker 1: how much they could compete with in video? 74 00:03:43,800 --> 00:03:46,720 Speaker 3: When Lisa Sue talks, everyone listens, and I think this 75 00:03:46,920 --> 00:03:49,880 Speaker 3: just shows it's not just about the godfather of AI, 76 00:03:50,480 --> 00:03:54,920 Speaker 3: Jensen and Nvidia AMD. They're getting into that AI party. 77 00:03:54,960 --> 00:03:57,680 Speaker 3: It's nine pm. They're gett onto the dance floor. So 78 00:03:57,720 --> 00:04:02,240 Speaker 3: what you saw from Lisa's sue bullish for AMD, triangulate 79 00:04:02,320 --> 00:04:04,680 Speaker 3: that with Microsoft. With what I believe we're going to 80 00:04:04,720 --> 00:04:09,000 Speaker 3: hear from Amazon, Meta and others, it should monitation starting 81 00:04:09,200 --> 00:04:12,440 Speaker 3: the next phase of AI playing out. That's Bush for 82 00:04:12,560 --> 00:04:18,120 Speaker 3: servers now, Oracle, Dell, Poundteer salesforce now, it's about second, third, 83 00:04:18,200 --> 00:04:21,400 Speaker 3: fourth derivative playing out. That's why I last everyone's focused 84 00:04:21,400 --> 00:04:24,080 Speaker 3: on there's two companies in the world. Everyone's focused on 85 00:04:24,200 --> 00:04:29,479 Speaker 3: Microsoft and video, AMD said, hey, don't forget about us, important. 86 00:04:29,000 --> 00:04:30,720 Speaker 2: Call and video up in the pre market as well. 87 00:04:30,760 --> 00:04:32,040 Speaker 2: Off the back of some of this, there was also 88 00:04:32,040 --> 00:04:33,920 Speaker 2: the story Danny was talking about it the story out 89 00:04:33,960 --> 00:04:37,559 Speaker 2: of routsas that's lifting Tokyo Electron and SML, the report 90 00:04:37,600 --> 00:04:40,159 Speaker 2: that they bind an administration plan to exempt ship equipment 91 00:04:40,160 --> 00:04:43,360 Speaker 2: makers in Japan, the Netherlands and South Korea from upcoming 92 00:04:43,400 --> 00:04:45,880 Speaker 2: export restrictions. How important is that story? 93 00:04:46,160 --> 00:04:49,120 Speaker 3: Very important because what's the one thing that could spoil 94 00:04:49,240 --> 00:04:53,960 Speaker 3: the AI party. It's not fed, it's not value e shit, 95 00:04:54,480 --> 00:04:57,520 Speaker 3: it's about restrictions. It's about basically like what we see 96 00:04:57,560 --> 00:05:00,800 Speaker 3: on tariffs, and ultimately this viewers trying to call tech 97 00:05:00,839 --> 00:05:02,000 Speaker 3: war that's playing out. 98 00:05:02,279 --> 00:05:03,680 Speaker 2: That was a huge move by. 99 00:05:03,560 --> 00:05:07,320 Speaker 3: The Beltway, just keeping that tight group where you want 100 00:05:07,400 --> 00:05:10,440 Speaker 3: to sound tough and obviously in terms of what's playing out, 101 00:05:10,960 --> 00:05:14,200 Speaker 3: very significant for ASML and also it just should you 102 00:05:14,240 --> 00:05:18,680 Speaker 3: cannot disrupt the supply chain as all of this constraint. 103 00:05:18,839 --> 00:05:20,960 Speaker 3: Microsoft talked about it as well as pointing out. 104 00:05:20,920 --> 00:05:23,120 Speaker 2: So we've done the cloud business, We've done the chip makers. 105 00:05:23,160 --> 00:05:24,840 Speaker 2: We need to finish with your thing for it your baby. 106 00:05:25,040 --> 00:05:27,200 Speaker 2: We need to talk about Apple, the Mark German report 107 00:05:27,240 --> 00:05:29,479 Speaker 2: of the last couple of days, you've seen it. The 108 00:05:29,600 --> 00:05:33,000 Speaker 2: chance that the iPhone is released in September without all 109 00:05:33,040 --> 00:05:36,080 Speaker 2: the AI goodies. Now you've had this thesis for a 110 00:05:36,080 --> 00:05:38,359 Speaker 2: long time. They've come out with this phone that'd be 111 00:05:38,400 --> 00:05:41,280 Speaker 2: this monster upgrade cycle. It's one of the biggest pillars 112 00:05:41,279 --> 00:05:44,240 Speaker 2: for your bullish call on the Apple stock. Does it 113 00:05:44,320 --> 00:05:46,039 Speaker 2: change with that report from Mark German? 114 00:05:46,360 --> 00:05:48,920 Speaker 3: No at all. I mean a career report by Germans 115 00:05:49,000 --> 00:05:52,760 Speaker 3: or is But developers got it on time, all the marriages. 116 00:05:52,800 --> 00:05:55,080 Speaker 3: Developers are going to build hundreds of apps on it 117 00:05:55,520 --> 00:05:59,720 Speaker 3: and on iPhone sixteen, even if it's an update October. 118 00:05:59,760 --> 00:06:02,800 Speaker 3: We're talking a few weeks and I go back to 119 00:06:02,880 --> 00:06:04,719 Speaker 3: all of our Asia checks will be in Asia again 120 00:06:04,760 --> 00:06:08,440 Speaker 3: this weekend. It started off as eighty million units for 121 00:06:08,480 --> 00:06:11,719 Speaker 3: iPhone sixteen. Guess what it is now based on our checks, 122 00:06:11,839 --> 00:06:14,400 Speaker 3: ninety million. So the point is it is not going 123 00:06:14,400 --> 00:06:16,279 Speaker 3: from eighty to seventies, going to eighty to ninety. 124 00:06:16,320 --> 00:06:17,120 Speaker 2: What that means is. 125 00:06:17,080 --> 00:06:21,000 Speaker 3: Cooper Tino news Cook sees it where demand is going 126 00:06:21,040 --> 00:06:23,760 Speaker 3: to be in an AI driven supercycle. 127 00:06:24,040 --> 00:06:26,680 Speaker 1: Do we already have a sense of what some of 128 00:06:26,720 --> 00:06:30,080 Speaker 1: the AI applications are consumer facing that are going to 129 00:06:30,160 --> 00:06:33,480 Speaker 1: be sort of game changing because I understand on a 130 00:06:33,520 --> 00:06:36,120 Speaker 1: sort of corporate sphere, but just getting sort of an 131 00:06:36,160 --> 00:06:39,120 Speaker 1: emoji that's personalized isn't necessarily a game changer. 132 00:06:39,240 --> 00:06:42,240 Speaker 3: Yeah, of course, and that's why what's so important. A 133 00:06:42,360 --> 00:06:46,279 Speaker 3: year from now, you're gonna have hundreds of apps on 134 00:06:46,360 --> 00:06:49,680 Speaker 3: this iPhone, on the Apple ecosystem that are AI driven. 135 00:06:49,960 --> 00:06:54,200 Speaker 3: That's why developers, that's the hearts and lungs of this story. 136 00:06:54,400 --> 00:06:57,760 Speaker 3: Apple's given it to them Apple Intelligence. Now the AI 137 00:06:57,839 --> 00:07:01,080 Speaker 3: consumer story runs through Cooper Tina, and it just comes 138 00:07:01,080 --> 00:07:04,560 Speaker 3: down to water. This week, Cook's going to talk about. Obviously, 139 00:07:04,720 --> 00:07:06,760 Speaker 3: June I View is almost a background noise to the 140 00:07:06,800 --> 00:07:10,680 Speaker 3: actual the main event September when this gets launched. What 141 00:07:10,840 --> 00:07:14,520 Speaker 3: I View is really a strong upgrade. Second, very importantly China. 142 00:07:15,120 --> 00:07:18,520 Speaker 3: This will be the last negative quarter China growth stories 143 00:07:18,560 --> 00:07:19,240 Speaker 3: back for Apple. 144 00:07:19,480 --> 00:07:20,120 Speaker 2: Before we get went. 145 00:07:20,120 --> 00:07:22,240 Speaker 1: On air and you were talking about how you've got 146 00:07:22,240 --> 00:07:23,600 Speaker 1: a lot of events to go to and you didn't 147 00:07:23,640 --> 00:07:24,400 Speaker 1: really want to show up. 148 00:07:24,520 --> 00:07:25,160 Speaker 2: Very casual. 149 00:07:25,560 --> 00:07:28,560 Speaker 1: What does casual look like for Dan ives so well? 150 00:07:28,560 --> 00:07:31,680 Speaker 3: First of the biggest insult for a college football fan 151 00:07:31,840 --> 00:07:34,720 Speaker 3: or if someone calls you a casual that's to me, 152 00:07:34,840 --> 00:07:37,440 Speaker 3: that is the most insulting you could ever get as 153 00:07:37,440 --> 00:07:40,200 Speaker 3: a sports fan. Someone says you're a casual. Now, obviously 154 00:07:40,320 --> 00:07:43,800 Speaker 3: Farah being a huge F one fan, he is along 155 00:07:43,840 --> 00:07:46,640 Speaker 3: with the Netflix epic got me into F one. I 156 00:07:46,680 --> 00:07:48,960 Speaker 3: will be going to my first F one race in 157 00:07:49,080 --> 00:07:51,480 Speaker 3: Vegas wear my Ferrari gear. 158 00:07:51,680 --> 00:07:54,000 Speaker 2: Well done. You're not a casual, A cashl I would 159 00:07:54,000 --> 00:07:56,040 Speaker 2: say it's a Red Bull fan and I've not been 160 00:07:56,040 --> 00:07:57,320 Speaker 2: involved in a spoil very long. 161 00:07:57,520 --> 00:07:59,480 Speaker 3: The casual the biggest insult. 162 00:07:59,040 --> 00:08:01,120 Speaker 2: For any sports fan, without a doubt. Dan, It's good 163 00:08:01,120 --> 00:08:03,160 Speaker 2: to see you. Dan, I's of webbush A dropped by 164 00:08:03,160 --> 00:08:05,200 Speaker 2: the green room this morning. Dan was talking to Juning 165 00:08:05,240 --> 00:08:07,160 Speaker 2: the Manuell about what was happening in the equity market. 166 00:08:07,240 --> 00:08:09,520 Speaker 2: Dan said he was this close to dressing in black 167 00:08:09,880 --> 00:08:13,320 Speaker 2: for this morning's appearance. When the Microsoft numbers first dropped 168 00:08:25,560 --> 00:08:29,480 Speaker 2: Harris with some real momentum. The latest looks like this 169 00:08:29,640 --> 00:08:32,840 Speaker 2: a new Bloomberg and Morning Console poll showing Kamala Harris 170 00:08:32,840 --> 00:08:36,600 Speaker 2: closing in on Donald Trump's lead across all seven swing states, 171 00:08:36,640 --> 00:08:40,079 Speaker 2: the biggest gains coming in Michigan and Arizona. Henry thetres 172 00:08:40,080 --> 00:08:43,120 Speaker 2: of Vader partners writing this, Kamala Harris's entrance into the 173 00:08:43,200 --> 00:08:45,560 Speaker 2: race has brought the Democratic ticket to high has not 174 00:08:45,600 --> 00:08:48,240 Speaker 2: seen all year and leveled out the twenty four election. 175 00:08:48,480 --> 00:08:51,160 Speaker 2: Our forecast still anticipates that Donald Trump will win the 176 00:08:51,200 --> 00:08:56,000 Speaker 2: election with sixty percent odds to Harris's forty. Henrietta joined 177 00:08:56,080 --> 00:08:58,480 Speaker 2: us now for more. Henryett, I want to get into 178 00:08:58,480 --> 00:09:00,560 Speaker 2: something Lisa and I have been talking about out for 179 00:09:00,600 --> 00:09:03,240 Speaker 2: the last two weeks, or at least the last week. 180 00:09:03,840 --> 00:09:07,040 Speaker 2: This has felt like what we would call inequity markets, 181 00:09:07,080 --> 00:09:10,600 Speaker 2: a position squeeze that the old CEO is left and 182 00:09:10,640 --> 00:09:13,600 Speaker 2: the short positions on the Democratic stock have come off. 183 00:09:14,040 --> 00:09:16,440 Speaker 2: I want to understand if it's more than just that. 184 00:09:16,480 --> 00:09:18,680 Speaker 2: Are we starting to see some real momentum that could 185 00:09:18,800 --> 00:09:21,960 Speaker 2: last as we go through Q three and into Q four. 186 00:09:23,360 --> 00:09:25,360 Speaker 4: I think there's a lot of reason to anticipate that 187 00:09:25,440 --> 00:09:27,360 Speaker 4: this is momentum that has not peaked yet. 188 00:09:27,400 --> 00:09:29,079 Speaker 5: I'll give you a number of reasons why. 189 00:09:29,800 --> 00:09:32,520 Speaker 4: First of all, there was an actual election in Arizona 190 00:09:32,640 --> 00:09:33,079 Speaker 4: last night. 191 00:09:33,160 --> 00:09:34,920 Speaker 5: We've been tracking it for the last. 192 00:09:34,640 --> 00:09:38,920 Speaker 4: Two months, but it's a primary election that Carrie Lake, 193 00:09:39,160 --> 00:09:42,480 Speaker 4: the Republican candidate on the Senate ticket, against Reuben Galeo, 194 00:09:42,559 --> 00:09:46,400 Speaker 4: a more progressive Democrat, think kirston Cinema who is retiring 195 00:09:46,440 --> 00:09:49,800 Speaker 4: this year. Kerry Lake is very close to Donald Trump, 196 00:09:50,240 --> 00:09:52,800 Speaker 4: tours with them, regularly, goes tomorrow, Lago, goes to the 197 00:09:52,800 --> 00:09:56,440 Speaker 4: White House, et cetera. And she only got fifty three, 198 00:09:56,520 --> 00:09:59,439 Speaker 4: I think percent of the vote, which means that amongst Republicans, 199 00:10:00,160 --> 00:10:02,559 Speaker 4: seven percent of Republican voters voted. 200 00:10:02,240 --> 00:10:03,480 Speaker 5: Against her last night. 201 00:10:03,880 --> 00:10:08,120 Speaker 4: That is a trajectory shift in a critical swing state 202 00:10:08,360 --> 00:10:11,360 Speaker 4: that your polls as well laid it on and pointed 203 00:10:11,400 --> 00:10:15,520 Speaker 4: to hard confirmable actual elections as opposed to even just 204 00:10:15,559 --> 00:10:17,600 Speaker 4: polling data, which is the best we can do right now, 205 00:10:17,880 --> 00:10:22,520 Speaker 4: suggesting that independent voters and moderate voters are trending away 206 00:10:22,600 --> 00:10:25,160 Speaker 4: from Donald Trump. And that's something that you showed up 207 00:10:25,200 --> 00:10:29,400 Speaker 4: in swing states across your polling last night, and others 208 00:10:29,440 --> 00:10:34,439 Speaker 4: did as well, including in Pennsylvania, another critical swing state. Effectively, 209 00:10:34,480 --> 00:10:37,520 Speaker 4: everywhere that Trump was ahead, he is now declining in 210 00:10:37,920 --> 00:10:39,559 Speaker 4: and Harris is on the surge. 211 00:10:39,280 --> 00:10:42,719 Speaker 2: Upward the opening that you just described in places like Arizona. 212 00:10:42,760 --> 00:10:45,160 Speaker 2: Do you think those kind of developments influenced the VP 213 00:10:45,360 --> 00:10:46,960 Speaker 2: pick in the coming week. 214 00:10:47,960 --> 00:10:50,679 Speaker 4: Well, it's if my pet belief that Mark Kelly will 215 00:10:50,679 --> 00:10:52,880 Speaker 4: be the vice presidential Canada. I don't have any special 216 00:10:52,880 --> 00:10:55,960 Speaker 4: insight there, but to me, you are not going to 217 00:10:55,960 --> 00:10:59,800 Speaker 4: get a tremendous move from the VP pick in either direction. 218 00:11:00,200 --> 00:11:03,000 Speaker 4: Jade Vince maybe an example of how we could be 219 00:11:03,040 --> 00:11:06,600 Speaker 4: wrong there. His negatives have increased pretty substantially. 220 00:11:06,600 --> 00:11:08,720 Speaker 5: I think he's negative fifteen right now. That might be 221 00:11:08,760 --> 00:11:11,120 Speaker 5: a drag on the ticket, particularly with female voters. 222 00:11:11,480 --> 00:11:13,640 Speaker 4: But for Mark Kelly, I mean you really don't need 223 00:11:13,640 --> 00:11:15,920 Speaker 4: to read too far into it. As my colleague Spencer 224 00:11:15,960 --> 00:11:18,040 Speaker 4: Proma likes to say, I mean they're talking about a 225 00:11:18,160 --> 00:11:21,720 Speaker 4: naval fighter, an ass or not, you know, gun violence 226 00:11:21,800 --> 00:11:24,960 Speaker 4: survivor with his wife Gabby Giffords. It's pretty much a 227 00:11:25,000 --> 00:11:28,000 Speaker 4: no brainer. But even voters in Arizona will say that 228 00:11:28,040 --> 00:11:29,280 Speaker 4: it's not going to move the needle for them. 229 00:11:29,280 --> 00:11:29,760 Speaker 2: I will leave. 230 00:11:29,800 --> 00:11:32,000 Speaker 4: The polling is at sixty percent of people in Arizona 231 00:11:32,080 --> 00:11:34,000 Speaker 4: say picking Mark Kelly won't move the needle. 232 00:11:34,000 --> 00:11:36,040 Speaker 5: I think it's a more broad. 233 00:11:36,120 --> 00:11:39,559 Speaker 4: National approach, specifically on immigration that leads me to think 234 00:11:39,600 --> 00:11:43,079 Speaker 4: that Kelly is the candidet that Kamala Harrison choose. 235 00:11:43,160 --> 00:11:44,680 Speaker 1: And I think it just gave a lot of reasons 236 00:11:44,679 --> 00:11:47,040 Speaker 1: for why this kind of has been a changed race. 237 00:11:47,360 --> 00:11:49,640 Speaker 1: Why do you see the outcome being the same. 238 00:11:51,120 --> 00:11:54,240 Speaker 4: Because I don't have enough data yet. It's really very fresh. 239 00:11:54,240 --> 00:11:57,160 Speaker 4: The Bloomberg Morning Console data is the best and the 240 00:11:57,320 --> 00:12:00,079 Speaker 4: latest and the only data that we have across all 241 00:12:00,080 --> 00:12:03,800 Speaker 4: swing states since Kamala Harris joined the ticket. So it's 242 00:12:03,800 --> 00:12:05,640 Speaker 4: going to take a lot more of that to convince me. 243 00:12:05,800 --> 00:12:08,240 Speaker 4: And as my clients know, I have a very aggressive 244 00:12:08,280 --> 00:12:11,320 Speaker 4: incumbency bias for our purposes. Now, I believe that the 245 00:12:11,320 --> 00:12:14,319 Speaker 4: incumbent in this race is Donald Trump, and I need 246 00:12:14,360 --> 00:12:17,400 Speaker 4: to see the Democratic candidate, particularly in the electoral College, 247 00:12:17,440 --> 00:12:20,440 Speaker 4: pull ahead two to four points in all of those 248 00:12:20,480 --> 00:12:23,680 Speaker 4: states consistently in order for me to change any of 249 00:12:23,679 --> 00:12:27,359 Speaker 4: the races. So I'm looking very closely at Nevada, at Georgia, 250 00:12:27,720 --> 00:12:30,240 Speaker 4: obviously at Pennsylvania, but I think Arizona is moving in 251 00:12:30,280 --> 00:12:31,640 Speaker 4: the direction that Kamala. 252 00:12:31,280 --> 00:12:32,360 Speaker 5: Harris wants to see. 253 00:12:33,000 --> 00:12:36,040 Speaker 4: Donald Trump's best luck is on Pennsylvania and North Carolina. 254 00:12:36,120 --> 00:12:38,800 Speaker 1: Right now, John, I love that Donald Trump is the incumbent, 255 00:12:38,920 --> 00:12:42,400 Speaker 1: and basically Kamala Harris is not being considered as Joe 256 00:12:42,440 --> 00:12:44,280 Speaker 1: Biden's kind of surrogate and any kind of well. 257 00:12:44,240 --> 00:12:45,880 Speaker 2: She make of that, because I remember when Joe Biden 258 00:12:45,880 --> 00:12:48,000 Speaker 2: stepped down. We did, especially in the evening, and the 259 00:12:48,000 --> 00:12:50,000 Speaker 2: first question we all asked about Kamala Harris is how 260 00:12:50,080 --> 00:12:52,800 Speaker 2: much distance she could put between herself and Joe Biden. 261 00:12:52,960 --> 00:12:54,839 Speaker 1: Well, that's exactly the question, Henriette. I mean, how much 262 00:12:55,080 --> 00:12:57,240 Speaker 1: distance is there? Isn't it fair to say that she's 263 00:12:57,440 --> 00:13:03,760 Speaker 1: essentially the incumbent policy president or does she really represent 264 00:13:03,840 --> 00:13:05,840 Speaker 1: an independent voice from Joe Biden. 265 00:13:06,920 --> 00:13:10,080 Speaker 5: Yeah, No, she's definitely a different candidate. 266 00:13:10,160 --> 00:13:13,199 Speaker 4: And I would love if this race were about policy, but. 267 00:13:13,160 --> 00:13:15,000 Speaker 5: We haven't gotten there yet. I mean, whenever we get 268 00:13:15,040 --> 00:13:16,520 Speaker 5: to tax policy, I'll be thrilled. 269 00:13:16,520 --> 00:13:20,080 Speaker 4: But at this point, it's really the change is in 270 00:13:20,400 --> 00:13:26,200 Speaker 4: Democratic activation, specifically, with double digit gains for the Democratic ticket, 271 00:13:26,600 --> 00:13:29,480 Speaker 4: plus twenty five with Black voters, plus twenty four with 272 00:13:29,559 --> 00:13:33,839 Speaker 4: Latino voters, huge gains with female voters, double digit gains 273 00:13:33,840 --> 00:13:34,680 Speaker 4: with youth voters. 274 00:13:34,720 --> 00:13:36,720 Speaker 5: It's a new ticket and she's. 275 00:13:36,480 --> 00:13:39,280 Speaker 4: Not the incumbent because it's brought a brand new basket 276 00:13:39,280 --> 00:13:40,199 Speaker 4: of voters. 277 00:13:40,000 --> 00:13:40,680 Speaker 5: To the field. 278 00:13:40,920 --> 00:13:43,760 Speaker 4: There was a slight uptick in Democratic voter registration in 279 00:13:43,800 --> 00:13:46,600 Speaker 4: North Carolina in the last week, for example, so it's 280 00:13:46,640 --> 00:13:49,839 Speaker 4: not that there is a policy shift, it's that this 281 00:13:49,880 --> 00:13:51,600 Speaker 4: is a fresh face for the ticket. You can see 282 00:13:51,640 --> 00:13:54,280 Speaker 4: it in her approval ratings, which have changed faster than 283 00:13:54,320 --> 00:13:56,160 Speaker 4: any candidate I've ever seen. 284 00:13:56,360 --> 00:13:59,000 Speaker 2: You know, the most ridiculous thing about all of this, Henritta, 285 00:13:59,280 --> 00:14:02,000 Speaker 2: This was the object all along to have the early debate, 286 00:14:02,520 --> 00:14:05,880 Speaker 2: to engage the population, to drum up the enthusiasm, to 287 00:14:05,880 --> 00:14:08,480 Speaker 2: get people engaged early. This is just not how we 288 00:14:08,480 --> 00:14:10,800 Speaker 2: thought things would turn out. It was the objective of 289 00:14:10,800 --> 00:14:12,800 Speaker 2: the Democratic ticket, of course, but we thought on the 290 00:14:12,840 --> 00:14:14,720 Speaker 2: ticket at the top would be Joe Biden and of 291 00:14:14,720 --> 00:14:17,520 Speaker 2: course Lisa. The debate went in a different direction and 292 00:14:17,960 --> 00:14:19,600 Speaker 2: ultimately the outcome has been the same, but with a 293 00:14:19,600 --> 00:14:21,360 Speaker 2: different name on the ticket. It's amazing, isn't it. 294 00:14:21,400 --> 00:14:24,280 Speaker 1: And we're talking instead not about policy, in fact, that's 295 00:14:24,360 --> 00:14:28,200 Speaker 1: kind of lost the stage, or instead talking about weird and. 296 00:14:28,360 --> 00:14:30,880 Speaker 2: It's fair enough, and retch can I jump in just quickly, 297 00:14:30,960 --> 00:14:33,720 Speaker 2: just quickly, when will we talk about policy? We've seen 298 00:14:33,760 --> 00:14:36,640 Speaker 2: a massive change in this election race, and Kamala Harris 299 00:14:36,680 --> 00:14:39,200 Speaker 2: has gone on some scripted rallies, which I get it, 300 00:14:39,240 --> 00:14:41,640 Speaker 2: drumming up loads of enthusiasm, But when do we start 301 00:14:41,640 --> 00:14:43,240 Speaker 2: to hear about actual policy. 302 00:14:46,080 --> 00:14:48,480 Speaker 5: Never I imagine it won't get around to that. 303 00:14:48,600 --> 00:14:50,400 Speaker 4: I mean, at the best case, we could say after 304 00:14:50,480 --> 00:14:53,680 Speaker 4: Labor Day, when people come back from vacation, we'll start 305 00:14:53,680 --> 00:14:57,600 Speaker 4: to tune in. But the immigration and maybe fentanyl are 306 00:14:57,680 --> 00:14:59,880 Speaker 4: areas where I think Trump has a really good chance 307 00:15:00,560 --> 00:15:03,200 Speaker 4: slamming Kamala Harris and taking away some of her early 308 00:15:03,560 --> 00:15:07,040 Speaker 4: and hopefully for him not locked in gains. But I 309 00:15:07,040 --> 00:15:10,120 Speaker 4: don't see a race between Kamala Harris and Donald Trump 310 00:15:10,480 --> 00:15:13,320 Speaker 4: talking about you know, capital gains, tax rates or a 311 00:15:13,320 --> 00:15:14,200 Speaker 4: corporate tax rate. 312 00:15:14,440 --> 00:15:15,840 Speaker 5: I really just don't see that happening. 313 00:15:15,920 --> 00:15:18,560 Speaker 4: I think it's more about the top of the message, 314 00:15:19,440 --> 00:15:22,920 Speaker 4: and the gender divide is probably the biggest indicator of that. 315 00:15:23,000 --> 00:15:25,800 Speaker 4: The largest divide in the electorate right now is between. 316 00:15:25,440 --> 00:15:26,000 Speaker 5: Men and women. 317 00:15:26,400 --> 00:15:41,240 Speaker 2: Interesting, Henretta, thank you, Henrita. Trace their avader partners. Let's 318 00:15:41,240 --> 00:15:43,200 Speaker 2: talk to a man who's been in the actual room 319 00:15:43,240 --> 00:15:45,760 Speaker 2: making the decision many times before over the years. Joining 320 00:15:45,840 --> 00:15:48,200 Speaker 2: us now is Jim Bullat, the dean of the Mitchell E. 321 00:15:48,360 --> 00:15:51,160 Speaker 2: Daniels Junior School of Business at Purdue University and the 322 00:15:51,240 --> 00:15:54,320 Speaker 2: former Saint Louis fed President. Jim, It's wonderful to catch 323 00:15:54,360 --> 00:15:57,240 Speaker 2: up with you, sir, once again, a timely conversation. You 324 00:15:57,320 --> 00:16:00,920 Speaker 2: have lived this repeatedly, and you've experienced the calls coming 325 00:16:00,960 --> 00:16:05,560 Speaker 2: from outside the building, beyond the FMC to do something. 326 00:16:05,800 --> 00:16:07,800 Speaker 2: And we've heard plenty of those calls. You've seen them too, 327 00:16:08,080 --> 00:16:10,000 Speaker 2: from the likes of Alan Blinder, from the likes of 328 00:16:10,040 --> 00:16:12,960 Speaker 2: Bill Dudley, from Muhammad al Arians saying this Federal Reserve 329 00:16:13,400 --> 00:16:15,040 Speaker 2: needs to get a move on. I want to pick 330 00:16:15,080 --> 00:16:17,400 Speaker 2: up on the last one, Muhammad Aller, And the point 331 00:16:17,400 --> 00:16:20,000 Speaker 2: that he's made is a similar one that you've made, Jim, 332 00:16:20,080 --> 00:16:22,320 Speaker 2: is that this Federal Reserve seems to have become more 333 00:16:22,400 --> 00:16:26,200 Speaker 2: data point dependent and not data dependent. Can you just 334 00:16:26,240 --> 00:16:28,920 Speaker 2: explain the distinction and the importance between the two. 335 00:16:31,120 --> 00:16:32,960 Speaker 6: Yeah. I think if you say you're waiting to the 336 00:16:33,040 --> 00:16:36,680 Speaker 6: next meeting because you want to see some data between 337 00:16:36,720 --> 00:16:42,040 Speaker 6: now and the next meeting, that makes markets wonder, Okay, 338 00:16:42,040 --> 00:16:45,880 Speaker 6: well what is it that could derail a red cut 339 00:16:46,320 --> 00:16:50,200 Speaker 6: between now and the next meeting? If you do react 340 00:16:50,240 --> 00:16:54,160 Speaker 6: to that data, then that's kind of data point dependence. 341 00:16:54,160 --> 00:16:56,520 Speaker 6: And I think that's what Muhammad al Arian has been 342 00:16:56,600 --> 00:17:01,120 Speaker 6: talking about. One thing that I did, I'd often say 343 00:17:01,160 --> 00:17:03,240 Speaker 6: when I was on the committee was that you know, 344 00:17:03,920 --> 00:17:05,720 Speaker 6: if you know you're going to do something with one 345 00:17:05,800 --> 00:17:08,600 Speaker 6: hundred percent probability at the next meeting, why aren't you 346 00:17:08,680 --> 00:17:11,359 Speaker 6: doing it at this meeting? And I think that gets 347 00:17:11,520 --> 00:17:14,080 Speaker 6: often gets the committee into a little bit of hot 348 00:17:14,119 --> 00:17:18,359 Speaker 6: water because sometimes the data don't cooperate between this meeting 349 00:17:18,359 --> 00:17:21,000 Speaker 6: and the next meeting, so it can be managed, but 350 00:17:21,160 --> 00:17:23,600 Speaker 6: it's it's kind of a committee dynamic that's been on 351 00:17:23,680 --> 00:17:26,080 Speaker 6: and off over the last decade or more. 352 00:17:26,200 --> 00:17:28,960 Speaker 1: This is the reason why many people, including Muhammad Larry 353 00:17:29,040 --> 00:17:31,200 Speaker 1: and say the FED probably is not going to cut 354 00:17:31,280 --> 00:17:34,240 Speaker 1: rates today by twenty five basis points, even if there 355 00:17:34,280 --> 00:17:36,280 Speaker 1: is a consensus that they are going to in September, 356 00:17:36,320 --> 00:17:39,320 Speaker 1: because they haven't telegraphed it. In New disrupt markets saying 357 00:17:39,320 --> 00:17:41,560 Speaker 1: what do they now think that they didn't think at 358 00:17:41,560 --> 00:17:44,879 Speaker 1: the last meeting. However, Liz Young, we were talking to 359 00:17:44,960 --> 00:17:48,440 Speaker 1: we were also talking to James Camp of Ego Asset Management. 360 00:17:48,520 --> 00:17:51,080 Speaker 1: They're suggesting the FED could set up a fifty basis 361 00:17:51,119 --> 00:17:54,640 Speaker 1: point rate cut in September. Are you sympathetic with that. 362 00:17:56,160 --> 00:17:59,440 Speaker 6: Now? I think that's too much. What I do think 363 00:17:59,480 --> 00:18:03,760 Speaker 6: could happen is that they'll get going in September, but 364 00:18:03,880 --> 00:18:11,200 Speaker 6: the discussion will turn to what about November, what about December? 365 00:18:11,240 --> 00:18:15,080 Speaker 6: What will the pace be? Shaf Powell said that this 366 00:18:15,160 --> 00:18:18,640 Speaker 6: first rate cut is consequential because it starts a process. 367 00:18:19,520 --> 00:18:23,679 Speaker 6: What is that process? And if the data continue to 368 00:18:23,800 --> 00:18:27,800 Speaker 6: confirm disinflationary trends, I think you could bring November onto 369 00:18:27,840 --> 00:18:31,600 Speaker 6: the table and then you could have a sequence of 370 00:18:31,680 --> 00:18:34,040 Speaker 6: rake cuts into the first part of next year, and 371 00:18:34,080 --> 00:18:37,600 Speaker 6: then the committee could assess at that point where they 372 00:18:37,640 --> 00:18:39,760 Speaker 6: are and how they want to play it from that point. 373 00:18:39,920 --> 00:18:41,800 Speaker 1: Do you feel like they've backed themselves into a corner 374 00:18:41,840 --> 00:18:45,159 Speaker 1: in some ways by being so data dependent, by just 375 00:18:45,200 --> 00:18:47,560 Speaker 1: repeating that sort of de facto to every question. 376 00:18:50,520 --> 00:18:53,720 Speaker 6: I don't know. This is a pretty successful policy here. 377 00:18:54,400 --> 00:18:58,840 Speaker 6: You know, output growing, you know, between two and two 378 00:18:58,880 --> 00:19:01,960 Speaker 6: and a half percent on a rate that's very close 379 00:19:02,000 --> 00:19:05,879 Speaker 6: to the potential growth rate for the US economy, Unemployment 380 00:19:06,040 --> 00:19:10,960 Speaker 6: coming up ever so slightly as they predicted, inflation coming 381 00:19:11,040 --> 00:19:15,720 Speaker 6: down as they predicted. There's a lot to like about this. 382 00:19:16,000 --> 00:19:18,919 Speaker 6: And the last piece of the soft landing would be 383 00:19:19,000 --> 00:19:23,040 Speaker 6: to get the short end of the curve down and 384 00:19:23,640 --> 00:19:26,560 Speaker 6: get rid of the inversion of the yield curve. So 385 00:19:27,200 --> 00:19:30,119 Speaker 6: to do that in an organized way without signaling that 386 00:19:30,160 --> 00:19:32,199 Speaker 6: you're worried about the economy, because I don't think they 387 00:19:32,240 --> 00:19:33,840 Speaker 6: are worried about the economy right now. 388 00:19:35,440 --> 00:19:36,640 Speaker 1: Is really the trick here. 389 00:19:36,640 --> 00:19:38,159 Speaker 2: Jim, Do you think they should be worried about the 390 00:19:38,160 --> 00:19:39,480 Speaker 2: economy right now? 391 00:19:40,880 --> 00:19:43,600 Speaker 6: You know, I think it's still to me, it looks 392 00:19:43,600 --> 00:19:45,879 Speaker 6: like an economy that's in a soft landing is growing 393 00:19:45,920 --> 00:19:51,359 Speaker 6: at a trend pace pretty good. Of course, there's always 394 00:19:51,480 --> 00:19:55,359 Speaker 6: risks out there. There's always the possibility that some big 395 00:19:55,400 --> 00:20:00,639 Speaker 6: shock would occur, or one of the geopolitical events wood 396 00:20:00,840 --> 00:20:03,919 Speaker 6: would sort of roll back onto the global macroeconomy. But 397 00:20:05,280 --> 00:20:09,160 Speaker 6: you just sitting here with this data, this looks awfully good. 398 00:20:09,400 --> 00:20:11,919 Speaker 6: And so if they can get the last piece of 399 00:20:11,920 --> 00:20:13,960 Speaker 6: the puzzle in place, I think they'll be in great shape. 400 00:20:14,000 --> 00:20:15,879 Speaker 2: I said earlier this morning that the Federal Reserve is 401 00:20:15,880 --> 00:20:17,920 Speaker 2: not in the crystal wall business. It's in the risk 402 00:20:17,960 --> 00:20:20,640 Speaker 2: management business, and Jim, you know that better than most. 403 00:20:20,680 --> 00:20:22,399 Speaker 2: And I just wonder, when you think about the balance 404 00:20:22,440 --> 00:20:25,360 Speaker 2: of risk right now, if the risk for higher unemployment 405 00:20:25,440 --> 00:20:28,040 Speaker 2: is greater than the risk for higher inflation, do they 406 00:20:28,080 --> 00:20:30,360 Speaker 2: need to formalize that somehow in the statement that comes 407 00:20:30,359 --> 00:20:31,920 Speaker 2: out a little bit later on this afternoon. 408 00:20:34,840 --> 00:20:37,480 Speaker 6: Yeah, I would say they probably think it's more balanced 409 00:20:37,920 --> 00:20:42,080 Speaker 6: than it was. You had this overheated labor market, which 410 00:20:42,160 --> 00:20:46,040 Speaker 6: is now much closer to the pre pandemic labor market, 411 00:20:46,080 --> 00:20:50,800 Speaker 6: but that labor market is considered pretty strong, and now 412 00:20:50,840 --> 00:20:56,119 Speaker 6: you've got inflation not being nearly the still elevated, moderately elevated, 413 00:20:56,160 --> 00:20:58,320 Speaker 6: but not nearly the concern that it would have been 414 00:20:58,359 --> 00:21:01,840 Speaker 6: a year ago or teen or sixteen months ago, and 415 00:21:01,920 --> 00:21:04,400 Speaker 6: it was up closer to five percent on the preferred 416 00:21:04,440 --> 00:21:06,679 Speaker 6: measures of the committee. 417 00:21:06,720 --> 00:21:07,679 Speaker 5: So I think. 418 00:21:09,040 --> 00:21:12,760 Speaker 6: Things are relatively balanced now they can begin to lower 419 00:21:12,800 --> 00:21:15,679 Speaker 6: the policy rate. There is a risk though that you know, 420 00:21:16,160 --> 00:21:19,280 Speaker 6: when outputs growing a trend and unemployments at the right 421 00:21:19,359 --> 00:21:23,480 Speaker 6: level and everything's going good, well, the policy rate should 422 00:21:23,520 --> 00:21:27,159 Speaker 6: be at its neutral level as well. And that's the 423 00:21:27,240 --> 00:21:29,960 Speaker 6: part of the soft landing that isn't there. So the 424 00:21:30,359 --> 00:21:34,160 Speaker 6: you know, comments by Alan Blinder and Muhammad al Area 425 00:21:34,160 --> 00:21:38,240 Speaker 6: and Bill Dudley are reflecting that I think is that 426 00:21:39,200 --> 00:21:42,240 Speaker 6: they couldn't find a moment earlier this year to get 427 00:21:42,240 --> 00:21:47,840 Speaker 6: started on this downward descent, and they're hoping that September 428 00:21:47,880 --> 00:21:48,639 Speaker 6: will be that moment. 429 00:21:48,800 --> 00:21:52,080 Speaker 1: The problem with going back to neutral is that there 430 00:21:52,119 --> 00:21:54,400 Speaker 1: is a huge debate raging in markets, and I'm sure 431 00:21:54,400 --> 00:21:56,600 Speaker 1: at the foot as well, and what neutral looks like 432 00:21:56,840 --> 00:21:59,480 Speaker 1: and whether we truly are in a higher inflation type 433 00:21:59,480 --> 00:22:02,520 Speaker 1: of regime or whether we're going back to something familiar 434 00:22:02,520 --> 00:22:05,560 Speaker 1: to pre pandemic. It seems like about six months ago 435 00:22:05,600 --> 00:22:08,040 Speaker 1: everyone was saying we're in a new higher inflation regime, 436 00:22:08,119 --> 00:22:11,480 Speaker 1: and increasingly it just seems like there's some doubt entering 437 00:22:11,560 --> 00:22:14,040 Speaker 1: in that maybe we're reverting back to what we knew, 438 00:22:14,320 --> 00:22:15,680 Speaker 1: say five six years ago. 439 00:22:15,720 --> 00:22:16,600 Speaker 2: Where are you in this. 440 00:22:19,920 --> 00:22:23,280 Speaker 6: On that, I would say that the Committee should guard 441 00:22:23,320 --> 00:22:27,960 Speaker 6: against inflation dipping below the inflation target, because I think 442 00:22:28,000 --> 00:22:33,080 Speaker 6: if that happens, then you will get this discussion about, Okay, 443 00:22:33,080 --> 00:22:35,439 Speaker 6: we're going back to the regime that was in place 444 00:22:35,520 --> 00:22:40,639 Speaker 6: between twenty nine and twenty nineteen, exceptionally low inflation, exceptionally 445 00:22:40,680 --> 00:22:44,240 Speaker 6: low nominal interest rates, even negative nominal interest rates in 446 00:22:44,280 --> 00:22:47,639 Speaker 6: many parts of the world, they'd be worried about that. 447 00:22:47,720 --> 00:22:49,480 Speaker 6: So I don't think you want to do that. You 448 00:22:49,560 --> 00:22:53,920 Speaker 6: want to approach the inflation target asymptotically from above. We're 449 00:22:53,960 --> 00:22:58,119 Speaker 6: at about two and a half percent inflation right now, PCE, 450 00:22:59,359 --> 00:23:02,600 Speaker 6: you'd like that to gently come down to two percent. 451 00:23:03,720 --> 00:23:05,679 Speaker 6: Even when they lower the policy rate will still be 452 00:23:05,680 --> 00:23:08,639 Speaker 6: a restricted policy. They will still be putting down pressure 453 00:23:08,640 --> 00:23:10,360 Speaker 6: on inflation, but you don't want to put too much 454 00:23:10,359 --> 00:23:13,959 Speaker 6: pressure on now because you want a glide path into 455 00:23:14,400 --> 00:23:15,399 Speaker 6: the two percent target. 456 00:23:15,800 --> 00:23:18,760 Speaker 1: Based on what you just said earlier, said that the 457 00:23:18,800 --> 00:23:24,119 Speaker 1: balance of risks is basically pretty equally balanced, measured at 458 00:23:24,119 --> 00:23:26,560 Speaker 1: a time where inflation is coming down but still present 459 00:23:26,640 --> 00:23:29,480 Speaker 1: and employment still looks like it's fairly strong. 460 00:23:29,720 --> 00:23:30,640 Speaker 2: Based on the fact that you. 461 00:23:30,560 --> 00:23:33,760 Speaker 1: Think that there is a greater risk of inflation undershooting 462 00:23:34,119 --> 00:23:36,359 Speaker 1: than overshooting, that that is the bigger risk that the 463 00:23:36,359 --> 00:23:39,040 Speaker 1: FED needs to counter. What would be the argument for 464 00:23:39,119 --> 00:23:40,040 Speaker 1: them not to say that the. 465 00:23:40,000 --> 00:23:42,280 Speaker 6: Power of risks so far as a risk that hasn't 466 00:23:42,320 --> 00:23:45,920 Speaker 6: even been talked about. But now it's time to start 467 00:23:45,920 --> 00:23:48,280 Speaker 6: thinking about that as you try to get this last 468 00:23:48,359 --> 00:23:53,240 Speaker 6: leg of the soft landing in place. And so you 469 00:23:53,280 --> 00:23:57,280 Speaker 6: know you're coming off you know, five percent core, you 470 00:23:57,280 --> 00:24:01,520 Speaker 6: know core PC inflation, you're kind of it's traumatizing for 471 00:24:01,560 --> 00:24:05,040 Speaker 6: a central banker. So right now they've just been focused 472 00:24:05,040 --> 00:24:07,280 Speaker 6: on let's let's make sure inflation is not going back 473 00:24:07,359 --> 00:24:09,639 Speaker 6: up and that that was the story certainly in the 474 00:24:09,640 --> 00:24:12,840 Speaker 6: first quarter of this year. But now that you've got 475 00:24:13,160 --> 00:24:16,960 Speaker 6: better inflation reports, now you have to think about, you know, 476 00:24:16,960 --> 00:24:19,760 Speaker 6: how do we play the end game here, declare victory, 477 00:24:19,920 --> 00:24:22,400 Speaker 6: get into the soft landing, and then then see what's 478 00:24:22,400 --> 00:24:23,080 Speaker 6: around the corner. 479 00:24:23,200 --> 00:24:24,960 Speaker 1: So why wouldn't they just put an emphasis on the 480 00:24:24,960 --> 00:24:27,879 Speaker 1: employment market and say, if they're clear signs that it's softening, 481 00:24:28,080 --> 00:24:31,120 Speaker 1: they're clear signs that it's normalizing, and we aren't sure 482 00:24:31,160 --> 00:24:33,280 Speaker 1: where it's heading right now, we're going to focus more 483 00:24:33,280 --> 00:24:34,200 Speaker 1: on that than inflation. 484 00:24:36,280 --> 00:24:40,359 Speaker 6: I think they've been gently, you know, gently saying that there. 485 00:24:41,000 --> 00:24:44,680 Speaker 6: But but really the normal the labor market has been 486 00:24:44,720 --> 00:24:48,440 Speaker 6: normalizing from a very hot market. You had two job 487 00:24:48,520 --> 00:24:53,359 Speaker 6: openings for every unemployed worker, you know, just astoundingly high. 488 00:24:53,600 --> 00:24:57,679 Speaker 6: Now you still have one point two openings per unemployed 489 00:24:57,720 --> 00:25:01,679 Speaker 6: worker or so that that's the pre pandemic number that 490 00:25:01,760 --> 00:25:04,320 Speaker 6: was always that was also a good labor market. So 491 00:25:05,160 --> 00:25:07,960 Speaker 6: it's not that the labor market is deteriorating in a 492 00:25:08,000 --> 00:25:11,920 Speaker 6: way that causes alarm or would cause the committee to move. 493 00:25:13,000 --> 00:25:16,640 Speaker 6: But you have to ask if in Austin gools view, 494 00:25:16,640 --> 00:25:21,199 Speaker 6: the Chicago Fed has asked, you know, if you thought 495 00:25:21,280 --> 00:25:25,160 Speaker 6: five and three eighths was the right policy rate last 496 00:25:25,160 --> 00:25:28,200 Speaker 6: summer when inflation was much higher, why do you think 497 00:25:28,240 --> 00:25:31,080 Speaker 6: five and three ates is the same. Uh, you know, 498 00:25:31,119 --> 00:25:34,160 Speaker 6: it's also the right policy rate today with a little 499 00:25:34,200 --> 00:25:38,000 Speaker 6: bit higher unemployment and much lower inflation. So you do 500 00:25:38,119 --> 00:25:39,960 Speaker 6: have to react to the data in the big in 501 00:25:40,040 --> 00:25:43,080 Speaker 6: the big picture, and I think that's you know, the 502 00:25:43,119 --> 00:25:45,520 Speaker 6: committee is looking for the right way to do that, 503 00:25:45,560 --> 00:25:47,640 Speaker 6: in the right moment to do that, and it looks 504 00:25:47,680 --> 00:25:49,200 Speaker 6: like September is going to be that moment. 505 00:25:49,320 --> 00:25:51,320 Speaker 2: Hi, Jim, border up, I'm not doing it right. I 506 00:25:51,359 --> 00:25:53,679 Speaker 2: think I'm doing it right. Thomas and Lewis fed President 507 00:25:53,720 --> 00:25:56,720 Speaker 2: Jim Filler out of patunity. Now appreciate it. Thank you 508 00:25:56,840 --> 00:26:00,840 Speaker 2: very much. This is the Bloomberg Seventans podcast, bringing you 509 00:26:01,200 --> 00:26:04,600 Speaker 2: the best in markets, economics, and geopolitics. You can watch 510 00:26:04,640 --> 00:26:07,400 Speaker 2: the show live on Bloomberg TV weekday mornings from six 511 00:26:07,440 --> 00:26:11,800 Speaker 2: am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 512 00:26:11,960 --> 00:26:14,200 Speaker 2: or anywhere else you listen, and as always on the 513 00:26:14,200 --> 00:26:16,640 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.