WEBVTT - Surveillance: Dutta on the Fed 0:00:05.120 --> 0:00:08.480 This is the Bloomberg Surveillance podcast. I'm Tom Keene, along 0:00:08.520 --> 0:00:12.319 with Jonathan Farrow and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.880 for insight from the best an economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.079 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:31.159 the Bloomberg Terminal, and the Bloomberg Business app. In the 0:00:31.200 --> 0:00:34.479 equity space, we heard it from the technical analysis giant, 0:00:34.880 --> 0:00:39.519 Ralph Ankompora, Edward Yardenni of Yale CJ. Lawrence is his 0:00:39.600 --> 0:00:42.800 own shop. On top of it, get into the stock 0:00:42.840 --> 0:00:46.280 market in October of last year, and on the economic 0:00:46.520 --> 0:00:49.879 side of why weel C plus I plus G plus NX. 0:00:50.560 --> 0:00:54.959 Was Neil dudda very lonely at Renaissance Macro a year ago. 0:00:55.080 --> 0:00:57.560 We're really coming out a year ago, Neil, from your 0:00:57.720 --> 0:01:01.080 arch call, let's review. What did you see in September 0:01:01.520 --> 0:01:02.960 of twenty twenty two. 0:01:04.959 --> 0:01:06.560 Well, thanks for that intro, Tom. 0:01:06.640 --> 0:01:08.679 You always make me look better than I actually do, 0:01:10.880 --> 0:01:13.280 so I appreciate it, but you know, I think it 0:01:13.360 --> 0:01:15.199 was for me. It boiled down to something very simple, 0:01:15.280 --> 0:01:20.680 which is wage inflation. Was hanging in there while price 0:01:20.720 --> 0:01:23.840 inflation was coming down. I mean, that was the principal 0:01:23.880 --> 0:01:27.280 risk of the economy. In the spring of twenty twenty two, 0:01:27.360 --> 0:01:30.360 you had a very aggressive FED. You had rising food 0:01:30.360 --> 0:01:33.880 and energy prices that shocked household incomes due to the 0:01:33.959 --> 0:01:37.639 Russian invasion of Ukraine. Of course, as we got towards 0:01:37.640 --> 0:01:39.280 the end of the year, a lot of that shock 0:01:39.319 --> 0:01:42.640 had gone away, while the labor markets were still kind 0:01:42.640 --> 0:01:46.319 of hanging in there, So real incomes were climbing, and 0:01:46.360 --> 0:01:52.360 that meant stronger consumer spending ultimately, and that's why the economy. 0:01:52.040 --> 0:01:52.280 Sort of. 0:01:54.160 --> 0:01:56.960 Remember early in the year, tom everyone was betting on 0:01:57.000 --> 0:02:02.280 a FED pivot and we saw a very you know, 0:02:02.320 --> 0:02:04.800 we saw a modest decline in mortgage rates as a 0:02:04.800 --> 0:02:08.240 result of that, but that modest drop elicited a fairly 0:02:09.240 --> 0:02:13.040 robust response in housing market activity. So there's a lot 0:02:13.080 --> 0:02:16.639 of pent up demand there for housing, and so I think, 0:02:16.720 --> 0:02:20.120 you know, when housing is working, it's difficult to be 0:02:20.320 --> 0:02:21.600 very verish on the economy. 0:02:21.639 --> 0:02:26.040 If we have disinflation or leveling of inflation. What does 0:02:26.160 --> 0:02:30.960 nominal GDP do, Because top line GDP, your real GDP 0:02:31.160 --> 0:02:36.680 optimism with whatever inflation is linked into revenues of corporations. 0:02:36.760 --> 0:02:39.560 What's the data nominal GDP call. 0:02:41.400 --> 0:02:45.320 I mean, it's at least six percent if you believe 0:02:45.400 --> 0:02:50.560 the If you believe the last employment report. When you 0:02:50.600 --> 0:02:55.480 look at aggregate weekly income, aggregate weekly payrolls sort of 0:02:55.480 --> 0:02:57.480 the sum product of jobs, hours and earnings over the 0:02:57.560 --> 0:03:00.640 last three months, that number is upset seven percent at 0:03:00.680 --> 0:03:03.280 an annual rate. So you know, the labor market sort 0:03:03.320 --> 0:03:06.120 of impulse phenomenal growth is quite strong as well. So 0:03:06.960 --> 0:03:11.920 we have an unsustainably strong economy still, and this is 0:03:11.960 --> 0:03:17.240 happening at a time when the FED is taking, you know, 0:03:17.360 --> 0:03:20.440 steps to the exit door. So you know, to me, 0:03:20.600 --> 0:03:23.359 I think the risk and this is what I think 0:03:23.440 --> 0:03:25.600 makes me not an optimist, is that the risk is 0:03:25.639 --> 0:03:30.400 that you know, the FED is prematurely declaring victory. I 0:03:30.440 --> 0:03:32.920 do see a lot of cyclical momentum in the economy 0:03:33.000 --> 0:03:35.960 right now, and the FED stepping back. I think that 0:03:36.000 --> 0:03:37.960 could set ups up for a problem as we go 0:03:38.000 --> 0:03:39.000 into twenty twenty four. 0:03:39.080 --> 0:03:42.160 Yeah, the fact that you said an unsustainably hot economy, 0:03:42.200 --> 0:03:45.560 an unsustainable level of growth in the US raises this 0:03:45.680 --> 0:03:49.320 real question, what's going to make it unsustainable? Is it 0:03:49.360 --> 0:03:52.560 the inflation story that you see as researching. We've talked 0:03:52.600 --> 0:03:55.000 about this before and the fact that the Fed's not 0:03:55.160 --> 0:03:58.360 there or is it just that you cannot continue in 0:03:58.400 --> 0:04:01.080 a vacuum, So at some point it's going to implode 0:04:01.080 --> 0:04:01.640 on itself. 0:04:02.920 --> 0:04:04.800 Well, I don't know that it will implode on itself 0:04:04.800 --> 0:04:07.360 without the FED doing something about it. And of course, 0:04:07.600 --> 0:04:10.680 you know, the problems for markets are always when there's 0:04:10.720 --> 0:04:13.920 a disconnect between what the FED wants to do and 0:04:13.960 --> 0:04:17.719 what they should do. That's when the problems come up. 0:04:17.800 --> 0:04:20.560 And you know, I think the FED should not be 0:04:20.600 --> 0:04:22.800 signaling rate cuts next year. I mean that to me 0:04:22.960 --> 0:04:26.119 is a bear. You know, that's like an easy first 0:04:26.120 --> 0:04:28.280 thing that they should do is not signal rate cuts. 0:04:29.240 --> 0:04:32.800 They need to maintain a tight monetary stance because frankly, 0:04:33.520 --> 0:04:39.480 real GDP growth is running last I checked six percent 0:04:39.560 --> 0:04:42.000 at an annual rate over the last three months. Now, 0:04:42.080 --> 0:04:45.800 you can talk about revisions, you can talk about you know, 0:04:45.839 --> 0:04:48.040 that's not where the underlying growth rate is. But if 0:04:48.040 --> 0:04:51.919 you look at monthly GDP as of July, over the 0:04:52.040 --> 0:04:55.440 last three months ending in July, it's up six percent 0:04:55.520 --> 0:04:56.400 at an annual rate. 0:04:56.760 --> 0:05:01.880 I know that's not the underlying trend. It's above trend growth. 0:05:02.080 --> 0:05:03.440 Well, and this is the reason why a lot of 0:05:03.440 --> 0:05:05.120 people are talking about the same thing that you are. 0:05:05.160 --> 0:05:08.719 We heard from Katie Kaminski over at Alpha Simplex basically 0:05:08.760 --> 0:05:10.760 saying the same thing that you are, in different ways, 0:05:10.800 --> 0:05:13.640 and she's bearish on bonds because she sees this coming 0:05:13.680 --> 0:05:16.800 to the foe and yields having to remain higher for longer. 0:05:17.240 --> 0:05:20.800 There is a question, though, embedded in Goldman Sachs's discussion 0:05:21.120 --> 0:05:23.320 of the long and variable lags, and maybe this is 0:05:23.360 --> 0:05:25.920 an economy that can shrug off a five percent FED 0:05:25.960 --> 0:05:28.600 funds rate and it's not going to matter. So at 0:05:28.640 --> 0:05:31.719 what point do you see higher bond yields as not 0:05:31.880 --> 0:05:35.320 inconsistent with higher stock prices, with higher valuations, with it 0:05:35.320 --> 0:05:38.080 a continue rally in the equity market. 0:05:40.200 --> 0:05:42.400 Well, I mean, I think right now the. 0:05:44.000 --> 0:05:47.600 Combination is reasonably good for stocks, right because the FED 0:05:47.680 --> 0:05:50.640 is backing off and you have strong growth and that's 0:05:50.800 --> 0:05:52.360 you know, so the Fed's sort of off your neck. 0:05:52.440 --> 0:05:54.599 I think at least through the end of the year. 0:05:54.640 --> 0:05:56.560 I mean, if they're going to hike again, it'll probably 0:05:56.600 --> 0:05:58.359 be in December. So I don't really think we have 0:05:58.400 --> 0:06:02.839 to worry about the FED you know, until then, and 0:06:02.920 --> 0:06:05.400 this is happening at a time when there's cyclical momentum 0:06:05.480 --> 0:06:08.880 in the in the economy. The fact is is that 0:06:09.040 --> 0:06:13.719 goods spending, consumer spending on goods is up over three 0:06:13.760 --> 0:06:18.159 percent against last year, and during that time, non farm 0:06:18.200 --> 0:06:21.720 inventories have been contracting around half a percentage point on 0:06:21.800 --> 0:06:25.200 average per quarter. Again, that's an unsustainable draft on an inventory. 0:06:25.240 --> 0:06:26.479 So what are you going to se You're gonna see 0:06:26.520 --> 0:06:32.240 inventory's restock. That's going to booy manufacturing production again cyclical industries. 0:06:32.680 --> 0:06:35.400 So that should be good for equities. The question is 0:06:36.040 --> 0:06:40.000 when does the FED wake up and realize that, you know, 0:06:40.080 --> 0:06:44.720 long and variable lags are not working out as neat 0:06:44.760 --> 0:06:48.120 and cleanly as they have in their in the Fervist model. 0:06:48.080 --> 0:06:51.279 Based on they. 0:06:49.920 --> 0:06:51.480 May have to step on the brakes even more. 0:06:51.520 --> 0:06:52.440 So what does that mean? 0:06:52.560 --> 0:06:52.720 Right? 0:06:52.760 --> 0:06:54.520 And that's exactly where I was going to go. How 0:06:54.600 --> 0:06:57.320 high do rates have to go in order to curtail 0:06:57.680 --> 0:07:00.000 some of what you see as unsustainable growth in the US? 0:07:00.040 --> 0:07:05.479 Yes, I mean to me, I think that they you 0:07:05.600 --> 0:07:07.880 need to keep the possibility on there for them to 0:07:07.960 --> 0:07:10.480 start to hike again in the first half of next 0:07:10.520 --> 0:07:14.560 year at a minimum, they're. 0:07:14.320 --> 0:07:14.840 Going to price. 0:07:14.880 --> 0:07:16.680 I mean, I think they have four rate cuts priced 0:07:16.680 --> 0:07:20.320 into the summary of economic projections right now. It's hard 0:07:20.320 --> 0:07:23.160 to see that surviving in September. So, you know, I 0:07:23.160 --> 0:07:24.080 think let's start there. 0:07:25.240 --> 0:07:29.640 Neil in an economics textbook, chapter twenty three or twenty 0:07:29.680 --> 0:07:34.680 four links all of Ziconobabbel into the stock market. Take 0:07:34.760 --> 0:07:38.280 the Dutta optimism and the corporations they are going to 0:07:38.320 --> 0:07:41.520 have to deal with an improved real rate, they're going 0:07:41.600 --> 0:07:43.840 to have to deal with a high nominal rate, you 0:07:43.880 --> 0:07:46.400 know it, three years, five years as well. How does 0:07:46.400 --> 0:07:48.880 a stock market respond to that? How does a stock 0:07:48.960 --> 0:07:54.440 market react to an overweighted optimistic Dutta world. 0:07:55.520 --> 0:07:58.520 Well, so I think you could call it sort of 0:07:58.520 --> 0:08:01.320 an inflationary boom. I think that might be what we're 0:08:01.360 --> 0:08:04.000 returning to. And if that's the case, that's an environment 0:08:04.040 --> 0:08:09.640 where stocks can work. But I mean, it's unambiguously bad 0:08:09.640 --> 0:08:12.200 for bonds, but for stocks, I think it's an environment 0:08:12.240 --> 0:08:15.600 where you should see continued positive returns, maybe not, you know, 0:08:15.640 --> 0:08:18.760 somewhat below the historical norm. Obviously, if you have higher 0:08:18.800 --> 0:08:21.080 real interest rates that hurts equities, But if you have 0:08:21.120 --> 0:08:24.160 continued growth in the economy, that means that actual and 0:08:24.160 --> 0:08:25.560 projected earnings will hang in there. 0:08:25.600 --> 0:08:27.960 So just because of time, you know, I got to 0:08:27.960 --> 0:08:31.360 get this in. How is an inflationary boom different now 0:08:31.760 --> 0:08:33.679 from the horror of the sixties. 0:08:36.240 --> 0:08:38.640 Well, that was obviously well the horrors of the sixties 0:08:38.640 --> 0:08:41.480 and the sixties were a reasonably good good period for 0:08:41.640 --> 0:08:46.360 stock market turns in the economy. An inflationary boom again, 0:08:46.400 --> 0:08:49.000 as I say, is something that where equities can work. 0:08:49.400 --> 0:08:53.040 What you don't want is is stagflation like conditions where 0:08:53.080 --> 0:08:55.960 productivity is coming down, where you have repeated supply shocks. 0:08:56.600 --> 0:09:00.880 That's an environment where bond returns are horrible, but but 0:09:00.960 --> 0:09:04.520 stock returns are is because you know, companies can't can't 0:09:04.559 --> 0:09:06.120 find a way to make to make money in. 0:09:06.120 --> 0:09:09.800 That Neil, your Q four GDP number right now, we 0:09:09.880 --> 0:09:12.080 got to get Bramo going, what's your Q four real 0:09:12.120 --> 0:09:13.040 GDP number. 0:09:13.400 --> 0:09:15.720 I mean, we're running so strong right now, I mean, 0:09:15.760 --> 0:09:17.800 but I think we've probably slow to something like two 0:09:17.840 --> 0:09:20.000 and a half in Q four. I think what the 0:09:20.040 --> 0:09:21.959 consensus is missing right now is that we're going to 0:09:22.000 --> 0:09:26.360 have a very robust inventory restocking on our hands that's 0:09:26.400 --> 0:09:28.720 going to bleed into measures of factory activity. 0:09:28.960 --> 0:09:31.880 You'll go to congratulations on your economic works of the 0:09:31.880 --> 0:09:34.240 renaissance macro research as well. 0:09:44.840 --> 0:09:47.920 Katy Commitsky chief Research strateg just to Alpha Simplex joins us. 0:09:47.920 --> 0:09:50.760 Now Katie, short question, just to open up. Are you 0:09:50.800 --> 0:09:52.280 still show at the treasury market? 0:09:52.920 --> 0:09:59.880 Yes, first time guests, you gotta got. 0:10:00.080 --> 0:10:03.240 No, no, no, there is a follow up. It's okay, we welcome 0:10:03.320 --> 0:10:06.400 short answers. Kitie. Let's elaborate on that. We saw four 0:10:06.520 --> 0:10:08.720 thirty six on a ten year, we got back to 0:10:08.760 --> 0:10:11.520 five point one percent on a two year. What exactly 0:10:11.640 --> 0:10:14.360 you're looking for? Why is the juice worth the squeeze? 0:10:15.160 --> 0:10:16.079 Well, I love that. 0:10:16.040 --> 0:10:18.960 You asked this because everyone keeps saying, let's be bullish 0:10:19.120 --> 0:10:19.959 the bond market. 0:10:20.160 --> 0:10:23.040 But look at the price. Look at the price all summer. 0:10:23.080 --> 0:10:25.880 It has continued to go up and yield so yields 0:10:25.880 --> 0:10:28.880 even though they pulled back last week, they continued on 0:10:28.960 --> 0:10:30.520 Friday and they're continuing today. 0:10:30.920 --> 0:10:32.880 And what we're seeing is we need to see a 0:10:32.920 --> 0:10:34.000 flatter yield curve. 0:10:34.480 --> 0:10:37.320 And everyone's really much, really really ready for there to 0:10:37.360 --> 0:10:39.640 be a pause, and there's probably a pause, but I 0:10:39.640 --> 0:10:42.280 think it's going to take a while before we see 0:10:42.280 --> 0:10:44.640 a flatter yield curve and before we see a situation 0:10:44.760 --> 0:10:47.920 where inflation has come down, thus we're going to see 0:10:48.000 --> 0:10:49.520 higher yields for a little bit longer. 0:10:49.559 --> 0:10:51.200 What does it mean to be bearish at a time 0:10:51.520 --> 0:10:53.560 or yields are jumping all over the place. Are you 0:10:53.640 --> 0:10:56.640 outright short or are you just not buying the stuff? 0:10:57.679 --> 0:11:01.079 So in the futures markets, the techechnical signals have been 0:11:01.120 --> 0:11:04.720 outright short for two years, and that sounds interesting, but 0:11:04.760 --> 0:11:07.800 it really means that they're in some sense in contrast 0:11:07.840 --> 0:11:11.600 to what you would think about most fundamental traders have 0:11:11.640 --> 0:11:12.880 been thinking about the bond market. 0:11:12.880 --> 0:11:13.719 But we've started to. 0:11:13.679 --> 0:11:17.080 See a lot of fundamental traders as well saying that 0:11:17.120 --> 0:11:19.280 they're also short at the bond market, which means that 0:11:19.320 --> 0:11:21.880 they're shorting bonds expecting that we're going to need to 0:11:21.880 --> 0:11:24.240 see a flatter yield curve, that we're going to need 0:11:24.280 --> 0:11:27.400 to see a higher yield return on longer term debts. 0:11:28.200 --> 0:11:30.720 And this makes sense because maybe we need a duration 0:11:30.880 --> 0:11:32.600 premium back in the curve. 0:11:33.280 --> 0:11:34.200 For the short term. 0:11:34.440 --> 0:11:38.240 When people ask you for some sort of fundamental explanation 0:11:38.440 --> 0:11:41.400 for why longer term bond yields to remain high, putting 0:11:41.400 --> 0:11:43.000 to the idea that we're probably going to go back 0:11:43.040 --> 0:11:45.319 to some sort of normal that we saw pre pandemic 0:11:45.360 --> 0:11:48.439 of slow growth and slow inflation. What do you say, 0:11:48.520 --> 0:11:51.240 is it just technical, is it foreign buying? Is it 0:11:51.320 --> 0:11:53.520 something about just the debtload of this nation. 0:11:54.880 --> 0:11:56.160 That's a really good question. 0:11:56.320 --> 0:11:59.320 I mean, I think it's a combination of either a 0:11:59.360 --> 0:12:02.280 preference for holding that long term debt either as a 0:12:02.320 --> 0:12:07.640 hedge for potential deterioration and financial conditions. A view that 0:12:07.640 --> 0:12:10.679 we could have rate cuts faster than they might occur. 0:12:11.960 --> 0:12:14.040 Is the two common ones I'm thinking about. 0:12:14.120 --> 0:12:16.640 So a lot of people are thinking, well, hey, things 0:12:16.640 --> 0:12:17.520 look good, the. 0:12:17.480 --> 0:12:18.720 Fed's going to come in and cuts. 0:12:18.920 --> 0:12:21.839 But my concern is that they think that, but now 0:12:21.880 --> 0:12:24.520 it's looking like twenty It was originally going to be 0:12:24.559 --> 0:12:27.679 twenty twenty three. Now they're saying twenty twenty four. Who 0:12:27.760 --> 0:12:30.560 knows when it's going to be twenty twenty five. My 0:12:30.720 --> 0:12:32.880 view is that we're going to take time to get 0:12:32.920 --> 0:12:36.160 to that point with the Fed, and thus interest rates 0:12:36.160 --> 0:12:38.600 have to stay higher for longer, and if you're going 0:12:38.600 --> 0:12:40.800 to hold a long term bond, you need to have 0:12:40.880 --> 0:12:45.040 that duration premium over the shorter term return of holding 0:12:45.160 --> 0:12:45.920 shorter term debt. 0:12:46.080 --> 0:12:49.080 So in that sense, it's a fundamental view. 0:12:49.120 --> 0:12:51.000 In that sense, Catchy, that might be an argument for 0:12:51.040 --> 0:12:53.559 why YO should stay high. What's the argument for why 0:12:53.559 --> 0:12:54.440 they will be higher. 0:12:55.800 --> 0:12:57.920 So why they will be higher is that I think 0:12:58.000 --> 0:13:00.840 that it's not priced in that it could take longer 0:13:01.360 --> 0:13:04.360 to get to cuts, and so people are assuming that 0:13:04.800 --> 0:13:06.640 you know, things are going to go back to normal, 0:13:06.679 --> 0:13:08.800 and thus shorter term rates will go down and we'll 0:13:08.800 --> 0:13:11.840 have a healthier curve. But if in fact they have 0:13:11.920 --> 0:13:14.439 to stay higher for longer in the short end, that 0:13:14.640 --> 0:13:16.800 means that longer term rates have. 0:13:16.720 --> 0:13:17.320 To go up. 0:13:17.640 --> 0:13:20.360 And it's a simple question when people start to realize, 0:13:20.360 --> 0:13:23.920 wait a minute, I'm getting five something percent for two years. 0:13:24.160 --> 0:13:26.240 If I'm going to hold something for ten, maybe I want. 0:13:26.160 --> 0:13:26.959 A little bit more. 0:13:28.040 --> 0:13:32.720 Catherine, let's talk trending. Let's talk Katie on the great 0:13:32.960 --> 0:13:37.240 Giant Wells Wilder. If I look at Brent Crode, I 0:13:37.320 --> 0:13:41.520 have a nascent up trend like I had three four 0:13:41.679 --> 0:13:46.400 years ago as well on ADXDMI, on parabolic SAR, on 0:13:46.600 --> 0:13:51.280 exponential climate moving averages. Is Brent crude trending higher? 0:13:52.280 --> 0:13:55.200 Yes, And that's the biggest thing we've been focusing on. 0:13:55.280 --> 0:13:57.920 So if we want to connect this inflation story, the 0:13:57.960 --> 0:14:00.960 thing we're watching is the oil mark it because we're 0:14:01.000 --> 0:14:04.160 looking for catalysts, something that might give us another wave 0:14:04.679 --> 0:14:08.480 of uptick for upside risk in the inflation numbers. Those 0:14:08.480 --> 0:14:10.240 are the things that are going to cause the FED 0:14:10.360 --> 0:14:11.559 to be more cautious. 0:14:11.920 --> 0:14:12.840 And also we're. 0:14:12.720 --> 0:14:14.959 Seeing signs of that outside the US. Of course, we 0:14:15.040 --> 0:14:17.440 saw it right, yeah, exactly, Katie. 0:14:17.520 --> 0:14:19.840 Come on, it's the beginning of the year, the beginning 0:14:19.880 --> 0:14:22.400 of the business year. What's your point figured target on 0:14:22.480 --> 0:14:24.760 brent crude right now? Over one hundred. 0:14:26.280 --> 0:14:29.280 I don't have the exact number, but we're definitely seeing 0:14:29.320 --> 0:14:31.520 that's one of the biggest growing trends in terms of 0:14:31.560 --> 0:14:36.040 our signals. The signal, the signal strength for brent crude 0:14:36.040 --> 0:14:38.400 has been one that's been ticking up lately. It did 0:14:39.000 --> 0:14:42.360 revert a little bit in August based on some data 0:14:42.480 --> 0:14:46.320 on China and other The dollar also weakening a little bit, 0:14:46.960 --> 0:14:49.720 so we started to see some dollar strength dollar weekening 0:14:49.760 --> 0:14:52.720 messing with some of that trend. But in general, that 0:14:52.840 --> 0:14:55.880 has been the trend to watch more recently. And the 0:14:55.920 --> 0:14:58.440 reason that is important is because that is one of 0:14:58.480 --> 0:15:02.000 the indicators at least when we i've seen inflation data 0:15:02.040 --> 0:15:05.280 down the pipeline. Brent crude has been one, for example, 0:15:05.280 --> 0:15:07.440 in twenty twenty two. That tends to be something to 0:15:07.480 --> 0:15:10.640 follow as a catalyst into where you start to see 0:15:10.720 --> 0:15:12.680 inflation numbers take up later in the year. 0:15:12.880 --> 0:15:16.320 Catty, thank you for the update. Kady Kaminski Alpha simplex 0:15:16.360 --> 0:15:17.240 on a bond market. 0:15:19.600 --> 0:15:24.320 We're going to be complete right now with Wendy Scheller, 0:15:24.400 --> 0:15:27.240 director of the Tubbin Center of American Politics and Policy 0:15:27.240 --> 0:15:30.800 at Brown truly one of our most popular guests. We 0:15:30.880 --> 0:15:34.080 get a huge response when she's on. Wendy, let's go 0:15:34.120 --> 0:15:36.440 to the images that we saw on radio. It was 0:15:36.440 --> 0:15:38.760 the President doing what it does, marching around the mic 0:15:38.880 --> 0:15:43.080 baseball cap on hearkening to a union that he knew 0:15:43.120 --> 0:15:47.400 in eastern Pennsylvania long ago and far away. Don't they 0:15:47.480 --> 0:15:48.520 vote for Trump? Now? 0:15:49.720 --> 0:15:53.320 Well, there's a lot of mixed voting in terms of unions, 0:15:53.440 --> 0:15:55.640 right So if you think about the Team Stairs, for example, 0:15:55.920 --> 0:15:59.840 they lean a little bit more Republican in their voting, 0:16:00.120 --> 0:16:02.760 but a lot of other private unions built in the 0:16:02.760 --> 0:16:06.920 local level vote for Democrats because they believe Democrats will 0:16:06.920 --> 0:16:10.800 spend money on things like infrastructure, which means construction, which 0:16:10.840 --> 0:16:13.400 means jobs for them. So it depends on the sort 0:16:13.400 --> 0:16:14.880 of local balance on where. 0:16:14.680 --> 0:16:15.480 The jobs are. 0:16:15.640 --> 0:16:18.320 In terms of private unions, You're absolutely right, that's seven percent. 0:16:18.320 --> 0:16:21.720 A little over seven percent of the private sector is unionized, 0:16:21.720 --> 0:16:24.320 but public sector is still in the thirties in terms 0:16:24.320 --> 0:16:26.760 of the unionization, and that can really matter in. 0:16:26.680 --> 0:16:28.080 Some of those key swing states. 0:16:28.240 --> 0:16:31.000 When Republicans go after unions, go after labor, they go 0:16:31.040 --> 0:16:34.160 after public employee unions, you know, that can cost the votes. 0:16:34.240 --> 0:16:37.080 So Biden' sort of skirting a line private labor but 0:16:37.160 --> 0:16:40.360 also public labor unions are very important coming down. 0:16:40.200 --> 0:16:41.680 To the election politically. 0:16:42.240 --> 0:16:47.000 Do you see a rekindling or rejuvenation of unions moving 0:16:47.040 --> 0:16:50.760 from that seven percent statistic hire or is that just 0:16:50.880 --> 0:16:53.280 wishful thinking on the part of union types. 0:16:54.320 --> 0:16:56.680 Well, I think there seems to be a concerted strategic 0:16:56.760 --> 0:16:59.720 effort for unions to branch out things like college campuses, 0:16:59.720 --> 0:17:03.160 for example, unionizing undergraduates, unionizing graduate students. 0:17:03.160 --> 0:17:05.000 You may they go, well, that may not matter on 0:17:05.040 --> 0:17:07.040 the margins. However, that's a group that. 0:17:07.080 --> 0:17:10.280 Is still really ripe for picking in terms of votes, 0:17:10.480 --> 0:17:12.840 and it's certainly a group that the Democrats need more 0:17:12.880 --> 0:17:15.679 than the Republicans to get out the door. So every 0:17:15.760 --> 0:17:18.040 time you have a new union agreement or a new 0:17:18.280 --> 0:17:21.000 new people coming into the union sphere, you know, that's 0:17:21.000 --> 0:17:24.200 a pretty much guaranteed vote because unions are excellent still 0:17:24.400 --> 0:17:25.480 at getting out their. 0:17:25.320 --> 0:17:26.200 Base to vote. 0:17:26.320 --> 0:17:29.200 Wendy, it seems like yesterday's speech did a number of things. 0:17:29.240 --> 0:17:32.199 It did highlight the union membership. It also highlighted the 0:17:32.240 --> 0:17:35.800 fact that there has been more union action recently without 0:17:35.800 --> 0:17:38.199 the strikes that could potentially be a liability. But this 0:17:38.280 --> 0:17:40.760 is also what Biden said, We're turning things around because 0:17:40.760 --> 0:17:42.800 of you. When the last guy was here, you are 0:17:42.840 --> 0:17:45.800 shipping jobs to China. Now we're bringing jobs home from China. 0:17:45.920 --> 0:17:49.840 How much is President Biden trying to galvanize his campaign 0:17:49.920 --> 0:17:52.600 by going after former President Trump with the assumption that 0:17:52.640 --> 0:17:56.040 he will be the person he's facing off, Well, Lisa. 0:17:56.160 --> 0:17:58.159 I he hasn't done that enough yet. 0:17:58.440 --> 0:18:00.800 And also, just to show Biden out on the trail, 0:18:01.119 --> 0:18:02.520 you know, you can walk, you can talk. 0:18:02.560 --> 0:18:04.000 He's clear, he was energetic. 0:18:04.280 --> 0:18:07.000 I mean, you know, given the most recent polling that 0:18:07.160 --> 0:18:10.000 has people really doubting his age and doubting his capability, 0:18:10.080 --> 0:18:11.960 the more he can get out and show that he's 0:18:11.960 --> 0:18:12.840 still vibrant. 0:18:13.000 --> 0:18:15.880 You know, the more he can mitigate those kinds of concerns. 0:18:16.200 --> 0:18:19.320 So I think that's a really important part of this strategy. 0:18:19.600 --> 0:18:21.480 And also, if you think about some of the things 0:18:21.520 --> 0:18:25.320 in the most recent polling about Trump's job performance in office, 0:18:25.359 --> 0:18:29.119 it's relatively positive. So you know, the COVID after effect, 0:18:29.160 --> 0:18:32.320 which some people argue costs Trump the presidency in twenty twenty, 0:18:32.480 --> 0:18:35.480 that seems to be diminishing for Trump. So you know, 0:18:35.520 --> 0:18:38.720 absent the indictments, there might be a rosier glow on 0:18:38.760 --> 0:18:42.439 how Trump's presidency went among average voters or independent voters. 0:18:42.640 --> 0:18:45.120 That's a real concern for the Democrats that real conserve 0:18:45.119 --> 0:18:47.480 Pi Biden. He's got to remind people of what the 0:18:47.520 --> 0:18:50.919 administration really was like and why they rejected it in 0:18:50.920 --> 0:18:51.880 twenty twenty. 0:18:51.680 --> 0:18:53.760 Does President Biden have any chance of winning if he's 0:18:53.760 --> 0:18:55.720 not facing off with the former President Trump? 0:18:57.240 --> 0:18:59.360 At LISTA? That is, you know, that is the Republican 0:18:59.359 --> 0:19:01.120 Party essential question. 0:19:01.840 --> 0:19:04.760 You have to believe that the negatives associated with Trump, 0:19:04.840 --> 0:19:08.240 particularly among independent voters in swing states. I remember some 0:19:08.240 --> 0:19:09.800 of these swing states have swung a little more of 0:19:09.840 --> 0:19:12.639 the Democrats in recent elections. At least at the couventorial 0:19:12.760 --> 0:19:15.520 level and the Senate level. When you think about that, 0:19:15.520 --> 0:19:18.080 that's their issue. You know, would they do much better 0:19:18.119 --> 0:19:20.000 if Nicki Haley is the head of the ticket, or 0:19:20.080 --> 0:19:22.720 even Ron DeSantis even if he looks shaky, or even 0:19:22.760 --> 0:19:23.400 Tim Scott. 0:19:23.480 --> 0:19:24.119 I'm not sure if a. 0:19:24.200 --> 0:19:27.440 Brahmaswamy is the guy to go to sort of Trump light. 0:19:27.560 --> 0:19:29.560 So I'm not sure that doesn't for them. But if 0:19:29.600 --> 0:19:32.399 they didn't have the liability of Trump, would they be 0:19:32.480 --> 0:19:35.439 doing and polling much more strongly among independence than they 0:19:35.440 --> 0:19:35.760 are now? 0:19:36.040 --> 0:19:39.280 Professor Shawer Jeff Stein with the article of the weekend 0:19:39.320 --> 0:19:44.200 on the nation's deficit again burgeoning out x number of trillion. Ever, 0:19:44.359 --> 0:19:47.840 Dirkson and I have lost track of the billions and trillions. 0:19:48.040 --> 0:19:50.800 Is the debt of concern to an academic like you? 0:19:51.600 --> 0:19:55.600 Or is it just the usual debt angst not understanding 0:19:55.640 --> 0:19:58.480 the mass, the size, the scale of America. 0:19:59.640 --> 0:20:03.119 Well, I think the parties have long abandoned really seriously 0:20:03.160 --> 0:20:03.960 worrying about the debt. 0:20:04.000 --> 0:20:06.440 The Republicans and the Democrats, all the Republicans use it. 0:20:06.520 --> 0:20:09.480 I think solving the debt limit crisis, I think that 0:20:09.640 --> 0:20:12.960 was as we saw something that both parties understood they 0:20:13.000 --> 0:20:14.480 had to finish and had to get done. 0:20:14.640 --> 0:20:17.080