WEBVTT - Bloomberg Daybreak: January 19, 2023

0:00:02.880 --> 0:00:06.199
<v Speaker 1>Live from the Bloomberg interactave Berger Studios. Is this Bloomberg

0:00:06.280 --> 0:00:09.560
<v Speaker 1>day Break for Thursday, January nine coming up this hour,

0:00:10.119 --> 0:00:14.400
<v Speaker 1>stocks drop and treasuries rise as recession fears persist. We

0:00:14.480 --> 0:00:16.520
<v Speaker 1>take you back to Davos for day four of the

0:00:16.560 --> 0:00:20.000
<v Speaker 1>World Economic Forum. Apple plans to take on Amazon and

0:00:20.079 --> 0:00:23.240
<v Speaker 1>Google by expanding its smart home line up, and Netflix

0:00:23.320 --> 0:00:26.680
<v Speaker 1>gets set to report hrnings this afternoon. I maybe Morris

0:00:26.680 --> 0:00:29.159
<v Speaker 1>the Supreme Court will not block new gun laws in

0:00:29.240 --> 0:00:31.920
<v Speaker 1>New York, and Mayor Adams doubles down on his call

0:00:32.040 --> 0:00:35.360
<v Speaker 1>for a national response to the migrant crisis. I'm trying

0:00:35.360 --> 0:00:37.640
<v Speaker 1>to stashon sports another home loss for the next meeting.

0:00:37.640 --> 0:00:40.760
<v Speaker 1>By Washington, the Bruins beat the Islanders. The upsets continue

0:00:40.880 --> 0:00:45.800
<v Speaker 1>with the Australian Open. That's all s Trady ahead on

0:00:45.880 --> 0:00:49.280
<v Speaker 1>Bloomberg day Break on Bloomberg eleven three, on New York

0:00:49.479 --> 0:00:54.120
<v Speaker 1>Bloomberg one, Washington, d C, Bloomberg one oh six one, Boston,

0:00:54.440 --> 0:00:58.840
<v Speaker 1>Bloomberg nine sixties, and Francisco Syrius x M one nineteen

0:00:59.080 --> 0:01:02.040
<v Speaker 1>and around the world on Bloomberg Radio dot Com and

0:01:02.160 --> 0:01:08.959
<v Speaker 1>via The Bloomberg Business. Good morning, I'm Nathan Hagar, and

0:01:09.000 --> 0:01:12.120
<v Speaker 1>I'm kerin Moscow. Here are the stories we're following today.

0:01:12.400 --> 0:01:15.319
<v Speaker 1>We are seeing a turn in the mood on Wall Street.

0:01:15.360 --> 0:01:18.200
<v Speaker 1>The tech heavy NASTAC one hundred snapped a seven day

0:01:18.280 --> 0:01:21.520
<v Speaker 1>rally yesterday, and after rising for five straight days, the

0:01:21.600 --> 0:01:24.399
<v Speaker 1>SMP five hundred fell for a second session. In fact,

0:01:24.480 --> 0:01:27.760
<v Speaker 1>yesterday's one point six percent decline was the worst in

0:01:27.800 --> 0:01:31.200
<v Speaker 1>a month week. Economic data are rekindling concern over the

0:01:31.200 --> 0:01:33.840
<v Speaker 1>outlook for growth. Howard Marks is co founder of oak

0:01:33.880 --> 0:01:37.480
<v Speaker 1>Tree Capital Group. With the appearance of the UH, of

0:01:37.560 --> 0:01:41.240
<v Speaker 1>the inflation and the increasing of rates to try to

0:01:41.280 --> 0:01:45.000
<v Speaker 1>stamp out the inflation, things have gotten harder. I imagine

0:01:45.040 --> 0:01:47.039
<v Speaker 1>people today saying, well, when are we going back to

0:01:47.120 --> 0:01:50.160
<v Speaker 1>normal like it was five, six, seven years ago? And

0:01:50.160 --> 0:01:52.840
<v Speaker 1>and the important thing to know is that that wasn't normal.

0:01:53.280 --> 0:01:56.120
<v Speaker 1>That was the easiest, the best of times. And I

0:01:56.520 --> 0:01:58.840
<v Speaker 1>my own belief is we're not going back there. Oak

0:01:58.880 --> 0:02:01.720
<v Speaker 1>Tree Capital co founder Howard Mark spoke with Bloomberg's remain

0:02:01.800 --> 0:02:04.600
<v Speaker 1>boss Stick Marx also says the current rally and junk

0:02:04.640 --> 0:02:08.040
<v Speaker 1>bonds is unlikely to last. Meantime, Nathan, the best start

0:02:08.120 --> 0:02:10.480
<v Speaker 1>to a year for a bond returns is helping fuel

0:02:10.480 --> 0:02:14.240
<v Speaker 1>an unprecedented debt sale bonanza. So far, governments and companies

0:02:14.280 --> 0:02:16.760
<v Speaker 1>around the world have sold more than half a trillion

0:02:16.800 --> 0:02:19.400
<v Speaker 1>dollars worth of debt. Virtually every corner of the new

0:02:19.440 --> 0:02:21.919
<v Speaker 1>issue market is booming, thanks in part to a rally

0:02:21.960 --> 0:02:24.680
<v Speaker 1>that's seen global bonds of all stripes searge four point

0:02:24.800 --> 0:02:27.280
<v Speaker 1>one percent to start the year. We'll still Karen. The

0:02:27.320 --> 0:02:30.880
<v Speaker 1>FED remains firmly in focus for fixed income investors now too,

0:02:31.000 --> 0:02:34.280
<v Speaker 1>FED officials are forecasting a downshift two quarter percent rate

0:02:34.320 --> 0:02:38.120
<v Speaker 1>hikes as the economy softens and inflation cools. Here's Philadelphia

0:02:38.160 --> 0:02:41.000
<v Speaker 1>FED President Patrick Harker. I expect that we will raise

0:02:41.120 --> 0:02:44.040
<v Speaker 1>rates a few more times this year, though to my mind,

0:02:44.080 --> 0:02:47.280
<v Speaker 1>and I this is my views, the days of us

0:02:47.400 --> 0:02:50.480
<v Speaker 1>raising them seventy five basis points at a time have

0:02:50.680 --> 0:02:55.280
<v Speaker 1>surely passed. In my view, hikes of twenty basis points

0:02:55.320 --> 0:02:58.440
<v Speaker 1>will be appropriate going forward. Those sentiments from the Philly

0:02:58.480 --> 0:03:02.200
<v Speaker 1>Feds Patrick Harker being echo by Dallas FED President Lorie Logan,

0:03:02.240 --> 0:03:04.760
<v Speaker 1>who says she favors cutting back the pace of tightening.

0:03:05.000 --> 0:03:06.639
<v Speaker 1>A slower pace is just a way to ensure we

0:03:06.680 --> 0:03:10.200
<v Speaker 1>make the best possible decisions we can, and if necessary,

0:03:10.240 --> 0:03:14.640
<v Speaker 1>should adjust our overall policy strategy to keep financial conditions restrictive,

0:03:15.280 --> 0:03:18.720
<v Speaker 1>even as the pace lows. Lori Logan and Patrick Harker

0:03:18.760 --> 0:03:20.600
<v Speaker 1>are both voting members on the f O m C

0:03:20.840 --> 0:03:24.160
<v Speaker 1>this year. The feds next policy decision comes February one,

0:03:24.600 --> 0:03:27.239
<v Speaker 1>but the global economy is also in focus at DeVos

0:03:27.360 --> 0:03:30.679
<v Speaker 1>Nathan during Gay four of the World Economic Forum, recession

0:03:30.680 --> 0:03:33.880
<v Speaker 1>talk remains on the front burner. European Economy Commissioner Palelo

0:03:33.960 --> 0:03:36.800
<v Speaker 1>gent Aloni tells us Europe is already in the midst

0:03:36.800 --> 0:03:39.560
<v Speaker 1>of a recession. We are, in my view and in

0:03:39.640 --> 0:03:43.760
<v Speaker 1>the EU estimate, which is more important, in a period

0:03:43.840 --> 0:03:47.840
<v Speaker 1>of economic contraction. This is for sure we will have

0:03:48.160 --> 0:03:51.880
<v Speaker 1>a couple of quarters, the previous one and this one

0:03:52.160 --> 0:03:57.160
<v Speaker 1>of slight contraction. Well, growth is contracting. European Economy Commissioner

0:03:57.240 --> 0:04:00.880
<v Speaker 1>Polo gent Aloni said the EU likely avoided the case scenario.

0:04:00.920 --> 0:04:03.160
<v Speaker 1>He made the comments in an interview with Bloomberg's Francy

0:04:03.280 --> 0:04:05.840
<v Speaker 1>Lakwa this morning. Let's turn to corporate news back here

0:04:05.840 --> 0:04:08.320
<v Speaker 1>in the US, Karen, we're seeing a new push from

0:04:08.360 --> 0:04:11.320
<v Speaker 1>Apple to take on Amazon and Google in the smart

0:04:11.360 --> 0:04:14.880
<v Speaker 1>home space. Bloomberg Steve Rappaport joins US Live with that story.

0:04:14.920 --> 0:04:17.960
<v Speaker 1>Good morning, Steve, Good morning, Nathan and Karen. Apple's playbook

0:04:17.960 --> 0:04:20.680
<v Speaker 1>includes rolling out what amounts to a low end iPad

0:04:20.800 --> 0:04:23.479
<v Speaker 1>meant to control in array of devices. It will allow

0:04:23.560 --> 0:04:26.800
<v Speaker 1>users to adjust lighting and temperatures, play videos, and much more.

0:04:27.120 --> 0:04:30.400
<v Speaker 1>iPads already have smart home features, but standalone devices to

0:04:30.440 --> 0:04:34.160
<v Speaker 1>control everything from one location are gaining popularity. The tech

0:04:34.160 --> 0:04:36.720
<v Speaker 1>giantess struggled to keep up in a market dominated by

0:04:36.720 --> 0:04:39.920
<v Speaker 1>Amazon's Alexa and the Google Assistant. Apple will also make

0:04:39.960 --> 0:04:42.640
<v Speaker 1>adjustments to its Sirie voice controlled service as part of

0:04:42.680 --> 0:04:46.080
<v Speaker 1>the push. Live in New York. I'm Steve Rappaport, Bloomberg Daybreak.

0:04:46.160 --> 0:04:48.520
<v Speaker 1>All right, Steve, thank you. Earnings also in focus today

0:04:48.520 --> 0:04:51.719
<v Speaker 1>as we await results from Netflix the company reports this afternoon,

0:04:51.760 --> 0:04:55.880
<v Speaker 1>and as Bloomberg Jeaff Bellinger reports analysts are upbeat. Bloomberg

0:04:55.880 --> 0:04:58.919
<v Speaker 1>Intelligence says things are finally falling into place for the

0:04:59.000 --> 0:05:01.840
<v Speaker 1>video streaming sir Risk and it could meet or even

0:05:01.880 --> 0:05:04.360
<v Speaker 1>exceed guidance for the addition of four and a half

0:05:04.440 --> 0:05:08.080
<v Speaker 1>million subscribers. That's based in part on a solid slate

0:05:08.160 --> 0:05:11.200
<v Speaker 1>of shows. Investors are hoping to hear more about the

0:05:11.320 --> 0:05:15.080
<v Speaker 1>rollout of the ad supported tier, and plans for crackdown

0:05:15.120 --> 0:05:19.520
<v Speaker 1>on password sharing. Analysts say Netflix could report stronger fourth

0:05:19.600 --> 0:05:22.920
<v Speaker 1>quarter revenue games given the recent weakening of the dollar.

0:05:23.360 --> 0:05:27.919
<v Speaker 1>Jeff Bullinger, Bloomberg Daybreak, Jeff, Thanks, and California. Elon Musk's

0:05:27.960 --> 0:05:32.240
<v Speaker 1>fraud trial is underway. Opening arguments are showcasing very different

0:05:32.279 --> 0:05:36.080
<v Speaker 1>pictures of the Testless CEO. Bloomberg's Baxter has the story.

0:05:36.360 --> 0:05:40.479
<v Speaker 1>The prosecution depicts Musk as a liar who callously jeopardized

0:05:40.480 --> 0:05:43.800
<v Speaker 1>the savings of regular people, and the defense as a

0:05:43.839 --> 0:05:48.159
<v Speaker 1>well intentioned visionary focused on Testla's future. The issue that

0:05:48.360 --> 0:05:50.960
<v Speaker 1>Musk tweet it he had lined up financing to take

0:05:51.000 --> 0:05:54.080
<v Speaker 1>Tesla private at a time the stock was slumping amid

0:05:54.120 --> 0:05:58.520
<v Speaker 1>production problems, and it fueled a rally. The prosecution says

0:05:58.520 --> 0:06:01.760
<v Speaker 1>he never intended to take the company private. His attorneys

0:06:01.760 --> 0:06:03.719
<v Speaker 1>say that isn't true, that he thought he had the

0:06:03.720 --> 0:06:06.840
<v Speaker 1>money lined up. Musk will be the star witness and

0:06:06.880 --> 0:06:10.080
<v Speaker 1>the two week trial in San Francisco. I'm at Baxter

0:06:10.120 --> 0:06:13.320
<v Speaker 1>Bloomberg Daybreak. All right, thanks, and let's turn our focus

0:06:13.360 --> 0:06:16.320
<v Speaker 1>now to corporate earnings. We're seeing shares about CoA down

0:06:16.360 --> 0:06:18.760
<v Speaker 1>about six and a half percent in early trading. The

0:06:18.800 --> 0:06:22.440
<v Speaker 1>company said aluminum shipments will be weaker than anticipated this year.

0:06:22.720 --> 0:06:27.120
<v Speaker 1>Alcoa blames ongoing uncertainty is caused by global inflation, dwindling

0:06:27.120 --> 0:06:33.560
<v Speaker 1>demanding Europe, and a soft outlook in China. It is

0:06:33.600 --> 0:06:36.320
<v Speaker 1>forty two degrees in Central Park, clear skies. For now,

0:06:36.360 --> 0:06:38.280
<v Speaker 1>We've got rain moving in. Later today, we'll hit a

0:06:38.320 --> 0:06:40.640
<v Speaker 1>high near forty five degrees. The rain will taper to

0:06:40.680 --> 0:06:42.839
<v Speaker 1>a few showers this evening as we head down to

0:06:42.920 --> 0:06:44.840
<v Speaker 1>near forty. Time Now for a look at some of

0:06:44.839 --> 0:06:47.120
<v Speaker 1>the other stories making news in New York and around

0:06:47.120 --> 0:06:49.279
<v Speaker 1>the world. For that, we're joined by Bloomberg's Amy Morris.

0:06:49.320 --> 0:06:51.960
<v Speaker 1>Good morning, Amy, Good morning Nathan. The U. S. Supreme

0:06:52.000 --> 0:06:54.640
<v Speaker 1>Court has refused to block new safety in record keeping

0:06:54.680 --> 0:06:58.640
<v Speaker 1>requirements that apply to New York gun retailers, letting those

0:06:58.640 --> 0:07:02.040
<v Speaker 1>provisions stay in a act while a legal fight goes forward.

0:07:02.279 --> 0:07:06.520
<v Speaker 1>The justices, without explanation or dissent, turned away an emergency

0:07:06.560 --> 0:07:09.040
<v Speaker 1>request by a group of gun dealers who say their

0:07:09.080 --> 0:07:12.520
<v Speaker 1>Second Amendment rights are being violated. New York City Mayor

0:07:12.680 --> 0:07:16.600
<v Speaker 1>Eric Adams spoke before the US Conference of Mayors in Washington,

0:07:16.680 --> 0:07:19.400
<v Speaker 1>d C. Where he laid out a six point action

0:07:19.480 --> 0:07:22.720
<v Speaker 1>plan to help alleviate what he calls the migrant crisis

0:07:22.720 --> 0:07:25.200
<v Speaker 1>in New York, and he doubled down on his call

0:07:25.360 --> 0:07:29.120
<v Speaker 1>for a national response. Cities and mayors have gotten us

0:07:29.280 --> 0:07:32.760
<v Speaker 1>this far. Nounce time for our entire government to support

0:07:32.760 --> 0:07:36.800
<v Speaker 1>the rope that we save so many lives. Mayor Adams

0:07:36.840 --> 0:07:40.080
<v Speaker 1>called for a dedicated point person at the US Mexico border,

0:07:40.200 --> 0:07:44.880
<v Speaker 1>a decompression strategy, and congressional funding to implement strategies in

0:07:45.000 --> 0:07:49.040
<v Speaker 1>cities with the greatest need. This as New Jersey Governor

0:07:49.080 --> 0:07:52.800
<v Speaker 1>Phil Murphy announced free state paid healthcare for thousands of

0:07:52.880 --> 0:07:57.200
<v Speaker 1>undocumented immigrant children. New Jersey expects to add sixteen thousand

0:07:57.240 --> 0:08:00.880
<v Speaker 1>non citizens under the age of nineteen for free routine

0:08:00.920 --> 0:08:05.200
<v Speaker 1>medical care, emergency room visits, and other services. Meanwhile, Mayor

0:08:05.240 --> 0:08:08.840
<v Speaker 1>Adams is also looking at ways to repurpose vacant commercial

0:08:08.920 --> 0:08:12.840
<v Speaker 1>real estate because so many people are working remotely, leaving

0:08:12.840 --> 0:08:17.200
<v Speaker 1>those offices empty. Adams tells Politico that ten million square

0:08:17.200 --> 0:08:20.280
<v Speaker 1>feet of space is not being used, turning it into

0:08:20.360 --> 0:08:24.640
<v Speaker 1>the much needed affordable houses. That's that we're looking for childcare.

0:08:25.360 --> 0:08:27.760
<v Speaker 1>We need to look at the spaces that are available.

0:08:27.840 --> 0:08:31.080
<v Speaker 1>Mayor Adams estimates about fifty people are in their offices

0:08:31.160 --> 0:08:34.080
<v Speaker 1>compared to thirty back in April. A bill that would

0:08:34.080 --> 0:08:36.880
<v Speaker 1>give terminally ill people the right to end their life

0:08:36.880 --> 0:08:40.240
<v Speaker 1>in Connecticut is once again before the legislature. The Public

0:08:40.280 --> 0:08:42.760
<v Speaker 1>Health Committee will be taking up the bill, which failed

0:08:42.760 --> 0:08:45.520
<v Speaker 1>to gain enough support in the Judiciary Committee last year.

0:08:45.840 --> 0:08:48.520
<v Speaker 1>This year's measure would allow a doctor to prescribe life

0:08:48.600 --> 0:08:51.760
<v Speaker 1>ending drugs to a person suffering from a terminal illness.

0:08:52.280 --> 0:08:54.800
<v Speaker 1>Global News twenty four hours a day on airand on

0:08:54.880 --> 0:08:59.240
<v Speaker 1>Bloomberg Quicktake, powered by more than journalists and analysts and

0:08:59.320 --> 0:09:02.120
<v Speaker 1>more than one of of twenty countries. I'm Amy Morris.

0:09:02.160 --> 0:09:09.760
<v Speaker 1>This is Bloomberg, Nathan. Thank you Amy. Now it's time

0:09:09.760 --> 0:09:12.120
<v Speaker 1>for our Bloomberg Sports Update, brought to you by try

0:09:12.240 --> 0:09:15.400
<v Speaker 1>stayed OUTI Good morning, John Stanshower, Good morning, Nathan. I

0:09:15.440 --> 0:09:17.360
<v Speaker 1>gave the next figure to win. They won last weekend.

0:09:17.400 --> 0:09:20.599
<v Speaker 1>Washington Wizards only eighteen wins on the season, losers of

0:09:20.679 --> 0:09:22.480
<v Speaker 1>five of their last six, but at the Garden they

0:09:22.520 --> 0:09:25.240
<v Speaker 1>never trailed, jumped in front by fifteen in the first quarter,

0:09:25.600 --> 0:09:28.360
<v Speaker 1>and won one sixteen to one oh five. Kyle Kuzma

0:09:28.440 --> 0:09:31.440
<v Speaker 1>score twenty seven Jalen Brunson lat the next with thirty two.

0:09:31.840 --> 0:09:35.040
<v Speaker 1>Nicks made only seven of twenty six three pointers. Julius

0:09:35.120 --> 0:09:37.880
<v Speaker 1>Randall and R. J. Barrett were together oh for nine.

0:09:37.960 --> 0:09:41.160
<v Speaker 1>The Knicks coach Tom Thibodeaux. We were playing from behind

0:09:41.200 --> 0:09:44.840
<v Speaker 1>all night. That show that that heard their state. They

0:09:44.880 --> 0:09:50.559
<v Speaker 1>came out, they were making shots early and h they

0:09:50.679 --> 0:09:53.600
<v Speaker 1>got a lot of confidence from that. I thought they

0:09:53.640 --> 0:09:58.400
<v Speaker 1>played really well in uh. You know, we missed shots

0:09:58.480 --> 0:10:02.960
<v Speaker 1>and we couldn't get our defense. And the struggles continue

0:10:03.000 --> 0:10:05.760
<v Speaker 1>at home. It's just eleven and thirteen, fourteen and eight

0:10:05.760 --> 0:10:07.560
<v Speaker 1>on the road at the Garden tonight. Rangers and the

0:10:07.559 --> 0:10:10.600
<v Speaker 1>team that's dominating the NHL, the Bruins last night beat

0:10:10.640 --> 0:10:12.600
<v Speaker 1>the Islanders for the one of the Bruins are twelve

0:10:12.600 --> 0:10:15.360
<v Speaker 1>points better than every other team. College hoops Seaton Hall

0:10:15.440 --> 0:10:18.360
<v Speaker 1>one point went over fifteenth rank Yukon, who was without

0:10:18.400 --> 0:10:21.240
<v Speaker 1>its coach Dan Hurley, the Seaton Hall grad. He missed

0:10:21.240 --> 0:10:23.960
<v Speaker 1>the game due to COVID. This Australian opened the first

0:10:23.960 --> 0:10:26.600
<v Speaker 1>Grand slamming over twenty years, where the top two scenes

0:10:26.640 --> 0:10:28.640
<v Speaker 1>on the men's side both failed to get out of

0:10:28.640 --> 0:10:30.800
<v Speaker 1>the second round. The day after after, you on the

0:10:30.840 --> 0:10:33.640
<v Speaker 1>data lost. Casper Rude, the two seed who lost into

0:10:33.679 --> 0:10:36.640
<v Speaker 1>Allen last year's final, upset by twenty two year old

0:10:36.679 --> 0:10:39.960
<v Speaker 1>American Jensen Brooks. Be Taylor Fritz, the top seeded American,

0:10:40.360 --> 0:10:42.920
<v Speaker 1>lost in five sets. The Mets have signed veteran outfielder

0:10:43.000 --> 0:10:47.080
<v Speaker 1>Tommy Fan. Jets interviewed Nathaniel Hackett to be their offensive coordinator.

0:10:47.120 --> 0:10:48.840
<v Speaker 1>He was just fired as the head coach in Denver.

0:10:49.280 --> 0:10:55.320
<v Speaker 1>John Stash that one. Bloomberg Sports live from coast to coast,

0:10:55.440 --> 0:10:58.800
<v Speaker 1>from New York to San Francisco, Boston to Washington, d C.

0:10:59.240 --> 0:11:03.040
<v Speaker 1>Nationwide on Sirius xamp, the Bloomberg Business app, and Bloomberg

0:11:03.160 --> 0:11:08.160
<v Speaker 1>dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hagar,

0:11:08.240 --> 0:11:11.560
<v Speaker 1>bringing you more of our conversation with billionaire Howard Marks,

0:11:11.600 --> 0:11:14.960
<v Speaker 1>the co chairman of oak Tree Capital Management. Mark sat

0:11:15.000 --> 0:11:18.120
<v Speaker 1>down with Bloomberg's Remain Bostick to explain why he thinks

0:11:18.160 --> 0:11:21.320
<v Speaker 1>financial markets maybe in the middle of their third sea

0:11:21.440 --> 0:11:25.319
<v Speaker 1>change of the last fifty years. Let's listen into that interview. Now,

0:11:25.679 --> 0:11:27.640
<v Speaker 1>you say we're basically in the middle of a third

0:11:27.640 --> 0:11:29.920
<v Speaker 1>sea change. What is it? Well, if you look at

0:11:29.960 --> 0:11:33.040
<v Speaker 1>the period from the end of the global financial crisis

0:11:33.200 --> 0:11:38.559
<v Speaker 1>UH roughly oh nine through the appearance of the pandemic,

0:11:38.640 --> 0:11:44.480
<v Speaker 1>and then in the one UH we were you know,

0:11:44.559 --> 0:11:49.240
<v Speaker 1>the FED took extreme measures to save the economy. They

0:11:49.280 --> 0:11:52.760
<v Speaker 1>worked very low interest rates the lowest in history zero

0:11:52.880 --> 0:11:56.720
<v Speaker 1>for much of that time, and UH quantitative easing, the

0:11:56.760 --> 0:12:00.960
<v Speaker 1>buying of bonds, which puts liquidity into the economy. UM.

0:12:01.080 --> 0:12:04.520
<v Speaker 1>These things produced what I would call was an easy

0:12:04.640 --> 0:12:08.000
<v Speaker 1>environment UH in the economy and the markets. It was

0:12:08.520 --> 0:12:11.360
<v Speaker 1>we had the longest economic recovery in history. It was

0:12:11.400 --> 0:12:14.080
<v Speaker 1>easy to make money, We had low cost capital, was

0:12:14.120 --> 0:12:17.280
<v Speaker 1>easy to make a profit, We had very few defaults

0:12:17.280 --> 0:12:19.599
<v Speaker 1>in bankruptcy. It was easy to stay in business, it

0:12:19.679 --> 0:12:23.280
<v Speaker 1>was easy to access capital. Um. Everything was easy at

0:12:23.280 --> 0:12:26.240
<v Speaker 1>that time. And UH in the last year, of course,

0:12:26.400 --> 0:12:29.679
<v Speaker 1>with the appearance of the UH, of the inflation, and

0:12:29.760 --> 0:12:33.520
<v Speaker 1>the increasing of rates to try to stamp out the inflation,

0:12:33.760 --> 0:12:37.320
<v Speaker 1>things have gotten harder. I imagine people today saying, well,

0:12:37.320 --> 0:12:39.880
<v Speaker 1>when are we going back to normal like it was five, six,

0:12:39.920 --> 0:12:42.640
<v Speaker 1>seven years ago? And and the important thing to know

0:12:42.920 --> 0:12:45.440
<v Speaker 1>is that that wasn't normal. That was the easiest, the

0:12:45.440 --> 0:12:48.679
<v Speaker 1>best of times. And I my own belief is we're

0:12:48.679 --> 0:12:52.040
<v Speaker 1>not going back there. We're now in an environment of

0:12:52.120 --> 0:12:56.480
<v Speaker 1>more normal and UH circumstances, and we're going to roughly

0:12:56.520 --> 0:12:58.640
<v Speaker 1>stay this way. Well do we go back? I mean,

0:12:58.640 --> 0:13:00.559
<v Speaker 1>what do we go back to? It all? Because when

0:13:00.600 --> 0:13:02.040
<v Speaker 1>I sort of read that memo and I look at

0:13:02.080 --> 0:13:05.679
<v Speaker 1>sea changes, it sounds like everything new is new. It's

0:13:05.720 --> 0:13:08.560
<v Speaker 1>never really a reversion to where we were in the past. Right. Well,

0:13:08.559 --> 0:13:13.520
<v Speaker 1>that that's what a sea change is. It's a complete transformation, uh,

0:13:13.640 --> 0:13:18.960
<v Speaker 1>not just a minor UH cyclical fluctuation. So you know, look,

0:13:19.120 --> 0:13:22.480
<v Speaker 1>I think that the business world, the economic world, is

0:13:22.480 --> 0:13:24.120
<v Speaker 1>not supposed to be easy. It's not supposed to be

0:13:24.120 --> 0:13:26.720
<v Speaker 1>easy to make money. UH. It's not supposed to be

0:13:26.760 --> 0:13:29.920
<v Speaker 1>easy for UH companies with bad business models to stay

0:13:29.960 --> 0:13:33.480
<v Speaker 1>in business, as it has been for the last fourteen years. UM.

0:13:33.559 --> 0:13:35.960
<v Speaker 1>So I think we go back to a period in

0:13:36.000 --> 0:13:39.520
<v Speaker 1>which we have moderate interest rates, we have moderate availability

0:13:39.520 --> 0:13:43.080
<v Speaker 1>of capital, we have a moderate UH default rate, and

0:13:43.120 --> 0:13:47.560
<v Speaker 1>so forth, all of which will feel much less accommodative,

0:13:47.679 --> 0:13:49.760
<v Speaker 1>I think than the last fourteen years. But so much

0:13:49.760 --> 0:13:51.480
<v Speaker 1>to the ada on the market right now is, of

0:13:51.520 --> 0:13:53.800
<v Speaker 1>course people trying to figure out what that new rate is,

0:13:54.280 --> 0:13:55.880
<v Speaker 1>if you want to call it a neutral rate or whatever.

0:13:56.240 --> 0:13:57.800
<v Speaker 1>But I mean, when was the last time that you

0:13:57.800 --> 0:14:02.080
<v Speaker 1>can remember that we had a stable and assistant neutral rate. Well,

0:14:02.160 --> 0:14:05.480
<v Speaker 1>it depends on your definition of stable time wise, But

0:14:05.559 --> 0:14:08.440
<v Speaker 1>of course I think that the FED became activist with

0:14:08.520 --> 0:14:11.640
<v Speaker 1>the arrival of Alan Greenspan in the mid nineties, and

0:14:11.679 --> 0:14:15.080
<v Speaker 1>I think that it's you know, we we had you know,

0:14:16.040 --> 0:14:18.480
<v Speaker 1>people started to talk about the arrival of the greenspand

0:14:18.480 --> 0:14:20.920
<v Speaker 1>put that if there was a problem in the economy,

0:14:20.800 --> 0:14:23.400
<v Speaker 1>the FED would just scored in some liquidity and solve it,

0:14:23.720 --> 0:14:27.160
<v Speaker 1>and and they frequently did. And they frequently did, including

0:14:27.600 --> 0:14:32.760
<v Speaker 1>Y two K and another real and imaginary UH crises,

0:14:33.040 --> 0:14:36.040
<v Speaker 1>the arrival of the bursting of the TMT bubble, for example.

0:14:36.600 --> 0:14:40.000
<v Speaker 1>So I would say that that's twenty five years that

0:14:40.120 --> 0:14:42.720
<v Speaker 1>that we haven't had what I call a free market

0:14:42.720 --> 0:14:45.080
<v Speaker 1>in money. But what gives you conviction that J. Pale

0:14:45.200 --> 0:14:48.240
<v Speaker 1>and whoever his successor might end up be being are

0:14:48.320 --> 0:14:50.640
<v Speaker 1>going to sort of move in a different direction where

0:14:50.640 --> 0:14:52.920
<v Speaker 1>they're not going to necessarily cow to out to the

0:14:52.920 --> 0:14:54.760
<v Speaker 1>market in a way that the market has come to expect.

0:14:54.880 --> 0:14:58.280
<v Speaker 1>I'm applying common sense. Uh, you can't always count on

0:14:58.360 --> 0:15:02.480
<v Speaker 1>common sense, but uh, you know, the events of recent

0:15:02.560 --> 0:15:05.080
<v Speaker 1>years tell me that it's not great to have interest

0:15:05.160 --> 0:15:09.200
<v Speaker 1>rates at zero. Zero interest rates are really in an

0:15:09.280 --> 0:15:12.960
<v Speaker 1>emergency measure. Uh, somebody gets a heart attack, you give

0:15:13.000 --> 0:15:16.480
<v Speaker 1>them a shot of a greneralman. Works. That doesn't mean

0:15:16.520 --> 0:15:18.080
<v Speaker 1>you start your day with a shot of a greneralman

0:15:18.120 --> 0:15:21.120
<v Speaker 1>every day. For seven years. We had rates at seven

0:15:21.200 --> 0:15:24.440
<v Speaker 1>at zero for seven years, and I think that you know,

0:15:24.480 --> 0:15:27.240
<v Speaker 1>and by the by the way, by the time uh

0:15:27.600 --> 0:15:31.200
<v Speaker 1>sixteen seventeen eighteen rolled around, people started saying, well, shouldn't

0:15:31.240 --> 0:15:33.520
<v Speaker 1>rates be a little higher, so that if we have

0:15:33.560 --> 0:15:38.160
<v Speaker 1>a recession, the Fed can cut rates and and become accommodative. Well,

0:15:38.200 --> 0:15:41.080
<v Speaker 1>if rates are zero or a quarter or a half,

0:15:41.120 --> 0:15:43.480
<v Speaker 1>you can't do that. So I think that's an important

0:15:43.520 --> 0:15:46.240
<v Speaker 1>reason why rates should be positive. And if you want

0:15:46.280 --> 0:15:50.320
<v Speaker 1>to fight inflation and and kill off inflationary psychology, which

0:15:50.360 --> 0:15:55.120
<v Speaker 1>is very important, you need a positive real Fed funds rate,

0:15:55.520 --> 0:15:57.760
<v Speaker 1>that is, the funds Fed funds rate has to exceed

0:15:57.840 --> 0:15:59.960
<v Speaker 1>the rate of inflation. And where we have a way

0:16:00.160 --> 0:16:05.440
<v Speaker 1>to go before that's the case. This is Bloomberg Daybreak today,

0:16:05.600 --> 0:16:08.360
<v Speaker 1>your morning brief on the stories making news from Wall

0:16:08.400 --> 0:16:11.440
<v Speaker 1>Street to Washington and beyond. Look for us on your

0:16:11.480 --> 0:16:15.920
<v Speaker 1>podcast feed at six am Eastern each morning, on Apple, Spotify,

0:16:16.040 --> 0:16:18.960
<v Speaker 1>and anywhere else you get your podcasts. You can also

0:16:19.040 --> 0:16:22.000
<v Speaker 1>listen live each morning starting at five am Wall Street

0:16:22.040 --> 0:16:25.040
<v Speaker 1>Time on Bloomberg eleven three oh in New York, Bloomberg

0:16:25.840 --> 0:16:28.960
<v Speaker 1>in Washington, Bloomberg one oh six one in Boston, and

0:16:29.080 --> 0:16:32.880
<v Speaker 1>Bloomberg nine six in San Francisco. Our flagship New York

0:16:32.920 --> 0:16:36.960
<v Speaker 1>station is also available on your Amazon Alexa devices. Just

0:16:37.120 --> 0:16:41.480
<v Speaker 1>say Alexa play Bloomberg eleven Plus listen coast to coast

0:16:41.560 --> 0:16:44.880
<v Speaker 1>on the Bloomberg Business app, Serius XM Channel one nine,

0:16:45.080 --> 0:16:48.120
<v Speaker 1>the I Heart Radio app, and on Bloomberg dot Com.

0:16:48.200 --> 0:16:51.280
<v Speaker 1>I'm Nathan Hager and I'm Karen Moscow. Join us again

0:16:51.320 --> 0:16:54.080
<v Speaker 1>tomorrow morning for all the news you need to start

0:16:54.120 --> 0:16:56.680
<v Speaker 1>your day right here on Bloomberg Daybreak