1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,520 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. There's 5 00:00:27,560 --> 00:00:30,880 Speaker 1: a history here. It's just laden with history, and with 6 00:00:31,000 --> 00:00:33,840 Speaker 1: the Republican Party that coming out of World War Two 7 00:00:34,360 --> 00:00:37,720 Speaker 1: with Shanka Sheck in Taiwan, where uh, there was just 8 00:00:37,760 --> 00:00:40,600 Speaker 1: a raging debate on the clearest memories of the debates 9 00:00:40,640 --> 00:00:42,320 Speaker 1: over this in the sixties when I was a kid, 10 00:00:42,400 --> 00:00:46,760 Speaker 1: and it was heated within Republican politics. Nothing's changed here 11 00:00:46,800 --> 00:00:50,280 Speaker 1: except we have a president who's grossly you know, without 12 00:00:50,320 --> 00:00:53,640 Speaker 1: any criticism with the president, to be kind, he's unpredictable 13 00:00:54,120 --> 00:00:56,160 Speaker 1: and we just simply don't won't, don't know what he'll 14 00:00:56,200 --> 00:00:58,400 Speaker 1: do with the veto proof vote that we just saw 15 00:00:59,520 --> 00:01:03,560 Speaker 1: senso w JPMorgan ESSEM Management Global market strategist Gabriella too 16 00:01:03,640 --> 00:01:05,840 Speaker 1: widely howd assumptions I've heard in the last couple of 17 00:01:05,920 --> 00:01:08,800 Speaker 1: days from market participants. One that the president needs to 18 00:01:08,800 --> 00:01:12,160 Speaker 1: face one trade deal before the elections in and two 19 00:01:12,640 --> 00:01:15,680 Speaker 1: it's unlikely that the President will break with Republican senators. 20 00:01:16,040 --> 00:01:20,520 Speaker 1: Can you reconcile those two things? So, I think I mean, 21 00:01:20,640 --> 00:01:23,840 Speaker 1: for for when we're writing our outlook, which was the season, 22 00:01:23,880 --> 00:01:26,480 Speaker 1: because the season, um, we have to have some sort 23 00:01:26,480 --> 00:01:29,360 Speaker 1: of assumption about what happens with trade here. It really 24 00:01:29,440 --> 00:01:33,240 Speaker 1: underpins the view for the economy and for asset markets 25 00:01:33,280 --> 00:01:36,560 Speaker 1: around the world. So really our belief is that there 26 00:01:36,680 --> 00:01:39,120 Speaker 1: is enough support both from the U. S side and 27 00:01:39,200 --> 00:01:42,399 Speaker 1: the China side to find some sort of compromise to 28 00:01:42,520 --> 00:01:45,679 Speaker 1: arrive at a trade truce. The question is how much 29 00:01:45,720 --> 00:01:49,440 Speaker 1: the symbolism around the passing of this bill will be 30 00:01:49,560 --> 00:01:53,960 Speaker 1: enough to deter China's, frankly own interest in arriving at 31 00:01:53,960 --> 00:01:56,240 Speaker 1: a truce. I think that's yet to be seen. Frankly, 32 00:01:56,560 --> 00:01:59,160 Speaker 1: so we're now changing our assumption. At this point, you're 33 00:01:59,240 --> 00:02:01,680 Speaker 1: changing your something are not You're not changing their assumption. 34 00:02:02,080 --> 00:02:05,360 Speaker 1: Do you think that the risk of escalating Hong Kong 35 00:02:05,840 --> 00:02:09,880 Speaker 1: distress and the US response is inappropriately priced right now 36 00:02:09,880 --> 00:02:12,400 Speaker 1: in markets? So I think the market is starting to 37 00:02:12,400 --> 00:02:15,440 Speaker 1: pay more attention to this right and and namely, over 38 00:02:15,480 --> 00:02:18,600 Speaker 1: the past ten days or so, we've started, um to 39 00:02:18,760 --> 00:02:22,400 Speaker 1: see a little bit more question marks around truly what 40 00:02:22,480 --> 00:02:25,320 Speaker 1: kind of phase one deal we're looking at here? Um. 41 00:02:25,360 --> 00:02:27,519 Speaker 1: But I think one important point here is this is 42 00:02:27,560 --> 00:02:31,400 Speaker 1: still symbolic mess uh measure right, And at this point 43 00:02:31,480 --> 00:02:35,320 Speaker 1: China has not taken a military step or a step 44 00:02:35,360 --> 00:02:39,480 Speaker 1: that would actually precipitate a strong response and practice from 45 00:02:39,520 --> 00:02:42,639 Speaker 1: the US. So they haven't crossed that line yet, which 46 00:02:42,720 --> 00:02:44,720 Speaker 1: I think is the most important thing to look at. Gaby, 47 00:02:44,720 --> 00:02:46,320 Speaker 1: we couldet him out of the politics for the rest 48 00:02:46,320 --> 00:02:48,160 Speaker 1: of this program. Let's not do that. Let's talk about 49 00:02:48,160 --> 00:02:50,040 Speaker 1: the markets. There's a few things happening that I think 50 00:02:50,040 --> 00:02:53,359 Speaker 1: it really interesting. The curves flattening again six straight days 51 00:02:53,400 --> 00:02:56,680 Speaker 1: of it, want to the data relative to expectations is 52 00:02:56,680 --> 00:02:59,280 Speaker 1: coming in negatively again. The City surprise index is now 53 00:02:59,360 --> 00:03:01,840 Speaker 1: back in negat of territory, and I would say three 54 00:03:02,200 --> 00:03:04,720 Speaker 1: high yield spreads back out to a round about four 55 00:03:04,800 --> 00:03:07,720 Speaker 1: hundred basis points. Put all of that together, and the 56 00:03:07,720 --> 00:03:10,519 Speaker 1: equity market is still near all time highs. And Betty 57 00:03:10,600 --> 00:03:13,000 Speaker 1: responding to the news and the price action now swhere 58 00:03:13,080 --> 00:03:15,960 Speaker 1: Why interesting thing though about the equity market, as if 59 00:03:15,960 --> 00:03:18,239 Speaker 1: we look beneath the surface, for the past ten days 60 00:03:18,320 --> 00:03:21,120 Speaker 1: or so, you have seen the defensives and kind of 61 00:03:21,120 --> 00:03:24,440 Speaker 1: shall we say, secular tech uh start to lead again. 62 00:03:24,680 --> 00:03:26,480 Speaker 1: So there has been a little bit of a pause 63 00:03:26,600 --> 00:03:29,880 Speaker 1: in the cyclical trade beneath the surface and equities as well. 64 00:03:30,200 --> 00:03:32,400 Speaker 1: And I think it's around this idea that all right, 65 00:03:32,480 --> 00:03:35,400 Speaker 1: the market has gotten excited about stability and global growth, 66 00:03:35,480 --> 00:03:38,200 Speaker 1: about a trade truce, but we haven't had new information 67 00:03:38,280 --> 00:03:41,080 Speaker 1: to confirm that for ten days now. So the burden 68 00:03:41,280 --> 00:03:43,520 Speaker 1: is here in the pudding, shall we say, And so 69 00:03:43,600 --> 00:03:47,280 Speaker 1: we need new information to see that cyclical trade back 70 00:03:47,320 --> 00:03:51,400 Speaker 1: on value is finally perking. We spoke with David Harrow 71 00:03:51,480 --> 00:03:55,560 Speaker 1: yesterday on arch value investor internationally. How do you find 72 00:03:55,800 --> 00:04:00,960 Speaker 1: value sectors, value stock selection internationally just by banks? Is 73 00:04:01,000 --> 00:04:07,320 Speaker 1: that the boring way its value internationally? Concrete companies in Thailand? 74 00:04:09,360 --> 00:04:13,760 Speaker 1: That was, That was the diplomatic wife shutting Tom Kane down. 75 00:04:13,840 --> 00:04:19,240 Speaker 1: That was now, not that I would ever hear that 76 00:04:19,400 --> 00:04:26,200 Speaker 1: at home. So it's new. Harrow never said to me new. 77 00:04:30,080 --> 00:04:33,520 Speaker 1: I said it that way just because it brought to mind, Um, 78 00:04:35,080 --> 00:04:39,719 Speaker 1: no more recent the more recent discussion around European banks 79 00:04:39,760 --> 00:04:43,240 Speaker 1: in Japanese banks in particular. Yeah, but the tradition is 80 00:04:43,320 --> 00:04:47,680 Speaker 1: concrete companies in Thailand, you know, and also by telephonist 81 00:04:47,760 --> 00:04:52,680 Speaker 1: to Mexico. Okay, you know, give me exposure now, oh 82 00:04:52,800 --> 00:04:55,320 Speaker 1: now you got it. Great. But the bottom line is 83 00:04:55,400 --> 00:04:59,520 Speaker 1: I need to discover value internationally. How do you find that? So? 84 00:04:59,600 --> 00:05:02,200 Speaker 1: I think, honestly, it's it's less of an easy call 85 00:05:02,400 --> 00:05:06,159 Speaker 1: value versus growth internationally exactly because we're not of the 86 00:05:06,240 --> 00:05:12,440 Speaker 1: belief that banks or industrials or materials are really the 87 00:05:12,560 --> 00:05:15,200 Speaker 1: trade here for the next year or two, right. I 88 00:05:15,240 --> 00:05:18,120 Speaker 1: think if we look at international, it's still more of 89 00:05:18,160 --> 00:05:21,120 Speaker 1: a growth story, it's still more of a consumer story, 90 00:05:21,480 --> 00:05:23,919 Speaker 1: it's still more of a text story. But there is 91 00:05:24,040 --> 00:05:27,080 Speaker 1: value in international versus the US. I think that's the 92 00:05:27,160 --> 00:05:31,320 Speaker 1: underlying message, but it's not necessarily in your typical value stocks. Gabby, 93 00:05:31,360 --> 00:05:34,200 Speaker 1: thank you, you can run now you think I should live. 94 00:05:35,880 --> 00:05:49,919 Speaker 1: Global market strategy is always great to see you, Gabby. 95 00:05:50,800 --> 00:05:53,920 Speaker 1: John what's so great about public service within central banking 96 00:05:54,040 --> 00:05:56,120 Speaker 1: in Europe? Like what is Mario drag you gonna do? 97 00:05:56,480 --> 00:06:00,920 Speaker 1: How will he convey message? Is everyone finds a unique 98 00:06:00,920 --> 00:06:04,160 Speaker 1: way to move forward and to convey the message. And 99 00:06:04,240 --> 00:06:06,159 Speaker 1: that happened again this morning. And what they can say 100 00:06:06,200 --> 00:06:08,320 Speaker 1: once they've left the central bank is very different to 101 00:06:08,360 --> 00:06:10,400 Speaker 1: what they could say when they were at the Central Bank. 102 00:06:10,440 --> 00:06:12,560 Speaker 1: That is no difference to the former New York Fed 103 00:06:12,600 --> 00:06:16,039 Speaker 1: president built uply now Bloomberg opinion columnist and running the 104 00:06:16,080 --> 00:06:20,360 Speaker 1: following this morning on the Bloomberg terminal. The Federal Reserve, 105 00:06:20,520 --> 00:06:23,920 Speaker 1: in its most recent semiannial report about risk of financial stability, 106 00:06:23,920 --> 00:06:26,720 Speaker 1: concluded that there are no serious immediate threats. So does 107 00:06:26,760 --> 00:06:30,320 Speaker 1: this mean we should relax? I definitely don't think so. 108 00:06:30,680 --> 00:06:32,960 Speaker 1: Take a listen to what Bill had to say a 109 00:06:33,000 --> 00:06:36,960 Speaker 1: little bit earlier on financial market valuations, the Fed concluded 110 00:06:37,000 --> 00:06:41,400 Speaker 1: are not high relative to bond yields, but bonnils are 111 00:06:41,440 --> 00:06:44,080 Speaker 1: extraordinarily low. So I think there's a risk that if 112 00:06:44,240 --> 00:06:46,960 Speaker 1: bonnils rise, which seems likely to me given the large 113 00:06:47,000 --> 00:06:49,279 Speaker 1: budget devisits that we see as far as the eye 114 00:06:49,279 --> 00:06:52,839 Speaker 1: can see, that's going to put financial market asset valuations 115 00:06:52,920 --> 00:06:55,760 Speaker 1: under pressure. And second, they highlight the build up of 116 00:06:55,839 --> 00:07:00,919 Speaker 1: corporate debt. Corporate debt is increased because since they're deciding 117 00:07:00,960 --> 00:07:03,960 Speaker 1: to borrow to buy back shares because that boosts their 118 00:07:04,000 --> 00:07:06,240 Speaker 1: share price. All well and good as long as we're 119 00:07:06,279 --> 00:07:09,000 Speaker 1: in an economic expansion, But what next time we have 120 00:07:09,080 --> 00:07:12,480 Speaker 1: a recession? That big load of corporate debt that we've 121 00:07:12,480 --> 00:07:14,600 Speaker 1: built up is going to be problematic because a lot 122 00:07:14,600 --> 00:07:17,320 Speaker 1: of that's in the triple B sector, and some of 123 00:07:17,320 --> 00:07:19,800 Speaker 1: that triple B debts can become junk debt and people 124 00:07:19,840 --> 00:07:21,280 Speaker 1: are gonna not gonna be able to hold that debt. 125 00:07:21,280 --> 00:07:22,800 Speaker 1: They're gonna have to sell it, and that's gonna put 126 00:07:22,800 --> 00:07:26,280 Speaker 1: a lot of upward pressure on credit spreads at that time. 127 00:07:26,600 --> 00:07:29,160 Speaker 1: This is a super bessity by Bill Dudley, and it 128 00:07:29,240 --> 00:07:31,600 Speaker 1: really hearkens back to the time where he wrote herd 129 00:07:31,640 --> 00:07:35,160 Speaker 1: on people like Ed mcelvey, Jan Hatzius, Jack Yondall and 130 00:07:35,200 --> 00:07:39,760 Speaker 1: others uh At Goldman, Sachs and all centering John back 131 00:07:39,800 --> 00:07:42,880 Speaker 1: to the fiscal space. He mentions at the bottom of 132 00:07:42,920 --> 00:07:46,400 Speaker 1: the essay, Ed mcelvey and you know, to the tone, 133 00:07:46,520 --> 00:07:50,200 Speaker 1: and there's not a moment to lose in identifying the 134 00:07:50,200 --> 00:07:54,160 Speaker 1: fiscal dynamics all these different financial stability risk that are percolating. 135 00:07:54,160 --> 00:07:55,840 Speaker 1: But at the epicenter of it all the risk that 136 00:07:55,880 --> 00:07:59,320 Speaker 1: treasury yokes rise and start to feel some of these problems. 137 00:07:59,440 --> 00:08:01,080 Speaker 1: But I think we got to talk about the premise 138 00:08:01,160 --> 00:08:06,320 Speaker 1: of the peace budget deficits pushing treasury yields higher so farly, sir, 139 00:08:06,520 --> 00:08:10,000 Speaker 1: no evidence of that in the United States. True, although 140 00:08:10,000 --> 00:08:12,800 Speaker 1: you are seeing foreign investors pull back. Actually, if you 141 00:08:12,800 --> 00:08:15,920 Speaker 1: look at the September data from the Treasury Department just 142 00:08:16,000 --> 00:08:19,040 Speaker 1: released earlier this week, you could see that foreign investors 143 00:08:19,040 --> 00:08:21,480 Speaker 1: reduced their holdings of US treasuries by the most in 144 00:08:21,560 --> 00:08:24,720 Speaker 1: two years in September. And you saw that foreigners came 145 00:08:24,760 --> 00:08:27,960 Speaker 1: in and bid on the least amount of the U 146 00:08:28,080 --> 00:08:31,320 Speaker 1: S Treasury options in September since the financial crisis. So 147 00:08:31,560 --> 00:08:34,319 Speaker 1: this does raise a question are there enough domestic buyers 148 00:08:34,360 --> 00:08:36,160 Speaker 1: to take in and fill in that extra demand. I 149 00:08:36,160 --> 00:08:38,440 Speaker 1: think you've just got to believe, and I really struggled 150 00:08:38,480 --> 00:08:40,000 Speaker 1: with this belief. You have to believe that in the 151 00:08:40,040 --> 00:08:44,240 Speaker 1: next downturn, people don't buy treasuries. In the next downturn, 152 00:08:44,360 --> 00:08:47,679 Speaker 1: yields don't go lower, they go higher. I struggle with that. 153 00:08:47,800 --> 00:08:50,320 Speaker 1: I really struggle with that. You're not alone. But the 154 00:08:50,400 --> 00:08:53,720 Speaker 1: question is, if you do have central banks globally pulling 155 00:08:53,760 --> 00:08:56,280 Speaker 1: back from their stimulus programs are frankly running out of 156 00:08:56,320 --> 00:08:59,680 Speaker 1: ammunition when it comes to suppressing bond yields, could there 157 00:08:59,720 --> 00:09:04,880 Speaker 1: be a natural repricing globally in sovereign risk what's interesting 158 00:09:05,000 --> 00:09:07,679 Speaker 1: is the reaction function is a smooth curve and then 159 00:09:07,720 --> 00:09:11,680 Speaker 1: it's not. And when rates rise there's always these kink effects. 160 00:09:11,679 --> 00:09:14,680 Speaker 1: And that's really what Dudley was was going to is Okay, 161 00:09:14,760 --> 00:09:18,080 Speaker 1: rates can rise a little bit, but there's a tip point, John, 162 00:09:18,120 --> 00:09:21,200 Speaker 1: I would see just we don't know where that where 163 00:09:21,280 --> 00:09:25,560 Speaker 1: where's higher rates actually higher rates. That's a huge mystery 164 00:09:26,000 --> 00:09:28,719 Speaker 1: given the negative rate regime in the last ten years. Well, 165 00:09:28,760 --> 00:09:31,200 Speaker 1: if you talk with Ira Jersey, he says that two 166 00:09:31,240 --> 00:09:33,079 Speaker 1: and a half percent on the ten years sort of 167 00:09:33,080 --> 00:09:35,839 Speaker 1: the tipping point for US stocks, And I think that's 168 00:09:35,840 --> 00:09:38,000 Speaker 1: sort of one measure people are looking at. What point 169 00:09:38,200 --> 00:09:41,280 Speaker 1: does that impede in stock valuations? But I think that John, 170 00:09:41,320 --> 00:09:43,880 Speaker 1: you raise a really good point, which is what's gonna 171 00:09:44,160 --> 00:09:46,400 Speaker 1: what's gonna kick us into this higher yield regime? We 172 00:09:46,440 --> 00:09:48,839 Speaker 1: have not seen it despite all the warnings over the 173 00:09:48,840 --> 00:09:52,080 Speaker 1: past ten years. If the FET successful generating inflation, and 174 00:09:52,120 --> 00:09:54,440 Speaker 1: once again I think many people would question their ability 175 00:09:54,679 --> 00:09:56,480 Speaker 1: to do that as well, it won't be the FED, 176 00:09:56,520 --> 00:09:59,199 Speaker 1: though it'll be a physical stimulus, It'll be the budget expansion, 177 00:09:59,200 --> 00:10:01,000 Speaker 1: which is a reason why Dudley is is honing it 178 00:10:01,040 --> 00:10:02,840 Speaker 1: on that. Well, let's talk about it. Let's talk about 179 00:10:02,840 --> 00:10:04,679 Speaker 1: a broad argument that I've heard many times after the 180 00:10:04,760 --> 00:10:06,560 Speaker 1: last couple of years as well. Ray Dannio has brought 181 00:10:06,559 --> 00:10:09,199 Speaker 1: this up a few times too. In the next downturn, 182 00:10:09,480 --> 00:10:12,520 Speaker 1: the US dollar does it play that traditional role? Does 183 00:10:12,520 --> 00:10:16,640 Speaker 1: it have those risk characteristics, those characteristics of risk aversion, 184 00:10:16,679 --> 00:10:19,520 Speaker 1: those traits that you buy the dollar and dollar denominating 185 00:10:19,559 --> 00:10:22,240 Speaker 1: assets at times of stress. Would it continue to have 186 00:10:22,360 --> 00:10:24,840 Speaker 1: those traits? I think many people leave people believe it will, 187 00:10:24,840 --> 00:10:27,319 Speaker 1: but just a small subsection of market participants downing to 188 00:10:27,440 --> 00:10:30,480 Speaker 1: question that view over the last few years. Yeah, and 189 00:10:30,480 --> 00:10:32,319 Speaker 1: and and part of that is what we you know, 190 00:10:32,360 --> 00:10:35,360 Speaker 1: when we bundle all together and go trade weighted, and 191 00:10:35,440 --> 00:10:38,920 Speaker 1: to the president saying the dollar is stronger, well on 192 00:10:39,440 --> 00:10:43,280 Speaker 1: a linear or frankly on a historic basis, No, it's 193 00:10:43,320 --> 00:10:46,959 Speaker 1: not all that stronger. We're not out to Plaza hotel, 194 00:10:47,280 --> 00:10:50,520 Speaker 1: you know, Plaza chord points or that. And the idea 195 00:10:50,559 --> 00:10:53,360 Speaker 1: of forcing the dollar weaker is buttressed up against a 196 00:10:53,440 --> 00:10:57,400 Speaker 1: huge wall of people that want to participate by owning flows. 197 00:10:57,720 --> 00:11:00,920 Speaker 1: This is bob, since one oh one flows matter, I 198 00:11:00,960 --> 00:11:03,720 Speaker 1: don't buy that. You're going to see people wholesale abandon 199 00:11:03,760 --> 00:11:06,120 Speaker 1: the dollar. I don't buy that, but I do buy 200 00:11:06,320 --> 00:11:08,920 Speaker 1: that we could enter a regime where yields rise and 201 00:11:08,960 --> 00:11:11,960 Speaker 1: that could disrupt market appetite for a risk. Bill Dudley 202 00:11:12,080 --> 00:11:14,199 Speaker 1: much talked about peace once again this morning, add on 203 00:11:14,200 --> 00:11:16,800 Speaker 1: the Bloomberg terminal and on the Bloomberger website. To risk 204 00:11:16,840 --> 00:11:20,240 Speaker 1: the stability build amid short term calm by the former 205 00:11:20,360 --> 00:11:37,760 Speaker 1: New York President on Bloomberg Opinion. The US Senate unanimously 206 00:11:37,800 --> 00:11:41,119 Speaker 1: passing a bill supporting the Hong Kong protesters, the Chinese 207 00:11:41,640 --> 00:11:44,320 Speaker 1: warning of retaliation, and the President of the United States 208 00:11:44,440 --> 00:11:49,280 Speaker 1: arguably stuck now between breaking with Republican senators or risking 209 00:11:49,280 --> 00:11:50,839 Speaker 1: a Phase one trade deal. I want to bring you, 210 00:11:50,880 --> 00:11:53,959 Speaker 1: Todd Mariana Eraisia Group US director, to help us understand 211 00:11:53,960 --> 00:11:55,920 Speaker 1: this a little bit more. He cools in, Todd, great 212 00:11:55,960 --> 00:11:59,080 Speaker 1: to have you with us, help us understand the president's 213 00:11:59,120 --> 00:12:03,560 Speaker 1: next move after this bill passes the Senate. Good morning, John, 214 00:12:03,600 --> 00:12:07,000 Speaker 1: Great to be with both you and tomm. Yeah, I think, 215 00:12:07,160 --> 00:12:10,360 Speaker 1: like you said, the clear risk to Trump here is 216 00:12:10,360 --> 00:12:13,240 Speaker 1: the Phase one trade deal, which is not only in 217 00:12:13,480 --> 00:12:16,680 Speaker 1: his interests, but also certainly in China's interests. And I 218 00:12:16,720 --> 00:12:19,760 Speaker 1: think you see the leadership of both countries working to 219 00:12:20,320 --> 00:12:24,559 Speaker 1: try and insulate those those talks, certainly from the congressional 220 00:12:24,559 --> 00:12:27,920 Speaker 1: reaction to Hong Kong. I think this is probably a 221 00:12:27,960 --> 00:12:32,520 Speaker 1: situation where you have such an overwhelming majority in Congress 222 00:12:32,960 --> 00:12:36,880 Speaker 1: supporting this bill that the president likely has to uh 223 00:12:37,000 --> 00:12:40,480 Speaker 1: swallow it and try to manage the fallout with Phase one. 224 00:12:40,800 --> 00:12:42,880 Speaker 1: One thing I think that's working in his favor there 225 00:12:43,000 --> 00:12:46,440 Speaker 1: is that it's it's certainly a diminimous bill in terms 226 00:12:46,480 --> 00:12:49,920 Speaker 1: of what Congress could actually do in Hong Kong, and 227 00:12:50,320 --> 00:12:53,280 Speaker 1: that's a risk for the future not here. I think 228 00:12:53,360 --> 00:12:55,920 Speaker 1: the President can probably manage it to keep trade talks 229 00:12:55,960 --> 00:12:58,439 Speaker 1: moving forward. So just help me understand the process down 230 00:12:58,440 --> 00:13:00,560 Speaker 1: in Washington at the moment, a different kind of bill 231 00:13:00,679 --> 00:13:03,199 Speaker 1: past the cent tome past the bill. So now this 232 00:13:03,200 --> 00:13:05,040 Speaker 1: bill needs to go to the House and then ultimately 233 00:13:05,120 --> 00:13:09,920 Speaker 1: ends up on the President's desk. Is it veto proof? 234 00:13:09,960 --> 00:13:12,079 Speaker 1: That's correct. They do have a couple of things I 235 00:13:12,120 --> 00:13:15,320 Speaker 1: believe to work out in conference, uh in order to 236 00:13:15,400 --> 00:13:18,360 Speaker 1: have a single bill that goes to the President's desk. 237 00:13:18,640 --> 00:13:23,480 Speaker 1: I believe there is likely a veto proof majority for 238 00:13:23,280 --> 00:13:26,040 Speaker 1: h for that bill. And you know, if if Trump 239 00:13:26,080 --> 00:13:29,200 Speaker 1: were to send it back to veto it, and then 240 00:13:29,440 --> 00:13:33,199 Speaker 1: that requires another vote to be taken in Congress. He 241 00:13:33,240 --> 00:13:36,679 Speaker 1: can use that to say to Shi jin Ping and 242 00:13:36,760 --> 00:13:39,720 Speaker 1: to China, this is not me, this is the Congress. 243 00:13:39,760 --> 00:13:43,360 Speaker 1: That's something many presidents have said to foreign leaders before. 244 00:13:43,760 --> 00:13:48,640 Speaker 1: China's reactions certainly publicly will be uh swift and uh 245 00:13:48,679 --> 00:13:51,559 Speaker 1: and harsh. You saw that even just when the House 246 00:13:51,600 --> 00:13:54,880 Speaker 1: passed their version of the bill. But again, that's not 247 00:13:54,920 --> 00:13:59,640 Speaker 1: an unusual uh diplomatic circumstance. I think that you know, 248 00:13:59,679 --> 00:14:04,120 Speaker 1: once that initial reaction has washed through, you can likely 249 00:14:04,280 --> 00:14:07,880 Speaker 1: keep trade talks um moving forward. That would probably not 250 00:14:07,960 --> 00:14:10,680 Speaker 1: be the case with a with a more severe bill. So, 251 00:14:10,880 --> 00:14:14,040 Speaker 1: given the fact that this is largely symbolic, is there 252 00:14:14,080 --> 00:14:18,280 Speaker 1: any market feedback loop that people should be pricing in 253 00:14:18,360 --> 00:14:21,280 Speaker 1: here from the bill that's just passed in the Senate? 254 00:14:22,560 --> 00:14:26,520 Speaker 1: Not directly, I think. I think the signal here is 255 00:14:26,560 --> 00:14:31,720 Speaker 1: certainly that this is symbolic, but it's also representative of 256 00:14:32,240 --> 00:14:35,960 Speaker 1: where the debate is going in Washington, and we've seen Congress, 257 00:14:35,960 --> 00:14:39,400 Speaker 1: both Republicans and Democrats, as kind of guardians of a 258 00:14:39,440 --> 00:14:44,360 Speaker 1: more traditional American foreign policy and forced by events on 259 00:14:44,400 --> 00:14:48,760 Speaker 1: the ground to respond to many different things from you know, 260 00:14:48,840 --> 00:14:52,280 Speaker 1: from Syria to Russia, UH, and now to Hong Kong. 261 00:14:52,480 --> 00:14:56,000 Speaker 1: The independent variable here is clearly where the protests go 262 00:14:56,560 --> 00:14:59,840 Speaker 1: and whether it's able to be handled by police there 263 00:15:00,040 --> 00:15:03,520 Speaker 1: or whether you eventually have a Beijing military response, which 264 00:15:03,640 --> 00:15:08,560 Speaker 1: I assume would necessitate a much uh you know, harsher 265 00:15:08,600 --> 00:15:12,640 Speaker 1: response from Congress. So it's it's symbolic in and of itself, 266 00:15:12,880 --> 00:15:15,680 Speaker 1: is not symbolic in terms of where the debates going. Okay, 267 00:15:15,760 --> 00:15:17,680 Speaker 1: I get the symbolism, and I tried to read the 268 00:15:17,760 --> 00:15:21,240 Speaker 1: fine print just within the general media analysis of it, 269 00:15:21,800 --> 00:15:26,040 Speaker 1: and I still don't understand where there's any power other 270 00:15:26,080 --> 00:15:30,000 Speaker 1: than verbal. To be clear, the legislative brands of the 271 00:15:30,080 --> 00:15:36,800 Speaker 1: United States has no quote unquote power here. Yeah, they 272 00:15:36,840 --> 00:15:41,360 Speaker 1: do have power in in terms of repealing what gives 273 00:15:41,360 --> 00:15:44,520 Speaker 1: Hong Kong special status in UH in US law. That's 274 00:15:44,520 --> 00:15:47,880 Speaker 1: the big bat that Congress has that's not involved, UH 275 00:15:47,880 --> 00:15:52,200 Speaker 1: in this bill. From China's perspective, Hong Kong is of 276 00:15:52,360 --> 00:15:58,920 Speaker 1: such strategic national importance than any I think involvement of Congress, uh, 277 00:15:58,960 --> 00:16:02,160 Speaker 1: you know, necessity take some sort of some sort of prizal. 278 00:16:02,360 --> 00:16:05,080 Speaker 1: To be clear, here, is there any Parson between Democrats 279 00:16:05,080 --> 00:16:09,640 Speaker 1: and Republicans. I mean, is unanimous or near unanimous what 280 00:16:09,720 --> 00:16:14,080 Speaker 1: we're talking about here. There's yeah, there's there's very This 281 00:16:14,160 --> 00:16:16,520 Speaker 1: is a this is a very bipartisan issue for sure, 282 00:16:16,880 --> 00:16:21,520 Speaker 1: and uh, but it's also bipartisan because Congress is reacting 283 00:16:21,560 --> 00:16:24,240 Speaker 1: to events. They're not being proactive and trying to get 284 00:16:24,320 --> 00:16:27,320 Speaker 1: in front of you know, where the protests go. That's 285 00:16:27,360 --> 00:16:30,320 Speaker 1: where you're going to find Republicans dropping off to support 286 00:16:30,360 --> 00:16:35,280 Speaker 1: the president's ability to make foreign policy and certainly to 287 00:16:35,360 --> 00:16:38,960 Speaker 1: continue his talks with China. That that's sort of been 288 00:16:39,000 --> 00:16:42,440 Speaker 1: at the core of what McConnell, UH Majority Leader McConnell 289 00:16:42,480 --> 00:16:46,200 Speaker 1: has said in the Senate. So, you know, I think 290 00:16:46,280 --> 00:16:51,080 Speaker 1: that that Congresses is reacting to things here. The epicenter 291 00:16:51,120 --> 00:16:52,680 Speaker 1: of all of this seems to be questioning how much 292 00:16:52,720 --> 00:16:56,080 Speaker 1: autonomy Hong Kong actually has. When China comes out and 293 00:16:56,080 --> 00:16:59,840 Speaker 1: says stay out of our internal issues, doesn't that undermine 294 00:16:59,840 --> 00:17:04,720 Speaker 1: the position on the international stage. It does in the 295 00:17:04,800 --> 00:17:09,160 Speaker 1: sense that what was promised in was one country, two 296 00:17:09,200 --> 00:17:13,840 Speaker 1: systems for you know, four fifty years um. It does 297 00:17:13,880 --> 00:17:17,800 Speaker 1: not undermine their position in that it's it's widely understood 298 00:17:17,920 --> 00:17:20,760 Speaker 1: that you know, at the end of those fifty years, 299 00:17:21,119 --> 00:17:26,200 Speaker 1: Hong Kong reverts to UH to direct Chinese control. And 300 00:17:26,560 --> 00:17:29,560 Speaker 1: you know that it's no secret why this is happening now, 301 00:17:29,560 --> 00:17:32,040 Speaker 1: why this has built up for for years and years 302 00:17:32,400 --> 00:17:36,040 Speaker 1: in Hong Kong. I think what probably would undermine UH 303 00:17:36,359 --> 00:17:39,439 Speaker 1: the Chinese position more would have been a very heavy 304 00:17:39,480 --> 00:17:43,920 Speaker 1: handed and early crackdown on the protest. And the fact 305 00:17:43,920 --> 00:17:46,800 Speaker 1: that China has not done that, I think is is 306 00:17:46,800 --> 00:17:50,120 Speaker 1: a testament to the fact that they realized there they've 307 00:17:50,160 --> 00:17:53,159 Speaker 1: got one arm tied behind their backs so far here Tom, Marianna, 308 00:17:53,240 --> 00:17:55,359 Speaker 1: thank you so much. Will you raise your group UH 309 00:17:55,600 --> 00:18:11,040 Speaker 1: this morning? Very quietly A number of days ago in 310 00:18:11,080 --> 00:18:13,919 Speaker 1: the right in column of the ft op ed was 311 00:18:13,960 --> 00:18:20,000 Speaker 1: Megan Green writing really really smartly on fiscal writing on debt, 312 00:18:20,240 --> 00:18:23,680 Speaker 1: and writing on the emotion and politics around it. We're 313 00:18:23,720 --> 00:18:26,600 Speaker 1: thrilled that she could join us now holding court at 314 00:18:26,600 --> 00:18:28,960 Speaker 1: the Kennedy School, that she got one of those old 315 00:18:29,000 --> 00:18:32,320 Speaker 1: wooden desks at the Kennedy School where she wax as 316 00:18:32,359 --> 00:18:36,119 Speaker 1: philosophical Megan, wonderful to have you with us. Congratulations on 317 00:18:36,240 --> 00:18:40,600 Speaker 1: driving forward the conversation on fiscal stimulus. All it comes 318 00:18:40,640 --> 00:18:43,600 Speaker 1: down to is it will where is the will to 319 00:18:43,720 --> 00:18:48,520 Speaker 1: get away from a historic austerity. So in the next 320 00:18:48,600 --> 00:18:50,880 Speaker 1: year or so, I don't think there's any will at 321 00:18:50,880 --> 00:18:55,440 Speaker 1: all outside of China where we might get more fiscal stimulus. 322 00:18:55,440 --> 00:18:59,520 Speaker 1: But amongst developed economies, I think there's very little chance 323 00:18:59,560 --> 00:19:02,640 Speaker 1: we'll have anything in the US going into an election year. 324 00:19:02,960 --> 00:19:05,399 Speaker 1: We might get some fiscal stimulus after the election, but 325 00:19:05,480 --> 00:19:08,040 Speaker 1: that would very much depend on the election plays out 326 00:19:08,200 --> 00:19:11,440 Speaker 1: and and whether we have a divided government there's grid locks, 327 00:19:11,520 --> 00:19:14,680 Speaker 1: nothing will happen. The Germans, of course, have just passed 328 00:19:14,720 --> 00:19:19,960 Speaker 1: another balanced budget for um, They've just skated past recessions, 329 00:19:19,960 --> 00:19:22,760 Speaker 1: so now any pressure on the German government to provide 330 00:19:22,760 --> 00:19:26,200 Speaker 1: fiscal stimulus, in their view, has gone in. In any case, 331 00:19:26,560 --> 00:19:29,600 Speaker 1: they were happy to withstand it as long as unemployment 332 00:19:29,640 --> 00:19:32,760 Speaker 1: rooms low in Germany, which it really does. UM. So 333 00:19:32,960 --> 00:19:36,440 Speaker 1: Europe so unlikely to really have a shift towards fiscal studulusts. Either. 334 00:19:36,720 --> 00:19:38,600 Speaker 1: You might get a little out of the UK UM 335 00:19:38,760 --> 00:19:41,080 Speaker 1: no matter who wins the election, but that's hardly a 336 00:19:41,119 --> 00:19:44,159 Speaker 1: game changer on the global stage. So if if central 337 00:19:44,200 --> 00:19:46,720 Speaker 1: bankers have been going around and all these big conferences 338 00:19:46,760 --> 00:19:49,680 Speaker 1: saying what we really need a fiscal stimulus. That leaves 339 00:19:49,680 --> 00:19:51,919 Speaker 1: me worried because I just don't see it happening, and 340 00:19:51,960 --> 00:19:54,040 Speaker 1: no one's really coming up with a plan b it. 341 00:19:54,240 --> 00:19:56,879 Speaker 1: It would be the best option, but I wonder what 342 00:19:57,040 --> 00:20:01,000 Speaker 1: second best possible options. So if we don't get fiscal stimulus, 343 00:20:01,400 --> 00:20:04,880 Speaker 1: and if we continue with this on again off again 344 00:20:04,960 --> 00:20:08,680 Speaker 1: trade discussion between the US and China, we're seeing your 345 00:20:08,880 --> 00:20:12,160 Speaker 1: US economic surprise indexes turned negative for the first time 346 00:20:12,200 --> 00:20:15,080 Speaker 1: since the beginning of September. Do you think that the 347 00:20:15,119 --> 00:20:20,399 Speaker 1: consensus narrative of reflation of positive growth next year in 348 00:20:20,440 --> 00:20:23,880 Speaker 1: the US is wrong? So I don't think it's wrong. 349 00:20:23,880 --> 00:20:26,240 Speaker 1: I think you know, I think we'll still grow next year. 350 00:20:26,240 --> 00:20:28,480 Speaker 1: I just think it could continue to be a slowdown 351 00:20:28,840 --> 00:20:31,200 Speaker 1: in developed countries. I think global growth will look a 352 00:20:31,240 --> 00:20:33,840 Speaker 1: little bit better next year actually under your scenario, just 353 00:20:33,880 --> 00:20:36,760 Speaker 1: because the averging markets should be squeezed less than they 354 00:20:36,760 --> 00:20:39,359 Speaker 1: were this year. Um. But for you know, the big 355 00:20:39,359 --> 00:20:42,480 Speaker 1: economies and developed markets, I think we'll continue to grow. 356 00:20:42,520 --> 00:20:45,679 Speaker 1: We'll just continue to converge with potential growth, which is 357 00:20:45,720 --> 00:20:48,119 Speaker 1: lower than where we are now. UM. It doesn't mean 358 00:20:48,119 --> 00:20:50,320 Speaker 1: we'll go into recession though, because central banks I think 359 00:20:50,320 --> 00:20:54,120 Speaker 1: will remain accommodative. Do you think that the market has 360 00:20:54,240 --> 00:20:56,080 Speaker 1: a good chance of going into recession if there is 361 00:20:56,119 --> 00:20:59,360 Speaker 1: no trade deal and the tariffs go into effect in December? 362 00:20:59,480 --> 00:21:03,879 Speaker 1: At President have this promised, So I think, um, that 363 00:21:03,920 --> 00:21:06,480 Speaker 1: would further slow growth. I don't think that alone would 364 00:21:06,480 --> 00:21:08,760 Speaker 1: push us into a session. Um it said the teariff 365 00:21:08,800 --> 00:21:11,719 Speaker 1: so much. I think that are so pernicious about this 366 00:21:11,800 --> 00:21:15,200 Speaker 1: trade issue. It's more the uncertainty that the threat of 367 00:21:15,280 --> 00:21:18,439 Speaker 1: tariffs causes, and that um that pushes firms did not 368 00:21:18,520 --> 00:21:20,960 Speaker 1: really know what world order we're living in right now. 369 00:21:21,040 --> 00:21:23,879 Speaker 1: So if we were to move immediately to a protectionist 370 00:21:23,920 --> 00:21:26,320 Speaker 1: world order, companies would figure out how to play in 371 00:21:26,359 --> 00:21:29,159 Speaker 1: that game. Or if we were to continue with the 372 00:21:29,200 --> 00:21:31,199 Speaker 1: liberal world order, companies would know how to play in 373 00:21:31,200 --> 00:21:33,560 Speaker 1: that game. It's just in between limbo that's so pernicious. 374 00:21:33,600 --> 00:21:35,719 Speaker 1: And so whether we get a trade deal or not, 375 00:21:35,840 --> 00:21:38,360 Speaker 1: actually I don't think it's going to be a substantive 376 00:21:38,359 --> 00:21:40,879 Speaker 1: one that will fundamentally resolve this conflict, and so that 377 00:21:40,960 --> 00:21:43,960 Speaker 1: uncertainty is going to exist either way. Megan, thank you 378 00:21:44,040 --> 00:21:46,840 Speaker 1: so much. Too short of visits, and again with an 379 00:21:46,840 --> 00:21:49,440 Speaker 1: important essay in the f T the other day on 380 00:21:49,640 --> 00:22:05,320 Speaker 1: a fiscal will. I love what she says about Hope. Folks, 381 00:22:05,400 --> 00:22:08,120 Speaker 1: here's what you do. Stack up all the books from 382 00:22:08,119 --> 00:22:12,199 Speaker 1: the financial crisis and run him up Madison Avenue and 383 00:22:12,280 --> 00:22:15,160 Speaker 1: you go into Bronx and you just keep going. Paul. 384 00:22:15,720 --> 00:22:18,240 Speaker 1: You take all those books and they stretch from here 385 00:22:18,640 --> 00:22:22,199 Speaker 1: to Bedford, New York, somewhere up there the barn, you know, 386 00:22:22,240 --> 00:22:25,680 Speaker 1: the Bedford posting and all that. And there's like four 387 00:22:25,720 --> 00:22:27,879 Speaker 1: books that matter. One of them is Dan Alpert The 388 00:22:27,880 --> 00:22:31,280 Speaker 1: Age of Oversupply? Were Gary Shilling just talking about that? 389 00:22:31,760 --> 00:22:36,280 Speaker 1: Is well, incredibly Prussian book, right, Dan Albert joins us. 390 00:22:36,280 --> 00:22:38,360 Speaker 1: Now we're thrilled he could be with us today. Author. 391 00:22:38,600 --> 00:22:41,639 Speaker 1: We're gonna get to his wonderful series here in a moment. 392 00:22:41,880 --> 00:22:45,200 Speaker 1: If you rewrote the Age of Oversupply ten years on, 393 00:22:45,800 --> 00:22:48,399 Speaker 1: how would it be different now versus when you wrote it? 394 00:22:49,040 --> 00:22:51,520 Speaker 1: I think I would put a lot more emphasis on 395 00:22:52,160 --> 00:22:54,560 Speaker 1: what was going on in terms of trade. I mean, 396 00:22:54,600 --> 00:22:58,159 Speaker 1: I think, uh, as it turned out, the trade and 397 00:22:58,240 --> 00:23:02,320 Speaker 1: balance we emerged, and you know, quite quite strongly after 398 00:23:02,600 --> 00:23:06,360 Speaker 1: the recovery got underway. We when I wrote the book, um, 399 00:23:06,600 --> 00:23:09,480 Speaker 1: you were seeing some erosion in that imbalance, specifically because 400 00:23:09,520 --> 00:23:14,040 Speaker 1: demand in the US declined, So, uh what what came back, 401 00:23:14,359 --> 00:23:16,639 Speaker 1: you know, certainly over the last few years was was 402 00:23:16,760 --> 00:23:20,679 Speaker 1: considerably more more in excess of what I expected. And 403 00:23:20,720 --> 00:23:22,199 Speaker 1: I think it's going to continue on. For we all 404 00:23:22,280 --> 00:23:26,680 Speaker 1: learned in school that age that supply clears, if there 405 00:23:26,880 --> 00:23:32,280 Speaker 1: is an age of oversupply, it clears. On this audience 406 00:23:32,320 --> 00:23:36,760 Speaker 1: knows that ain't happening. Well that that that's exactly you 407 00:23:36,760 --> 00:23:39,760 Speaker 1: you hit the nail on the head that the notion 408 00:23:39,880 --> 00:23:43,800 Speaker 1: in conventional economics is that the price mechanism is going 409 00:23:43,840 --> 00:23:47,399 Speaker 1: to clear supply, and unfortunately, what you have today is 410 00:23:47,440 --> 00:23:50,160 Speaker 1: a stall in that effect. You don't have the price 411 00:23:50,200 --> 00:23:57,040 Speaker 1: mechanism actually forcing supply uh to to to clear um. 412 00:23:57,280 --> 00:23:59,480 Speaker 1: And this is going to go on for a long 413 00:23:59,520 --> 00:24:02,320 Speaker 1: period of time because the mechanism that we've chosen to 414 00:24:02,359 --> 00:24:06,840 Speaker 1: combat it is cheap money, which is causing asset inflation, 415 00:24:07,480 --> 00:24:10,240 Speaker 1: which is you know, really making it very very difficult, 416 00:24:10,840 --> 00:24:14,160 Speaker 1: uh for uh for for the price system to clear 417 00:24:14,320 --> 00:24:16,720 Speaker 1: the excess supply. I tweeted out this weekend as it 418 00:24:16,800 --> 00:24:20,399 Speaker 1: broke the Cornell CP a US private sector job quality index. 419 00:24:20,440 --> 00:24:23,399 Speaker 1: All you gotta know, folks, with Dan Alpert's leadership, a 420 00:24:23,480 --> 00:24:27,119 Speaker 1: whole bunch of people got together, smart academics, and it 421 00:24:27,160 --> 00:24:31,159 Speaker 1: looked away from the aggregation of all our statistics to 422 00:24:31,200 --> 00:24:34,920 Speaker 1: come up with something that actually touches on the inequalities 423 00:24:34,920 --> 00:24:37,440 Speaker 1: of America. I was tearing up, it was so good page. 424 00:24:38,080 --> 00:24:40,480 Speaker 1: My daughter thought it was because I booked frozen tickets, 425 00:24:40,600 --> 00:24:43,400 Speaker 1: of course, and it wasn't frozen tickets. It was Dan's thing. 426 00:24:43,480 --> 00:24:45,560 Speaker 1: The chart you have on page eight in your study 427 00:24:46,080 --> 00:24:49,879 Speaker 1: that shows the halves are more heavier and the have 428 00:24:50,080 --> 00:24:52,879 Speaker 1: nots are just not getting it done. We know that. 429 00:24:53,040 --> 00:24:56,399 Speaker 1: So what's new within your wonderful series. Well, I think 430 00:24:56,480 --> 00:25:00,400 Speaker 1: that the series itself divides jobs into two categor glories, 431 00:25:00,400 --> 00:25:02,640 Speaker 1: one our low wage low hour jobs and the other 432 00:25:02,760 --> 00:25:05,359 Speaker 1: high wage high hour jobs. And it does that simply 433 00:25:05,400 --> 00:25:08,800 Speaker 1: by striking a mean weekly wage between the two sets. 434 00:25:09,440 --> 00:25:13,000 Speaker 1: Um But and and clearly we've become far more dependent 435 00:25:13,040 --> 00:25:15,760 Speaker 1: in this country on low wage, low hour jobs, which 436 00:25:15,880 --> 00:25:19,200 Speaker 1: you know, hearkening back to what Gary Shilling said before 437 00:25:19,240 --> 00:25:21,800 Speaker 1: the break, is the reason that we have an adequate 438 00:25:22,000 --> 00:25:25,880 Speaker 1: growth and aggregate demand. So uh, when you but when 439 00:25:25,920 --> 00:25:27,879 Speaker 1: you go under the hood and you actually look at 440 00:25:27,920 --> 00:25:31,280 Speaker 1: that division, what what you see is that the growth 441 00:25:31,320 --> 00:25:34,199 Speaker 1: in weekly income on an inflation adjusted basis for the 442 00:25:34,280 --> 00:25:38,080 Speaker 1: high wage and high our categories has been far greater 443 00:25:38,280 --> 00:25:40,919 Speaker 1: than it has than it was historically. Around two thousand 444 00:25:41,000 --> 00:25:44,160 Speaker 1: and four, it really started to diverge, leaving the low wage, 445 00:25:44,160 --> 00:25:47,600 Speaker 1: low hour workers in the dust. Now, this this this 446 00:25:48,160 --> 00:25:50,680 Speaker 1: series is about jobs, not workers, and I think it's 447 00:25:50,680 --> 00:25:54,240 Speaker 1: really important to focus on that fact. This um this 448 00:25:54,359 --> 00:25:58,080 Speaker 1: is about particularly production and non supervisory jobs, which is 449 00:25:58,119 --> 00:26:01,399 Speaker 1: eighty two and a half percent UH of total jobs 450 00:26:01,400 --> 00:26:05,040 Speaker 1: in the private sector. When you analyze that that that subgroup, 451 00:26:05,119 --> 00:26:09,080 Speaker 1: you're not only noticed that wages have diverged weekly weekly 452 00:26:09,080 --> 00:26:11,359 Speaker 1: incomes rather have diverged, but you also noticed that the 453 00:26:11,400 --> 00:26:15,200 Speaker 1: low wage categories have lost an hour of work. And 454 00:26:15,320 --> 00:26:18,800 Speaker 1: those those people in that category, which is far more 455 00:26:18,880 --> 00:26:22,200 Speaker 1: numerous now than it was before, are working less than 456 00:26:22,240 --> 00:26:25,480 Speaker 1: thirty hours a week. So, Dan, when I walk into 457 00:26:25,520 --> 00:26:29,120 Speaker 1: a Starbucks anywhere around this country, half of the Starbucks, 458 00:26:29,760 --> 00:26:34,160 Speaker 1: if not more, is people with their laptops open, notes out, 459 00:26:34,680 --> 00:26:39,320 Speaker 1: you know, briefcases out morning, noon, and night. The gig economy, 460 00:26:39,359 --> 00:26:42,040 Speaker 1: how does that impact the U S workforce and wages 461 00:26:42,080 --> 00:26:43,800 Speaker 1: and all that kind of stuff. So we wanted to 462 00:26:43,800 --> 00:26:47,000 Speaker 1: make sure that when we did this that we weren't 463 00:26:47,520 --> 00:26:50,640 Speaker 1: reflecting the emergence of a gig economy. And we looked 464 00:26:50,640 --> 00:26:53,400 Speaker 1: at two things. One was multiple job holdings, which would 465 00:26:53,400 --> 00:26:57,040 Speaker 1: obviously be a reflection of of of gig work. And 466 00:26:57,080 --> 00:27:00,000 Speaker 1: it turns out that in terms of multiple job holders 467 00:27:00,080 --> 00:27:04,399 Speaker 1: as as you look at the CPS to tantalyze that, um, 468 00:27:04,520 --> 00:27:06,440 Speaker 1: we're at a low in terms of percentage of the 469 00:27:06,520 --> 00:27:09,280 Speaker 1: labor force. So it's clearly not multiple job holding. The 470 00:27:09,320 --> 00:27:12,040 Speaker 1: second thing, which I think is probably closer to what 471 00:27:12,080 --> 00:27:15,680 Speaker 1: you're talking about, is self employment. And uh and we 472 00:27:15,800 --> 00:27:18,440 Speaker 1: found a similar thing. I mean, self employment at the 473 00:27:18,520 --> 00:27:20,080 Speaker 1: end of the day, as it turns out, is not 474 00:27:20,200 --> 00:27:23,400 Speaker 1: those young people with laptops, it's old people like like me. 475 00:27:24,800 --> 00:27:28,840 Speaker 1: Uh And and this is really really important. I'm gonna 476 00:27:28,840 --> 00:27:31,720 Speaker 1: give a huge credit to Benjamin Toll of CIBC World 477 00:27:31,760 --> 00:27:35,040 Speaker 1: Markets in Toronto. It was way out front on this. 478 00:27:35,400 --> 00:27:37,359 Speaker 1: When you look at the data, and what's so charming 479 00:27:37,400 --> 00:27:39,359 Speaker 1: about your work As you go right into the FED 480 00:27:39,480 --> 00:27:43,280 Speaker 1: data and use the data other people don't, How will 481 00:27:43,320 --> 00:27:48,840 Speaker 1: the experts respond to your simple mathematical ratio which just 482 00:27:48,920 --> 00:27:52,320 Speaker 1: describes so much the inequalities in this nation. Yeah, I 483 00:27:52,320 --> 00:27:54,920 Speaker 1: don't think there's gonna be much issue with regard to 484 00:27:55,119 --> 00:27:57,680 Speaker 1: the data itself. They're not debating about that. It comes 485 00:27:57,680 --> 00:27:59,720 Speaker 1: out of the beats. Wait wait, wait, is this called 486 00:27:59,760 --> 00:28:02,400 Speaker 1: the ratio? Can we start there right now? I don't 487 00:28:02,400 --> 00:28:04,840 Speaker 1: think anyone with a ratio named after them called it 488 00:28:04,920 --> 00:28:09,199 Speaker 1: that when they started. So what is you know, when 489 00:28:09,240 --> 00:28:11,280 Speaker 1: you think about the kind of the income inequality in 490 00:28:11,280 --> 00:28:14,639 Speaker 1: this country? It really came into focus on the election. 491 00:28:14,720 --> 00:28:18,480 Speaker 1: I would argue, what do you think a solution could 492 00:28:18,480 --> 00:28:20,800 Speaker 1: be or should be to address that? Or was that 493 00:28:20,880 --> 00:28:23,520 Speaker 1: just kind of how our economies evolving? Well, So, the 494 00:28:23,880 --> 00:28:29,600 Speaker 1: series which begins in shows a continuous decline with certain 495 00:28:29,880 --> 00:28:33,879 Speaker 1: fits and starts. Meaning during the enormous productivity boost of 496 00:28:33,920 --> 00:28:36,719 Speaker 1: the nine six two th three period caused by the 497 00:28:36,760 --> 00:28:41,840 Speaker 1: I T revolution um the the index stopped declining. Obviously, 498 00:28:41,880 --> 00:28:44,240 Speaker 1: It's spiked for a little time during the period of 499 00:28:44,240 --> 00:28:48,600 Speaker 1: the household housing and credit bubble due to the emergence 500 00:28:48,600 --> 00:28:51,360 Speaker 1: of construction jobs and housing and so forth, But the 501 00:28:51,400 --> 00:28:54,200 Speaker 1: general tenor of the index has been downwards since since. 502 00:28:55,440 --> 00:28:57,800 Speaker 1: And when you look at that, you have to ask yourself, 503 00:28:57,880 --> 00:29:00,040 Speaker 1: you know, what's going on at the time, Well, what 504 00:29:00,160 --> 00:29:03,240 Speaker 1: was going on, obviously is a considerable amount of globalization. 505 00:29:03,280 --> 00:29:05,600 Speaker 1: So it's one thing to just say it's globalization and 506 00:29:05,640 --> 00:29:08,160 Speaker 1: walk away from the problems. They can't be can't be helped. 507 00:29:08,520 --> 00:29:12,440 Speaker 1: The problem is, though, it also coincides with you know, 508 00:29:12,720 --> 00:29:17,120 Speaker 1: the thirty thirty of the forty years of the removal 509 00:29:17,360 --> 00:29:21,240 Speaker 1: of government from a serious role in the economy. You know, 510 00:29:21,360 --> 00:29:24,480 Speaker 1: government spending has declined during that period as a percentage 511 00:29:24,480 --> 00:29:28,760 Speaker 1: of GDP, and specifically government spending on infrastructure, and those 512 00:29:28,800 --> 00:29:32,320 Speaker 1: are the job creating sectors of government spending that actually, 513 00:29:32,800 --> 00:29:34,600 Speaker 1: you know, could have made it different. We got to 514 00:29:34,640 --> 00:29:36,560 Speaker 1: have you back for a lot more very quickly. Here. 515 00:29:37,200 --> 00:29:41,480 Speaker 1: You tried out to any given presidential candidate, Republican, Democrat, whatever, 516 00:29:42,120 --> 00:29:44,959 Speaker 1: You've tossed them your corn l CP, a US private 517 00:29:45,000 --> 00:29:48,680 Speaker 1: sector job callity index, and you say, what's the plan 518 00:29:48,800 --> 00:29:52,840 Speaker 1: to fix this? What's the solution? Well, I was I 519 00:29:52,880 --> 00:29:56,360 Speaker 1: was getting you know, I think most certainly both parties 520 00:29:56,960 --> 00:30:01,200 Speaker 1: find the notion of massive government infrastructure are spending very attractive. 521 00:30:01,280 --> 00:30:04,080 Speaker 1: Right now. The issue is how to pay for it? Um, 522 00:30:04,160 --> 00:30:07,200 Speaker 1: And that that's where the debate is, and it's become um, 523 00:30:07,240 --> 00:30:09,200 Speaker 1: you know a little bit of a do not go 524 00:30:09,360 --> 00:30:11,320 Speaker 1: area for a lot of people because no one's willing 525 00:30:11,360 --> 00:30:13,640 Speaker 1: to talk. I mean, you have look at the healthcare debate, 526 00:30:13,680 --> 00:30:16,720 Speaker 1: which is all being hung up over the issue of taxes. Um, 527 00:30:17,200 --> 00:30:20,920 Speaker 1: there are other ways obviously paying for infrastructure spending. Uh. 528 00:30:20,960 --> 00:30:24,960 Speaker 1: What we need is more job creation in the higher wage, 529 00:30:25,000 --> 00:30:29,000 Speaker 1: high our categories. And that's really goods producing. Right, That's 530 00:30:29,040 --> 00:30:31,320 Speaker 1: what it comes down to. We're out of time. You 531 00:30:31,440 --> 00:30:33,400 Speaker 1: got to come back and continue this. This is where 532 00:30:33,400 --> 00:30:38,560 Speaker 1: the Cornell Law School Dan Alpert in a great set 533 00:30:38,600 --> 00:30:42,640 Speaker 1: of people looking at I can't convey folks the joy 534 00:30:42,760 --> 00:30:47,760 Speaker 1: of how simple this guidances through reams of fat data. 535 00:30:47,800 --> 00:30:50,960 Speaker 1: The Cornell cp a US private sector job callity index. 536 00:30:51,280 --> 00:30:53,120 Speaker 1: I throw it out on Twitter a couple of days ago. 537 00:30:53,200 --> 00:30:57,720 Speaker 1: All reduct set here sometimes through the morning. Thanks for 538 00:30:57,800 --> 00:31:01,920 Speaker 1: listening to the Bloomberg Surveillance podcast US. Subscribe and listen 539 00:31:02,120 --> 00:31:07,480 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 540 00:31:07,560 --> 00:31:11,880 Speaker 1: you prefer. I'm on Twitter at Tom Keene before the podcast. 541 00:31:11,920 --> 00:31:15,440 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio