1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,920 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,360 Speaker 2: Terminal and the Bloomberg Business app. David Malpas, the former 10 00:00:37,400 --> 00:00:39,760 Speaker 2: World Bank President, joins us now from the R and 11 00:00:39,840 --> 00:00:42,960 Speaker 2: C in Milwaukee, Wisconsin. David, it's always the wonderful to 12 00:00:43,000 --> 00:00:44,800 Speaker 2: catch up with you, sir. Thanks for making time for 13 00:00:44,840 --> 00:00:46,960 Speaker 2: us this morning. This is a man that you know 14 00:00:47,080 --> 00:00:49,239 Speaker 2: quite well. Walk us through what we need to know 15 00:00:49,560 --> 00:00:52,680 Speaker 2: and how you think this administration might change might be 16 00:00:52,720 --> 00:00:54,920 Speaker 2: different to what we saw the first time around with 17 00:00:54,960 --> 00:00:55,600 Speaker 2: Donald Trump. 18 00:00:58,240 --> 00:01:00,280 Speaker 1: Hi, John, good to see you. World one day is 19 00:01:00,400 --> 00:01:03,040 Speaker 1: high energy, so that's going to I think help. We 20 00:01:03,120 --> 00:01:06,840 Speaker 1: need a lot of US leadership within the world. Another 21 00:01:06,920 --> 00:01:10,000 Speaker 1: theme from last night that was very clear is the 22 00:01:10,040 --> 00:01:13,720 Speaker 1: working person in America you know, I'm a nerd, So 23 00:01:13,840 --> 00:01:17,759 Speaker 1: we talk about median income. Raising the median income. That's 24 00:01:17,800 --> 00:01:20,880 Speaker 1: what I've worked for for forty years, and that means 25 00:01:21,120 --> 00:01:23,480 Speaker 1: what's the wage of the people in the middle of 26 00:01:23,520 --> 00:01:25,759 Speaker 1: the economy. How do you get it up? And there 27 00:01:25,800 --> 00:01:28,720 Speaker 1: was a lot of talk, of course last night about manufacturing. 28 00:01:29,080 --> 00:01:32,360 Speaker 1: Jd Vance is a great choice as you think about 29 00:01:32,600 --> 00:01:35,560 Speaker 1: how do you get people in jobs in rural areas, 30 00:01:35,600 --> 00:01:39,679 Speaker 1: in suburban areas that are manufacturing jobs that are making things. Again, 31 00:01:40,080 --> 00:01:46,679 Speaker 1: that speaks directly to Michigan, to Ohio, to Wisconsin, to 32 00:01:46,760 --> 00:01:50,400 Speaker 1: Minnesota and so on around. I'm from Michigan and manufacturing 33 00:01:50,480 --> 00:01:51,920 Speaker 1: is a key part of the state. 34 00:01:51,920 --> 00:01:53,680 Speaker 2: David, if I can match that with a conversation on 35 00:01:53,720 --> 00:01:55,680 Speaker 2: Wall Street, just to get across the here, there are 36 00:01:55,720 --> 00:01:58,920 Speaker 2: some conversations taking place about foreign exchange. You know Larry 37 00:01:58,960 --> 00:02:01,800 Speaker 2: Kudlow than I do. We both know him well. Larry 38 00:02:01,840 --> 00:02:04,760 Speaker 2: Kudlow would often talk about the strong dollar policy. You 39 00:02:04,760 --> 00:02:07,160 Speaker 2: don't hear that so much from Senate events. Some might say, 40 00:02:07,280 --> 00:02:09,160 Speaker 2: you hear the opposite. What do you think is going 41 00:02:09,200 --> 00:02:10,120 Speaker 2: to change on that front? 42 00:02:13,040 --> 00:02:15,959 Speaker 1: We saw in the platform that the US is going 43 00:02:16,000 --> 00:02:19,920 Speaker 1: to protect the reserve currency status of the dollar. That 44 00:02:19,960 --> 00:02:22,760 Speaker 1: means defend the dollar. You know, I use the phrase 45 00:02:22,800 --> 00:02:25,919 Speaker 1: strong and stable dollar. That means fifty years from now, 46 00:02:25,960 --> 00:02:30,399 Speaker 1: you will know that the US dollar is the stable 47 00:02:30,600 --> 00:02:33,520 Speaker 1: store of value for the world. That's the best thing 48 00:02:33,560 --> 00:02:36,920 Speaker 1: for manufacturing because you can make the new investments. I 49 00:02:36,960 --> 00:02:40,359 Speaker 1: think the key is to create an environment where people 50 00:02:40,480 --> 00:02:45,400 Speaker 1: want to invest in the US. There was the Teamsters 51 00:02:45,480 --> 00:02:49,200 Speaker 1: Union had last night gave a really strong endorsement to 52 00:02:49,280 --> 00:02:54,560 Speaker 1: President Trump talking about breaking the political caste system and 53 00:02:54,639 --> 00:02:58,200 Speaker 1: creating an environment where people who are corporations wanted to 54 00:02:58,240 --> 00:03:01,800 Speaker 1: be in America because they could here. That's going to 55 00:03:01,800 --> 00:03:05,000 Speaker 1: be especially true of energy. You can create energy and 56 00:03:05,080 --> 00:03:10,000 Speaker 1: mining huge value in the US, and that enables all 57 00:03:10,040 --> 00:03:13,240 Speaker 1: of the manufacturing and the technology sectors of the country. 58 00:03:13,720 --> 00:03:15,880 Speaker 3: What do you make of the mister Vance talking about 59 00:03:15,880 --> 00:03:19,160 Speaker 3: and he's questioned j Powell about this as well, the 60 00:03:19,160 --> 00:03:22,120 Speaker 3: fact that the reserve currency status of the US dollar 61 00:03:22,280 --> 00:03:24,800 Speaker 3: worries him and the lack of control we have our 62 00:03:24,840 --> 00:03:27,560 Speaker 3: own currency. Does that bode with some of the members, 63 00:03:27,560 --> 00:03:30,919 Speaker 3: as Jonathan was saying, in the former Trump administration, like Carrot, 64 00:03:31,040 --> 00:03:32,120 Speaker 3: Larry Kudlow. 65 00:03:35,160 --> 00:03:37,880 Speaker 1: I think the FED made big mistakes. You know I've 66 00:03:37,920 --> 00:03:40,400 Speaker 1: been reading about I've been writing about that in the 67 00:03:40,400 --> 00:03:43,720 Speaker 1: Wall Street Journal for well over a decade. The idea 68 00:03:43,720 --> 00:03:47,200 Speaker 1: of having zero percent interest rates didn't defend the dollar, 69 00:03:47,280 --> 00:03:50,000 Speaker 1: and it didn't work for getting investment into the US. 70 00:03:50,280 --> 00:03:53,800 Speaker 1: So you can have a much stronger policy from the 71 00:03:53,800 --> 00:03:56,800 Speaker 1: Federal Reserve. I think that's some of what people are 72 00:03:56,840 --> 00:03:59,200 Speaker 1: getting at that the Fed needs to be talking about 73 00:03:59,240 --> 00:04:03,360 Speaker 1: production in the US as a way to bring down inflation, 74 00:04:03,720 --> 00:04:06,760 Speaker 1: and that will bring down interest rates. So I think 75 00:04:06,800 --> 00:04:10,120 Speaker 1: there is a huge complaint right now that interest rates 76 00:04:10,120 --> 00:04:12,480 Speaker 1: are the only tool being used to try to bring 77 00:04:12,520 --> 00:04:15,280 Speaker 1: down inflation. That's not the right way to go at it, 78 00:04:15,520 --> 00:04:18,679 Speaker 1: and it means that the little guys, small businesses across 79 00:04:18,720 --> 00:04:22,080 Speaker 1: the country are feeling the pain. The interest rates are 80 00:04:22,120 --> 00:04:25,719 Speaker 1: too high for small businesses, and it's feeding into the 81 00:04:25,800 --> 00:04:27,600 Speaker 1: concentration of wealth at the top. 82 00:04:28,000 --> 00:04:29,640 Speaker 2: David, I just want to understand that. Just give me 83 00:04:29,680 --> 00:04:31,839 Speaker 2: some more color. How are you thinking about the Federal Reserve? 84 00:04:31,920 --> 00:04:35,000 Speaker 2: Are you saying they need newer tools, more tools, or are 85 00:04:35,000 --> 00:04:38,440 Speaker 2: you saying the emphasis should be elsewhere in Congress? 86 00:04:41,279 --> 00:04:45,359 Speaker 1: They have lots of tools. They have regulatory, regulatory tools 87 00:04:45,600 --> 00:04:48,760 Speaker 1: that really affect how lending is done within the country, 88 00:04:48,960 --> 00:04:51,919 Speaker 1: they're not doing it in order to in order to 89 00:04:51,960 --> 00:04:55,480 Speaker 1: help small businesses. They need to be thinking about that. Also, 90 00:04:55,680 --> 00:05:00,000 Speaker 1: the tradeoff between the balance sheet and the interest rates, 91 00:05:00,360 --> 00:05:02,880 Speaker 1: I think can be done in a more effective way. 92 00:05:03,200 --> 00:05:05,359 Speaker 1: They don't need to be owning all the bonds of 93 00:05:05,400 --> 00:05:09,000 Speaker 1: the US government. They're helping. How is it that we're 94 00:05:09,000 --> 00:05:12,000 Speaker 1: in this environment where central banks buy the bonds of 95 00:05:12,040 --> 00:05:16,000 Speaker 1: their governments and that enables big government spending. So you 96 00:05:16,040 --> 00:05:18,839 Speaker 1: can change that in a way that's very pro growth, 97 00:05:19,160 --> 00:05:22,400 Speaker 1: and I think that also plays into making the dollar 98 00:05:22,520 --> 00:05:25,720 Speaker 1: the reserve currency of the world. China is looking at 99 00:05:25,760 --> 00:05:28,240 Speaker 1: it saying it sure looks to us like the United 100 00:05:28,240 --> 00:05:31,520 Speaker 1: States has lost its way. It's cha chasing its tail, 101 00:05:32,160 --> 00:05:35,680 Speaker 1: and that can be fixed, I think pretty quickly by 102 00:05:35,720 --> 00:05:39,760 Speaker 1: communicating clearly that you want a strong, independent FED that 103 00:05:40,040 --> 00:05:44,039 Speaker 1: is talking about the actual needs of the country as 104 00:05:44,040 --> 00:05:46,960 Speaker 1: a way to bring down inflation and bring down interest rates. 105 00:05:47,120 --> 00:05:49,640 Speaker 2: David, you just sounded like you were saying that you 106 00:05:49,680 --> 00:05:52,159 Speaker 2: think they should accelerate the balance sheet roll off and 107 00:05:52,160 --> 00:05:54,120 Speaker 2: get out of the treasury business. And I'm trying to 108 00:05:54,160 --> 00:05:56,800 Speaker 2: sort of match that up with the prospect of extending 109 00:05:56,839 --> 00:05:59,680 Speaker 2: the tax counts of twenty seventeen. How do you do 110 00:05:59,720 --> 00:06:02,000 Speaker 2: both those things at the same time. You know financial 111 00:06:02,000 --> 00:06:04,080 Speaker 2: markets better than most What was that going to look like? 112 00:06:06,920 --> 00:06:09,640 Speaker 1: They all go together and they actually work toward growth. 113 00:06:09,720 --> 00:06:12,400 Speaker 1: I think if the if they would shrink the balance sheet. 114 00:06:12,640 --> 00:06:15,960 Speaker 1: Remember the balance sheet has two sides, assets and liabilities. 115 00:06:16,160 --> 00:06:19,000 Speaker 1: The liabilities that the FED is using to hold all 116 00:06:19,040 --> 00:06:22,920 Speaker 1: those bonds is short term liabilities. They have this giant 117 00:06:23,400 --> 00:06:27,000 Speaker 1: leverage to trade on that's lost a huge amount of money, 118 00:06:27,000 --> 00:06:30,479 Speaker 1: maybe a trillion dollars of losses from that trade. They 119 00:06:30,520 --> 00:06:32,840 Speaker 1: should they can let it run off in a way 120 00:06:32,839 --> 00:06:36,320 Speaker 1: that puts money through the financial through the private sector, 121 00:06:36,560 --> 00:06:39,719 Speaker 1: so it actually gets to small businesses. Think how better 122 00:06:39,800 --> 00:06:42,839 Speaker 1: the environment would be if we had lower short term 123 00:06:42,880 --> 00:06:46,160 Speaker 1: interest rates? And that that I think can be achieved 124 00:06:46,360 --> 00:06:49,880 Speaker 1: by talking about growth, about the dollar, defending the dollar, 125 00:06:50,000 --> 00:06:53,560 Speaker 1: and about about having more investment in the US, you'd 126 00:06:53,560 --> 00:06:56,640 Speaker 1: have more confidence in the in the country and in 127 00:06:56,680 --> 00:06:59,400 Speaker 1: the future. And that really was the theme at the 128 00:06:59,440 --> 00:07:00,600 Speaker 1: convention yesterday. 129 00:07:00,800 --> 00:07:03,839 Speaker 2: You clearly have a very clear policy preference, David. I 130 00:07:03,920 --> 00:07:05,520 Speaker 2: just wondered you have a clear preference on who you 131 00:07:05,560 --> 00:07:07,599 Speaker 2: would like to run the federal Reserve. 132 00:07:10,760 --> 00:07:15,800 Speaker 1: Oh no, that's not so much the issue as the policies. 133 00:07:15,840 --> 00:07:20,000 Speaker 1: We need good people in strong positions in order to 134 00:07:20,040 --> 00:07:22,600 Speaker 1: turn the country around. I've written a lot about the 135 00:07:22,640 --> 00:07:26,760 Speaker 1: need for a full upheaval of policy thinking, and especially 136 00:07:26,800 --> 00:07:29,840 Speaker 1: the models at the FED. You know, they're still basically 137 00:07:29,920 --> 00:07:32,920 Speaker 1: operating under the Phillips curve model that in some way 138 00:07:32,960 --> 00:07:36,400 Speaker 1: you have to have unemployment in order to bring inflation down. 139 00:07:36,680 --> 00:07:39,400 Speaker 1: And I think that can be switched around to say, look, 140 00:07:39,560 --> 00:07:42,040 Speaker 1: if we have more people working, you're going to get 141 00:07:42,080 --> 00:07:44,240 Speaker 1: lower prices and lower interest rates. 142 00:07:44,560 --> 00:07:46,440 Speaker 2: One of the bad things about TV, David is you 143 00:07:46,520 --> 00:07:47,960 Speaker 2: run out of time, and this is one of those 144 00:07:48,000 --> 00:07:50,160 Speaker 2: conversations where I needed an extra thirty minutes to get 145 00:07:50,160 --> 00:07:52,040 Speaker 2: more clarity from you. David. Let's do it again soon. 146 00:07:52,200 --> 00:07:54,560 Speaker 2: Thanks for making sign for David Malpasta, a former World 147 00:07:54,600 --> 00:08:07,320 Speaker 2: Bank president. This is two New York Congressman Mike Lauda 148 00:08:07,360 --> 00:08:11,240 Speaker 2: and Richie Taurus are introducing bipartisan legislation that would increase 149 00:08:11,280 --> 00:08:15,640 Speaker 2: protection for presidential candidates Trump, Biden and Robert Kennedy. Junior 150 00:08:15,840 --> 00:08:18,480 Speaker 2: Police have said that joining us now is Republican Congressman 151 00:08:18,640 --> 00:08:21,120 Speaker 2: Mike Lawla Congressman. Thanks for sharing some of your time 152 00:08:21,160 --> 00:08:23,480 Speaker 2: this morning, particularly how busy things have been for you 153 00:08:23,520 --> 00:08:25,680 Speaker 2: over the last couple of days following the events of 154 00:08:25,760 --> 00:08:28,960 Speaker 2: Saturday evening. Can you walk us through just the content 155 00:08:29,040 --> 00:08:31,360 Speaker 2: of your bill and the kind of changes that you'd 156 00:08:31,400 --> 00:08:32,840 Speaker 2: like to see. 157 00:08:34,760 --> 00:08:37,920 Speaker 4: Well, we're working through the logistics right now and plan 158 00:08:38,000 --> 00:08:42,080 Speaker 4: to introduce this week. But the intention here is to 159 00:08:42,240 --> 00:08:47,720 Speaker 4: ensure that President Trump, President Biden, and RFK Junior, whose 160 00:08:47,760 --> 00:08:55,200 Speaker 4: family has twice been victim of political assassination, have enhanced security. Obviously, 161 00:08:55,320 --> 00:08:59,960 Speaker 4: as more information is uncovered about the events on Saturday 162 00:09:00,000 --> 00:09:05,840 Speaker 4: to day, it raises serious questions about, you know, what 163 00:09:06,040 --> 00:09:10,360 Speaker 4: level of security the former president had. The fact that 164 00:09:10,679 --> 00:09:15,079 Speaker 4: a armed shooter was able to get on a roof 165 00:09:15,200 --> 00:09:18,720 Speaker 4: with a clear line of sight at the former president 166 00:09:18,840 --> 00:09:23,839 Speaker 4: and get a shot off that went through Donald Trump's ear. 167 00:09:24,520 --> 00:09:27,520 Speaker 4: But not for the grace of God, we'd be having 168 00:09:27,559 --> 00:09:31,440 Speaker 4: a very different conversation right now. So, you know, the 169 00:09:31,520 --> 00:09:34,640 Speaker 4: fact that this was able to happen, There's been lots 170 00:09:34,679 --> 00:09:37,960 Speaker 4: of questions about, you know, the lack of resources, the 171 00:09:38,040 --> 00:09:41,120 Speaker 4: lack of air support, if you will, as well as 172 00:09:41,240 --> 00:09:45,400 Speaker 4: the use of drone technology. You know, lots of questions 173 00:09:45,440 --> 00:09:51,400 Speaker 4: being raised that require immediate and serious answers, and this 174 00:09:51,480 --> 00:09:54,520 Speaker 4: cannot be a you know, cover your own ass situation. 175 00:09:54,720 --> 00:09:59,480 Speaker 4: This has to be a full and transparent investigation into 176 00:09:59,520 --> 00:10:03,400 Speaker 4: what happened and why it happened, and how to ensure 177 00:10:03,400 --> 00:10:07,440 Speaker 4: that this never happens again. Our elections must be determined 178 00:10:07,520 --> 00:10:09,520 Speaker 4: by votes at a ballot box, not. 179 00:10:09,520 --> 00:10:11,040 Speaker 1: By violence at a rally. 180 00:10:11,400 --> 00:10:15,240 Speaker 4: And obviously, the Secret Service has a responsibility to ensure 181 00:10:15,280 --> 00:10:18,000 Speaker 4: the safety and well being and this cannot be a 182 00:10:18,080 --> 00:10:23,680 Speaker 4: question of expense or resources. The federal government has a 183 00:10:23,760 --> 00:10:27,440 Speaker 4: responsibility to ensure the safety and well being of these 184 00:10:27,480 --> 00:10:32,800 Speaker 4: candidates and to ensure that every resource necessary is available 185 00:10:32,800 --> 00:10:33,120 Speaker 4: to them. 186 00:10:33,240 --> 00:10:36,079 Speaker 3: Congressman, I think many of your colleagues on the other 187 00:10:36,280 --> 00:10:38,360 Speaker 3: side of the aisle also agree with you. But just 188 00:10:38,400 --> 00:10:40,719 Speaker 3: from a logistical point of view, how quickly can this 189 00:10:40,760 --> 00:10:44,080 Speaker 3: bill get passed and then we actually see those resources 190 00:10:44,160 --> 00:10:44,720 Speaker 3: hit the ground. 191 00:10:48,000 --> 00:10:51,439 Speaker 4: Look, obviously this is a question for leadership on getting 192 00:10:51,480 --> 00:10:55,560 Speaker 4: this bill to the floor as quickly as possible. I'm 193 00:10:55,920 --> 00:10:59,760 Speaker 4: heartened to see that the binding Administration did move yesterday 194 00:10:59,760 --> 00:11:05,040 Speaker 4: to get give RFK Secret Service protection after many months 195 00:11:05,040 --> 00:11:10,680 Speaker 4: of him requesting it, and obviously the head of the 196 00:11:10,679 --> 00:11:13,760 Speaker 4: Secret Service saying that there's going to be immediate changes 197 00:11:14,600 --> 00:11:19,760 Speaker 4: with respect to President Trump's detailed butt. We need to 198 00:11:19,800 --> 00:11:23,320 Speaker 4: make sure as a Congress that we are ensuring that 199 00:11:23,360 --> 00:11:26,600 Speaker 4: the resources are there both financially and that there is 200 00:11:26,760 --> 00:11:32,800 Speaker 4: more stringent requirement on providing this security. I mean, it 201 00:11:32,840 --> 00:11:36,600 Speaker 4: shouldn't have taken a shooting on Saturday for them to 202 00:11:36,679 --> 00:11:40,960 Speaker 4: realize that President Trump needed enhanced security and that RFK 203 00:11:41,240 --> 00:11:42,840 Speaker 4: Junior should have security. 204 00:11:43,600 --> 00:11:44,360 Speaker 1: That should have been. 205 00:11:44,280 --> 00:11:48,840 Speaker 4: A no brainer in this heightened political environment in which look, 206 00:11:48,880 --> 00:11:53,360 Speaker 4: we're a deeply divided country and obviously we've seen incidents 207 00:11:53,400 --> 00:11:58,360 Speaker 4: in recent years, attacks on members of Congress, threats against 208 00:11:58,400 --> 00:12:03,320 Speaker 4: sitting governors, violence against the former speaker's husband. 209 00:12:04,320 --> 00:12:05,160 Speaker 1: So this is. 210 00:12:05,160 --> 00:12:09,480 Speaker 4: Critical in this moment that we recognize the seriousness of 211 00:12:09,520 --> 00:12:13,120 Speaker 4: this the threat, and that Congress acts both in terms 212 00:12:13,200 --> 00:12:17,840 Speaker 4: of ensuring the support financially and otherwise for the Secret Service, 213 00:12:17,880 --> 00:12:23,040 Speaker 4: as well as these congressional investigations that are going to 214 00:12:23,080 --> 00:12:26,840 Speaker 4: get underway next week when we get back to Washington. 215 00:12:27,040 --> 00:12:29,960 Speaker 3: Congressman, given we are deeply divided country at the moment. 216 00:12:30,120 --> 00:12:34,560 Speaker 3: Following that assassination attempt, the now VP pick of President 217 00:12:34,559 --> 00:12:38,400 Speaker 3: Trump said that this had ties back to Biden. Do 218 00:12:38,440 --> 00:12:41,680 Speaker 3: you think that kind of rhetoric is appropriate coming from 219 00:12:41,840 --> 00:12:42,960 Speaker 3: the VP candidate. 220 00:12:45,760 --> 00:12:49,360 Speaker 4: Well, first of all, the investigation obviously is underway. We 221 00:12:49,440 --> 00:12:53,719 Speaker 4: don't yet know the motivation of the shooter, and that 222 00:12:53,760 --> 00:12:55,920 Speaker 4: will come out in due time, and we should allow 223 00:12:55,960 --> 00:13:00,120 Speaker 4: that process to play itself out. I think what you 224 00:13:00,120 --> 00:13:04,080 Speaker 4: know the vice presidential nominee was alluding to in his 225 00:13:04,160 --> 00:13:08,880 Speaker 4: comments is the continued assertion that Donald Trump is a 226 00:13:08,960 --> 00:13:11,559 Speaker 4: threat to democracy or a fascist, or that if he 227 00:13:11,840 --> 00:13:16,160 Speaker 4: somehow wins in November, that therefore American democracy is going 228 00:13:16,200 --> 00:13:16,680 Speaker 4: to end. 229 00:13:17,040 --> 00:13:17,840 Speaker 1: Is destructive. 230 00:13:18,200 --> 00:13:21,720 Speaker 4: It's destructive to our country. It undermines our democracy, it 231 00:13:21,800 --> 00:13:24,400 Speaker 4: undermines our electoral process. 232 00:13:24,200 --> 00:13:24,920 Speaker 1: And should stop. 233 00:13:25,600 --> 00:13:28,600 Speaker 4: And I think all of us can recognize the need 234 00:13:29,040 --> 00:13:33,839 Speaker 4: to bring down the temperature several notches to look at 235 00:13:33,880 --> 00:13:38,120 Speaker 4: the rhetoric that is being used. Both Republicans and Democrats 236 00:13:38,160 --> 00:13:44,400 Speaker 4: have a responsibility here in this moment of heightened political disagreement, 237 00:13:44,960 --> 00:13:49,640 Speaker 4: that we really recognize the importance of the moment. 238 00:13:50,840 --> 00:13:51,559 Speaker 1: As I said. 239 00:13:51,400 --> 00:13:54,800 Speaker 4: Before, our election should always be determined by votes at 240 00:13:54,800 --> 00:13:58,240 Speaker 4: a ballot box, not by violence at a rally, and 241 00:13:58,600 --> 00:14:03,040 Speaker 4: all of us have a responsibilit to understand that words matter, 242 00:14:03,400 --> 00:14:09,600 Speaker 4: Our rhetoric can at times cause harm, and we need 243 00:14:09,640 --> 00:14:12,520 Speaker 4: to be clear that we're not going to tolerate it. 244 00:14:12,679 --> 00:14:18,160 Speaker 4: And I think what the vice presidential nominee was alluding 245 00:14:18,160 --> 00:14:21,600 Speaker 4: to in that is that, you know, the continued effort 246 00:14:21,680 --> 00:14:25,000 Speaker 4: to somehow say that Donald Trump getting elected is going 247 00:14:25,040 --> 00:14:28,520 Speaker 4: to destroy our democracy needs to stop and representative. 248 00:14:28,560 --> 00:14:31,400 Speaker 5: I mean to be clear, this was of course shocking 249 00:14:31,440 --> 00:14:34,680 Speaker 5: events over the weekend and deeply disturbing to anyone, but 250 00:14:34,760 --> 00:14:37,200 Speaker 5: it is not the only case of political violence. 251 00:14:37,280 --> 00:14:38,600 Speaker 1: You only need to look back. 252 00:14:38,360 --> 00:14:41,360 Speaker 5: Over the past few years, whether it be the insurrection 253 00:14:41,520 --> 00:14:45,600 Speaker 5: on January sixth, whether it be Nancy Pelosi's husband being attacked. 254 00:14:45,720 --> 00:14:47,920 Speaker 5: I want to understand from you the temperature read that 255 00:14:47,920 --> 00:14:49,880 Speaker 5: you're getting at this moment in this country, what you're 256 00:14:49,880 --> 00:14:53,960 Speaker 5: hearing from constituents. Are we starting to dial down the temperature? 257 00:14:54,000 --> 00:14:56,240 Speaker 5: Does this weekend represent a peak to you? Or how 258 00:14:56,280 --> 00:14:59,880 Speaker 5: concerned are you still of this deeply divided rhetoric that 259 00:15:00,160 --> 00:15:00,880 Speaker 5: continue to hear. 260 00:15:04,000 --> 00:15:08,000 Speaker 4: Well, if this doesn't shock our nation's conscience to its core, 261 00:15:08,200 --> 00:15:08,800 Speaker 4: I don't. 262 00:15:08,560 --> 00:15:10,480 Speaker 6: Know what would look. 263 00:15:10,520 --> 00:15:13,320 Speaker 4: I've been very clear over the years. I was the 264 00:15:13,360 --> 00:15:16,800 Speaker 4: first Republican member of the state legislature in New York 265 00:15:17,080 --> 00:15:21,280 Speaker 4: to denounce the events of January sixth. On January sixth, 266 00:15:22,440 --> 00:15:25,960 Speaker 4: I spoke out when Nancy Pelosi's husband was attacked in 267 00:15:26,000 --> 00:15:29,760 Speaker 4: the same way I'm speaking out about the assassination attempt 268 00:15:29,760 --> 00:15:33,280 Speaker 4: against President Trump. All of us should be universally clear 269 00:15:33,320 --> 00:15:38,080 Speaker 4: in this political violence has no place in our democracy. 270 00:15:38,400 --> 00:15:41,360 Speaker 4: There should be no tolerance for it wherever it occurs. 271 00:15:42,040 --> 00:15:46,080 Speaker 4: Whether it's those that seized control of a federal courthouse 272 00:15:46,200 --> 00:15:49,840 Speaker 4: in Portland, burned down a police station in Minneapolis, or 273 00:15:49,880 --> 00:15:53,280 Speaker 4: storm to capital on January sixth, it should never be 274 00:15:53,480 --> 00:15:55,440 Speaker 4: tolerated or condoned, period. 275 00:15:55,800 --> 00:15:58,840 Speaker 2: Congressman, appreciate perspective. Thanks for making time for us this morning. 276 00:15:58,880 --> 00:16:11,880 Speaker 2: Thank you, Sir Michael that joining us now to talk 277 00:16:11,880 --> 00:16:14,840 Speaker 2: about bank earnings is Chris marronach of Jenny Montgomery Sco. 278 00:16:15,120 --> 00:16:16,560 Speaker 2: Chris Water for to catch up with you. So we've 279 00:16:16,560 --> 00:16:18,840 Speaker 2: got a lot to talk about, particularly the rally in 280 00:16:18,880 --> 00:16:20,600 Speaker 2: small caps in a regionals, but I want to start 281 00:16:20,600 --> 00:16:22,840 Speaker 2: with the earnings from the big players on Wall Street. First, 282 00:16:23,000 --> 00:16:25,240 Speaker 2: we've had JP Morgan, We've had City, We've had Bank 283 00:16:25,320 --> 00:16:27,880 Speaker 2: for America. What stands out for you, not just this morning, 284 00:16:28,040 --> 00:16:29,400 Speaker 2: but over the last week. 285 00:16:29,960 --> 00:16:30,720 Speaker 6: Well, nenadist. 286 00:16:30,720 --> 00:16:33,360 Speaker 7: Margins aren't really increasing yet, John Amie, I think we 287 00:16:33,400 --> 00:16:35,560 Speaker 7: have this final quarter where margins bottom. 288 00:16:35,840 --> 00:16:38,560 Speaker 8: You know, we're happy that the cost of funds at BNA. 289 00:16:38,400 --> 00:16:42,160 Speaker 7: Was only up marginally, so they're still the leader in 290 00:16:42,240 --> 00:16:44,760 Speaker 7: terms of low cost deposits. I think that yield you're 291 00:16:44,800 --> 00:16:47,840 Speaker 7: going to get better as things roll over on the upside, 292 00:16:47,960 --> 00:16:49,800 Speaker 7: but the cost of funds has to come down. That's 293 00:16:49,800 --> 00:16:52,600 Speaker 7: where the Fed policy, the possible shift and interest rates 294 00:16:52,960 --> 00:16:53,840 Speaker 7: third fourth. 295 00:16:53,600 --> 00:16:54,920 Speaker 8: Quarter could be very useful. 296 00:16:55,520 --> 00:16:58,520 Speaker 7: I was very thankful that the criticized loans were flat 297 00:16:58,560 --> 00:17:01,160 Speaker 7: in the quarter from Q one, charge offs only up 298 00:17:01,200 --> 00:17:02,080 Speaker 7: one basis point. 299 00:17:02,400 --> 00:17:03,480 Speaker 6: The provision was higher. 300 00:17:03,480 --> 00:17:06,000 Speaker 7: They could build slightly, but I think overall that was 301 00:17:06,000 --> 00:17:08,040 Speaker 7: a win as well. But you're not really seeing the 302 00:17:08,040 --> 00:17:11,320 Speaker 7: big revenue growth on the spread side. Investment banking, as 303 00:17:11,320 --> 00:17:14,159 Speaker 7: you mentioned, was definitely higher, so no issues there. That 304 00:17:14,359 --> 00:17:17,159 Speaker 7: was a beat. I think expenses acted well, but no 305 00:17:17,280 --> 00:17:18,960 Speaker 7: major surprise on the expense front. 306 00:17:19,040 --> 00:17:21,000 Speaker 2: Chris, I went through the today gains for the Stokes 307 00:17:21,000 --> 00:17:23,080 Speaker 2: to some of these major players. If you go over 308 00:17:23,080 --> 00:17:25,960 Speaker 2: the last twelve months, you can double it. They've been tremendous. Chris, 309 00:17:25,960 --> 00:17:28,040 Speaker 2: there was something about this environment in the last year 310 00:17:28,320 --> 00:17:30,720 Speaker 2: that has been particularly good for the bigger players in 311 00:17:30,760 --> 00:17:34,120 Speaker 2: the financial world. Is something changing, Chris? Why you think 312 00:17:34,160 --> 00:17:37,080 Speaker 2: things get better for the smaller, the mid sized banks, 313 00:17:37,119 --> 00:17:39,639 Speaker 2: the more regional players. Sure. 314 00:17:39,680 --> 00:17:41,720 Speaker 7: I think on the regional and the smaller players, I 315 00:17:41,720 --> 00:17:43,520 Speaker 7: think what you have is the cost of funds is 316 00:17:43,520 --> 00:17:46,679 Speaker 7: beginning to crust. That was the major challenge even before 317 00:17:46,720 --> 00:17:49,440 Speaker 7: you had the Silicon Valley and First Republic failures last year. 318 00:17:49,760 --> 00:17:52,960 Speaker 7: I also think that generally speaking, the expense leverage in 319 00:17:53,000 --> 00:17:56,000 Speaker 7: this business is very good. We've seen banks much more 320 00:17:56,000 --> 00:17:58,480 Speaker 7: efficient today than they were fifteen years ago, John, and 321 00:17:58,520 --> 00:18:01,320 Speaker 7: that's a tremendous difference. You know, the cost of technology 322 00:18:01,400 --> 00:18:03,920 Speaker 7: is helping banks do more with less. I think they're 323 00:18:03,920 --> 00:18:06,639 Speaker 7: getting much more efficient with their staffing. They still have 324 00:18:06,720 --> 00:18:09,040 Speaker 7: to spend money, but I think they're much more efficient 325 00:18:09,040 --> 00:18:10,679 Speaker 7: at doing so. So I think as we get to 326 00:18:10,720 --> 00:18:13,879 Speaker 7: a period where the cost of funds comes down or 327 00:18:13,960 --> 00:18:16,080 Speaker 7: the at least flattens out, that's going to lead to 328 00:18:16,160 --> 00:18:18,600 Speaker 7: better spread in common I think overall, the expense leverage 329 00:18:18,680 --> 00:18:19,800 Speaker 7: is still there for the industry. 330 00:18:19,840 --> 00:18:21,760 Speaker 2: The moving regional banks over the last few days has 331 00:18:21,760 --> 00:18:24,240 Speaker 2: been absolutely phenomenal. Chris. I think We're up by something 332 00:18:24,280 --> 00:18:26,480 Speaker 2: like eleven percent in just five days. There was a 333 00:18:26,520 --> 00:18:29,000 Speaker 2: note from City just yesterday from Scott cron Now I'm 334 00:18:29,000 --> 00:18:30,080 Speaker 2: going to share it with our audience. 335 00:18:30,119 --> 00:18:30,879 Speaker 6: Maybe you've seen it. 336 00:18:31,200 --> 00:18:36,560 Speaker 2: Overweight US banks, our preferred Trump trade. Easy evaluation sets up, 337 00:18:37,000 --> 00:18:42,880 Speaker 2: stable fundamentals, lesser tariff risk combined with incremental deregulatory inertia 338 00:18:43,440 --> 00:18:46,120 Speaker 2: give this sector a good risk reward sets up. It's 339 00:18:46,119 --> 00:18:48,879 Speaker 2: the conversation at the moment, Chris, how would does Trump's 340 00:18:48,880 --> 00:18:52,600 Speaker 2: second term influence shape the performance of these stocks? 341 00:18:53,920 --> 00:18:56,639 Speaker 8: Well, John, for sure, the regulatory environment's going to shift. 342 00:18:56,680 --> 00:18:59,920 Speaker 7: I think regulation can very much have peaked in terms 343 00:18:59,920 --> 00:19:02,960 Speaker 7: of the banks in the industry. Under a new administration, 344 00:19:03,040 --> 00:19:05,080 Speaker 7: you would see regulations change dramatically. 345 00:19:05,119 --> 00:19:07,800 Speaker 8: I think it would take about eighteen months to really 346 00:19:07,840 --> 00:19:09,320 Speaker 8: affect the rank and file. 347 00:19:09,400 --> 00:19:11,399 Speaker 7: Do not change that quickly just because the head of 348 00:19:11,440 --> 00:19:13,440 Speaker 7: the White House changes, But it is going to be 349 00:19:13,520 --> 00:19:15,879 Speaker 7: a perception shift which is going to be anticipated and 350 00:19:15,920 --> 00:19:18,679 Speaker 7: already is by the stocks. You know, the banks were 351 00:19:18,720 --> 00:19:21,720 Speaker 7: training at forty eight percent relative multiples last week. Today 352 00:19:21,760 --> 00:19:25,399 Speaker 7: they're fifty three or fifty four relative pe to SMP. 353 00:19:25,840 --> 00:19:27,760 Speaker 7: That has a long way to go, because we used 354 00:19:27,800 --> 00:19:30,280 Speaker 7: to be at sixty six to seventy percent. You know, 355 00:19:30,359 --> 00:19:32,639 Speaker 7: median reigns for the last ten years, so there's a 356 00:19:32,680 --> 00:19:37,199 Speaker 7: lot more valuation to recapture. The regulatory perception change is 357 00:19:37,240 --> 00:19:39,680 Speaker 7: a massive one. We have to see the follow through 358 00:19:39,720 --> 00:19:42,240 Speaker 7: in the fall, but that certainly is a very good start. 359 00:19:42,320 --> 00:19:43,440 Speaker 7: They last several days. 360 00:19:43,600 --> 00:19:47,119 Speaker 3: We heard jd Vance, the Foreign President's VP pick in 361 00:19:47,160 --> 00:19:50,480 Speaker 3: the past, talk about big banks, but also talk about regional, 362 00:19:50,520 --> 00:19:53,680 Speaker 3: smaller banks. He says community lenders. He thinks they operate 363 00:19:53,920 --> 00:19:56,760 Speaker 3: at a financial disadvantage to the biggest banks. Would that 364 00:19:56,880 --> 00:19:59,520 Speaker 3: be another reason why potentially put on trades for some 365 00:19:59,560 --> 00:20:01,320 Speaker 3: of these all are regional players. 366 00:20:02,359 --> 00:20:04,119 Speaker 7: Well, sure, I mean I think you have to have 367 00:20:04,200 --> 00:20:07,200 Speaker 7: a regulatory framework that's going to fit the community banks 368 00:20:07,200 --> 00:20:08,680 Speaker 7: and it makes it elite. 369 00:20:08,240 --> 00:20:10,040 Speaker 8: Easier and less onerous on them. 370 00:20:10,400 --> 00:20:12,880 Speaker 7: I think having the trickle down to the same regulation 371 00:20:12,920 --> 00:20:15,040 Speaker 7: applied to one hundred or two hundred million dollar bank 372 00:20:15,400 --> 00:20:18,359 Speaker 7: on one that's a billion or two billion dollars is 373 00:20:18,720 --> 00:20:20,879 Speaker 7: just very difficult to execute. It gets back to the 374 00:20:20,880 --> 00:20:23,760 Speaker 7: opposite of the expense leverage I was mentioning. So if 375 00:20:23,760 --> 00:20:26,399 Speaker 7: we can have relief there, that is a tremendous shift 376 00:20:26,440 --> 00:20:28,840 Speaker 7: I think that is a possibility. I do think it 377 00:20:28,880 --> 00:20:31,840 Speaker 7: takes time, but that absolutely happens. The small banks are 378 00:20:31,880 --> 00:20:34,440 Speaker 7: the major lenders in the country. Small businesses are still 379 00:20:34,440 --> 00:20:38,160 Speaker 7: to generate. They generate the new jobs, the new activity 380 00:20:38,200 --> 00:20:38,800 Speaker 7: in the country. 381 00:20:39,040 --> 00:20:41,600 Speaker 8: That's where community banks really do their best work. 382 00:20:41,680 --> 00:20:53,560 Speaker 2: Hik Chris Wonderful, I hear from you, sir, great echo 383 00:20:53,640 --> 00:20:56,960 Speaker 2: of ey alongside Andrew Husby of BNP Parwaback, Greg, I 384 00:20:57,040 --> 00:20:59,040 Speaker 2: want to come across the US first. Your reaction to 385 00:20:59,080 --> 00:21:02,520 Speaker 2: this data is the shaky period for the consumer over 386 00:21:02,720 --> 00:21:04,000 Speaker 2: or is the jury still out? 387 00:21:05,920 --> 00:21:07,920 Speaker 6: What we're doing is just generally more prudence. 388 00:21:07,960 --> 00:21:09,879 Speaker 9: I don't think we're seeing any form of retrenchment in 389 00:21:09,920 --> 00:21:12,400 Speaker 9: consumer spending activity. And this type of June report, which 390 00:21:12,440 --> 00:21:16,480 Speaker 9: was quite strong across the word, as Mike was just highlighting, 391 00:21:16,800 --> 00:21:19,720 Speaker 9: is indication that consumers are not pulling back, but they 392 00:21:19,760 --> 00:21:22,560 Speaker 9: are being more judicious with how they spend, how much 393 00:21:22,600 --> 00:21:24,800 Speaker 9: they spent, and where they spend. And that's still the 394 00:21:24,840 --> 00:21:27,320 Speaker 9: reality today despite this fairly favorable report. 395 00:21:27,520 --> 00:21:28,800 Speaker 6: Let's not forget we still. 396 00:21:28,560 --> 00:21:31,160 Speaker 9: Have a job market that's still adding the decent number 397 00:21:31,160 --> 00:21:32,960 Speaker 9: of jobs one hundred and eighty thousand on a three 398 00:21:32,960 --> 00:21:36,520 Speaker 9: month moving average, and wage growth is still around four percent, 399 00:21:36,600 --> 00:21:39,240 Speaker 9: so combined it too, you still have that income support. 400 00:21:39,640 --> 00:21:42,359 Speaker 9: It's not any sign of a retrenchment, but it is 401 00:21:42,480 --> 00:21:43,640 Speaker 9: more prudence. 402 00:21:43,600 --> 00:21:44,639 Speaker 6: On the part of consumers. 403 00:21:44,840 --> 00:21:46,879 Speaker 2: The Federal Reserve for a while has pointed to the 404 00:21:46,920 --> 00:21:49,760 Speaker 2: consumer the labor market and said the strength there is 405 00:21:49,800 --> 00:21:52,840 Speaker 2: a reason to wait. It gives us the luxury of 406 00:21:52,880 --> 00:21:57,760 Speaker 2: time just to see how the inflation trajectory changes evolves. Greg, 407 00:21:57,800 --> 00:22:00,000 Speaker 2: do you think they have that time? Can they wait? 408 00:22:00,040 --> 00:22:01,879 Speaker 2: Can they skip your line? Wait until September. 409 00:22:03,520 --> 00:22:06,320 Speaker 9: I think we're not talking about necessarily bringing rates down 410 00:22:06,359 --> 00:22:09,199 Speaker 9: to zero or cutting rates in an emergency fashion. What 411 00:22:09,200 --> 00:22:12,040 Speaker 9: we're talking about is really recalibrating monetary policy, and I 412 00:22:12,119 --> 00:22:15,280 Speaker 9: think now would be optimal to recalibrate monetary policy. 413 00:22:15,600 --> 00:22:17,919 Speaker 6: Now that the labor market is rebalanced. 414 00:22:17,960 --> 00:22:22,520 Speaker 9: You probably don't need as restrictive monetary polsy. Now that 415 00:22:22,560 --> 00:22:26,000 Speaker 9: the labor market is rebalanced, and now that inflation is 416 00:22:26,080 --> 00:22:28,480 Speaker 9: continuing to move to the downside, what you wanted to 417 00:22:28,520 --> 00:22:35,120 Speaker 9: do is sustain the economic expansion in a low inflation environment. 418 00:22:35,480 --> 00:22:39,200 Speaker 6: That calls for a recalibration of monetary policy. I've been 419 00:22:39,240 --> 00:22:40,439 Speaker 6: discussing this for a few. 420 00:22:40,320 --> 00:22:43,320 Speaker 9: Months now, I think now would be optimal to recalibrate 421 00:22:43,359 --> 00:22:44,159 Speaker 9: monetary policy. 422 00:22:44,480 --> 00:22:46,600 Speaker 6: June would probably also have been good as well. 423 00:22:46,760 --> 00:22:48,919 Speaker 5: Andel, let me bring you into the conversation, get your 424 00:22:48,960 --> 00:22:50,879 Speaker 5: first read and whether you kind of agree with Greg here, 425 00:22:50,920 --> 00:22:52,639 Speaker 5: whether still now is the time to act? 426 00:22:52,880 --> 00:22:55,119 Speaker 10: Yeah, I definitely agree with Greg here. This is a 427 00:22:55,160 --> 00:22:58,400 Speaker 10: consumer that's taking a breather after a pretty solid sprint 428 00:22:58,600 --> 00:23:01,360 Speaker 10: over much of the pandemic here. So what we've seen 429 00:23:01,400 --> 00:23:03,520 Speaker 10: in the consumer sentiment data is some fatigue about high 430 00:23:03,560 --> 00:23:06,080 Speaker 10: interest rates and higher prices. But this is not, as 431 00:23:06,119 --> 00:23:08,199 Speaker 10: Greg said, a consumer that's kind of rolling over, and 432 00:23:08,400 --> 00:23:10,440 Speaker 10: the labor market is a key key part of that. 433 00:23:10,520 --> 00:23:13,560 Speaker 10: Income is still growing, wages are still growing, and really 434 00:23:13,560 --> 00:23:15,720 Speaker 10: the economy is not really set to really take a dive. 435 00:23:15,800 --> 00:23:18,400 Speaker 2: Right The balance of risk around Joel Manday has clearly shifted, 436 00:23:18,640 --> 00:23:20,920 Speaker 2: and you can see that with the communication coming from 437 00:23:20,960 --> 00:23:23,240 Speaker 2: Chair and Pal. The focus now, can we say is 438 00:23:23,280 --> 00:23:26,560 Speaker 2: equally on CPI's equally on price stability and full employment. 439 00:23:27,080 --> 00:23:29,719 Speaker 10: I think you're if they're not going to say that exactly. Basically, 440 00:23:29,720 --> 00:23:31,640 Speaker 10: that's where we are right now. It's a FED that's 441 00:23:31,640 --> 00:23:33,920 Speaker 10: going to be very attuned until weakness in the labor market, 442 00:23:33,960 --> 00:23:36,199 Speaker 10: the job is rate above four point one percent, the 443 00:23:36,240 --> 00:23:38,760 Speaker 10: economy probably slowing below trend in the back half of 444 00:23:38,800 --> 00:23:40,800 Speaker 10: this year on our estimate, so it's a time where 445 00:23:40,800 --> 00:23:42,680 Speaker 10: they can think about recalibrating policy. 446 00:23:42,720 --> 00:23:46,159 Speaker 5: Lower greg with all the things of lining up to 447 00:23:46,200 --> 00:23:49,199 Speaker 5: be able to recalibrate, Jan Hasias probably agrees with you, 448 00:23:49,240 --> 00:23:50,919 Speaker 5: and he even goes so far as to put a 449 00:23:50,960 --> 00:23:54,119 Speaker 5: note out yesterday saying, why wait, if everything is lining up, 450 00:23:54,160 --> 00:23:56,280 Speaker 5: why wait seven weeks? Would you agree with that? That 451 00:23:56,400 --> 00:23:58,000 Speaker 5: July actually makes sense? 452 00:24:01,160 --> 00:24:02,600 Speaker 6: I think June might have made sense. 453 00:24:02,640 --> 00:24:05,680 Speaker 9: I mean, you're really talking about recalibrating monetary policy gradually. 454 00:24:05,880 --> 00:24:08,560 Speaker 9: You want to avoid a situation where you're reacting to 455 00:24:08,760 --> 00:24:11,240 Speaker 9: a more significant slowdown in economic activity. 456 00:24:11,280 --> 00:24:13,760 Speaker 6: That's really the risk right now, as John was saying, 457 00:24:13,760 --> 00:24:15,200 Speaker 6: you have an equally. 458 00:24:14,840 --> 00:24:18,360 Speaker 9: Balanced balanced environment when it comes to the downside risk 459 00:24:18,440 --> 00:24:21,240 Speaker 9: on the labor market front and the easing of inflation. 460 00:24:21,400 --> 00:24:24,679 Speaker 9: So now is really the time to gradually recalibrate monetary policy. 461 00:24:24,960 --> 00:24:27,159 Speaker 9: Do so with a lot of regard towards how the 462 00:24:27,240 --> 00:24:31,280 Speaker 9: data is evolving, but gradually moved towards the state where 463 00:24:31,320 --> 00:24:33,760 Speaker 9: interest rates are more in line with potential growth through 464 00:24:33,800 --> 00:24:36,560 Speaker 9: the economy and an environment where inflation is continuing to 465 00:24:36,560 --> 00:24:37,560 Speaker 9: move towards two percent. 466 00:24:37,800 --> 00:24:39,200 Speaker 6: So yes, I would agree. 467 00:24:38,920 --> 00:24:43,080 Speaker 9: With yanhatsyus there in terms of easing monetary policy now 468 00:24:43,160 --> 00:24:45,000 Speaker 9: and not necessarily waiting until September. 469 00:24:45,119 --> 00:24:47,159 Speaker 2: Andrew Honjost of City, Yes, that I put out a 470 00:24:47,160 --> 00:24:50,080 Speaker 2: pace in the title read like this, rates cuts go 471 00:24:50,160 --> 00:24:52,960 Speaker 2: from if to when to how many? On the if 472 00:24:53,280 --> 00:24:55,200 Speaker 2: not a matter of if. I think we're all waiting 473 00:24:55,200 --> 00:24:57,480 Speaker 2: for that move on the when, debate about what it 474 00:24:57,520 --> 00:25:00,840 Speaker 2: is July September or shortly afterwards, a thinmic compos Let's 475 00:25:00,880 --> 00:25:03,439 Speaker 2: talk about the how many greg when you start to adjust, 476 00:25:03,440 --> 00:25:06,040 Speaker 2: are they talking about a fine tuning amid cycle adjustment? 477 00:25:06,160 --> 00:25:08,240 Speaker 2: What kind of adjustments are you actually looking for? And 478 00:25:08,280 --> 00:25:10,520 Speaker 2: how on earth? And this is a difficult question. Can 479 00:25:10,560 --> 00:25:13,159 Speaker 2: we make that call for twenty twenty five Given the 480 00:25:13,240 --> 00:25:17,600 Speaker 2: kind of political conversations we're having in this country, we. 481 00:25:17,640 --> 00:25:19,399 Speaker 6: Tend to focus a little bit too much on the years. 482 00:25:19,480 --> 00:25:21,359 Speaker 9: Right, There's nothing that says that there have to be 483 00:25:21,400 --> 00:25:23,399 Speaker 9: a certain number of rate cuts in any given year. 484 00:25:23,880 --> 00:25:26,720 Speaker 9: We're anticipating a couple of rate cuts this year in 485 00:25:26,760 --> 00:25:30,840 Speaker 9: September and December. Given what we've heard from policy makers, 486 00:25:30,920 --> 00:25:33,200 Speaker 9: and we're anticipating about one hundred and twenty five based 487 00:25:33,280 --> 00:25:37,880 Speaker 9: points of further easing in twenty twenty five. But as 488 00:25:37,880 --> 00:25:41,200 Speaker 9: you said, there's a lot of uncertainty, whether it's political uncertainty, 489 00:25:41,240 --> 00:25:44,439 Speaker 9: policy uncertainty, geopolitical uncertainty that comes on top of the 490 00:25:44,480 --> 00:25:47,440 Speaker 9: macro uncertainty. So the direction of travel of the economy 491 00:25:48,000 --> 00:25:52,720 Speaker 9: is one in which you're seeing at gradual slow down 492 00:25:52,920 --> 00:25:56,119 Speaker 9: in the pace of growth, which warrants a recalibration of 493 00:25:56,200 --> 00:25:57,120 Speaker 9: monetary policy. 494 00:25:57,400 --> 00:25:59,920 Speaker 6: We're in the early stages now. I think the FED 495 00:26:00,040 --> 00:26:01,320 Speaker 6: would be well placed now. 496 00:26:01,320 --> 00:26:05,399 Speaker 9: To correct, Actually, we calibrate and allow itself some time 497 00:26:05,480 --> 00:26:08,800 Speaker 9: to observe how the economy is evolving while recalibrating the 498 00:26:08,840 --> 00:26:10,639 Speaker 9: pace of monetary pols and tightening. 499 00:26:11,000 --> 00:26:13,320 Speaker 3: I think certain right now is the uncertainty. But if 500 00:26:13,359 --> 00:26:15,359 Speaker 3: we could pick up Andrew on the politics, how are 501 00:26:15,400 --> 00:26:18,040 Speaker 3: you thinking about twenty twenty five, because the Fed could 502 00:26:18,040 --> 00:26:20,360 Speaker 3: be looking at a set of policies that are very different. 503 00:26:20,880 --> 00:26:23,560 Speaker 10: Yeah, it's certainly a key key catalyst. Obviously here we're 504 00:26:23,560 --> 00:26:27,720 Speaker 10: talking about tariff's taxes, other issues. It's potentially labor supply 505 00:26:27,760 --> 00:26:30,439 Speaker 10: as well. The key catalyst for us. We think On 506 00:26:30,480 --> 00:26:32,840 Speaker 10: the inflation front, the FED might be thinking about, or 507 00:26:32,920 --> 00:26:35,400 Speaker 10: might have to think about in short order is tariffs. 508 00:26:35,880 --> 00:26:38,160 Speaker 10: We did put out a pretty extensive note last month, 509 00:26:38,480 --> 00:26:41,719 Speaker 10: and certainly there's a lot of detail that's left unsaid 510 00:26:41,800 --> 00:26:44,640 Speaker 10: right now about what that might exactly look like. But illustratively, 511 00:26:44,680 --> 00:26:46,960 Speaker 10: you're looking at inflation that could be a percentage point, 512 00:26:47,000 --> 00:26:49,760 Speaker 10: couple percentage points, or even several percentage points higher than 513 00:26:49,880 --> 00:26:52,160 Speaker 10: the base case right now. So that with the Fed 514 00:26:52,200 --> 00:26:54,840 Speaker 10: having gotten inflation roughly in the neighborhood of where it 515 00:26:54,840 --> 00:26:56,600 Speaker 10: wants to, it hasn't gotten it all the way home yet, 516 00:26:56,640 --> 00:26:58,680 Speaker 10: so that's going to be potentially. 517 00:26:58,200 --> 00:27:01,520 Speaker 3: Something potentially in twenty twenty five. 518 00:27:01,800 --> 00:27:05,080 Speaker 10: So that'll be so with cuts priced in right now. 519 00:27:05,160 --> 00:27:06,960 Speaker 10: One way you could look at it is basically just 520 00:27:06,960 --> 00:27:09,520 Speaker 10: a hold for longer, but certainly, depending on the mix 521 00:27:09,520 --> 00:27:12,440 Speaker 10: of policies, you could be thinking about hikes potentially after 522 00:27:12,520 --> 00:27:14,359 Speaker 10: some cuts, so that you've seen in the past. 523 00:27:14,520 --> 00:27:17,800 Speaker 2: Andrew Husby have been preparabout together with Greg daco Ey, 524 00:27:17,880 --> 00:27:19,520 Speaker 2: both trying to figure out the future here, which is 525 00:27:19,520 --> 00:27:23,040 Speaker 2: tremendously difficult to do in twenty twenty five. 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