Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day
Speaker 1: for insight from the best and economics, geopolitics, finance and investment.
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Speaker 1: Right now is our interview of the day for those
Speaker 1: of you who concerned about the persistency of inflation. Andrew
Speaker 1: Hollenhorst is chief US Economist at Citygroup and has been
Speaker 1: shockingly prescient about elevated inflation not only in America but
Speaker 1: for Citygroup worldwide as well. Andrew, I want to go
Speaker 1: back to yesterday's Free for all on one year, six months,
Speaker 1: three months, one month annualized John's beautiful job there on PPI. Seriously,
Speaker 1: the granularity of the data. Are we getting way too
Speaker 1: grand n here? Andrew? Are we so desperate that we're
Speaker 1: just looking at every single tea leaf?
Speaker 2: Well, I really think you have to do both here, Tom,
Speaker 2: and I would say for John, PPI is one of
Speaker 2: the hardest releases to read. You have a lot of
Speaker 2: different subcomponents, a lot of different core measures, and we
Speaker 2: look at all of those things. We look at those
Speaker 2: things in course CPI also the supercore. We're looking at
Speaker 2: various measures of underlying inflation one month trends, three month trends,
Speaker 2: So you have to look at the details, but then
Speaker 2: you have to look back, step back and look at
Speaker 2: where is the factory broadly in the economy. So looking
Speaker 2: at the details, there's some upside risks we're seeing. If
Speaker 2: we look at inflation in August, we obviously have gasoline
Speaker 2: prices that are up. Airs are down twenty percent since March.
Speaker 2: That's certainly not the experience I've had with airfares, so
Speaker 2: we think we're going to see those coming up in
Speaker 2: the official data. That's on the kind of details, the
Speaker 2: you know, short term movements month to month. But then
Speaker 2: you step back and you say, where are we going
Speaker 2: as an economy. It's an economy that's generating two percent
Speaker 2: plus growth, it's an economy with a very tight labor
Speaker 2: market wave growth running around five percent by various different measures.
Speaker 2: That's not an economy that's going to bring inflation back
Speaker 2: down to two percent. So yeah, we're getting a couple
Speaker 2: months of softer inflation readings here, that's certainly going to
Speaker 2: look like a soft landing. I don't think that's where
Speaker 2: we're headed.
Speaker 3: We were speaking with Vish Turbotur of Morgan Stanley earlier
Speaker 3: and he said that the bond market action this week
Speaker 3: was a head scratcher since you got softer than expected
Speaker 3: economic data. You did get confirmation at least in the
Speaker 3: data that we're getting right now of disinflation. Do you
Speaker 3: agree or do you think that this makes perfect sense
Speaker 3: that the more the Fed gets complacent, the more concerned
Speaker 3: people are about longer term inflation.
Speaker 1: Yeah.
Speaker 2: I think there is a way to make sense of
Speaker 2: the price action this weekly, so, which is partly that
Speaker 2: this soft landing idea narrative and the softer inflation data
Speaker 2: that's come in really well priced into the market. Speaking
Speaker 2: to investors ahead of the CPI release yesterday, it was
Speaker 2: hard to find anyone who really thought that this wasn't
Speaker 2: going to be a very soft print. So I think
Speaker 2: that was already in the price. So then what investors
Speaker 2: are looking at is some of those details, some of
Speaker 2: those trends in the labor market, the longer term trends
Speaker 2: in the economy, and exactly like you're saying, Lisa, if
Speaker 2: the FED is going to be finishing up rate hikes
Speaker 2: and pretty much everyone thinks either they're done or maybe
Speaker 2: they're going to do another twenty five basis points in
Speaker 2: November and be done, then we're looking at where does
Speaker 2: inflation go from here? And do FED officials just need
Speaker 2: to keep policy rates higher for longer? I think that
Speaker 2: that's a discussion that we're going to increasingly be hearing
Speaker 2: amongst FED officials, is increasingly going to play out in
Speaker 2: the market, this idea that maybe just the neutral policy
Speaker 2: rate where policy makers need to leave FED funds in
Speaker 2: the longer term, is going to be higher.
Speaker 3: How much do oil prices do commodity prices feature into this?
Speaker 3: I was looking at a Muhammad al Arian column yesterday
Speaker 3: saying there's an asterisk next to the disinflation that everybody
Speaker 3: was celebrating yesterday, and it has to do with oil
Speaker 3: prices heading toward their seventh weekly gain. Looking at food
Speaker 3: prices which are starting to inflect higher. How much do
Speaker 3: these sort of affect the larger input prices like the
Speaker 3: factory gauge ones that we just got.
Speaker 2: Yeah, so I think the FED really got helped out
Speaker 2: with lower inflation, with gasoline prices coming down, energy prices
Speaker 2: coming down, food prices that stopped rising as quickly, And
Speaker 2: we were saying at that time FED officials should be
Speaker 2: a little bit careful in terms of take credit for
Speaker 2: that down shift in inflation, because FED policy doesn't really
Speaker 2: control oil prices or food prices, and now they may
Speaker 2: start experiencing the opposite scenario where you actually get some
Speaker 2: of these commodity prices moving higher, most notably energy prices.
Speaker 2: So that is something that FED officials economists tend to
Speaker 2: look through to the core measures. But ye know I
Speaker 2: mentioned airfares before. We're going to higher jet fuel prices.
Speaker 2: That's going to boost airfares, and that that August inflation reading,
Speaker 2: we could get a month on month increase on the headline,
Speaker 2: something like zero point four, zero point five, zero point
Speaker 2: six percent month on month, So that could really kind
Speaker 2: of change the narrative in terms of how the numbers
Speaker 2: are coming in.
Speaker 1: Andrew, just a simple question, are we beyond the pandemic?
Speaker 1: Are we back to conventional macroeconomic analysis?
Speaker 2: So I think we can still use conventional macroeconomic analysis,
Speaker 2: and I think that's one way that we've been forecasting
Speaker 2: inflation and thinking about inflation staying higher for longer, the
Speaker 2: idea that tight labor markets do drive inflation over the
Speaker 2: medium term. So I think that framework of analysis has
Speaker 2: actually been a useful one throughout the pandemic and then
Speaker 2: this post pandemic period. But the idea that the economy
Speaker 2: is going to kind of normalize back to where we were,
Speaker 2: you know, let's say twenty twelve or twenty thirteen, I
Speaker 2: just really don't understand that analysis. A lot of people
Speaker 2: would have thought in twenty thirteen things look pretty different
Speaker 2: than where we were in two thousand and five, so
Speaker 2: I'm not sure why there's this belief that we would
Speaker 2: go back there.
Speaker 1: So this is the heart of the question. I'm gonna
Speaker 1: get a little wonky er folks. This is wrapped around
Speaker 1: John Williams our start and and all the theory mumble
Speaker 1: jumble that doctor Hollenhurst is really quite good at the
Speaker 1: school of thought out there, Andrew is that we return
Speaker 1: to a quiescent our start, and then there's debate. I'm
Speaker 1: going to wrap it around what Olivia Blanchard has done,
Speaker 1: where there's a new higher our start set or dare
Speaker 1: I say, people debt worried looking at an even ever
Speaker 1: higher our start Where are you on this? How do
Speaker 1: you position our start out three and five years right now?
Speaker 2: Yeah, I think we have to think about the possibility
Speaker 2: at least that our star is migrating higher. And if
Speaker 2: you take the famous Laubach Williams model, which to your point,
Speaker 2: Tom is full of complexities and the ideas, you're doing
Speaker 2: this so called baysy An update, where you look at
Speaker 2: the account of figure out where our stars, I mean
Speaker 2: you can very simply, you can say, essentially what that
Speaker 2: model is doing is saying, if growth comes in higher
Speaker 2: than we expect, if inflation comes in higher than we expect,
Speaker 2: then it must be the case that the neutral real
Speaker 2: interest rate is higher than we thought it was. Well,
Speaker 2: where's growth come in stronger than we expect it, where's
Speaker 2: inflation come in higher than we expected? So that model,
Speaker 2: over time should start catching up to what we've seen
Speaker 2: in the data that looks like our star is rising.
Speaker 2: I think we're going to hear about this at Jackson Hole.
Speaker 2: I think that that really could be the interesting conversation
Speaker 2: that Powell brings up. Now to your point, new York
Speaker 2: Fed President Williams, the father of the Lavak Williams model.
Speaker 2: I don't think that he thinks that our star has
Speaker 2: moved up yet he's made comments to that effect. So Powell,
Speaker 2: I think, can't kind of completely break away from what
Speaker 2: Williams is talking about. But let's watch Jackson Hole at
Speaker 2: the end of this month. I think we're going to
Speaker 2: hear some discussion about the possibility at least that our
Speaker 2: star is higher.
Speaker 3: How long can the Fed hold rates around these levels
Speaker 3: five and a quarter to five and a half percent
Speaker 3: before it causes recession at a time where perhaps growth
Speaker 3: is still strong but it's coming down.
Speaker 2: Yeah, I think there are lags of monetary policy that
Speaker 2: will vary slowly but surely slow down the economy. We
Speaker 2: see that in the Senior Loan Officer Opinion Survey, where
Speaker 2: you see banks that are still tightening lending standards. You
Speaker 2: think about many people right now have a mortgage at
Speaker 2: three percent three and a half percent. Mortgage rates for
Speaker 2: thirty or fixed rate mortgage are seven percent now, So
Speaker 2: over time people will start slowly but surely resetting into
Speaker 2: those higher mortgages. But those effects that slow the economy
Speaker 2: work with a very long lag. You're not going to
Speaker 2: be very incentivized to sell your house now and go
Speaker 2: pick up a new house at a higher mortgage rate.
Speaker 2: So that will only happen if you have a life event,
Speaker 2: you change your job, or your family size increases. So
Speaker 2: that does slow the economy, but it takes a long time,
Speaker 2: So Lisa, it could be quite a long period of
Speaker 2: higher for longer.
Speaker 1: Andrew Hollanders, thank you so much. You're lighting up the airways.
Speaker 1: You're written in all sorts of emails here, and Andrew Hollanders.
Speaker 4: Emily Rowland joins now cou Chief Investment strategistic John Hancock
Speaker 4: Investment Management. Emily, don't worry, we'll keep him in line.
Speaker 4: Let's talk about China. Emily, do we want stimulus out
Speaker 4: of China right now? If you have a seat at
Speaker 4: the federers.
Speaker 5: F well, I don't know if it's working necessarily. You
Speaker 5: look at some of this lone growth data this morning
Speaker 5: and it's simply not showing up. I think the China
Speaker 5: stimulus narrative is one that the markets have really loved
Speaker 5: and embraced, and we're getting a bit of a reality
Speaker 5: check on that as it relates to commodity prices. All
Speaker 5: of this news of stimulus has certainly pushed them up,
Speaker 5: pushed inflation expectations higher, and that's become a big problem
Speaker 5: for the Fed here, who certainly has not yet claimed
Speaker 5: victory on inflation. So we're watching that really cool here,
Speaker 5: but a lot of mixed messages. And by the way,
Speaker 5: speaking of mixed messages, I understand trying to get to
Speaker 5: the weekend here. As you've said all morning long, if
Speaker 5: you watch the macro and you watch the fundamentals, this week,
Speaker 5: the market action didn't really make a ton of sense.
Speaker 1: You know.
Speaker 5: Of course, we had the treasury auction that you talked about,
Speaker 5: pushing yields higher, but at the same time, the economic
Speaker 5: data were pretty disappointing. You know, you had softer inflation,
Speaker 5: you had initial claims picking up, you had dubvish comments
Speaker 5: from the Fed. Meanwhile, the tenure treasureyeld sort of right
Speaker 5: where we started, and European equities trading on another planet
Speaker 5: right now.
Speaker 1: And Emily, it was in your note you talk about
Speaker 1: whipsaw and I think it's perfect if there's one big
Speaker 1: group whipsaw here over the last number weeks, whatever anybody's
Speaker 1: belief with that said, in the group whipsaw that we're
Speaker 1: in right now. How do you position out one year
Speaker 1: or two year in my depleted two to oh one K.
Speaker 5: Yeah, it's tough. So the macro signals right now are
Speaker 5: like a stoplight. They're going from red to green and
Speaker 5: back to red. And we look at the macro messages
Speaker 5: right now is more of a yellow. You know, you
Speaker 5: want to maybe take your foot off the gas a
Speaker 5: little bit. You want to look both ways, You want
Speaker 5: to proceed with caution. So we're starting to see this
Speaker 5: big shift in sentiment. It's been pulled back a little
Speaker 5: bit over the last couple of weeks from fear to greed,
Speaker 5: and you're starting to see more cyclical, higher beta parts
Speaker 5: of the market outperforming. We would be mindful of taking
Speaker 5: too much risk in this environment. Again, we still want
Speaker 5: to be invested. We still like higher quality stocks. We
Speaker 5: think bonds can do more heavy lifting in a portfolio.
Speaker 5: But look, the leading economic indicators have been negative for
Speaker 5: twelve straight months. The yield curve has been inverted for
Speaker 5: thirteen straight months. I mean, it's just become exhausting. But
Speaker 5: we need to stick to our premise here. We need
Speaker 5: to stick to our work that tells us that our
Speaker 5: recession is likely to unfold due to the lagged impact
Speaker 5: of FED tightening. It's becoming difficult to stay patient for sure.
Speaker 3: I just want to pick up on what you said
Speaker 3: about European equity is trading on another planet, what do
Speaker 3: you mean, And just the fact that they haven't sold
Speaker 3: off more aggressively in the face of China weakness.
Speaker 5: Yeah, I think it's notable to look at the strength
Speaker 5: particularly versus domestic equities. As of late, Europe has certainly
Speaker 5: been more tied to China stimulus. You've seen that, You've
Speaker 5: seen a big momentum trade there. I think is some
Speaker 5: short covering has resulted in a lot of gains in
Speaker 5: that market, and you're seeing some major companies in Europe
Speaker 5: disappointing on the earnings front, some solvency issues there. You know,
Speaker 5: markets really seem to be very much enamored with Europe.
Speaker 5: They're very much enamored with this China story, and it
Speaker 5: just doesn't match up with the macroeconomic dan look at
Speaker 5: the City Group Economic Surprise Index. It's surging in the
Speaker 5: United States right now, and it's about negative one hundred
Speaker 5: in Europe, and yet those markets are outperforming to US
Speaker 5: as macro investors. We want to continue to emphasize domestic
Speaker 5: equities because of the relative economic strength here.
Speaker 3: That said, US tech underperformed this year. This week, I
Speaker 3: should say not this year. This year, they've outperformed tremendously.
Speaker 3: But how much is that going to be a real
Speaker 3: challenge to your thesis if it continues.
Speaker 5: Yeah, we've definitely seen a pull back there, and of
Speaker 5: course valuations were stretched and we were expecting to potentially
Speaker 5: see you know, a bit of a profit taking there.
Speaker 5: And you know, I still wonder if tech is the
Speaker 5: biggest issue that market should be focused on. It's hard
Speaker 5: not to like quality in this type of a market,
Speaker 5: and of course tech is your poster child there. I
Speaker 5: think over three five years we've seen the US technology
Speaker 5: sector has produced of the best earnings globally. Of course,
Speaker 5: we want to diversify from some of that. Look at
Speaker 5: some of the ways the sectors that are starting to
Speaker 5: perk up a little bit here. Healthcare one of our favorites.
Speaker 5: It's trading at a meaningful discount to the S and
Speaker 5: P five hundred. It's got the quality metrics that we love,
Speaker 5: great balance sheets, good return on equity, and it's more
Speaker 5: defensive so I do think that the baton can be
Speaker 5: passed here in the back hap of the year into
Speaker 5: next year to some of these more defensive sectors in
Speaker 5: order to create that balance away from the tech sector.
Speaker 4: Emily, final question, and you on the strong doll to
Speaker 4: train as well, then yeah, we have been.
Speaker 5: The way that we look at the dollar is where's
Speaker 5: the best relative economic growth and which central bankers globally
Speaker 5: are going to be continuing to tighten the most. And
Speaker 5: because of the relative strength we talked about here in
Speaker 5: the US, we think that's the US Federal Reserve. We
Speaker 5: think the US economy is doing the best. We also
Speaker 5: think if a recession on folds, which is our base case,
Speaker 5: there should be a bit.
Speaker 2: For US dollars.
Speaker 5: I don't know that the dollar goes gangbusters like it
Speaker 5: did in the first few quarters of twenty twenty two,
Speaker 5: but I would say I would fade any weaker dollar
Speaker 5: trade here.
Speaker 4: You're got to pay Malkes on another planet. That's the
Speaker 4: headline from every island of John Hancock. Whether we intended
Speaker 4: that's the headline or not, it will be heavily. Thank you.
Speaker 1: To brief you forward in the next week. Joseph Feldman
Speaker 1: Joins just senior research analysts. You working with Dana Telsea
Speaker 1: at the Telsia Advisory Group. They've been in a fire
Speaker 1: the last forty eight hours. Joe, I want to get
Speaker 1: the big box, but I really want to frame out
Speaker 1: the different here at Tarja. I've got a women's boxy
Speaker 1: zip up denim jacket wild Fable Blue denim for thirty
Speaker 1: five dollars. That's what you're looking at, your colleague in crime,
Speaker 1: Dana Telsey's looking at the MEDUSA ninety five. Do a
Speaker 1: leap of denim jacket over at for Sachi for one
Speaker 1: three d and fifty dollars. When all this is done
Speaker 1: three years out, is there going to be anything left
Speaker 1: in the middle between Coach Corps, Versace or LVMH and Target.
Speaker 1: What's the middle end up doing in the coming years.
Speaker 6: Yeah, the middle is kind of squeezed right now, and
Speaker 6: that's where we're seeing that middle has been trading down
Speaker 6: and then the upper end is kind of staying where
Speaker 6: they are. It's that aspirational customer has traded down a little,
Speaker 6: the middle has traded down. So I think that still
Speaker 6: positions Target and Walmart pretty well. Data. I think likes
Speaker 6: the deal with Tapestry and Capri in the sense you
Speaker 6: can bring these two companies together. There are a house
Speaker 6: of brands, and I know there are more of those
Speaker 6: middle aspirational type brands, but you can operate them more efficiently,
Speaker 6: and maybe the way you allocate resources to the different
Speaker 6: brands and do the back end can make it more
Speaker 6: profitable and make them more of a stronger venture to
Speaker 6: go forward. So I think that we kind of like
Speaker 6: that lineup and the strategy there. And you know, honestly,
Speaker 6: the Capricecide has been kind of languishing for a little bit,
Speaker 6: and so I think that now if you put it together,
Speaker 6: you could maybe make a go of it, make it stronger.
Speaker 6: That all said, the near term, the consumer's still under
Speaker 6: a lot of pressure. Discretionary sales have been slow, and
Speaker 6: especially big ticket discretionary sales have been slow. And so
Speaker 6: that's where we're at heading into this earning season. And
Speaker 6: why we like Walmart.
Speaker 4: Engineer well Walmart yet today outperformance target by massive margin
Speaker 4: underperformance from Target outperformance from Walmart.
Speaker 6: Joe.
Speaker 4: There's a word I really don't like around the retail names.
Speaker 4: It's shrink. Why don't they just call it what it is?
Speaker 4: Theft and how much are we going to be talking
Speaker 4: about that next week?
Speaker 6: Yeah, I think we're going to hear a lot about
Speaker 6: Shrink next week. You know. Target has laid it out
Speaker 6: and told us, you know, they're expecting around five hundred
Speaker 6: million of incremental strength this year. Walmart's got a big
Speaker 6: number as well. Now they haven't quantified it, but it
Speaker 6: is big and Home Depot and Low's and Best Buying,
Speaker 6: you go down the list, and it's been a big
Speaker 6: problem for everybody. I mean, theft has really kicked in
Speaker 6: higher you know, the shrink side. Yeah, there's always been
Speaker 6: damages for turns that you can't really sell, things that
Speaker 6: maybe walk out the store with an employee every once
Speaker 6: in a while, things like that. But this organized crime
Speaker 6: that's happening in retail is really a big problem for
Speaker 6: this especially for these big box retailers. You know, Dana
Speaker 6: actually recently was in Beverly Hills and witness at firsthand
Speaker 6: one of those grabbing gos somebody just running out of
Speaker 6: the high end store and literally right in front of her,
Speaker 6: And it's just it's frustrating to see and it's scary
Speaker 6: for the average consumer to see that.
Speaker 3: Happen, and it's something that we've seen, particularly with respect
Speaker 3: to a lot of drug stores, particularly in city centers.
Speaker 3: I'm wondering how much this pushes the emphasis then on
Speaker 3: the online presences of some of these companies, and I
Speaker 3: think of Walmart in particular, which is actually putting up
Speaker 3: competition to the likes of Amazon with what they can
Speaker 3: offer in e commerce.
Speaker 6: Yeah. Absolutely, I mean the e commerce side of the
Speaker 6: business at Walmart, at Target, really many of the big
Speaker 6: boxes improved significantly. They're very robust, and we see Walmart
Speaker 6: is going toe to toe with Amazon, especially on the
Speaker 6: retail side of it. It's clearly Walmart doesn't have AWS,
Speaker 6: but on the retail side and the physical presence, to
Speaker 6: leverage the physical with the digital is a real advantage,
Speaker 6: especially relevant to Amazon at the moment. Now Amazon wants
Speaker 6: to get more physical. They're trying to open grocery stores.
Speaker 6: I think we'll see that accelerate once they've kind of
Speaker 6: figured out the box that they want. But there's definitely
Speaker 6: this conflict is going to be around for a while,
Speaker 6: and you can get great value of both of these tailers,
Speaker 6: adding Target, adding Costco, adding all the other big box guys,
Speaker 6: And you're absolutely right, you know, that is a way
Speaker 6: around this. We have seen East commerce sales decelerate a
Speaker 6: little bit, you know, broadly speaking in retail as people
Speaker 6: have returned to the stores a bit more. But that's
Speaker 6: definitely a strong area of opportunity for the retailers forward.
Speaker 3: Walmart's kind of a confusing read on the US consumer
Speaker 3: because on one hand, if it does well, that's a
Speaker 3: good thing. People are spending money. On the other hand,
Speaker 3: it's been people who are trading down, who are trying
Speaker 3: to spend less, who are going from Whole Foods or
Speaker 3: whole paycheck is Ton likes to call it to Walmart
Speaker 3: and looking for a bargain. So is Walmart's gain everybody
Speaker 3: else's pain? Is it sort of a counter indicator of
Speaker 3: consumer strength.
Speaker 6: Well, that's a great point, you know that it is
Speaker 6: an indicator of where the health of the consumer is now.
Speaker 6: The good sign is the consumer is still spending, they
Speaker 6: are trying to save money. They may be trading down,
Speaker 6: they may be trading in. But Walmart has done a
Speaker 6: really good job over the past few years and making
Speaker 6: that their business model stickier, and so they're retaining a
Speaker 6: lot of those customers. So they've seen trade down and
Speaker 6: trade into the business, but they're seeing those people stay.
Speaker 6: So yes, that's not great for the rest of retail.
Speaker 6: It just shows that Walmart's gaining market share. But some
Speaker 6: of their latest formats, especially the ones over in New
Speaker 6: Jersey if you just cross the river, they're really phenomenal stores,
Speaker 6: and they're very much target light, to be quite honest,
Speaker 6: it has that little slightly more upscale feel. Really goes
Speaker 6: after that the core American consumer, And you're actually right,
Speaker 6: we are concerned about how things will shape up, especially
Speaker 6: for that middle income consumer for this holiday season.
Speaker 4: So, Joe, we talked a little bit about the prospect
Speaker 4: of trade down to Walmart. We've heard that over the
Speaker 4: last few quarters from the company itself on the earnings call. Joe,
Speaker 4: what about holding onto talent. We've seen a bit of
Speaker 4: softening in the labor market. You're talking about maybe the
Speaker 4: economy deteriorating. Do they have that issue on the talent side?
Speaker 4: Do they have a ups pro Do they have a
Speaker 4: problem like GM Ford.
Speaker 6: I don't think so. I think Walmart and Target and
Speaker 6: all these guys have done a really good job over
Speaker 6: the past few years of trying to pay their people better,
Speaker 6: to raise wages, opening opening starting wages, I should say,
Speaker 6: and raise the average wage for everybody. They've added more
Speaker 6: benefits to their consumer and to their to their employees,
Speaker 6: and you know, they've done a much better job with that.
Speaker 6: And we haven't heard as much of the griping that
Speaker 6: we used to hear a few years ago, especially around
Speaker 6: Walmart or Target or some of the others that the
Speaker 6: employees felt underpaid.
Speaker 4: Ass Joe, and I'm jumping in because we've only got
Speaker 4: about sixty seconds left. I can only imagine how difficult
Speaker 4: it would be to work at some of those stores
Speaker 4: in certain locations, a Target, at CVS, when you're seeing
Speaker 4: people come in clear off the shells and you're told
Speaker 4: that you can't intervene, you can't do anything. You've just
Speaker 4: got to step by step back and watch it. What's
Speaker 4: happening to those locations? Have they just been shut down?
Speaker 6: Unfortunately? Some have in I mean, you saw Walmart shut
Speaker 6: down a couple of stores in Chicago. Others have shut
Speaker 6: down stores in San Francisco and other parts of the country.
Speaker 6: You know, the retailers tell us there's definitely isolated pockets
Speaker 6: and they're limited to certain stores. It's not everywhere, but
Speaker 6: it's a concern, and it's scary for employees, it's scary
Speaker 6: for the shopper while you're there. And it's very frustrating too.
Speaker 6: I mean, we keep hearing stories of employees that occasionally,
Speaker 6: you know, step in and when they're told not to,
Speaker 6: and yet it's just so frustrating to them that they
Speaker 6: step in and try to stop it, and some have
Speaker 6: actually lost their jobs for doing so, because you know,
Speaker 6: it does put them at risk. It puts a company
Speaker 6: of risk, and puts everybody these the shopper at risk
Speaker 6: as well. So it's best to let the people go.
Speaker 6: But very frustrating for sure.
Speaker 4: Some shocking images Joe, thank you, sir, Joe found when
Speaker 4: they of the TAUSI Advisory Group going into warnings next week.
Speaker 1: It's about yes, US, China, China, US, but also the
Speaker 1: complexities of other nations as well. We have an expert
Speaker 1: on this, the banker from Arkansas, the Republican French Hill,
Speaker 1: joins us this morning. French, you and Arkansas live this.
Speaker 1: You are absolutely front and center on agriculture. I'll use
Speaker 1: Tyson's as the iconic chicken maker and also pork and
Speaker 1: the simplicity that's in the political dialogue. Versus the complexities
Speaker 1: of chicken from America to China, chicken from Brazil to China,
Speaker 1: and the stew of it all. Not to use a
Speaker 1: pun here, what is your best policy with China given
Speaker 1: the complex realities of a multinational export import reality.
Speaker 7: Well, Tom Jonathan, great to be with you. Yeah, this
Speaker 7: is a super complex issue. You know, we're not going
Speaker 7: to fronted with a Cold War situation like we had
Speaker 7: in the nineteen fifties to the nineteen nineties with the
Speaker 7: Soviet unions Soviet Union, where we were not an integrated
Speaker 7: economy there. The case is exactly the opposite with China,
Speaker 7: for Japan, for South Korea, for Taiwan, for the United States,
Speaker 7: and for the EU. So, first of all, I think
Speaker 7: your comment has to be thought of in a multilateral
Speaker 7: way because all these developed economies have supply chain and
Speaker 7: market revenue opportunity. In China, this de risking that we're
Speaker 7: seeing led by the private sector, I think is one
Speaker 7: of the most important components of why you see concern
Speaker 7: in China, and I hope that's the case, because in
Speaker 7: my view, economic deterrence to Beijing is one of the
Speaker 7: most important things that we can do on a multilateral
Speaker 7: basis to keep them from being provocative visa the Taiwan
Speaker 7: or the South China Sea. And I think that's a
Speaker 7: key point.
Speaker 1: French. We're thrilled dead you on as you are the
Speaker 1: only Republican that will not be debating here at the
Speaker 1: end of the month. It's good to see at least
Speaker 1: one Republican won't be up on stage. But French, can
Speaker 1: all of Washington, Democrat and Republican the bipartisan China view.
Speaker 1: Can we have an adult, multilateral and complex discussion or
Speaker 1: we just gonna end up with silly simplicities that we
Speaker 1: hear and listen to.
Speaker 7: Now, Yeah, such a good point. And that's why I
Speaker 7: think Mike Gallagher, who chairs the China Select Committee on
Speaker 7: behalf of Speaker McCarthy, has got a good worldview. He
Speaker 7: comes from obviously a military background, but he understands these
Speaker 7: global capital market and trade market complexities that are multilateral
Speaker 7: and not solely with the United States. And that's why
Speaker 7: I was glad to see the G seven countries think
Speaker 7: about a reverse Scithius type approach at the G seven meeting.
Speaker 7: This is the essence of where Joe Biden's going with
Speaker 7: his executive order yesterday. I do agree that I think
Speaker 7: it's more complicated. I think don't think it goes far
Speaker 7: enough because everything in China is a dual use technology
Speaker 7: and that's how they operate. So it makes very hard
Speaker 7: for us to monitor and think about how to limit
Speaker 7: capital flows or technology flows into China.
Speaker 3: That's the China story. There's a very big domestic story
Speaker 3: that was highlighted last week by Fitch that a lot
Speaker 3: of people are discussing, especially in light of the auctions
Speaker 3: which were okay to pour as the week went on.
Speaker 3: One thing that Michael Zesus of Morgan Stanley said in
Speaker 3: a recent note was we're taking seriously the risk of
Speaker 3: a government shutdown this fall. Do you think that a
Speaker 3: government shutdown should be on the table in order to
Speaker 3: reduce the deficit.
Speaker 7: Well, Lisa, here's my view. The House is behind the
Speaker 7: curve here. We need to pass the other eleven bill
Speaker 7: appropriations bills that we did not get to in July.
Speaker 7: We passed one. We need to pass all twelve that
Speaker 7: gives us the maximum negotiation capability on behalf of the
Speaker 7: House of Representatives, with the Senate and with the Biden
Speaker 7: administration to get the kind of spending deal that we
Speaker 7: anticipated from the debt sealing negotiations. We want to hold
Speaker 7: the line on that and the best way we can
Speaker 7: do it is to get our work done on the
Speaker 7: appropriations bill in the short time of remaining. Those conversations
Speaker 7: are going on every day. Secondly, look if we can't
Speaker 7: get all that done before September thirtieth, I think a
Speaker 7: short term continuing resolution in order to get that work
Speaker 7: done is important. We don't need to go into a
Speaker 7: government shut down when we've done the hard work through
Speaker 7: the debt sealing negotiation, and we've done the hard work
Speaker 7: in our committees both in the House and Senate on
Speaker 7: the appropriations process.
Speaker 3: Is there enough unity right now within the Republican congress
Speaker 3: members and senators to really get an agreement that everyone
Speaker 3: can get on board with because it was splintered in
Speaker 3: order to get anything through. Is that one of the
Speaker 3: big obstacles for you?
Speaker 7: Yeah, I think it is, Lisa. I think we are
Speaker 7: talking with our members every day, as we've done all year,
Speaker 7: as we've accomplished. I think a broad set of solid
Speaker 7: policy accomplishments this year that some of which have even
Speaker 7: gone to President Biden's desk. We have to do that
Speaker 7: on each of these appropriations bills, you've got concerned about
Speaker 7: each one from different members of the Republican Conference. And
Speaker 7: I think that's good. I think it's constructive. We can
Speaker 7: handle some of that with amendments on the floor. But
Speaker 7: we do need to get these bills move forward because look,
Speaker 7: that maximizes our negotiating clout. And I would say to
Speaker 7: my Republican colleagues, if you go to a continuing resolution
Speaker 7: and don't do your work, what you're doing is essentially
Speaker 7: institutionalizing Nancy Pelosi and Joe Biden's spending levels of last
Speaker 7: year and their policy positions, which is not something that
Speaker 7: House Republicans are in support of.
Speaker 1: You know, French, we got to cut to the chase
Speaker 1: on what matters here. You and I have talked about
Speaker 1: this before. But if you look at razorback football and
Speaker 1: you look at the schedule, A Western Carolina Kent State
Speaker 1: BYU LSU finally a real game LSU and Texas A
Speaker 1: and M later on, what in God's name is happening
Speaker 1: to college football? And what are you going to do
Speaker 1: in Congress to tell these people to get their act together.
Speaker 7: Well, let me tell you, Tom, this is all about
Speaker 7: the money, and those schools love coming to they love
Speaker 7: coming to Arkansas. They're going to make a lot of money.
Speaker 7: And I guess the Razorback is going to hopefully have
Speaker 7: three victories in a row. But college sports is now
Speaker 7: absolutely all about the money. And that's why Jonathan needs
Speaker 7: to come out here and watch some good SEC football
Speaker 7: and stop talking about quote European football close quote.
Speaker 4: French tells you, Frenchman gonna make it happen. It's a
Speaker 4: treat of mine. I want to make it happen. I
Speaker 4: want to go and watch college football in the South.
Speaker 4: I think want to come watch shit.
Speaker 1: To someone like Congress school Hill tell us it's all
Speaker 1: about the money. I mean, that's the most shocking thing
Speaker 1: I've heard I've heard this year.
Speaker 4: This year, French is going to happen. Congressman, Thank you, Congressman.
Speaker 4: French Show at Bakers.
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