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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and am Marie Hortern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

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Speaker 2: or anywhere else you listen, and as always on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business App. Peter Cheer of

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Speaker 2: Academy right in the following. While the market is right

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Speaker 2: not to get too concerned at the moment, there is

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Speaker 2: a risk that is being very complacent, he joins us

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Speaker 2: now for more peke Monic morning.

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Speaker 1: That risk always exists.

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Speaker 2: Let's talk about whether the base case right now is

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Speaker 2: justified or complacent.

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Speaker 1: I think it's heading towards complacent. I think the administration

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Speaker 1: seems very comfortable with tariffs. They're coming out talking with them.

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Speaker 1: Let's not forget Trump A you really like tariffs. And

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Speaker 1: I think this whole taco thing is overdone. I think

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Speaker 1: he pivoted right. It wasn't going well, stock market was

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Speaker 1: coming down, he had other things to focus on. He

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Speaker 1: pulled back. Now he's had a few big wins. I

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Speaker 1: think the success that we had in Iran very positive

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Speaker 1: for him. Getting NATO to agree to five percent except

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Speaker 1: for Spain, that was a very positive for him. Getting

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Speaker 1: the big beautiful bill turned into an actual law as positive.

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Speaker 1: I think he's going to take another cut at this

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Speaker 1: and the problem is, I think for markets, we're not

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Speaker 1: going to get a quick reaction. We might not even

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Speaker 1: get a reaction after August first, assuming the tariffs go in.

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Speaker 1: Because last time the tariffs were actually and I believe

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Speaker 1: for some number of hours before they pulled back. So

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Speaker 1: I think this could drag on. I think it's going

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Speaker 1: to be more of a slow bleed. Unfortunately, there's a

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Speaker 1: larger question here.

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Speaker 3: Is this just the market saying, look, we've been fooled before.

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Speaker 3: What are you doing We're not going to buy into

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Speaker 3: these rates actually going through.

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Speaker 4: Or is this a market saying.

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Speaker 3: We've seen how companies absorb these tariffs and it isn't

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Speaker 3: going to be as big of a hit as many

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Speaker 3: people initially thought.

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Speaker 1: I think it's the former. I think people are just like,

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Speaker 1: we got fooled by this, we all got paniced. We

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Speaker 1: all believe the Main Street versus Wall Street, the rhetoric

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Speaker 1: I was coming out of the administration that they would

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Speaker 1: go forward. I think when you start seeing this one,

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Speaker 1: it's too early to expect much of a hit onto

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Speaker 1: Wall Street. Right even at ten percent, one company's had

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Speaker 1: a lot of ability to pre order stuff that helped

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Speaker 1: take care of it. You've seen a lot of USMCA

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Speaker 1: goods get compliant approved a USMCA compliant that's where used

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Speaker 1: effective tariffs. And you look at the tariff revenue, I

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Speaker 1: think it's about eighty billion over the last three months.

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Speaker 1: That's a drop in the bucket in terms of inflation

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Speaker 1: or anything. So I think we will not start seeing

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Speaker 1: the inflation effects or the impact on corporate earnings until

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Speaker 1: a few more months down the road.

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Speaker 3: Which is the reason why we've been talking about how

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Speaker 3: pivotal this week is. How much are you concerned about

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Speaker 3: it being a headfake if we don't see the real

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Speaker 3: ramifications from tariffs, either in consumer inflation or in bank

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Speaker 3: earnings in particular.

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Speaker 1: You know, I'm not as worried about the earnings. What

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Speaker 1: I'm looking for a little bit is what are people

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Speaker 1: seeing globally, what's the global economy looking like. We talked

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Speaker 1: so much about the domestic economy. What's it like, what's

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Speaker 1: spending going on? And are any of the US brands

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Speaker 1: seeing a pullback and spending that's me is one thing

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Speaker 1: we've seen it in tourism. Is it more widespread because

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Speaker 1: that would be a bigger concern to me that you're

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Speaker 1: starting to see this kind of pulling away from the

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Speaker 1: American brands, which would be very consistent now with what

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Speaker 1: you're reporting this morning that other countries are trying to

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Speaker 1: figure out, Okay, what trade deals can we do away

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Speaker 1: from the US.

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Speaker 5: So what do you like then in this moment if

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Speaker 5: you don't think the president is just a negotiating mode

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Speaker 5: and potentially some of these rates can stay.

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Speaker 1: So I still like anything that's really involved around national security,

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Speaker 1: national production, right, And I think last week we saw

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Speaker 1: MP ticker symbol got an investment from the Department Offense.

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Speaker 1: There's a little bit of ad hoc that the Department

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Speaker 1: Defense had that money. But maybe we start seeing the

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Speaker 1: sovereign wealth funds that we talked about at the start

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Speaker 1: of the administration start turning into something where you start

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Speaker 1: seeing investment where the US public actually gets to take

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Speaker 1: advantage of the growth. We have to have rarest and

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Speaker 1: critical minerals and not just the commids, the process and

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Speaker 1: refined versions of those. We need chips, we need pharma,

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Speaker 1: all those things. I think that's where I want to

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Speaker 1: focus because the President could juggle throo things right, push

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Speaker 1: hard on tariff's on the one side, domestic growth and

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Speaker 1: those things do take away jobs from China, they bring

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Speaker 1: jobs to the US, so they fit a lot of

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Speaker 1: it genders a lot of it's deregulation, which again is

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Speaker 1: right up the President's alley. So that to me is

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Speaker 1: the positive that we last week in that investment of

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Speaker 1: the Department Fence is just the tip of the iceberg.

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Speaker 5: Do you think the fifty percent tariffs on copper is

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Speaker 5: good and it stays.

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Speaker 1: I don't know that it's good at all. Again, it's

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Speaker 1: something we import a lot of and we need to

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Speaker 1: and we're not going to be able to turn it back.

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Speaker 1: But yeah, I think he stays. I think he tries

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Speaker 1: to grow some domestic businesses around that. But it's going

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Speaker 1: to come through investments, not going to come out through handouts,

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Speaker 1: their subsidies.

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Speaker 2: Quick final word on CPI tomorrow morning. We've had a

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Speaker 2: string of softer that expected rates to we get a

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Speaker 2: fifth tomorrow morning.

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Speaker 1: I don't think so. I think we've kind of bottomed

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Speaker 1: out on it for a little while. I think there's

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Speaker 1: been some pressure on, you know, through some of what's

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Speaker 1: been going on the USMCA. I think people push some

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Speaker 1: prices through, So I don't think I'm not alarmed, but

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Speaker 1: I don't think we get a you know, a good number.

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Speaker 2: It A sure the FED has a lot to answer for.

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Speaker 2: Where's this one going?

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Speaker 1: I have no idea. It does feel politically that he's

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Speaker 1: going to be under a lot of pressure in the

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Speaker 1: coming days weeks, you know, And I do think he

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Speaker 1: probably should have cut rates or be on the pace

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Speaker 1: we should be cutting in July. I think I don't

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Speaker 1: like the jobs data, so I don't agree with all

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Speaker 1: this policy, but I think pushing them out and this

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Speaker 1: pressure markets aren't going to like it. The world's not

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Speaker 1: going to like it. So I don't love that stat

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Speaker 1: What do you.

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Speaker 2: Think the cost is? What's the price of firing the

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Speaker 2: FED chair? Not saying it will happen, if it happens,

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Speaker 2: What is the cost and is it so high that

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Speaker 2: it prevents it from happening.

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Speaker 1: You know, unfortunately or not fortunately. I don't think it's

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Speaker 1: going to be that high. Front end yields probably go down,

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Speaker 1: right because whoever's going to come and is probably going

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Speaker 1: to implement cutting. You see yields go higher maybe at

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Speaker 1: the back end, but how much can you choose tens

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Speaker 1: go out. So I think it's actually going to be

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Speaker 1: a muted reaction. I think there's a lot of fear

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Speaker 1: that we're going to blow up the treasury market. I

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Speaker 1: just don't think that happens right away.

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Speaker 4: And part of the reason.

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Speaker 3: Why is because people say there's a whole committee full

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Speaker 3: of FED members that all have a vote, and yet

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Speaker 3: Kevin Walsh, who previously was on the FED Board of Governors,

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Speaker 3: came out and said, we need regime change, we need

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Speaker 3: an overhaul, and started talking about the strategic shift that

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Speaker 3: he would like to see at the Federal Reserve.

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Speaker 4: How realistic, how feasible is that?

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Speaker 1: You know, I've often wondered for the last decade why

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Speaker 1: we don't have more behavioral economists on the FED. Right,

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Speaker 1: we have the traditional macroeconomists, and yet when you look

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Speaker 1: at the Nobel Prizes, you know, they're going out to

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Speaker 1: the behavioral So I think we shake up in kind

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Speaker 1: of some different thinking wouldn't be a bad idea. Again,

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Speaker 1: I'm not sure that it should be done in this

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Speaker 1: kind of, you know, very quick and rough way, but

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Speaker 1: I think there are things how do we think about

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Speaker 1: the world, how do people respond? I think a lot

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Speaker 1: of traditional macroeconomics has failed us, and we've kind of

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Speaker 1: missed the GFC, we miss European debt crisis. So bringing

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Speaker 1: some new types of thinking might not be a bad idea.

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Speaker 3: There are two things that you're sort of alluding to here,

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Speaker 3: and one is the fundamental economic justification for both the

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Speaker 3: rate cut, andy rethink of some of the economic modeling

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Speaker 3: on the FED. The other is the political job boning

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Speaker 3: that leaves people concerned about a Turkey situation, air dou

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Speaker 3: On like pressure, talking about what happened with Arthur Burns

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Speaker 3: that led to the highest pace of inflation that we've

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Speaker 3: seen in modern history in the United States. So how

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Speaker 3: do you distinguish between the two, And does this kind

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Speaker 3: of pressure make it less likely that they can cut

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Speaker 3: in a way that might be appropriate.

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Speaker 1: So I would have said before this weekend I felt

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Speaker 1: they would be pressured not to cut because they didn't

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Speaker 1: want to be bowing to this. But it does seem

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Speaker 1: like this is a whole new line of attack. They're

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Speaker 1: kind of going down different avenues to get that sort

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Speaker 1: of change, and if that happens, then I think we

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Speaker 1: do get cuts very quickly, because whoever comes in, we'll

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Speaker 1: try and say, well, this has to be our mandate.

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Speaker 1: It's probably the most confusing I've ever had because we've

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Speaker 1: never i think, had to figure out the political ramifications

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Speaker 1: of the FED in such a way.

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Speaker 5: Kevin Hassett was asked about this over the weekend. He says,

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Speaker 5: they're being looked into whether or not if there's cause,

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Speaker 5: he could be fired, but this would be about issues

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Speaker 5: regarding renovations at the FED. Does it matter to the

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Speaker 5: markets what the potential issue is that they think they

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Speaker 5: have a legal standing to fire the FED share?

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Speaker 1: I think it does make a difference. And I do

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Speaker 1: think one thing. Powell was very successful independently before he

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Speaker 1: joining the FED, so I think he probably has a

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Speaker 1: lot more stomach to fight this than someone who didn't have,

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Speaker 1: you know, his own personal wealth isn't coming into this

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Speaker 1: job very strong. I think he is very committed to

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Speaker 1: what he's doing, So you know, I find you will

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Speaker 1: not go down easily.

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Speaker 5: If he's not going to go down easily, then do

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Speaker 5: you think he sticks around to finish out his governorship

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Speaker 5: to twenty twenty eight?

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Speaker 1: I think that's such a long way away in this

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Speaker 1: environment right now. It's like we have trouble living week

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Speaker 1: to week.

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Speaker 5: Right But he won't tell Trump administration officials, he won't

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Speaker 5: tell reporters. He's repeatedly asked about this and doesn't give

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Speaker 5: an answer.

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Speaker 1: I think there's no reason for him to give an answer.

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Speaker 1: Why I make it easy on anyone. It says kind

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Speaker 1: of a little bit of leverage. Maybe it is what

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Speaker 1: makes him happy when he's fighting with this. So I

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Speaker 1: feel it's all a bit of a side show to

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Speaker 1: what we should be looking at, and that's not good.

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Speaker 2: The price of this now, you said it wouldn't be

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Speaker 2: that high, Joe Somervellos said, it's thirty to forty basis

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Speaker 2: points and a fixed thing comes sell off in the

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Speaker 2: following twenty four hours for the FX market, it could

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Speaker 2: mean a three to four percent move in the trade

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Speaker 2: weighted dollar at least support up the experience in Turkey.

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Speaker 2: If you go back to spring of twenty twenty one

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Speaker 2: when Erdehan fired is then central bank governor. I think

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Speaker 2: the following day we have an eight percent move on

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Speaker 2: the Turkish LERA. Are you not expecting anything like that

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Speaker 2: in the following twenty four hours?

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Speaker 1: I think it'll be hard like you want to sell off.

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Speaker 1: I think that I agree on the FX. I think

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Speaker 1: it's going to push people away from the dollar. I

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Speaker 1: think that makes sense to me. But why would Tebow

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Speaker 1: sell off a lot? Right? Clearly you're going to get

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Speaker 1: someone coming in and I think that will anchor the

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Speaker 1: curve a little bit. I think maybe you get this

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Speaker 1: and make.

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Speaker 2: At the front end. Tell me what happens further along

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Speaker 2: the curve. I'm not interested in the front end. I

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Speaker 2: don't know what happens to tens and thirties.

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Speaker 1: Maybe it widens a little bit. I don't see a

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Speaker 1: thirty to forty BIB. I would not be surprised to

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Speaker 1: see markets actually remain more calm than all the hype. Unfortunately,

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Speaker 1: I think that gives the whole ammunition. But I think

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Speaker 1: there's just so much more going on than the FED share. Now,

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Speaker 1: if we believe that someone's going to come in and

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Speaker 1: cut one hundred BIPs immediately and get us down to

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Speaker 1: two percent, that's a different story. But I think if

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Speaker 1: you think someone's going to cut fifty and try and

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Speaker 1: get down one hundred bits by September, do we really

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Speaker 1: sell off that much? Like that's kind of more in

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Speaker 1: the ballpark what I think the FED should be doing anyway.

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Speaker 1: So I'm not going to react that negatively.

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Speaker 3: I was setting though, a precedent that becomes dangerous for

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Speaker 3: the bond market going forward. And I say this not

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Speaker 3: just from the US perspective, but globally at a time

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Speaker 3: when you see all the long bonds around the world

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Speaker 3: and develop market selling off in the prospect of more

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Speaker 3: end and politicians that don't want to have to raise

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Speaker 3: taxes or cut spending in order to reduce the deficit.

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Speaker 3: Isn't this a fundamental problem that increasingly politicians will just

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Speaker 3: job own their central banks as opposed to actually taking

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Speaker 3: the pain.

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Speaker 1: Yeah, And I think it's like a lot of things.

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Speaker 1: We've had executive orders skyrocket over the last twenty years.

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Speaker 1: Everything's kind of being done a little bit backdoor, maybe

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Speaker 1: not quite by the official channels. So I think those

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Speaker 1: are all risks. One thing I keep. You know, we've

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Speaker 1: been arguing to our customers probably for three years now.

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Speaker 1: You're supposed to be if you're investing in one year

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Speaker 1: end paper heavily, heavily, heavily overweighted towards corporate debt commercial

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Speaker 1: paper because corporations actually have good governance, right, corporations that

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Speaker 1: are there to make sure their bills are paid on time.

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Speaker 1: So I would be overweight. I think you're getting that

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Speaker 1: extra spread, and I think there's going to be more

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Speaker 1: and more conversation about what should one of these top

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Speaker 1: companies trade versus the US dollar, or sorry, versus T bills.

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Speaker 1: I don't think we're right through. I don't think we're

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Speaker 1: there at this point, but I could see us approaching

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Speaker 1: that right. It's happened in some third world or em

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Speaker 1: countries in the past for a variety of reasons. We're

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Speaker 1: not there, But I think you're getting free spread almost

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Speaker 1: when you look at some of these double A, triple A,

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Speaker 1: even single A companies orrising commercial paper. I would own

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Speaker 1: that all day long instead of tea bills. I think

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Speaker 1: it's less hassle.

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Speaker 5: Peter, if you don't think there's going to be a

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Speaker 5: massive implication to the market, if they fire fed Chair J.

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Speaker 5: Powell's what's holding them back then from doing it.

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Speaker 1: I assume there's legalities and how to do it, whether

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Speaker 1: they're allowed to do it, and I'm sure that's being

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Speaker 1: worked on it.

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Speaker 2: Pete, it's going to say, as always, thanks for dropping

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Speaker 2: by a pity share there of Academy. The former senior

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Speaker 2: White House Trade advisor Kelly and Shaw, writing the President

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Speaker 2: believes he still has a long leash when it comes

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Speaker 2: to tariffs for countries that don't have deals by August first,

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Speaker 2: I do expect tariffs to go up. Kelly and joins

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Speaker 2: us now for more Kelly, and welcome back to the program.

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Speaker 2: I think you told us all to get a beer

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Speaker 2: and take a break last time, and then everyone gets

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Speaker 2: fired up after the announcements over the weekend. How seriously

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Speaker 2: are you taking some of the threats this past weekend.

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Speaker 6: Yeah, good morning, And I think I have the same

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Speaker 6: advice today that I had last week, and that this

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Speaker 6: is not for us, This is not for business.

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Speaker 4: These tactics are really for other governments.

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Speaker 6: And I think that director has it said it well

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Speaker 6: on Sunday when he said the President was trying to

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Speaker 6: squeeze every last drop out of some of these deals.

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Speaker 4: So that to me is really what these letters are about.

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Speaker 6: I'm still relatively optimistic will land somewhere with the European Union.

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Speaker 6: The Mexico letter was a bit of a surprise to me,

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Speaker 6: given that they weren't negotiating one of these full reciprocal deals.

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Speaker 4: It was really about steel and aluminum.

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Speaker 6: But that said, we've got two and a half weeks

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Speaker 6: to go and I expect to see a bunch of deals,

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Speaker 6: and for those countries that don't have them, I expect

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Speaker 6: to see those terif.

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Speaker 4: Rates go up.

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Speaker 5: When you say you do think this is the President

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Speaker 5: trying to squeeze every lens ounce out of these trade negotiations,

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Speaker 5: say what comes to the European Union?

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Speaker 1: What is he after?

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Speaker 6: Well, with the European Union, there are a number of

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Speaker 6: sticking points, and I think everyone's expectation is that if

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Speaker 6: the US and EU were able were going to be

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Speaker 6: in a position to agree, that it would be too

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Speaker 6: basically a subset of issues, and not every irritant. But

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Speaker 6: I had been hearing some consternation about agriculture in particular,

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Speaker 6: and some frustration on the US side that the EU

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Speaker 6: wasn't willing to cut some of the more sensitive teriff rates,

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Speaker 6: and then a lot of disagreement over those Section two

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Speaker 6: thirty two carve outs and what those might look like

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Speaker 6: on auto steel, pharma, semiconductors.

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Speaker 4: And then of course, the President has long talked about

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Speaker 4: Europe's treatment of US tech.

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Speaker 6: Firms and from state aid to the DMA and DSA,

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Speaker 6: and so those are going to continue to be difficult

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Speaker 6: points between the US and the European Union.

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Speaker 5: The European Union, we have this story, is preparing to

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Speaker 5: step up engagement with other countries, potentially pros the United

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Speaker 5: States with other allies. Do you think that tactic could

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Speaker 5: work with this administration?

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Speaker 6: I mean, I think it is a unique administration who

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Speaker 6: negotiates in ways that are not typical in terms of

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Speaker 6: diplomatic relations. So why not come to the United States

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Speaker 6: as a block and say here is a potential solution

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Speaker 6: and a potential way forward. Because is what is clear

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Speaker 6: from Presidents Trump's tactic in terms of taking the sledgehammer

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Speaker 6: to the global trading system and negotiating bilaterally with every

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Speaker 6: government on Earth, is that the current global trading system,

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Speaker 6: the World Trade Organization that is one hundred and sixty.

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Speaker 4: Six member countries just doesn't work.

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Speaker 6: And so if there are a subset of countries who

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Speaker 6: want to join together and approach the United States, I

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Speaker 6: think the administration could be open to that.

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Speaker 3: Kelly, and you said a keyword there, tactic. And this

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Speaker 3: is what the market is viewing all of this as,

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Speaker 3: at least in terms of the muted reaction that we're

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Speaker 3: seeing this morning, a tactic to negotiate a better deal.

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Speaker 3: Is this negotiating with the trade partners or is this

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Speaker 3: negotiating with the market.

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Speaker 6: I think it's predominantly negotiating with the trading partners.

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Speaker 4: But I do think that the market is playing a role.

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Speaker 6: And right now, the fact that the market hasn't reacted

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Speaker 6: as significantly as it did in the aftermath of April second,

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Speaker 6: coupled with low inflation, positive job reports, and overall good

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Speaker 6: economic indicators, I think doesen bolden the president and gives

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Speaker 6: him a longer leash on his tariff strategy.

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Speaker 4: Now, if the markets were to.

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Speaker 6: Totally go the other way, I do think that that

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Speaker 6: might have a bit of a mitigating impact on some

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Speaker 6: of these tariffs. But I think the market is reading

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Speaker 6: the situation exactly right, which is the President is sending

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Speaker 6: these letters out the announcing these high tariff rates in

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Speaker 6: the hopes of actually getting deals so that he won't

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Speaker 6: have to impose those tariffs.

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Speaker 4: So Kelly, And that's where.

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Speaker 3: I think there is some confusion. What is the tariff strategy?

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Speaker 3: Is it to get deals that are specific and have

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Speaker 3: certain parameters, or is it just to see how far

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Speaker 3: someone can push before you get revenues on the tariff's

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Speaker 3: side and markets don't freak out.

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Speaker 1: Yeah.

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Speaker 4: I think it can be a little bit of both.

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Speaker 6: I mean, certainly the pressing task right now is to

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Speaker 6: create this action forcing event that by August first, these

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Speaker 6: tariff rates will be exceptionally high unless countries are able

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Speaker 6: to get a deal. I think that's really first and

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Speaker 6: foremost on the president's mind. But the second line of

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Speaker 6: messaging that we're hearing is about this revenue and the

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Speaker 6: fact that the tariffs have been good for the US economy,

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Speaker 6: that prices haven't gone up, and we're going to use

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Speaker 6: it to pay for some of.

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Speaker 4: These tax cuts.

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Speaker 6: I think that's about softening the message on tariff so

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Speaker 6: that for countries that don't get deals, it's not viewed.

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Speaker 4: As catastrophic the sky is falling.

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Speaker 6: That there might be some positive benefit there, But I

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Speaker 6: do think at the end of the day, it would

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Speaker 6: be best case scenario for everyone involved to find some

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Speaker 6: sort of landing zone in terms of these bilateral negotiations

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Speaker 6: with countries and to see a bunch of deals get

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Speaker 6: inked and see those tariff and non tariff barriers come down.

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Speaker 2: Kelly on I appreciate the update, the catch up. Thank

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Speaker 2: you the former senior White House trying advise that Kelly

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Speaker 2: on Shore that on the leak system. Vito s Perduto

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Speaker 2: of BC Capital Markets saying EMINI activity is delayed, not derailed,

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Speaker 2: writing the backlog of Vemini opportunities continues to build. Itals

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Speaker 2: what happen that're just not happening as quickly as many

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Speaker 2: had expected. Vita, it's going to see it.

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Speaker 1: Good morning. Thank you for having me.

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Speaker 2: The difference between those two words delayed and derailed what

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Speaker 2: inspires confidence this is just a delay and not a derailment.

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Speaker 7: Well, I think the fundamental conditions have continued to be

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Speaker 7: very solid. I think the corporates are sitting flush with

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Speaker 7: cash more so than they have historically. I think for clients,

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Speaker 7: for instance, we're open to lend the clients to support

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Speaker 7: their transactions much like we were earlier in the year.

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Speaker 7: I think people have gotten comfortable with the current environment.

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Speaker 7: They are operating in an environment of constant uncertainty, and

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Speaker 7: so when you talk about whether it's tariffs or other

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Speaker 7: policy coming out of EC, you have to plan for

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Speaker 7: multiple scenarios. And so what we're finding with our clients

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Speaker 7: is that they're preparing for transactions. There's a fair amount

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Speaker 7: that they'd like to do. They're continuing their plans. It's

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Speaker 7: just a question of when do you make the decision

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Speaker 7: to do it, and so it's delayed to the right,

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Speaker 7: it's not being taken off the t and so I

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Speaker 7: think there's a fair amount of activity when the window

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Speaker 7: does open.

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Speaker 2: A lot of people said it was a wait and

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Speaker 2: see economy, and then doutsa airlines happened and Ed Bastion

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Speaker 2: came out and said that things are stable. Businesses have Clarency,

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Speaker 2: they're investing again. Have we broken out of that weight

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Speaker 2: and see economy.

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Speaker 1: I think some have.

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Speaker 7: I think we're seeing it certainly. I take a look

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Speaker 7: very closely, for example, at the CEO Confidence Index out

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Speaker 7: of the Conference Board. So the median there is fifty

439
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Speaker 7: on a scale of zero to one hundred, in terms

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Speaker 7: of the inflection point. In the first quarter, which was

441
00:18:31,200 --> 00:18:35,159
Speaker 7: taken in February, CEOs were at a sixty, meaning that

442
00:18:35,200 --> 00:18:37,720
Speaker 7: they were confident in the forward outlook. They felt positive

443
00:18:37,760 --> 00:18:40,600
Speaker 7: about it. The survey that was taken in mid May

444
00:18:41,119 --> 00:18:43,720
Speaker 7: dropped to thirty four. It's the biggest quarterly drop that

445
00:18:43,760 --> 00:18:47,200
Speaker 7: you've seen. So what's happened between February and May Liberation Day?

446
00:18:47,760 --> 00:18:53,280
Speaker 7: So that tariff and policy uncertainty, concerns about geopolitical instability,

447
00:18:53,480 --> 00:18:56,680
Speaker 7: and then also an uncertain regulatory environment in some cases

448
00:18:57,520 --> 00:19:00,560
Speaker 7: has driven them to not make decisions. And so when

449
00:19:00,560 --> 00:19:03,280
Speaker 7: they looked at that, a very high number of them

450
00:19:03,680 --> 00:19:06,520
Speaker 7: felt that we were in a worse position versus six

451
00:19:06,600 --> 00:19:10,000
Speaker 7: months ago, back in May. But what we are seeing

452
00:19:10,040 --> 00:19:12,880
Speaker 7: is that, Look, I think you look to Trump one

453
00:19:12,880 --> 00:19:15,720
Speaker 7: point zero versus this. It took a full year of

454
00:19:15,760 --> 00:19:19,359
Speaker 7: the first administration for people to get their arms around

455
00:19:19,359 --> 00:19:22,800
Speaker 7: what it meant. I think it's happening quicker now, and

456
00:19:22,840 --> 00:19:26,400
Speaker 7: I think the better companies are prepared and they're going

457
00:19:26,440 --> 00:19:27,480
Speaker 7: to enact policy.

458
00:19:27,680 --> 00:19:30,560
Speaker 3: The pipeline is rich, the pipeline is there. Look, I

459
00:19:30,640 --> 00:19:32,480
Speaker 3: think one reason why a lot of people are looking

460
00:19:32,480 --> 00:19:33,800
Speaker 3: at this is because we are going to get the

461
00:19:33,880 --> 00:19:37,000
Speaker 3: earnings from JP Morgan and City tomorrow and Wells Fargo

462
00:19:37,200 --> 00:19:39,600
Speaker 3: and then from Morgan Stanley and Goldbin Sachs on Wednesday.

463
00:19:39,640 --> 00:19:42,320
Speaker 3: And people are wondering how much of a boom this

464
00:19:42,440 --> 00:19:44,320
Speaker 3: is going to be to them, considering that heading into

465
00:19:44,320 --> 00:19:45,600
Speaker 3: this year it was supposed to be the year of

466
00:19:45,680 --> 00:19:49,679
Speaker 3: M and A didn't happen. How much has that been derailed?

467
00:19:50,640 --> 00:19:52,200
Speaker 7: Well, I think you're seeing if you look at M

468
00:19:52,240 --> 00:19:55,120
Speaker 7: and A volumes this year announced volumes, it's actually up

469
00:19:55,240 --> 00:19:57,399
Speaker 7: versus last year, but a lot of those transactions in

470
00:19:57,440 --> 00:19:59,640
Speaker 7: the first quarter were things that were already on.

471
00:19:59,600 --> 00:20:00,920
Speaker 1: The books about to happen.

472
00:20:00,920 --> 00:20:03,520
Speaker 7: And so you have USM and announced volumes are up

473
00:20:03,560 --> 00:20:07,320
Speaker 7: sixteen percent this year. Globally it's up twenty six percent.

474
00:20:07,800 --> 00:20:11,479
Speaker 7: But it's really larger deals billion dollar plus are driving that,

475
00:20:11,600 --> 00:20:14,440
Speaker 7: and the smaller deals sub a billion are actually slightly

476
00:20:14,520 --> 00:20:17,320
Speaker 7: down in value. So what's happened is a lot of

477
00:20:17,359 --> 00:20:19,840
Speaker 7: it's just been, like we talked about, pushed to the right.

478
00:20:20,640 --> 00:20:23,200
Speaker 7: People should not be surprised by this, Like I said

479
00:20:23,359 --> 00:20:28,600
Speaker 7: just now, this is what happened back in twenty seventeen

480
00:20:28,880 --> 00:20:33,199
Speaker 7: during the first administration. But what we are seeing is

481
00:20:33,240 --> 00:20:36,400
Speaker 7: that where we sit today versus the beginning of the year,

482
00:20:36,880 --> 00:20:38,960
Speaker 7: is that there has been a tightening of the bid

483
00:20:39,000 --> 00:20:43,320
Speaker 7: ask spread. I think parties that are prepared and feel

484
00:20:43,320 --> 00:20:46,640
Speaker 7: confident are out there doing transactions. I think sellers that

485
00:20:46,800 --> 00:20:49,520
Speaker 7: need capital and need to For instance, if you're a

486
00:20:49,520 --> 00:20:51,840
Speaker 7: private equity firm and you need to return capital to

487
00:20:52,280 --> 00:20:55,800
Speaker 7: your LPs, you're looking at various alternatives. It might not

488
00:20:55,840 --> 00:20:57,960
Speaker 7: be a traditional sale, but maybe you look at a

489
00:20:58,000 --> 00:21:01,920
Speaker 7: continuation vehicle, maybe you're looking at some structured equity.

490
00:21:02,040 --> 00:21:02,919
Speaker 1: Maybe you're looking at a.

491
00:21:02,960 --> 00:21:06,760
Speaker 7: Minority sale or taking a loan on your net asset value,

492
00:21:07,280 --> 00:21:10,399
Speaker 7: and you're finding ways to return capital because that's the

493
00:21:10,440 --> 00:21:11,760
Speaker 7: lifeblood of what they need to do.

494
00:21:11,920 --> 00:21:15,080
Speaker 3: I wonder how much the scenario for how people are

495
00:21:15,160 --> 00:21:18,640
Speaker 3: financing these purchases has changed with yields where they are.

496
00:21:18,760 --> 00:21:22,040
Speaker 3: Have you seen people less willing or companies not people,

497
00:21:22,240 --> 00:21:25,600
Speaker 3: companies less willing to incur debt to make those purchases

498
00:21:25,680 --> 00:21:27,960
Speaker 3: and want you at all stock or crash or whatever

499
00:21:28,080 --> 00:21:29,119
Speaker 3: just lucas of the fees.

500
00:21:29,680 --> 00:21:32,439
Speaker 7: I think if you go back two years ago, a

501
00:21:32,520 --> 00:21:36,160
Speaker 7: year ago, certainly I think people had not accepted this

502
00:21:36,200 --> 00:21:39,200
Speaker 7: new level yet. I think they've accepted it now, so

503
00:21:39,200 --> 00:21:43,159
Speaker 7: they understand rates higher for longer. I think if you

504
00:21:43,200 --> 00:21:46,080
Speaker 7: look at where where the calls are. For instance, our

505
00:21:46,160 --> 00:21:49,960
Speaker 7: rate desk just pushed out their call last week that

506
00:21:50,080 --> 00:21:52,560
Speaker 7: instead of a first cut happening in September, it's now

507
00:21:52,600 --> 00:21:55,000
Speaker 7: going to be December, just because it's too short of

508
00:21:55,000 --> 00:21:58,960
Speaker 7: a window to August first or the September meeting to

509
00:21:59,040 --> 00:22:02,840
Speaker 7: really see any the statistics that will allow the FED

510
00:22:02,880 --> 00:22:04,879
Speaker 7: to cut. And so as a result, I think companies

511
00:22:04,880 --> 00:22:07,040
Speaker 7: are saying, I'm going to be in this environment longer.

512
00:22:07,400 --> 00:22:09,600
Speaker 7: I need to make the right decisions for my business.

513
00:22:10,800 --> 00:22:13,760
Speaker 7: It's too soon to just focus on twenty six and beyond.

514
00:22:14,080 --> 00:22:15,480
Speaker 7: But I think a lot of folks are looking at

515
00:22:15,480 --> 00:22:18,080
Speaker 7: they're more longer term plans, and as a result, you're

516
00:22:18,080 --> 00:22:21,439
Speaker 7: seeing them make decisions that are strategic. I always like

517
00:22:21,480 --> 00:22:25,720
Speaker 7: to say good strategic transactions will happen and we can

518
00:22:25,760 --> 00:22:27,679
Speaker 7: find a way to support them and finance them. And

519
00:22:27,720 --> 00:22:29,159
Speaker 7: we're seeing that with our best clients.

520
00:22:29,200 --> 00:22:31,120
Speaker 5: But what's the risks in delaying.

521
00:22:32,680 --> 00:22:35,359
Speaker 7: The risk in delaying is that someone else takes advantage

522
00:22:35,600 --> 00:22:39,280
Speaker 7: and you're sitting on the sideline and left behind. And

523
00:22:39,359 --> 00:22:41,520
Speaker 7: so we're seeing a lot of activity in some sectors

524
00:22:41,840 --> 00:22:45,280
Speaker 7: where folks are feeling that. For example, if you look

525
00:22:45,280 --> 00:22:48,280
Speaker 7: at the technology sector, I think folks are trying to

526
00:22:48,320 --> 00:22:51,520
Speaker 7: build their pipelines from an AI perspective, and they're looking

527
00:22:51,560 --> 00:22:53,600
Speaker 7: and saying, I need to be in here quickly.

528
00:22:53,680 --> 00:22:55,560
Speaker 1: I can't wait to develop this on my own.

529
00:22:55,680 --> 00:22:58,159
Speaker 7: I'm going to acquire it. If you think about some

530
00:22:58,240 --> 00:23:02,919
Speaker 7: other sectors like industrials, they're looking to diversify their supply

531
00:23:03,040 --> 00:23:06,199
Speaker 7: chains and think about making sure they've got ample supply

532
00:23:06,280 --> 00:23:10,959
Speaker 7: and various geographies and so that they're teriff resistant, and

533
00:23:11,000 --> 00:23:12,800
Speaker 7: they know they have to operate in this environment. We

534
00:23:12,880 --> 00:23:15,960
Speaker 7: know it's going to not necessarily be what's out there

535
00:23:15,960 --> 00:23:18,399
Speaker 7: in terms of a headline today, but we don't know

536
00:23:18,440 --> 00:23:20,159
Speaker 7: what that's going to be, and I think they're planning

537
00:23:20,160 --> 00:23:21,040
Speaker 7: for various scenarios.

538
00:23:21,040 --> 00:23:22,919
Speaker 2: It just finally they support up the price of money

539
00:23:23,160 --> 00:23:25,640
Speaker 2: to right. Cuts make a difference, so they move the dial.

540
00:23:26,320 --> 00:23:30,240
Speaker 7: I think, as I started before, I said, we're looking

541
00:23:30,280 --> 00:23:33,000
Speaker 7: for a signal for the for sort of people to

542
00:23:33,320 --> 00:23:37,760
Speaker 7: make decisions. I think certainly rate cuts would be a

543
00:23:37,800 --> 00:23:41,640
Speaker 7: good signal to the market and to buyers and sellers

544
00:23:41,680 --> 00:23:44,720
Speaker 7: that this is an environment where we're ready to transact

545
00:23:45,000 --> 00:23:47,679
Speaker 7: and there's a level of confidence there. M and A

546
00:23:47,800 --> 00:23:52,320
Speaker 7: is about aligning many different factors, and so you need

547
00:23:52,359 --> 00:23:54,720
Speaker 7: your management teams, you need your boards, you need them

548
00:23:54,760 --> 00:23:57,320
Speaker 7: all to have confidence in the forward outlook. If they

549
00:23:57,359 --> 00:23:59,720
Speaker 7: feel that the Fed's giving a strong signal like that,

550
00:24:00,119 --> 00:24:02,320
Speaker 7: I think that's a positive. But at the same time,

551
00:24:02,359 --> 00:24:05,560
Speaker 7: I think the better companies are prepared to act in

552
00:24:05,560 --> 00:24:09,920
Speaker 7: this environment. And so again I jokingly say, we always

553
00:24:09,920 --> 00:24:11,240
Speaker 7: have a pretty full pipeline.

554
00:24:11,400 --> 00:24:12,720
Speaker 1: It's pretty full right now.

555
00:24:13,080 --> 00:24:14,840
Speaker 7: But again i'd love to see a lot of that

556
00:24:15,560 --> 00:24:17,320
Speaker 7: transition to announce transactions.

557
00:24:17,400 --> 00:24:19,119
Speaker 2: You're certainly not alone. It's going to see you, sir.

558
00:24:19,160 --> 00:24:21,600
Speaker 2: Thanks for dropping by, Thank you for having me. Vita Spaduta.

559
00:24:21,640 --> 00:24:34,720
Speaker 2: There of abc DA of rough capital rights in this

560
00:24:34,880 --> 00:24:38,080
Speaker 2: given the FEDS wait and see approach, prospective CPI readings

561
00:24:38,119 --> 00:24:40,760
Speaker 2: may take on greater importance for risk assets in the

562
00:24:40,760 --> 00:24:42,960
Speaker 2: months ahead. Mike joins us now for more, Mike, welcome

563
00:24:43,000 --> 00:24:45,320
Speaker 2: to the program, sir, what are you expected tomorrow morning?

564
00:24:45,960 --> 00:24:49,639
Speaker 8: Thank you for having me back on SO consensus is

565
00:24:49,720 --> 00:24:53,480
Speaker 8: expecting a three tenths rise, both headlined in Core. So

566
00:24:53,560 --> 00:24:55,760
Speaker 8: I don't really think that is going to change the

567
00:24:55,880 --> 00:24:59,320
Speaker 8: mood on the FED. It's a very divided committee, as

568
00:24:59,480 --> 00:25:03,800
Speaker 8: you guys just discussing. I'm not super worried about a

569
00:25:03,800 --> 00:25:06,520
Speaker 8: big inflation spike here, and the reason I say that

570
00:25:06,760 --> 00:25:10,880
Speaker 8: is bond market inflation expectations are very low and steady.

571
00:25:11,280 --> 00:25:14,520
Speaker 8: Some of the higher frequency data actually looks pretty good.

572
00:25:15,160 --> 00:25:18,879
Speaker 8: There's a gauge called trueflation, which is based on eighty

573
00:25:18,920 --> 00:25:23,800
Speaker 8: million prices in blockchain technology, super high frequency. So we

574
00:25:23,920 --> 00:25:28,040
Speaker 8: have year over year readings extending into almost mid July

575
00:25:28,240 --> 00:25:32,040
Speaker 8: here one point seven percent. So I don't think we

576
00:25:32,119 --> 00:25:34,840
Speaker 8: need to worry about a repeat of that three year

577
00:25:34,840 --> 00:25:39,880
Speaker 8: inflation overshoot, which was really an aggregate demand monetary policy story.

578
00:25:40,160 --> 00:25:44,239
Speaker 8: The tariffs could definitely create some inflationary headwinds, but I

579
00:25:44,240 --> 00:25:46,760
Speaker 8: think they are temporary in the FED probably is best

580
00:25:46,760 --> 00:25:47,880
Speaker 8: to just look through them.

581
00:25:48,200 --> 00:25:50,520
Speaker 3: If that's the case, Mike, do you see this as

582
00:25:50,560 --> 00:25:52,960
Speaker 3: a time for the FED to be cutting especially if

583
00:25:53,000 --> 00:25:56,360
Speaker 3: this CPI print that we get tomorrow shows that ongoing

584
00:25:56,359 --> 00:25:58,560
Speaker 3: disinflation at least not an inflationary trend.

585
00:26:00,200 --> 00:26:02,280
Speaker 8: Yeah, I think so. I think they're getting much closer

586
00:26:02,280 --> 00:26:05,280
Speaker 8: to that point, probably September. That's what markets are priced

587
00:26:05,320 --> 00:26:08,840
Speaker 8: for FED funds futures are priced for just under one

588
00:26:08,880 --> 00:26:11,920
Speaker 8: hundred basis points of rate cuts over the next year.

589
00:26:13,119 --> 00:26:15,160
Speaker 8: That sounds like a lot, but it's really not over

590
00:26:15,200 --> 00:26:18,439
Speaker 8: a twelve month period. If the economy is softening a

591
00:26:18,440 --> 00:26:20,520
Speaker 8: bit at the margin, and I think, you know, some

592
00:26:20,640 --> 00:26:23,160
Speaker 8: of the data suggests that's the case, not falling off

593
00:26:23,200 --> 00:26:25,880
Speaker 8: a cliff, for sure, but we are seeing a little

594
00:26:25,880 --> 00:26:29,080
Speaker 8: bit of softness at the margin with the most recent

595
00:26:29,160 --> 00:26:35,680
Speaker 8: job numbers. And also it looks like GDP underlying growth.

596
00:26:36,119 --> 00:26:39,240
Speaker 8: Real final sales to the private sector probably ran around

597
00:26:39,320 --> 00:26:43,439
Speaker 8: one percent or so in Q two, So that's, you know,

598
00:26:43,480 --> 00:26:46,160
Speaker 8: that's much that's much softer than what we've seen over

599
00:26:46,160 --> 00:26:49,280
Speaker 8: the course of the last you know, two plus years.

600
00:26:49,320 --> 00:26:51,760
Speaker 8: So I don't think it's inappropriate for the FED to

601
00:26:51,840 --> 00:26:55,560
Speaker 8: be starting to consider lowering policy rates here. But I

602
00:26:55,600 --> 00:26:58,919
Speaker 8: will say this, the hectoring from the White House is

603
00:26:59,119 --> 00:27:03,480
Speaker 8: wholly on helpful. I mean, even if the administration were

604
00:27:03,480 --> 00:27:06,320
Speaker 8: to convince Paul to step away from the FED and

605
00:27:06,359 --> 00:27:09,399
Speaker 8: you know, this stuff about the construction project is just

606
00:27:09,440 --> 00:27:12,960
Speaker 8: a fig leaf. It's pretty obviously obvious what's going on here.

607
00:27:14,119 --> 00:27:16,400
Speaker 8: It's completely out of line in my view. But even

608
00:27:16,400 --> 00:27:19,120
Speaker 8: if you were able to convince Paul to step down

609
00:27:19,200 --> 00:27:23,000
Speaker 8: and someone else takes over. It's a committee, they operate

610
00:27:23,080 --> 00:27:27,800
Speaker 8: by consensus, so it's really very unlikely to dramatically change

611
00:27:27,840 --> 00:27:30,000
Speaker 8: the rate path in any event.

612
00:27:30,119 --> 00:27:32,640
Speaker 3: So it's just like Michael, because this is actually one

613
00:27:32,680 --> 00:27:35,359
Speaker 3: key question that the market has right that the people

614
00:27:35,600 --> 00:27:39,119
Speaker 3: are questioning whether the market is pricing in some sort

615
00:27:39,200 --> 00:27:42,439
Speaker 3: of firing of fed Shair J. Powell and wouldn't have

616
00:27:42,520 --> 00:27:45,800
Speaker 3: that big of a reaction at all. Peter Shecheer was saying, no,

617
00:27:45,920 --> 00:27:47,800
Speaker 3: that it is a committee and that people would look

618
00:27:47,880 --> 00:27:51,439
Speaker 3: through that. How much does it complicate a message that

619
00:27:51,560 --> 00:27:55,240
Speaker 3: actually would go the president's way if you've followed the

620
00:27:55,240 --> 00:27:57,639
Speaker 3: economic data at least in your opinion, how much does

621
00:27:57,680 --> 00:28:00,560
Speaker 3: it complicate that kind of messaging from a that wants

622
00:28:00,600 --> 00:28:01,719
Speaker 3: to appear independent.

623
00:28:03,359 --> 00:28:04,240
Speaker 4: That's a great point.

624
00:28:04,320 --> 00:28:07,680
Speaker 8: I think, if anything, this hectoring in the political pressure

625
00:28:08,600 --> 00:28:11,840
Speaker 8: probably makes it more difficult for the committee to move

626
00:28:11,920 --> 00:28:15,760
Speaker 8: forward with rate cuts, and because they don't want to

627
00:28:15,800 --> 00:28:19,320
Speaker 8: be viewed as, you know, a bending to political pressure.

628
00:28:19,480 --> 00:28:23,439
Speaker 8: So I think, if anything, these kinds of shenanigans are

629
00:28:23,560 --> 00:28:28,240
Speaker 8: likely a backfire and it sets a terrible precedent going forward.

630
00:28:28,280 --> 00:28:31,399
Speaker 8: I mean, you know, the FED should be an independent institution.

631
00:28:32,040 --> 00:28:34,880
Speaker 8: We can look back at what happened with President Nixon

632
00:28:35,840 --> 00:28:39,960
Speaker 8: when he pressured FED Chair Burns to inappropriately run easy

633
00:28:40,000 --> 00:28:43,960
Speaker 8: monetary policy, setting off a decade of inflation which eventually

634
00:28:43,960 --> 00:28:47,360
Speaker 8: culminated in double digit interest rates. We saw a situation

635
00:28:47,480 --> 00:28:51,720
Speaker 8: in Turkey where President Erdawan tampered with the central bank,

636
00:28:51,840 --> 00:28:55,560
Speaker 8: wanted low rates, easy money policy, a currency collapse and

637
00:28:55,640 --> 00:28:59,080
Speaker 8: hyperinflation followed. So let's get back to basics. If you

638
00:28:59,120 --> 00:29:01,400
Speaker 8: want low mark at interest rates, what do you need?

639
00:29:01,480 --> 00:29:03,560
Speaker 8: You need price stability, and I think the FED is

640
00:29:03,760 --> 00:29:06,520
Speaker 8: well on their way to achieving that in terms of

641
00:29:06,560 --> 00:29:10,040
Speaker 8: on target inflation. And you need budget integrity, and the

642
00:29:10,080 --> 00:29:12,680
Speaker 8: FED has nothing to do with that in the administration,

643
00:29:13,320 --> 00:29:17,120
Speaker 8: and my judgment and Congress are certainly not on that

644
00:29:17,240 --> 00:29:20,520
Speaker 8: path with the so called big beautiful Bill that was

645
00:29:20,880 --> 00:29:23,880
Speaker 8: miles and miles away from an optimal outcome.

646
00:29:24,280 --> 00:29:26,600
Speaker 5: Jonathan's been talking about this Deutsche Bank note about the

647
00:29:26,720 --> 00:29:30,880
Speaker 5: risks of if Powell was to be ousted are underpriced.

648
00:29:30,920 --> 00:29:33,800
Speaker 5: What kind of market reaction could we see if we've

649
00:29:33,840 --> 00:29:35,000
Speaker 5: come to that point.

650
00:29:36,200 --> 00:29:39,200
Speaker 8: Well, it's very uncertain. I think it's just a matter

651
00:29:39,280 --> 00:29:44,360
Speaker 8: of setting a very bad precedent of political tampering or

652
00:29:44,400 --> 00:29:48,760
Speaker 8: the attempt to tamper with an independent federal reserve. And

653
00:29:48,800 --> 00:29:52,960
Speaker 8: you really look back at history and policized central banks

654
00:29:53,400 --> 00:29:57,280
Speaker 8: don't achieve optimal outcomes. They might do something that helps

655
00:29:57,280 --> 00:30:00,280
Speaker 8: the sitting administration in the short run. In the long

656
00:30:00,400 --> 00:30:03,480
Speaker 8: term price is paid by the public in terms of

657
00:30:03,560 --> 00:30:07,160
Speaker 8: higher inflation and lower real income. So it's really not

658
00:30:07,280 --> 00:30:09,560
Speaker 8: the path you want to be going down. Very hard

659
00:30:09,560 --> 00:30:11,480
Speaker 8: to say in terms of the very short term. I mean,

660
00:30:11,480 --> 00:30:14,480
Speaker 8: what happens even if were to step down, I don't

661
00:30:14,480 --> 00:30:17,760
Speaker 8: think it really changes things dramatically in terms of you

662
00:30:17,760 --> 00:30:19,960
Speaker 8: know where the FED is headed here, given that it's

663
00:30:20,000 --> 00:30:22,959
Speaker 8: a committee, and you know, the administration is not going

664
00:30:23,000 --> 00:30:26,760
Speaker 8: to be able to completely politicize the majority on the

665
00:30:26,800 --> 00:30:32,240
Speaker 8: committee anytime soon. That said, it's really a move in

666
00:30:32,280 --> 00:30:35,280
Speaker 8: the wrong direction. It's totally inappropriate, and they should just.

667
00:30:35,240 --> 00:30:37,400
Speaker 2: Stop it, just a bit of bow on it, given

668
00:30:37,440 --> 00:30:39,760
Speaker 2: all the risks we've talked about. Why are market based

669
00:30:39,760 --> 00:30:41,640
Speaker 2: inflation and expectations so well anchored?

670
00:30:42,880 --> 00:30:45,640
Speaker 8: Well, I think they're well anchored because the FED has

671
00:30:45,680 --> 00:30:48,240
Speaker 8: achieved quite a bit of credibility here, right. I mean,

672
00:30:48,280 --> 00:30:52,520
Speaker 8: they obviously had a big goof in twenty one twenty

673
00:30:52,520 --> 00:30:55,160
Speaker 8: two where we had inflation shoot up to forty year highs.

674
00:30:55,680 --> 00:30:59,240
Speaker 8: But you know, they ended up correcting that with five

675
00:30:59,320 --> 00:31:01,960
Speaker 8: hundred and fifty basis points of rate hikes and we're

676
00:31:02,000 --> 00:31:05,320
Speaker 8: somehow able to achieve a soft landing avoid a recession.

677
00:31:05,760 --> 00:31:09,080
Speaker 8: And now inflation has come down to much lower levels historically,

678
00:31:09,600 --> 00:31:12,560
Speaker 8: So the bond market is giving the Fed the benefit

679
00:31:12,600 --> 00:31:16,280
Speaker 8: of the doubt. The institution has really regained and re

680
00:31:16,400 --> 00:31:20,960
Speaker 8: anchored its credibility, and that's another reason not to tamper

681
00:31:21,840 --> 00:31:24,200
Speaker 8: with the Federal Reserve in a political way, because if

682
00:31:24,200 --> 00:31:28,480
Speaker 8: that credibility is lost, it could be very difficult to reachieve.

683
00:31:28,560 --> 00:31:32,960
Speaker 8: They certainly got very fortunate with this episode a few

684
00:31:33,000 --> 00:31:36,360
Speaker 8: years ago. You know why keep playing Russian roulette with

685
00:31:36,440 --> 00:31:39,040
Speaker 8: credibility doesn't make any sense whatsoever.

686
00:31:39,400 --> 00:31:41,280
Speaker 2: Mikeel, appreciate your time. It's been too long. Let's do

687
00:31:41,360 --> 00:31:45,160
Speaker 2: it against so micro daanave of rough capital. This is

688
00:31:45,200 --> 00:31:50,520
Speaker 2: the Bloomberg Seventants podcast, bringing you the best in markets, economics, angiopolitics.

689
00:31:50,840 --> 00:31:53,320
Speaker 2: You can watch the show live on Bloomberg TV weekday

690
00:31:53,360 --> 00:31:56,560
Speaker 2: mornings from six am to nine am Eastern. Subscribe to

691
00:31:56,600 --> 00:31:59,760
Speaker 2: the podcast on Apple Spotify or anywhere else you listen,

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00:32:00,120 --> 00:32:02,200
Speaker 2: and as always on the bloom Blog, Terminal and the

693
00:32:02,200 --> 00:32:03,120
Speaker 2: Bloomberg Business

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Speaker 1: Out Mm hmm