WEBVTT - Diane Swonk Sees U.S. Election Driving Bond Prices Lower(Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>dot com, the radio, plus mobile, and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Charlie Pallet's stocks are falling for the first time

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<v Speaker 1>in four days as disappointing numbers from Macy's to Walt

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<v Speaker 1>Disney heightened concern that American consumers remain hesitant to booth spending.

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<v Speaker 1>Macy's down fourteen percent now, Disney is down four point

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<v Speaker 1>four percent. Down Industrials dropping one hundred ninety six points

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<v Speaker 1>and decline there of one point one percent, SMP five

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<v Speaker 1>hundred index down sixteen the drop of eight tenths of

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<v Speaker 1>one percent, and as stack is down seven tenths of

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<v Speaker 1>one percent. Gold up thirteen thirty ounce to twelve seventy

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<v Speaker 1>eight again there of one point one percent. Crude oil

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<v Speaker 1>up a dollar forty seven and barrel forty six twelve.

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<v Speaker 1>Right now again they're a three point three percent. I'm

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<v Speaker 1>Charlie Paloton. That's a Bloomberg Business Flash. Bloom or jaking stock.

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<v Speaker 1>The FED in focus infest rates start too low for

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<v Speaker 1>where the economy is going. The question is how much

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<v Speaker 1>higher should they be? The FED has increased the fast yes,

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<v Speaker 1>and in doing so, it has increased its liability. Keeping

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<v Speaker 1>interest rates at zero for a long time is not

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<v Speaker 1>going to cause inflation to go up. It's very controversial.

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<v Speaker 1>I think what we need to do is find a

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<v Speaker 1>way for the FED to integrate its policy and think

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<v Speaker 1>more about its impact on the world. The Fed, in

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<v Speaker 1>focus on Bloomberg Radio, Better Reserve, are they going to

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<v Speaker 1>raise interest rates in June? Or will market bets be

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<v Speaker 1>right again? It will the Fed perhaps not raise rates

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<v Speaker 1>until the end of the year. If then, this is

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<v Speaker 1>the question on the market's mind and so many investors

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<v Speaker 1>minds as well. To grapple with it, to look at

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<v Speaker 1>the ECO data, to look at some recent comments from

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<v Speaker 1>feder Reserve officials, including on this program. We're very happy

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<v Speaker 1>to welcome back to the show Diane Swank. She's founder

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<v Speaker 1>of Diane Swank Economics based in Chicago. However, joining us

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<v Speaker 1>today from our bureau in Washington, d C. Home of

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<v Speaker 1>Bloomberg Point One. Welcome Diane. Good to be here so Washington,

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<v Speaker 1>d c. Uh. Certainly the debate continues there as well.

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<v Speaker 1>But in your mind, when you look at the probability

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<v Speaker 1>of a FED rate hike, as reflected in the FED

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<v Speaker 1>Funds futures contract, almost no chance the Fed moves in June.

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<v Speaker 1>And yet we have spoken recently to a couple of

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<v Speaker 1>FED officials who certainly kept the door open to that possibility,

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<v Speaker 1>including John Williams, President of San Francisco FED, just last week.

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<v Speaker 1>This is the issues that we're still seeing, this break between,

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<v Speaker 1>you know, within the FED about what they want to do. Clearly,

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<v Speaker 1>carry Yelln has to corral the cats. She was able

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<v Speaker 1>to do that to some extent at the last meeting,

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<v Speaker 1>but there really is no clear direction on signaling from

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<v Speaker 1>the Fed. And I think that's why you're seeing the

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<v Speaker 1>financial markets because of this dissonance, financial markets not pricing

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<v Speaker 1>it in. And as much as I think it would

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<v Speaker 1>be advantageous for the Fed to move in June, I

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<v Speaker 1>also think that um the financial markets have been more

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<v Speaker 1>right than the Fed at forecasting their own rate hikes.

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<v Speaker 1>Diane Swanks will continue along on that thought. And if

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<v Speaker 1>an investor is not necessarily concerned about the push and

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<v Speaker 1>pull at the Federal Reserve but wants to concentrate on

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<v Speaker 1>making money in stocks, where would you suggest they look? Well,

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<v Speaker 1>you know, I'm not an advisor on stocks, But you know,

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<v Speaker 1>winners and losers in the US economy. I think what

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<v Speaker 1>we're looking at is, even though we've seen some bad

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<v Speaker 1>news from retailers, we also are seeing retailers that are

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<v Speaker 1>going bankrupt. There's a restructuring in the retail sector. That

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<v Speaker 1>doesn't mean the consumer is anywhere near dead. In fact,

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<v Speaker 1>we know that some of the consumer data from the

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<v Speaker 1>first quarter was underestimated because of the way we account

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<v Speaker 1>for the retail sales data. We look at retail sales

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<v Speaker 1>by type of retailer, not by what they sell. And

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<v Speaker 1>in fact, in January and February, when gas prices were

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<v Speaker 1>plummeting at the pump, places like Walmart, Sam's Club, Cost Club,

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<v Speaker 1>which sell gasoline, also saw softening and retail sales. But

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<v Speaker 1>it isn't actual softening. It was the prices of gas

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<v Speaker 1>going down while people were spending more money inside the stores.

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<v Speaker 1>So there really is a lot of noise out there

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<v Speaker 1>in the data as well, which makes it really hard

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<v Speaker 1>to get through this period in terms of finding winners

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<v Speaker 1>and losers. I do think a key issue going forward,

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<v Speaker 1>particularly from manufacturing beyond the retail sector. I think the

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<v Speaker 1>consumer is going to still continue to spend. The question

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<v Speaker 1>is where and beyond the retail sector is a strong

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<v Speaker 1>dollar and how will that affect manufacturing? Manufacturing looks like

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<v Speaker 1>it's bottoming out there, but we still got a long

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<v Speaker 1>way to go. When you're at the bottom of a

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<v Speaker 1>barrel of oil, you've still got to climb your way out.

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<v Speaker 1>Is it possible that some have said that the the

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<v Speaker 1>markets are underestimating the FEDER reserves resolved. And if you take,

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<v Speaker 1>for example, the fact the Fed in December raise its

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<v Speaker 1>key rate the first time since two thousand and six,

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<v Speaker 1>when in one of its key metrics inflation was far

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<v Speaker 1>from target. Does that is that perhaps a sign that,

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<v Speaker 1>you know, guess what they could move in June because

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<v Speaker 1>they're nervous about keeping the key rates so low and

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<v Speaker 1>as they keep say is John william said in San

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<v Speaker 1>Francisco last week, this is normalizing rates. Isn't necessarily tightening exactly,

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<v Speaker 1>And I think that's one of the issues that's still

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<v Speaker 1>very hard. Our markets operate in black and white. As

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<v Speaker 1>the rates going up, by the rates going down, that's

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<v Speaker 1>not necessarily tightening or easin. It's less easy money. And

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<v Speaker 1>stan Fisher has gone to great lengths to try to

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<v Speaker 1>explain this saying, listen, we're trying to um ease up

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<v Speaker 1>on the accelerator. We're not hitting the brake. And I

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<v Speaker 1>think that's a subtlety that's getting lost in translation. Although

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<v Speaker 1>the Feds of one doing the translation, so let's let's

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<v Speaker 1>face it, they're not giving the right message. I think

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<v Speaker 1>it's also important though, that you know the break within

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<v Speaker 1>the FED between the sort of more hawkish, say Vice

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<v Speaker 1>Chairman Stan Fisher and Janet Yellen, who's not necessarily not hawkish,

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<v Speaker 1>but she really does see She's a veteran in the

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<v Speaker 1>nineties and she sees this opportunity to sort of overshoot unemployment.

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<v Speaker 1>She's seen the participation rate coming up, and she sees

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<v Speaker 1>that ability that if you overshoot in a low inflation

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<v Speaker 1>environment and over stimulate perhaps a bit, you might actually

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<v Speaker 1>re engage all of these workers that we sort of

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<v Speaker 1>thought could never even re enter the labor force back

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<v Speaker 1>in the nineties. All he needed was a pulse to

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<v Speaker 1>get a job. That's something we're far from right now,

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<v Speaker 1>but to think that you could even get a little

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<v Speaker 1>bit closer to that is something that I think is

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<v Speaker 1>enticing to her. Diana wonder if you have any thoughts

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<v Speaker 1>about the automobile industry in the United States, and maybe

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<v Speaker 1>then we'll talk about housing. But automobiles have been important

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<v Speaker 1>for the economic recovery. Yeah, you know automobile. I'm from Detroit.

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<v Speaker 1>I used to be an auto analyst. I grew up

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<v Speaker 1>in the auto industry. It's like, you know, on only

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<v Speaker 1>my blood. So you can take the girl out of Detroit,

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<v Speaker 1>you can't take the Detroit out of the girl. I know. Um,

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<v Speaker 1>Tom King's always getting me on the auto industry as well,

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<v Speaker 1>but you know, I mean, the issue is on autos

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<v Speaker 1>is what's feeling the sales, And what worries me is

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<v Speaker 1>the run up in two things right now, not only

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<v Speaker 1>sub prime lending, which um, the auto industry got a

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<v Speaker 1>way run when they got restructured, they were the ones

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<v Speaker 1>to continue so prime lending, which helped to support vehicle sales.

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<v Speaker 1>And we did have really strong vehicle sales snap back

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<v Speaker 1>in the month of April. But also we're seeing least

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<v Speaker 1>sales pick up. And these are many of the problems

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<v Speaker 1>that got the auto industry into it's um sort of

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<v Speaker 1>racist in the first place. Beyond what was tied to

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<v Speaker 1>the subprime mortgage crisis up until about two thousand and five.

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<v Speaker 1>Many people who were up through two thousand and five

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<v Speaker 1>a lot of home equity lines of credit. We're not

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<v Speaker 1>just going to pay for homes and refinance homes and

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<v Speaker 1>pay for mortgages. They're also going to pay for cars.

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<v Speaker 1>And then of course car sales collapsed as the equity

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<v Speaker 1>market in housing collapse. I think I think the auto

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<v Speaker 1>industry is being a little precarious with how they're juicing

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<v Speaker 1>sales at the moment. We're going to continue the conversation

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<v Speaker 1>with Diane Swank, the founder of Diane Swank Economics, more

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<v Speaker 1>on the Federal Reserve and more on what the U

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<v Speaker 1>s economy means for the direction of stock prices and

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<v Speaker 1>bond fields. That's next on taking stock? Is the dollar

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<v Speaker 1>slump over Goldman Sachs says it is. Does the Federal

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<v Speaker 1>Reserve play a role on? How about that Bank of

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<v Speaker 1>England needing tomorrow? We're gonna look at all these questions

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<v Speaker 1>coming up on Bloomberg Radio Broadcasting Live to New York,

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<v Speaker 1>Bloomberg eleventh, Brio to Washington, d C. Bloomberg to Boston,

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<v Speaker 1>Bloomberg twelve hundred to San Francisco, Bloomberg nine to the

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<v Speaker 1>Country Series Exam General one nineteen and around the globe

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<v Speaker 1>the Bloomberg Radio plus NAP and Bloomberg Got Gone Zeus

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<v Speaker 1>is taking stock. I'm Kathleen Hayes, along with Pim Fox,

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<v Speaker 1>the Federal Reserve in focus, along with the Bank of

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<v Speaker 1>England and the European Central Bank of Central Banks run

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<v Speaker 1>out of bullets at the economy? Does falter in the

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<v Speaker 1>U S? And globally We'll be asking Diane Swamp answer

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<v Speaker 1>that question and more yes. And also coming up, we'll

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<v Speaker 1>take a look at the impeachment of the President of Brazil,

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<v Speaker 1>Tilma Russef. We've got Raymond Collett, Bloomberg Bureau Chief in Brazilia.

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<v Speaker 1>He'll be joining us later on in the program, but

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<v Speaker 1>right now, let's go to Charlie Pellett in the Bloomberg

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<v Speaker 1>news room for a Bloomberg Business Flat and I thank you,

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<v Speaker 1>Pim Fox, Thank you, Kathleen Hayes. The dial the SMP

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<v Speaker 1>nez dak all declining. We are brought to you by

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<v Speaker 1>Van Eck Vector's e t fs. Expect more from your

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<v Speaker 1>eck dot com slash Muni van Eck access the opportunities

0:09:21.200 --> 0:09:23.760
<v Speaker 1>stocks are slipping after the biggest gain in two months,

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<v Speaker 1>as disappointing results from Disney and Macy's raised outs about

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<v Speaker 1>the strength of the U. S. Consumer oil rose after

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<v Speaker 1>an unexpected drop in inventories. The dollar fell, crewed up

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<v Speaker 1>a dollar fifty one of barrel seventeen. Now again there

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<v Speaker 1>of three point four percent, Gold up twelve seventy the

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<v Speaker 1>ounce advancing one percent to twelve seventy seven. Fifty Billionaire

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<v Speaker 1>hedge fund manager Paul Singer says Gold's best quarter in

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<v Speaker 1>thirty years probably just the beginning of a rebound. Bob

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<v Speaker 1>Iachino is with Path Trading Partners in Chicago, when you

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<v Speaker 1>look at the fundamental picture of the FED losing credibility,

0:10:00.600 --> 0:10:04.000
<v Speaker 1>global central banks continuing to have that pressure. We saw

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<v Speaker 1>industrial production in Germany and France disappoint last week, and

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<v Speaker 1>we're seeing now that in the same period of time

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<v Speaker 1>from about December third of last year, the dollar index

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<v Speaker 1>fell about six and a half percent. Gold is almost

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<v Speaker 1>twenty two percent. So if you expect a couple more

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<v Speaker 1>percentage points lower, if you expect the FEDS path to

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<v Speaker 1>be a little more dovish, you can expect another large

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<v Speaker 1>rising gold. Fossil Group shares plummeting to the lowest price

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<v Speaker 1>in more than six years after the watchmakers slashed its

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<v Speaker 1>full year earnings forecast. Shares now down by twenty eight

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<v Speaker 1>point nine percent, the SMP down fifteen, a drop of

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<v Speaker 1>seven tenths of one percent to thirty two on Wall Street.

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<v Speaker 1>Now we'll look at other news from around the world.

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<v Speaker 1>On Bloomberg Radio, Charlie, Thank you from the Bloomberg news

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<v Speaker 1>Room by Mark Crumpton. House Speaker Paul Ryan says the

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<v Speaker 1>Republican Party needs to come together to defeat likely Democratic

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<v Speaker 1>presidential nominee Hillary Clinton in November. To pretend where unified

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<v Speaker 1>as a party after coming through a very bruising primary

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<v Speaker 1>which just ended like a week ago. Um to pretend

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<v Speaker 1>reunified without actually unifying, then we go into the fall

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<v Speaker 1>at half strength. Speaker Ryan meets with presumptive GOP presidential

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<v Speaker 1>nominee Donald Trump in Washington tomorrow. At BI director James

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<v Speaker 1>Comey is speaking out on the investigation into the private

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<v Speaker 1>email server account that Hillary Clinton used when she was

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<v Speaker 1>Secretary of State. Director Comey told reporters quote, I remained

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<v Speaker 1>close to that investigation to ensure that it's done well

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<v Speaker 1>and has the resources it needs. End quote. ABC News

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<v Speaker 1>reported last week the FBI was seeking to interview Secretary

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<v Speaker 1>Clinton soon, but a Clinton spokesman says she hasn't received

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<v Speaker 1>an invitation from the FBI to answer questions. In Italy,

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<v Speaker 1>the Lower Chamber of Deputies has voted to grant legal

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<v Speaker 1>recognition to civil unions. The bill pass three sixty to one.

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<v Speaker 1>The legislation stopped short of authorizing gay marriage, but it's

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<v Speaker 1>significant because Italy was the last holdout in Western Europe

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<v Speaker 1>to extend some rights to gay couples. A new right

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<v Speaker 1>to Die bill has been introduced to New York's legislature.

0:12:06.920 --> 0:12:10.080
<v Speaker 1>It would allow terminally ill patients to request life ending

0:12:10.160 --> 0:12:14.200
<v Speaker 1>drugs from a physician. The proposal would require two doctors

0:12:14.400 --> 0:12:18.199
<v Speaker 1>to certify that the patient's illness is in fact terminal.

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<v Speaker 1>Global News twenty four hours a day, powered by our

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<v Speaker 1>two hundred journalists in more than one hundred fifty news

0:12:25.280 --> 0:12:28.600
<v Speaker 1>bureaus around the world. From the Bloomberg News Room, I'm

0:12:28.600 --> 0:12:32.480
<v Speaker 1>Mark Crumpton, Charlie, and we thank you and again recapping

0:12:32.480 --> 0:12:34.920
<v Speaker 1>a move law for US equities. Right now the SMP

0:12:35.080 --> 0:12:38.320
<v Speaker 1>down fifteen points to two thousand sixty nine to drop

0:12:38.480 --> 0:12:41.480
<v Speaker 1>seven tenths of one percent, ten year up nine thirty seconds.

0:12:41.520 --> 0:12:45.760
<v Speaker 1>The yield there one point seven to I'm Charlie Palatine.

0:12:45.840 --> 0:12:49.680
<v Speaker 1>That sub Bloomberg Business Flash. The FED in Focus on

0:12:49.720 --> 0:12:52.800
<v Speaker 1>Taking Stock is brought to you by Commonwealth Financial Network.

0:12:52.840 --> 0:12:55.160
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0:13:00.720 --> 0:13:05.680
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0:13:05.720 --> 0:13:10.360
<v Speaker 1>Stock the FED in Focus on bloom Bird Radio joining

0:13:10.440 --> 0:13:14.720
<v Speaker 1>us now as Dianne Swank, founder of Dianne Swank Economics. Diane,

0:13:14.760 --> 0:13:17.480
<v Speaker 1>just to continue the conversation, I know that we were

0:13:17.480 --> 0:13:20.079
<v Speaker 1>talking about the automobile industry. Tell us your thoughts about

0:13:20.120 --> 0:13:23.000
<v Speaker 1>the housing industry in the United States. You know, this

0:13:23.080 --> 0:13:25.520
<v Speaker 1>is really an interesting area where we've got prices going

0:13:25.600 --> 0:13:29.199
<v Speaker 1>up very rapidly because demand is outstripping supply and what's

0:13:29.200 --> 0:13:32.760
<v Speaker 1>still a tepid overall market. Some of the supply problems

0:13:32.760 --> 0:13:35.480
<v Speaker 1>we're finding our very structural in nature. Um, what we've

0:13:35.480 --> 0:13:38.200
<v Speaker 1>seen is at the local level, in particular in more

0:13:38.320 --> 0:13:42.080
<v Speaker 1>urban areas and in close by suburbs. Many cash stat

0:13:42.200 --> 0:13:47.080
<v Speaker 1>strapped municipalities have raised fees and all the costs of

0:13:47.120 --> 0:13:49.640
<v Speaker 1>the land for builders to build in order to make

0:13:49.720 --> 0:13:52.040
<v Speaker 1>up for the shortfall they felt in real estate revenues

0:13:52.120 --> 0:13:54.520
<v Speaker 1>during the height of the crisis. The result has made

0:13:54.520 --> 0:13:57.760
<v Speaker 1>it really hard for builders to move downstream and build

0:13:58.040 --> 0:14:00.840
<v Speaker 1>more product for entry level for a time buyers, and

0:14:00.880 --> 0:14:03.080
<v Speaker 1>as a result, they've stayed higher in the market which

0:14:03.160 --> 0:14:06.160
<v Speaker 1>is really constrained supply. We also have seen the South

0:14:06.240 --> 0:14:08.480
<v Speaker 1>not really come back at which is the driver of

0:14:08.480 --> 0:14:11.240
<v Speaker 1>housing starts and the real activity out there, and that's

0:14:11.280 --> 0:14:13.880
<v Speaker 1>really Florida has been sort of a laggered. It was

0:14:14.040 --> 0:14:17.160
<v Speaker 1>the epicenter of the subprime crisis. Some of those markets

0:14:17.200 --> 0:14:19.200
<v Speaker 1>are starting to finally firm, and I do think that

0:14:19.240 --> 0:14:22.240
<v Speaker 1>will help. But you really got an issue where housing

0:14:22.360 --> 0:14:24.920
<v Speaker 1>is actually very constrained and the result is showing up

0:14:24.920 --> 0:14:28.080
<v Speaker 1>in price, and the prices are going up much more

0:14:28.200 --> 0:14:32.000
<v Speaker 1>rapidly than incomes and eroding some affordability even at a

0:14:32.040 --> 0:14:35.320
<v Speaker 1>time when housing and interest rates are still relatively affordable.

0:14:35.320 --> 0:14:37.600
<v Speaker 1>I think these are real issues we need to sort

0:14:37.600 --> 0:14:41.160
<v Speaker 1>of look at because that housing price appreciation is also

0:14:41.160 --> 0:14:44.120
<v Speaker 1>going to show up in some of the measurements of

0:14:44.160 --> 0:14:50.160
<v Speaker 1>inflation as well. Diane, Why are bond yields staying soul below?

0:14:50.520 --> 0:14:54.600
<v Speaker 1>Is it because investors around the world. Number one, they're saying, oh,

0:14:54.640 --> 0:14:56.240
<v Speaker 1>we can get some yield in the US, which we

0:14:56.280 --> 0:14:58.560
<v Speaker 1>can't get almost any place else. Our investors saying, oh

0:14:58.600 --> 0:15:00.520
<v Speaker 1>the economy is weak. Are they saying, well, the FED

0:15:00.600 --> 0:15:02.560
<v Speaker 1>is going to move but so slowly. I might as

0:15:02.600 --> 0:15:04.960
<v Speaker 1>well keep my money and bonds because that's the main

0:15:05.000 --> 0:15:06.760
<v Speaker 1>reason you've got these terrific mortgage rates, and a lot

0:15:06.800 --> 0:15:09.480
<v Speaker 1>of people are refining now. It's it's really stunning, isn't that.

0:15:09.520 --> 0:15:11.880
<v Speaker 1>I mean one seven on a on a tenure. And

0:15:11.920 --> 0:15:14.640
<v Speaker 1>I laugh because you know, we we've all been I've

0:15:14.680 --> 0:15:16.920
<v Speaker 1>been humbled more than once by my own forecast that

0:15:16.960 --> 0:15:19.040
<v Speaker 1>bonnield should rise at some point in time, and it's

0:15:19.040 --> 0:15:21.480
<v Speaker 1>like waiting for the good Oh um. I think all

0:15:21.520 --> 0:15:23.680
<v Speaker 1>of the above is really important. You know, the seek

0:15:23.760 --> 0:15:26.360
<v Speaker 1>for yield. The US is a safe return. And if

0:15:26.360 --> 0:15:28.400
<v Speaker 1>you don't think inflation is high, and think about you know,

0:15:28.760 --> 0:15:31.920
<v Speaker 1>in other countries where you've got inflation much lower than

0:15:31.960 --> 0:15:33.880
<v Speaker 1>the US and the risk of deflation still there, it

0:15:33.880 --> 0:15:36.680
<v Speaker 1>looks pretty good to get one seven on the tenure.

0:15:36.760 --> 0:15:39.360
<v Speaker 1>So I think all of these factors are coming into play.

0:15:39.440 --> 0:15:41.640
<v Speaker 1>I also think they're really you know, there is a

0:15:41.720 --> 0:15:44.400
<v Speaker 1>sort of reluctance to believe the FED will raise rates,

0:15:44.400 --> 0:15:46.360
<v Speaker 1>and that's because the FED has not been consistent in

0:15:46.400 --> 0:15:49.000
<v Speaker 1>their message. There really is a credibility issue here. There's

0:15:49.040 --> 0:15:51.600
<v Speaker 1>a communication issue here, and you know that's sort of

0:15:51.640 --> 0:15:54.720
<v Speaker 1>a residual of the transparency that we saw come under

0:15:54.800 --> 0:15:57.280
<v Speaker 1>Ben Berniky. He really felt that everyone should see the

0:15:57.280 --> 0:15:59.360
<v Speaker 1>spectrum of debate and instead, you know, we see the

0:15:59.360 --> 0:16:01.920
<v Speaker 1>sausage getting made and we don't really like the blood

0:16:01.960 --> 0:16:04.520
<v Speaker 1>and everything that goes with it. Dian, who is going

0:16:04.600 --> 0:16:09.360
<v Speaker 1>to take the loss on bonds? You mentioned the tenure

0:16:09.480 --> 0:16:13.480
<v Speaker 1>right now at one point seven two. If you were

0:16:13.480 --> 0:16:16.560
<v Speaker 1>to buy that, or if you're in an institution and

0:16:16.560 --> 0:16:19.200
<v Speaker 1>you're gonna buy it to trade it, someone's going to

0:16:19.280 --> 0:16:20.600
<v Speaker 1>have to be on the other side of the trade

0:16:20.600 --> 0:16:23.080
<v Speaker 1>when you finally sell it. Is everyone going to rush

0:16:23.120 --> 0:16:24.920
<v Speaker 1>to the exit at the same time and we're gonna

0:16:24.960 --> 0:16:27.560
<v Speaker 1>have a bond collapse? Um? Well, you know who knows.

0:16:27.680 --> 0:16:29.560
<v Speaker 1>I mean that we do tend to have big movements

0:16:29.560 --> 0:16:31.800
<v Speaker 1>and bonds. My biggest concerned about the bond market is

0:16:31.840 --> 0:16:35.240
<v Speaker 1>actually depending on what happens in November, we are really

0:16:35.360 --> 0:16:38.400
<v Speaker 1>under pricing political risk out there, and that could be

0:16:38.440 --> 0:16:41.480
<v Speaker 1>a turning point um as we finally we're not pricing

0:16:41.480 --> 0:16:44.240
<v Speaker 1>in political risk or policy risk because there's still many,

0:16:43.960 --> 0:16:46.640
<v Speaker 1>so many uncertainties out there, and the marketing bond prices

0:16:46.680 --> 0:16:49.440
<v Speaker 1>could rally. I actually think they could go. They could

0:16:49.480 --> 0:16:51.840
<v Speaker 1>go the other direction. But if you have political risk,

0:16:51.880 --> 0:16:55.359
<v Speaker 1>woulden people buy US treasuries? Political risk in the US?

0:16:55.400 --> 0:16:59.400
<v Speaker 1>I see, and I think there's we uh, there's other

0:16:59.400 --> 0:17:01.960
<v Speaker 1>those over saying that if you look at the global forces,

0:17:02.000 --> 0:17:06.080
<v Speaker 1>they are still more disinflationary and even deflationary, and that

0:17:06.160 --> 0:17:08.080
<v Speaker 1>in fact p M. You may recall just a couple

0:17:08.119 --> 0:17:10.040
<v Speaker 1>of weeks ago, we had David kotok On from Cumblent

0:17:10.080 --> 0:17:12.560
<v Speaker 1>Advisors and we were looking at Europe. He's predicting that

0:17:12.600 --> 0:17:15.840
<v Speaker 1>you're going to have very low inflation and very low

0:17:15.840 --> 0:17:17.960
<v Speaker 1>and even some negag rates in Europe till the end

0:17:18.160 --> 0:17:21.040
<v Speaker 1>of the decade. And he said that is going to

0:17:21.119 --> 0:17:25.000
<v Speaker 1>support these yields and prices on US treasuries and we

0:17:25.080 --> 0:17:29.960
<v Speaker 1>could see a further rally. What do you think, Well,

0:17:30.000 --> 0:17:33.040
<v Speaker 1>you know. I mean, um, there certainly is a possibility

0:17:33.040 --> 0:17:35.399
<v Speaker 1>for a further rail and we can't roll it out. Um.

0:17:35.480 --> 0:17:37.080
<v Speaker 1>One of the things that I think we're gonna have

0:17:37.119 --> 0:17:38.879
<v Speaker 1>to see is whether or not we get a snap

0:17:38.880 --> 0:17:41.040
<v Speaker 1>back and growth. I do think the GDP numbers, we've

0:17:41.080 --> 0:17:44.720
<v Speaker 1>got to deal with the disconnectre syne unemployment data versus

0:17:44.720 --> 0:17:48.200
<v Speaker 1>the overall GDP data. Is productivity growth? Really that week,

0:17:48.480 --> 0:17:51.480
<v Speaker 1>if it is, any acceleration in wages would be dry

0:17:51.520 --> 0:17:54.960
<v Speaker 1>tinder for some inflation. I don't think that's necessarily the case,

0:17:55.000 --> 0:17:57.760
<v Speaker 1>but I do think that reality is somewhere in between

0:17:57.800 --> 0:18:00.240
<v Speaker 1>the GDP figures, which were you know, a point five

0:18:00.240 --> 0:18:02.560
<v Speaker 1>percent in the first quarter, and the employment data, which

0:18:02.600 --> 0:18:05.399
<v Speaker 1>was much stronger. So I think my own sense is

0:18:05.440 --> 0:18:06.960
<v Speaker 1>that we will see a bit of a snap back

0:18:07.359 --> 0:18:10.120
<v Speaker 1>in growth. The question is what happens when we get

0:18:10.160 --> 0:18:12.320
<v Speaker 1>to the elections. Because it used to just be noise.

0:18:12.359 --> 0:18:14.400
<v Speaker 1>And here I am sitting in Washington and it used

0:18:14.440 --> 0:18:16.280
<v Speaker 1>to just be noise to us as an economist. But

0:18:16.320 --> 0:18:21.480
<v Speaker 1>the policy risks of trade protective protectionism, of tariffs, increasing,

0:18:21.960 --> 0:18:25.120
<v Speaker 1>of immigration, you know, being even further cut back, all

0:18:25.160 --> 0:18:28.440
<v Speaker 1>of those things undermine growth. There's sort of a misconnect,

0:18:28.440 --> 0:18:32.600
<v Speaker 1>a disconnect between correlation and causality. The globalization of the U. S.

0:18:32.640 --> 0:18:35.560
<v Speaker 1>Economy was gonna kernel matter what the problem is, many

0:18:35.600 --> 0:18:38.520
<v Speaker 1>people were sidelined by that globalization. We just didn't prepare

0:18:38.560 --> 0:18:41.440
<v Speaker 1>them for the operating in a global economy, that the

0:18:41.480 --> 0:18:43.960
<v Speaker 1>skills they needed to earn what they needed to earn cancel.

0:18:44.080 --> 0:18:46.760
<v Speaker 1>I love that new word you just made, misconnect a misconnect.

0:18:46.800 --> 0:18:48.920
<v Speaker 1>I'm gonna tweet that out. Diane Swonk is founder of

0:18:48.960 --> 0:18:53.119
<v Speaker 1>Diane Swonk Economics, joining us from Washington, d C. Today

0:18:53.160 --> 0:18:56.159
<v Speaker 1>to put the feeder Reserve in focus on Kathleen has Long.

0:18:56.240 --> 0:19:01.480
<v Speaker 1>Pin Flock were taken stock on Blueberg Radio. Coming upon

0:19:01.600 --> 0:19:06.200
<v Speaker 1>taking stock, Brazil's president Dilma Rousseff could be hours away

0:19:06.280 --> 0:19:10.520
<v Speaker 1>from being forced out of office, at least temporarily. We've

0:19:10.520 --> 0:19:11.840
<v Speaker 1>got an update next