1 00:00:02,480 --> 00:00:03,040 Speaker 1: Good morning. 2 00:00:03,080 --> 00:00:05,920 Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the 3 00:00:05,960 --> 00:00:07,480 Speaker 2: stories we're following today. 4 00:00:07,880 --> 00:00:10,280 Speaker 3: We begin with an appeal to the American people from 5 00:00:10,320 --> 00:00:13,920 Speaker 3: President Biden. As the wars in Israel and Ukraine rage on. 6 00:00:14,200 --> 00:00:17,320 Speaker 3: The President used a rare primetime address from the Oval 7 00:00:17,320 --> 00:00:20,720 Speaker 3: Office to make the case that both conflicts represent parallel 8 00:00:20,760 --> 00:00:22,000 Speaker 3: fights for democracy. 9 00:00:22,480 --> 00:00:25,759 Speaker 4: I know these conflicts can seem far away, and snatch 10 00:00:25,760 --> 00:00:28,720 Speaker 4: will ask why does this matter to America? So let 11 00:00:28,760 --> 00:00:31,800 Speaker 4: me share with you why making sure Israel and Ukraine 12 00:00:31,840 --> 00:00:36,240 Speaker 4: succeed is vital for America's national security. You know, history 13 00:00:36,240 --> 00:00:38,600 Speaker 4: has taught us that when terrorists don't pay a price 14 00:00:38,640 --> 00:00:41,680 Speaker 4: for their terror, when dictators don't pay a price for 15 00:00:41,720 --> 00:00:45,919 Speaker 4: their aggression, they cause more chaos and death and more destruction. 16 00:00:47,080 --> 00:00:49,839 Speaker 4: They keep going, and the cost and the threats to 17 00:00:49,920 --> 00:00:51,440 Speaker 4: America and the world keep rising. 18 00:00:52,000 --> 00:00:55,080 Speaker 3: In his roughly fifteen minute speech, President Biden argue that 19 00:00:55,160 --> 00:00:59,040 Speaker 3: supporting Ukraine and Israel is vital for America's national security. 20 00:00:59,160 --> 00:01:01,920 Speaker 3: The White House now plans of formal request to Congress 21 00:01:01,920 --> 00:01:05,000 Speaker 3: for about one hundred billion dollars in resources for both countries, 22 00:01:05,160 --> 00:01:08,080 Speaker 3: along with Taiwan and the Southern US border. 23 00:01:08,040 --> 00:01:08,559 Speaker 5: Well, Nathan. 24 00:01:08,560 --> 00:01:11,400 Speaker 2: The President's speech comes as tensions heightened in the Middle 25 00:01:11,400 --> 00:01:14,520 Speaker 2: East and Bloomberg's Oliver Crook is covering the war from Tel. 26 00:01:14,319 --> 00:01:17,679 Speaker 6: Aviv and as fears of escalation and spillover mount. We 27 00:01:17,680 --> 00:01:19,959 Speaker 6: should also say Hamas has called for a day of 28 00:01:20,080 --> 00:01:23,160 Speaker 6: rage today across the Islamic world, where last time they 29 00:01:23,160 --> 00:01:25,680 Speaker 6: called for it we saw protesters take to the street, 30 00:01:25,760 --> 00:01:28,680 Speaker 6: really raising the temperatures. Also raising the temperatures of the 31 00:01:28,800 --> 00:01:31,200 Speaker 6: United States, saying that they're seeing more drone attacks and 32 00:01:31,240 --> 00:01:34,040 Speaker 6: their installations in Iraq and Syria, and that they've also 33 00:01:34,160 --> 00:01:38,319 Speaker 6: intercepted fire from Yemen headed towards Israel. There is the 34 00:01:38,400 --> 00:01:41,680 Speaker 6: small matter of a huge country that sits between Yemen 35 00:01:41,720 --> 00:01:45,880 Speaker 6: and Israel, It's called Saudi Arabia, with huge geopolitical influence. 36 00:01:45,920 --> 00:01:49,360 Speaker 2: And Bloomberg's Oliver Crook says the death toll continues to mount. 37 00:01:49,440 --> 00:01:52,559 Speaker 2: More than fourteen hundred people in Israel have been killed. 38 00:01:52,560 --> 00:01:55,520 Speaker 2: The Hamas run Gaza Health Ministry says more than thirty 39 00:01:55,560 --> 00:01:58,360 Speaker 2: seven hundred Palestinians have also been killed. 40 00:01:58,440 --> 00:02:00,840 Speaker 3: Now and Karen will have much more the war ahead. 41 00:02:00,880 --> 00:02:03,279 Speaker 3: But we now turn our attention back here to the US, 42 00:02:03,320 --> 00:02:05,240 Speaker 3: where a search for a Speaker of the House is 43 00:02:05,480 --> 00:02:09,240 Speaker 3: still underway. Round three for Jim Jordan's quest hold the 44 00:02:09,280 --> 00:02:11,120 Speaker 3: gavel is scheduled for this morning. 45 00:02:11,120 --> 00:02:13,640 Speaker 1: In Bloomberg's Edd Baxter has the story. 46 00:02:13,560 --> 00:02:15,920 Speaker 7: More twist and turns to even get to this space. 47 00:02:16,200 --> 00:02:18,680 Speaker 7: Jordan has come off as support of an interim speaker 48 00:02:18,760 --> 00:02:21,640 Speaker 7: after very heated response from his caucus. 49 00:02:21,960 --> 00:02:24,480 Speaker 8: So I'm still running for speaker, and I plan to 50 00:02:24,520 --> 00:02:27,359 Speaker 8: go to the floor and get the votes and win 51 00:02:27,400 --> 00:02:29,600 Speaker 8: this race. But I want to go talk with a 52 00:02:29,600 --> 00:02:31,680 Speaker 8: few of my colleagues, particularly, I want to talk with 53 00:02:32,160 --> 00:02:33,760 Speaker 8: the twenty individuals voted against me. 54 00:02:34,080 --> 00:02:36,480 Speaker 7: Whether that will land him what he needs is a 55 00:02:36,520 --> 00:02:39,160 Speaker 7: big question as it hangs in the wind and delays 56 00:02:39,200 --> 00:02:43,720 Speaker 7: action on aid for Israel or Ukraine. Ed Baxter, Bloomberg Radio. 57 00:02:43,840 --> 00:02:45,919 Speaker 2: All right, Ed, thank you, We turned to the markets now. 58 00:02:46,000 --> 00:02:48,560 Speaker 2: Jay Powell signaling the Fed will stand pat at it's 59 00:02:48,639 --> 00:02:51,680 Speaker 2: November meeting. After speaking at the Economic Club of New York, 60 00:02:51,720 --> 00:02:55,200 Speaker 2: the fetch here told Bloomberg's David Weston the economy is 61 00:02:55,240 --> 00:02:58,360 Speaker 2: doing a good job of handling tighter monetary policy. 62 00:02:58,840 --> 00:03:01,440 Speaker 9: So the evidence of your eyes is that the economy 63 00:03:01,520 --> 00:03:06,000 Speaker 9: is handling much higher rates at least for now without difficulties. 64 00:03:06,040 --> 00:03:10,040 Speaker 9: So notionally, that might tell you that the neutral rate 65 00:03:10,080 --> 00:03:11,720 Speaker 9: has risen, or it may just tell you that we 66 00:03:11,760 --> 00:03:14,360 Speaker 9: haven't had rates high enough for long enough. If we 67 00:03:14,360 --> 00:03:17,359 Speaker 9: have models for everything, we have formulists for everything. Ultimately, 68 00:03:17,400 --> 00:03:21,200 Speaker 9: as a practitioner, we have to focused on what the 69 00:03:21,240 --> 00:03:24,520 Speaker 9: economy is telling us, even taking legs into account, what's 70 00:03:24,560 --> 00:03:25,200 Speaker 9: it telling us? 71 00:03:25,600 --> 00:03:28,320 Speaker 5: Does it feel like policy is too tight right now? 72 00:03:28,360 --> 00:03:29,320 Speaker 5: I would have to say no. 73 00:03:29,880 --> 00:03:31,679 Speaker 9: I think the evidence is not that a policy is 74 00:03:31,720 --> 00:03:32,560 Speaker 9: too tight right now. 75 00:03:33,960 --> 00:03:36,280 Speaker 2: And the Fed chief also said a recent run up 76 00:03:36,280 --> 00:03:39,200 Speaker 2: and long term treasury yields, if they persist, could lessen 77 00:03:39,200 --> 00:03:41,960 Speaker 2: the need for further hikes at the margin. For the 78 00:03:41,960 --> 00:03:44,680 Speaker 2: full conversation with FED chair J Powell, head over to 79 00:03:44,720 --> 00:03:49,120 Speaker 2: our Bloomberg Talks podcast feed, available anywhere you get your podcasts. 80 00:03:49,160 --> 00:03:51,440 Speaker 1: Well, Karen, there was plenty of reaction to Powell's remarks. 81 00:03:51,520 --> 00:03:54,560 Speaker 3: Yields on two your treasuries declined tenure yields paired an 82 00:03:54,600 --> 00:03:57,280 Speaker 3: increase that pushed them near the five percent mark. Former 83 00:03:57,320 --> 00:03:59,760 Speaker 3: New York Fed President Bill Dudley says Powell was pretty 84 00:03:59,760 --> 00:04:01,320 Speaker 3: out the mystic about the economy. 85 00:04:01,680 --> 00:04:03,960 Speaker 10: Basically, you got the impression that he's pretty comfortable with 86 00:04:04,000 --> 00:04:06,400 Speaker 10: the level of rates and the fact that the economy 87 00:04:06,440 --> 00:04:08,640 Speaker 10: is a little stronger than expected, well that's a you know, 88 00:04:08,720 --> 00:04:11,200 Speaker 10: that's a nice problem to have. And the fact that 89 00:04:11,240 --> 00:04:13,280 Speaker 10: boniles are a little higher, well that's actually maybe going 90 00:04:13,320 --> 00:04:14,760 Speaker 10: to help deal with the fact that. 91 00:04:14,920 --> 00:04:16,480 Speaker 5: Growth is a little bit stronger than expected. 92 00:04:16,720 --> 00:04:18,880 Speaker 10: He also implied that he expected growth to slow in 93 00:04:18,920 --> 00:04:21,480 Speaker 10: the fourth quarter going into next year. So yeah, I 94 00:04:21,480 --> 00:04:24,280 Speaker 10: think the Fed's on hold until they see whether the 95 00:04:24,320 --> 00:04:26,479 Speaker 10: economy is slow as much as they anticipate or not. 96 00:04:26,880 --> 00:04:29,000 Speaker 3: Former New York Fed President Bill Dudley is now a 97 00:04:29,000 --> 00:04:30,359 Speaker 3: Bloomberg opinion columnist. 98 00:04:30,760 --> 00:04:33,760 Speaker 2: Well, many on Wall Street think rate hikes are over Nathan. 99 00:04:33,800 --> 00:04:36,880 Speaker 2: In fact, in our latest Bloomberg Monthly survey, economists think 100 00:04:36,920 --> 00:04:39,799 Speaker 2: the Fed is done raising rates, but they also anticipate 101 00:04:39,839 --> 00:04:42,840 Speaker 2: a slower pace of rate cuts next year. The economists 102 00:04:42,839 --> 00:04:46,240 Speaker 2: are also raising their growth projections and reducing their odds 103 00:04:46,240 --> 00:04:46,880 Speaker 2: of a recession. 104 00:04:47,200 --> 00:04:49,799 Speaker 1: There's also some optimism on the auto strike. This morning. 105 00:04:49,880 --> 00:04:52,640 Speaker 3: Karen, a top union negotiator, says General Motors and the 106 00:04:52,760 --> 00:04:55,440 Speaker 3: United Auto Workers are moving toward a tentative agreement that 107 00:04:55,480 --> 00:04:57,520 Speaker 3: would put an end to a major strike that has 108 00:04:57,560 --> 00:05:00,120 Speaker 3: dragged on for more than a month. GM, along with 109 00:05:00,200 --> 00:05:02,320 Speaker 3: rivals Ford and Stillantis, have been trying to cut a 110 00:05:02,360 --> 00:05:05,040 Speaker 3: deal to end a walk out that started September fifteenth. 111 00:05:05,120 --> 00:05:07,400 Speaker 3: A GM spokesperson declined to comment. 112 00:05:07,800 --> 00:05:10,200 Speaker 2: Another corporate news Nathan, more job cuts may be on 113 00:05:10,240 --> 00:05:13,159 Speaker 2: the way at UBS. The Financial News is reporting the 114 00:05:13,200 --> 00:05:15,680 Speaker 2: Swiss bank is poised to target about ten percent of 115 00:05:15,680 --> 00:05:19,040 Speaker 2: its support staff at credit Sueeze. UBS is taking over 116 00:05:19,080 --> 00:05:22,760 Speaker 2: its longtime Swiss rival and a government orchestrated deal and 117 00:05:22,839 --> 00:05:25,760 Speaker 2: pairing a combined workforce that swelled to about one hundred 118 00:05:25,760 --> 00:05:26,600 Speaker 2: and twenty thousand. 119 00:05:26,920 --> 00:05:29,360 Speaker 3: Let's get you updated on the Sam Bankman freed Trialcaren. 120 00:05:29,400 --> 00:05:32,200 Speaker 3: The third week ended with the testimony of FTX former 121 00:05:32,279 --> 00:05:35,080 Speaker 3: general counsel can Son, who told the court he resigned 122 00:05:35,120 --> 00:05:38,159 Speaker 3: after finding a massive hole in ftx's balance sheet. The 123 00:05:38,200 --> 00:05:40,760 Speaker 3: trial will now take a week long break. It's due 124 00:05:40,800 --> 00:05:43,279 Speaker 3: to resume October twenty sixth. 125 00:05:46,680 --> 00:05:47,240 Speaker 1: Sorry, Nathan. 126 00:05:47,279 --> 00:05:48,640 Speaker 2: Thanks. It's time now for a look at some of 127 00:05:48,640 --> 00:05:50,880 Speaker 2: the other stories making news around the world. For that, 128 00:05:50,960 --> 00:05:54,440 Speaker 2: we're joined by Bloomberg's John Tucker, John Good Morning, and. 129 00:05:54,400 --> 00:05:58,359 Speaker 11: Karen the Pentagonist reaffirming that Israel was not behind that 130 00:05:58,480 --> 00:06:01,159 Speaker 11: deadly rocket strike on a how but in Ganza this week, 131 00:06:01,480 --> 00:06:04,560 Speaker 11: Rerigadier General pat Ryder says the US is using its 132 00:06:04,600 --> 00:06:06,440 Speaker 11: own information to make the determination. 133 00:06:06,839 --> 00:06:09,480 Speaker 12: It is our assessment that Israel was not responsible for 134 00:06:09,520 --> 00:06:15,000 Speaker 12: that explosion. We're continuing to assess that. Initial indications are 135 00:06:15,360 --> 00:06:19,720 Speaker 12: that this was from an errant rocket that was launched 136 00:06:19,839 --> 00:06:21,800 Speaker 12: by the Palestinian Islamic Jahad. 137 00:06:22,080 --> 00:06:25,200 Speaker 11: Hundreds were killed in the attack. The president of New 138 00:06:25,279 --> 00:06:29,159 Speaker 11: York based private equity giant Blackstone, John Gray, says he 139 00:06:29,240 --> 00:06:32,679 Speaker 11: remains committed to funding low income students and cancer research 140 00:06:32,760 --> 00:06:36,599 Speaker 11: at the University of Pennsylvania, while acknowledging concerns over anti 141 00:06:36,600 --> 00:06:38,080 Speaker 11: Sabbitic speech on campus. 142 00:06:38,440 --> 00:06:41,120 Speaker 13: Some of my colleagues in the financial field and more 143 00:06:41,160 --> 00:06:46,679 Speaker 13: broadly have raised some really legitimate concerns about hate speech 144 00:06:47,240 --> 00:06:52,200 Speaker 13: masquerading as free speech in the context of anti Semitism 145 00:06:52,560 --> 00:06:55,720 Speaker 13: on college campuses at penn and other places. 146 00:06:55,839 --> 00:06:58,560 Speaker 11: Jan has bet the center of controversy at her high 147 00:06:58,600 --> 00:07:02,279 Speaker 11: profile alum demanded that the president and board chair stepped down. 148 00:07:02,960 --> 00:07:05,839 Speaker 11: A Maryland Circuit Court judge was fatally shot in the 149 00:07:05,920 --> 00:07:09,200 Speaker 11: driveway of his home last night. Circuit Court Judge Andrew 150 00:07:09,200 --> 00:07:12,800 Speaker 11: Wilkinson was found with the parent gunshot wounds around eight pm. 151 00:07:13,000 --> 00:07:16,200 Speaker 11: He was taken from his home in Hagerstown Demeritis Medical Center, 152 00:07:16,400 --> 00:07:19,760 Speaker 11: where he died of his injuries. The Sheriff's office investigating 153 00:07:19,760 --> 00:07:22,680 Speaker 11: the fatal shooting. That Army private, who fled to North 154 00:07:22,720 --> 00:07:25,960 Speaker 11: Korea before being returned home to the US last month, 155 00:07:26,240 --> 00:07:28,760 Speaker 11: has now been detained by the US military and is 156 00:07:28,800 --> 00:07:33,800 Speaker 11: facing charges including desertion and possessing sexual images of a child. 157 00:07:33,880 --> 00:07:36,920 Speaker 11: The accounts against Private Travis king Or detailed in a 158 00:07:37,080 --> 00:07:41,320 Speaker 11: charging document CVS. Calling some of the most common decongestions 159 00:07:41,360 --> 00:07:44,280 Speaker 11: off the store shelves, An advisory panel at the FDA 160 00:07:44,400 --> 00:07:48,160 Speaker 11: declared that the common ingredient in cold medicines, fenel efrine, 161 00:07:48,160 --> 00:07:51,000 Speaker 11: does not work. It's supposed to be the decongested and 162 00:07:51,080 --> 00:07:53,840 Speaker 11: cold medications. It's in some of the most known and 163 00:07:53,880 --> 00:07:57,720 Speaker 11: widely used cold medications. Global news twenty four hours a day, 164 00:07:57,920 --> 00:08:00,000 Speaker 11: wherever you want it with Bloomberg News. 165 00:08:00,120 --> 00:08:00,400 Speaker 1: Now. 166 00:08:00,520 --> 00:08:03,119 Speaker 11: I'm John Tucker and this is Bloomberg Karen. 167 00:08:03,240 --> 00:08:05,160 Speaker 2: All right, John, thank you well. We do bring you 168 00:08:05,240 --> 00:08:07,920 Speaker 2: news throughout the day here on Bloomberg Radio. But now, 169 00:08:08,000 --> 00:08:10,240 Speaker 2: as John said, you can get the latest news on 170 00:08:10,320 --> 00:08:14,280 Speaker 2: demand whenever you want it. Subscribe to Bloomberg News Now 171 00:08:14,280 --> 00:08:16,560 Speaker 2: to get the latest headlines at the click of a button. 172 00:08:16,880 --> 00:08:20,080 Speaker 2: Get informed on your schedule. You can listen and subscribe 173 00:08:20,120 --> 00:08:23,600 Speaker 2: to Bloomberg News Now on the Bloomberg Business app, Bloomberg 174 00:08:23,640 --> 00:08:27,240 Speaker 2: dot com, plus Apple, Spotify, and anywhere else you get 175 00:08:27,280 --> 00:08:31,160 Speaker 2: your podcasts. It is time now for the Bloomberg Sports updates, 176 00:08:35,760 --> 00:08:37,720 Speaker 2: and here's John Stash Hour John. 177 00:08:37,880 --> 00:08:39,240 Speaker 1: Karn Thursday Night Football. 178 00:08:39,240 --> 00:08:42,080 Speaker 14: To kick off Week seven, the Jaguars in New Orleans 179 00:08:42,080 --> 00:08:45,080 Speaker 14: to face the Saints. Jacksonville jumped in front twenty four 180 00:08:45,120 --> 00:08:48,120 Speaker 14: to nine. Travis Etn scored twice. The Jags had a 181 00:08:48,200 --> 00:08:50,640 Speaker 14: pick six back came the Saints to tie the game. 182 00:08:51,200 --> 00:08:53,360 Speaker 14: Jacksonville ball just over three minutes left. 183 00:08:53,440 --> 00:08:56,160 Speaker 15: Jock you going empty backfield for driver three right two 184 00:08:56,240 --> 00:08:59,960 Speaker 15: Lefty drops look, checks it down underneath. That's a cross 185 00:09:00,120 --> 00:09:04,040 Speaker 15: round to Christin Karkcurty twenty five, twenty fifty ten. Christian 186 00:09:04,120 --> 00:09:10,480 Speaker 15: Kirk pull one touchdown Jacksonville, but crossing route to Christian Kirk. 187 00:09:10,600 --> 00:09:12,680 Speaker 14: Tags Radio had it and they beat the Saints thirty 188 00:09:12,760 --> 00:09:15,679 Speaker 14: one to twenty four. Jacksonville's now won four games in 189 00:09:15,720 --> 00:09:17,400 Speaker 14: a row at five and two it's their best start 190 00:09:17,720 --> 00:09:20,000 Speaker 14: since two thousand and seven. Jimmy Garoppolo is not going 191 00:09:20,040 --> 00:09:22,520 Speaker 14: to play for the Raiders Sunday against Chicago. He's got 192 00:09:22,520 --> 00:09:24,839 Speaker 14: a back injury, and the Bears are expected to be 193 00:09:24,880 --> 00:09:26,760 Speaker 14: without justin fields. Not knowing if the Raiders will go 194 00:09:26,800 --> 00:09:30,560 Speaker 14: with the veteran Brian Hoyer or the rookie Aidan O'Connell. 195 00:09:30,720 --> 00:09:33,400 Speaker 14: Sean Watson may play Sunday for Cleveland. He missed last 196 00:09:33,400 --> 00:09:37,000 Speaker 14: week's game with a shoulder injury. Baseball Playoffs, the Arizona 197 00:09:37,040 --> 00:09:39,280 Speaker 14: Diamondbacks top the Phillies two to one, and the con 198 00:09:39,360 --> 00:09:41,439 Speaker 14: Tell Marte hit bottom of the ninth to eighty his 199 00:09:41,559 --> 00:09:43,360 Speaker 14: hurt third hit of the game as the d Backs 200 00:09:43,440 --> 00:09:45,240 Speaker 14: take a lead in the series for the first time, 201 00:09:45,240 --> 00:09:47,680 Speaker 14: but the Phillies are still up two games to one 202 00:09:47,760 --> 00:09:51,600 Speaker 14: with Game four tonight in Phoenix. All Astros in Texas 203 00:09:51,640 --> 00:09:54,600 Speaker 14: taking Game four ten to three. Jose Abrad who had 204 00:09:54,600 --> 00:09:57,040 Speaker 14: a big three run homer, Chas McCormick at two run 205 00:09:57,120 --> 00:10:00,000 Speaker 14: shot for Jose al two by three hits three runs. 206 00:10:00,240 --> 00:10:03,520 Speaker 14: That series is now tie to two heading into today's 207 00:10:03,559 --> 00:10:07,000 Speaker 14: Game five, justin Berland are against Jordan mcgommery, John Stashy. 208 00:10:07,000 --> 00:10:08,160 Speaker 1: I were Bloomberg. 209 00:10:07,720 --> 00:10:13,680 Speaker 16: Sports from coast to coast, from New York to San Francisco, 210 00:10:14,000 --> 00:10:18,600 Speaker 16: Boston to Washington, DC, nationwide on Syrias exam the Bloomberg 211 00:10:18,679 --> 00:10:22,840 Speaker 16: Business app in Bloomberg dot Com. This is Bloomberg Daybreak. 212 00:10:24,080 --> 00:10:27,120 Speaker 16: Good morning, I'm Nathan Hager. On day fourteen of war 213 00:10:27,200 --> 00:10:29,760 Speaker 16: between Israel and Hamas. There are new concerns about a 214 00:10:29,760 --> 00:10:33,079 Speaker 16: wider conflict, with US bases in Iraq and Syria experiencing 215 00:10:33,120 --> 00:10:36,199 Speaker 16: attacks at runback groups and Yemen trying to fire missiles 216 00:10:36,200 --> 00:10:40,000 Speaker 16: at Israel. All as President Biden defense continued US support 217 00:10:40,000 --> 00:10:43,280 Speaker 16: for Israel and Ukraine in a direct appeal to the 218 00:10:43,320 --> 00:10:44,000 Speaker 16: American people. 219 00:10:44,120 --> 00:10:47,240 Speaker 4: I'm awesome food and represent different threats, but they share 220 00:10:47,280 --> 00:10:50,640 Speaker 4: this in common. They both want to completely annihilate in 221 00:10:50,720 --> 00:10:51,840 Speaker 4: neighboring democracy. 222 00:10:51,880 --> 00:10:55,120 Speaker 3: Completely annihilated, President Biden speaking. They're in a rare Oval 223 00:10:55,160 --> 00:10:58,280 Speaker 3: office address this morning. We're joined by a team of reporters. 224 00:10:58,320 --> 00:11:01,480 Speaker 3: Bloomberg's news director for Europe, the Least and Africa, Roslind 225 00:11:01,520 --> 00:11:04,640 Speaker 3: Matheson is with us, along with Bloomberg's Oliver Crook in 226 00:11:04,679 --> 00:11:05,160 Speaker 3: Tel Aviv. 227 00:11:05,200 --> 00:11:06,040 Speaker 1: Good morning to you both. 228 00:11:06,040 --> 00:11:08,040 Speaker 3: I want to start with you Oliver for just to 229 00:11:08,040 --> 00:11:10,840 Speaker 3: get the latest on what's been happening overnight in the 230 00:11:10,840 --> 00:11:12,200 Speaker 3: war between Israel and Hamas. 231 00:11:12,720 --> 00:11:14,640 Speaker 17: So some of the context we should give for Friday 232 00:11:14,640 --> 00:11:16,760 Speaker 17: today is another day of rage that has been called 233 00:11:17,240 --> 00:11:19,480 Speaker 17: by Hamas. So this is sort of protests across the 234 00:11:19,559 --> 00:11:21,760 Speaker 17: Islamic world, is what they called for last week. We 235 00:11:21,800 --> 00:11:23,960 Speaker 17: saw this, you know, thousands took to the streets. And 236 00:11:24,040 --> 00:11:26,960 Speaker 17: it comes as the IDEF continues to strike targets in Gaza, 237 00:11:27,000 --> 00:11:30,160 Speaker 17: continues to strike targets in Lebanon. It has not sort 238 00:11:30,200 --> 00:11:32,880 Speaker 17: of escalated dramatically on the border of Lebanon, but there 239 00:11:32,920 --> 00:11:35,719 Speaker 17: are still skirmishes there. There are more civilians evacuating from 240 00:11:35,720 --> 00:11:37,760 Speaker 17: the north, and as you mentioned, the US saying that 241 00:11:37,840 --> 00:11:40,720 Speaker 17: seeing some of their installations coming under more attack in 242 00:11:40,720 --> 00:11:44,480 Speaker 17: Iraq and Syria. And also these missiles apparently intercepted by 243 00:11:44,520 --> 00:11:47,280 Speaker 17: the US Navy fired from Yemen. And there's a small 244 00:11:47,320 --> 00:11:50,160 Speaker 17: matter of a big country of huge influence in the 245 00:11:50,200 --> 00:11:52,880 Speaker 17: region that sits between Yemen and Israel, and that is 246 00:11:52,920 --> 00:11:55,600 Speaker 17: Saudi Arabia, And that'll push us forward to a summit 247 00:11:55,640 --> 00:11:58,240 Speaker 17: that we understand will be held tomorrow in Egypt, where 248 00:11:58,320 --> 00:12:00,720 Speaker 17: again there's a lot of information on the flying around, 249 00:12:00,760 --> 00:12:03,240 Speaker 17: and according to people familiar that we have that the 250 00:12:03,240 --> 00:12:06,040 Speaker 17: Crown prints will be at that meeting, along with President Erdawan, 251 00:12:06,280 --> 00:12:08,600 Speaker 17: the King of Jordan, and some representative from Western and 252 00:12:08,600 --> 00:12:11,960 Speaker 17: European countries as well, to discuss peace in Caira. 253 00:12:12,320 --> 00:12:16,080 Speaker 3: There has been a real difficulty getting the Arab world 254 00:12:16,120 --> 00:12:18,800 Speaker 3: more involved in what's happening here to try to keep 255 00:12:18,840 --> 00:12:23,120 Speaker 3: this conflict contained. Rosalind matheson what's your assessment of how 256 00:12:23,200 --> 00:12:25,359 Speaker 3: diplomacy is going at this point. 257 00:12:25,640 --> 00:12:27,880 Speaker 18: Well, certainly, we do know there's a lot of conversation 258 00:12:28,080 --> 00:12:31,080 Speaker 18: going on, as Oliver was just pointing out, although how 259 00:12:31,120 --> 00:12:34,640 Speaker 18: you have a peace summit without Israel is slightly tricky 260 00:12:35,120 --> 00:12:37,920 Speaker 18: given there at they're a key player in the conflict. 261 00:12:37,960 --> 00:12:39,920 Speaker 5: Obviously with Hamas. 262 00:12:39,559 --> 00:12:41,880 Speaker 18: We do know that there is an endless parade of 263 00:12:41,880 --> 00:12:45,720 Speaker 18: officials from Europe and elsewhere into the region. We do 264 00:12:45,840 --> 00:12:48,880 Speaker 18: know that also the Arab's talking to each other. A 265 00:12:48,960 --> 00:12:51,240 Speaker 18: very important thing to note this morning is that we're 266 00:12:51,280 --> 00:12:54,080 Speaker 18: hearing that the leaders of Saudi Arabia and the UAE 267 00:12:54,320 --> 00:12:57,560 Speaker 18: are holding a meeting. That's their first public meeting that 268 00:12:57,600 --> 00:13:00,600 Speaker 18: we know of in three years in real and that's 269 00:13:00,600 --> 00:13:04,520 Speaker 18: a very significant mood, because that shows perhaps a desire 270 00:13:04,640 --> 00:13:08,120 Speaker 18: on the part of these key powerbrokers in the region 271 00:13:08,240 --> 00:13:12,080 Speaker 18: to work together to limit the possibility of contagion from 272 00:13:12,080 --> 00:13:14,960 Speaker 18: this conflict. We do know that some of these states 273 00:13:14,960 --> 00:13:18,400 Speaker 18: are under pressure from their own people who angry what 274 00:13:18,480 --> 00:13:22,440 Speaker 18: they sees the treatment of people inside Gaza. But equally, 275 00:13:22,520 --> 00:13:25,800 Speaker 18: the leaders of these countries have been working delicately and 276 00:13:25,840 --> 00:13:29,960 Speaker 18: carefully towards sort of improving ties with Israel and certainly 277 00:13:30,320 --> 00:13:33,199 Speaker 18: sort of keeping a greater calm across the region, promoting 278 00:13:33,280 --> 00:13:37,800 Speaker 18: economic and trade their economies and trade and investment. So 279 00:13:37,800 --> 00:13:40,240 Speaker 18: they've got an interest in doing that. So that's one 280 00:13:40,280 --> 00:13:42,480 Speaker 18: meeting that's happening this morning. It's very much when we 281 00:13:42,480 --> 00:13:43,520 Speaker 18: should pay attention to. 282 00:13:44,000 --> 00:13:47,640 Speaker 3: As we await the comments from Arab leaders. Alie, we 283 00:13:47,720 --> 00:13:50,480 Speaker 3: did hear from President Biden last night from the Oval 284 00:13:50,480 --> 00:13:53,480 Speaker 3: Office defending continued US support for Israel as well as 285 00:13:53,600 --> 00:13:57,760 Speaker 3: Ukraine and other global conflict points around the world. How 286 00:13:57,840 --> 00:14:01,400 Speaker 3: is that message from the President being re in Israel? 287 00:14:01,880 --> 00:14:04,040 Speaker 17: I mean, I think it's received positively in Israel. He 288 00:14:04,080 --> 00:14:05,720 Speaker 17: echoed many of the things that he said when he 289 00:14:05,760 --> 00:14:07,760 Speaker 17: was here in Tel Aviv just a few days ago. 290 00:14:07,800 --> 00:14:09,800 Speaker 17: But I think that the tougher cell and the cell 291 00:14:09,840 --> 00:14:12,560 Speaker 17: that is more important for Israelis is how is this 292 00:14:12,600 --> 00:14:14,920 Speaker 17: going to go down with the American people? And this 293 00:14:14,960 --> 00:14:17,840 Speaker 17: is a question that Biden asked openly. Why should the Americans? 294 00:14:17,880 --> 00:14:20,120 Speaker 17: Why does this matter to the American people? And this 295 00:14:20,200 --> 00:14:23,040 Speaker 17: is where he was saying that basically terrorism and dictatorship 296 00:14:23,080 --> 00:14:26,000 Speaker 17: here talking about Hamas and Putin need to pay the price, 297 00:14:26,240 --> 00:14:28,280 Speaker 17: otherwise there will be more death, more destruction, and it 298 00:14:28,360 --> 00:14:31,440 Speaker 17: is in the national security interests of the United States. 299 00:14:31,640 --> 00:14:33,680 Speaker 17: And he does this appeal to the people of the 300 00:14:33,760 --> 00:14:35,920 Speaker 17: United States because he's going to ask for a lot 301 00:14:35,960 --> 00:14:38,840 Speaker 17: of money. We understand sixty billion dollars of that is 302 00:14:38,880 --> 00:14:41,840 Speaker 17: for Ukraine and fourteen billion is for Israeli defense, but 303 00:14:41,880 --> 00:14:45,960 Speaker 17: also another ten for humanitarian efforts, including Gaza. And again 304 00:14:46,040 --> 00:14:49,520 Speaker 17: he warned Israel in this speech, as he's done repeatedly, 305 00:14:49,600 --> 00:14:52,320 Speaker 17: evoking nine to eleven, saying the US sought revenge, they 306 00:14:53,360 --> 00:14:56,040 Speaker 17: got justice, but they should not be blinded by rage 307 00:14:56,040 --> 00:14:57,320 Speaker 17: because they made mistakes. 308 00:14:58,080 --> 00:15:01,080 Speaker 1: What is the risk that this spills over more widely. 309 00:15:01,600 --> 00:15:04,840 Speaker 18: Well, that really depends on a ground war if or 310 00:15:04,840 --> 00:15:07,560 Speaker 18: when it starts. It certainly seems that is Israel's intent 311 00:15:08,080 --> 00:15:10,200 Speaker 18: still to go into Gaza and what that looks like. 312 00:15:10,520 --> 00:15:13,520 Speaker 18: We do know that there's been some discussion, including from 313 00:15:13,560 --> 00:15:16,760 Speaker 18: the US, about perhaps helping frame that. Would it be 314 00:15:16,760 --> 00:15:20,160 Speaker 18: a more targeted incursion than a full scale war and 315 00:15:20,160 --> 00:15:23,400 Speaker 18: a lot will depend on that, quite frankly, but also 316 00:15:23,520 --> 00:15:26,080 Speaker 18: the unknowns of Iran and does Iran just say we 317 00:15:26,520 --> 00:15:29,480 Speaker 18: can't sit by, We need to do something. The risk 318 00:15:29,520 --> 00:15:31,280 Speaker 18: has to be high, and that's why you're seeing that 319 00:15:31,360 --> 00:15:34,160 Speaker 18: level of diplomacy in the region to try and avert it. 320 00:15:34,840 --> 00:15:39,120 Speaker 3: Rosalind Matheson and Oliver Crook of Bloomberg News team coverage 321 00:15:39,320 --> 00:15:43,760 Speaker 3: as the war between Israel and Hamas extends Intoday fourteen, 322 00:15:43,840 --> 00:15:46,440 Speaker 3: Olie Roz, thanks to you both for being with us 323 00:15:46,560 --> 00:15:49,760 Speaker 3: this morning. Now we want to turn from geopolitics to 324 00:15:49,840 --> 00:15:52,960 Speaker 3: the US economy. We did hear from Federal Reserve Chairman 325 00:15:53,160 --> 00:15:56,800 Speaker 3: Jerome Powell at the Economic Club of New York giving 326 00:15:56,840 --> 00:16:01,280 Speaker 3: a speech followed by a conversation with bloom David Weston. 327 00:16:01,440 --> 00:16:03,080 Speaker 1: Let's go to part of that discussion. 328 00:16:03,160 --> 00:16:06,240 Speaker 19: Now, are you surprised at how resilient the United States 329 00:16:06,280 --> 00:16:08,720 Speaker 19: economiation across the board. It seems like a very strong 330 00:16:08,720 --> 00:16:11,800 Speaker 19: economy despite all you've done to try to slow it down. 331 00:16:13,040 --> 00:16:18,320 Speaker 9: Yes, so we certainly have a very resilient economy on 332 00:16:18,360 --> 00:16:21,960 Speaker 9: our hands. We've got the economy growing strongly. If you 333 00:16:22,000 --> 00:16:24,720 Speaker 9: think back a year, many forecasts called for the US 334 00:16:24,720 --> 00:16:27,040 Speaker 9: economy economy to be in recession this year. 335 00:16:27,440 --> 00:16:28,280 Speaker 5: Not only has that. 336 00:16:28,240 --> 00:16:31,880 Speaker 9: Not happened, growth is now running for this year above 337 00:16:31,960 --> 00:16:35,080 Speaker 9: its longer run trend. So that's been a surprise, driven 338 00:16:35,160 --> 00:16:39,040 Speaker 9: largely by consumer spending, driven by a very strong job 339 00:16:39,080 --> 00:16:43,400 Speaker 9: market with people getting jobs with high first time nominal wages, 340 00:16:43,400 --> 00:16:46,160 Speaker 9: and that as inflation has come down real wages, which 341 00:16:46,200 --> 00:16:49,120 Speaker 9: is spurring spending. And we've also had inflation coming down, 342 00:16:49,200 --> 00:16:53,040 Speaker 9: so you know that's it really is a story of 343 00:16:53,120 --> 00:16:56,160 Speaker 9: much stronger demand. There may also be there may be 344 00:16:56,200 --> 00:16:59,960 Speaker 9: some ways in which the economy is less affected by 345 00:17:00,080 --> 00:17:04,840 Speaker 9: interest rates. It's hard to know precisely, but for example, companies, 346 00:17:05,040 --> 00:17:07,879 Speaker 9: many companies, any company with bond market access will have 347 00:17:08,000 --> 00:17:11,119 Speaker 9: termed out its debt right and therefore may not be 348 00:17:11,160 --> 00:17:13,560 Speaker 9: feeling the effects of higher rates. The same may be 349 00:17:13,680 --> 00:17:16,640 Speaker 9: true of homeowners who have a long term, fixed rate, 350 00:17:16,960 --> 00:17:20,320 Speaker 9: low rate mortgage, who then are therefore not because it's 351 00:17:20,359 --> 00:17:23,720 Speaker 9: not an adjustable rate or a higher rate, they're not 352 00:17:23,800 --> 00:17:26,480 Speaker 9: feeling that increase in rates, so the economy may be 353 00:17:26,640 --> 00:17:30,000 Speaker 9: somewhat less susceptible to the effects. 354 00:17:29,680 --> 00:17:30,440 Speaker 5: Of rate increases. 355 00:17:30,480 --> 00:17:33,199 Speaker 9: On the other hand, if you look at look at 356 00:17:33,240 --> 00:17:37,920 Speaker 9: interra sensitive spending, these are very much the places where 357 00:17:37,920 --> 00:17:40,840 Speaker 9: we see where we expect to see and do see effects. 358 00:17:40,840 --> 00:17:44,919 Speaker 9: So for example, in housing or in you know, the 359 00:17:44,920 --> 00:17:46,920 Speaker 9: housing effector has been sector. 360 00:17:46,600 --> 00:17:49,240 Speaker 5: Has been very affected by higher rates, as purchases of 361 00:17:50,280 --> 00:17:51,000 Speaker 5: durable goods. 362 00:17:51,080 --> 00:17:53,280 Speaker 9: If you look at surveys, people will not say that 363 00:17:53,320 --> 00:17:54,960 Speaker 9: it's a good time to buy a car or a house. 364 00:17:55,080 --> 00:17:55,960 Speaker 5: Quite the contrary. 365 00:17:56,400 --> 00:18:00,639 Speaker 9: So we see policy working through its usual channels. It 366 00:18:00,680 --> 00:18:02,760 Speaker 9: may just be that rates haven't been high enough for 367 00:18:02,840 --> 00:18:05,520 Speaker 9: long enough. And again it's all happening in the context 368 00:18:05,600 --> 00:18:06,879 Speaker 9: of a very strong demand. 369 00:18:07,119 --> 00:18:08,520 Speaker 5: We've had other speculators. 370 00:18:08,520 --> 00:18:10,280 Speaker 19: Maybe the terming out of debt, as you say, both 371 00:18:10,320 --> 00:18:14,720 Speaker 19: corporate debt and hustle debt, may diminish the effectiveness of 372 00:18:14,800 --> 00:18:17,359 Speaker 19: rate hikes. Do you have a view of whether that's true, 373 00:18:17,520 --> 00:18:19,680 Speaker 19: And if it is true, what does it say about 374 00:18:19,680 --> 00:18:21,600 Speaker 19: mantre plus. Does it mean you have to go farther 375 00:18:22,119 --> 00:18:23,679 Speaker 19: in the rate hikes or do you just not have 376 00:18:23,720 --> 00:18:24,520 Speaker 19: the power to affect it. 377 00:18:25,440 --> 00:18:29,679 Speaker 9: So no, I don't think that there's a fundamental shift 378 00:18:29,800 --> 00:18:32,200 Speaker 9: in the way that interest rates affect the economy. There 379 00:18:32,200 --> 00:18:34,840 Speaker 9: may be some differences in this cycle because of what 380 00:18:34,880 --> 00:18:38,879 Speaker 9: I mentioned. As I mentioned, we are seeing those are 381 00:18:38,920 --> 00:18:40,760 Speaker 9: the effects where we expect to see them, which is 382 00:18:40,800 --> 00:18:45,159 Speaker 9: interrasensitive spending, and also asset prices to some extent in 383 00:18:45,200 --> 00:18:48,000 Speaker 9: the exchange rate, which you're also seeing a strong exchange rate, 384 00:18:48,000 --> 00:18:51,760 Speaker 9: which is disinflationary. So I don't think there's a fundamental 385 00:18:51,880 --> 00:18:54,720 Speaker 9: change in the way monetary policy affects the economy. And 386 00:18:54,760 --> 00:18:57,239 Speaker 9: again it goes back to just very strong demand. We 387 00:18:57,280 --> 00:19:00,000 Speaker 9: take the economy as it is, We take fiscal power 388 00:19:00,680 --> 00:19:02,840 Speaker 9: and the economy and all the things we don't control, 389 00:19:02,880 --> 00:19:06,679 Speaker 9: they come to us, and we conduct policy always to 390 00:19:06,800 --> 00:19:11,040 Speaker 9: achieve maximum employment and stable prices. So we just take 391 00:19:11,080 --> 00:19:15,240 Speaker 9: what comes the fact that we have a strong, growing economy, 392 00:19:15,280 --> 00:19:20,000 Speaker 9: a strong growing labor market, and you know, inflation coming down. 393 00:19:20,119 --> 00:19:22,760 Speaker 9: These are the elements that we want to see that 394 00:19:23,000 --> 00:19:26,600 Speaker 9: to achieve the outcome we want. It may take more time, 395 00:19:26,720 --> 00:19:30,200 Speaker 9: but ultimately those that's this is the kind of thing 396 00:19:30,200 --> 00:19:33,080 Speaker 9: you would want to see along the path to getting 397 00:19:33,080 --> 00:19:35,000 Speaker 9: through this without a big increase in unemployment? 398 00:19:35,160 --> 00:19:38,680 Speaker 19: How much effect thus far has the FED had. We 399 00:19:39,000 --> 00:19:42,120 Speaker 19: all have memorized how long and variable legs? How long 400 00:19:42,119 --> 00:19:44,360 Speaker 19: and how variable? And where are you in that process? 401 00:19:44,600 --> 00:19:46,600 Speaker 19: Are you at the twenty five percent point the fifercent 402 00:19:46,680 --> 00:19:48,480 Speaker 19: in terms of seeing it in the effect in the 403 00:19:48,520 --> 00:19:49,160 Speaker 19: real economy. 404 00:19:49,720 --> 00:19:54,600 Speaker 5: So there's there's no precision in our understanding of how 405 00:19:54,640 --> 00:19:55,600 Speaker 5: long legs are. 406 00:19:57,119 --> 00:19:59,679 Speaker 9: One thing that has changed in the modern era is 407 00:19:59,720 --> 00:20:04,280 Speaker 9: that markets now, over the course of the last thirty years, 408 00:20:04,320 --> 00:20:06,960 Speaker 9: central banks have decided, instead of being secretive, to be 409 00:20:07,080 --> 00:20:10,480 Speaker 9: very transparent. And what that has meant is that markets 410 00:20:10,600 --> 00:20:14,880 Speaker 9: move actually well in anticipation, well before our policy moves. 411 00:20:14,880 --> 00:20:20,399 Speaker 9: So the transmission from policy moves to financial conditions actually 412 00:20:20,480 --> 00:20:22,760 Speaker 9: happens before the moves now, whereas that was not the 413 00:20:22,800 --> 00:20:26,439 Speaker 9: case fifty years ago when Milton Friedman coined the phrase 414 00:20:26,760 --> 00:20:31,120 Speaker 9: along and variable legs. But now you have financial conditions 415 00:20:31,200 --> 00:20:33,679 Speaker 9: changing and the questions how does it affect the economy? 416 00:20:33,800 --> 00:20:38,560 Speaker 9: The standard channels are asset prices and such intersensitive spending 417 00:20:38,600 --> 00:20:40,800 Speaker 9: in the exchange rate, for example. And again we do 418 00:20:40,880 --> 00:20:44,199 Speaker 9: see that happening, just not as fast as we would like. 419 00:20:44,560 --> 00:20:47,919 Speaker 9: And I would attribute some of that to just stronger demand. 420 00:20:48,240 --> 00:20:51,840 Speaker 9: Household savings were turned out to be higher. Household spending 421 00:20:51,920 --> 00:20:53,639 Speaker 9: has been stronger, and that's by far. 422 00:20:53,520 --> 00:20:54,720 Speaker 5: The largest part of the economy. 423 00:20:54,880 --> 00:20:57,240 Speaker 19: In order to conduct monetary policy effectively, do you need 424 00:20:57,280 --> 00:21:01,000 Speaker 19: at least hypothesis about how much already hit the economy, 425 00:21:01,040 --> 00:21:02,560 Speaker 19: because it's hard to know how much more you need 426 00:21:02,600 --> 00:21:04,400 Speaker 19: to do if you don't know how far you've come. 427 00:21:04,760 --> 00:21:07,400 Speaker 9: So on legs, I think if you think back, it's 428 00:21:07,440 --> 00:21:10,760 Speaker 9: been a year now since the last seventy five basis 429 00:21:10,760 --> 00:21:13,359 Speaker 9: point hike we did. It was the November meeting in 430 00:21:13,359 --> 00:21:16,359 Speaker 9: twenty twenty two. The first one was in June, so 431 00:21:16,400 --> 00:21:18,560 Speaker 9: it's more than a year, so we should be seeing 432 00:21:19,160 --> 00:21:21,560 Speaker 9: the effects. By the way, they don't all just arrive 433 00:21:21,640 --> 00:21:24,080 Speaker 9: on one day. They arrive and then they're thought to 434 00:21:24,200 --> 00:21:26,879 Speaker 9: peak and then to diminish. So there's a lot of 435 00:21:26,920 --> 00:21:29,919 Speaker 9: uncertainty around lags, and one of the reasons why we 436 00:21:29,960 --> 00:21:33,600 Speaker 9: have slowed down significantly this year is to give monetary 437 00:21:33,640 --> 00:21:36,840 Speaker 9: policy time to work. The truth is, though you can 438 00:21:36,880 --> 00:21:42,719 Speaker 9: find academic support for different different speeds and duration of lags, 439 00:21:42,720 --> 00:21:45,920 Speaker 9: so we have to use our eyes and a little 440 00:21:45,920 --> 00:21:49,040 Speaker 9: bit of risk management. In patients in slowing down the 441 00:21:49,080 --> 00:21:51,720 Speaker 9: pace to make sure that we are seeing the full effects. 442 00:21:51,760 --> 00:21:54,359 Speaker 9: And I think again that's part of why we've slowed 443 00:21:54,400 --> 00:21:57,879 Speaker 9: down this year. We went very quickly in twenty twenty 444 00:21:57,880 --> 00:21:59,919 Speaker 9: two to catch up to where we need to be, 445 00:22:00,080 --> 00:22:02,879 Speaker 9: and now we're moving carefully with these decisions. 446 00:22:03,720 --> 00:22:06,919 Speaker 19: So when you spoke back in August of twenty twenty 447 00:22:07,000 --> 00:22:09,359 Speaker 19: and sort of laid out the revisions to the framework 448 00:22:09,400 --> 00:22:12,560 Speaker 19: as it were, you said that in terms of anticipated growth, 449 00:22:12,600 --> 00:22:14,800 Speaker 19: the sort of consensus have gone from something like two 450 00:22:14,840 --> 00:22:16,680 Speaker 19: point five to one point eight percent. I think we're 451 00:22:16,680 --> 00:22:17,760 Speaker 19: the numbers you laid out of that. 452 00:22:18,080 --> 00:22:20,159 Speaker 5: Where are you now? Where's the FED? Where are you? 453 00:22:20,240 --> 00:22:21,320 Speaker 19: And what you think? Basically? 454 00:22:21,359 --> 00:22:22,760 Speaker 5: The long run growth is. 455 00:22:23,240 --> 00:22:26,800 Speaker 9: Long run potential growth is not something that moves around 456 00:22:26,800 --> 00:22:29,440 Speaker 9: a lot over time. But I would my own guess 457 00:22:29,480 --> 00:22:32,880 Speaker 9: is it's around two percent. I think that the standard 458 00:22:34,000 --> 00:22:36,200 Speaker 9: mainstream view would be a little bit below two percent, 459 00:22:36,320 --> 00:22:40,200 Speaker 9: but I would just say two percent real growth over time. 460 00:22:40,600 --> 00:22:43,080 Speaker 9: And you know what causes growth is you know, growth 461 00:22:43,119 --> 00:22:45,320 Speaker 9: in hours worked plus growth in productivity. 462 00:22:45,480 --> 00:22:46,560 Speaker 5: Growth in hours worked is. 463 00:22:46,800 --> 00:22:49,240 Speaker 9: A function of population growth in the long run and 464 00:22:49,280 --> 00:22:52,840 Speaker 9: also labor force participation. Many things affect productivity but if 465 00:22:52,840 --> 00:22:56,720 Speaker 9: you if you drop in reasonable standard longer term estimates 466 00:22:56,720 --> 00:22:59,960 Speaker 9: of hours work growth and productivity, which is just out 467 00:23:00,080 --> 00:23:03,440 Speaker 9: put per hour productivity growth, you get something around two percent, 468 00:23:03,480 --> 00:23:06,119 Speaker 9: and that's higher than most other advanced economies. 469 00:23:06,560 --> 00:23:09,680 Speaker 19: As you look at it, do you see historical precedents 470 00:23:09,680 --> 00:23:13,840 Speaker 19: for having growing economy with high rates over a long 471 00:23:13,880 --> 00:23:15,600 Speaker 19: period of time, I mean as you look back, I 472 00:23:15,640 --> 00:23:19,000 Speaker 19: mean like the late nineties, for example. What analogies do 473 00:23:19,040 --> 00:23:21,240 Speaker 19: you draw as you try to determine what this might 474 00:23:21,280 --> 00:23:23,399 Speaker 19: be doing at the economy with a longer term. 475 00:23:23,320 --> 00:23:27,440 Speaker 9: So that's really a question about what the level of 476 00:23:27,520 --> 00:23:30,119 Speaker 9: rates will be going for what the neutral level will be, 477 00:23:30,200 --> 00:23:33,400 Speaker 9: And I think it's very hard to know confidently what 478 00:23:33,440 --> 00:23:36,280 Speaker 9: the answer to that will be in five years. Some 479 00:23:36,359 --> 00:23:38,760 Speaker 9: of the reasons why rates were low for the last 480 00:23:38,800 --> 00:23:41,920 Speaker 9: twenty five years were just the aging of the global 481 00:23:41,920 --> 00:23:47,520 Speaker 9: population and globalization, and so lots of savings and relatively 482 00:23:48,119 --> 00:23:51,480 Speaker 9: with an aging population, savings greater than investment, so rates 483 00:23:51,480 --> 00:23:54,120 Speaker 9: are lower and productivity was low. So all of those 484 00:23:54,200 --> 00:23:57,000 Speaker 9: led to low interest rates. So what has changed with 485 00:23:57,080 --> 00:24:01,680 Speaker 9: the pandemic. You might see less effect from globalization, certainly 486 00:24:01,720 --> 00:24:05,120 Speaker 9: demographics that the aging of the global population is not changed. 487 00:24:06,359 --> 00:24:08,840 Speaker 9: I mean, this is a discussion we're having on an 488 00:24:08,840 --> 00:24:13,040 Speaker 9: ongoing basis. It doesn't really affect current policy. But where 489 00:24:13,080 --> 00:24:15,600 Speaker 9: will rates settle out? What will be at a normal rate? 490 00:24:15,680 --> 00:24:20,119 Speaker 9: So if a typical FED tightening cycle would leave you 491 00:24:20,119 --> 00:24:23,080 Speaker 9: at five or six percent, and this is in the 492 00:24:23,480 --> 00:24:26,399 Speaker 9: before the pandemic and before this the low inflation period, 493 00:24:26,840 --> 00:24:29,480 Speaker 9: you would have had had FED rates in four or 494 00:24:29,520 --> 00:24:32,000 Speaker 9: five percent or even higher. Frequently are we going back 495 00:24:32,000 --> 00:24:32,199 Speaker 9: to that? 496 00:24:32,280 --> 00:24:32,800 Speaker 5: I really don't know. 497 00:24:32,800 --> 00:24:35,080 Speaker 9: I wouldn't want to speculate. I mean, my guess is 498 00:24:35,080 --> 00:24:36,240 Speaker 9: it'll be somewhere in the middle. 499 00:24:36,320 --> 00:24:37,399 Speaker 5: But I don't know. 500 00:24:37,440 --> 00:24:40,320 Speaker 9: I mean, I think we can say this now, the 501 00:24:40,320 --> 00:24:42,840 Speaker 9: effective lower bound is not an issue. 502 00:24:42,880 --> 00:24:44,720 Speaker 5: You know, we were very concerned about that. 503 00:24:44,840 --> 00:24:47,359 Speaker 9: Right now we're very far from the effective lower bound 504 00:24:47,600 --> 00:24:50,760 Speaker 9: and the economy's handling it just fine. But that's you know, 505 00:24:50,840 --> 00:24:53,800 Speaker 9: that's because we're at a time of really elevated demand 506 00:24:55,160 --> 00:24:57,679 Speaker 9: coming out of the pandemic. As we reopened with fiscal 507 00:24:57,720 --> 00:25:00,119 Speaker 9: stimulus and monetary stimulus. We have very strong deman in 508 00:25:00,200 --> 00:25:03,640 Speaker 9: the United States. Hard to know what the economy will 509 00:25:03,680 --> 00:25:05,920 Speaker 9: want in the way of interest rates when when five 510 00:25:06,000 --> 00:25:07,920 Speaker 9: years from now, in all of the effects of the 511 00:25:08,040 --> 00:25:09,400 Speaker 9: pandemic are behind us. 512 00:25:12,000 --> 00:25:14,919 Speaker 20: This is Bloomberg day Break Today, your morning brief on 513 00:25:15,000 --> 00:25:18,520 Speaker 20: the stories making news from Wall Street to Washington and beyond. 514 00:25:18,800 --> 00:25:21,560 Speaker 2: Look for us on your podcast feed at six am 515 00:25:21,640 --> 00:25:25,280 Speaker 2: Eastern each morning, on Apple, Spotify, and anywhere else you 516 00:25:25,359 --> 00:25:26,520 Speaker 2: get your podcasts. 517 00:25:26,640 --> 00:25:29,359 Speaker 20: You can also listen live each morning starting at five 518 00:25:29,400 --> 00:25:32,040 Speaker 20: am Wall Street Time on Bloomberg eleven three to zero 519 00:25:32,040 --> 00:25:34,920 Speaker 20: in New York, Bloomberg ninety nine to one in Washington, 520 00:25:35,000 --> 00:25:37,840 Speaker 20: Bloomberg one oh six to one in Boston, and Bloomberg 521 00:25:37,960 --> 00:25:39,639 Speaker 20: ninety sixty in San Francisco. 522 00:25:40,000 --> 00:25:43,160 Speaker 2: Our flagship New York station is also available on your 523 00:25:43,200 --> 00:25:48,639 Speaker 2: Amazon Alexa devices. 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