WEBVTT - Core US Inflation Picks Up, Damping Odds of Outsize Fed Cut 0:00:02.920 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg Business Wait inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:26.960 --> 0:00:29.400 Let's get to one of the key data points really 0:00:29.400 --> 0:00:31.840 before next week's FED meeting. I feel like Tim, we 0:00:31.920 --> 0:00:34.800 just keep counting down, you know, jobs report, inflation reports, 0:00:34.800 --> 0:00:35.600 just different things. 0:00:35.800 --> 0:00:37.800 We kept kind of making our way through. 0:00:37.720 --> 0:00:38.800 T minus seven days. 0:00:39.200 --> 0:00:41.400 Welllock, I'm kind of excited. 0:00:41.680 --> 0:00:44.159 What we got this morning, though, was another readout inflation 0:00:44.280 --> 0:00:47.839 data that showed underlying US inflation unexpectedly picked up in 0:00:47.880 --> 0:00:49.880 the month of August, higher prices. 0:00:49.479 --> 0:00:50.879 For housing and travel. 0:00:51.520 --> 0:00:55.160 So maybe that fifty basis point rate cut that some 0:00:55.280 --> 0:00:57.320 have been banking on not going to happen. 0:00:57.640 --> 0:01:01.560 Let's ask Bloomberg News International Economics and Policy correspondent Michael McKee. 0:01:01.560 --> 0:01:03.240 He's here in the studio, So. 0:01:03.240 --> 0:01:05.640 Headline numbers, Mike, what everyone is talking about the so 0:01:05.720 --> 0:01:10.200 called CPI. Does it rule out fifty basis points come 0:01:10.200 --> 0:01:10.679 next week? 0:01:10.920 --> 0:01:12.399 No, it doesn't rule it out, But I think the 0:01:12.400 --> 0:01:15.240 fatas default position was always twenty five basis points and 0:01:15.280 --> 0:01:17.279 the fifty with sort of a wish on Wall Street 0:01:17.680 --> 0:01:18.440 that they. 0:01:18.319 --> 0:01:20.600 Are now ruling out for themselves. 0:01:21.280 --> 0:01:23.680 If you look at the overall numbers, we saw the 0:01:23.720 --> 0:01:26.679 headline CPI come down to two and a half percent, 0:01:26.880 --> 0:01:30.520 and we saw the core at three point two percent, 0:01:30.600 --> 0:01:34.600 But those include twelve months ago. Well, it's an annual 0:01:34.680 --> 0:01:37.479 rate and that's irrelevant. 0:01:37.480 --> 0:01:40.160 Now. If you look at it on a six month. 0:01:39.959 --> 0:01:45.360 Basis, the headline is at one point nine percent and 0:01:45.440 --> 0:01:48.160 the core is at one point eight percent. If you 0:01:48.200 --> 0:01:50.200 look at it at a three month basis, the three 0:01:50.240 --> 0:01:54.520 most recent months, you're at one point one five percent 0:01:54.680 --> 0:01:58.400 for the headline and two point four percent for the core, 0:01:59.280 --> 0:02:02.880 So you're you'd be especially on the headline, thinking well, 0:02:02.960 --> 0:02:04.800 maybe we're too low. 0:02:05.240 --> 0:02:08.200 So you know, with the Fed think it's too low. 0:02:08.240 --> 0:02:10.720 Do they look at that a month or I don't 0:02:10.720 --> 0:02:13.320 think they would look at it that way, but they are. 0:02:15.480 --> 0:02:18.760 If they wanted to do fifty, there would be an 0:02:18.800 --> 0:02:22.040 excuse in that they could say that the economy may 0:02:22.080 --> 0:02:22.799 be slowing too. 0:02:23.000 --> 0:02:24.840 Do they need to do fifty? Mic In your view, 0:02:24.840 --> 0:02:25.720 when you look at the rest. 0:02:25.639 --> 0:02:29.440 Of and I think That's why the consensus has merged 0:02:29.440 --> 0:02:32.240 around the idea of twenty five is because the economy 0:02:32.320 --> 0:02:36.480 is not falling apart. We're still seeing strong consumer spending 0:02:36.520 --> 0:02:40.920 and we're seeing jobs reasonable. We didn't get quite as 0:02:41.000 --> 0:02:42.200 many last week. 0:02:42.200 --> 0:02:44.320 But we saw the unemployment rate fall. 0:02:44.760 --> 0:02:48.160 So there's not a flashing red light out there that 0:02:48.200 --> 0:02:49.760 says we got to move quickly. 0:02:50.400 --> 0:02:52.480 There is a flashing red headline that I do want 0:02:52.480 --> 0:02:54.360 to bring to your attention. It's kind of perfect that 0:02:54.400 --> 0:02:56.800 we have you in here. The Fed Inspector General releases 0:02:56.800 --> 0:03:00.760 a report on Bostic's investments. The Fed Inspector General didn't 0:03:00.760 --> 0:03:06.200 find evidence that Bostick traded on confidential information. Mike remind 0:03:06.240 --> 0:03:07.680 everyone what was going on here. 0:03:08.200 --> 0:03:13.280 Well, it's kind of a an offshoot of the earlier 0:03:13.520 --> 0:03:19.040 FED issues about whether they properly properly disclosed. 0:03:19.120 --> 0:03:22.200 It was a Boston Fed and the Dallas Fed. Even J. 0:03:22.360 --> 0:03:23.280 Powell got caught up in it. 0:03:23.400 --> 0:03:29.040 I had forgotten that did they disclose accurately what trades 0:03:29.080 --> 0:03:31.880 had been done? And so the FED, after the initial round, 0:03:31.960 --> 0:03:36.640 tightened the rules. And the way this story went there 0:03:37.320 --> 0:03:42.880 was Bostick had to refile his financial forms because it 0:03:42.960 --> 0:03:46.120 turned out that he had that there had been trades 0:03:46.160 --> 0:03:49.040 made during a time period when there shouldn't have been 0:03:49.120 --> 0:03:51.320 trades made, which brought up the question of whether there 0:03:51.400 --> 0:03:55.680 was a confidential conflict of interest. And what Bostick said 0:03:55.720 --> 0:03:59.160 at the time was that this was a mistake by 0:03:59.240 --> 0:04:04.040 his trustee who's running his keeping track of his money 0:04:04.040 --> 0:04:07.360 because they didn't realize that the rules had changed. And 0:04:07.440 --> 0:04:10.600 I guess the Inspector General says, yes, you know, the 0:04:11.120 --> 0:04:14.080 trades created the appearance of the conflict of interest, but 0:04:14.200 --> 0:04:18.560 it wasn't him doing something based on confidential information. 0:04:18.680 --> 0:04:20.479 So just remind us going forward, and then we'll go 0:04:20.560 --> 0:04:23.919 back to the inflation data. So things though have changed 0:04:23.960 --> 0:04:26.960 in terms of oversight of FED officials in terms of trading. 0:04:27.040 --> 0:04:28.479 Is it what we came out of all of this. 0:04:28.720 --> 0:04:32.600 Well, they completely changed the disclosure rules and they have 0:04:32.680 --> 0:04:36.400 to disclose any trades. They can't make trades at certain 0:04:36.440 --> 0:04:40.039 times now, and there are some things that. 0:04:40.040 --> 0:04:41.360 Are not allowed to trade. 0:04:41.480 --> 0:04:45.240 So it's a much tighter regime and we get the 0:04:45.240 --> 0:04:50.919 financial disclosure forms every year and they haven't suggested anything 0:04:51.000 --> 0:04:52.120 bad in a while. 0:04:52.400 --> 0:04:54.360 All right, all right, good to know, because you're right, 0:04:54.360 --> 0:04:56.160 it's been a while since we've got a headline. 0:04:56.360 --> 0:04:58.200 I mean, reporters just pour over those. 0:05:00.200 --> 0:05:03.560 As we do, and as we also pour over, you know, 0:05:03.600 --> 0:05:05.600 these economic data points, especially because we've got a FED 0:05:05.600 --> 0:05:07.080 meeting next week and we know this is going to 0:05:07.120 --> 0:05:09.360 be probably a big one right where the Fed actually 0:05:09.920 --> 0:05:13.680 starts to cut rates. Having said that, the economic risks 0:05:13.880 --> 0:05:16.360 right now, Mike, in the US economy, is it more 0:05:16.360 --> 0:05:18.000 on the labor market side of things? 0:05:18.000 --> 0:05:19.200 Like where are the risks? 0:05:19.520 --> 0:05:22.360 Because I do feel like with this political election, the 0:05:22.400 --> 0:05:25.080 economy is still front and center. I was away and 0:05:25.120 --> 0:05:26.680 I was talking to somebody and I was making a 0:05:26.680 --> 0:05:28.440 purchase and it was under a hundred dollars, and I said, 0:05:28.480 --> 0:05:30.360 oh my god, it's so nice to make a purchase 0:05:30.400 --> 0:05:32.200 that's under a hundred dollars because it doesn't feel like 0:05:32.240 --> 0:05:35.479 you get away with groceries or was it food at home? 0:05:36.160 --> 0:05:37.440 It was the things we're going to talk to Mike 0:05:37.440 --> 0:05:38.440 about in thirty seconds. 0:05:38.440 --> 0:05:40.520 It was not baking our food. But what she said 0:05:40.520 --> 0:05:42.360 to me is, you know, I get my paycheck, I 0:05:42.440 --> 0:05:44.960 deposit it and it's gone right away. And it just 0:05:45.000 --> 0:05:47.479 speaks to how many Americans are struggling right now. 0:05:47.680 --> 0:05:50.720 I think you probably would have heard that prior to 0:05:50.760 --> 0:05:56.520 the pandemic too. What people tend to forget the idea that, yes, 0:05:56.960 --> 0:05:59.880 the price level's gone up for a lot of things. 0:06:00.480 --> 0:06:03.960 Input prices went up and so that fed through and 0:06:04.000 --> 0:06:08.919 now they've basically sort of stopped rising, but the level 0:06:08.960 --> 0:06:11.080 of prices is higher than it was. The one thing 0:06:11.120 --> 0:06:13.960 everybody leaves out when they come out with those statistics, though, 0:06:14.080 --> 0:06:17.880 is the level of incomes has also risen and in 0:06:17.920 --> 0:06:21.000 the last year been higher than the inflation rate. So 0:06:21.080 --> 0:06:23.880 you're really still ahead of inflation. But what sticks in 0:06:23.920 --> 0:06:27.640 your head is when you go to the grocery store 0:06:27.680 --> 0:06:30.280 and the price is higher, You're not thinking about, well, 0:06:30.320 --> 0:06:32.280 I made a little bit more of my paycheck this month, 0:06:32.760 --> 0:06:35.840 because that was me. I'm so great, I get more money. 0:06:36.040 --> 0:06:38.840 But I'm getting screwed because the prices. 0:06:38.440 --> 0:06:38.880 Have gone up. 0:06:38.920 --> 0:06:40.719 But as you reminded us on Bloomberg TV this morning, 0:06:40.800 --> 0:06:43.560 some prices are actually coming down, including grocery prices. 0:06:43.720 --> 0:06:44.320 This came up. 0:06:44.240 --> 0:06:48.120 Last night the day yeah they asked me about the 0:06:48.160 --> 0:06:50.760 financial aspects of the debate. Last night, I pointed out 0:06:50.800 --> 0:06:53.240 that grocery prices were a big deal. They were down 0:06:54.440 --> 0:06:57.560 where they were flat this month, they were down by 0:06:57.680 --> 0:07:00.040 a tenth last month, and basically they've been flat for 0:07:00.040 --> 0:07:01.160 a couple of months. 0:07:01.200 --> 0:07:03.720 And I think Trump brought up bacon. 0:07:04.160 --> 0:07:06.880 Bacon prices have been down big for two months now, 0:07:06.920 --> 0:07:10.080 down one point seven percent this past month. And then 0:07:10.120 --> 0:07:13.440 I noted that if you had to replace a pet, 0:07:14.240 --> 0:07:17.520 pet prices were lower, you had. 0:07:17.400 --> 0:07:17.800 To go there. 0:07:17.880 --> 0:07:19.160 Huh, had to go there. 0:07:20.240 --> 0:07:22.400 And if you don't understand that, just you know, Google, 0:07:22.440 --> 0:07:23.040 watch the boot. 0:07:23.160 --> 0:07:25.920 Just watch the debate, which you all shid as good Americans. 0:07:26.240 --> 0:07:27.000 Mike, thank you so much. 0:07:27.040 --> 0:07:30.080 As always, Bloomberg News International Economics and Policy correspondent. 0:07:30.840 --> 0:07:34.360 You're listening to the Bloomberg Business Week podcast. Catch US 0:07:34.400 --> 0:07:37.640 Live weekday afternoons from two to five pm Eastern. Listen 0:07:37.680 --> 0:07:39.840 on Apple car Play and then brought auto with a 0:07:39.840 --> 0:07:44.160 Bloomberg Business app, or watch US Live on YouTube to. 0:07:44.240 --> 0:07:45.920 Continuing their coverage of last night's debate. 0:07:45.960 --> 0:07:49.760 As you know, Democratic Vice President Kamala Harris and Republican 0:07:49.800 --> 0:07:52.560 Donald Trump former president Donald Trump's barring through their first 0:07:52.600 --> 0:07:55.440 debate with the former president, often on the defensive of 0:07:55.680 --> 0:07:59.440 abortion rights, the January sixth Insurrection, on foreign policy and 0:07:59.520 --> 0:08:00.600 sometimes trade. 0:08:01.040 --> 0:08:04.720 Well, let's be clear that the Trump administration resulted in 0:08:04.800 --> 0:08:07.400 a trade deficit, one of the highest we've ever seen 0:08:07.440 --> 0:08:11.120 in the history of America. He invited trade wars. You 0:08:11.160 --> 0:08:14.360 want to talk about his deal with China. What he 0:08:14.520 --> 0:08:17.960 ended up doing is under Donald Trump's presidency, he ended 0:08:18.000 --> 0:08:23.720 up selling American chips to China to help them improve 0:08:23.760 --> 0:08:25.480 and modernize their military. 0:08:26.320 --> 0:08:28.720 And that, of course was Vice President Kamala Harris talking 0:08:28.760 --> 0:08:33.439 trade with former President Donald Trump. Her views on the 0:08:33.480 --> 0:08:36.120 Trump trade policy. Let's get more on the debate in 0:08:36.160 --> 0:08:38.440 the political conversation that is, and that maybe needs to 0:08:38.480 --> 0:08:40.800 be back with us. A Stefan sila Key has worked 0:08:40.800 --> 0:08:43.120 in leadership roles in both the private and public sectors, 0:08:43.120 --> 0:08:47.000 including a nearly thirty year on Wall Street. Former Undersecretary 0:08:47.000 --> 0:08:50.000 of Commerce for International Trade at the US Department of Commerce. 0:08:50.040 --> 0:08:53.359 During the Obama administration, he also headed the International Trade Administration. 0:08:53.800 --> 0:08:55.640 His background is so rich, which is why we lean 0:08:55.679 --> 0:08:57.839 on him a lot. He is also managing partner and 0:08:57.880 --> 0:09:01.480 founder Bridge Park Advisors, the financing advisory firm. He's back 0:09:01.480 --> 0:09:04.920 here in our Bloomberg Interactive Broker studio. He also, last 0:09:04.920 --> 0:09:08.040 time he was on with Us, said that President Biden 0:09:08.080 --> 0:09:10.079 would step down from the race. So first of all 0:09:10.120 --> 0:09:13.800 congratulations and will you buy me a lottery ticket? Why 0:09:13.800 --> 0:09:16.640 did you think that so much? Because he had no choice? 0:09:16.840 --> 0:09:17.560 Remind us? 0:09:17.880 --> 0:09:19.959 And why you were thinking about that because it was 0:09:20.000 --> 0:09:21.120 before he did it obviously. 0:09:21.200 --> 0:09:21.360 Yeah. 0:09:21.360 --> 0:09:24.040 I mean, if you recall, Carol, this was right after 0:09:24.760 --> 0:09:27.880 the former president was shot, and I thought that, you know, 0:09:28.240 --> 0:09:32.000 that opportunity for him to look so presidential frankly, was 0:09:32.040 --> 0:09:36.000 going to give him a real bump, and I thought 0:09:36.000 --> 0:09:40.080 it was going to force President Biden's hand. And fundamentally, 0:09:40.120 --> 0:09:42.600 what I told you is when I believe that when 0:09:42.600 --> 0:09:46.920 he was convinced and his closest advisors and confidence was 0:09:47.040 --> 0:09:49.160 were convinced that he was going to lose, he was 0:09:49.160 --> 0:09:50.800 going to do the right thing and be a patriot 0:09:51.280 --> 0:09:52.920 and do the right thing for the country and for 0:09:53.000 --> 0:09:53.480 the party. 0:09:53.559 --> 0:09:56.520 And that's ended up being he did. That's what he did. 0:09:57.000 --> 0:09:59.480 So your thoughts on last night and what the race 0:09:59.559 --> 0:10:03.080 is now? Did we get enough when it comes to 0:10:03.200 --> 0:10:05.720 economics and policy and things that Americans care about? 0:10:05.800 --> 0:10:08.640 You know, I was actually surprised about how little of 0:10:08.640 --> 0:10:12.200 the debate actually covered economic topics. Where you look at 0:10:12.240 --> 0:10:15.640 all of the polling, it says economic issues are the 0:10:15.679 --> 0:10:19.679 most important things that are going to drive undecided voters 0:10:21.280 --> 0:10:24.480 votes in the election. One is the economy, and two 0:10:24.600 --> 0:10:28.640 is inflation. I'm not sure not part of the economy. 0:10:29.400 --> 0:10:31.800 But I think we got, you know, far less of 0:10:31.880 --> 0:10:35.280 a real substance of dialogue on those topics, and I 0:10:35.320 --> 0:10:37.600 would have hoped and expected. And I also thought that, 0:10:37.679 --> 0:10:40.480 you know, there was really very peripheral conversation around China, 0:10:40.800 --> 0:10:44.080 which I also might have expected given the important issues 0:10:44.640 --> 0:10:47.040 that our country faces with its greatest competitor. 0:10:47.400 --> 0:10:50.600 We did get some conversation on tariffs, and Donald Trump 0:10:50.679 --> 0:10:53.080 did push back on what we heard from Kamala Harris 0:10:53.559 --> 0:10:56.120 in that clip just now by saying that the Biden 0:10:56.120 --> 0:10:59.520 administration did leave attack some of the tariffs that the 0:10:59.559 --> 0:11:01.800 Trump and ggustration had put on China. What are your 0:11:01.800 --> 0:11:04.599 thoughts around those types of protectionist trade policies. 0:11:04.720 --> 0:11:08.160 You know, it's interesting, Tim, actually both parties are really 0:11:08.280 --> 0:11:13.200 largely aligned on tariffs and trade. Actually, there are, of 0:11:13.240 --> 0:11:17.560 course some nuances. Former President Trump is doubling down on 0:11:17.760 --> 0:11:22.200 his reasonably aggressive, you know, trade stance. What he's said 0:11:22.240 --> 0:11:25.600 at least was he would implement tariffs of ten to 0:11:25.600 --> 0:11:27.920 twenty percent across the board and sixty percent of goods 0:11:27.920 --> 0:11:31.040 coming in from China with a broad brush. I don't 0:11:31.040 --> 0:11:35.840 think that's particularly effective. You know, to be sure, tariffs 0:11:36.000 --> 0:11:41.240 have a important place to protect industry, US industry, where 0:11:41.240 --> 0:11:45.160 those industries are critical to our national security interest. But 0:11:45.200 --> 0:11:48.040 when you do it on a broad brushed basis, at least, 0:11:48.080 --> 0:11:51.160 it's my view that the light's not worth the candle 0:11:51.280 --> 0:11:55.400 because clearly it's inflationary. I think it actually costs you 0:11:55.440 --> 0:11:58.360 more jobs than it saves you, and costs get passed 0:11:58.400 --> 0:12:00.439 on to the consumer. And frankly, there are a lot 0:12:00.440 --> 0:12:03.839 of industries where we are just not competing effectively on 0:12:03.880 --> 0:12:06.959 a global basis, and as a result, taxing those goods 0:12:07.040 --> 0:12:10.520 coming in is just you know, bad for US consumers 0:12:10.520 --> 0:12:11.120 and is inflation. 0:12:11.240 --> 0:12:13.000 So it's not apples to apples in terms of what 0:12:13.800 --> 0:12:17.480 Donald Trump is proposing now stuff in terms of more 0:12:17.600 --> 0:12:19.800 Chinese goods that are coming in versus what we've seen 0:12:19.920 --> 0:12:22.920 during the Trump administration, what continued into the Biden administration, 0:12:23.000 --> 0:12:25.800 specifically on high tech and chips in particular. 0:12:25.920 --> 0:12:27.200 So it's not the same thing. 0:12:27.800 --> 0:12:30.160 Well, the tariffs, I mean, let's separate. One of the 0:12:30.160 --> 0:12:35.320 things the Biden administration did was export controls as it 0:12:35.360 --> 0:12:38.560 relates to chips and critical technology, but specifically as it 0:12:38.600 --> 0:12:42.760 relates to tariffs. You know, this started with steel production 0:12:43.720 --> 0:12:51.440 and the issue around state owned enterprises in China, which 0:12:51.480 --> 0:12:55.160 controls steel production and now are by far the leading 0:12:55.200 --> 0:12:58.079 producer of steel around the world and have flooded the market. 0:12:58.320 --> 0:13:02.960 The fact is President Trump put on tariffs for imported 0:13:03.000 --> 0:13:06.560 steel from China. The fact is the Biden administration kept 0:13:06.559 --> 0:13:10.520 those tariffs. But the fact is China's behavior has not changed, 0:13:10.960 --> 0:13:14.200 and so the question always should become in these circumstances, 0:13:14.640 --> 0:13:17.840 was it effective and at least so far in changing 0:13:17.920 --> 0:13:21.600 Chinese behavior as it relates to steel. It hasn't been effective, 0:13:21.600 --> 0:13:23.760 and in fact it's gotten in many ways worse because 0:13:23.760 --> 0:13:26.600 the Chinese economy has slowed and as a result, their 0:13:26.640 --> 0:13:30.800 domestic consumption of steel has gone down. And what's happened 0:13:30.800 --> 0:13:33.840 to all that steel that continues to be produced. It's 0:13:33.880 --> 0:13:40.040 being sent overseas, driving down prices and creating real global 0:13:41.200 --> 0:13:44.120 instability in that steel in the steel market. 0:13:44.880 --> 0:13:48.040 You did mention the economy and inflation, two things that 0:13:48.080 --> 0:13:50.040 we know thanks to pull after pollar on the top 0:13:50.040 --> 0:13:52.560 of mind for voters, we learned a little bit more 0:13:52.600 --> 0:13:55.800 about Kamala Harris last night. But still, since she's relatively 0:13:55.840 --> 0:13:57.520 new as a candidate and it doesn't have a full 0:13:57.520 --> 0:14:01.000 policy position out there, we don't know everything about how 0:14:01.040 --> 0:14:03.000 she feels about this stuff. Some of her other policies 0:14:03.000 --> 0:14:07.400 that she's unveiled in recent weeks include not no taxing 0:14:07.400 --> 0:14:10.960 tips she's come out with that first time home buyers 0:14:11.000 --> 0:14:14.120 getting some sort of home buying credit, expansion of the 0:14:14.160 --> 0:14:18.560 child tax credit, supporting small businesses we learned in recent 0:14:18.600 --> 0:14:23.320 weeks with tax cuts there. But let's go through a 0:14:23.320 --> 0:14:25.600 couple of those tips when you talk specifically about the 0:14:25.600 --> 0:14:27.640 home the home buying, the home buying. 0:14:27.400 --> 0:14:30.160 One, to me is interesting, and you didn't mention, obviously 0:14:30.160 --> 0:14:33.720 the whole price gouging price issue that she raised, because 0:14:34.080 --> 0:14:38.479 you know, to me, these both reflect a fundamental misunderstanding 0:14:38.600 --> 0:14:41.720 of reasonably simple economics, right, which is, if you give 0:14:41.800 --> 0:14:45.160 somebody twenty five thousand dollars to go buy a first home, 0:14:45.720 --> 0:14:49.640 and there is frankly a not a demand issue, but 0:14:49.680 --> 0:14:51.840 a supply issue, let me tell you what's going to 0:14:51.880 --> 0:14:55.960 happen that curve goes up and houses are going to 0:14:56.000 --> 0:14:57.560 cost twenty five thousand dollars. 0:14:57.560 --> 0:14:58.760 More basic economics. 0:14:58.920 --> 0:15:02.600 Basic economics I just don't see how that works and 0:15:02.680 --> 0:15:05.280 does what she wants to do, which is to actually 0:15:05.320 --> 0:15:10.280 assist new home buyers in affording their first terms. What 0:15:10.280 --> 0:15:12.640 it's going to do is just increase the prices of 0:15:14.000 --> 0:15:18.200 homes and so to me, this is very similar with 0:15:18.280 --> 0:15:21.520 the whole price gouging issue which you talked about in 0:15:21.520 --> 0:15:25.240 groceries and in food retail. As we all know, when 0:15:25.280 --> 0:15:28.680 you don't let the market set prices, let that leads 0:15:28.680 --> 0:15:32.280 to inefficiencies and in this particular case, would lead to 0:15:32.480 --> 0:15:36.640 shortages in certain goods. You know, again, the supply and 0:15:36.680 --> 0:15:39.960 demand does Carol suggested, it sets prices, and when government 0:15:40.320 --> 0:15:44.720 artificially sets prices, you lose the signaling impact of what 0:15:44.960 --> 0:15:48.000 supply and demand leads to and as a result, you 0:15:48.040 --> 0:15:51.320 get market inefficiencies, which is going to be bad ultimately 0:15:51.360 --> 0:15:53.800 for consumers because when they go buy macaroni and cheese, 0:15:53.840 --> 0:15:55.720 it it's not going to be on the shelf because 0:15:55.760 --> 0:15:57.720 companies aren't going to be able to make enough money. 0:15:57.760 --> 0:16:00.560 I would also observe that it's not like the food 0:16:00.560 --> 0:16:04.760 retailing industry is such a profitable business. I mean, at 0:16:04.800 --> 0:16:08.240 the height of the pandemic, the best grossers were making 0:16:08.280 --> 0:16:11.720 what five ish percent margins, right, And so as a 0:16:11.760 --> 0:16:14.120 result of that, the notion that they're price gouging is 0:16:14.160 --> 0:16:15.800 a little bit of a head scratcher. 0:16:15.920 --> 0:16:18.840 One thing that's stuck with me, or stayed with me 0:16:19.040 --> 0:16:22.760 from our last conversation is, you know, the stock market 0:16:23.280 --> 0:16:26.040 isn't Main Street, right, and so there are a lot 0:16:26.080 --> 0:16:28.800 of Americans that are struggling. So I'm trying to understand 0:16:28.840 --> 0:16:32.040 because you know, this race is a close one no 0:16:32.040 --> 0:16:33.880 matter what, and these are two people who stand for 0:16:34.000 --> 0:16:37.360 very different things and a very different candidate. Why is 0:16:37.400 --> 0:16:40.040 it in such a rich country and in a market 0:16:40.120 --> 0:16:42.960 where companies seem to get richer and richer, that we're 0:16:43.000 --> 0:16:45.960 not able to pass that wealth on to more workers. 0:16:45.960 --> 0:16:48.600 I know wages are starting to go up, but how 0:16:48.640 --> 0:16:49.960 do we fix that? 0:16:50.920 --> 0:16:53.640 Well, look, I mean they're that's a big one. That 0:16:54.200 --> 0:16:56.520 is a big one, and it's you know, it relates, 0:16:56.600 --> 0:17:02.200 at least in my view, to education to opportunity, which 0:17:02.440 --> 0:17:06.439 you know, which touches a whole host of policies. But 0:17:06.480 --> 0:17:09.520 I think very narrowly as it relates to what is 0:17:09.560 --> 0:17:13.640 causing the dissatisfaction with the economy today, it is because 0:17:13.800 --> 0:17:16.960 prices are elevated and prices are elevated because of what 0:17:17.040 --> 0:17:21.400 happened in COVID and what's happened after where both administrations, frankly, 0:17:22.280 --> 0:17:24.760 you know, have a lot to answer for because of 0:17:24.880 --> 0:17:28.320 the increase in the deficits, in the deficit that both 0:17:28.680 --> 0:17:32.840 parties policies caused, and until they tackle that, I think 0:17:32.880 --> 0:17:36.400 the conversation about the stock market is high, interest rates 0:17:36.400 --> 0:17:39.800 are low, inflation is under control, is fine. But as 0:17:39.800 --> 0:17:44.679 your last guest or commentator suggested, inflation is interesting, but 0:17:44.760 --> 0:17:47.080 it's a point to point measure. It has nothing to 0:17:47.119 --> 0:17:48.119 do with prices. 0:17:48.440 --> 0:17:51.280 Prices are high, right, right, and come down. 0:17:51.160 --> 0:17:53.480 With I think the problem is Americans, whom most of 0:17:53.520 --> 0:17:57.240 whom have not experienced inflation, don't understand that about inflation. 0:17:57.280 --> 0:17:58.720 They think of inflation as what they pay at the 0:17:58.760 --> 0:18:01.439 gas pump, and they see those prices fluctuate, So they 0:18:01.480 --> 0:18:03.399 do see gas prices come down, and maybe that's what 0:18:03.440 --> 0:18:04.280 they expect, other. 0:18:04.200 --> 0:18:06.280 Than gas prices are now at a three or low. 0:18:07.200 --> 0:18:11.240 Former President Trump is very fixated on oil and gas 0:18:11.240 --> 0:18:13.840 and gas prices because he thinks there's a direct linkage 0:18:13.880 --> 0:18:17.919 between gas and prices and inflation. I don't get that 0:18:18.080 --> 0:18:21.120 economics either. In fact, you know there is no more 0:18:21.119 --> 0:18:24.800 of a global commodity than oil and gas, and those 0:18:24.840 --> 0:18:28.240 prices are not set narrowly based on US production. And 0:18:28.280 --> 0:18:31.679 so I think that's another example of especially given the 0:18:31.720 --> 0:18:37.480 importance of energy in Pennsylvania, another example of campaign rhetoric 0:18:37.640 --> 0:18:40.680 as opposed to you know, real economics and real math. 0:18:41.880 --> 0:18:43.920 Every time we wrap up with you, I'm like, wait, 0:18:44.000 --> 0:18:47.000 I have a million more questions, so you have to 0:18:47.000 --> 0:18:47.560 come back again. 0:18:48.119 --> 0:18:49.560 We're always happy to join you guys. 0:18:49.640 --> 0:18:51.000 So we so much appreciated. 0:18:51.040 --> 0:18:53.199 I'm Stefan Seek, Thank you so much, maaging partner over 0:18:53.240 --> 0:18:55.760 at Bridge Park Advisors, as we say, former Undersecretary of 0:18:55.800 --> 0:18:58.000 Commerce for International Trade at the used Department of Commerce 0:18:58.040 --> 0:19:01.080 that was during the Obama administration, but really looks at 0:19:01.080 --> 0:19:03.320 things from, as we say, the public and private sectors. 0:19:03.359 --> 0:19:05.880 All right, folks, you are listening and watching Bloomberg Business Week. 0:19:07.840 --> 0:19:11.720 You're listening to the Bloomberg Business Week podcast. Listen live 0:19:11.800 --> 0:19:14.600 each weekday starting at two pm Eastern on Apple car 0:19:14.720 --> 0:19:17.679 Play and Android Auto with the Bloomberg Business app. You 0:19:17.720 --> 0:19:21.000 can also listen live on Amazon Alexa from our flagship 0:19:21.040 --> 0:19:24.840 New York station just Say Alexa playing Bloomberg eleven thirty. 0:19:26.280 --> 0:19:28.680 Jennie Brook is the founder of Genoa Ventures. 0:19:28.680 --> 0:19:31.680 It's a venture capital firm that invests in, as she says, 0:19:31.800 --> 0:19:34.960 the quote, next generation of companies at the convergence of 0:19:35.040 --> 0:19:38.639 technology and biology. Jenny Rook has invested in such companies 0:19:38.720 --> 0:19:40.919 as Entabio. 0:19:40.960 --> 0:19:41.920 I'm saying it correctly. 0:19:42.119 --> 0:19:44.320 You got a lot of on the list, right spec 0:19:44.760 --> 0:19:46.600 I will say, biotech is not easy when it comes 0:19:46.640 --> 0:19:47.640 to the can we. 0:19:47.600 --> 0:19:48.600 Just talk deal with that? 0:19:49.000 --> 0:19:50.920 Where's the consultant to say, all right, let's just call 0:19:50.920 --> 0:19:52.359 them Smith and Company or something? 0:19:52.400 --> 0:19:53.920 Well, then they would all be called Smith and Company. 0:19:53.960 --> 0:19:55.320 All right, But you know what I mean. 0:19:55.920 --> 0:19:57.240 I mean, I guess they do do a lot of 0:19:57.280 --> 0:19:59.920 work and there's something connect connected with it. We said, 0:20:00.040 --> 0:20:02.000 you're from the Bay Area. You're here in our studio, 0:20:02.080 --> 0:20:03.320 so welcome, welcome. 0:20:03.040 --> 0:20:03.800 Thanks for having me. 0:20:04.240 --> 0:20:06.359 Tell us a little bit about first of all, your sailor, right, 0:20:06.480 --> 0:20:08.320 I am a hence the name of your company. 0:20:08.440 --> 0:20:11.720 That's true. When I found at Genoa almost seven years ago, 0:20:11.760 --> 0:20:13.199 it was really important to me if I was going 0:20:13.280 --> 0:20:16.120 to start yet another venture firm, that we were known 0:20:16.119 --> 0:20:18.960