1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along

2
00:00:09,240 --> 00:00:13,200
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jaily. We bring you

3
00:00:13,320 --> 00:00:18,600
Speaker 1: insight from the best and economics, finance, investment, and international relations.

4
00:00:18,960 --> 00:00:23,840
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,

5
00:00:23,920 --> 00:00:30,520
Speaker 1: and of course on the Bloomberg terminal. Here's why the

6
00:00:30,560 --> 00:00:33,800
Speaker 1: game is played a long time, and the great Martin

7
00:00:33,880 --> 00:00:36,720
Speaker 1: Feldstein told me this once you try to write op

8
00:00:36,880 --> 00:00:40,240
Speaker 1: eds and they're really hard to write. They're much harder

9
00:00:40,280 --> 00:00:43,199
Speaker 1: to pull off than any of us think. And if

10
00:00:43,200 --> 00:00:45,600
Speaker 1: you're lucky, one out of five, one out of seven.

11
00:00:45,720 --> 00:00:48,920
Speaker 1: As residents. William Dudley of the New York Fat and

12
00:00:49,000 --> 00:00:51,120
Speaker 1: of course all his work at Golden Sachs over the

13
00:00:51,159 --> 00:00:53,840
Speaker 1: year's full disclosure. He was on my book of Ancient

14
00:00:53,920 --> 00:00:57,560
Speaker 1: Time Ago. Bill Dudley has done that. The essay this

15
00:00:57,640 --> 00:01:02,320
Speaker 1: Morning from Dudley is a required read because he lectures

16
00:01:02,400 --> 00:01:05,959
Speaker 1: us on the dynamics of inflation and now it links

17
00:01:05,959 --> 00:01:08,280
Speaker 1: to the real economy. I'll get that out on Twitter.

18
00:01:08,640 --> 00:01:11,720
Speaker 1: It's the essay to throw at somebody mouthing off with

19
00:01:11,840 --> 00:01:16,560
Speaker 1: certitude about inflation. Bill Dudley, congratulations are clearing the air.

20
00:01:16,680 --> 00:01:19,000
Speaker 1: I want to go back to Hella in the sixties,

21
00:01:19,280 --> 00:01:22,880
Speaker 1: and it's real simple, Bill Dudley. You emphasize demand pull

22
00:01:23,120 --> 00:01:29,600
Speaker 1: inflation over cost push inflation. Why is demand of labor

23
00:01:29,760 --> 00:01:35,039
Speaker 1: so important to jump start our fear of inflation? Well, again,

24
00:01:35,040 --> 00:01:38,240
Speaker 1: an ongoing inflation problem, not just the little bubble that

25
00:01:38,280 --> 00:01:43,360
Speaker 1: we're experiencing right now from reopening and lid disruptions. You

26
00:01:43,400 --> 00:01:45,840
Speaker 1: really need to have pressure on resources, and pressure on

27
00:01:45,920 --> 00:01:49,400
Speaker 1: resources starts with labor. It's probably a premature to expect

28
00:01:49,440 --> 00:01:51,560
Speaker 1: a real inflation problem right now because we still have

29
00:01:51,560 --> 00:01:54,240
Speaker 1: a lot of people out of work because of the pandemic.

30
00:01:54,560 --> 00:01:57,000
Speaker 1: You look at the level of payil employment to right

31
00:01:57,000 --> 00:01:59,840
Speaker 1: now compared to where we were in several before the

32
00:02:00,040 --> 00:02:03,480
Speaker 1: endemic started, were still eight million jobs short. And we're

33
00:02:03,480 --> 00:02:05,560
Speaker 1: also not seeing much in the way of wage pressure.

34
00:02:05,640 --> 00:02:07,680
Speaker 1: While wage pressure in the first quarter was a little

35
00:02:07,720 --> 00:02:10,600
Speaker 1: bit firmer on a your over your basis, So wages

36
00:02:10,639 --> 00:02:13,120
Speaker 1: for a private sector workers are only up two percent,

37
00:02:13,200 --> 00:02:14,959
Speaker 1: it's hard to have much of a weight of inflation

38
00:02:15,000 --> 00:02:19,679
Speaker 1: problem with wages are still quite cressive. Dr Dudley, how

39
00:02:19,680 --> 00:02:23,800
Speaker 1: do you overlay this different American economy? Lisa alluded to

40
00:02:23,880 --> 00:02:27,640
Speaker 1: this earlier, but to me, it's simply an exercise and

41
00:02:27,720 --> 00:02:33,440
Speaker 1: technology and an exercise and concentration of jobs growth almost monopximistic.

42
00:02:33,800 --> 00:02:38,200
Speaker 1: How do you overlay technology onto the American fears of

43
00:02:38,200 --> 00:02:43,120
Speaker 1: inflation in two thousand twenty one. Well, to that technology

44
00:02:43,200 --> 00:02:45,919
Speaker 1: is obviously changing work there, habits in quite a way

45
00:02:45,960 --> 00:02:48,799
Speaker 1: allows people to work remotely. Uh, and so we're going

46
00:02:48,840 --> 00:02:51,240
Speaker 1: to see a wholesale change in how people work. I

47
00:02:51,280 --> 00:02:54,239
Speaker 1: think over the next few years you know whether whether

48
00:02:54,240 --> 00:02:57,000
Speaker 1: we how fluch we go back to the predemn endemic

49
00:02:57,080 --> 00:02:59,799
Speaker 1: motive working I think remains to be seen. I think

50
00:02:59,840 --> 00:03:01,200
Speaker 1: the problem right now is that you have a lot

51
00:03:01,240 --> 00:03:05,440
Speaker 1: of people who are not actively seeking work because you know,

52
00:03:05,440 --> 00:03:09,200
Speaker 1: they have child care problems, Uh, they're worried about getting sick,

53
00:03:10,400 --> 00:03:13,160
Speaker 1: or uh, they just may you know, their their businesses

54
00:03:13,200 --> 00:03:15,960
Speaker 1: may not have been reopened yet. But I think as

55
00:03:16,000 --> 00:03:19,519
Speaker 1: the economy reopens, a lot of these eight million workers

56
00:03:19,560 --> 00:03:21,160
Speaker 1: there are still out of work, will will will become

57
00:03:21,160 --> 00:03:24,800
Speaker 1: available again. Bill, how much control does the FED still

58
00:03:24,840 --> 00:03:29,840
Speaker 1: have over inflation? I think they still have control in

59
00:03:29,880 --> 00:03:32,200
Speaker 1: the large in the sense that they can control how

60
00:03:32,280 --> 00:03:35,480
Speaker 1: fast the economy grows, how tight the labor market becomes

61
00:03:35,800 --> 00:03:39,000
Speaker 1: and that ultimately drives inflation. They can on over in

62
00:03:39,000 --> 00:03:41,440
Speaker 1: the small I mean, obviously the supply disruptions that we're

63
00:03:41,440 --> 00:03:43,960
Speaker 1: seeing right now that can't do very much about that,

64
00:03:44,280 --> 00:03:46,640
Speaker 1: the big spiky soft for example, and use car prices.

65
00:03:46,760 --> 00:03:49,880
Speaker 1: You know, that's a confluence of two things, one chip

66
00:03:50,000 --> 00:03:54,000
Speaker 1: disruptions that are limiting new car production and to demand

67
00:03:54,000 --> 00:03:56,120
Speaker 1: for cars by rental companies who are starting to get

68
00:03:56,160 --> 00:03:58,280
Speaker 1: back in business again. But it raises a question for

69
00:03:58,320 --> 00:04:00,880
Speaker 1: the reaction function of the federals serve, in other words,

70
00:04:01,080 --> 00:04:04,200
Speaker 1: how much they can actually effectuate change or some sort

71
00:04:04,240 --> 00:04:07,440
Speaker 1: of decline in these prices. Should it start to tighten policy.

72
00:04:07,640 --> 00:04:09,960
Speaker 1: It perhaps isn't a first step towards tightening policy, but

73
00:04:10,000 --> 00:04:12,800
Speaker 1: the Fed is going to unwind it's nearly fourteen billion

74
00:04:12,800 --> 00:04:16,880
Speaker 1: dollar uh portfolio of corporate debt and corporate debt ETFs.

75
00:04:17,080 --> 00:04:19,960
Speaker 1: Was this policy a template for how the Fed will

76
00:04:19,960 --> 00:04:24,560
Speaker 1: handle other additional market situations going forward. I think what

77
00:04:24,600 --> 00:04:28,160
Speaker 1: they're doing with the corporate bond portfolio is pretty unrelated

78
00:04:28,160 --> 00:04:30,680
Speaker 1: to the whole notion of montery policy tightening, because it's

79
00:04:30,680 --> 00:04:34,720
Speaker 1: actually very small portfolio in terms of size, and it's

80
00:04:34,760 --> 00:04:36,880
Speaker 1: not something that they typically own as part of their

81
00:04:37,800 --> 00:04:40,400
Speaker 1: portfolio mix. But I think I would not take that

82
00:04:40,480 --> 00:04:44,160
Speaker 1: decision as implying anything about the timing of paper and

83
00:04:44,200 --> 00:04:48,719
Speaker 1: the timing of actually lifting off raising short community bill

84
00:04:48,760 --> 00:04:51,120
Speaker 1: does does? Does The FED, though, actually really want to

85
00:04:51,160 --> 00:04:53,040
Speaker 1: see that target hit because we get a lot of

86
00:04:53,240 --> 00:04:56,040
Speaker 1: talk out of the FED about how this is transitory.

87
00:04:56,080 --> 00:04:58,279
Speaker 1: There seems to be this general sense here right now

88
00:04:58,320 --> 00:05:01,440
Speaker 1: that if expectations of elves don't rise, you basically don't

89
00:05:01,480 --> 00:05:04,040
Speaker 1: get there. You look at market pricing right now, we're

90
00:05:04,080 --> 00:05:07,000
Speaker 1: somewhere around about two point three percent or so on

91
00:05:07,160 --> 00:05:09,479
Speaker 1: five year five year forwards right now. With regards to

92
00:05:09,680 --> 00:05:12,040
Speaker 1: inflation expectations, that's pretty much in line with what we've

93
00:05:12,040 --> 00:05:15,080
Speaker 1: seen or the last ten twenty thirty years as far

94
00:05:15,080 --> 00:05:18,159
Speaker 1: as averages go. Here, expectations at least among the market

95
00:05:18,240 --> 00:05:21,240
Speaker 1: really hasn't risen despite all of the anecdotal evidence we

96
00:05:21,279 --> 00:05:23,440
Speaker 1: have on the ground that inflation is here and it

97
00:05:23,520 --> 00:05:27,760
Speaker 1: is real. DEFEND is actually happy that inflation expectations have

98
00:05:27,880 --> 00:05:31,000
Speaker 1: risen a bit, because they were actually pretty low going

99
00:05:31,000 --> 00:05:33,960
Speaker 1: into the pandemic, and this is one reason why the

100
00:05:33,960 --> 00:05:37,120
Speaker 1: FIT has changed their long term Terrey policy framework to

101
00:05:37,160 --> 00:05:39,960
Speaker 1: target to percent inflation and average rather than to percent

102
00:05:40,000 --> 00:05:42,640
Speaker 1: inflation at any point in time. They want to keep

103
00:05:42,680 --> 00:05:46,000
Speaker 1: inflation expectations better anchored anchored, and this increase that we've

104
00:05:46,000 --> 00:05:49,280
Speaker 1: seen in inflation expectations, which is pretty modest as better

105
00:05:49,320 --> 00:05:52,279
Speaker 1: anchored inflation expectations around two percent there. So they're pretty

106
00:05:52,279 --> 00:05:54,960
Speaker 1: comfortable with what's happening in that respect. They're probably happy

107
00:05:54,960 --> 00:05:58,000
Speaker 1: about that as opposed to unhappy about that. You're absolutely right,

108
00:05:58,000 --> 00:06:01,120
Speaker 1: though inflation expectations are well behaved, it's really hard to

109
00:06:01,120 --> 00:06:03,600
Speaker 1: get an ongoing inflation problem. So my view of it

110
00:06:03,640 --> 00:06:05,400
Speaker 1: is it's really about the labor market tightness and the

111
00:06:05,440 --> 00:06:08,799
Speaker 1: labor market that driving of wages, wages getting into prices,

112
00:06:09,160 --> 00:06:11,360
Speaker 1: and then do the does the increase in prices start

113
00:06:11,400 --> 00:06:14,120
Speaker 1: to affect inflation expectations. I think that that what we're

114
00:06:14,120 --> 00:06:15,640
Speaker 1: seeing now in inflation is going to turn out to

115
00:06:15,640 --> 00:06:17,880
Speaker 1: be transitory. But I think there could be a longer

116
00:06:18,000 --> 00:06:21,200
Speaker 1: term inflation problem just because the FEDS Monterrey policy regime

117
00:06:21,240 --> 00:06:22,720
Speaker 1: is a different one now where they said that it

118
00:06:22,760 --> 00:06:25,479
Speaker 1: could be very very slow to lift off from zero

119
00:06:25,480 --> 00:06:27,600
Speaker 1: in terms of short term interest rate. I'm curious as

120
00:06:27,640 --> 00:06:30,600
Speaker 1: your thoughts on the wage a situation, the wage inflation situation,

121
00:06:30,640 --> 00:06:33,720
Speaker 1: particularly because we actually saw wages at least as far

122
00:06:33,760 --> 00:06:36,920
Speaker 1: as their historical averages hold up pretty well UH during

123
00:06:36,960 --> 00:06:40,560
Speaker 1: the COVID induced recession. Here the idea here that we

124
00:06:40,560 --> 00:06:43,839
Speaker 1: would see some sort of meaningful appreciation above the whatever

125
00:06:43,839 --> 00:06:47,440
Speaker 1: it is three uh plus rate that we've been at. Here,

126
00:06:48,080 --> 00:06:50,320
Speaker 1: is it even possible, given that we're coming off such

127
00:06:50,560 --> 00:06:53,560
Speaker 1: a relatively high floor UH, that we would see a

128
00:06:53,600 --> 00:06:57,680
Speaker 1: meaningful bump up in wage inflation. I mean, it's possible,

129
00:06:57,680 --> 00:07:00,240
Speaker 1: but it's hard to imagine a big wage inflame Asian

130
00:07:00,320 --> 00:07:02,480
Speaker 1: spiral at this point in time, giving that you still

131
00:07:02,520 --> 00:07:04,719
Speaker 1: have eight million or eight million jobs short of where

132
00:07:04,720 --> 00:07:07,920
Speaker 1: you were going into the pandemic, and the unemployment rate itself,

133
00:07:08,080 --> 00:07:10,360
Speaker 1: even though that doesn't suggest the labor market that's that

134
00:07:10,520 --> 00:07:13,480
Speaker 1: type six point one percent unemployment rates still well above

135
00:07:13,560 --> 00:07:15,720
Speaker 1: the three and a half percent rate that we reached

136
00:07:15,720 --> 00:07:20,080
Speaker 1: in February of two thousand and twenty, the labor market slack.

137
00:07:20,640 --> 00:07:23,320
Speaker 1: Before we let you go, Bill, we're talking about AMC today.

138
00:07:23,480 --> 00:07:27,880
Speaker 1: Is the FED responsible for frothy markets? I think the

139
00:07:27,960 --> 00:07:31,360
Speaker 1: FED is responsible for creating a monterrey policy that's very

140
00:07:31,360 --> 00:07:34,840
Speaker 1: conducive to lifting financial asset prices, but you know, the

141
00:07:34,880 --> 00:07:36,960
Speaker 1: AMC phenomenal. I think it's something that I would not

142
00:07:37,040 --> 00:07:39,559
Speaker 1: lay at the feet of the FED. Well, Bill, we'd

143
00:07:39,560 --> 00:07:41,280
Speaker 1: like to get more of a quote from you than

144
00:07:41,320 --> 00:07:45,840
Speaker 1: that on AMC. Right, Bill, do you think regulations got

145
00:07:45,920 --> 00:07:48,080
Speaker 1: to step in here? I mean this is unusual, to

146
00:07:48,120 --> 00:07:51,280
Speaker 1: say the least. Well, I think you know this is

147
00:07:51,280 --> 00:07:53,320
Speaker 1: a question where you know, I think people need to

148
00:07:53,320 --> 00:07:57,360
Speaker 1: think about what's fundamental value? What's the stockbrights relative value?

149
00:07:58,480 --> 00:08:00,600
Speaker 1: You know? So so buyer beware. I guess that's why

150
00:08:01,600 --> 00:08:04,080
Speaker 1: Bill Dudley, with advice to Romaine Bostick, will run their

151
00:08:04,120 --> 00:08:07,880
Speaker 1: tap this afternoon. Budley Bloomberg Opinion comments, I can't say

152
00:08:07,960 --> 00:08:10,360
Speaker 1: enough about his essay today. I'll put it out on

153
00:08:10,400 --> 00:08:20,640
Speaker 1: Twitter here in a bit right now, Glenn Hubbard joins us.

154
00:08:20,640 --> 00:08:23,720
Speaker 1: He is, of course the former dean of Columbia Business School,

155
00:08:24,080 --> 00:08:27,920
Speaker 1: which many of our employees have attended, and I must say,

156
00:08:27,960 --> 00:08:31,880
Speaker 1: with his esteem public service to America, Glenn, we're so

157
00:08:32,000 --> 00:08:35,000
Speaker 1: happy to have you with your bachelor's degree of Florida,

158
00:08:35,480 --> 00:08:38,439
Speaker 1: knowing that Bill Dudley will come along with his bachelor's

159
00:08:38,480 --> 00:08:41,920
Speaker 1: degree of Florida. What's in Florida economics. I think it's

160
00:08:42,080 --> 00:08:47,520
Speaker 1: hugely misunderstood in the northeast of the esteemed history of

161
00:08:47,600 --> 00:08:51,400
Speaker 1: Florida economics talked to us about Central Florida. His Bill

162
00:08:51,480 --> 00:08:54,920
Speaker 1: Dudley would talk about the New College. Well, I had

163
00:08:54,920 --> 00:08:58,320
Speaker 1: a great experience. I was an engineering student and then

164
00:08:58,360 --> 00:09:01,320
Speaker 1: any con student. But I thing but great teachers and

165
00:09:01,400 --> 00:09:04,240
Speaker 1: great experiences and a wonderful part of the country. I

166
00:09:04,240 --> 00:09:06,800
Speaker 1: could really say, folks, you know, in all my experience here,

167
00:09:06,840 --> 00:09:11,319
Speaker 1: Florida economics is a general statement, is way way under rated.

168
00:09:11,320 --> 00:09:14,160
Speaker 1: Glenn Hubbard, you are not in inflation East. I want

169
00:09:14,200 --> 00:09:18,400
Speaker 1: you to describe for our audiences fear of inflation and

170
00:09:18,440 --> 00:09:23,440
Speaker 1: what the true inflation eastas have wrong. Well, it really

171
00:09:23,440 --> 00:09:26,760
Speaker 1: gets back to supply and demand, Tom, and it's a

172
00:09:26,880 --> 00:09:31,120
Speaker 1: race between the two. We know the economy is reopening

173
00:09:31,120 --> 00:09:34,800
Speaker 1: and demand is certainly there from very a comminative fiscal

174
00:09:34,800 --> 00:09:38,719
Speaker 1: and monetary policy. Supply has been slower, with bottlenecks and

175
00:09:38,840 --> 00:09:42,880
Speaker 1: some issues in the labor markets like unemployment insurance benefits

176
00:09:42,880 --> 00:09:46,320
Speaker 1: perhaps being too generous. I think, on balance, it's not

177
00:09:46,360 --> 00:09:48,840
Speaker 1: that I think the FED is necessarily wrong, but they're

178
00:09:48,880 --> 00:09:52,760
Speaker 1: not managing risks. Well, I do think there's more of

179
00:09:52,800 --> 00:09:56,360
Speaker 1: a risk of an upside to inflation, and I think

180
00:09:56,360 --> 00:09:58,880
Speaker 1: the FED would be wise to at least acknowledge that

181
00:09:59,040 --> 00:10:02,960
Speaker 1: risk more and begin it's tapering and discussions of tapering.

182
00:10:03,480 --> 00:10:06,079
Speaker 1: You mentioned Florida. I'm from the South. There's an expression

183
00:10:06,240 --> 00:10:09,000
Speaker 1: fixing to do something. Well, if FED needs to stop

184
00:10:09,040 --> 00:10:13,000
Speaker 1: fixing to do something and actually do something. So can

185
00:10:13,040 --> 00:10:16,440
Speaker 1: you draw the distinction between good inflation and bad inflation

186
00:10:16,480 --> 00:10:18,560
Speaker 1: at a time when food prices are searching the most

187
00:10:18,600 --> 00:10:21,520
Speaker 1: in more than a decade. Well, I don't know that

188
00:10:21,880 --> 00:10:25,559
Speaker 1: anything is really good, but the transitory inflation would be

189
00:10:25,640 --> 00:10:29,439
Speaker 1: simply the bottlenecks occur and we have supply chain disruptions

190
00:10:29,440 --> 00:10:31,800
Speaker 1: related to the pandemic. Takes a little while for that

191
00:10:31,880 --> 00:10:36,200
Speaker 1: to work through. Relative prices can change as people's preferences

192
00:10:36,320 --> 00:10:41,560
Speaker 1: change across goods. The real concern is longer term, persistent inflation.

193
00:10:42,200 --> 00:10:44,280
Speaker 1: And I do get a little weary of hearing the

194
00:10:44,360 --> 00:10:46,720
Speaker 1: FEDS say, well, we have all the tools. Of course,

195
00:10:46,760 --> 00:10:48,280
Speaker 1: they have all the tools, but they had all the

196
00:10:48,280 --> 00:10:50,839
Speaker 1: tools in the nine sixties two and and it got

197
00:10:50,840 --> 00:10:53,080
Speaker 1: out of hands. And I think you you really need

198
00:10:53,120 --> 00:10:56,560
Speaker 1: to watch those pressures a little bit more carefully than

199
00:10:56,600 --> 00:10:59,520
Speaker 1: are being watched right now, Professor Hubbard, we're just getting

200
00:10:59,600 --> 00:11:02,760
Speaker 1: a word from political reporting that Biden wants one trillion

201
00:11:02,800 --> 00:11:06,360
Speaker 1: dollars in new spending in the infrastructure bill, countering some

202
00:11:06,400 --> 00:11:09,000
Speaker 1: of the Republican offers that include less than three billion

203
00:11:09,000 --> 00:11:13,040
Speaker 1: dollars in new spending. Why do you think that this

204
00:11:13,200 --> 00:11:15,600
Speaker 1: is excessive given the fact that we still have a

205
00:11:15,600 --> 00:11:19,000
Speaker 1: lot of people unemployed and wages are still a key concern,

206
00:11:19,080 --> 00:11:23,640
Speaker 1: particularly on the lower wage spectrum. Well, I do think

207
00:11:23,640 --> 00:11:27,200
Speaker 1: it's successive. We don't have output gaps. If I can

208
00:11:27,320 --> 00:11:30,440
Speaker 1: use econ speak for a minute, of the size the

209
00:11:30,480 --> 00:11:34,400
Speaker 1: Biden plans identify. I do think we need a real

210
00:11:34,440 --> 00:11:37,360
Speaker 1: infrastructure package, but a lot of what President Biden is

211
00:11:37,400 --> 00:11:41,120
Speaker 1: proposed is really more social spending than infrastructure. And I

212
00:11:41,160 --> 00:11:44,440
Speaker 1: think the economy does need infrastructure, and even the size

213
00:11:44,480 --> 00:11:47,320
Speaker 1: of that could be open to debate. What worries me

214
00:11:47,360 --> 00:11:49,560
Speaker 1: about his physical plans is that if you add them

215
00:11:49,600 --> 00:11:52,360
Speaker 1: all up, from the rescue plan, the job's Plan, the

216
00:11:52,480 --> 00:11:57,680
Speaker 1: Family's plan, they're very, very large and largely unpaid for,

217
00:11:58,040 --> 00:12:02,520
Speaker 1: despite despite the red and they are indeed a transformation

218
00:12:02,679 --> 00:12:06,560
Speaker 1: and away from work and dynamism towards social spending, and

219
00:12:06,600 --> 00:12:09,320
Speaker 1: both of those things worry me, and I think worry

220
00:12:09,400 --> 00:12:13,439
Speaker 1: me in the public. You know, there was a great

221
00:12:13,559 --> 00:12:17,760
Speaker 1: rap video about ten years ago UM that showed Caines

222
00:12:18,120 --> 00:12:21,880
Speaker 1: versus Hyak in a boxing match. But a decade on

223
00:12:22,120 --> 00:12:26,439
Speaker 1: it seems like Cain's one uh in a knockout Hiak.

224
00:12:26,760 --> 00:12:30,120
Speaker 1: I mean, there aren't any Austrian economists left, it seems,

225
00:12:30,280 --> 00:12:35,520
Speaker 1: and even the Kynesians are have become conservative and traditional.

226
00:12:35,720 --> 00:12:37,720
Speaker 1: M M T is the new way to think is

227
00:12:37,720 --> 00:12:40,560
Speaker 1: there has there really been a sea change here? Well,

228
00:12:40,559 --> 00:12:42,600
Speaker 1: I'm not so. Strike actually use that video of my

229
00:12:42,679 --> 00:12:46,959
Speaker 1: political economy class to talk about the pandemic. So basically

230
00:12:47,040 --> 00:12:51,000
Speaker 1: the Keynsie response was the big aggregate demand stimulus. But

231
00:12:51,120 --> 00:12:52,920
Speaker 1: a lot of what is going to happen in the

232
00:12:53,000 --> 00:12:56,559
Speaker 1: economy and is interesting in the economy is how we're

233
00:12:56,559 --> 00:13:00,720
Speaker 1: going to adapt, as we received from co Good, that's

234
00:13:00,720 --> 00:13:03,360
Speaker 1: a high ache In story. The way to do that

235
00:13:03,840 --> 00:13:06,600
Speaker 1: is on the ground, high X quote, man on the spot,

236
00:13:06,800 --> 00:13:09,960
Speaker 1: person on the spot of really figuring that out. So

237
00:13:10,000 --> 00:13:12,360
Speaker 1: I think we're gonna need a mixture of the Kynsie

238
00:13:12,480 --> 00:13:15,480
Speaker 1: response and the high achie In response. And I don't

239
00:13:15,480 --> 00:13:19,120
Speaker 1: think we want one without the other. We uh, we

240
00:13:19,240 --> 00:13:22,320
Speaker 1: all love the economics lesson. We saw on Ferris Bueller's

241
00:13:22,360 --> 00:13:27,200
Speaker 1: Day Off where he talks about voodoo economics. UM, top

242
00:13:27,280 --> 00:13:31,040
Speaker 1: down stimulus. What we're looking at right now in Matthew

243
00:13:31,080 --> 00:13:34,160
Speaker 1: Bosler's Great Big Take UM from last week you're quoted

244
00:13:34,200 --> 00:13:37,760
Speaker 1: in that story is an attempt to stimulate the economy

245
00:13:37,760 --> 00:13:40,880
Speaker 1: from the bottom up. Is that, UM a smart way

246
00:13:40,920 --> 00:13:44,760
Speaker 1: to do it? Well, I think we do need measures

247
00:13:44,800 --> 00:13:49,160
Speaker 1: that maintaining incomes. I do think we're calling too much stimulus.

248
00:13:49,240 --> 00:13:52,400
Speaker 1: What the economy really needs right now is a way

249
00:13:52,400 --> 00:13:55,800
Speaker 1: to help people adapt and that support for the jobs

250
00:13:55,840 --> 00:13:58,880
Speaker 1: of the future, for the businesses of the future. And

251
00:13:58,880 --> 00:14:01,760
Speaker 1: it's very different then the kinds of plans that President

252
00:14:01,840 --> 00:14:07,200
Speaker 1: Biden is proposing. Unfortunately, the opposition is not proposing much either,

253
00:14:07,280 --> 00:14:09,640
Speaker 1: but it would really be about jobs in the future.

254
00:14:10,040 --> 00:14:12,560
Speaker 1: Greg Glenn, rather, we're short on time. I want to

255
00:14:12,559 --> 00:14:15,920
Speaker 1: be direct as I can. We're getting new pushback in Congress.

256
00:14:15,960 --> 00:14:20,160
Speaker 1: According to Greg Villier on text increases, can we move

257
00:14:20,360 --> 00:14:24,360
Speaker 1: this forward without text increases or do you just assume

258
00:14:24,360 --> 00:14:27,040
Speaker 1: it's got to happen? Well, this is what you mean

259
00:14:27,080 --> 00:14:31,680
Speaker 1: by this? If you mean a modest infrastructure plan. Probably,

260
00:14:31,840 --> 00:14:34,600
Speaker 1: if it's true infrastructure, you can borrow for much of

261
00:14:34,640 --> 00:14:37,560
Speaker 1: that and use user fees. If you mean the very

262
00:14:37,640 --> 00:14:40,720
Speaker 1: large spending bills the President is proposed, you would need

263
00:14:40,800 --> 00:14:44,640
Speaker 1: taxing pieces. Unfortunately, what you would have to have to

264
00:14:44,680 --> 00:14:46,840
Speaker 1: really pay for that would be something like a value

265
00:14:46,840 --> 00:14:49,720
Speaker 1: added tax, and the President hasn't talked about that. The

266
00:14:49,800 --> 00:14:53,160
Speaker 1: tax increases he's proposing are much too small. Glenn Hubard,

267
00:14:53,160 --> 00:14:56,040
Speaker 1: thank you so much, greatly, greatly appreciate it this morning.

268
00:15:01,440 --> 00:15:03,200
Speaker 1: Right now, we are thrilled to bring on the equity

269
00:15:03,240 --> 00:15:06,880
Speaker 1: market someone who's absolutely nailed at Julian Emmanuel B. T

270
00:15:07,040 --> 00:15:10,480
Speaker 1: i D, Chief Equities and derivative strategist. Julian, good morning.

271
00:15:10,480 --> 00:15:13,560
Speaker 1: I'm gonna cut right to the chase. We've had a rotation.

272
00:15:14,000 --> 00:15:17,680
Speaker 1: One camp says a rotation continues. Another camp says, go

273
00:15:17,720 --> 00:15:21,160
Speaker 1: along the big tech. Which is it? We think the

274
00:15:21,280 --> 00:15:25,280
Speaker 1: rotation continues if you look at it, regardless of what

275
00:15:25,320 --> 00:15:28,280
Speaker 1: the Fed does or does not do. Says there doesn't

276
00:15:28,280 --> 00:15:31,520
Speaker 1: say how many thinking about sweet here. The U. S

277
00:15:31,560 --> 00:15:35,760
Speaker 1: economy is going to grow somewhere six seven eight percent

278
00:15:35,880 --> 00:15:38,880
Speaker 1: this year. It's tracking for ten percent this quarter, and

279
00:15:38,960 --> 00:15:42,280
Speaker 1: that to US means value continues to outperform. We're gonna

280
00:15:42,320 --> 00:15:43,960
Speaker 1: do a headline right now and we'll come back to

281
00:15:44,000 --> 00:15:46,880
Speaker 1: it in a moment with Romayne Boston AMC Entertainment. They

282
00:15:47,000 --> 00:15:50,200
Speaker 1: filed to sell up to twelve million shares that's on

283
00:15:50,280 --> 00:15:53,280
Speaker 1: a float right now. A five million, so you can

284
00:15:53,320 --> 00:15:56,040
Speaker 1: take twelve and divided by five and gives you a

285
00:15:56,040 --> 00:15:58,560
Speaker 1: sense of it. We'll get back to that in a moment.

286
00:15:58,560 --> 00:16:01,720
Speaker 1: On the stock that hasn't a rich little story, Julian Emmanuel,

287
00:16:01,840 --> 00:16:04,520
Speaker 1: what's your original store in this market right now as

288
00:16:04,560 --> 00:16:06,840
Speaker 1: you're right up for the weekend after the jobs report,

289
00:16:06,880 --> 00:16:11,240
Speaker 1: what sectors, what part of the market are you looking at? Well?

290
00:16:11,360 --> 00:16:14,000
Speaker 1: So for us, the story has been if you look

291
00:16:14,080 --> 00:16:17,040
Speaker 1: at it, you've got the meme stocks moving, you've got

292
00:16:17,040 --> 00:16:21,400
Speaker 1: this fascination with inflation. But in reality, the SMP five

293
00:16:21,480 --> 00:16:26,000
Speaker 1: hundred index has essentially gone nowhere for the last two months. Now. Normally,

294
00:16:26,160 --> 00:16:28,920
Speaker 1: the wisdom has it you never want to shore a

295
00:16:29,000 --> 00:16:31,760
Speaker 1: dull market. You look at the last three years or so,

296
00:16:32,120 --> 00:16:35,240
Speaker 1: and actually, in fact, when the market gets this quiet,

297
00:16:36,000 --> 00:16:38,440
Speaker 1: basically you know day to day moves in the SMP

298
00:16:38,600 --> 00:16:41,480
Speaker 1: five hundred of three, four or five points on a

299
00:16:41,560 --> 00:16:45,040
Speaker 1: four thousand plus number. Uh, it really says it's time

300
00:16:45,080 --> 00:16:47,040
Speaker 1: to be a little bit more defensive. As I said,

301
00:16:47,080 --> 00:16:51,160
Speaker 1: we like the value stocks. We're tilting more defensively here

302
00:16:51,160 --> 00:16:55,880
Speaker 1: consumer staples with pricing, power, healthcare, and actually reads which

303
00:16:55,920 --> 00:16:59,520
Speaker 1: are going to do well if the environment stays inflationary. Julian,

304
00:16:59,560 --> 00:17:01,480
Speaker 1: are you telling clients to load the boat on AMC.

305
00:17:03,440 --> 00:17:06,520
Speaker 1: That's a much more difficult call, Lisa. I think when

306
00:17:06,520 --> 00:17:09,399
Speaker 1: when you look at it, the options market is telling

307
00:17:09,400 --> 00:17:12,160
Speaker 1: you that the yellow flag is coming out once again.

308
00:17:12,520 --> 00:17:15,399
Speaker 1: We go back to January when you had that first

309
00:17:15,440 --> 00:17:18,520
Speaker 1: top in the meme stocks. We all know the video

310
00:17:18,600 --> 00:17:23,200
Speaker 1: game retailer, their option implied volatility hit a thousand percent.

311
00:17:23,680 --> 00:17:26,639
Speaker 1: That was the top. Worried about six hundred and fifty

312
00:17:26,720 --> 00:17:32,399
Speaker 1: seven percent um in in the movie theater stock today. Uh,

313
00:17:32,440 --> 00:17:36,360
Speaker 1: this is a warning sign. This speculation is intense. Uh.

314
00:17:36,400 --> 00:17:40,080
Speaker 1: And as we set back in January, rocket ships go

315
00:17:40,200 --> 00:17:43,119
Speaker 1: back to their lunch pads. How do you understand the

316
00:17:43,160 --> 00:17:46,919
Speaker 1: trading activity here? Is this Reddit traders sending messages to

317
00:17:46,960 --> 00:17:49,200
Speaker 1: their grandmothers saying load the boat on a m C.

318
00:17:49,560 --> 00:17:52,600
Speaker 1: Or is there another phenomenon happening here that's either more

319
00:17:52,600 --> 00:17:56,760
Speaker 1: tied to the fundamentals or more tied to institutional traders. Well,

320
00:17:57,320 --> 00:18:01,240
Speaker 1: it is a more magnified version again of what happened

321
00:18:01,240 --> 00:18:06,040
Speaker 1: in January. Is that basically, the people gathering on social

322
00:18:06,080 --> 00:18:10,000
Speaker 1: media have plenty money in their accounts, They paid their

323
00:18:10,040 --> 00:18:13,920
Speaker 1: taxes with winnings from last year, and are pushing selected stocks.

324
00:18:14,160 --> 00:18:17,760
Speaker 1: The group is narrowing, um, but it is very much

325
00:18:17,800 --> 00:18:20,480
Speaker 1: a social media phenomenon. But the other thing about it,

326
00:18:20,520 --> 00:18:24,000
Speaker 1: is strangely enough, is that the shorts really haven't learned

327
00:18:24,000 --> 00:18:26,399
Speaker 1: their lessons from January. So if you look at it,

328
00:18:26,480 --> 00:18:29,800
Speaker 1: the short interests continues to rise. It's not what it was,

329
00:18:30,080 --> 00:18:32,919
Speaker 1: but it's still, you know, really too high given the

330
00:18:32,960 --> 00:18:35,320
Speaker 1: price actors dueling quickly here. I don't want to get

331
00:18:35,359 --> 00:18:37,680
Speaker 1: you in trouble with the General Council B T, I G.

332
00:18:38,160 --> 00:18:41,760
Speaker 1: But are you seeking regulation of what we're observing and

333
00:18:41,920 --> 00:18:47,000
Speaker 1: things like AMC. The thing that ties all of this

334
00:18:47,119 --> 00:18:51,920
Speaker 1: together is the fact that margin debt leverage is at

335
00:18:51,960 --> 00:18:55,440
Speaker 1: all time highs. And generally when we see that, obviously

336
00:18:55,480 --> 00:18:59,959
Speaker 1: the indiceason near all time highs. Uh, it's almost inevitable

337
00:19:00,280 --> 00:19:02,320
Speaker 1: that the government will step in at some point. Did

338
00:19:02,359 --> 00:19:04,520
Speaker 1: Julian thank you so much, Julian Emmanuel with b T

339
00:19:04,680 --> 00:19:14,159
Speaker 1: I g less nerdy than me is Jennifer Neusoh at

340
00:19:14,240 --> 00:19:17,080
Speaker 1: John's hop Could Center for Health Security, and she joins

341
00:19:17,160 --> 00:19:19,720
Speaker 1: us right now. Jennifer was talking about this last night

342
00:19:19,720 --> 00:19:23,399
Speaker 1: at the dining room table. We completely have missold the

343
00:19:23,520 --> 00:19:30,000
Speaker 1: triumph of American virology, American microbiology, and our pharmaceutical business.

344
00:19:30,359 --> 00:19:35,719
Speaker 1: It is stunning. As President Biden said, what's occurred. I agree.

345
00:19:35,880 --> 00:19:39,080
Speaker 1: I mean, we are living a much different life now

346
00:19:39,160 --> 00:19:41,880
Speaker 1: than we were a year ago thanks to science, and

347
00:19:42,080 --> 00:19:44,119
Speaker 1: not just thanks to science in the last year, but

348
00:19:44,200 --> 00:19:46,800
Speaker 1: thanks to you more than a decade, several decades where

349
00:19:46,880 --> 00:19:49,240
Speaker 1: the science. This is why we invest, This is why

350
00:19:49,280 --> 00:19:51,520
Speaker 1: we sustain, This is why we do this because one

351
00:19:51,600 --> 00:19:53,880
Speaker 1: day it will be necessary, will be it will be important.

352
00:19:54,119 --> 00:19:57,919
Speaker 1: Dr Nutso, can we codify the scientific advancement in a

353
00:19:58,080 --> 00:20:02,160
Speaker 1: social passport, a vaccine passport that people can use can

354
00:20:02,200 --> 00:20:05,040
Speaker 1: take to go places and say I am not at

355
00:20:05,119 --> 00:20:08,040
Speaker 1: risk of getting COVID or frankly that high risk of

356
00:20:08,080 --> 00:20:11,600
Speaker 1: distributing it either. Yeah, so it's a really tricky question.

357
00:20:11,640 --> 00:20:14,000
Speaker 1: I know people are very eager to do that because

358
00:20:14,000 --> 00:20:15,639
Speaker 1: we're all eager to get back to normal, and for

359
00:20:15,760 --> 00:20:17,440
Speaker 1: those of us who you know, feel like we've done

360
00:20:17,440 --> 00:20:20,280
Speaker 1: our part, We've went out and got vaccinated, we feel

361
00:20:20,320 --> 00:20:23,840
Speaker 1: like we should be entitled UM to gain access to places.

362
00:20:24,119 --> 00:20:27,000
Speaker 1: I fully expect that private businesses are going to require

363
00:20:27,320 --> 00:20:31,639
Speaker 1: UM vaccine proof, provided their governors don't prevent them from

364
00:20:31,720 --> 00:20:34,120
Speaker 1: doing that, but that they will, UM you know, at

365
00:20:34,119 --> 00:20:37,600
Speaker 1: some point start requiring vaccine proof to allow people to

366
00:20:38,080 --> 00:20:40,639
Speaker 1: you know, go to concerts and things like that. But

367
00:20:40,720 --> 00:20:42,680
Speaker 1: it is a bit tricky because there are people out

368
00:20:42,680 --> 00:20:46,119
Speaker 1: there who are hesitant, and their their hesitancy is not

369
00:20:46,160 --> 00:20:49,159
Speaker 1: without reason. There this is a new vaccine UM. You know,

370
00:20:49,240 --> 00:20:51,480
Speaker 1: they maybe don't have the luxury of spending all day

371
00:20:51,680 --> 00:20:54,040
Speaker 1: like I do thinking about these things, and so they

372
00:20:54,040 --> 00:20:56,640
Speaker 1: still need to you know, be convinced of the benefits

373
00:20:56,680 --> 00:21:00,680
Speaker 1: of vaccinations. And you know, I do worry about prematurely

374
00:21:00,800 --> 00:21:03,399
Speaker 1: rolling those things out before we've had really a fair

375
00:21:03,480 --> 00:21:05,520
Speaker 1: chance at winning the hearts and minds of people and

376
00:21:05,560 --> 00:21:10,520
Speaker 1: showing them why these vaccines are so liberating and hopefully

377
00:21:10,560 --> 00:21:13,040
Speaker 1: tools that they will willingly accept wait to be cually

378
00:21:13,080 --> 00:21:16,000
Speaker 1: more in favor of parents than sticks UM, and so

379
00:21:16,240 --> 00:21:18,040
Speaker 1: you know, I expect that will probably be there at

380
00:21:18,040 --> 00:21:20,520
Speaker 1: some point, but I do worry that rolling them out

381
00:21:20,560 --> 00:21:22,960
Speaker 1: too quickly could create a culture war which will entrench

382
00:21:23,040 --> 00:21:25,560
Speaker 1: people in their opposition to it. So are you saying

383
00:21:25,600 --> 00:21:29,000
Speaker 1: that the main reason against the main argument against vaccine

384
00:21:29,000 --> 00:21:31,959
Speaker 1: passports is an emotional one. Is basically that you need

385
00:21:32,000 --> 00:21:34,119
Speaker 1: to cater to the way that people feel about the

386
00:21:34,200 --> 00:21:38,639
Speaker 1: vaccine first and then deal with the mandates later. No,

387
00:21:38,720 --> 00:21:40,800
Speaker 1: I don't think it's an emotional one. I mean, you know,

388
00:21:40,960 --> 00:21:44,200
Speaker 1: first of all, people's hesitancy is not purely about emotion.

389
00:21:44,400 --> 00:21:47,640
Speaker 1: It is also just that, you know, we haven't fully

390
00:21:47,640 --> 00:21:49,760
Speaker 1: approved a number of vaccines. I expect that that's going

391
00:21:49,800 --> 00:21:51,679
Speaker 1: to come soon, but you know, there still needs to

392
00:21:51,680 --> 00:21:55,359
Speaker 1: be an educational component to it. It's more really about pragmatism. Um. That.

393
00:21:55,440 --> 00:21:58,600
Speaker 1: So there's also some access issues, and UM, we know

394
00:21:58,760 --> 00:22:01,639
Speaker 1: that many of the people who haven't yet been vaccinated,

395
00:22:01,800 --> 00:22:03,359
Speaker 1: it's not because they don't want to, it's just that

396
00:22:03,400 --> 00:22:05,520
Speaker 1: they haven't been able to, and in part because it's

397
00:22:05,680 --> 00:22:07,880
Speaker 1: harder for them to get they may not have time

398
00:22:07,880 --> 00:22:11,080
Speaker 1: off from work. That maybe, UM, not as many options

399
00:22:11,080 --> 00:22:13,679
Speaker 1: in all places where people live. And so you know,

400
00:22:13,720 --> 00:22:16,959
Speaker 1: we also have to be worried about what we restrict

401
00:22:17,040 --> 00:22:20,160
Speaker 1: people from doing if they haven't been vaccinated, and whether

402
00:22:20,200 --> 00:22:22,280
Speaker 1: that's worth it in the long run. I don't care

403
00:22:22,280 --> 00:22:24,480
Speaker 1: about the emotions as much as the pragmatism, and I

404
00:22:24,600 --> 00:22:27,600
Speaker 1: worry that if we create a culture war or roll

405
00:22:27,680 --> 00:22:30,360
Speaker 1: these things out too quickly dot that we could actually

406
00:22:30,440 --> 00:22:34,960
Speaker 1: damp an enthusiasm for vaccines. Doctor, what what danger do

407
00:22:35,200 --> 00:22:37,919
Speaker 1: the anti vaxxers present? I mean, if you end up

408
00:22:37,960 --> 00:22:42,920
Speaker 1: in a situation where sixty sev of the US population

409
00:22:43,280 --> 00:22:48,760
Speaker 1: is vaccinated, are they threatened? Is that majority threatened by

410
00:22:48,840 --> 00:22:53,040
Speaker 1: a minority that refuses to get the shots? Sure? So

411
00:22:53,040 --> 00:22:55,920
Speaker 1: so far, the answer is they are dangerous to themselves.

412
00:22:55,920 --> 00:22:57,960
Speaker 1: The people who have not gone vaccinated are dangerous to

413
00:22:58,000 --> 00:23:00,960
Speaker 1: themselves because they risk getting vaccinated. And so interested in

414
00:23:01,000 --> 00:23:03,480
Speaker 1: reaching those folks and convincing them of the benefits of

415
00:23:03,520 --> 00:23:05,600
Speaker 1: vaccines because I don't want there to be any additional

416
00:23:05,680 --> 00:23:08,040
Speaker 1: loss of life. Of course, you know, down the road

417
00:23:08,359 --> 00:23:10,439
Speaker 1: we very much worry about. You know, as long as

418
00:23:10,440 --> 00:23:13,159
Speaker 1: this virus continues to circulate at high levels, that there

419
00:23:13,240 --> 00:23:16,359
Speaker 1: is the potential for mutations that could overcome vaccines. But

420
00:23:16,440 --> 00:23:18,639
Speaker 1: so far we haven't seen that. So right now, at

421
00:23:18,720 --> 00:23:21,080
Speaker 1: least in the United states. That is less of my

422
00:23:21,119 --> 00:23:24,280
Speaker 1: concern because our case numbers are falling. My main concern

423
00:23:24,359 --> 00:23:26,399
Speaker 1: right now is making sure we protect people so that

424
00:23:26,440 --> 00:23:28,400
Speaker 1: we don't see additional loss of lives, so we don't

425
00:23:28,400 --> 00:23:32,240
Speaker 1: see schools closed in places where schools had been open. Um.

426
00:23:32,280 --> 00:23:34,199
Speaker 1: You know, it's it's about getting back to normal. I'm

427
00:23:34,240 --> 00:23:35,800
Speaker 1: not giving up on people. I still think we can

428
00:23:35,800 --> 00:23:38,399
Speaker 1: reach them. Jennifer News, So thank you so much, greatly

429
00:23:38,400 --> 00:23:40,800
Speaker 1: appreciate it. With JOHNS Hopkins this morning on this story

430
00:23:40,840 --> 00:23:43,400
Speaker 1: unfolding and you heard the President there, it was great

431
00:23:43,440 --> 00:23:47,920
Speaker 1: optimism about the summer. This is the Bloomberg Surveillance Podcast.

432
00:23:48,240 --> 00:23:51,600
Speaker 1: Thanks for listening. Join us live weekdays from seven to

433
00:23:51,680 --> 00:23:55,760
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

434
00:23:56,119 --> 00:24:00,159
Speaker 1: each day from six to nine am for insight from

435
00:24:00,200 --> 00:24:04,679
Speaker 1: the best in economics, finance, investment, and international relations. And

436
00:24:04,800 --> 00:24:09,920
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

437
00:24:10,000 --> 00:24:13,320
Speaker 1: dot com, and of course on the terminal. I'm Tom

438
00:24:13,400 --> 00:24:15,720
Speaker 1: Keene and this is Bloomberg