WEBVTT - China, QT, Threads, Earnings, and ETFs (Audio) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 I'm the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.760 --> 0:00:22.680 All right, Emily grad Fai, thank you so much for 0:00:22.720 --> 0:00:25.599 giving getting us up to date on those markets. Let's 0:00:25.600 --> 0:00:29.120 talk about China here, Secretary Yellen there, four day visit. 0:00:29.240 --> 0:00:30.920 Let's get the latest reporting. We've got a couple of 0:00:30.960 --> 0:00:34.120 smart voices here, Eddie Vanderwaldt, Deputy Managing editor of the 0:00:34.159 --> 0:00:36.800 Market's Live team with Bloomberg News, and Chris Condon, US 0:00:36.800 --> 0:00:41.040 Treasury reporter with Bloomberg News. Hey, Chris, I know you 0:00:41.200 --> 0:00:44.680 joined Secretary Yellen on the trip to China. 0:00:45.280 --> 0:00:48.000 What's the takeaway from from ground zero there that you have? 0:00:48.640 --> 0:00:52.880 Well, I apologize quick correction there, our colleague Victoria Dendron. 0:00:52.920 --> 0:00:54.560 It was actually on the trip. 0:00:54.720 --> 0:00:54.840 Oh. 0:00:55.080 --> 0:00:57.320 I got to travel with her on her next trip, 0:00:57.360 --> 0:01:00.800 but very good. But I've obviously been keeping close tabs 0:01:00.840 --> 0:01:03.800 on this trip. It was I have to say first 0:01:04.560 --> 0:01:08.800 and foremost, there were low expectations in terms of what 0:01:08.840 --> 0:01:13.120 they call deliverables from this trip. The main goal was 0:01:13.160 --> 0:01:16.200 to kind of stabilize the relationship and how the two 0:01:16.280 --> 0:01:20.000 countries deal with each other on economic issues and re 0:01:21.120 --> 0:01:25.240 establish regular lines of communication. You know, if you go 0:01:25.400 --> 0:01:29.520 back before the Trump administration, US and China kept a 0:01:29.680 --> 0:01:33.840 sort of pace of regular phone and in person meetings 0:01:33.880 --> 0:01:37.200 with high level Chinese staffers on economic issues, and that 0:01:37.280 --> 0:01:40.679 really fell apart due first of all to the more 0:01:40.720 --> 0:01:44.200 confrontational tone of the Trump administration and then second just 0:01:44.240 --> 0:01:47.640 because of COVID, and it's taken a long time to 0:01:47.760 --> 0:01:53.000 re establish regular ties, and Yellen has been personally really 0:01:53.080 --> 0:01:57.720 eager to get those reconnected, and I think on that front, 0:01:57.840 --> 0:02:01.080 it was a pretty successful trip. From what I understand, 0:02:01.760 --> 0:02:04.440 she and her staff were very pleased with the way 0:02:04.760 --> 0:02:08.800 meetings went. They were a bit more informal as time 0:02:08.840 --> 0:02:12.519 went on. They weren't as scripted as they thought they 0:02:12.639 --> 0:02:15.920 might be, so that was a good thing, and she 0:02:16.120 --> 0:02:20.560 does expect from here her staff will have that kind 0:02:20.600 --> 0:02:25.399 of regular pace of contexts re established where high level 0:02:25.400 --> 0:02:27.320 people can get on the phone with each other and 0:02:27.360 --> 0:02:31.160 discuss concerns or just hit regular agenda items and discuss 0:02:31.200 --> 0:02:34.400 them and that's a pretty healthy set of steps. 0:02:34.680 --> 0:02:36.320 All right, Well, Eddie, I want to bring you in 0:02:36.680 --> 0:02:40.240 and Eddie rementioning, you are our debuty managing editor of 0:02:40.280 --> 0:02:43.200 the Markets Live team have all of the best quotes 0:02:43.240 --> 0:02:45.399 that I steal throughout the day to say on air 0:02:45.520 --> 0:02:47.920 to sound smart. So thank you for that, Eddie. But 0:02:48.280 --> 0:02:49.560 I want to talk to you about some of this 0:02:49.680 --> 0:02:52.880 soft economic data that we got out of China, looking 0:02:53.040 --> 0:02:58.720 like that stimulus urgency is just increasing for the mainland there, Eddie, 0:02:58.760 --> 0:03:00.760 What is that sort of doing in terms of the 0:03:00.800 --> 0:03:02.959 impact on US markets this week? 0:03:04.200 --> 0:03:07.600 Yeah, Look, these were really really soft numbers that we 0:03:07.680 --> 0:03:12.919 saw from China. You know, globally, it's quite surprising to see, 0:03:13.080 --> 0:03:16.320 you know, with inflation around the world running so much 0:03:16.360 --> 0:03:19.959 above expectations and so much higher than most central bankers 0:03:20.000 --> 0:03:23.239 would like to see it. In China, they had zero inflation, 0:03:23.400 --> 0:03:26.120 literally nothing over the last year. Number came in a 0:03:26.200 --> 0:03:30.720 zero percent flat, core inflation flowed to zero point four percent, 0:03:30.960 --> 0:03:35.000 and producer prices were in retreat. Now, yes, I mean 0:03:35.040 --> 0:03:37.240 a lot of central bankers would probably look at that 0:03:37.640 --> 0:03:41.360 with envy, but it shows just how difficult the situation 0:03:41.480 --> 0:03:44.720 in China is and just how much, you know, there 0:03:44.800 --> 0:03:48.240 is maybe a need to start the economy because remember, 0:03:48.400 --> 0:03:51.400 they only recently came out of lockdown, and it was 0:03:51.480 --> 0:03:53.800 when the rest of the world came out of lockdown 0:03:54.120 --> 0:03:58.040 that we had that really strong demand that fired inflation 0:03:58.120 --> 0:04:00.520 across the globe. But we're just not seeing that and 0:04:00.600 --> 0:04:03.800 that's feeding through the market. It's sort of certainly adding 0:04:04.120 --> 0:04:06.840 a little bit of a headwind to risk assets. 0:04:07.080 --> 0:04:11.280 More broadly, Hey, Chris, you know how important is it? 0:04:12.040 --> 0:04:14.280 I mean, I guess you know, covering the Treasury there, 0:04:15.160 --> 0:04:18.240 Secretary of yell and being in China is certainly important. 0:04:19.040 --> 0:04:20.719 Talk to us about how it kind of works the 0:04:21.440 --> 0:04:23.080 under the you know, when you get down into the 0:04:23.160 --> 0:04:25.640 makings of the sausage. Is there that much interaction between 0:04:25.880 --> 0:04:28.480 members of the staff the Treasury and counterparts in China. 0:04:28.520 --> 0:04:30.440 Is this something that really needs to be nurtured. 0:04:31.440 --> 0:04:35.040 Well, it certainly does need to be nurtured. It's something, 0:04:35.120 --> 0:04:38.159 as I said, that that deteriorated over the last few 0:04:38.240 --> 0:04:41.560 years and is expected to restart now. And this can 0:04:41.680 --> 0:04:45.120 have a couple of different benefits. First of all, you know, 0:04:45.200 --> 0:04:47.640 Eddie was just talking about what we know about the 0:04:47.720 --> 0:04:52.040 Chinese economy. Well, the information coming out of China is 0:04:52.040 --> 0:04:58.240 not always believable or reliable, and those types of contacts 0:04:58.360 --> 0:05:03.320 help the Treasury at least gather more information, gives them 0:05:03.360 --> 0:05:06.479 a better read about what Chinese officials think is going 0:05:06.520 --> 0:05:11.359 on in their own economy. In fact, from these meetings, 0:05:12.200 --> 0:05:14.640 one thing that was taken away is that Chinese officials 0:05:14.760 --> 0:05:20.440 are concerned about growth and certain pockets of bubbles in 0:05:20.480 --> 0:05:23.600 their economy, but not overly so they feel they have 0:05:23.680 --> 0:05:27.080 it under control. So that's the kind of insider understanding 0:05:27.080 --> 0:05:30.440 that Treasury is always looking for more of. And second 0:05:30.440 --> 0:05:33.400 of all, it's beneficial in the sense that it might 0:05:33.600 --> 0:05:40.920 help prevent certain contentious issues from escalating in a sort 0:05:40.960 --> 0:05:45.359 of retaliatory cycle. It gives each side a chance to 0:05:45.560 --> 0:05:49.800 kind of communicate, intervene, talk things over, and prevent perhaps 0:05:49.839 --> 0:05:54.000 a more severe escalation of issues that begin as small 0:05:54.080 --> 0:05:56.000 economic concerns and could escalate. 0:05:56.360 --> 0:05:58.880 Well, Jennet Yalen kind of echoed the idea that it 0:05:58.920 --> 0:06:01.679 could escalate, sa that she wouldn't rule out the threat 0:06:01.720 --> 0:06:04.560 of a US recession, and it's appropriate and normal for 0:06:04.640 --> 0:06:08.640 growth to moderate as inflation remains too high, So Eddie, 0:06:08.640 --> 0:06:12.040 given that that kind of seems a little bit hotish, 0:06:12.040 --> 0:06:15.040 and we're heading into this next FED meeting here likely 0:06:15.080 --> 0:06:18.320 to see another hike. To what extent is that move 0:06:18.360 --> 0:06:20.960 from the US potentially going to impact China. 0:06:22.800 --> 0:06:27.480 Yeah, Look, there's definitely divergence of monetary policy around the globe. 0:06:27.560 --> 0:06:30.400 Right when we came out of COVID, everybody was in 0:06:30.440 --> 0:06:35.080 the same situation. You know, growth was very strong and 0:06:35.160 --> 0:06:38.120 we had fast inflation, and now we're starting to see 0:06:38.320 --> 0:06:40.960 real divergence. The US is kind of in the middle 0:06:41.000 --> 0:06:43.760 of the road. It's inflation is starting to come down, 0:06:43.839 --> 0:06:46.120 but it's not like it's not where it would like 0:06:46.200 --> 0:06:48.320 to see it. In China, you know, the numbers are 0:06:48.400 --> 0:06:51.960 much lower now. The I think there's a disconnect here 0:06:52.000 --> 0:06:54.920 because in the US we're starting to see wages and 0:06:54.960 --> 0:06:58.200 the services sick to driving that, whereas in China it's 0:06:58.279 --> 0:07:01.760 very much the manufacturies that is at fault. And I 0:07:01.800 --> 0:07:05.320 think as long as China's you know, as long as 0:07:05.360 --> 0:07:08.520 it's services sectors stay stay strong, then I think they 0:07:08.600 --> 0:07:12.240 will be they will be shy of providing further stimulus. 0:07:12.280 --> 0:07:14.160 But I think there is definitely a f two between 0:07:14.200 --> 0:07:15.320 the two economies for sure. 0:07:15.760 --> 0:07:17.520 All right, Eddie, thank you so much for joining us. 0:07:17.600 --> 0:07:20.880 Eddie Vanderwaldt, Deputy Managing editor of the Market's Live team, 0:07:21.160 --> 0:07:24.200 joining us from London, and Chris Condon, your treasury reporter 0:07:24.320 --> 0:07:25.760 with Bloomberg News. 0:07:27.000 --> 0:07:30.360 You're listening to the team. Ken's are live program Bloomberg 0:07:30.480 --> 0:07:33.800 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:07:33.920 --> 0:07:37.040 the iHeartRadio app and the Bloomberg Business APPM or listen 0:07:37.120 --> 0:07:39.160 on demand wherever you get your podcast. 0:07:41.080 --> 0:07:44.000 All right, nobody covers the Fed, I think any better 0:07:44.040 --> 0:07:46.280 or any more intensely than Bloomberg News. But one thing 0:07:46.280 --> 0:07:48.880 that's fallen through the cracks from just for me as 0:07:48.880 --> 0:07:49.680 a reader, is like. 0:07:49.920 --> 0:07:50.400 What's going on? 0:07:50.600 --> 0:07:51.520 Quantitative tightening? 0:07:51.560 --> 0:07:53.960 The QT thing? Isn't Is it still a thing? I 0:07:53.960 --> 0:07:56.160 don't know, but I know somebody does know this stuff. 0:07:56.160 --> 0:07:59.120 It's Lis McCormick's. She's a chief correspondent Macro Markets with 0:07:59.160 --> 0:07:59.960 Bloomberg News Check. 0:08:00.040 --> 0:08:00.840 She follows this stuff. 0:08:00.840 --> 0:08:03.240 I don't know why, but she joined us actually here 0:08:03.240 --> 0:08:06.280 in studio. Liz talk to me about and talk to 0:08:06.320 --> 0:08:09.040 us about quantitative tightening? Is the FED still doing it? 0:08:09.400 --> 0:08:11.480 How are they doing it? Is it important? What's it 0:08:11.520 --> 0:08:13.600 mean for the economy and tell us how they kind 0:08:13.600 --> 0:08:14.960 of screwed up maybe a couple of years ago. 0:08:15.280 --> 0:08:17.320 Yeah, I'm going to tell you all that. But fun fact, 0:08:17.920 --> 0:08:21.160 Liz Capo McCormick's brother used to work at Bloomberg Sports 0:08:21.240 --> 0:08:21.800 years ago. 0:08:23.440 --> 0:08:23.640 Later. 0:08:24.720 --> 0:08:27.800 Yeah, but yeah, QT is still we kind of got 0:08:27.840 --> 0:08:30.320 out off the limelight with that, but it's still going on. 0:08:30.840 --> 0:08:33.040 In fact, in full force. It's going to be about 0:08:33.080 --> 0:08:35.920 a trillion a year that'll come off the Fed's balance sheet. 0:08:35.960 --> 0:08:38.160 And it was so interesting. I mean, maybe I'm just 0:08:38.200 --> 0:08:42.520 a nerd, but listening to Chairman Palell speak on Capitol 0:08:42.559 --> 0:08:46.560 Hill recently and he you know, politicians really don't like 0:08:46.800 --> 0:08:48.679 all the debt on the Fed's balance sheet. I think 0:08:48.679 --> 0:08:51.120 they feel like it takes too much, you know, sway 0:08:51.160 --> 0:08:53.360 in the market. And they were kind of saying to him, hey, 0:08:53.400 --> 0:08:55.400 you're going to get the balance sheet down, and Chairman Pale, 0:08:55.480 --> 0:08:58.439 like you're alluding to, Paul, said, we are, but we 0:08:58.440 --> 0:09:00.600 were going to be careful. Lat you know, in twenty 0:09:00.679 --> 0:09:02.920 nineteen kind of we didn't see it coming that there 0:09:03.000 --> 0:09:06.360 was scarcity in the banking system for reserves, which created problem. 0:09:06.400 --> 0:09:07.080 So the FED had to. 0:09:07.120 --> 0:09:10.720 Quickly reverse course, remember the repo blow up and add reserves, 0:09:10.720 --> 0:09:13.000 So they're they're doing their job. They want to get 0:09:13.040 --> 0:09:16.080 the balance sheet down, but they're being very careful to 0:09:16.320 --> 0:09:19.600 not make reserves too scarce in the system. And it's 0:09:19.640 --> 0:09:22.240 not so easy, right, So I think Pal, I mean, 0:09:22.280 --> 0:09:24.360 I give them credit, was saying like, hey, we learned 0:09:24.360 --> 0:09:27.120 from the last time. We're trying to avoid it. But yeah, 0:09:27.120 --> 0:09:29.240 it's going on in the background. It's the second tool 0:09:29.280 --> 0:09:30.000 of their tightening. 0:09:30.520 --> 0:09:33.079 So in terms of that being the second tool of 0:09:33.120 --> 0:09:36.800 their tightening, do you think that the FED is secretly 0:09:36.840 --> 0:09:39.280 a little bit excited when bad eco news comes out 0:09:39.320 --> 0:09:41.920 and they have an excuse to raise rates again because 0:09:41.920 --> 0:09:45.040 it helps them with their balance sheet if rates are higher. 0:09:45.280 --> 0:09:46.319 Yeah, that's funny, right. 0:09:46.360 --> 0:09:49.600 They would never say that, right, but I mean they would, like, 0:09:49.920 --> 0:09:52.440 you know, on everything to when you kind of go 0:09:52.520 --> 0:09:54.280 one way, you want to go back the other way 0:09:54.360 --> 0:09:56.400 so you have some ammo for the next crisis. 0:09:56.480 --> 0:09:56.720 Right. 0:09:56.800 --> 0:09:58.600 So it's it's tough. 0:09:58.400 --> 0:10:01.199 If you start, you know, every new crisis with an 0:10:01.200 --> 0:10:04.199 even bigger balance sheet, even though you've done some quantitative 0:10:04.240 --> 0:10:07.520 tightening bringing it down. So I think the FED would 0:10:07.600 --> 0:10:10.120 really love, like Janet Yellen, I think was famous for 0:10:10.120 --> 0:10:12.720 saying we want QT to run in the background like 0:10:12.760 --> 0:10:13.640 paint drying. 0:10:13.640 --> 0:10:14.760 Which doesn't always work. 0:10:15.520 --> 0:10:17.840 But I really do think they I mean, they're in 0:10:17.880 --> 0:10:20.400 a new regime. Well, they'll never have the uber small 0:10:20.440 --> 0:10:23.880 balance sheet though, and we all saw years and decades ago. 0:10:25.120 --> 0:10:26.800 But yeah, they would like to get it down a 0:10:26.800 --> 0:10:30.520 little maddie, right, So they if we god willing, we don't. 0:10:30.559 --> 0:10:32.400 But if we go in another crisis, they have the 0:10:32.480 --> 0:10:35.200 AMMO with the ability to cut rates and then jack 0:10:35.280 --> 0:10:38.120 up the balance sheet again. So it's a little bit 0:10:38.120 --> 0:10:40.320 of a tricky, tricky wicket I call it for them. 0:10:40.440 --> 0:10:44.200 Yeah, help, does a central bank actually do quantitative tightening? 0:10:44.240 --> 0:10:44.920 How does it work? 0:10:45.280 --> 0:10:45.559 Yeah? 0:10:45.559 --> 0:10:47.959 So you know the central bank like, it's easy. When 0:10:48.000 --> 0:10:49.960 we know they're buying kuy, they just go in there 0:10:50.000 --> 0:10:52.640 and buy, right. But the quantitative tightening, let's talk about 0:10:52.640 --> 0:10:56.520 the treasury side. So what happens is they have treasury 0:10:56.559 --> 0:10:59.800 debt that mature, Say they haveure debt maturing middle of 0:10:59.800 --> 0:11:02.800 this month. What they'll do is say, hey, we're gonna 0:11:02.840 --> 0:11:06.559 let that mature. Normally, if they're leaving their balance sheet stable, 0:11:06.720 --> 0:11:09.719 then they buy the same amount that matures, and now 0:11:09.720 --> 0:11:13.800 they're saying, hey, we're gonna let x billion mature and 0:11:13.840 --> 0:11:16.960 not buy more, So that kind of whittles down how 0:11:17.040 --> 0:11:19.440 much treasuries they have on their balance sheet. The mortgages 0:11:19.480 --> 0:11:22.360 are a little more convoluted because it's depends on refi 0:11:22.520 --> 0:11:24.439 rates and things like that, but that's what they do, 0:11:24.600 --> 0:11:26.720 kind of not keep rolling into new debt. 0:11:27.400 --> 0:11:29.360 And what does the impact of that look like in 0:11:29.440 --> 0:11:31.400 terms of overall liquidity. 0:11:32.040 --> 0:11:36.080 Yeah, so it's interesting because QI the buying was really 0:11:36.200 --> 0:11:38.839 and is used to kind of help lower long rates. 0:11:38.840 --> 0:11:41.760 It's felt to help juice the housing market and things, 0:11:41.760 --> 0:11:44.360 so QT in essent should go the other way. It's 0:11:44.360 --> 0:11:46.080 a little less clear, but what it does on the 0:11:46.120 --> 0:11:48.840 short end, like we're talking about in this story, is 0:11:48.920 --> 0:11:51.440 what it does is you know, kind of the way 0:11:51.480 --> 0:11:54.160 all the mechanics work on the Fed's balance sheet is 0:11:54.200 --> 0:11:56.560 if they let the asset side roll down, then a 0:11:56.600 --> 0:11:59.400 liability has to roll down. So that's either in bank 0:11:59.440 --> 0:12:02.839 reserves or this facility. They have reverse repos where money 0:12:02.840 --> 0:12:05.520 market funds can put money with the FED. So that's 0:12:05.600 --> 0:12:08.959 where manny, if we get too tight, then that liquidity 0:12:09.000 --> 0:12:11.280 is sucking out of the short end, and that's kind 0:12:11.280 --> 0:12:14.200 of what turns. You know the financial system, right, you know, 0:12:14.280 --> 0:12:18.439 banks having enough liquidity to do their operations. So that's 0:12:18.520 --> 0:12:21.760 where you know, on the exit side of QT that 0:12:21.800 --> 0:12:24.320 you have to worry about liquidity in the repo market 0:12:24.360 --> 0:12:25.160 and things like that. 0:12:25.960 --> 0:12:29.560 So, Liz, how about let's just assume I'm on the 0:12:29.600 --> 0:12:31.720 FED and at the end of this month, I argue 0:12:31.760 --> 0:12:34.600 to my fellow folks on the Fed, Hey, we raised 0:12:34.679 --> 0:12:36.680 rates five one hundred basis points. 0:12:36.880 --> 0:12:40.199 Inflation's coming down. We just saw a three percent headline print. 0:12:40.679 --> 0:12:41.120 We're done. 0:12:41.200 --> 0:12:42.680 Let's just sit on the sidelines. Why don't we have 0:12:42.679 --> 0:12:45.160 to do anything? It's actually working. Why don't we just 0:12:45.240 --> 0:12:46.440 do that? What would happen if I. 0:12:46.440 --> 0:12:47.000 Made that pitch? 0:12:47.320 --> 0:12:49.800 Well, on the rate side, I think that's what they're 0:12:49.800 --> 0:12:51.760 going to eventually get to. Let's just say they hike 0:12:51.800 --> 0:12:53.880 in July. You know, I can't remember if that was 0:12:53.880 --> 0:12:54.880 in your scenario. 0:12:54.960 --> 0:12:56.640 Well, no, my scenariy was don't do anything. 0:12:56.679 --> 0:12:58.679 We're done, well, right, So okay, so say they don't, 0:12:58.720 --> 0:13:02.200 which is possible right now. That's the one tool of 0:13:02.240 --> 0:13:04.920 their policy, the rates. So in that scenario, what the 0:13:04.960 --> 0:13:07.120 FED has been saying is like QT is going to 0:13:07.200 --> 0:13:11.040 keep going right where it gets tricky is the FED 0:13:11.080 --> 0:13:13.120 has always said we don't I'm sorry, I'm telling you 0:13:13.440 --> 0:13:16.560 about my hands. We don't like our tools to be 0:13:16.600 --> 0:13:20.120 moving in opposite direction. So say which we're far away 0:13:20.160 --> 0:13:23.719 from that? The FED started lowering its benchmark rate. Then 0:13:23.760 --> 0:13:26.360 if QT is going on, it's like one hand of 0:13:26.400 --> 0:13:28.920 the FED is easing and the other is tightening. And 0:13:28.960 --> 0:13:30.959 most people say the FED won't want to do that, 0:13:31.080 --> 0:13:34.560 Like the folks at TD who see easing later this year, say, 0:13:34.559 --> 0:13:36.839 the Fed's going to stop the QT because it doesn't 0:13:36.840 --> 0:13:39.080 make sense to be going in opposite directions. But there's 0:13:39.520 --> 0:13:41.400 a lot of variables, so we don't know. So it's 0:13:41.400 --> 0:13:43.120 going to be interesting to see what happens in July. 0:13:43.240 --> 0:13:46.160 I'm already thinking about August and Jackson Hole. What guidance 0:13:46.200 --> 0:13:49.000 dos Sherman Pal give us, h Let's go. 0:13:49.440 --> 0:13:50.440 Of course you should go. 0:13:51.160 --> 0:13:53.560 I'll put a ticket in for that. See how that works. 0:13:53.920 --> 0:13:56.559 What are you anticipating that in terms of FED moves, 0:13:56.600 --> 0:13:58.679 It feels like July is a definite. Do you have 0:13:58.720 --> 0:13:59.800 a take on September? 0:14:00.120 --> 0:14:00.320 Yeah? 0:14:00.360 --> 0:14:02.880 I think that's the wildcard. Now we're already kind of 0:14:02.960 --> 0:14:06.520 like looking through into September and there's a mix. There's 0:14:06.559 --> 0:14:09.160 a lot of economists on Wall Street who say one 0:14:09.200 --> 0:14:12.360 more July and we're done. Then there's others saying, hey, 0:14:12.360 --> 0:14:14.800 the Fed has more to go. You know, we're not 0:14:14.880 --> 0:14:17.319 seeing policy really be that restricted because look at the 0:14:17.320 --> 0:14:20.720 stock market, look at the housing market. So some are saying, 0:14:20.880 --> 0:14:23.200 you know, terminal rate has to be even higher, maybe 0:14:23.200 --> 0:14:25.360 over sixty percent. So I think I was talking to 0:14:25.880 --> 0:14:28.600 you know, the folks around my desk today and we 0:14:28.600 --> 0:14:31.240 were saying it really it sounds boring, but it's going 0:14:31.280 --> 0:14:33.840 to be data dependent. Like if it's like you were saying, 0:14:33.840 --> 0:14:36.880 the data if we start getting another strong jobs, if 0:14:36.920 --> 0:14:39.680 CPI misses to the upside, we have a lot of 0:14:39.760 --> 0:14:42.000 data between now and September, the FED kind of has 0:14:42.080 --> 0:14:45.480 to do if inflation is not coming down, they're going 0:14:45.520 --> 0:14:46.960 to have to do it. So I feel like, oh 0:14:47.000 --> 0:14:48.240 my god, well we ever get a. 0:14:48.200 --> 0:14:50.640 Break, it's not going to be calm right, you know. 0:14:50.960 --> 0:14:53.120 So again it seems like we were just getting some 0:14:53.200 --> 0:14:57.160 data passed around the newsroom here talking about used car 0:14:57.240 --> 0:14:59.200 prices coming down. I mean, there's so many data points 0:14:59.200 --> 0:15:01.840 that you can look at here, But does a FED 0:15:01.880 --> 0:15:03.920 feel like in order from a credibility perspective, they need 0:15:03.960 --> 0:15:04.800 to hike one more time? 0:15:04.880 --> 0:15:05.800 Is that kind of where we are? 0:15:06.520 --> 0:15:10.760 Well? You know, an analysis on Wall Street goes that 0:15:11.120 --> 0:15:13.280 the FED doesn't like to surprise the market, and when 0:15:13.320 --> 0:15:16.720 the market, like the futures in the short term overnight 0:15:16.760 --> 0:15:19.560 interest rate swaps are pricing in like a near certainty 0:15:19.600 --> 0:15:21.880 that they hike in July, FED doesn't like to surprise. 0:15:22.400 --> 0:15:24.720 So I think, I don't know if it's credibility, but 0:15:25.640 --> 0:15:27.360 I don't think they want to upend the market. We're 0:15:27.360 --> 0:15:29.760 so close to that meeting, right, I Mean, I could 0:15:29.800 --> 0:15:32.480 be wrong, but I suspect that they kind of have 0:15:32.640 --> 0:15:35.400 it priced in already. It's almost like a done deal. Look, 0:15:35.480 --> 0:15:37.160 let's just do it, right, yep. 0:15:37.200 --> 0:15:39.840 And if you look at the warp function which Liz 0:15:39.920 --> 0:15:44.200 is referring to, it's almost a ninety percent expectation that 0:15:44.280 --> 0:15:47.320 rates will be hiked in July, so to the extent 0:15:47.320 --> 0:15:49.280 you don't want to upset the apple cart. There we go, 0:15:49.480 --> 0:15:51.680 all right, Liz McCormick, thanks so much for joining us 0:15:51.680 --> 0:15:53.480 here in our Bloomberg Interactive Broker studio. 0:15:53.480 --> 0:15:55.480 Always good to see it in the office. 0:15:55.480 --> 0:15:58.680 Here, Lis McCormick, Chief corresponding covering the global macro markets 0:15:59.320 --> 0:16:02.920 for Bloomberg News again. So we'll have some economic data 0:16:02.920 --> 0:16:06.600 this week, some inflation data this week CPI, so be 0:16:06.680 --> 0:16:09.960 really interesting. PPI as well get a good read on inflation, 0:16:10.080 --> 0:16:12.960 which the Fed will certainly need prior to meeting at 0:16:13.000 --> 0:16:14.720 the end of this month, because we'll get an announcement 0:16:14.760 --> 0:16:16.480 on July the twenty sixth. 0:16:16.800 --> 0:16:19.840 You're listening to the tape can's our live program Bloomberg 0:16:19.960 --> 0:16:23.560 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:16:23.600 --> 0:16:26.840 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:16:26.880 --> 0:16:29.680 You can also listen live on Amazon Alexa from our 0:16:29.720 --> 0:16:34.800 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:16:35.720 --> 0:16:38.800 All right, we're just talking about threads one hundred million users. 0:16:39.160 --> 0:16:40.000 That gets my attention. 0:16:41.520 --> 0:16:43.840 Let's see what it means for Meta, Let's see what 0:16:43.920 --> 0:16:45.600 it means for Twitter. Let's see what it means for 0:16:45.720 --> 0:16:49.080 just people's spare time, spending more time on social I'm 0:16:49.080 --> 0:16:51.160 gonna blame Man Deep Sing for all of that stuff. 0:16:51.160 --> 0:16:54.120 He covers the technology for Bloomberg Intelligence. He joins us 0:16:54.120 --> 0:16:57.360 here in our Bloomberg Interactive Broker Studio. I mean Zuck 0:16:57.400 --> 0:16:59.720 comes on and says, geos more than our expectations. One 0:16:59.760 --> 0:17:03.480 hundred million signups for threads. Is that number men anything 0:17:03.480 --> 0:17:03.680 to you? 0:17:04.280 --> 0:17:06.960 It does? I mean, look, this is the fastest growing 0:17:07.040 --> 0:17:11.080 app ever. It surpassed chat GPT, which was the craze 0:17:11.119 --> 0:17:15.520 so far. So I think clearly they have a great momentum. 0:17:15.520 --> 0:17:19.680 And what it shows is the creators are seeking an 0:17:19.680 --> 0:17:23.440 alternative here. I mean that is really the crux of it. 0:17:23.520 --> 0:17:28.480 That everyone wants something that is similar to Twitter where 0:17:28.520 --> 0:17:31.600 they can build their network, and they think this is 0:17:31.640 --> 0:17:35.560 a viable platform. Blue Sky, Macedon and the others didn't 0:17:35.600 --> 0:17:37.959 take off because they didn't have that scale. 0:17:38.160 --> 0:17:40.080 Well what do you make of the scale? And it's 0:17:40.080 --> 0:17:43.000 so funny, Mandy, because on Friday we talked about how 0:17:43.119 --> 0:17:46.160 over the weekend we might get that surpassing of chat 0:17:46.160 --> 0:17:48.280 gpt in terms of signups, and I think it happened 0:17:48.320 --> 0:17:50.400 like right after you got off the air with us. 0:17:50.440 --> 0:17:53.000 So you are a leading indicator when it comes to 0:17:53.080 --> 0:17:56.720 the metastory. But why are they able to convert active 0:17:56.800 --> 0:17:57.880 users so quickly? 0:17:58.440 --> 0:18:01.719 I mean, look, it's social media. It's like you have 0:18:01.800 --> 0:18:05.119 those network effects, and in the case of meta, they 0:18:05.119 --> 0:18:08.320 have the three billion users across their family of apps. 0:18:08.400 --> 0:18:11.440 Right they can promote stuff on their app. Look at 0:18:11.480 --> 0:18:13.080 how TikTok grew back. 0:18:12.880 --> 0:18:13.359 In the day. 0:18:13.760 --> 0:18:19.160 They were one of the heaviest advertisers on Facebook on Instagram. 0:18:19.320 --> 0:18:22.359 In this case, I mean, Meta owns all these properties, 0:18:22.560 --> 0:18:25.879 so they can promote their Threads app. And right now 0:18:26.280 --> 0:18:30.080 I feel they have gone with a very niche focused approach, 0:18:30.359 --> 0:18:35.640 text based format. They will keep layering more photos, more 0:18:35.760 --> 0:18:38.520 videos on Threads over time, but what they want to 0:18:38.560 --> 0:18:42.000 make sure is there's a clear value proposition for Threads 0:18:42.000 --> 0:18:45.600 and it doesn't end up cannibalizing Instagram or Blue App. 0:18:45.680 --> 0:18:48.960 Well that's a great point. Do you think that Threads 0:18:49.200 --> 0:18:52.160 is going to be a legitimate competitor to a TikTok? 0:18:52.920 --> 0:18:55.600 I think so over time, I can see Threads having 0:18:55.640 --> 0:18:58.800 a messaging tab. So think of all the things that 0:18:58.880 --> 0:19:03.360 Meta does of features. They're using a very narrow subset 0:19:03.400 --> 0:19:07.040 of that for Threads because they want it to rival Twitter. 0:19:08.000 --> 0:19:11.600 Get those users on board, and then iterate and add 0:19:11.640 --> 0:19:14.120 more features to drive engagement. And look, at the end 0:19:14.119 --> 0:19:17.760 of the day, it's about average time spent on the platform. 0:19:17.840 --> 0:19:21.639 So compare that Instagram average time spent it's around like 0:19:21.760 --> 0:19:25.639 seventy to eighty minutes per daily active user. Twitter is 0:19:25.680 --> 0:19:28.480 around twenty five minutes, and they try to pivot to 0:19:28.520 --> 0:19:32.399 subscriptions too early. I mean, this is still an adriven model, 0:19:32.760 --> 0:19:36.199 and in an adriven model, it's all about engagement and 0:19:36.240 --> 0:19:38.119 time spent on the platform. 0:19:38.520 --> 0:19:41.400 I'm not buying it? Are you on? Are you're a threader? 0:19:41.440 --> 0:19:41.680