1 00:00:02,480 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,440 Speaker 2: with Lisa Bromwitz and a Marie Hortenn. Join us each 4 00:00:18,520 --> 00:00:21,440 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,480 --> 00:00:24,759 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,800 --> 00:00:27,479 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,560 --> 00:00:31,040 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,240 --> 00:00:33,519 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,520 --> 00:00:37,240 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. Rob Casey of 10 00:00:37,280 --> 00:00:39,920 Speaker 2: Signum Global Advisors joins us now for more. Rob, we'd 11 00:00:39,920 --> 00:00:42,720 Speaker 2: love your thoughts on this. Millions of people have already voted. 12 00:00:42,760 --> 00:00:45,480 Speaker 2: Do we have any clarity whatsoever on how that vote 13 00:00:45,520 --> 00:00:46,120 Speaker 2: has been breaking? 14 00:00:47,120 --> 00:00:47,320 Speaker 3: Yeah? 15 00:00:47,400 --> 00:00:49,159 Speaker 4: John, ten really good to be with you. I mean, 16 00:00:49,200 --> 00:00:50,760 Speaker 4: we have clarity in the sense that we have really 17 00:00:50,800 --> 00:00:53,640 Speaker 4: good data coming out of the early vote. A number 18 00:00:53,720 --> 00:00:58,120 Speaker 4: of states report, you know, partisanship, gender race breakdown. 19 00:00:58,120 --> 00:00:59,200 Speaker 3: We can see it by county. 20 00:00:59,400 --> 00:01:01,080 Speaker 4: The thing is with in that data, even though it's 21 00:01:01,120 --> 00:01:03,280 Speaker 4: good data, we haven't seen a lot of clear trends. 22 00:01:03,280 --> 00:01:05,319 Speaker 4: So women are turning out more than men. That's a 23 00:01:05,319 --> 00:01:07,840 Speaker 4: good sign for Harris, but they're turning out about where 24 00:01:07,840 --> 00:01:09,840 Speaker 4: they were turning out in twenty twenty, So so not 25 00:01:09,880 --> 00:01:13,080 Speaker 4: a clear better or worse than the Biden Trump matchups. 26 00:01:13,280 --> 00:01:15,480 Speaker 1: You know, Rob, just to jump in there. 27 00:01:15,560 --> 00:01:19,160 Speaker 5: NBC News Decision Desk has new female Democratic voters in Pennsylvania. 28 00:01:19,240 --> 00:01:22,160 Speaker 5: They're seeing that in flux. But the flip side of 29 00:01:22,160 --> 00:01:24,640 Speaker 5: this is what about the male vote, because they see 30 00:01:24,920 --> 00:01:29,200 Speaker 5: new male Republican voters in Arizona, two critical swing states. 31 00:01:30,360 --> 00:01:33,120 Speaker 4: Yeah, Frankly, I think Arizona is where Harris is running weakest, 32 00:01:33,360 --> 00:01:35,240 Speaker 4: and that's for two reasons. We're seeing her running weaker 33 00:01:35,280 --> 00:01:38,319 Speaker 4: among Latino voters and much weaker among male voters, which 34 00:01:38,360 --> 00:01:40,840 Speaker 4: is really a national trend in the blue Wall. Though 35 00:01:41,319 --> 00:01:45,080 Speaker 4: Harris is less impacted by both of those, primarily because 36 00:01:45,080 --> 00:01:47,400 Speaker 4: of the white women who David was just discussing. 37 00:01:47,560 --> 00:01:48,639 Speaker 3: White women turning out. 38 00:01:48,520 --> 00:01:52,240 Speaker 4: In droves for Harris at a higher percentage and with 39 00:01:52,280 --> 00:01:54,440 Speaker 4: a better margin for Harris than in twenty twenty. 40 00:01:54,640 --> 00:01:57,200 Speaker 5: They're both going to be in Wisconsin today, Rob, how 41 00:01:57,240 --> 00:01:58,040 Speaker 5: tight does that raise? 42 00:01:59,200 --> 00:02:00,360 Speaker 3: It's really tight, really tight. 43 00:02:00,400 --> 00:02:02,880 Speaker 4: At Sigmam, we feel good in our call that Harris 44 00:02:02,920 --> 00:02:05,120 Speaker 4: will win the presidency. A lot of that is because 45 00:02:05,120 --> 00:02:07,760 Speaker 4: we feel as though she's running clearly ahead in Michigan 46 00:02:07,760 --> 00:02:10,560 Speaker 4: and Wisconsin, but across all of the swing states, you know, 47 00:02:11,520 --> 00:02:13,200 Speaker 4: the point today doesn't show. 48 00:02:13,040 --> 00:02:15,760 Speaker 3: Clearly that they're tied. At every pole that we're seeing 49 00:02:15,800 --> 00:02:18,480 Speaker 3: is within the four points, which. 50 00:02:18,280 --> 00:02:21,360 Speaker 4: Is the average margin of varia in presidential cycles between 51 00:02:21,360 --> 00:02:22,520 Speaker 4: two thousand and today. 52 00:02:23,080 --> 00:02:25,040 Speaker 3: So all of these races are incredibly tight. 53 00:02:25,040 --> 00:02:26,560 Speaker 4: But I do think it's fair to say Harris is 54 00:02:26,680 --> 00:02:29,400 Speaker 4: leading if anywhere in Wisconsin and Michigan. 55 00:02:29,560 --> 00:02:31,960 Speaker 6: Rob We keep talking about how tight these poles are, 56 00:02:32,000 --> 00:02:34,480 Speaker 6: how it's really not connecting. Yet there seems to be 57 00:02:34,480 --> 00:02:36,919 Speaker 6: a growing conviction in the investors who we speak with 58 00:02:37,200 --> 00:02:39,079 Speaker 6: that it's not going to be a contested election, that 59 00:02:39,120 --> 00:02:41,040 Speaker 6: it's not going to drag on for a significant amount 60 00:02:41,040 --> 00:02:43,119 Speaker 6: of time. And you can see this in the options 61 00:02:43,160 --> 00:02:45,880 Speaker 6: market or basically the volatility peaks a day after the 62 00:02:45,919 --> 00:02:47,959 Speaker 6: election and then it peters off with this idea that 63 00:02:48,000 --> 00:02:51,079 Speaker 6: we'll have some sort of clear outcome. Er sense, how 64 00:02:51,120 --> 00:02:52,040 Speaker 6: is that correct? 65 00:02:52,160 --> 00:02:53,640 Speaker 7: Is that your base case? 66 00:02:53,680 --> 00:02:54,000 Speaker 2: Also? 67 00:02:55,240 --> 00:02:56,040 Speaker 3: It is our base case. 68 00:02:56,120 --> 00:02:57,840 Speaker 4: We think we get a very clear result in the 69 00:02:57,880 --> 00:03:01,440 Speaker 4: first forty eight hours post election. It may not be 70 00:03:01,480 --> 00:03:03,679 Speaker 4: that the Associated Press is calling the election within forty 71 00:03:03,720 --> 00:03:06,679 Speaker 4: eight hours. But we do think that markets and most 72 00:03:06,720 --> 00:03:08,960 Speaker 4: who are looking at the election most closely will have 73 00:03:09,000 --> 00:03:11,000 Speaker 4: a very good sense. As we did in twenty twenty, 74 00:03:11,040 --> 00:03:13,800 Speaker 4: right betting markets moved to Biden about eighty percent as 75 00:03:13,800 --> 00:03:16,119 Speaker 4: of Wednesday morning, So even though it took until Saturday 76 00:03:16,320 --> 00:03:18,680 Speaker 4: for the Associated Press to call the twenty twenty election, 77 00:03:19,080 --> 00:03:21,560 Speaker 4: markets essentially priced in the Biden wins starting on Wednesday. 78 00:03:22,280 --> 00:03:24,600 Speaker 4: We expect to see a similar result. I mean, you 79 00:03:24,639 --> 00:03:27,480 Speaker 4: have to remember in twenty sixteen and in twenty twenty, 80 00:03:27,800 --> 00:03:29,600 Speaker 4: all of the swing states, essentially all of the swing 81 00:03:29,600 --> 00:03:31,560 Speaker 4: states broke for one candidate or the other. 82 00:03:31,600 --> 00:03:33,280 Speaker 3: It was Trump and then it was Biden. 83 00:03:33,880 --> 00:03:35,760 Speaker 4: And we think very likely that there will be some 84 00:03:35,880 --> 00:03:38,080 Speaker 4: polling air it will affect most of the swing states 85 00:03:38,120 --> 00:03:40,520 Speaker 4: almost equally. And that's that most of the swing states 86 00:03:40,520 --> 00:03:42,440 Speaker 4: will break for one candidate or the other. So even 87 00:03:42,480 --> 00:03:46,320 Speaker 4: if there are outstanding legal challenges, et cetera, they're probably 88 00:03:46,320 --> 00:03:48,480 Speaker 4: not going to be significant enough and the margin won't 89 00:03:48,480 --> 00:03:50,720 Speaker 4: be tight enough for them to matter a whole lot. 90 00:03:50,880 --> 00:03:52,800 Speaker 6: Robbie said something there that was really important to me 91 00:03:52,840 --> 00:03:55,040 Speaker 6: because I've heard it echoed by other people that there 92 00:03:55,080 --> 00:03:57,920 Speaker 6: probably is a polling air. What could that polling air 93 00:03:58,080 --> 00:04:00,480 Speaker 6: be because a lot of people have been saying it 94 00:04:00,520 --> 00:04:02,840 Speaker 6: feels like maybe something is just off of these polls. 95 00:04:04,040 --> 00:04:06,120 Speaker 4: Yeah, Unfortunately, I don't have a very good answer in 96 00:04:06,160 --> 00:04:09,240 Speaker 4: terms of direction, because we really feel as though there 97 00:04:09,280 --> 00:04:11,360 Speaker 4: will be polling air. I mean, there always is polling air. 98 00:04:11,640 --> 00:04:13,920 Speaker 4: Polling was very good in twenty twenty two. There was 99 00:04:13,960 --> 00:04:17,839 Speaker 4: still some era two to four points. We have heard 100 00:04:17,880 --> 00:04:20,720 Speaker 4: from clients as very strong belief that Poland will underestimate 101 00:04:20,720 --> 00:04:23,960 Speaker 4: Trump because it underestimated him in twenty sixteen, it underestimated 102 00:04:24,040 --> 00:04:25,640 Speaker 4: him in twenty twenty. I mean, we all remember that. 103 00:04:25,880 --> 00:04:28,120 Speaker 4: The thing is, we've seen posters make a number of 104 00:04:28,200 --> 00:04:32,279 Speaker 4: changes both to their collection process and to their sampling process, 105 00:04:32,520 --> 00:04:34,600 Speaker 4: and so we really think that, you know, we probably 106 00:04:34,640 --> 00:04:36,680 Speaker 4: will see a polling air if we're lucky, two to 107 00:04:36,720 --> 00:04:39,279 Speaker 4: four points. If we're unlucky, you know, four to eight points. 108 00:04:39,560 --> 00:04:41,359 Speaker 4: But it's really hard at this point to predict in 109 00:04:41,400 --> 00:04:43,640 Speaker 4: what direction that polling air is going to land. 110 00:04:43,839 --> 00:04:46,120 Speaker 5: Web I think of twenty sixteen in Michigan and how 111 00:04:46,200 --> 00:04:49,599 Speaker 5: Hillary Clinton lost that vote by about ten thousand votes. 112 00:04:49,640 --> 00:04:52,679 Speaker 5: So if the independent Jill Stein wasn't on the ballot, 113 00:04:52,880 --> 00:04:56,080 Speaker 5: Hillary Clinton could have clinged Michigan. Is that what gives 114 00:04:56,080 --> 00:04:59,960 Speaker 5: you confidence about Wisconsin and Michigan because OURFK is still 115 00:05:00,120 --> 00:05:02,560 Speaker 5: on the battle in those two key states. 116 00:05:03,920 --> 00:05:07,080 Speaker 4: Yeah, the third party question is really interesting. Third party 117 00:05:07,120 --> 00:05:09,440 Speaker 4: candidates did hurt Clinton in twenty sixteen. They came back 118 00:05:09,440 --> 00:05:12,520 Speaker 4: and hurt Trump in twenty twenty. It is true that 119 00:05:12,839 --> 00:05:15,440 Speaker 4: Joe Sign especially in Michigan, is probably going to run 120 00:05:15,600 --> 00:05:18,039 Speaker 4: beyond polling it, and that's because she sort of serves 121 00:05:18,040 --> 00:05:21,000 Speaker 4: as a proxy for Air American voters and progressive Democrats 122 00:05:21,000 --> 00:05:23,719 Speaker 4: who are very unhappy with the Biden administration's handling of 123 00:05:23,760 --> 00:05:27,000 Speaker 4: the Middle East. Nonetheless anmiory to your point, I mean, 124 00:05:27,120 --> 00:05:29,680 Speaker 4: RFK remains on the ballot in Michigan and Wisconsin. 125 00:05:29,720 --> 00:05:31,279 Speaker 3: As hard as he's tried to get. 126 00:05:31,080 --> 00:05:33,840 Speaker 4: Off of the ballot, he's pulling it between one and 127 00:05:33,920 --> 00:05:37,560 Speaker 4: a half to three percentage points nationally still today. So 128 00:05:37,640 --> 00:05:39,480 Speaker 4: I don't know who those people are who think they're 129 00:05:39,520 --> 00:05:42,160 Speaker 4: still going to vote for RFK. They're certainly not paying 130 00:05:42,200 --> 00:05:45,240 Speaker 4: attention to the newsfolk, given he's clearly dropped out and 131 00:05:45,279 --> 00:05:47,000 Speaker 4: supported Trump even though he remains. 132 00:05:46,680 --> 00:05:47,279 Speaker 3: On the ballot. 133 00:05:47,880 --> 00:05:50,520 Speaker 4: I think It's also important to consider that the only 134 00:05:50,600 --> 00:05:52,920 Speaker 4: third party candidate who is on the ballot in all 135 00:05:53,080 --> 00:05:56,480 Speaker 4: seven of the swing states is chased all over the libertarians, 136 00:05:56,720 --> 00:05:59,160 Speaker 4: so he's going to pull more votes from the right 137 00:05:59,200 --> 00:05:59,720 Speaker 4: wing as well. 138 00:05:59,720 --> 00:06:02,039 Speaker 3: I don't want to overstate it. It's not a lot. 139 00:06:02,080 --> 00:06:04,680 Speaker 4: I think third party candidates are unlikely to make a 140 00:06:04,760 --> 00:06:07,640 Speaker 4: huge impact in this race. But we're hearing a lot 141 00:06:07,680 --> 00:06:09,720 Speaker 4: about Jill Stein, and I think it's important to look 142 00:06:10,080 --> 00:06:11,760 Speaker 4: on the other side of the aisle on the ticket 143 00:06:11,800 --> 00:06:12,159 Speaker 4: as well. 144 00:06:12,360 --> 00:06:12,560 Speaker 1: Rob. 145 00:06:12,640 --> 00:06:15,560 Speaker 2: Just quickly, a final word from you, sir on election night. 146 00:06:15,560 --> 00:06:17,760 Speaker 2: If there's one thing to watch your election night guide 147 00:06:17,960 --> 00:06:19,480 Speaker 2: was the one thing you'll look here. 148 00:06:20,200 --> 00:06:22,960 Speaker 4: Well, we're really hoping to get results from North Carolina early, 149 00:06:23,160 --> 00:06:24,799 Speaker 4: most of the results from Georgia early. 150 00:06:24,880 --> 00:06:26,760 Speaker 3: But if there's sort of one other thing I. 151 00:06:26,680 --> 00:06:29,800 Speaker 4: Would look at, is Kamala Harris outperforming in urban areas 152 00:06:30,560 --> 00:06:33,960 Speaker 4: among all voters, but primarily black and Latino voters and 153 00:06:34,000 --> 00:06:36,279 Speaker 4: young voters. If she can outperform there as well as 154 00:06:36,279 --> 00:06:37,680 Speaker 4: I perform among white women. 155 00:06:37,600 --> 00:06:38,600 Speaker 3: The election as hers. 156 00:06:38,720 --> 00:06:51,520 Speaker 2: Okay, the signal globifizis thank you. Let Mohammad into the 157 00:06:51,520 --> 00:06:53,840 Speaker 2: conversation as well. Mohammad and Evan of Queen's College Camp 158 00:06:53,839 --> 00:06:56,000 Speaker 2: which joins us. Now, Mohammed, we'd love your early reaction 159 00:06:56,080 --> 00:06:58,279 Speaker 2: to this and just tell us is this noise? Is 160 00:06:58,320 --> 00:06:59,560 Speaker 2: this weakness we can look through? 161 00:07:00,880 --> 00:07:03,479 Speaker 1: So my free takeaways and the first one speaks to 162 00:07:03,760 --> 00:07:07,080 Speaker 1: is it noise? Is it signal? Three elements on noise, 163 00:07:07,080 --> 00:07:10,880 Speaker 1: we should look through them pay rolls, labor force participation, 164 00:07:11,000 --> 00:07:13,960 Speaker 1: and earnings. The fourth one unemployment. I agree with Jeff 165 00:07:14,080 --> 00:07:19,400 Speaker 1: that has more information. Content two is if you want 166 00:07:19,480 --> 00:07:22,600 Speaker 1: to make more of this data, then go beyond the 167 00:07:22,640 --> 00:07:26,840 Speaker 1: big four headline numbers and go into the details. And 168 00:07:27,320 --> 00:07:30,160 Speaker 1: you need to do that if you're going to derive 169 00:07:30,360 --> 00:07:34,920 Speaker 1: any economic and policy implications from this report. And then finally, 170 00:07:35,360 --> 00:07:38,240 Speaker 1: the reaction of the bond market has to do with 171 00:07:38,320 --> 00:07:42,600 Speaker 1: two things. One, as Mike noted, the Wisper number was 172 00:07:42,640 --> 00:07:45,840 Speaker 1: even higher than the consensus on hundred thousand, and as 173 00:07:45,880 --> 00:07:49,960 Speaker 1: you noted earlier, the balance of risk was on the 174 00:07:50,040 --> 00:07:51,960 Speaker 1: upside for the market. So what you're seeing is a 175 00:07:52,040 --> 00:07:56,920 Speaker 1: repositioning that people were hedging a little bit because the 176 00:07:56,920 --> 00:07:59,320 Speaker 1: one thing that would have really moved things is a 177 00:07:59,400 --> 00:08:02,200 Speaker 1: much stronger number, not a much weaker number, and that's 178 00:08:02,200 --> 00:08:04,360 Speaker 1: something that you noted earlier today, John. 179 00:08:04,600 --> 00:08:07,080 Speaker 6: Mohammed, I obstruck by the fact that we've gotten so 180 00:08:07,120 --> 00:08:11,559 Speaker 6: many revisions and so many unclear numbers that we can't 181 00:08:11,600 --> 00:08:15,120 Speaker 6: fully rely on. How much are you really taking more 182 00:08:15,160 --> 00:08:17,960 Speaker 6: signal still from what corporate executives say and from the 183 00:08:17,960 --> 00:08:20,400 Speaker 6: page book and some of that commentary, then some of 184 00:08:20,400 --> 00:08:22,800 Speaker 6: the numbers that we've been getting out that show and 185 00:08:22,960 --> 00:08:25,840 Speaker 6: really have led this expectation in markets that there should 186 00:08:25,840 --> 00:08:27,000 Speaker 6: have been an upside surprise. 187 00:08:28,840 --> 00:08:31,320 Speaker 1: So, Lisa, this is a time when you've got to 188 00:08:31,360 --> 00:08:35,000 Speaker 1: take a very holistic view and also have a pencil 189 00:08:35,000 --> 00:08:38,200 Speaker 1: of salt added to all that because we have some 190 00:08:38,360 --> 00:08:41,960 Speaker 1: major events coming up. Look on the whole, I think 191 00:08:42,080 --> 00:08:46,120 Speaker 1: the data are consistent with an economy that's still robust, 192 00:08:46,679 --> 00:08:50,280 Speaker 1: an inflation weight that is proving somewhat more sticky than 193 00:08:50,360 --> 00:08:54,360 Speaker 1: you would like, and a major call for the FED 194 00:08:55,120 --> 00:08:59,440 Speaker 1: to exit this notion of fine tuning and go into 195 00:08:59,480 --> 00:09:03,200 Speaker 1: a world where it has a steady steer on interest rates. 196 00:09:03,800 --> 00:09:07,040 Speaker 1: It should be cutting by twenty five basis points for 197 00:09:07,640 --> 00:09:12,040 Speaker 1: the next few meetings and then revisiting after that. It 198 00:09:12,080 --> 00:09:14,640 Speaker 1: should not be looking to react like it had in 199 00:09:14,720 --> 00:09:17,520 Speaker 1: July by not cutting like it did last time by 200 00:09:17,520 --> 00:09:21,040 Speaker 1: cutting fifty to every basis points. It should just be 201 00:09:21,080 --> 00:09:24,800 Speaker 1: steady because this data is going to be noisy, and 202 00:09:24,840 --> 00:09:26,800 Speaker 1: that's what happens at inflection points. 203 00:09:27,400 --> 00:09:29,680 Speaker 6: Jeff to that point, and a number of different people 204 00:09:29,720 --> 00:09:31,800 Speaker 6: who've come on the show today and in the past 205 00:09:31,800 --> 00:09:34,000 Speaker 6: few weeks have pointed to this idea that maybe they 206 00:09:34,040 --> 00:09:37,440 Speaker 6: Fed could frontload rate cuts because they are on sort 207 00:09:37,440 --> 00:09:40,439 Speaker 6: of this steady steer right now that they do have 208 00:09:40,600 --> 00:09:44,679 Speaker 6: room to make rates less restrictive in tangent with inflation 209 00:09:44,880 --> 00:09:48,280 Speaker 6: coming down based on these numbers. Is that basically your 210 00:09:48,320 --> 00:09:50,200 Speaker 6: base case too, that they're going to take this window 211 00:09:50,480 --> 00:09:51,160 Speaker 6: to front load. 212 00:09:52,840 --> 00:09:53,040 Speaker 1: Yeah. 213 00:09:53,080 --> 00:09:55,160 Speaker 7: You know, if you look at where the market has 214 00:09:55,200 --> 00:09:57,960 Speaker 7: been moving, it's not really been in the November and 215 00:09:58,040 --> 00:10:01,719 Speaker 7: December expectation. The Fed's kind of done a pretty good 216 00:10:01,800 --> 00:10:04,120 Speaker 7: job saying we're going to front load. There's a debate 217 00:10:04,160 --> 00:10:06,400 Speaker 7: about whether fifty was a mistake or not. Okay, let's 218 00:10:06,400 --> 00:10:09,240 Speaker 7: put that to the side. That's behind us. So it's 219 00:10:09,280 --> 00:10:12,319 Speaker 7: really about the forward looking twenty twenty five twenty twenty 220 00:10:12,320 --> 00:10:15,280 Speaker 7: six path that's been repriced. And I think the story 221 00:10:15,320 --> 00:10:18,640 Speaker 7: going into next year will be the FED talking about, hey, 222 00:10:18,679 --> 00:10:22,120 Speaker 7: we've gotten off of we've gotten started here in terms 223 00:10:22,160 --> 00:10:24,480 Speaker 7: of normalization, we don't have to go quite as fast 224 00:10:24,559 --> 00:10:28,520 Speaker 7: because away from today's data, the economic data, yesterday's data, 225 00:10:29,600 --> 00:10:32,880 Speaker 7: you know, is much stronger than the kind of fears 226 00:10:32,960 --> 00:10:35,960 Speaker 7: over a very restrictive FED policy would otherwise say. So 227 00:10:36,000 --> 00:10:38,120 Speaker 7: they can kind of pull back, maybe they start to 228 00:10:38,360 --> 00:10:40,920 Speaker 7: talk about every other meeting that's kind of in the 229 00:10:40,960 --> 00:10:43,360 Speaker 7: price and so I think the Fed's got itself in 230 00:10:43,400 --> 00:10:45,800 Speaker 7: a better place. We're going to get the front loaded 231 00:10:46,280 --> 00:10:49,120 Speaker 7: cuts fifty last time, twenty five to twenty five, and 232 00:10:49,160 --> 00:10:51,280 Speaker 7: then every other meeting that's kind of a ligne, and 233 00:10:51,320 --> 00:10:53,000 Speaker 7: then we'll see where the data goes and where the 234 00:10:53,040 --> 00:10:56,640 Speaker 7: debate on our star and how restrictive are we really. 235 00:10:56,760 --> 00:10:59,520 Speaker 7: The economic data is held up pretty well. Yes, this 236 00:10:59,559 --> 00:11:02,600 Speaker 7: is a down side disappointment, but the broader message is 237 00:11:03,080 --> 00:11:07,599 Speaker 7: labor markets have been normalizing. They're not collapsing, they're normalizing. 238 00:11:07,880 --> 00:11:10,120 Speaker 7: They're still trying to stick the soft landing, and I 239 00:11:10,120 --> 00:11:12,160 Speaker 7: think the soft landing is still the message. 240 00:11:11,760 --> 00:11:13,520 Speaker 2: If you are just joining us, welcome to the program. 241 00:11:13,559 --> 00:11:15,640 Speaker 2: Just moments ago, twelve minutes ago, we've got a big 242 00:11:15,679 --> 00:11:18,080 Speaker 2: downside surprise on a payrolls report came into twelve k. 243 00:11:18,160 --> 00:11:20,839 Speaker 2: The media estimate was one hundred. I want to remind 244 00:11:20,880 --> 00:11:22,880 Speaker 2: you of some words from a speech from Governor Waller 245 00:11:23,120 --> 00:11:25,319 Speaker 2: in the middle of October ahead of this number. Governor 246 00:11:25,360 --> 00:11:27,840 Speaker 2: Waller said this at a federal reserve, this report will 247 00:11:27,840 --> 00:11:30,480 Speaker 2: most likely show a significant but temporary loss of jobs 248 00:11:30,480 --> 00:11:33,000 Speaker 2: from two recent hurricanes and a strike at Boeing. I 249 00:11:33,040 --> 00:11:35,640 Speaker 2: expect these factors may reduce employment growth by more than 250 00:11:35,679 --> 00:11:38,679 Speaker 2: one hundred thousand this month. He went up to say, 251 00:11:38,920 --> 00:11:41,440 Speaker 2: since the job's report will come during the usual blackout 252 00:11:41,480 --> 00:11:44,720 Speaker 2: period for policymakers commenting on the economy, you won't have 253 00:11:44,800 --> 00:11:47,120 Speaker 2: any of us trying to put this low reading into perspective, 254 00:11:47,160 --> 00:11:50,040 Speaker 2: though I hope others will. So let's do that right now, 255 00:11:50,120 --> 00:11:51,360 Speaker 2: my McKee, we've got some more. 256 00:11:51,800 --> 00:11:56,199 Speaker 8: Yeah. Looking again at the hurricane impact. According to the BLS, 257 00:11:56,400 --> 00:11:59,800 Speaker 8: the Establishment survey was affected for two reasons. They say 258 00:12:00,040 --> 00:12:04,760 Speaker 8: one is that the hurricanes probably prevented people from answering, 259 00:12:05,120 --> 00:12:07,920 Speaker 8: and also the survey period. The way they phrase it 260 00:12:08,000 --> 00:12:10,000 Speaker 8: is it ended several days before the end of the 261 00:12:10,080 --> 00:12:12,720 Speaker 8: month because of the timing of the month, and so 262 00:12:13,080 --> 00:12:15,000 Speaker 8: they may not have gotten all the surveys in that 263 00:12:15,120 --> 00:12:17,680 Speaker 8: even were answered, so we're going to have to look 264 00:12:17,720 --> 00:12:21,679 Speaker 8: at next month to do it. The survey, as Lisa 265 00:12:21,720 --> 00:12:24,640 Speaker 8: points out, as the lower survey response rate lowis since 266 00:12:24,679 --> 00:12:27,640 Speaker 8: nineteen ninety one, and when you look at what the 267 00:12:27,679 --> 00:12:31,880 Speaker 8: weather is overall, it's understandable. 268 00:12:31,920 --> 00:12:32,079 Speaker 1: Now. 269 00:12:32,200 --> 00:12:34,920 Speaker 8: The other part of it is the household survey, and 270 00:12:34,960 --> 00:12:39,840 Speaker 8: the BLS specifically says that was not affected by the storms. 271 00:12:40,040 --> 00:12:42,760 Speaker 8: So the number you can trust is the four point 272 00:12:42,800 --> 00:12:46,080 Speaker 8: one Jeff Rosenberg was pointing out, and the number you 273 00:12:46,120 --> 00:12:48,800 Speaker 8: got a hold in abeyance is the twelve thousand. 274 00:12:48,920 --> 00:12:50,400 Speaker 2: In some ways, do you think this makes the fence 275 00:12:50,440 --> 00:12:53,240 Speaker 2: life just a little bit easier next week? A stronger 276 00:12:53,320 --> 00:12:55,320 Speaker 2: number have been the bigger problem in the news coming. 277 00:12:55,360 --> 00:12:57,240 Speaker 8: Oh, a very strong number would have been something that 278 00:12:57,240 --> 00:13:00,360 Speaker 8: they would have to have talked around. Now they can say, well, 279 00:13:00,520 --> 00:13:02,480 Speaker 8: this just we seem to be on the same path. 280 00:13:02,480 --> 00:13:06,320 Speaker 8: And unemployment's not going up, and average hourly earnings on 281 00:13:06,320 --> 00:13:08,640 Speaker 8: a year over year basis haven't changed, so we don't 282 00:13:08,679 --> 00:13:09,240 Speaker 8: have a problem. 283 00:13:09,280 --> 00:13:11,400 Speaker 2: We can cut an employment's not going out. Bond yields 284 00:13:11,400 --> 00:13:13,760 Speaker 2: down either. This morning they're down by nine basis points 285 00:13:13,760 --> 00:13:15,240 Speaker 2: on a two year. On a ten year, we're down 286 00:13:15,280 --> 00:13:17,880 Speaker 2: five just moments ago, fifteen minutes ago, we saw four 287 00:13:18,040 --> 00:13:21,400 Speaker 2: thirty on tens, on twoes, we saw four twenty. Muhammad, 288 00:13:21,400 --> 00:13:23,160 Speaker 2: I want to bring you into the conversation on fixed 289 00:13:23,160 --> 00:13:25,800 Speaker 2: income because you wrote earlier this week in Bloomberg Opinion 290 00:13:25,880 --> 00:13:29,080 Speaker 2: the importance of understanding what's behind this move, and we've 291 00:13:29,120 --> 00:13:31,320 Speaker 2: heard a bunch of people give a bunch of reasons 292 00:13:31,360 --> 00:13:33,520 Speaker 2: as to what's behind it. It might be the data, 293 00:13:33,800 --> 00:13:36,199 Speaker 2: it might be definicite concerns, it might be policy concerns 294 00:13:36,200 --> 00:13:38,679 Speaker 2: going into next week. Have you decided on which one 295 00:13:38,720 --> 00:13:40,280 Speaker 2: it is at the moment, Muhammad, what do you think 296 00:13:40,280 --> 00:13:42,840 Speaker 2: the dominant factor is going into next week? 297 00:13:44,520 --> 00:13:47,280 Speaker 1: I have not gone. I don't think you can because 298 00:13:47,480 --> 00:13:51,600 Speaker 1: there are at least four influencers and it's very difficult 299 00:13:51,840 --> 00:13:57,160 Speaker 1: to determine the weight of each. Over the next few days, 300 00:13:57,559 --> 00:14:00,839 Speaker 1: we're going to have some major developments. We're going to 301 00:14:00,920 --> 00:14:04,840 Speaker 1: have the FED recalibrating again. We're going to have the 302 00:14:04,880 --> 00:14:08,040 Speaker 1: results or at least we'll know how the vote went 303 00:14:09,320 --> 00:14:12,200 Speaker 1: for the elections, so we're going to get some important 304 00:14:12,240 --> 00:14:16,240 Speaker 1: data point. I'm really glad you read out Chris Waller 305 00:14:16,280 --> 00:14:21,960 Speaker 1: speech because he has emerged as the best FED policy 306 00:14:21,960 --> 00:14:24,800 Speaker 1: maker in terms of not only assessing what has happened, 307 00:14:25,280 --> 00:14:27,920 Speaker 1: but telling us what to look at. And I thought 308 00:14:28,080 --> 00:14:31,240 Speaker 1: what you read out was really interesting. Of course, we 309 00:14:31,280 --> 00:14:36,840 Speaker 1: may always get a newspaper leak during the blackout period, 310 00:14:37,200 --> 00:14:39,600 Speaker 1: but I think the FED right now is looking at this, 311 00:14:39,880 --> 00:14:43,280 Speaker 1: and I agree with what was said is that they'll say, 312 00:14:43,280 --> 00:14:45,280 Speaker 1: you know what, this is not going to influence what 313 00:14:45,320 --> 00:14:46,560 Speaker 1: we're going to do, and we're going to We're going 314 00:14:46,560 --> 00:14:48,320 Speaker 1: to cut by twenty five basis points next week. 315 00:14:48,440 --> 00:14:50,440 Speaker 6: Of course, yields are lower, so they might not need 316 00:14:50,480 --> 00:14:53,560 Speaker 6: a particular person to weak anything out to the market 317 00:14:53,600 --> 00:14:56,880 Speaker 6: to correct the impression. Jeff, what do you think in 318 00:14:57,000 --> 00:15:00,360 Speaker 6: terms of the main drivers of the yield rise that 319 00:15:00,360 --> 00:15:02,640 Speaker 6: we've seen over the past month, the fifty basis points 320 00:15:02,720 --> 00:15:03,800 Speaker 6: increase across the curve. 321 00:15:05,440 --> 00:15:07,760 Speaker 7: Yeah, I'll agree with Muhammad. I mean, there's a lot 322 00:15:07,800 --> 00:15:10,400 Speaker 7: of cross currents in there, but I would say a 323 00:15:10,400 --> 00:15:14,160 Speaker 7: big one not to ignore. And it's hard because we're obviously, 324 00:15:14,200 --> 00:15:17,760 Speaker 7: you know, very focused on the prospects of post election 325 00:15:17,840 --> 00:15:21,360 Speaker 7: fiscal policy. Is that the economic data got much better, 326 00:15:22,160 --> 00:15:26,560 Speaker 7: and you had a very negative, very extreme level of 327 00:15:26,800 --> 00:15:30,080 Speaker 7: FED expectations priced into the bond market. So it's a 328 00:15:30,080 --> 00:15:32,600 Speaker 7: little bit of combination of the bond market kind of 329 00:15:32,600 --> 00:15:37,400 Speaker 7: getting over as skis in terms of fifties and consecutive fifties, 330 00:15:37,840 --> 00:15:42,920 Speaker 7: and the accelerating the expectations into pricing on the weakness, 331 00:15:43,000 --> 00:15:44,760 Speaker 7: and then when you started to pull some of that 332 00:15:44,800 --> 00:15:47,720 Speaker 7: weakness back in terms of the economic data that started 333 00:15:47,720 --> 00:15:49,840 Speaker 7: to come in, then you had a reaction to that. 334 00:15:49,960 --> 00:15:51,800 Speaker 7: So I think, you know, that's kind of probably the 335 00:15:52,160 --> 00:15:54,440 Speaker 7: main thrust. There's a lot of other stuff, as Muhammad's 336 00:15:54,480 --> 00:15:58,120 Speaker 7: talking about in there, and Jonathan, yeah, absolutely, you know, 337 00:15:58,160 --> 00:16:00,640 Speaker 7: I think this makes their life easier and harder if 338 00:16:00,640 --> 00:16:04,040 Speaker 7: this was a big upside surprise. Certainly the number is 339 00:16:04,080 --> 00:16:07,240 Speaker 7: overstated in terms of its weakness because of strikes and hurricanes, 340 00:16:07,280 --> 00:16:09,360 Speaker 7: and I think everyone knows that it makes it easier 341 00:16:09,400 --> 00:16:11,680 Speaker 7: for them to deliver on the twenty five cut, which 342 00:16:11,680 --> 00:16:14,920 Speaker 7: they want, which they certainly want to do, and I 343 00:16:14,920 --> 00:16:16,960 Speaker 7: think that's an important point to highlight. 344 00:16:26,840 --> 00:16:29,520 Speaker 5: There's also revisions to the downsign for the prior month, 345 00:16:29,600 --> 00:16:32,120 Speaker 5: So Jeff, is there a possibility that fifties back on 346 00:16:32,160 --> 00:16:32,560 Speaker 5: the table. 347 00:16:34,840 --> 00:16:38,520 Speaker 7: You know, I would say for November that's still a 348 00:16:38,560 --> 00:16:42,480 Speaker 7: pretty high bar. The revisions are part of the noise 349 00:16:42,640 --> 00:16:46,040 Speaker 7: and I think the signal is the establishment is the 350 00:16:46,640 --> 00:16:50,200 Speaker 7: household survey, the four point one percent, the ECI number, 351 00:16:50,920 --> 00:16:53,240 Speaker 7: the GDP numbers, although you know they have their own 352 00:16:53,280 --> 00:16:57,280 Speaker 7: revision problems, but overall you have you have a K 353 00:16:57,400 --> 00:17:04,320 Speaker 7: shaped recovery. But in aggregate, despite the distributional differences, the 354 00:17:04,359 --> 00:17:07,840 Speaker 7: aggregate is doing very well, and I think that's driven 355 00:17:07,920 --> 00:17:11,600 Speaker 7: by the ease in financial conditions, the support for consumption. 356 00:17:11,760 --> 00:17:12,960 Speaker 3: What we saw in terms of the. 357 00:17:12,880 --> 00:17:16,840 Speaker 7: Revisions and GDI and savings rate, the consumption side is 358 00:17:16,880 --> 00:17:20,520 Speaker 7: still an aggregate very well supported here and so that, 359 00:17:20,720 --> 00:17:23,639 Speaker 7: more than the noise out of the payroll reports and 360 00:17:23,680 --> 00:17:26,760 Speaker 7: the difficulty in measuring that on a month to month basis, 361 00:17:26,920 --> 00:17:29,119 Speaker 7: is going to drive the outlook for FED policy going forward. 362 00:17:29,119 --> 00:17:32,080 Speaker 5: Well, Mohammad, when the Fed meets next week, Jonathan is right, 363 00:17:32,160 --> 00:17:34,800 Speaker 5: this may actually help them and make their job easier. 364 00:17:34,800 --> 00:17:39,040 Speaker 5: What might make their job very difficult is the presidential election. 365 00:17:39,200 --> 00:17:41,879 Speaker 5: And already we are seeing this number be politicized. The 366 00:17:41,880 --> 00:17:46,560 Speaker 5: Trump camp is coming out calling it quote brutal. What 367 00:17:46,680 --> 00:17:50,080 Speaker 5: does the Harris camp need to come out and explain 368 00:17:50,160 --> 00:17:52,919 Speaker 5: about this job's report to an electorate that says the 369 00:17:52,960 --> 00:17:55,400 Speaker 5: economy is their number one concern. 370 00:17:57,200 --> 00:18:00,879 Speaker 1: And Marie, they need to explain that the numbers have 371 00:18:01,000 --> 00:18:06,360 Speaker 1: been heavily influenced by one off effects, painful one off effects, 372 00:18:06,640 --> 00:18:09,399 Speaker 1: especially with respect to the hurricanes, but they're one off 373 00:18:09,440 --> 00:18:13,360 Speaker 1: effects for now, and also by the strikes, and they 374 00:18:13,400 --> 00:18:17,160 Speaker 1: need to do that because they have not taken sufficient 375 00:18:17,200 --> 00:18:20,960 Speaker 1: control of the narrative. We talk day after day of 376 00:18:21,000 --> 00:18:24,960 Speaker 1: economic exceptionalism. That's not what the narrative is out there is, 377 00:18:25,000 --> 00:18:26,480 Speaker 1: you know. The narrative is out there is about the 378 00:18:26,480 --> 00:18:31,440 Speaker 1: cost of living, about inflation, and people don't realize that 379 00:18:31,600 --> 00:18:35,720 Speaker 1: this economy has been outperforming not just expectations, but has 380 00:18:35,800 --> 00:18:38,720 Speaker 1: been outperforming to the rest of the world. And this 381 00:18:38,840 --> 00:18:42,240 Speaker 1: is really important as to the FED. Look, it goes 382 00:18:42,280 --> 00:18:46,080 Speaker 1: down to two numbers. One mentioned by Jeff Eci the 383 00:18:46,200 --> 00:18:51,400 Speaker 1: point eight percent increase the quarterly increase in employment cost. 384 00:18:51,720 --> 00:18:54,520 Speaker 1: You look at that and you're relaxed. The other number 385 00:18:54,960 --> 00:18:58,520 Speaker 1: is the PC inflated inflation, the monthly point three percent increase. 386 00:18:58,520 --> 00:19:00,720 Speaker 1: You look at that, you're not so relaxed, and they're 387 00:19:00,760 --> 00:19:03,000 Speaker 1: going to have to balance that. And I think if 388 00:19:03,040 --> 00:19:04,960 Speaker 1: you balance that, you end up with a twenty five 389 00:19:05,000 --> 00:19:08,080 Speaker 1: basis point cut. You certainly do not go to fifty. 390 00:19:08,000 --> 00:19:10,680 Speaker 2: Muhammed, November just feels like an easy decision for them 391 00:19:11,000 --> 00:19:13,040 Speaker 2: if they don't have a result to the election. If 392 00:19:13,040 --> 00:19:15,520 Speaker 2: you get the jettison markets is another reason to count 393 00:19:15,520 --> 00:19:18,640 Speaker 2: buy twenty five basis points. December is where things get 394 00:19:18,680 --> 00:19:21,080 Speaker 2: a little bit harder. A question we've gone back to 395 00:19:21,119 --> 00:19:23,440 Speaker 2: on the program a few times. We've had this succession 396 00:19:23,440 --> 00:19:25,000 Speaker 2: with you two, and i'd love your thoughts going into 397 00:19:25,000 --> 00:19:28,600 Speaker 2: the weekend whether you really believe next week's election has 398 00:19:28,600 --> 00:19:31,399 Speaker 2: the real potential to redefine the economic bank drop, not 399 00:19:31,440 --> 00:19:34,560 Speaker 2: just in America but worldwide, and whether by the time 400 00:19:34,560 --> 00:19:37,359 Speaker 2: we get to December, the Federal Reserve will really have 401 00:19:37,440 --> 00:19:40,120 Speaker 2: to think about the policy initiatives on the table, even 402 00:19:40,119 --> 00:19:41,879 Speaker 2: if they are not yet reality. 403 00:19:41,920 --> 00:19:47,800 Speaker 1: In Washington, DC, John, I've been bemused by how confidence 404 00:19:47,840 --> 00:19:50,560 Speaker 1: some people have been in predicting what will happen here, 405 00:19:50,600 --> 00:19:53,880 Speaker 1: what will happen there. Look, you're trying to solve Think 406 00:19:53,920 --> 00:19:57,760 Speaker 1: of it as a four plus by three plus two 407 00:19:58,560 --> 00:20:03,639 Speaker 1: matrix about it. There are four potential outcomes in Congress. 408 00:20:05,400 --> 00:20:11,640 Speaker 1: There are two potential outcomes for who wins the presidential 409 00:20:11,680 --> 00:20:13,800 Speaker 1: election and the third one, which is no one for 410 00:20:13,800 --> 00:20:18,560 Speaker 1: a while, and then even when you solve for Congress 411 00:20:18,600 --> 00:20:20,119 Speaker 1: and yourself for the president, you've got to solve for 412 00:20:20,119 --> 00:20:22,800 Speaker 1: a third issue, which is how much of what is 413 00:20:22,840 --> 00:20:27,160 Speaker 1: being said will actually be implemented. I remember what happened 414 00:20:27,320 --> 00:20:31,040 Speaker 1: in twenty sixteen. I remember how the market turned on 415 00:20:31,119 --> 00:20:35,080 Speaker 1: a dime when the winning candidate at that time came 416 00:20:35,119 --> 00:20:37,600 Speaker 1: out with a completely different narrative than what was said 417 00:20:37,760 --> 00:20:43,280 Speaker 1: during the election campaign. So the Fed on Wednesday morning 418 00:20:43,840 --> 00:20:46,399 Speaker 1: is not going to be able to solve for this 419 00:20:46,520 --> 00:20:49,240 Speaker 1: four by three by two matrix. So I think what 420 00:20:49,280 --> 00:20:51,440 Speaker 1: they're going to do is say, we put this aside, 421 00:20:51,960 --> 00:20:55,320 Speaker 1: we will react based on what we know, and then 422 00:20:55,359 --> 00:20:56,960 Speaker 1: we will revisit this issue. 423 00:20:57,200 --> 00:20:58,879 Speaker 2: Jeff, That's what it feels like, just to build up 424 00:20:58,920 --> 00:21:01,840 Speaker 2: what Muhammad was saying. Phil'sit, we're an also pilot to 425 00:21:01,880 --> 00:21:04,560 Speaker 2: the high estimate of neutral, which could be around four. 426 00:21:05,160 --> 00:21:06,760 Speaker 2: So you get a few more cuts, you get closer 427 00:21:06,800 --> 00:21:09,280 Speaker 2: to four, and the decision gets harder because I think 428 00:21:09,280 --> 00:21:11,440 Speaker 2: for many people we are truly flying blind into twenty 429 00:21:11,440 --> 00:21:13,920 Speaker 2: five and perhaps even beyond based on the outcome of 430 00:21:13,960 --> 00:21:15,480 Speaker 2: next week. Can Jeff, I'd love you view on that, 431 00:21:15,520 --> 00:21:17,280 Speaker 2: and whether you agree with that view. 432 00:21:18,760 --> 00:21:21,520 Speaker 7: Well, I think the key observation is we've gotten a 433 00:21:21,520 --> 00:21:25,560 Speaker 7: little bit closer in terms of a more reasonable expectation 434 00:21:25,720 --> 00:21:29,040 Speaker 7: of the level of FED cuts relative to the debate 435 00:21:29,200 --> 00:21:32,280 Speaker 7: or the distribution around where is neutral? Whereas a month 436 00:21:32,280 --> 00:21:36,840 Speaker 7: ago you were very much weighted to one side of 437 00:21:36,880 --> 00:21:39,399 Speaker 7: that debate, which is we're very far away from neutral. 438 00:21:39,440 --> 00:21:41,520 Speaker 7: We got to cut quite a bit. And what is 439 00:21:41,600 --> 00:21:45,639 Speaker 7: the data that sort of pushes against that excessive amount 440 00:21:45,720 --> 00:21:49,760 Speaker 7: of cut the very low level of neutral economic growth? Right, 441 00:21:50,080 --> 00:21:52,600 Speaker 7: we know what you don't know where neutral is, so 442 00:21:52,640 --> 00:21:54,440 Speaker 7: you know where you see it and where you see 443 00:21:54,440 --> 00:21:56,600 Speaker 7: it is in the data. And so the piece that 444 00:21:56,680 --> 00:21:59,119 Speaker 7: has kind of been missing here for a while is 445 00:21:59,200 --> 00:22:02,440 Speaker 7: where is the slow down? Yes, the payroll Yes, the 446 00:22:02,520 --> 00:22:06,120 Speaker 7: labor markets are slowing, but they're not tightening and they're 447 00:22:06,200 --> 00:22:10,440 Speaker 7: certainly not eroding to the level of degree that would screen, oh, 448 00:22:10,480 --> 00:22:13,600 Speaker 7: we need to cut fifty basis points at each meeting 449 00:22:13,680 --> 00:22:16,879 Speaker 7: because this economy is hard landing. So it's really come back. 450 00:22:16,960 --> 00:22:19,800 Speaker 7: It really comes back to this kind of basic fundamental, 451 00:22:19,840 --> 00:22:22,200 Speaker 7: which is you see it in the economic growth data. 452 00:22:22,520 --> 00:22:24,960 Speaker 7: There's lots of inputs to that. We can look at earnings, 453 00:22:25,000 --> 00:22:27,160 Speaker 7: we can look at payrolls, we can look at layoffs, 454 00:22:27,400 --> 00:22:30,560 Speaker 7: you can look at the leading indicators for the job market, 455 00:22:30,720 --> 00:22:35,760 Speaker 7: and not much in their screams that this is excessively tight. 456 00:22:35,840 --> 00:22:37,960 Speaker 7: The only thing that screens that you're excessively tight is 457 00:22:38,000 --> 00:22:42,000 Speaker 7: a historical comparison of the real rate relative to past 458 00:22:42,040 --> 00:22:45,480 Speaker 7: real rates. Outside of that, the economic data says financial 459 00:22:45,520 --> 00:22:50,960 Speaker 7: conditions are how monetary policy transmits. It's much easier than 460 00:22:51,000 --> 00:22:53,720 Speaker 7: the rate or the real rate would imply, and so 461 00:22:53,840 --> 00:22:57,200 Speaker 7: you don't need to cut as aggressive, and that's kind 462 00:22:57,200 --> 00:23:00,000 Speaker 7: of recognized in the bond market. So there's less disagreement 463 00:23:00,080 --> 00:23:04,720 Speaker 7: and so therefore less potential volatility from realizing that disagreement. 464 00:23:04,800 --> 00:23:06,760 Speaker 2: Mohammed, just before you go and find a word, please 465 00:23:06,800 --> 00:23:08,840 Speaker 2: go and get the next week. How would you navigate 466 00:23:09,359 --> 00:23:09,920 Speaker 2: next week? 467 00:23:11,720 --> 00:23:16,080 Speaker 1: John, I would wait, and mentally I would change the paradigm. 468 00:23:16,119 --> 00:23:19,200 Speaker 1: For a very long time, we looked at the stage, 469 00:23:19,640 --> 00:23:22,240 Speaker 1: the economic and policy stage, and we looked at the 470 00:23:22,280 --> 00:23:28,480 Speaker 1: FED as the principal actor. Going forward, we should think 471 00:23:28,480 --> 00:23:31,160 Speaker 1: of the FED as stepping back, and there'll be three 472 00:23:31,200 --> 00:23:37,480 Speaker 1: other principal actors. One is fiscal policy, the second is tariffs, 473 00:23:38,320 --> 00:23:42,359 Speaker 1: and the third is in the combination of reforms, the 474 00:23:42,520 --> 00:23:46,680 Speaker 1: regulation and industrial policy. So mentally, John, we're going to 475 00:23:46,720 --> 00:23:49,080 Speaker 1: have to evolve, and it's really hard because we have 476 00:23:49,160 --> 00:23:52,760 Speaker 1: been conditioned to look at the FED as the only 477 00:23:52,800 --> 00:23:55,439 Speaker 1: game in town. But we're coming into a world, as 478 00:23:55,520 --> 00:23:58,720 Speaker 1: Jeff said, where the FED is going to be going backward, 479 00:23:58,960 --> 00:24:03,320 Speaker 1: going to the side, and allowing three other actors to 480 00:24:03,440 --> 00:24:04,480 Speaker 1: determine where this. 481 00:24:04,440 --> 00:24:05,560 Speaker 3: Economy is going. 482 00:24:05,680 --> 00:24:08,760 Speaker 1: And we just need to change our mindset to make 483 00:24:08,800 --> 00:24:12,800 Speaker 1: sure we allow for them to enter our mind and 484 00:24:13,080 --> 00:24:15,120 Speaker 1: assess them better. And it's going to be hard, John. 485 00:24:15,160 --> 00:24:16,920 Speaker 2: I'm going to be kind to you both because that's 486 00:24:16,960 --> 00:24:19,440 Speaker 2: hard enough. I'm not going to ask for election guesses. Mohammed, 487 00:24:19,480 --> 00:24:21,679 Speaker 2: you can go. I appreciate your time, Sir Mohammed al 488 00:24:21,680 --> 00:24:25,080 Speaker 2: Aeron of Quain's College, Cambridge, alongside Jeff Rosenberg of Black Rock. 489 00:24:26,000 --> 00:24:29,560 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 490 00:24:29,600 --> 00:24:32,679 Speaker 2: in markets, economics, and gio politics. You can watch the 491 00:24:32,680 --> 00:24:35,800 Speaker 2: show live on Bloomberg TV weekday mornings from six am 492 00:24:35,840 --> 00:24:39,000 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 493 00:24:39,280 --> 00:24:42,119 Speaker 2: Spotify or anywhere else you listen, and as always on 494 00:24:42,119 --> 00:24:44,560 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.