WEBVTT - Bloomberg Surveillance TV: November 1, 2024 0:00:02.480 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.440 with Lisa Bromwitz and a Marie Hortenn. Join us each 0:00:18.520 --> 0:00:21.440 day for insight from the best in markets, economics, and 0:00:21.480 --> 0:00:24.759 geopolitics from our global headquarters in New York City. We 0:00:24.800 --> 0:00:27.479 are live on Bloomberg Television weekday mornings from six to 0:00:27.560 --> 0:00:31.040 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.240 --> 0:00:33.519 or anywhere else you listen, and as always on the 0:00:33.520 --> 0:00:37.240 Bloomberg Terminal and the Bloomberg Business App. Rob Casey of 0:00:37.280 --> 0:00:39.920 Signum Global Advisors joins us now for more. Rob, we'd 0:00:39.920 --> 0:00:42.720 love your thoughts on this. Millions of people have already voted. 0:00:42.760 --> 0:00:45.480 Do we have any clarity whatsoever on how that vote 0:00:45.520 --> 0:00:46.120 has been breaking? 0:00:47.120 --> 0:00:47.320 Yeah? 0:00:47.400 --> 0:00:49.159 John, ten really good to be with you. I mean, 0:00:49.200 --> 0:00:50.760 we have clarity in the sense that we have really 0:00:50.800 --> 0:00:53.640 good data coming out of the early vote. A number 0:00:53.720 --> 0:00:58.120 of states report, you know, partisanship, gender race breakdown. 0:00:58.120 --> 0:00:59.200 We can see it by county. 0:00:59.400 --> 0:01:01.080 The thing is with in that data, even though it's 0:01:01.120 --> 0:01:03.280 good data, we haven't seen a lot of clear trends. 0:01:03.280 --> 0:01:05.319 So women are turning out more than men. That's a 0:01:05.319 --> 0:01:07.840 good sign for Harris, but they're turning out about where 0:01:07.840 --> 0:01:09.840 they were turning out in twenty twenty, So so not 0:01:09.880 --> 0:01:13.080 a clear better or worse than the Biden Trump matchups. 0:01:13.280 --> 0:01:15.480 You know, Rob, just to jump in there. 0:01:15.560 --> 0:01:19.160 NBC News Decision Desk has new female Democratic voters in Pennsylvania. 0:01:19.240 --> 0:01:22.160 They're seeing that in flux. But the flip side of 0:01:22.160 --> 0:01:24.640 this is what about the male vote, because they see 0:01:24.920 --> 0:01:29.200 new male Republican voters in Arizona, two critical swing states. 0:01:30.360 --> 0:01:33.120 Yeah, Frankly, I think Arizona is where Harris is running weakest, 0:01:33.360 --> 0:01:35.240 and that's for two reasons. We're seeing her running weaker 0:01:35.280 --> 0:01:38.319 among Latino voters and much weaker among male voters, which 0:01:38.360 --> 0:01:40.840 is really a national trend in the blue Wall. Though 0:01:41.319 --> 0:01:45.080 Harris is less impacted by both of those, primarily because 0:01:45.080 --> 0:01:47.400 of the white women who David was just discussing. 0:01:47.560 --> 0:01:48.639 White women turning out. 0:01:48.520 --> 0:01:52.240 In droves for Harris at a higher percentage and with 0:01:52.280 --> 0:01:54.440 a better margin for Harris than in twenty twenty. 0:01:54.640 --> 0:01:57.200 They're both going to be in Wisconsin today, Rob, how 0:01:57.240 --> 0:01:58.040 tight does that raise? 0:01:59.200 --> 0:02:00.360 It's really tight, really tight. 0:02:00.400 --> 0:02:02.880 At Sigmam, we feel good in our call that Harris 0:02:02.920 --> 0:02:05.120 will win the presidency. A lot of that is because 0:02:05.120 --> 0:02:07.760 we feel as though she's running clearly ahead in Michigan 0:02:07.760 --> 0:02:10.560 and Wisconsin, but across all of the swing states, you know, 0:02:11.520 --> 0:02:13.200 the point today doesn't show. 0:02:13.040 --> 0:02:15.760 Clearly that they're tied. At every pole that we're seeing 0:02:15.800 --> 0:02:18.480 is within the four points, which. 0:02:18.280 --> 0:02:21.360 Is the average margin of varia in presidential cycles between 0:02:21.360 --> 0:02:22.520 two thousand and today. 0:02:23.080 --> 0:02:25.040 So all of these races are incredibly tight. 0:02:25.040 --> 0:02:26.560 But I do think it's fair to say Harris is 0:02:26.680 --> 0:02:29.400 leading if anywhere in Wisconsin and Michigan. 0:02:29.560 --> 0:02:31.960 Rob We keep talking about how tight these poles are, 0:02:32.000 --> 0:02:34.480 how it's really not connecting. Yet there seems to be 0:02:34.480 --> 0:02:36.919 a growing conviction in the investors who we speak with 0:02:37.200 --> 0:02:39.079 that it's not going to be a contested election, that 0:02:39.120 --> 0:02:41.040 it's not going to drag on for a significant amount 0:02:41.040 --> 0:02:43.119 of time. And you can see this in the options 0:02:43.160 --> 0:02:45.880 market or basically the volatility peaks a day after the 0:02:45.919 --> 0:02:47.959 election and then it peters off with this idea that 0:02:48.000 --> 0:02:51.079 we'll have some sort of clear outcome. Er sense, how 0:02:51.120 --> 0:02:52.040 is that correct? 0:02:52.160 --> 0:02:53.640 Is that your base case? 0:02:53.680 --> 0:02:54.000 Also? 0:02:55.240 --> 0:02:56.040 It is our base case. 0:02:56.120 --> 0:02:57.840 We think we get a very clear result in the 0:02:57.880 --> 0:03:01.440 first forty eight hours post election. It may not be 0:03:01.480 --> 0:03:03.679 that the Associated Press is calling the election within forty 0:03:03.720 --> 0:03:06.679 eight hours. But we do think that markets and most 0:03:06.720 --> 0:03:08.960 who are looking at the election most closely will have 0:03:09.000 --> 0:03:11.000 a very good sense. As we did in twenty twenty, 0:03:11.040 --> 0:03:13.800 right betting markets moved to Biden about eighty percent as 0:03:13.800 --> 0:03:16.119 of Wednesday morning, So even though it took until Saturday 0:03:16.320 --> 0:03:18.680 for the Associated Press to call the twenty twenty election, 0:03:19.080 --> 0:03:21.560 markets essentially priced in the Biden wins starting on Wednesday. 0:03:22.280 --> 0:03:24.600 We expect to see a similar result. I mean, you 0:03:24.639 --> 0:03:27.480 have to remember in twenty sixteen and in twenty twenty, 0:03:27.800 --> 0:03:29.600 all of the swing states, essentially all of the swing 0:03:29.600 --> 0:03:31.560 states broke for one candidate or the other. 0:03:31.600 --> 0:03:33.280 It was Trump and then it was Biden. 0:03:33.880 --> 0:03:35.760 And we think very likely that there will be some 0:03:35.880 --> 0:03:38.080 polling air it will affect most of the swing states 0:03:38.120 --> 0:03:40.520 almost equally. And that's that most of the swing states 0:03:40.520 --> 0:03:42.440 will break for one candidate or the other. So even 0:03:42.480 --> 0:03:46.320 if there are outstanding legal challenges, et cetera, they're probably 0:03:46.320 --> 0:03:48.480 not going to be significant enough and the margin won't 0:03:48.480 --> 0:03:50.720 be tight enough for them to matter a whole lot. 0:03:50.880 --> 0:03:52.800 Robbie said something there that was really important to me 0:03:52.840 --> 0:03:55.040 because I've heard it echoed by other people that there 0:03:55.080 --> 0:03:57.920 probably is a polling air. What could that polling air 0:03:58.080 --> 0:04:00.480 be because a lot of people have been saying it 0:04:00.520 --> 0:04:02.840 feels like maybe something is just off of these polls. 0:04:04.040 --> 0:04:06.120 Yeah, Unfortunately, I don't have a very good answer in 0:04:06.160 --> 0:04:09.240 terms of direction, because we really feel as though there 0:04:09.280 --> 0:04:11.360 will be polling air. I mean, there always is polling air. 0:04:11.640 --> 0:04:13.920 Polling was very good in twenty twenty two. There was 0:04:13.960 --> 0:04:17.839 still some era two to four points. We have heard 0:04:17.880 --> 0:04:20.720 from clients as very strong belief that Poland will underestimate 0:04:20.720 --> 0:04:23.960 Trump because it underestimated him in twenty sixteen, it underestimated 0:04:24.040 --> 0:04:25.640 him in twenty twenty. I mean, we all remember that. 0:04:25.880 --> 0:04:28.120 The thing is, we've seen posters make a number of 0:04:28.200 --> 0:04:32.279 changes both to their collection process and to their sampling process, 0:04:32.520 --> 0:04:34.600 and so we really think that, you know, we probably 0:04:34.640 --> 0:04:36.680 will see a polling air if we're lucky, two to 0:04:36.720 --> 0:04:39.279 four points. If we're unlucky, you know, four to eight points. 0:04:39.560 --> 0:04:41.359 But it's really hard at this point to predict in 0:04:41.400 --> 0:04:43.640 what direction that polling air is going to land. 0:04:43.839 --> 0:04:46.120 Web I think of twenty sixteen in Michigan and how 0:04:46.200 --> 0:04:49.599 Hillary Clinton lost that vote by about ten thousand votes. 0:04:49.640 --> 0:04:52.679 So if the independent Jill Stein wasn't on the ballot, 0:04:52.880 --> 0:04:56.080 Hillary Clinton could have clinged Michigan. Is that what gives 0:04:56.080 --> 0:04:59.960 you confidence about Wisconsin and Michigan because OURFK is still 0:05:00.120 --> 0:05:02.560 on the battle in those two key states. 0:05:03.920 --> 0:05:07.080 Yeah, the third party question is really interesting. Third party 0:05:07.120 --> 0:05:09.440 candidates did hurt Clinton in twenty sixteen. They came back 0:05:09.440 --> 0:05:12.520 and hurt Trump in twenty twenty. It is true that 0:05:12.839 --> 0:05:15.440 Joe Sign especially in Michigan, is probably going to run 0:05:15.600 --> 0:05:18.039 beyond polling it, and that's because she sort of serves 0:05:18.040 --> 0:05:21.000 as a proxy for Air American voters and progressive Democrats 0:05:21.000 --> 0:05:23.719 who are very unhappy with the Biden administration's handling of 0:05:23.760 --> 0:05:27.000 the Middle East. Nonetheless anmiory to your point, I mean, 0:05:27.120 --> 0:05:29.680 RFK remains on the ballot in Michigan and Wisconsin. 0:05:29.720 --> 0:05:31.279 As hard as he's tried to get. 0:05:31.080 --> 0:05:33.840 Off of the ballot, he's pulling it between one and 0:05:33.920 --> 0:05:37.560 a half to three percentage points nationally still today. So 0:05:37.640 --> 0:05:39.480 I don't know who those people are who think they're 0:05:39.520 --> 0:05:42.160 still going to vote for RFK. They're certainly not paying 0:05:42.200 --> 0:05:45.240 attention to the newsfolk, given he's clearly dropped out and 0:05:45.279 --> 0:05:47.000 supported Trump even though he remains. 0:05:46.680 --> 0:05:47.279 On the ballot. 0:05:47.880 --> 0:05:50.520 I think It's also important to consider that the only 0:05:50.600 --> 0:05:52.920 third party candidate who is on the ballot in all 0:05:53.080 --> 0:05:56.480 seven of the swing states is chased all over the libertarians, 0:05:56.720 --> 0:05:59.160 so he's going to pull more votes from the right 0:05:59.200 --> 0:05:59.720 wing as well. 0:05:59.720 --> 0:06:02.039 I don't want to overstate it. It's not a lot. 0:06:02.080 --> 0:06:04.680 I think third party candidates are unlikely to make a 0:06:04.760 --> 0:06:07.640 huge impact in this race. But we're hearing a lot 0:06:07.680 --> 0:06:09.720 about Jill Stein, and I think it's important to look 0:06:10.080 --> 0:06:11.760 on the other side of the aisle on the ticket 0:06:11.800 --> 0:06:12.159 as well. 0:06:12.360 --> 0:06:12.560 Rob. 0:06:12.640 --> 0:06:15.560 Just quickly, a final word from you, sir on election night. 0:06:15.560 --> 0:06:17.760 If there's one thing to watch your election night guide 0:06:17.960 --> 0:06:19.480 was the one thing you'll look here. 0:06:20.200 --> 0:06:22.960 Well, we're really hoping to get results from North Carolina early, 0:06:23.160 --> 0:06:24.799 most of the results from Georgia early. 0:06:24.880 --> 0:06:26.760 But if there's sort of one other thing I. 0:06:26.680 --> 0:06:29.800 Would look at, is Kamala Harris outperforming in urban areas 0:06:30.560 --> 0:06:33.960 among all voters, but primarily black and Latino voters and 0:06:34.000 --> 0:06:36.279 young voters. If she can outperform there as well as 0:06:36.279 --> 0:06:37.680 I perform among white women. 0:06:37.600 --> 0:06:38.600 The election as hers. 0:06:38.720 --> 0:06:51.520 Okay, the signal globifizis thank you. Let Mohammad into the 0:06:51.520 --> 0:06:53.840 conversation as well. Mohammad and Evan of Queen's College Camp 0:06:53.839 --> 0:06:56.000 which joins us. Now, Mohammed, we'd love your early reaction 0:06:56.080 --> 0:06:58.279 to this and just tell us is this noise? Is 0:06:58.320 --> 0:06:59.560 this weakness we can look through? 0:07:00.880 --> 0:07:03.479 So my free takeaways and the first one speaks to 0:07:03.760 --> 0:07:07.080 is it noise? Is it signal? Three elements on noise, 0:07:07.080 --> 0:07:10.880 we should look through them pay rolls, labor force participation, 0:07:11.000 --> 0:07:13.960 and earnings. The fourth one unemployment. I agree with Jeff 0:07:14.080 --> 0:07:19.400 that has more information. Content two is if you want 0:07:19.480 --> 0:07:22.600 to make more of this data, then go beyond the 0:07:22.640 --> 0:07:26.840 big four headline numbers and go into the details. And 0:07:27.320 --> 0:07:30.160 you need to do that if you're going to derive 0:07:30.360 --> 0:07:34.920 any economic and policy implications from this report. And then finally, 0:07:35.360 --> 0:07:38.240 the reaction of the bond market has to do with 0:07:38.320 --> 0:07:42.600 two things. One, as Mike noted, the Wisper number was 0:07:42.640 --> 0:07:45.840 even higher than the consensus on hundred thousand, and as 0:07:45.880 --> 0:07:49.960 you noted earlier, the balance of risk was on the 0:07:50.040 --> 0:07:51.960 upside for the market. So what you're seeing is a 0:07:52.040 --> 0:07:56.920 repositioning that people were hedging a little bit because the 0:07:56.920 --> 0:07:59.320 one thing that would have really moved things is a 0:07:59.400 --> 0:08:02.200 much stronger number, not a much weaker number, and that's 0:08:02.200 --> 0:08:04.360 something that you noted earlier today, John. 0:08:04.600 --> 0:08:07.080 Mohammed, I obstruck by the fact that we've gotten so 0:08:07.120 --> 0:08:11.559 many revisions and so many unclear numbers that we can't 0:08:11.600 --> 0:08:15.120 fully rely on. How much are you really taking more 0:08:15.160 --> 0:08:17.960 signal still from what corporate executives say and from the 0:08:17.960 --> 0:08:20.400 page book and some of that commentary, then some of 0:08:20.400 --> 0:08:22.800 the numbers that we've been getting out that show and 0:08:22.960 --> 0:08:25.840 really have led this expectation in markets that there should 0:08:25.840 --> 0:08:27.000 have been an upside surprise. 0:08:28.840 --> 0:08:31.320 So, Lisa, this is a time when you've got to 0:08:31.360 --> 0:08:35.000 take a very holistic view and also have a pencil 0:08:35.000 --> 0:08:38.200 of salt added to all that because we have some 0:08:38.360 --> 0:08:41.960 major events coming up. Look on the whole, I think 0:08:42.080 --> 0:08:46.120 the data are consistent with an economy that's still robust, 0:08:46.679 --> 0:08:50.280 an inflation weight that is proving somewhat more sticky than 0:08:50.360 --> 0:08:54.360 you would like, and a major call for the FED 0:08:55.120 --> 0:08:59.440 to exit this notion of fine tuning and go into 0:08:59.480 --> 0:09:03.200 a world where it has a steady steer on interest rates. 0:09:03.800 --> 0:09:07.040 It should be cutting by twenty five basis points for 0:09:07.640 --> 0:09:12.040 the next few meetings and then revisiting after that. It 0:09:12.080 --> 0:09:14.640 should not be looking to react like it had in 0:09:14.720 --> 0:09:17.520 July by not cutting like it did last time by 0:09:17.520 --> 0:09:21.040 cutting fifty to every basis points. It should just be 0:09:21.080 --> 0:09:24.800 steady because this data is going to be noisy, and 0:09:24.840 --> 0:09:26.800 that's what happens at inflection points. 0:09:27.400 --> 0:09:29.680 Jeff to that point, and a number of different people 0:09:29.720 --> 0:09:31.800 who've come on the show today and in the past 0:09:31.800 --> 0:09:34.000 few weeks have pointed to this idea that maybe they 0:09:34.040 --> 0:09:37.440 Fed could frontload rate cuts because they are on sort 0:09:37.440 --> 0:09:40.439 of this steady steer right now that they do have 0:09:40.600 --> 0:09:44.679 room to make rates less restrictive in tangent with inflation 0:09:44.880 --> 0:09:48.280 coming down based on these numbers. Is that basically your 0:09:48.320 --> 0:09:50.200 base case too, that they're going to take this window 0:09:50.480 --> 0:09:51.160 to front load. 0:09:52.840 --> 0:09:53.040 Yeah. 0:09:53.080 --> 0:09:55.160 You know, if you look at where the market has 0:09:55.200 --> 0:09:57.960 been moving, it's not really been in the November and 0:09:58.040 --> 0:10:01.719 December expectation. The Fed's kind of done a pretty good 0:10:01.800 --> 0:10:04.120 job saying we're going to front load. There's a debate 0:10:04.160 --> 0:10:06.400 about whether fifty was a mistake or not. Okay, let's 0:10:06.400 --> 0:10:09.240 put that to the side. That's behind us. So it's 0:10:09.280 --> 0:10:12.319 really about the forward looking twenty twenty five twenty twenty 0:10:12.320 --> 0:10:15.280 six path that's been repriced. And I think the story 0:10:15.320 --> 0:10:18.640 going into next year will be the FED talking about, hey, 0:10:18.679 --> 0:10:22.120 we've gotten off of we've gotten started here in terms 0:10:22.160 --> 0:10:24.480 of normalization, we don't have to go quite as fast 0:10:24.559 --> 0:10:28.520 because away from today's data, the economic data, yesterday's data, 0:10:29.600 --> 0:10:32.880 you know, is much stronger than the kind of fears 0:10:32.960 --> 0:10:35.960 over a very restrictive FED policy would otherwise say. So 0:10:36.000 --> 0:10:38.120 they can kind of pull back, maybe they start to 0:10:38.360 --> 0:10:40.920 talk about every other meeting that's kind of in the 0:10:40.960 --> 0:10:43.360 price and so I think the Fed's got itself in 0:10:43.400 --> 0:10:45.800 a better place. We're going to get the front loaded 0:10:46.280 --> 0:10:49.120 cuts fifty last time, twenty five to twenty five, and 0:10:49.160 --> 0:10:51.280 then every other meeting that's kind of a ligne, and 0:10:51.320 --> 0:10:53.000 then we'll see where the data goes and where the 0:10:53.040 --> 0:10:56.640 debate on our star and how restrictive are we really. 0:10:56.760 --> 0:10:59.520 The economic data is held up pretty well. Yes, this 0:10:59.559 --> 0:11:02.600 is a down side disappointment, but the broader message is 0:11:03.080 --> 0:11:07.599 labor markets have been normalizing. They're not collapsing, they're normalizing. 0:11:07.880 --> 0:11:10.120 They're still trying to stick the soft landing, and I 0:11:10.120 --> 0:11:12.160 think the soft landing is still the message. 0:11:11.760 --> 0:11:13.520 If you are just joining us, welcome to the program. 0:11:13.559 --> 0:11:15.640 Just moments ago, twelve minutes ago, we've got a big 0:11:15.679 --> 0:11:18.080 downside surprise on a payrolls report came into twelve k. 0:11:18.160 --> 0:11:20.839 The media estimate was one hundred. I want to remind 0:11:20.880 --> 0:11:22.880 you of some words from a speech from Governor Waller 0:11:23.120 --> 0:11:25.319 in the middle of October ahead of this number. Governor 0:11:25.360 --> 0:11:27.840 Waller said this at a federal reserve, this report will 0:11:27.840 --> 0:11:30.480 most likely show a significant but temporary loss of jobs 0:11:30.480 --> 0:11:33.000 from two recent hurricanes and a strike at Boeing. I 0:11:33.040 --> 0:11:35.640 expect these factors may reduce employment growth by more than 0:11:35.679 --> 0:11:38.679 one hundred thousand this month. He went up to say, 0:11:38.920 --> 0:11:41.440 since the job's report will come during the usual blackout 0:11:41.480 --> 0:11:44.720 period for policymakers commenting on the economy, you won't have 0:11:44.800 --> 0:11:47.120 any of us trying to put this low reading into perspective, 0:11:47.160 --> 0:11:50.040 though I hope others will. So let's do that right now, 0:11:50.120 --> 0:11:51.360 my McKee, we've got some more. 0:11:51.800 --> 0:11:56.199 Yeah. Looking again at the hurricane impact. According to the BLS, 0:11:56.400 --> 0:11:59.800 the Establishment survey was affected for two reasons. They say 0:12:00.040 --> 0:12:04.760 one is that the hurricanes probably prevented people from answering, 0:12:05.120 --> 0:12:07.920 and also the survey period. The way they phrase it 0:12:08.000 --> 0:12:10.000 is it ended several days before the end of the 0:12:10.080 --> 0:12:12.720 month because of the timing of the month, and so 0:12:13.080 --> 0:12:15.000 they may not have gotten all the surveys in that 0:12:15.120 --> 0:12:17.680 even were answered, so we're going to have to look 0:12:17.720 --> 0:12:21.679 at next month to do it. The survey, as Lisa 0:12:21.720 --> 0:12:24.640 points out, as the lower survey response rate lowis since 0:12:24.679 --> 0:12:27.640 nineteen ninety one, and when you look at what the 0:12:27.679 --> 0:12:31.880 weather is overall, it's understandable. 0:12:31.920 --> 0:12:32.079 Now. 0:12:32.200 --> 0:12:34.920 The other part of it is the household survey, and 0:12:34.960 --> 0:12:39.840 the BLS specifically says that was not affected by the storms. 0:12:40.040 --> 0:12:42.760 So the number you can trust is the four point 0:12:42.800 --> 0:12:46.080 one Jeff Rosenberg was pointing out, and the number you 0:12:46.120 --> 0:12:48.800 got a hold in abeyance is the twelve thousand. 0:12:48.920 --> 0:12:50.400 In some ways, do you think this makes the fence 0:12:50.440 --> 0:12:53.240 life just a little bit easier next week? A stronger 0:12:53.320 --> 0:12:55.320 number have been the bigger problem in the news coming. 0:12:55.360 --> 0:12:57.240 Oh, a very strong number would have been something that 0:12:57.240 --> 0:13:00.360 they would have to have talked around. Now they can say, well, 0:13:00.520 --> 0:13:02.480 this just we seem to be on the same path. 0:13:02.480 --> 0:13:06.320 And unemployment's not going up, and average hourly earnings on 0:13:06.320 --> 0:13:08.640 a year over year basis haven't changed, so we don't 0:13:08.679 --> 0:13:09.240 have a problem. 0:13:09.280 --> 0:13:11.400 We can cut an employment's not going out. Bond yields 0:13:11.400 --> 0:13:13.760 down either. This morning they're down by nine basis points 0:13:13.760 --> 0:13:15.240 on a two year. On a ten year, we're down 0:13:15.280 --> 0:13:17.880 five just moments ago, fifteen minutes ago, we saw four 0:13:18.040 --> 0:13:21.400 thirty on tens, on twoes, we saw four twenty. Muhammad, 0:13:21.400 --> 0:13:23.160 I want to bring you into the conversation on fixed 0:13:23.160 --> 0:13:25.800 income because you wrote earlier this week in Bloomberg Opinion 0:13:25.880 --> 0:13:29.080 the importance of understanding what's behind this move, and we've 0:13:29.120 --> 0:13:31.320 heard a bunch of people give a bunch of reasons 0:13:31.360 --> 0:13:33.520 as to what's behind it. It might be the data, 0:13:33.800 --> 0:13:36.199 it might be definicite concerns, it might be policy concerns 0:13:36.200 --> 0:13:38.679 going into next week. Have you decided on which one 0:13:38.720 --> 0:13:40.280 it is at the moment, Muhammad, what do you think 0:13:40.280 --> 0:13:42.840 the dominant factor is going into next week? 0:13:44.520 --> 0:13:47.280 I have not gone. I don't think you can because 0:13:47.480 --> 0:13:51.600 there are at least four influencers and it's very difficult 0:13:51.840 --> 0:13:57.160 to determine the weight of each. Over the next few days, 0:13:57.559 --> 0:14:00.839 we're going to have some major developments. We're going to 0:14:00.920 --> 0:14:04.840 have the FED recalibrating again. We're going to have the 0:14:04.880 --> 0:14:08.040 results or at least we'll know how the vote went 0:14:09.320 --> 0:14:12.200 for the elections, so we're going to get some important 0:14:12.240 --> 0:14:16.240 data point. I'm really glad you read out Chris Waller 0:14:16.280 --> 0:14:21.960 speech because he has emerged as the best FED policy 0:14:21.960 --> 0:14:24.800 maker in terms of not only assessing what has happened, 0:14:25.280 --> 0:14:27.920 but telling us what to look at. And I thought 0:14:28.080 --> 0:14:31.240 what you read out was really interesting. Of course, we 0:14:31.280 --> 0:14:36.840 may always get a newspaper leak during the blackout period, 0:14:37.200 --> 0:14:39.600 but I think the FED right now is looking at this, 0:14:39.880 --> 0:14:43.280 and I agree with what was said is that they'll say, 0:14:43.280 --> 0:14:45.280 you know what, this is not going to influence what 0:14:45.320 --> 0:14:46.560 we're going to do, and we're going to We're going 0:14:46.560 --> 0:14:48.320 to cut by twenty five basis points next week. 0:14:48.440 --> 0:14:50.440 Of course, yields are lower, so they might not need 0:14:50.480 --> 0:14:53.560 a particular person to weak anything out to the market 0:14:53.600 --> 0:14:56.880 to correct the impression. Jeff, what do you think in 0:14:57.000 --> 0:15:00.360 terms of the main drivers of the yield rise that 0:15:00.360 --> 0:15:02.640 we've seen over the past month, the fifty basis points 0:15:02.720 --> 0:15:03.800 increase across the curve. 0:15:05.440 --> 0:15:07.760 Yeah, I'll agree with Muhammad. I mean, there's a lot 0:15:07.800 --> 0:15:10.400 of cross currents in there, but I would say a 0:15:10.400 --> 0:15:14.160 big one not to ignore. And it's hard because we're obviously, 0:15:14.200 --> 0:15:17.760 you know, very focused on the prospects of post election 0:15:17.840 --> 0:15:21.360 fiscal policy. Is that the economic data got much better, 0:15:22.160 --> 0:15:26.560 and you had a very negative, very extreme level of 0:15:26.800 --> 0:15:30.080 FED expectations priced into the bond market. So it's a 0:15:30.080 --> 0:15:32.600 little bit of combination of the bond market kind of 0:15:32.600 --> 0:15:37.400 getting over as skis in terms of fifties and consecutive fifties, 0:15:37.840 --> 0:15:42.920 and the accelerating the expectations into pricing on the weakness, 0:15:43.000 --> 0:15:44.760 and then when you started to pull some of that 0:15:44.800 --> 0:15:47.720 weakness back in terms of the economic data that started 0:15:47.720 --> 0:15:49.840 to come in, then you had a reaction to that. 0:15:49.960 --> 0:15:51.800 So I think, you know, that's kind of probably the 0:15:52.160 --> 0:15:54.440 main thrust. There's a lot of other stuff, as Muhammad's 0:15:54.480 --> 0:15:58.120 talking about in there, and Jonathan, yeah, absolutely, you know, 0:15:58.160 --> 0:16:00.640 I think this makes their life easier and harder if 0:16:00.640 --> 0:16:04.040 this was a big upside surprise. Certainly the number is 0:16:04.080 --> 0:16:07.240 overstated in terms of its weakness because of strikes and hurricanes, 0:16:07.280 --> 0:16:09.360 and I think everyone knows that it makes it easier 0:16:09.400 --> 0:16:11.680 for them to deliver on the twenty five cut, which 0:16:11.680 --> 0:16:14.920 they want, which they certainly want to do, and I 0:16:14.920 --> 0:16:16.960 think that's an important point to highlight. 0:16:26.840 --> 0:16:29.520 There's also revisions to the downsign for the prior month, 0:16:29.600 --> 0:16:32.120 So Jeff, is there a possibility that fifties back on 0:16:32.160 --> 0:16:32.560 the table. 0:16:34.840 --> 0:16:38.520 You know, I would say for November that's still a 0:16:38.560 --> 0:16:42.480 pretty high bar. The revisions are part of the noise 0:16:42.640 --> 0:16:46.040 and I think the signal is the establishment is the 0:16:46.640 --> 0:16:50.200 household survey, the four point one percent, the ECI number, 0:16:50.920 --> 0:16:53.240 the GDP numbers, although you know they have their own 0:16:53.280 --> 0:16:57.280 revision problems, but overall you have you have a K 0:16:57.400 --> 0:17:04.320 shaped recovery. But in aggregate, despite the distributional differences, the 0:17:04.359 --> 0:17:07.840 aggregate is doing very well, and I think that's driven 0:17:07.920 --> 0:17:11.600 by the ease in financial conditions, the support for consumption. 0:17:11.760 --> 0:17:12.960 What we saw in terms of the. 0:17:12.880 --> 0:17:16.840 Revisions and GDI and savings rate, the consumption side is 0:17:16.880 --> 0:17:20.520 still an aggregate very well supported here and so that, 0:17:20.720 --> 0:17:23.639 more than the noise out of the payroll reports and 0:17:23.680 --> 0:17:26.760 the difficulty in measuring that on a month to month basis, 0:17:26.920 --> 0:17:29.119 is going to drive the outlook for FED policy going forward. 0:17:29.119 --> 0:17:32.080 Well, Mohammad, when the Fed meets next week, Jonathan is right, 0:17:32.160 --> 0:17:34.800 this may actually help them and make their job easier. 0:17:34.800 --> 0:17:39.040 What might make their job very difficult is the presidential election. 0:17:39.200 --> 0:17:41.879 And already we are seeing this number be politicized. The 0:17:41.880 --> 0:17:46.560 Trump camp is coming out calling it quote brutal. What 0:17:46.680 --> 0:17:50.080 does the Harris camp need to come out and explain 0:17:50.160 --> 0:17:52.919 about this job's report to an electorate that says the 0:17:52.960 --> 0:17:55.400 economy is their number one concern. 0:17:57.200 --> 0:18:00.879 And Marie, they need to explain that the numbers have 0:18:01.000 --> 0:18:06.360 been heavily influenced by one off effects, painful one off effects, 0:18:06.640 --> 0:18:09.399 especially with respect to the hurricanes, but they're one off 0:18:09.440 --> 0:18:13.360 effects for now, and also by the strikes, and they 0:18:13.400 --> 0:18:17.160 need to do that because they have not taken sufficient 0:18:17.200 --> 0:18:20.960 control of the narrative. We talk day after day of 0:18:21.000 --> 0:18:24.960 economic exceptionalism. That's not what the narrative is out there is, 0:18:25.000 --> 0:18:26.480 you know. The narrative is out there is about the 0:18:26.480 --> 0:18:31.440 cost of living, about inflation, and people don't realize that 0:18:31.600 --> 0:18:35.720 this economy has been outperforming not just expectations, but has 0:18:35.800 --> 0:18:38.720 been outperforming to the rest of the world. And this 0:18:38.840 --> 0:18:42.240 is really important as to the FED. Look, it goes 0:18:42.280 --> 0:18:46.080 down to two numbers. One mentioned by Jeff Eci the 0:18:46.200 --> 0:18:51.400 point eight percent increase the quarterly increase in employment cost. 0:18:51.720 --> 0:18:54.520 You look at that and you're relaxed. The other number 0:18:54.960 --> 0:18:58.520 is the PC inflated inflation, the monthly point three percent increase. 0:18:58.520 --> 0:19:00.720 You look at that, you're not so relaxed, and they're 0:19:00.760 --> 0:19:03.000 going to have to balance that. And I think if 0:19:03.040 --> 0:19:04.960 you balance that, you end up with a twenty five 0:19:05.000 --> 0:19:08.080 basis point cut. You certainly do not go to fifty. 0:19:08.000 --> 0:19:10.680 Muhammed, November just feels like an easy decision for them 0:19:11.000 --> 0:19:13.040 if they don't have a result to the election. If 0:19:13.040 --> 0:19:15.520 you get the jettison markets is another reason to count 0:19:15.520 --> 0:19:18.640 buy twenty five basis points. December is where things get 0:19:18.680 --> 0:19:21.080 a little bit harder. A question we've gone back to 0:19:21.119 --> 0:19:23.440 on the program a few times. We've had this succession 0:19:23.440 --> 0:19:25.000 with you two, and i'd love your thoughts going into 0:19:25.000 --> 0:19:28.600 the weekend whether you really believe next week's election has 0:19:28.600 --> 0:19:31.399 the real potential to redefine the economic bank drop, not 0:19:31.440 --> 0:19:34.560 just in America but worldwide, and whether by the time 0:19:34.560 --> 0:19:37.359 we get to December, the Federal Reserve will really have 0:19:37.440 --> 0:19:40.120