WEBVTT - Surveillance: Fed in Extended Pause, Kasman Says 0:00:09.840 --> 0:00:13.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Leye. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.560 Bloomberg dot Com, and of course, on the Bloomberg Tom, 0:00:33.600 --> 0:00:36.320 do you want to introduce our guests? Consider? No? No, Please? 0:00:36.360 --> 0:00:39.600 You you're so so keen on disrupting the top of 0:00:39.600 --> 0:00:41.400 the program. I urge you to. I urge you to 0:00:41.479 --> 0:00:46.040 kick off the program. Bracecast somebody. Brace. There'll be a 0:00:46.040 --> 0:00:48.199 spare mike in about two minutes if you want to 0:00:48.240 --> 0:00:50.760 take it. The chief economist at JP Morgan, good morning 0:00:50.800 --> 0:00:54.240 to you, Bruce. Good morning. One hundred straight months of 0:00:54.320 --> 0:00:58.920 gains for payrolls. Why they expected in January? One hundreds 0:00:59.000 --> 0:01:03.440 straight months of payroll gains in America? How much longer 0:01:03.440 --> 0:01:06.360 can we do this for? I think we can continue 0:01:06.400 --> 0:01:08.280 to do this for a while, especially since we now 0:01:08.319 --> 0:01:11.479 have a FED who seems to be on a extended pause, 0:01:11.600 --> 0:01:13.720 and you know, I think we have to absorb some 0:01:13.800 --> 0:01:16.360 of the weakness coming from abroad, and we do have 0:01:16.400 --> 0:01:18.800 some risks, but I don't think this expansion is close 0:01:18.800 --> 0:01:21.080 to ending. So I don't see why we can't keep 0:01:21.160 --> 0:01:24.200 going for a couple more years at least. John's really 0:01:24.200 --> 0:01:26.160 important question. I didn't know that, John, that was a 0:01:26.200 --> 0:01:29.200 hundred months in a row. John, wouldn't you agree as 0:01:29.240 --> 0:01:31.520 we look at all the economis who speak to it 0:01:31.600 --> 0:01:34.680 was a great Miscall of the of the recovery was 0:01:34.720 --> 0:01:38.680 two hundred plus thousand a month. Everybody was suing a 0:01:38.680 --> 0:01:40.680 couple of years ago. Everybody said, get ready for two 0:01:41.240 --> 0:01:42.720 to slow, get ready for it to slow, and it 0:01:42.720 --> 0:01:45.160 didn't happen. So brace if this can continue for the 0:01:45.240 --> 0:01:48.120 time big, can it continue at the clip that it 0:01:48.160 --> 0:01:51.560 has done through with what you set me up. I'm 0:01:51.560 --> 0:01:53.600 a little bit cautious and saying I do think job 0:01:53.640 --> 0:01:56.080 growth is is going to slow here because we've been 0:01:56.160 --> 0:02:00.160 running an economy that's been supported by a stimulus and 0:02:00.240 --> 0:02:02.480 that is starting to fade, and I think the global 0:02:02.520 --> 0:02:05.440 economy softer as well. So we think job growth today 0:02:05.560 --> 0:02:08.040 is gonna be a hundred and seventy thousand. I think 0:02:08.080 --> 0:02:09.640 as we moved through the rest of the year, we 0:02:09.720 --> 0:02:13.480 slow into the fifty range. If we're if our broad 0:02:13.520 --> 0:02:16.600 forecast on growth being close to two percent is right, Uh, 0:02:16.680 --> 0:02:19.440 that's still pretty good, and it's still gonna put a 0:02:19.480 --> 0:02:21.920 downward pressure on the on the unemployment rate, and that 0:02:22.040 --> 0:02:25.840 I think ultimately becomes your call. The FED is basically saying, hey, 0:02:25.880 --> 0:02:28.359 we don't think we're going to see inflation anytime soon, 0:02:28.360 --> 0:02:31.160 so we could signal a longer pause. I would agree 0:02:31.200 --> 0:02:32.600 with that. I don't think the problem is going to 0:02:32.680 --> 0:02:34.920 be inflation moving up, but I do think wages are 0:02:34.960 --> 0:02:36.960 gonna get higher. And I think the problem as we 0:02:37.000 --> 0:02:38.640 go through the next year, year and a half is 0:02:38.880 --> 0:02:41.320 the compression in corporate profit margins that we begin to 0:02:41.320 --> 0:02:45.400 see how will companies respond to decelerating nominal growth and 0:02:45.520 --> 0:02:48.160 compressing margins. How would they respond to that just in 0:02:48.280 --> 0:02:51.040 terms of hiring. Well, I think they're gonna bend a little, 0:02:51.160 --> 0:02:53.440 and that's the forecast we have, but I don't think 0:02:53.440 --> 0:02:56.639 they're gonna break, especially given that it has come against 0:02:56.720 --> 0:02:58.919 the backdrop of what was a really good two year 0:02:59.040 --> 0:03:02.000 run in terms of core for profits and margin expansion. 0:03:02.080 --> 0:03:05.400 So our call as the corporate sector pulls back modestly 0:03:06.000 --> 0:03:08.720 on both jobs and business spending, and we have an 0:03:08.720 --> 0:03:11.200 economy that slows down to about a two pace. Here 0:03:11.280 --> 0:03:13.640 if you're just joining US force casmin with j Pete Morgan. 0:03:13.680 --> 0:03:15.600 I want to go back to the theme of the 0:03:15.600 --> 0:03:17.919 week out of the San Francisco Feed, a brilliant paper, 0:03:17.960 --> 0:03:20.919 thanks to Jim Edwards, a business decider, for really pushing 0:03:20.960 --> 0:03:25.680 it forward. Uh, involuntary part time employment? Are the jobs 0:03:25.680 --> 0:03:29.280 were creating? Are they full time? For the most part? 0:03:29.320 --> 0:03:31.839 They are? I think what we have seen all time 0:03:31.880 --> 0:03:35.080 with medical benefits is that is that part is that assumed. 0:03:35.720 --> 0:03:38.160 I don't know the data on how many people have 0:03:38.240 --> 0:03:41.720 medical benefit but clearly today there's more people with health 0:03:41.720 --> 0:03:44.280 insurance than there were five or six years ago. Part 0:03:44.280 --> 0:03:46.400 of that is Obamacare and some other things that have 0:03:46.480 --> 0:03:49.240 gone on. I think the issue on this economy is 0:03:49.360 --> 0:03:53.520 not that we're creating bad jobs. It's that we are 0:03:53.600 --> 0:03:56.560 still sitting with a part a utilization rate, of layer 0:03:56.600 --> 0:03:59.640 participation rate which is still very much lower than where 0:03:59.640 --> 0:04:03.280 it was before the expansion. We're still sitting with wage 0:04:03.320 --> 0:04:06.040 inflation which was lower, as we talked about earlier, where 0:04:06.080 --> 0:04:09.240 it was in the previous expansion. So the labor market 0:04:09.320 --> 0:04:12.280 is tight, but we only partially recovered. And that's one 0:04:12.320 --> 0:04:14.160 reason why I think the FED is willing to give 0:04:14.160 --> 0:04:16.840 this experiment some time to work, to see how far 0:04:17.000 --> 0:04:19.720 we can go before inflation becomes an issue. I mean, 0:04:19.760 --> 0:04:21.840 maybe the FED will and maybe it won't. I think 0:04:21.880 --> 0:04:23.720 the consensus view at the moment is that they've got 0:04:23.720 --> 0:04:25.920 to the right place in terms of policy. But how 0:04:25.920 --> 0:04:28.560 we got here, Bruce, was an absolute mess over the 0:04:28.640 --> 0:04:30.880 last couple of months. Actually asked this question a couple 0:04:30.920 --> 0:04:33.239 of times yesterday to try and get a better picture 0:04:33.240 --> 0:04:35.960 of where people think the FED is actually going. So 0:04:36.000 --> 0:04:38.760 we sit here now with what many people assume is 0:04:38.760 --> 0:04:41.559 the right policy setting for this economy and the amount 0:04:41.560 --> 0:04:44.080 of uncertainty abroad. But then someone turned around to me 0:04:44.120 --> 0:04:46.120 yesterday and said, well, hang on a minute, the journey 0:04:46.120 --> 0:04:48.440 does matter. How we got here was a total mess. 0:04:48.440 --> 0:04:50.279 And how do you know that in a couple of 0:04:50.320 --> 0:04:53.120 months time, after a few payrolls prints that are really, 0:04:53.120 --> 0:04:56.719 really strong, that this FED won't introduce the likelihood of 0:04:56.760 --> 0:05:00.240 another rate hike. Well, I think in the next couple 0:05:00.279 --> 0:05:02.600 of months, if you take the signal and its entirety 0:05:02.640 --> 0:05:04.600 on Wednesday would be it would be a mess if 0:05:04.640 --> 0:05:06.960 they would shift back that quickly, even if the data 0:05:06.960 --> 0:05:09.360 flow is good. What I would argue about this is 0:05:09.760 --> 0:05:12.200 that the last three or four months you have to 0:05:12.240 --> 0:05:14.080 realize the Fed had been on a path to get 0:05:14.120 --> 0:05:16.440 to some level that was close to neutral, and they 0:05:16.440 --> 0:05:21.039 were basically signaling they were relatively insensitive to the incoming news. 0:05:21.600 --> 0:05:25.080 They actually welcomed some adjustment in financial conditions as they 0:05:25.120 --> 0:05:27.600 did that, and then that began to snowball on itself 0:05:27.640 --> 0:05:29.760 and they had to make a change. Also, they got 0:05:29.839 --> 0:05:33.440 rates up into the mid twos. So I wouldn't characterize 0:05:33.440 --> 0:05:35.960 it a mess, and I would be characterizing it as 0:05:35.960 --> 0:05:38.239 a mess if we in two months time with better 0:05:38.279 --> 0:05:40.719 economic you see the Fed kind of backtrack on the 0:05:40.760 --> 0:05:44.240 statements so that they made on Wednesday, but linking in 0:05:44.360 --> 0:05:47.080 jobs here, and this is important. The one off of 0:05:47.120 --> 0:05:49.760 a weaker first quarter g d P. The JP Morgan 0:05:49.839 --> 0:05:52.440 house call is we go back to Richard Claire to 0:05:52.640 --> 0:05:56.599 solid economy. Um, yes, solid economy, but not the economy 0:05:56.600 --> 0:06:00.280 who had in two thousand and eighteen, which was clearly everybody, 0:06:00.320 --> 0:06:02.880 even the president it was because he wants more of that. 0:06:02.960 --> 0:06:05.200 So we come back to a solid economy. We continue 0:06:05.200 --> 0:06:07.520 to see job growth, we continue to see wage inflation 0:06:07.560 --> 0:06:10.800 move higher, but core inflation sticks it around two percent. 0:06:11.279 --> 0:06:13.239 And the question is does the Fed have any reason 0:06:13.880 --> 0:06:15.880 to move and I think they're telling us that that's 0:06:15.960 --> 0:06:17.640 probably not going to be enough to get them to 0:06:17.720 --> 0:06:20.359 move as we go through the next I think I 0:06:20.360 --> 0:06:22.720 think my frustration with the Federal Reserve is, is you 0:06:22.760 --> 0:06:25.640 describe this economy. Of course it was goosed through, it 0:06:25.680 --> 0:06:28.359 was going to slow down in Everyone was saying the 0:06:28.400 --> 0:06:30.880 same thing. You all saw it on the horizon, and 0:06:30.880 --> 0:06:33.000 then the Federal Reserve behaved like it was a corner 0:06:33.040 --> 0:06:34.800 it didn't see in the road, a turn it didn't 0:06:34.839 --> 0:06:36.400 see in the road, and it's sliding the back end 0:06:36.440 --> 0:06:39.000 of the car route. I mean, I don't understand why 0:06:39.040 --> 0:06:42.280 the Federal Reserve has done this abrupt turn when so 0:06:42.320 --> 0:06:45.880 many people saw this coming through eighteen into nineteen that 0:06:45.960 --> 0:06:48.839 growth was going to slow. So why didn't the Federal 0:06:48.880 --> 0:06:52.640 Reserve start making the adjustment in December? Why was it 0:06:52.720 --> 0:06:55.039 only after the December news conference that all the troops 0:06:55.080 --> 0:06:57.000 were sent out from the f O m C to 0:06:57.080 --> 0:07:00.000 start pledging patients. I didn't hear it in the chair 0:07:00.000 --> 0:07:02.560 Ammond's news conference in December. I didn't hear any of 0:07:02.560 --> 0:07:04.680 what I heard a couple of days ago from him. 0:07:04.800 --> 0:07:07.120 This is an abrupt term, Bruce in six weeks. I 0:07:07.160 --> 0:07:09.800 do think we had a shift in December which basically 0:07:09.880 --> 0:07:12.960 signaled to us that the March meeting was off the table, 0:07:13.000 --> 0:07:16.040 that this sequence of moving every quarter had been broken. 0:07:16.280 --> 0:07:18.640 But what they were signaling us in December was a 0:07:18.680 --> 0:07:21.880 pause and a tightening cycle that had not been completed 0:07:21.960 --> 0:07:25.040 on their point in time, and certainly market participants were 0:07:25.080 --> 0:07:27.760 frustrated by that, at least some. Uh. There's also issues 0:07:27.800 --> 0:07:31.000 around how they're talking about the balance sheet. UM. Again, 0:07:31.040 --> 0:07:32.880 I'm going to defend the Fed a little bit here, 0:07:32.880 --> 0:07:35.920 which is that I think they've made an important shift 0:07:36.200 --> 0:07:39.400 uh this week, a shift that we didn't expect in 0:07:39.440 --> 0:07:42.480 the magnitude of it. Um. But they have been gradually 0:07:42.480 --> 0:07:45.640 moving against an economy that you know, has continued to grow, 0:07:45.720 --> 0:07:49.000 has seen risk build pretty quickly. Basically, it started to 0:07:49.840 --> 0:07:53.080 rise in October in terms of the financial market adjustments, 0:07:53.120 --> 0:07:55.400 in terms of the deceleration, and it took them three 0:07:55.440 --> 0:07:57.880 months against the backdrop of a four or five month event. 0:07:58.320 --> 0:08:00.640 It's you know, you could argue it's slow for market time, 0:08:00.680 --> 0:08:03.000 but it's not actually that slow in real time in 0:08:03.080 --> 0:08:05.240 terms of what the data has been showing us. Bruce, 0:08:05.280 --> 0:08:07.680 always get your insight on the economy, and of course 0:08:07.760 --> 0:08:09.640 on the Federal Reserve as well. Bruce Cassman, the chief 0:08:09.640 --> 0:08:26.760 economist that Jake P. Morgan let us digress over the 0:08:26.840 --> 0:08:29.520 equity markets here. I've got some good guests coming up 0:08:29.600 --> 0:08:32.800 on the labor economy. John Gallop joins from Credit speech 0:08:32.840 --> 0:08:35.560 as well. John, you have a killer chart which answers 0:08:35.679 --> 0:08:38.280 a lot of questions of our listeners. If you take 0:08:38.320 --> 0:08:41.400 the stock market and you rip out Apple with all 0:08:41.440 --> 0:08:44.360 of its emotion and effect, and you rip out Energy 0:08:44.480 --> 0:08:47.240 with all the dynamics of that goofy sector, you get 0:08:47.280 --> 0:08:50.800 a different look. What's the look of the equity market? Ex? 0:08:50.840 --> 0:08:55.120 Apple x Energy? Well, when you look good morning time, 0:08:55.200 --> 0:08:59.240 When when you look at the earnings UM picture UM, 0:08:59.360 --> 0:09:02.439 things are coming in exactly in line with long term 0:09:02.480 --> 0:09:06.880 averages if you x out Apple and Energy stock with 0:09:07.000 --> 0:09:10.000 respect to UM stock price revisions. And the reason this 0:09:10.080 --> 0:09:13.440 is so important is because the headlines are reading that 0:09:13.559 --> 0:09:16.600 these results are coming in horribly and that that earnings 0:09:16.600 --> 0:09:21.240 expectations are being flashed, and that's just really not the case. John, 0:09:21.640 --> 0:09:23.080 What do you say to people that say, well, this 0:09:23.160 --> 0:09:25.200 is easy to strip out the weakness, and of course 0:09:25.200 --> 0:09:28.200 you'll end up with some stress. Why Why is this? Why? 0:09:28.240 --> 0:09:32.240 Is this a useful exercise, John John John John Galub 0:09:32.440 --> 0:09:38.920 has done that for fifteen years. That's oh. You know. 0:09:39.040 --> 0:09:41.080 The funny thing is when I when I do, when 0:09:41.080 --> 0:09:44.400 I strip out things that make things look better. Um, 0:09:44.480 --> 0:09:46.640 people say that you're trying to juice the numbers, but 0:09:46.679 --> 0:09:48.840 at the same works in the opposite direction. Let me 0:09:48.840 --> 0:09:51.400 give an example of in the first three quarters of 0:09:53.000 --> 0:09:57.760 the earnings grew at about a ridiculously good number. I said, 0:09:57.800 --> 0:10:00.400 wait a second, that you can't count that, because first 0:10:00.440 --> 0:10:03.920 of all, you have all these tax games, which tax benefits, 0:10:03.920 --> 0:10:06.760 which aren't gonna continue into the future. You have a 0:10:06.800 --> 0:10:09.240 whole bunch of one off items, and when you actually 0:10:09.240 --> 0:10:12.560 look at the underlying trend, you're left with something probably 0:10:12.600 --> 0:10:15.880 closer to ten percent, which is still healthy but importantly 0:10:15.880 --> 0:10:18.800 potentially sustainable. And that that's the way you have to 0:10:18.840 --> 0:10:21.360 look at it with John. John Ferrell brings up a 0:10:21.400 --> 0:10:24.880 really important point. A lot of people think having the 0:10:24.960 --> 0:10:28.200 confidence to be in the market, to participate is an 0:10:28.200 --> 0:10:32.880 easy task. You've been brilliant about participating in the market. 0:10:33.280 --> 0:10:36.240 State the faith this morning, somebody's going on this weekend, 0:10:36.600 --> 0:10:38.640 and as they get ready to root for the patriots 0:10:38.640 --> 0:10:40.800 to get it done, They're gonna go. Should I be 0:10:40.920 --> 0:10:44.160 in the market state the case for people to think 0:10:44.200 --> 0:10:49.600 it's a simple exercise, Well, well I don't think right now, Tom, 0:10:49.920 --> 0:10:52.720 it is such an easy exercise. I'll tell you why. 0:10:52.880 --> 0:10:56.439 The first thing is is that the economy is legitimately 0:10:56.480 --> 0:11:01.440 going to be slower in in in teen and than 0:11:01.440 --> 0:11:04.240 it was last year. And the earnings as a results 0:11:04.240 --> 0:11:06.640 are gonna be not They're not gonna be horrible, but 0:11:06.679 --> 0:11:10.240 they're also gonna be weaker. But here's the key. We're 0:11:10.320 --> 0:11:13.840 not going into recession. We're gonna hear from today that 0:11:13.880 --> 0:11:18.160 that jobs are still expanding, UM in this uh, in 0:11:18.160 --> 0:11:22.120 this country. UM. The FED. The the consensus belief on 0:11:22.200 --> 0:11:26.360 Wall Street is that the Fed is entirely done raising 0:11:26.480 --> 0:11:30.079 rates for this cycle, so that they're no longer a 0:11:30.200 --> 0:11:33.360 headwind and we're still reaping the benefits of the fact 0:11:33.440 --> 0:11:36.640 that in the fourth quarter of last year you had 0:11:36.679 --> 0:11:40.199 stock prices get smacked down really hard, and stocks are 0:11:40.240 --> 0:11:42.600 are really inexpensive compared to where there were a few 0:11:42.600 --> 0:11:44.079 months ago. So, John, I want to bring you a 0:11:44.160 --> 0:11:46.760 quote from Andrew Sheets of Morgan Stanley, who we caught 0:11:46.800 --> 0:11:49.440 up with a little bit earlier. He basically said, if 0:11:49.440 --> 0:11:51.120 you look back at the history when the feed has 0:11:51.120 --> 0:11:54.000 got a more dovish because of weakening data, that's been 0:11:54.040 --> 0:11:58.080 a bad time for investors. It's helpful the FED is helping, 0:11:58.440 --> 0:12:00.760 but it doesn't solve some of these bigger issues. What 0:12:00.800 --> 0:12:05.040 do you think about that, John, Well, here's what happens, Johnson, 0:12:05.080 --> 0:12:09.320 Typically is the FED stops raising rates when they've screwed 0:12:09.400 --> 0:12:12.480 up and gone too far and and really done some damage. 0:12:12.880 --> 0:12:16.400 And it's it's somewhat rare that they pull off a 0:12:16.480 --> 0:12:20.040 soft landing. And right now it kind of looks like 0:12:20.120 --> 0:12:22.880 that's where we are, that the FED has gone from 0:12:23.440 --> 0:12:27.120 zero rate policy to two and a half percent on 0:12:27.240 --> 0:12:30.240 FED funds when most other major countries in the world 0:12:30.600 --> 0:12:34.520 are still at zero or negative UM. But I don't 0:12:34.559 --> 0:12:37.559 believe that they've done the kind of damage that they 0:12:37.600 --> 0:12:40.320 have in the past. So perhaps this time is the 0:12:40.360 --> 0:12:43.240 magic bullet there, and this is that that soft landing 0:12:43.240 --> 0:12:45.400 that everybody helps, which I actually think I think it 0:12:45.520 --> 0:12:48.160 is many people reflecting on the nine nineties kind of 0:12:48.200 --> 0:12:50.680 playbook the midnineties going into the late nineties of the 0:12:50.720 --> 0:12:53.560 framework for thinking about this market. Is that a useful 0:12:53.600 --> 0:12:56.960 framework to use? John, You know. I think that we 0:12:57.120 --> 0:13:01.439 always try to to say what's the thing which looks 0:13:01.559 --> 0:13:04.319 closest to this, and I'm not sure that we can. 0:13:04.400 --> 0:13:07.520 And I think that the most important difference right now 0:13:07.559 --> 0:13:10.080 is I think that the overall long term trend here 0:13:10.600 --> 0:13:15.040 is on slower economic growth, and it doesn't mean recessionary, 0:13:15.120 --> 0:13:18.800 It just means um a little bit more slug me. 0:13:19.280 --> 0:13:21.400 I think that if you the most likely period this 0:13:21.440 --> 0:13:28.120 is gonna mimic, do I own the belieguerd to have 0:13:28.200 --> 0:13:31.640 them come back, or given your slower model, do you 0:13:31.800 --> 0:13:37.120 value more highly marginally better growth. Which is it? I 0:13:37.559 --> 0:13:41.120 think in this environment, um companies that generate lots of 0:13:41.160 --> 0:13:45.320 cash flow, companies that have lower fixed overhead, companies that 0:13:45.400 --> 0:13:49.280 generate growth that doesn't need the economy, which means that 0:13:49.360 --> 0:13:54.720 in this environment, heck companies look good, healthcare companies look good. 0:13:54.920 --> 0:13:58.920 And maybe as importantly, the US market I still think 0:13:58.960 --> 0:14:02.439 looks better than the rest the world because our businesses 0:14:02.520 --> 0:14:05.560 are are more resilient, just because of the industries are in. 0:14:05.880 --> 0:14:08.440 Is Amazon resilient? I mean they come out with earnings 0:14:08.520 --> 0:14:12.839 own you know they're down two two three percent, whatever 0:14:12.920 --> 0:14:15.320 thing was more than that, you know they're down and 0:14:15.320 --> 0:14:17.080 there's all that, But how do I know? You don't 0:14:17.080 --> 0:14:20.040 do individual stocks, But what do you do, John Gallup 0:14:20.120 --> 0:14:23.320 with a double digit revenue grower in your lower revenue 0:14:23.320 --> 0:14:28.320 growth environment. If that revenue growth, if it was an 0:14:28.440 --> 0:14:32.200 energy company that had had double digit energy growth because 0:14:32.200 --> 0:14:34.960 of the commodity, I'm not that interested. If it's a 0:14:35.000 --> 0:14:38.680 double digit grower, because they're taking share from everyone else 0:14:38.720 --> 0:14:41.640 around it. They've been taking share whether the economy was 0:14:41.680 --> 0:14:44.080 a little stronger a little bit weaker. You have to 0:14:44.160 --> 0:14:47.840 like those kind of companies. The stockdown four percent In 0:14:47.880 --> 0:14:50.080 case you're wondering home in the pre market, did you 0:14:50.120 --> 0:14:53.720 have any more questions? Have plenty of questions for Jonathan Gollup. 0:14:53.760 --> 0:14:55.200 I wanted to pick up on his point about buy 0:14:55.240 --> 0:14:58.720 America versus the rest of the World's interesting. There are 0:14:58.720 --> 0:15:00.920 some people John excites it now that fed us back 0:15:01.000 --> 0:15:03.040 to way and seemingly we may well get a trade 0:15:03.040 --> 0:15:06.360 deal that the opportunity will lie outside of America. What's 0:15:06.360 --> 0:15:11.720 your message to those the you want to buy outside 0:15:11.720 --> 0:15:15.440 of the US when you have a an accelerating economy, 0:15:15.560 --> 0:15:17.320 and you want to buy in the US when the 0:15:17.360 --> 0:15:20.200 economy is more stagnant, and the reason for that is 0:15:20.200 --> 0:15:23.440 that the US, the U S SMP is more services, 0:15:23.800 --> 0:15:27.480 they're more businesses that are not as industrial base. And 0:15:27.560 --> 0:15:30.600 so if the economy slows over the next year or two, 0:15:30.680 --> 0:15:34.160 as not only I expect, but as a consensus view is, 0:15:34.520 --> 0:15:36.920 then the US tends to do better in that environment. 0:15:36.920 --> 0:15:40.360 It's not about the US economy being being better, It's 0:15:40.360 --> 0:15:43.160 really about the environment being one that that tends to 0:15:43.200 --> 0:15:47.520 favor s. Thank you so much. Really, really, you know 0:15:47.600 --> 0:15:49.840 what's great about Gala you going to this research on 0:15:49.920 --> 0:15:51.920 John There is always that one thing that shots you 0:15:52.200 --> 0:15:56.800 and you did that X Apple X energy thing. It's 0:15:56.800 --> 0:15:59.840 a whole different look. The street always always helps me. 0:16:00.000 --> 0:16:16.280 Inc it was six, it was a summer. I have 0:16:16.400 --> 0:16:19.840 the clearest memory of the shock of the Iceland summit, 0:16:19.880 --> 0:16:24.080 the Ravick Summit of Reagan and Gorbachev. Are Michael McKee 0:16:24.080 --> 0:16:26.720 was there. Michael is down in Washington today knee deep 0:16:26.720 --> 0:16:29.600 in the jobs report. But we're doing better. Margaret Brennan 0:16:29.640 --> 0:16:31.400 with US. Of course, I host to Face the Nation 0:16:31.440 --> 0:16:35.200 Seat on CBS all of their network affiliates coast to coast. 0:16:35.520 --> 0:16:37.600 UH Sunday morning, you can hear at a two pm 0:16:37.600 --> 0:16:39.640 on Bloomberg Rady I'll tell you about that in a minute. 0:16:40.080 --> 0:16:43.680 But Margaret, you're actually way knowledgeable on this. What is 0:16:43.720 --> 0:16:47.320 the import at the Secretary of State and the President 0:16:47.440 --> 0:16:52.400 United States are gonna walk away from Raya vic Well, 0:16:52.760 --> 0:16:55.560 this is significant. The iro n F treaty, it's one 0:16:55.560 --> 0:16:58.000 of those nuclear arms control agreements that tried to put 0:16:58.040 --> 0:17:00.280 a cap on the pulled up end of this pools 0:17:00.280 --> 0:17:05.160 that could develop direct these nuclear weapons at each other. 0:17:05.880 --> 0:17:10.440 What strategically the Trump administration says this does quietly says 0:17:10.480 --> 0:17:14.040 this does is that it allows them to build up 0:17:14.160 --> 0:17:17.800 in response to China. It frees them from the constraints 0:17:17.840 --> 0:17:22.240 there to address a new threat within Asia. But it 0:17:22.320 --> 0:17:26.119 also and what they're saying publicly is that the they say, 0:17:26.160 --> 0:17:29.119 a response to Russia breaking the rules anyhow, if they 0:17:29.160 --> 0:17:33.679 Russia has already been developing missiles outside the agreement, and 0:17:33.760 --> 0:17:37.200 therefore if this thing wasn't effective in the first place, 0:17:37.240 --> 0:17:40.080 but this gives us six months they could change their 0:17:40.080 --> 0:17:42.520 minds if Russia comes into compliance. But very few people 0:17:42.520 --> 0:17:46.879 think that will actually happen. In the Chinese there's this 0:17:46.960 --> 0:17:52.760 illusion of Republican and Democratic party support for the outrage 0:17:52.840 --> 0:17:56.240 over Walwi whatever. That's separate issue. Is there any kind 0:17:56.240 --> 0:18:03.840 of Republican and democratic support of what Secretary Pompeio's proposing, uh, 0:18:03.920 --> 0:18:08.400 in terms of the I n F treating treating Excuse me, Yes, 0:18:08.960 --> 0:18:11.200 there is. There's a lot of support actually, and in 0:18:11.320 --> 0:18:15.120 that Intelligence Chief exchange you saw on Capitol Hill earlier 0:18:15.200 --> 0:18:18.600 this week, you heard some of that from republicans. Um 0:18:18.640 --> 0:18:22.760 certainly as Sara Marco Rubio center Tom Popp. They want 0:18:22.960 --> 0:18:26.080 to see the administration get quote unquote tougher on Russia. 0:18:26.160 --> 0:18:28.520 They like that signaling, and they also like the re 0:18:28.720 --> 0:18:32.080 orientation towards China, so they cheer it on. So the 0:18:32.200 --> 0:18:37.359 question is really, uh, you know, it's interesting how much 0:18:38.040 --> 0:18:42.360 Russia and Putin are given air time beyond their actual impact. 0:18:42.720 --> 0:18:46.719 But you know, are they actually undermining us in other ways? 0:18:47.119 --> 0:18:48.680 You know, we may be dealing with a treaty, but 0:18:48.720 --> 0:18:52.080 when they're doing things like social media manipulation and other things, 0:18:52.320 --> 0:18:54.600 are they actually more effective at using the new tools 0:18:54.680 --> 0:18:57.680 rather than the old ones. Margaret Bennan, you're the only 0:18:57.680 --> 0:19:00.480 one I know that actually counts the number of residential 0:19:00.480 --> 0:19:04.960 tweets per day that completely shifts face the nation. On Sunday, 0:19:05.000 --> 0:19:07.040 I'm going to take a real risk here that maybe 0:19:07.040 --> 0:19:10.800 Trump Pelosi leads a charge frame face the nation. For 0:19:10.840 --> 0:19:14.399 this Sunday morning on CBS, we will be speaking with 0:19:14.600 --> 0:19:19.639 President Trump, continuing this tradition of a Super Bowl time. Okay, 0:19:19.680 --> 0:19:23.119 stop stop, stop, Margaret Rams or patriots to see if 0:19:23.119 --> 0:19:28.080 we continue. Look, I'm a Connecticut Yankee, but you know, 0:19:28.720 --> 0:19:30.560 I guess I'm supposed to be neutral in this one. 0:19:30.800 --> 0:19:33.960 You gotta be neutral because you're with CBS. There you go. 0:19:34.440 --> 0:19:36.359 What are you gonna say to President Trump this weekend? 0:19:36.400 --> 0:19:38.399 I mean, it is a great tradition of the Super Bowl. 0:19:38.600 --> 0:19:41.320 It's also a really serious interview. How will you approach 0:19:41.400 --> 0:19:45.000 this interview with the President of the United States, Well, 0:19:45.040 --> 0:19:46.960 you know, we will talk about a range of things 0:19:47.000 --> 0:19:49.760 including you know, we know he's a patriot, Patriots fan. 0:19:49.920 --> 0:19:51.520 We want to talk to him a little bit about 0:19:51.520 --> 0:19:55.320 the fun stuff, but also a lot of serious stuff including, um, 0:19:55.920 --> 0:19:59.159 the chances of another shutdown in three weeks less than 0:19:59.200 --> 0:20:03.160 three weeks now, uh, whether he intends to bypass Congress 0:20:03.200 --> 0:20:05.400 to get funding to build this border wall that he's 0:20:05.400 --> 0:20:09.320 still arguing with Congress about Democrats about um. But also 0:20:09.359 --> 0:20:11.919 look at some of the security threats, whether it's Venezuela. 0:20:12.160 --> 0:20:15.040 He's tweeting this morning about Syria and Afghanistan and again 0:20:15.119 --> 0:20:17.679 vowing to bring our troops help. What does that look like, 0:20:17.720 --> 0:20:21.200 particularly when you have seen the vast majority of Republicans 0:20:21.200 --> 0:20:24.600 in the Senate rebuke him, tell him he's endangering national 0:20:24.640 --> 0:20:28.800 security by going through the percipitates withdrawal from the battlefield. 0:20:28.880 --> 0:20:31.119 Margaret Brennan, thank you so much. Really looking forward to 0:20:31.160 --> 0:20:34.600 this interview of the weekend. Without question, Margaret Brennan and 0:20:34.800 --> 0:20:54.800 President Trump, it has been an extraordinary October. The Peace 0:20:54.960 --> 0:20:59.199 of November, what a December, and in the January, and 0:20:59.240 --> 0:21:01.720 the house call that one last year by a country 0:21:01.720 --> 0:21:05.600 mile was the shop known as Morgan Stanley. There, Ellen Zetner, 0:21:05.840 --> 0:21:09.399 way out front, way out front, on a fed that 0:21:09.400 --> 0:21:13.840 would slow down, would demur from higher interest rates. She 0:21:14.000 --> 0:21:17.399 nailed that. And Michael Wilson nailed the struggles of the 0:21:17.440 --> 0:21:21.080 equity market. He is their chief US equity strategist of 0:21:21.160 --> 0:21:25.560 Michael Wilson joins us this morning from our interactive broker studio, 0:21:25.640 --> 0:21:28.600 the Bloomberg Interactive Broker Studio. Mike, you've got a re 0:21:28.760 --> 0:21:33.680 appraise after down thirteen percent. Whatever the math is, how 0:21:33.720 --> 0:21:39.320 do you position into this new month. Thanks Tom. Look, 0:21:39.359 --> 0:21:41.879 I think, as you said, we've just had this crazy 0:21:42.160 --> 0:21:46.280 move both down and up. I mean, clearly December we 0:21:46.359 --> 0:21:50.480 think overshot on the downside. We expected things to bounce back, 0:21:50.520 --> 0:21:53.560 Like pretty much everybody, you know, nobody's really ever sure 0:21:53.600 --> 0:21:56.560 how far it's gonna snap back. And I think obviously 0:21:56.640 --> 0:22:01.800 price momentum makes people feel more boa just like negative 0:22:01.800 --> 0:22:05.359 price momentum makes them feel more bearish. And I think 0:22:05.400 --> 0:22:07.000 that I think that that's a little bit of a 0:22:07.040 --> 0:22:09.200 mirage at the moment. So if you're if you're actually 0:22:09.200 --> 0:22:12.480