1 00:00:05,120 --> 00:00:07,119 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,160 --> 00:00:11,080 Speaker 2: I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. 3 00:00:11,280 --> 00:00:15,760 Speaker 2: Join us each day for insight from the best an economics, geopolitics, 4 00:00:15,760 --> 00:00:20,720 Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 5 00:00:20,960 --> 00:00:25,400 Speaker 2: Spotify and anywhere you get your podcasts, and always on 6 00:00:25,520 --> 00:00:29,880 Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. 7 00:00:30,360 --> 00:00:32,640 Speaker 2: This is a joy and I'm gonna cut to the 8 00:00:32,720 --> 00:00:36,080 Speaker 2: chase of what Ethan Harris really did. There was a 9 00:00:36,159 --> 00:00:40,400 Speaker 2: small shop that went under. It was called Lehman Brothers, 10 00:00:40,840 --> 00:00:43,520 Speaker 2: and he was one of a select few that provided 11 00:00:43,680 --> 00:00:48,599 Speaker 2: immense stability to Lehman Brothers in the debris. After that, 12 00:00:48,680 --> 00:00:52,159 Speaker 2: he migrated over to Bank of America marilynch where he's 13 00:00:52,159 --> 00:00:53,000 Speaker 2: been a force. 14 00:00:52,760 --> 00:00:56,840 Speaker 1: For decades and he's retiring. Here, I'm gonna cut to 15 00:00:56,920 --> 00:00:57,360 Speaker 1: the chase. 16 00:00:57,360 --> 00:01:00,520 Speaker 2: Its moynihanna aware of this because Brian comes out Bloomberg. 17 00:01:00,720 --> 00:01:02,200 Speaker 1: Well, I really think real. 18 00:01:02,080 --> 00:01:04,160 Speaker 2: GDP, he's going to do this, and he's looking at 19 00:01:04,280 --> 00:01:05,680 Speaker 2: down at Ethan Harris and stuff. 20 00:01:06,040 --> 00:01:08,560 Speaker 1: Moynihn allow this, Yeah, he's allowing it. 21 00:01:08,640 --> 00:01:10,720 Speaker 3: You know. One of the great things about our CEO 22 00:01:10,920 --> 00:01:13,800 Speaker 3: is that he does read our stuff and he really 23 00:01:13,920 --> 00:01:17,920 Speaker 3: cares about his research department. So I'm going to miss that. 24 00:01:17,959 --> 00:01:19,520 Speaker 3: I mean, one of the great things about working at 25 00:01:19,600 --> 00:01:22,319 Speaker 3: b of A is that the firm really cares about research. 26 00:01:22,760 --> 00:01:26,240 Speaker 1: I've been busting. He's selling this like it's just great. Brian. 27 00:01:26,360 --> 00:01:28,119 Speaker 1: You can't come out in front of the campus. Stay 28 00:01:28,160 --> 00:01:29,480 Speaker 1: over there, Brian. 29 00:01:29,840 --> 00:01:33,040 Speaker 2: What's important here is you wrote a magnificent book years ago, 30 00:01:33,080 --> 00:01:37,800 Speaker 2: Ben Bernanke's FED. That was a piercing book with your 31 00:01:37,800 --> 00:01:40,320 Speaker 2: experience at the FED about the dynamics of the FED. 32 00:01:40,720 --> 00:01:42,840 Speaker 2: What does Jerome Powell's FED look like? 33 00:01:43,280 --> 00:01:45,160 Speaker 1: Is you go to write your next book? 34 00:01:45,360 --> 00:01:47,680 Speaker 3: Yeah, so I am going to finally write that next 35 00:01:47,680 --> 00:01:50,600 Speaker 3: book you've been asking me about for fifteen years. 36 00:01:51,480 --> 00:01:51,720 Speaker 4: You know. 37 00:01:52,000 --> 00:01:54,919 Speaker 3: I think what we're going to see is a turning 38 00:01:54,960 --> 00:01:57,440 Speaker 3: back the clock. I think the experiment that the FED 39 00:01:57,520 --> 00:02:02,360 Speaker 3: did with this twenty twenty new framework didn't work, and 40 00:02:02,360 --> 00:02:03,880 Speaker 3: we're going to see a turning back of the clock 41 00:02:03,960 --> 00:02:06,320 Speaker 3: to something that looks more like a Ben Bernanke or 42 00:02:06,360 --> 00:02:10,040 Speaker 3: a Janet Yallen FED. I don't think it makes sense 43 00:02:10,080 --> 00:02:12,280 Speaker 3: for the FED to do what they did was which 44 00:02:12,320 --> 00:02:14,920 Speaker 3: is way to the last second, wait for inflation to 45 00:02:15,000 --> 00:02:18,919 Speaker 3: be really underway and then start to hike interest rates. 46 00:02:18,919 --> 00:02:22,360 Speaker 3: So I don't expect radical change, but rather kind of 47 00:02:22,400 --> 00:02:23,920 Speaker 3: just go back to the old model. 48 00:02:24,280 --> 00:02:25,240 Speaker 2: Well, the old model. 49 00:02:25,720 --> 00:02:28,320 Speaker 5: Is it the old model meaning ten years ago, or 50 00:02:28,320 --> 00:02:30,560 Speaker 5: is it the old model forty years ago which was 51 00:02:30,680 --> 00:02:32,800 Speaker 5: very different? And that's really the big debate we've been 52 00:02:32,840 --> 00:02:35,440 Speaker 5: hearing about. What's your view of how we're going to 53 00:02:35,480 --> 00:02:37,600 Speaker 5: look back at this moment in history. 54 00:02:37,919 --> 00:02:39,600 Speaker 6: Was it a sea change that. 55 00:02:39,600 --> 00:02:42,720 Speaker 5: Ushered in a new era of high inflation or was 56 00:02:42,760 --> 00:02:45,320 Speaker 5: it a pandemic and dous blip it's going to go 57 00:02:45,360 --> 00:02:46,880 Speaker 5: back to what we were seeing five years ago. 58 00:02:47,200 --> 00:02:50,000 Speaker 3: Well, I think the Fed is demonstrated that they learned 59 00:02:50,000 --> 00:02:53,280 Speaker 3: a lesson here. They started very late, and you'll hear 60 00:02:53,320 --> 00:02:56,040 Speaker 3: that from Bill Dudley later today. He was one of 61 00:02:56,040 --> 00:02:59,120 Speaker 3: the people arguing they should get moving and they start 62 00:02:59,160 --> 00:03:05,120 Speaker 3: too late. They did an incredibly aggressive catching up, and 63 00:03:05,160 --> 00:03:07,280 Speaker 3: that was a signal to me that they understood that 64 00:03:07,280 --> 00:03:09,560 Speaker 3: they'd made a mistake. Because you don't want to be 65 00:03:09,600 --> 00:03:13,200 Speaker 3: going seventy five basis points a meeting. It's very dangerous normally, 66 00:03:13,280 --> 00:03:16,720 Speaker 3: but if you're way behind the curve, you catch up, 67 00:03:16,800 --> 00:03:19,760 Speaker 3: So I don't agree with people who say they're going 68 00:03:19,800 --> 00:03:23,720 Speaker 3: to compromise on their inflation target. At his press conference, 69 00:03:23,919 --> 00:03:26,960 Speaker 3: he repeats over and over and over again every chance 70 00:03:27,000 --> 00:03:29,720 Speaker 3: he gets, he says, we're serious about hitting our two 71 00:03:29,760 --> 00:03:32,959 Speaker 3: percent inflation target. He's putting his credibility in the line. 72 00:03:33,040 --> 00:03:35,200 Speaker 3: He does not want to be Arthur Burns. He wants 73 00:03:35,320 --> 00:03:36,840 Speaker 3: to be Paul Vulker. 74 00:03:37,080 --> 00:03:39,640 Speaker 5: What have we learned though, about this aggressive tightening. You're 75 00:03:39,640 --> 00:03:41,720 Speaker 5: saying they don't want to do that. They did that, 76 00:03:42,560 --> 00:03:46,800 Speaker 5: nothing broke. You could argue, Okay, we saw some bank rumbles, 77 00:03:47,400 --> 00:03:50,800 Speaker 5: but right now we're looking at housing reaccelerating, seeming to 78 00:03:50,800 --> 00:03:53,480 Speaker 5: have already bottomed, and much of the economy before being 79 00:03:53,520 --> 00:03:55,080 Speaker 5: better than expected. What do you make of that? 80 00:03:55,200 --> 00:03:58,600 Speaker 3: Well, I think that they were up against some very 81 00:03:58,640 --> 00:04:00,960 Speaker 3: big tail winds in the I mean, you had all 82 00:04:01,000 --> 00:04:04,760 Speaker 3: that massive excess saving left over from the fiscal stimulus 83 00:04:04,800 --> 00:04:08,000 Speaker 3: during the crisis. You've had a pent up demand for 84 00:04:08,080 --> 00:04:11,600 Speaker 3: workers with all these job openings, and so the Fed 85 00:04:11,720 --> 00:04:14,320 Speaker 3: did achieve some weakening in parts of the economy that 86 00:04:14,320 --> 00:04:18,599 Speaker 3: are intrasensitive, but the consumer just refused to roll over. 87 00:04:18,839 --> 00:04:23,039 Speaker 3: You know, jobs were great, the savings were high, and 88 00:04:23,080 --> 00:04:25,920 Speaker 3: they could spend their savings. So I think it's delayed 89 00:04:26,080 --> 00:04:30,480 Speaker 3: the weakness, and we still think a mild recession, probably 90 00:04:30,600 --> 00:04:33,440 Speaker 3: early next year. But like a lot of other forecasters, 91 00:04:33,480 --> 00:04:37,000 Speaker 3: we've been forced to conceive that it's not here. It's 92 00:04:37,120 --> 00:04:39,920 Speaker 3: gonna take a while. I don't think it's the end 93 00:04:39,960 --> 00:04:43,440 Speaker 3: of the world. There's this hot hard landing soft landing debate. 94 00:04:44,200 --> 00:04:47,040 Speaker 3: Come on, if you're forecasting the unemployment rate going from 95 00:04:47,080 --> 00:04:49,320 Speaker 3: three and a half to four and a half, that's 96 00:04:49,320 --> 00:04:53,599 Speaker 3: not a hard landing. That's great, that's normal unemployment. So 97 00:04:54,200 --> 00:04:57,360 Speaker 3: it's the people I disagree with, the perfect landing crowd 98 00:04:57,400 --> 00:04:59,680 Speaker 3: that says, oh, you don't have to have any pain 99 00:04:59,720 --> 00:05:02,000 Speaker 3: at all. All that inflation is going to go away 100 00:05:02,000 --> 00:05:05,839 Speaker 3: on its own. No adjustment in the economy that I 101 00:05:05,920 --> 00:05:08,719 Speaker 3: disagree with. But it's going to be a soft landing, 102 00:05:08,880 --> 00:05:13,320 Speaker 3: either bumpy or a little more bumpy. But it's not 103 00:05:13,320 --> 00:05:15,360 Speaker 3: going to be a hard landing. 104 00:05:15,120 --> 00:05:18,240 Speaker 2: With our new data capture, with all the noise that's 105 00:05:18,320 --> 00:05:22,279 Speaker 2: out there, is there too much communication? We open the 106 00:05:22,320 --> 00:05:25,479 Speaker 2: show with a beautiful vignette one of our interns put 107 00:05:25,480 --> 00:05:28,039 Speaker 2: together of all these fed speakers speaking. 108 00:05:28,240 --> 00:05:29,480 Speaker 1: Is there too much communication? 109 00:05:29,800 --> 00:05:32,360 Speaker 3: Well, I mean that's the structure of the FED, right, 110 00:05:32,440 --> 00:05:36,400 Speaker 3: it's a very old FED. Well, when when Greenspan dominated, 111 00:05:36,520 --> 00:05:41,120 Speaker 3: he would he's suppressed the rest of the committee's openness, 112 00:05:41,120 --> 00:05:44,920 Speaker 3: and so that's changed under the new FED chairs. So 113 00:05:44,960 --> 00:05:46,760 Speaker 3: there's a lot of information coming out. 114 00:05:47,880 --> 00:05:48,400 Speaker 1: I think the. 115 00:05:50,200 --> 00:05:53,880 Speaker 3: Business reporters are a bit too hyped up about this 116 00:05:53,960 --> 00:05:57,279 Speaker 3: whole thing. They keep talking about hawks and doves and 117 00:05:57,279 --> 00:06:00,680 Speaker 3: all that hawks hawkish pulls. Yeah, well, look look at 118 00:06:00,680 --> 00:06:04,840 Speaker 3: the FED. There's been virtually no descents through a period 119 00:06:04,880 --> 00:06:08,880 Speaker 3: of way behind the curve, fastest titan history and now 120 00:06:09,000 --> 00:06:13,080 Speaker 3: data dependent. Nobody's dissenting, right. So the idea that you know, 121 00:06:13,160 --> 00:06:16,680 Speaker 3: you need to get all pumped up about what some 122 00:06:16,839 --> 00:06:18,840 Speaker 3: dove said or what some hawks said, I think is 123 00:06:18,960 --> 00:06:20,000 Speaker 3: way overdone. 124 00:06:20,440 --> 00:06:23,720 Speaker 2: You have been prodigious in building careers. I mean what 125 00:06:23,760 --> 00:06:25,720 Speaker 2: you did for Michelle Myers she went off to some 126 00:06:25,800 --> 00:06:28,839 Speaker 2: charge card company. I know what she was thinking. Moine 127 00:06:28,880 --> 00:06:31,640 Speaker 2: hands you have to recover from Michelle Meyer Levn. But 128 00:06:31,720 --> 00:06:35,000 Speaker 2: the bottom line is you built careers. You came out 129 00:06:35,000 --> 00:06:38,720 Speaker 2: of the Newtonian calculus at Clark University up in Massachuse. 130 00:06:38,800 --> 00:06:41,120 Speaker 2: It's the idea here of math matters is there's too 131 00:06:41,160 --> 00:06:43,120 Speaker 2: much math now in the game. 132 00:06:43,560 --> 00:06:47,159 Speaker 3: Well not in the part of the area I'm in. Right, 133 00:06:47,640 --> 00:06:50,200 Speaker 3: If you're a fed economist or a street economist and 134 00:06:50,240 --> 00:06:53,640 Speaker 3: you're trying to figure out the economy and policy, we 135 00:06:53,760 --> 00:06:58,200 Speaker 3: all understand that it's a lot of storytelling and historic 136 00:06:58,279 --> 00:07:01,719 Speaker 3: analogy that you don't want to get crazy about the modeling. 137 00:07:02,279 --> 00:07:06,280 Speaker 3: In academia, there is has been this drift into mathiness 138 00:07:06,320 --> 00:07:10,960 Speaker 3: where you impress people by the complexity of the model, 139 00:07:11,320 --> 00:07:13,800 Speaker 3: but it doesn't really work in the real world. So 140 00:07:14,160 --> 00:07:17,520 Speaker 3: there's become a split in economics profession between people are 141 00:07:17,600 --> 00:07:20,840 Speaker 3: practical economists and the ones that do the mathiness. 142 00:07:21,360 --> 00:07:24,080 Speaker 5: We're speaking with Ethan Harris of Bank of America Securities 143 00:07:24,200 --> 00:07:26,960 Speaker 5: after more than a decade at Bank of America, who 144 00:07:27,040 --> 00:07:30,160 Speaker 5: is retiring as of this Friday. I believe I believe 145 00:07:30,240 --> 00:07:34,600 Speaker 5: this is your last interview that has been scheduled, and 146 00:07:34,680 --> 00:07:37,800 Speaker 5: we appreciate you sharing it with us. I want to 147 00:07:37,920 --> 00:07:41,440 Speaker 5: pivot a little bit because we're talking about looking back 148 00:07:41,520 --> 00:07:44,280 Speaker 5: over a trajectory of a career and understanding where we are. 149 00:07:44,320 --> 00:07:45,280 Speaker 7: At this moment. 150 00:07:46,000 --> 00:07:48,520 Speaker 5: Do you think that in the future people coming into 151 00:07:48,520 --> 00:07:51,560 Speaker 5: this industry, we'll be working in an office to the 152 00:07:51,560 --> 00:07:53,280 Speaker 5: same degree, do you think that that will be one 153 00:07:53,280 --> 00:07:57,320 Speaker 5: of the big sea changes that persists over the next decades. 154 00:07:57,760 --> 00:08:01,280 Speaker 3: Well, I think it to some degree. Hybrid is the 155 00:08:01,320 --> 00:08:05,320 Speaker 3: new normal. I think there's a battle going on between 156 00:08:05,680 --> 00:08:08,920 Speaker 3: a corporate leadership and the and the staff about whether 157 00:08:09,000 --> 00:08:10,280 Speaker 3: that's really what they want to do. 158 00:08:10,440 --> 00:08:17,360 Speaker 2: Harris getting himself into Troubletdown's compliance is like, what's he saying, Yeah, so. 159 00:08:17,280 --> 00:08:21,920 Speaker 3: Maybe maybe today is my last day. But I'm not 160 00:08:21,920 --> 00:08:24,320 Speaker 3: talking about Bank of America. I'm talking about in general, 161 00:08:24,440 --> 00:08:27,280 Speaker 3: you know, And there's a trade off, right, So it's 162 00:08:27,360 --> 00:08:31,600 Speaker 3: definitely not good for developing new people to have everyone 163 00:08:31,680 --> 00:08:34,760 Speaker 3: sitting and their pajamas at home. That's not a good. 164 00:08:34,840 --> 00:08:36,600 Speaker 1: Maybe quote you on that exactly. 165 00:08:37,120 --> 00:08:39,400 Speaker 3: If they don't have their panamason then you're early trouble. 166 00:08:39,400 --> 00:08:43,880 Speaker 3: But anyways, so you don't want to be entirely at home. 167 00:08:44,320 --> 00:08:46,559 Speaker 3: On the other hand, in my case, I have a 168 00:08:46,600 --> 00:08:50,679 Speaker 3: crazy New York City suburb commute, and so for me, 169 00:08:50,760 --> 00:08:54,560 Speaker 3: I'm more productive if I'm working hybrid. So that's really 170 00:08:54,640 --> 00:08:58,760 Speaker 3: the debate. It's about, you know, what's the most productive model, 171 00:08:59,080 --> 00:09:01,360 Speaker 3: And I think in many industry's hybrid it's going to 172 00:09:01,480 --> 00:09:02,880 Speaker 3: end up being the thing. 173 00:09:02,760 --> 00:09:05,440 Speaker 5: A sensitive question as we talk about some of the 174 00:09:05,480 --> 00:09:09,880 Speaker 5: earnings of tech companies and artificial intelligence. Is chat gpt 175 00:09:10,080 --> 00:09:11,720 Speaker 5: going to be your new research assistant? 176 00:09:12,520 --> 00:09:12,720 Speaker 1: You know? 177 00:09:12,800 --> 00:09:15,440 Speaker 3: I tried it, and in fact, a friend of my 178 00:09:15,600 --> 00:09:17,960 Speaker 3: son tried it out, and he put my name in 179 00:09:18,000 --> 00:09:20,600 Speaker 3: there and started asking questions about me. Now I've got 180 00:09:20,640 --> 00:09:24,720 Speaker 3: a lot of visibility in the press and stuff. What 181 00:09:24,840 --> 00:09:29,040 Speaker 3: I found with chat the chat app is that at 182 00:09:29,080 --> 00:09:33,320 Speaker 3: first it gave very good answers. It found my bio 183 00:09:33,960 --> 00:09:36,760 Speaker 3: and wrote it up in better language than I did. 184 00:09:37,920 --> 00:09:41,360 Speaker 3: But then as my son's friend kept asking tougher questions, 185 00:09:41,679 --> 00:09:45,880 Speaker 3: it started returning nonsense. It started telling me that I'd 186 00:09:45,920 --> 00:09:51,240 Speaker 3: won some great prize in Japan for some Yeah, there's 187 00:09:51,280 --> 00:09:54,520 Speaker 3: something like it's like a peace prize or something in Japan. 188 00:09:54,640 --> 00:09:56,960 Speaker 3: And so if you pushed it and tried to get 189 00:09:56,960 --> 00:09:59,920 Speaker 3: it to get really interesting, it gave you junk. 190 00:10:00,520 --> 00:10:02,800 Speaker 1: I've got to ask you this, because it's the heritage. 191 00:10:03,160 --> 00:10:05,200 Speaker 1: Can you give all of our global. 192 00:10:04,880 --> 00:10:08,360 Speaker 2: Wall Street audience a vignette of what it was like, 193 00:10:08,600 --> 00:10:12,800 Speaker 2: not the final days of Lehman, but a week after Lehman, 194 00:10:13,120 --> 00:10:16,520 Speaker 2: a month after Lehman. Give us a window and how 195 00:10:16,600 --> 00:10:19,280 Speaker 2: you and others had the leadership there to pick up 196 00:10:19,280 --> 00:10:19,840 Speaker 2: the pieces. 197 00:10:20,080 --> 00:10:24,720 Speaker 3: Well, I mean everyone was in shell shock, and I 198 00:10:24,840 --> 00:10:30,960 Speaker 3: was lucky my team got picked up by Barclay's and 199 00:10:31,040 --> 00:10:36,480 Speaker 3: so we had a life raft to lifeboat to jump into. 200 00:10:37,920 --> 00:10:39,840 Speaker 3: But you know, you were kind of in this environment 201 00:10:39,880 --> 00:10:44,320 Speaker 3: where you had both these forced marriages going on in 202 00:10:44,360 --> 00:10:48,079 Speaker 3: Wall Street, which are never fun, at the same time 203 00:10:48,120 --> 00:10:52,679 Speaker 3: that you have this incredibly demanding and interesting and challenging 204 00:10:53,920 --> 00:10:58,640 Speaker 3: world you're trying to forecast where the economy is just collapsing. 205 00:11:00,280 --> 00:11:03,160 Speaker 3: It was an amazing time and you just had to 206 00:11:03,280 --> 00:11:06,680 Speaker 3: kind of, you know, lean on each other a bit. 207 00:11:06,720 --> 00:11:10,080 Speaker 2: I guess Ethan Harris thank you so much. With a 208 00:11:10,240 --> 00:11:11,440 Speaker 2: huge commitment to the show. 209 00:11:11,520 --> 00:11:25,240 Speaker 8: It's just been great research. 210 00:11:25,720 --> 00:11:28,160 Speaker 6: Francis, I just can't believe how transparency k just was 211 00:11:28,200 --> 00:11:29,520 Speaker 6: so for a legal issue. 212 00:11:29,600 --> 00:11:31,839 Speaker 9: Well, in the CFA curriculum they talk a lot about 213 00:11:31,880 --> 00:11:34,560 Speaker 9: transparency and they talk about how you shouldn't even give 214 00:11:34,600 --> 00:11:37,520 Speaker 9: the appearance of conflicts. So Tom looks like it's done 215 00:11:37,640 --> 00:11:38,480 Speaker 9: a great job there. 216 00:11:38,679 --> 00:11:41,000 Speaker 1: Yeah, But the other issue is letter in. 217 00:11:42,520 --> 00:11:45,959 Speaker 2: The major issue here is insider trading is not as 218 00:11:45,960 --> 00:11:48,680 Speaker 2: clear cut as the public thinks they get. 219 00:11:48,960 --> 00:11:51,960 Speaker 1: It can get really back and forth about who said what? 220 00:11:52,160 --> 00:11:55,280 Speaker 2: When I was stunned by the allegations, I would think 221 00:11:55,880 --> 00:11:57,360 Speaker 2: Francis Donald is with us. 222 00:11:57,440 --> 00:12:00,000 Speaker 1: All right now we say thank you. I thrilled your 223 00:12:00,120 --> 00:12:02,760 Speaker 1: here this morning. What are you writing about this weekend? 224 00:12:02,920 --> 00:12:06,440 Speaker 1: And why will see plus iplet's cheapless NX. What's the 225 00:12:06,559 --> 00:12:09,559 Speaker 1: dynamic there? Is it investment or is it the mystery 226 00:12:09,559 --> 00:12:10,760 Speaker 1: of this buoyant consumer? 227 00:12:11,240 --> 00:12:14,439 Speaker 9: You know, we are trying to stick to process even 228 00:12:14,520 --> 00:12:17,880 Speaker 9: as price moves against our base case, which is that, yes, 229 00:12:18,080 --> 00:12:21,600 Speaker 9: still all of our leading indicators and our economic model 230 00:12:21,640 --> 00:12:24,360 Speaker 9: suggests that the best base case scenario is indeed a 231 00:12:24,520 --> 00:12:26,280 Speaker 9: recession in Q four. 232 00:12:26,840 --> 00:12:27,679 Speaker 6: Now that's not. 233 00:12:27,720 --> 00:12:30,160 Speaker 9: Actually the game. The game is an asset manager is 234 00:12:30,200 --> 00:12:32,280 Speaker 9: not to say whether there's recession or a soft lanning, 235 00:12:32,280 --> 00:12:34,040 Speaker 9: but to get a sense as to what markets will 236 00:12:34,040 --> 00:12:36,800 Speaker 9: price in and out over the next three to six months. 237 00:12:36,840 --> 00:12:37,840 Speaker 8: So what we're. 238 00:12:37,600 --> 00:12:39,520 Speaker 9: Talking about is that in the next one to two 239 00:12:39,600 --> 00:12:42,559 Speaker 9: months we actually see economic data that will still give 240 00:12:42,559 --> 00:12:45,640 Speaker 9: the appearance of soft lanning. That's an opportunity to chase 241 00:12:45,679 --> 00:12:48,200 Speaker 9: some risk. But if you're looking further out, if you're 242 00:12:48,240 --> 00:12:50,520 Speaker 9: looking beyond the next three months, we still have to 243 00:12:50,559 --> 00:12:54,600 Speaker 9: maintain this call. It doesn't feel good as everyone moves 244 00:12:54,600 --> 00:12:56,800 Speaker 9: towards the soft lanning thesis. But when you stick to 245 00:12:56,840 --> 00:12:59,400 Speaker 9: the leading indicators, we have to say that is the 246 00:12:59,400 --> 00:12:59,960 Speaker 9: best base case. 247 00:13:00,240 --> 00:13:02,360 Speaker 5: What does it mean to lean into risk right now? 248 00:13:02,480 --> 00:13:04,640 Speaker 5: What are those areas well? 249 00:13:04,720 --> 00:13:07,240 Speaker 9: There is even as a macro strategist, as an economist, 250 00:13:07,320 --> 00:13:10,000 Speaker 9: I can say sometimes you need to participate in momentum 251 00:13:10,120 --> 00:13:11,000 Speaker 9: driven rallies. 252 00:13:11,320 --> 00:13:12,160 Speaker 6: This happens. 253 00:13:12,760 --> 00:13:16,160 Speaker 9: Macro is not always the primary investment driver. Again, that 254 00:13:16,280 --> 00:13:18,200 Speaker 9: is not the most comfortable thing to say as a 255 00:13:18,200 --> 00:13:21,360 Speaker 9: macro strategist, but an overlay and it matters much more 256 00:13:21,400 --> 00:13:24,240 Speaker 9: at inflection points. I do not believe right now we 257 00:13:24,280 --> 00:13:27,480 Speaker 9: are at an inflection point, even though today's a FED 258 00:13:27,520 --> 00:13:30,040 Speaker 9: meeting and it may feel that way. That inflection point 259 00:13:30,080 --> 00:13:32,200 Speaker 9: is to win. That recession will probably come back into 260 00:13:32,240 --> 00:13:34,679 Speaker 9: the story is probably three months from now. So if 261 00:13:34,720 --> 00:13:37,600 Speaker 9: you want to play off momentum, sentiment and technicals, now 262 00:13:37,679 --> 00:13:39,240 Speaker 9: is the time to shine if those are your strength. 263 00:13:39,320 --> 00:13:42,559 Speaker 2: Did somebody overnight push their recession call out to twenty 264 00:13:42,640 --> 00:13:43,160 Speaker 2: twenty five? 265 00:13:43,200 --> 00:13:45,080 Speaker 1: I want to say gold and sex, but I'm making it. 266 00:13:45,280 --> 00:13:46,160 Speaker 6: I didn't say that. 267 00:13:46,080 --> 00:13:52,280 Speaker 2: Somebody out there finding everybody's pushing it out, not nar Yeah, 268 00:13:52,440 --> 00:13:52,840 Speaker 2: I'm sure. 269 00:13:54,040 --> 00:13:56,680 Speaker 1: Fortunately, can you raise it to twenty twenty six? 270 00:13:56,960 --> 00:13:57,240 Speaker 2: Sure? 271 00:13:57,280 --> 00:13:59,480 Speaker 9: And I'm sure that if you asked any economists, they 272 00:13:59,480 --> 00:14:01,640 Speaker 9: would have some sort of recession in over the next 273 00:14:01,640 --> 00:14:05,240 Speaker 9: five years, because I don't believe that cycles are necessarily dead. 274 00:14:05,360 --> 00:14:07,679 Speaker 9: But it's a good question, and we ask ourselves all 275 00:14:07,760 --> 00:14:10,960 Speaker 9: the time, which is why hasn't the recession that everyone's 276 00:14:11,040 --> 00:14:14,480 Speaker 9: forecast materialized? It's probably because, and again, you know, you 277 00:14:14,559 --> 00:14:17,000 Speaker 9: have to look at what a standard economic model would 278 00:14:17,040 --> 00:14:19,840 Speaker 9: tell you. You also have to say what may be not 279 00:14:20,000 --> 00:14:23,000 Speaker 9: true about that model or what's different about this environment, 280 00:14:23,200 --> 00:14:25,200 Speaker 9: And a lot of strategists has said this time is 281 00:14:25,320 --> 00:14:28,080 Speaker 9: fundamentally different. My view is that, well, you can't throw 282 00:14:28,080 --> 00:14:30,200 Speaker 9: the baby out with the bathwater. There are elements of 283 00:14:30,240 --> 00:14:32,440 Speaker 9: this story that are going to be very different. This 284 00:14:32,480 --> 00:14:34,840 Speaker 9: recession that occurs later this year and into twenty twenty 285 00:14:34,920 --> 00:14:37,880 Speaker 9: four will look slightly different. Unemployment rate probably not going 286 00:14:37,880 --> 00:14:39,840 Speaker 9: to rise to the same extent, and you do have 287 00:14:39,880 --> 00:14:42,280 Speaker 9: to question why isn't it here yet? It's probably because 288 00:14:42,320 --> 00:14:45,040 Speaker 9: you have what we like to call cycle extenders in play, 289 00:14:45,160 --> 00:14:48,680 Speaker 9: things like labor shortages, excess savings. We're not talking, you 290 00:14:48,720 --> 00:14:50,480 Speaker 9: know, you don't need a PhD to figure it out that 291 00:14:50,480 --> 00:14:52,680 Speaker 9: there are things that are different about this story. But 292 00:14:52,840 --> 00:14:56,080 Speaker 9: negating all of history, negating all of the power of 293 00:14:56,160 --> 00:14:59,120 Speaker 9: leading indicators, to me, is not prudent in this environment. 294 00:14:59,200 --> 00:15:02,760 Speaker 6: So Geremeny has session, Yes, Europe still has an inflation problem. 295 00:15:03,080 --> 00:15:06,000 Speaker 6: As you anticipate that growth downturn in the United States, 296 00:15:06,080 --> 00:15:08,160 Speaker 6: do you also envision that maybe we have a sticky 297 00:15:08,160 --> 00:15:09,920 Speaker 6: inflation problem too simultaneously? 298 00:15:10,000 --> 00:15:12,920 Speaker 9: Yeah, absolutely, And this is actually what concerns me more. 299 00:15:12,960 --> 00:15:16,680 Speaker 9: We spend so much time talking about recession or soft landing. 300 00:15:16,880 --> 00:15:19,080 Speaker 9: There are a heck of a lot of environments in 301 00:15:19,120 --> 00:15:22,840 Speaker 9: between those two things. And frankly, if I'm an asset manager, 302 00:15:22,920 --> 00:15:24,880 Speaker 9: which i am, and trying to figure out how to 303 00:15:24,920 --> 00:15:28,400 Speaker 9: invest over the next five years, a classic recession rebound, 304 00:15:28,640 --> 00:15:30,800 Speaker 9: we have a playbook for that. You can do well 305 00:15:30,800 --> 00:15:33,120 Speaker 9: in that type of environment. What concerns me more, what 306 00:15:33,160 --> 00:15:35,560 Speaker 9: we don't have the playbooks for is what Europe is 307 00:15:35,600 --> 00:15:40,600 Speaker 9: experiencing now, sticky high inflation with no growth. One thing 308 00:15:40,640 --> 00:15:42,960 Speaker 9: I'm worried about is actually this concept of the soft 309 00:15:43,040 --> 00:15:47,000 Speaker 9: landing being green light being the most bullish outcome. I'm 310 00:15:47,040 --> 00:15:49,440 Speaker 9: not sure that a soft landing is as bullish as 311 00:15:49,480 --> 00:15:51,040 Speaker 9: everybody makes it out to be. 312 00:15:51,040 --> 00:15:52,080 Speaker 6: Because we have four. 313 00:15:51,920 --> 00:15:54,000 Speaker 9: Cuts priced in for next year, and if we don't 314 00:15:54,040 --> 00:15:56,480 Speaker 9: get those, because the economy is all clear, we have 315 00:15:56,520 --> 00:15:59,200 Speaker 9: a rerating to be made in a variety of risk assets. 316 00:15:59,360 --> 00:16:02,120 Speaker 9: I'm not sure that we've really thought through what does 317 00:16:02,200 --> 00:16:05,160 Speaker 9: soft landing need for equity markets. It's not as bullish 318 00:16:05,160 --> 00:16:05,800 Speaker 9: as it may appear. 319 00:16:05,960 --> 00:16:08,320 Speaker 5: How much do you think it's a bear market trap 320 00:16:08,400 --> 00:16:11,680 Speaker 5: almost to lure people back to the sixty forty ahead 321 00:16:11,720 --> 00:16:14,600 Speaker 5: of what you just explained in terms of the vulnerabilities 322 00:16:14,920 --> 00:16:18,920 Speaker 5: in that type of maybe soft landing, but high inflation, 323 00:16:19,080 --> 00:16:20,560 Speaker 5: no growth kind of a circumstances. 324 00:16:20,640 --> 00:16:23,280 Speaker 9: Well, again, it really depends on your timeline. If you're 325 00:16:23,400 --> 00:16:26,120 Speaker 9: operating on a one to two month timeline, it's not 326 00:16:26,160 --> 00:16:29,480 Speaker 9: a trap. It's an opportunity in order to really leverage 327 00:16:29,480 --> 00:16:32,560 Speaker 9: what we'll probably see is some cyclicality, some cyclical bounds, 328 00:16:32,600 --> 00:16:35,160 Speaker 9: and things like manufacturing data. But if you're a longer 329 00:16:35,240 --> 00:16:38,600 Speaker 9: term investor, absolutely you should be looking at these bullish 330 00:16:38,680 --> 00:16:41,120 Speaker 9: runs as opportunities to add back to quality and maybe 331 00:16:41,200 --> 00:16:43,600 Speaker 9: reduce your risk. I think it's also going to call 332 00:16:43,600 --> 00:16:45,840 Speaker 9: into play why there's a lot more focus on alternative 333 00:16:45,880 --> 00:16:49,560 Speaker 9: assets and private assets, because in this type of environment, 334 00:16:49,640 --> 00:16:53,040 Speaker 9: one that John is describing as slower growth for sessions 335 00:16:53,040 --> 00:16:54,960 Speaker 9: with sticky hin inflation, we're going to be looking for 336 00:16:55,000 --> 00:16:57,960 Speaker 9: asset classes that really reduce that volatility and are less 337 00:16:57,960 --> 00:17:00,200 Speaker 9: correlated with the sixty forty As for. 338 00:17:00,160 --> 00:17:03,360 Speaker 2: A friend, is the meeting, this afternoon is the press conference? 339 00:17:03,360 --> 00:17:04,880 Speaker 1: This afternoon is snoozefest. 340 00:17:05,760 --> 00:17:07,840 Speaker 9: I hope for Marcus that it is, and I would expect 341 00:17:07,840 --> 00:17:10,560 Speaker 9: that Chair Powell also hopes that it's a smooth what 342 00:17:10,640 --> 00:17:14,280 Speaker 9: you produce. I don't believe there is anything that Chair 343 00:17:14,320 --> 00:17:17,720 Speaker 9: Powell could say today that would convince the market to 344 00:17:17,880 --> 00:17:21,080 Speaker 9: take out rate cuts from next year. And that's because 345 00:17:21,240 --> 00:17:25,000 Speaker 9: just about everybody recognizes that the Fed does not have 346 00:17:25,040 --> 00:17:28,240 Speaker 9: the luxury of pivoting. What's happened since the last meeting. 347 00:17:28,280 --> 00:17:32,040 Speaker 9: We've got ad prices surging, inflation expectations in the longer 348 00:17:32,200 --> 00:17:33,960 Speaker 9: end of the curve are up quite a bit, and 349 00:17:34,040 --> 00:17:37,720 Speaker 9: financial conditions are easing. He has no choice. He cannot 350 00:17:37,800 --> 00:17:40,000 Speaker 9: go dubbish. If he does, it'll be a little bit 351 00:17:40,040 --> 00:17:42,640 Speaker 9: of an accident. So this is a market that's probably 352 00:17:42,640 --> 00:17:44,399 Speaker 9: going to start putting a little less weight on what 353 00:17:44,400 --> 00:17:46,720 Speaker 9: the Fed says and more on what twenty twenty four 354 00:17:46,800 --> 00:17:47,359 Speaker 9: is going to look like. 355 00:17:47,440 --> 00:17:49,840 Speaker 6: How do you think he manages what is increasingly looking 356 00:17:49,920 --> 00:17:52,560 Speaker 6: like a broken consensus on the FMCA. 357 00:17:52,600 --> 00:17:54,560 Speaker 9: Well, that's a tough one, probably like a lot of 358 00:17:54,600 --> 00:17:57,240 Speaker 9: strategists are doing, which is coming out with a base 359 00:17:57,320 --> 00:18:00,399 Speaker 9: case and then thinking through all the other scenarios behind 360 00:18:00,440 --> 00:18:03,040 Speaker 9: the scenes. Goldman does a good job about talking about 361 00:18:03,080 --> 00:18:06,639 Speaker 9: a base case and then a probability weighted base case, 362 00:18:07,200 --> 00:18:09,280 Speaker 9: and so the FED can start talking a little bit 363 00:18:09,320 --> 00:18:11,760 Speaker 9: more about scenarios. But it comes back to the issue 364 00:18:11,760 --> 00:18:14,640 Speaker 9: that the FED has to control inflation expectations. I think 365 00:18:14,680 --> 00:18:16,640 Speaker 9: this is a big theme for the next five years 366 00:18:16,840 --> 00:18:18,680 Speaker 9: that central banks will have to have a moment where 367 00:18:18,680 --> 00:18:21,760 Speaker 9: they admit, we don't know what's always going on, and secondly, 368 00:18:21,840 --> 00:18:25,280 Speaker 9: we can't combat all elements of inflation. That's going to 369 00:18:25,280 --> 00:18:28,480 Speaker 9: be the story for how markets trade around central banks 370 00:18:28,520 --> 00:18:30,040 Speaker 9: over the secular theme. 371 00:18:30,160 --> 00:18:32,520 Speaker 6: Francis, this was awesome coming to studium more often. 372 00:18:32,560 --> 00:18:32,920 Speaker 4: I'd love to. 373 00:18:33,040 --> 00:18:35,480 Speaker 6: I love it, Francis Donald of Manueline. 374 00:18:38,800 --> 00:18:40,359 Speaker 2: Right now in the bond gent I'm going to bounce 375 00:18:40,359 --> 00:18:42,560 Speaker 2: it back to you here because Kathy Jones is with us. 376 00:18:42,560 --> 00:18:46,040 Speaker 2: She's Chief Fixed income strategist at Charles Schwab, and I 377 00:18:46,040 --> 00:18:48,680 Speaker 2: think this is under play, John. There's been real stasis here, 378 00:18:48,760 --> 00:18:52,439 Speaker 2: the real yield stasis, ten year old stasis. All my 379 00:18:52,560 --> 00:18:55,040 Speaker 2: radars up in the boondom market because it's boring. 380 00:18:54,800 --> 00:18:56,840 Speaker 6: Right now, Kathy, let's get to it. Will it be boring? 381 00:18:56,920 --> 00:18:58,200 Speaker 6: Get to thirty Eastern time? 382 00:18:58,520 --> 00:19:01,080 Speaker 10: Oh, I'm sure we'll get some excited, you know, you 383 00:19:01,119 --> 00:19:05,920 Speaker 10: always do. But as you said, that's widely anticipated that 384 00:19:05,920 --> 00:19:08,760 Speaker 10: it's going to hike. And then what's forward guidance going 385 00:19:08,800 --> 00:19:13,240 Speaker 10: to be? And I think the expectation is they'll sound hawkish, 386 00:19:13,320 --> 00:19:16,400 Speaker 10: but they may indicate a pause. How does that get 387 00:19:16,440 --> 00:19:19,320 Speaker 10: parsed out in the Q and A session? What does 388 00:19:19,359 --> 00:19:22,440 Speaker 10: Paul kind of communicate here? Will we get a dissenting 389 00:19:22,720 --> 00:19:26,040 Speaker 10: vote possibly, or at least a hint that a handful 390 00:19:26,119 --> 00:19:29,240 Speaker 10: of Fed officials are not on board with more rate hikes. 391 00:19:29,840 --> 00:19:31,639 Speaker 10: That could communicate a lot to the market. 392 00:19:31,680 --> 00:19:33,680 Speaker 6: We've spoken to a couple of people this morning who 393 00:19:33,680 --> 00:19:36,880 Speaker 6: think the inflation reaccelerates later this year. I just wonder 394 00:19:36,920 --> 00:19:38,440 Speaker 6: if that's in your base case and what it would 395 00:19:38,440 --> 00:19:41,280 Speaker 6: mean for a yield curve right now that's already deeply inverted. 396 00:19:41,680 --> 00:19:45,359 Speaker 10: Yeah, we don't have a really acceleration and inflation built in. 397 00:19:45,760 --> 00:19:48,639 Speaker 10: There's a lot of disinflation in the pipeline that is 398 00:19:48,680 --> 00:19:52,119 Speaker 10: still flowing through, especially when you look at wholesale goods prices, 399 00:19:52,560 --> 00:19:56,040 Speaker 10: and we're not seeing that huge amount of pressure on 400 00:19:56,080 --> 00:20:00,000 Speaker 10: the inflation side. Of course, you have oil, which is 401 00:20:00,080 --> 00:20:02,119 Speaker 10: it is going to be there, but ex food and energy, 402 00:20:02,840 --> 00:20:05,399 Speaker 10: it doesn't look like we're seeing a reacceleration at this 403 00:20:05,480 --> 00:20:09,520 Speaker 10: stage of the game. Growth is still substandard. It's been 404 00:20:09,840 --> 00:20:13,200 Speaker 10: five quarters of one and a half percent GDP growth. 405 00:20:13,200 --> 00:20:16,400 Speaker 10: It's really hard, I think, to push the inflation narrative 406 00:20:16,440 --> 00:20:16,920 Speaker 10: from there. 407 00:20:17,440 --> 00:20:20,000 Speaker 5: Would it be bad if J. Powell came out and said, 408 00:20:20,000 --> 00:20:22,159 Speaker 5: we have no clue, we don't know where this is going. 409 00:20:22,640 --> 00:20:25,400 Speaker 5: We're going to pause. Raphael Bostik is going to dissent, 410 00:20:25,520 --> 00:20:28,040 Speaker 5: because he probably will, because he's been the lone dove 411 00:20:28,080 --> 00:20:29,439 Speaker 5: out there that's been pretty vocal. 412 00:20:29,960 --> 00:20:31,159 Speaker 1: All of us aren't sure. 413 00:20:31,520 --> 00:20:32,600 Speaker 5: Here's what we're watching. 414 00:20:32,920 --> 00:20:33,640 Speaker 10: Call it a day. 415 00:20:33,840 --> 00:20:35,080 Speaker 5: Why can't he just do that? 416 00:20:36,240 --> 00:20:38,520 Speaker 10: I sort of wish he would to tell you the truth, 417 00:20:38,880 --> 00:20:41,320 Speaker 10: but I think the Fed has to. They have forecasts, 418 00:20:41,320 --> 00:20:44,520 Speaker 10: they have to communicate some sort of confidence about going forward. 419 00:20:44,960 --> 00:20:46,960 Speaker 10: But you know, the truth is they don't know. They 420 00:20:47,000 --> 00:20:49,560 Speaker 10: never know. Nobody really knows what's going to happen in 421 00:20:49,600 --> 00:20:52,679 Speaker 10: the next few quarters. They can only follow the indicators 422 00:20:52,680 --> 00:20:54,879 Speaker 10: and the trends. And we have, as Tom mentioned, very 423 00:20:54,960 --> 00:20:58,720 Speaker 10: high real rates. We have tightening credit at the banks 424 00:20:58,760 --> 00:21:01,080 Speaker 10: a lot, and we'll get the senior loan officers I 425 00:21:01,119 --> 00:21:04,680 Speaker 10: think pretty soon. I would imagine the Fed has done 426 00:21:04,680 --> 00:21:06,840 Speaker 10: some work on what's going on behind the scenes at 427 00:21:06,840 --> 00:21:09,840 Speaker 10: the banks. I'm not waiting for the quarterly report to 428 00:21:09,880 --> 00:21:12,119 Speaker 10: come out, so they may have a feel for just 429 00:21:12,160 --> 00:21:15,080 Speaker 10: how tight credit is getting. So those are all going 430 00:21:15,119 --> 00:21:18,080 Speaker 10: to go into the equation and then QT continues. We've 431 00:21:18,119 --> 00:21:21,560 Speaker 10: still got that going on in the background, so tightening 432 00:21:21,680 --> 00:21:24,960 Speaker 10: is still happening even if they pause, and I think 433 00:21:25,000 --> 00:21:29,040 Speaker 10: that that may be part of the message that comes out. 434 00:21:28,800 --> 00:21:31,399 Speaker 5: And one aspect of this. And we're seeing this in 435 00:21:31,480 --> 00:21:33,320 Speaker 5: terms of two year yields going up as high as 436 00:21:33,359 --> 00:21:36,200 Speaker 5: they have, higher than the previous meeting, even as ris 437 00:21:36,200 --> 00:21:40,919 Speaker 5: askids continue to rally. Can they with conviction say they 438 00:21:40,920 --> 00:21:43,399 Speaker 5: are not going to hike next year and really push 439 00:21:43,440 --> 00:21:46,560 Speaker 5: against people who are saying, well, it might be a recession. 440 00:21:46,760 --> 00:21:48,960 Speaker 5: Could they give some indication of how high the bar 441 00:21:49,240 --> 00:21:50,840 Speaker 5: is for them to really ease. 442 00:21:52,080 --> 00:21:52,320 Speaker 2: Well. 443 00:21:52,400 --> 00:21:55,840 Speaker 10: Paul, I think it was last November, outlined four things 444 00:21:55,920 --> 00:21:58,760 Speaker 10: that he was watching for a pivot for a change 445 00:21:58,800 --> 00:22:02,080 Speaker 10: in rates, and when was this disinflation from the wholesale 446 00:22:02,160 --> 00:22:05,720 Speaker 10: markets to retail pricing. You could sort of say, yeah, 447 00:22:05,800 --> 00:22:11,200 Speaker 10: that's happened. He's talked about a sub trend GDP growth 448 00:22:11,200 --> 00:22:14,480 Speaker 10: for a number of quarters. Would argue we've probably had 449 00:22:14,520 --> 00:22:18,119 Speaker 10: that over the last year or so. He talked about, 450 00:22:18,640 --> 00:22:21,400 Speaker 10: you know, slow down in housing prices, and we're starting 451 00:22:21,440 --> 00:22:23,639 Speaker 10: to see that, but it hasn't flown a kind of 452 00:22:23,680 --> 00:22:26,119 Speaker 10: flowed through to the data. And then I think that 453 00:22:26,240 --> 00:22:29,240 Speaker 10: there's the wage data, and so we have to wait 454 00:22:29,280 --> 00:22:31,760 Speaker 10: for that. So I think they could outline the criteria 455 00:22:32,680 --> 00:22:34,439 Speaker 10: and then say this is what we're watching. I think 456 00:22:34,440 --> 00:22:37,680 Speaker 10: they've kind of outlined it in general over the last 457 00:22:37,720 --> 00:22:40,040 Speaker 10: year or two. But we're waiting to see all of 458 00:22:40,080 --> 00:22:42,760 Speaker 10: the boxes get checked. We're waiting to see everything kicking. 459 00:22:42,800 --> 00:22:45,120 Speaker 10: And I would argue that, you know, the labor data 460 00:22:45,160 --> 00:22:46,840 Speaker 10: is probably the final one. 461 00:22:46,920 --> 00:22:49,280 Speaker 2: Let's go from sixty thousand feet down to six feet. 462 00:22:49,320 --> 00:22:51,600 Speaker 2: I'm over a kitchen table this weekend I'm still not 463 00:22:51,680 --> 00:22:54,440 Speaker 2: recovered from the bond tobaccle of eighteen months ago. 464 00:22:54,880 --> 00:22:57,080 Speaker 1: I thought bonds were always supposed to go up. 465 00:22:57,160 --> 00:23:02,200 Speaker 2: What is the retail recommendation in to participate in fixed 466 00:23:02,240 --> 00:23:04,000 Speaker 2: income out to twenty twenty six? 467 00:23:04,600 --> 00:23:07,760 Speaker 10: So we like extending duration, either with a barbell or 468 00:23:08,200 --> 00:23:08,560 Speaker 10: say a. 469 00:23:08,520 --> 00:23:11,040 Speaker 8: Ladder ladder out is appropriate? 470 00:23:11,240 --> 00:23:13,359 Speaker 10: Yeah, yeah, laddering is fine because it takes you out 471 00:23:13,400 --> 00:23:14,359 Speaker 10: of the game. 472 00:23:14,440 --> 00:23:16,680 Speaker 2: Give us a duration gap and that a maturity gap 473 00:23:16,720 --> 00:23:17,680 Speaker 2: on how you ladder up? 474 00:23:17,800 --> 00:23:20,320 Speaker 10: Yeah, we like the a one to seven year right now, 475 00:23:20,440 --> 00:23:21,919 Speaker 10: but it depends. If you're in the UNI market, you 476 00:23:21,960 --> 00:23:23,800 Speaker 10: might want to go a little further out because. 477 00:23:23,560 --> 00:23:26,240 Speaker 2: They thirty years or the Austrian piece. 478 00:23:26,440 --> 00:23:27,920 Speaker 10: No, no, Austrian pieces. 479 00:23:28,119 --> 00:23:28,760 Speaker 1: That's what I did. 480 00:23:30,119 --> 00:23:32,560 Speaker 2: This is a really important lesson, John, You ladder out 481 00:23:32,720 --> 00:23:36,280 Speaker 2: with someone an adult like this and retails ladder out? 482 00:23:36,600 --> 00:23:38,720 Speaker 2: Should we go ten years or twenty years because they're 483 00:23:38,760 --> 00:23:40,359 Speaker 2: yild hogs and they want to pick up yield? 484 00:23:40,800 --> 00:23:43,920 Speaker 1: Miss Jones? Is laddering one to seven? That's a massive 485 00:23:44,000 --> 00:23:44,720 Speaker 1: lesson right there. 486 00:23:44,760 --> 00:23:45,960 Speaker 6: How's that sentry bund doing? 487 00:23:46,400 --> 00:23:48,200 Speaker 1: It's you know, it's just. 488 00:23:50,160 --> 00:23:55,440 Speaker 5: It's gonna say, it's just you know, it's a nice. 489 00:23:55,480 --> 00:23:57,720 Speaker 6: You know at the time when all that stuff was 490 00:23:57,760 --> 00:24:00,480 Speaker 6: being issued, when Argentina came to the mind, it was 491 00:24:00,480 --> 00:24:03,560 Speaker 6: one of those moments where everyone knew. Everyone knew it 492 00:24:03,600 --> 00:24:05,720 Speaker 6: wasn't like you had that contrarian thought, well, this is 493 00:24:05,760 --> 00:24:08,520 Speaker 6: a bubble, this is bad. Like everyone knew it was. 494 00:24:08,760 --> 00:24:11,560 Speaker 6: They also knew that negative yields was deeply unsustainable. They 495 00:24:11,640 --> 00:24:14,560 Speaker 6: just got more negative and persisted for a long time. 496 00:24:14,640 --> 00:24:14,960 Speaker 1: Lisa. 497 00:24:15,119 --> 00:24:17,240 Speaker 5: This is when you know something's truly a bubble, when 498 00:24:17,280 --> 00:24:19,640 Speaker 5: people say maybe it's a bubble that can just exist 499 00:24:19,760 --> 00:24:23,320 Speaker 5: in perpetuity. Giants have a new place where it's really 500 00:24:23,359 --> 00:24:28,240 Speaker 5: capital appreciation and or the price appreciation, not the actual coupon, 501 00:24:28,480 --> 00:24:29,160 Speaker 5: which is nothing. 502 00:24:29,440 --> 00:24:31,080 Speaker 6: Yeah, we were going to the bond market for capital 503 00:24:31,119 --> 00:24:35,120 Speaker 6: returns and a monster bond market rally that yields are negative. Great, 504 00:24:35,160 --> 00:24:39,119 Speaker 6: but there'll be more negative and price. That was the story, 505 00:24:39,200 --> 00:24:41,040 Speaker 6: like the last ten years, Tom. 506 00:24:40,960 --> 00:24:43,280 Speaker 1: I mean, I mean it is, I mean the whole 507 00:24:43,320 --> 00:24:44,840 Speaker 1: last ten years, last sixteen years. 508 00:24:45,040 --> 00:24:47,480 Speaker 6: Kathy Jones, thank you. It's going to see you, Kathy 509 00:24:47,560 --> 00:25:00,159 Speaker 6: Jhons are charged for up there. It denis alongside this 510 00:25:00,440 --> 00:25:01,840 Speaker 6: morning and good morning, Dat. 511 00:25:02,000 --> 00:25:03,720 Speaker 1: I's going to see it. 512 00:25:03,840 --> 00:25:04,960 Speaker 6: I thought you were going to say, at the corner 513 00:25:04,960 --> 00:25:06,959 Speaker 6: of my eye saw this fluorescent jacket, and that's when 514 00:25:06,960 --> 00:25:09,480 Speaker 6: I met Dan Ives. Dan, I always reflect on this 515 00:25:09,600 --> 00:25:11,960 Speaker 6: video and you've heard this story before, forgive me, but 516 00:25:12,080 --> 00:25:14,320 Speaker 6: you remember the clip from sixty Minutes in the late nineties, 517 00:25:14,320 --> 00:25:16,479 Speaker 6: and there's this very sort of smug journalist asking an 518 00:25:16,480 --> 00:25:19,720 Speaker 6: analyst about Amazon being bigger than Sears and saying bigger 519 00:25:19,760 --> 00:25:22,080 Speaker 6: than Sears, And you look back on it thirty years later, 520 00:25:22,160 --> 00:25:25,480 Speaker 6: twenty five years later, and it sounds ridiculous. So in 521 00:25:25,560 --> 00:25:28,160 Speaker 6: moments like these, are trying to be maybe a little 522 00:25:28,160 --> 00:25:30,760 Speaker 6: bit modest about what I don't know, and try and 523 00:25:30,800 --> 00:25:33,320 Speaker 6: be a little bit you know, humidity is the word, 524 00:25:33,359 --> 00:25:36,000 Speaker 6: maybe Ramo, just you know, try and have some humility 525 00:25:36,040 --> 00:25:38,840 Speaker 6: about this AI moment. Dan, do you think we need 526 00:25:38,880 --> 00:25:40,919 Speaker 6: a bigger dose of humility about how big this could be? 527 00:25:41,600 --> 00:25:43,640 Speaker 7: I mean, I think it's even going to be bigger 528 00:25:43,640 --> 00:25:46,159 Speaker 7: than the street is even anticipating. And I think what 529 00:25:46,200 --> 00:25:50,520 Speaker 7: we saw from Microsoft and Google just further confirms what 530 00:25:50,560 --> 00:25:53,040 Speaker 7: we saw from in video. I mean, the used cases 531 00:25:53,400 --> 00:25:57,199 Speaker 7: are exploding across the board. And if I look at 532 00:25:57,200 --> 00:26:00,520 Speaker 7: this as a nineteen ninety five moment, biggest trend information 533 00:26:00,760 --> 00:26:03,240 Speaker 7: that we've seen in tech in thirty years, and I 534 00:26:03,280 --> 00:26:06,640 Speaker 7: think that's why this is just what's going to lead 535 00:26:06,960 --> 00:26:09,600 Speaker 7: Obviously spite fed and MACA, it's the star of a 536 00:26:09,680 --> 00:26:11,240 Speaker 7: new tech bull market in my opinion. 537 00:26:11,640 --> 00:26:13,840 Speaker 5: There is the nuance though, when people start to dig 538 00:26:13,880 --> 00:26:16,639 Speaker 5: into what does AI mean in which areas are the 539 00:26:16,680 --> 00:26:19,359 Speaker 5: investable and most lucrative areas. Is it going to be 540 00:26:19,440 --> 00:26:22,200 Speaker 5: generative AI where basically you can go to any retailer, 541 00:26:22,640 --> 00:26:25,600 Speaker 5: put your avatar and try on clothes and then order things, 542 00:26:25,720 --> 00:26:27,800 Speaker 5: or is it something else? What are you looking for 543 00:26:27,920 --> 00:26:29,840 Speaker 5: to determine who the winners are going to be? 544 00:26:30,040 --> 00:26:30,240 Speaker 4: Yeah? 545 00:26:30,280 --> 00:26:32,720 Speaker 7: Well right now New York City cab driven is the 546 00:26:32,760 --> 00:26:35,800 Speaker 7: first derivative nvidiam Microsoft, and I think that's been proven 547 00:26:35,840 --> 00:26:38,760 Speaker 7: again again top of the mountain. Now it's all about 548 00:26:38,800 --> 00:26:41,919 Speaker 7: who's second, third, fourth derivative. It's really software and chips. 549 00:26:42,000 --> 00:26:46,200 Speaker 7: When I look at names like Salesforce, dot Com, Mango, dB, 550 00:26:46,960 --> 00:26:49,560 Speaker 7: you look at Snowflake, I think that's really just tip 551 00:26:49,560 --> 00:26:53,440 Speaker 7: of the iceberg. I think others across the chip ecosystem 552 00:26:53,640 --> 00:26:55,280 Speaker 7: and what we're really starting to see now it's all 553 00:26:55,280 --> 00:26:59,600 Speaker 7: about use cases. That that's why right now, investors they're 554 00:26:59,640 --> 00:27:02,040 Speaker 7: just looking. If you look at UH, it's expensive on 555 00:27:02,080 --> 00:27:05,520 Speaker 7: next year's number, it's really looking out two, three, four years. 556 00:27:05,800 --> 00:27:08,000 Speaker 7: I believe this from everything we're hearing. It could be 557 00:27:08,080 --> 00:27:10,720 Speaker 7: eight to ten percent of budgets next year for it 558 00:27:11,160 --> 00:27:12,560 Speaker 7: from less than one percent today. 559 00:27:12,680 --> 00:27:14,320 Speaker 5: So if you take a look at the price action 560 00:27:14,440 --> 00:27:18,280 Speaker 5: today with Microsoft shares lower because they didn't necessarily deliver 561 00:27:18,560 --> 00:27:21,520 Speaker 5: on the profitability of AI yet they can't. They're investing 562 00:27:21,560 --> 00:27:25,000 Speaker 5: still and they're not delivering as fast of some sort 563 00:27:25,040 --> 00:27:28,080 Speaker 5: of investment on the cloud space. What would you say 564 00:27:28,119 --> 00:27:30,720 Speaker 5: to investors in terms of how they should look at 565 00:27:30,760 --> 00:27:32,760 Speaker 5: this valuation, how they should look at some of the 566 00:27:32,880 --> 00:27:36,720 Speaker 5: rejiggering of the top executives and put a price target 567 00:27:36,760 --> 00:27:36,919 Speaker 5: on that. 568 00:27:37,160 --> 00:27:39,640 Speaker 7: Yeah, it's a great and that was all my conversations 569 00:27:39,720 --> 00:27:43,760 Speaker 7: last night and even earlier this morning with institutional investors. Look, Nadella, 570 00:27:43,920 --> 00:27:46,119 Speaker 7: the tactician, the hall of famer. I mean, this is 571 00:27:46,200 --> 00:27:49,160 Speaker 7: just getting the popcorn out ready for what I view 572 00:27:49,200 --> 00:27:53,480 Speaker 7: as actually an accelerating growth story. They're not gonna they're 573 00:27:53,720 --> 00:27:57,760 Speaker 7: not cook style, gonna give their playbook away. They're going 574 00:27:57,800 --> 00:28:00,320 Speaker 7: to keep this conservative and I view, which is the 575 00:28:00,359 --> 00:28:03,360 Speaker 7: sandbag special as they continue to just beat numbers over 576 00:28:03,400 --> 00:28:06,720 Speaker 7: the next few course, which is why I believe Microsoft 577 00:28:06,800 --> 00:28:09,600 Speaker 7: a year from now it's gonna join Apple in that 578 00:28:09,720 --> 00:28:12,760 Speaker 7: three trillion dollar I think more three point five trillion. 579 00:28:12,840 --> 00:28:14,639 Speaker 1: What I see in the year George Hammond Wrights in 580 00:28:14,680 --> 00:28:16,600 Speaker 1: the Ft today about the AI crew. 581 00:28:16,600 --> 00:28:22,280 Speaker 2: He's got anthropic Google, Microsoft and open AI. Okay, I 582 00:28:22,280 --> 00:28:25,359 Speaker 2: guess that's the new industry organization around this. 583 00:28:25,920 --> 00:28:27,240 Speaker 1: The ludites are going to show up. 584 00:28:27,240 --> 00:28:29,639 Speaker 2: We're gonna do a nineteenth century redux here of the 585 00:28:29,720 --> 00:28:33,560 Speaker 2: damage of AI. How do these giant companies with a 586 00:28:33,600 --> 00:28:37,240 Speaker 2: profitability they have handled the twenty first century ludites? 587 00:28:37,480 --> 00:28:39,800 Speaker 7: Look, I think stronger. You're gonna get stronger. There'll be 588 00:28:39,880 --> 00:28:43,120 Speaker 7: some self regulation, but ultimately, if you look from a 589 00:28:43,200 --> 00:28:46,760 Speaker 7: regulatory perspective, they're going twenty miles an hour in the 590 00:28:46,840 --> 00:28:49,760 Speaker 7: right lane. Technology is going one hundred in the left lane. 591 00:28:49,840 --> 00:28:52,959 Speaker 7: So I think, really the stronger to get stronger. If 592 00:28:52,960 --> 00:28:54,680 Speaker 7: you look at Microsoft, you look what we see out 593 00:28:54,720 --> 00:28:56,760 Speaker 7: of alp BET. That was a huge fux. The muscles 594 00:28:56,800 --> 00:28:58,000 Speaker 7: carter for them. 595 00:28:58,320 --> 00:28:59,560 Speaker 1: Oh, I like the CFA talk. 596 00:29:00,880 --> 00:29:03,360 Speaker 7: It was a huge fux and muscles quarter and that's Look, 597 00:29:03,440 --> 00:29:06,480 Speaker 7: this is this is one if you're if you're a 598 00:29:06,520 --> 00:29:10,840 Speaker 7: bear now coming a little out of hibernation mode, thinking 599 00:29:10,880 --> 00:29:14,120 Speaker 7: that you want to look at me, if you're a 600 00:29:14,160 --> 00:29:17,000 Speaker 7: bear coming a little out of hibernation mode. I think 601 00:29:17,080 --> 00:29:19,960 Speaker 7: ultimately what you saw from tech earnings, which is more 602 00:29:20,000 --> 00:29:22,800 Speaker 7: and more bullish, okay, And I think next week is 603 00:29:22,800 --> 00:29:23,960 Speaker 7: going to be the golden moment that. 604 00:29:25,440 --> 00:29:27,240 Speaker 2: Next Thursday'll say I talk. I want to know about 605 00:29:27,240 --> 00:29:30,360 Speaker 2: next Thursday. Amazon and Apple. Amazon's not in an list 606 00:29:30,400 --> 00:29:32,920 Speaker 2: of AI companies. I think they're in the cloud. Apple 607 00:29:33,040 --> 00:29:36,479 Speaker 2: certainly isn't. How does Apple embrace AI? How did they 608 00:29:36,480 --> 00:29:38,160 Speaker 2: get on this list of these companies? 609 00:29:38,440 --> 00:29:41,240 Speaker 7: Cook continues to play chess, others play checkers, And I 610 00:29:41,240 --> 00:29:43,840 Speaker 7: think where we believe it's going to be an AI 611 00:29:44,120 --> 00:29:47,840 Speaker 7: driven app store. German's hinted at some of the AI technology, 612 00:29:47,920 --> 00:29:50,280 Speaker 7: but I ultimately believe the next one to two years 613 00:29:50,480 --> 00:29:53,200 Speaker 7: that's just going to be a further penetration story adds 614 00:29:53,280 --> 00:29:55,200 Speaker 7: thirty to forty dollars some of the part. 615 00:29:55,200 --> 00:29:57,400 Speaker 2: And if they took their margins down the income statement, 616 00:29:57,440 --> 00:30:01,120 Speaker 2: how many beefs can Apple pick up on uh ebitdal 617 00:30:01,200 --> 00:30:03,080 Speaker 2: Let's say out of AI five. 618 00:30:02,880 --> 00:30:06,400 Speaker 7: Years out, AI combined with chips you're talking to incremental 619 00:30:06,520 --> 00:30:10,720 Speaker 7: three four hundred BIPs. That's just three to four hundred 620 00:30:10,760 --> 00:30:14,600 Speaker 7: BIPs improvement because they own their ecosystem plus AI okay, 621 00:30:14,760 --> 00:30:15,720 Speaker 7: being pure software. 622 00:30:15,840 --> 00:30:16,480 Speaker 1: Quickly do they. 623 00:30:16,400 --> 00:30:18,640 Speaker 2: Get the four trillion dollars market cap off of three 624 00:30:18,720 --> 00:30:19,640 Speaker 2: hundred bip improvement. 625 00:30:19,680 --> 00:30:22,520 Speaker 7: I believe we will be sitting here in early twenty 626 00:30:22,640 --> 00:30:25,760 Speaker 7: twenty five getting ready for Super Bowl and Apple will 627 00:30:25,800 --> 00:30:26,560 Speaker 7: be four trillion. 628 00:30:27,040 --> 00:30:30,920 Speaker 6: Okay, brief so I acknowledged it in the late nineties, 629 00:30:31,000 --> 00:30:33,520 Speaker 6: there were some real things that we didn't appreciate. We 630 00:30:33,560 --> 00:30:35,760 Speaker 6: also got sold a lot of bs. So can you 631 00:30:35,800 --> 00:30:37,720 Speaker 6: explain to me? And I wish we could curse on 632 00:30:37,760 --> 00:30:42,360 Speaker 6: this show, could you explain to me AI generated App Store? 633 00:30:43,040 --> 00:30:43,600 Speaker 6: What is that? 634 00:30:44,040 --> 00:30:47,800 Speaker 7: So that's ultimately going to be whether it's health, fitness, 635 00:30:48,120 --> 00:30:51,200 Speaker 7: any types of apps developers are going to build, They're 636 00:30:51,200 --> 00:30:54,120 Speaker 7: going to be AI generated with all what I'll called 637 00:30:54,160 --> 00:30:57,560 Speaker 7: generated AI technology that we built within the app store, 638 00:30:57,640 --> 00:31:00,720 Speaker 7: So ultimately any Apple user will be able to download 639 00:31:00,760 --> 00:31:03,320 Speaker 7: those apps for developers, just like we have the App 640 00:31:03,320 --> 00:31:06,480 Speaker 7: store today. The next version of that is going to 641 00:31:06,520 --> 00:31:09,760 Speaker 7: be an AI driven app store that I believe Coupertino 642 00:31:09,920 --> 00:31:12,680 Speaker 7: will ultimately come out and I think they're actually starting 643 00:31:13,080 --> 00:31:15,840 Speaker 7: the concept of it with you know, Vision pro and 644 00:31:15,920 --> 00:31:17,520 Speaker 7: ultimately a new form factor. 645 00:31:17,600 --> 00:31:18,920 Speaker 6: In the meantime, it's not gonna be a bad that 646 00:31:18,960 --> 00:31:20,600 Speaker 6: it's going to be about how many iPhones they sell. 647 00:31:20,920 --> 00:31:23,160 Speaker 6: For a long time, you've been bullished on this upgrade 648 00:31:23,200 --> 00:31:25,760 Speaker 6: cycle that kind of never was and it's always been 649 00:31:25,760 --> 00:31:27,760 Speaker 6: a justification for why this stock's got to go further. 650 00:31:27,920 --> 00:31:29,480 Speaker 6: So a lot of people that haven't upgraded, they're going 651 00:31:29,560 --> 00:31:32,680 Speaker 6: to buy the iPhone thirteen, fourteen, fifteen, and then it 652 00:31:32,760 --> 00:31:34,880 Speaker 6: kind of remains the same and pretty staple what's coming 653 00:31:34,920 --> 00:31:35,240 Speaker 6: on there. 654 00:31:35,360 --> 00:31:38,360 Speaker 7: Street numbers are moved up fifteen percent of iPhone. So 655 00:31:38,480 --> 00:31:41,640 Speaker 7: the thing is the Bears ultimately thought sub two hundred million, 656 00:31:41,720 --> 00:31:43,720 Speaker 7: but yet they sold two hundred twenty five million. Because 657 00:31:43,960 --> 00:31:47,120 Speaker 7: they continue and keen the tacticianers as well as anyone, 658 00:31:47,440 --> 00:31:50,880 Speaker 7: they continue to underestimate the golden install based Cooper Tino, 659 00:31:51,080 --> 00:31:53,200 Speaker 7: which is why I view this as a mini super 660 00:31:53,240 --> 00:31:56,800 Speaker 7: cycle playing out. And I think Apple next Thursday, Cook 661 00:31:57,360 --> 00:32:00,240 Speaker 7: on the call, that's just going to be further what 662 00:32:00,400 --> 00:32:04,040 Speaker 7: I've used fuel on the engine for this upgrade cycle. 663 00:32:04,880 --> 00:32:07,360 Speaker 2: Here's the upgrade cycle. I just took a photo of 664 00:32:07,480 --> 00:32:12,080 Speaker 2: Dan's shoe. The saturation on this phone is so superior 665 00:32:12,160 --> 00:32:13,120 Speaker 2: to anything. 666 00:32:13,000 --> 00:32:15,640 Speaker 5: And it still doesn't It doesn't care. 667 00:32:15,800 --> 00:32:19,400 Speaker 7: Sure, and look at that camera tech, the technology and 668 00:32:19,440 --> 00:32:20,000 Speaker 7: the chip. 669 00:32:19,920 --> 00:32:23,000 Speaker 6: Isn't the Samsung camera betsa yeah. 670 00:32:22,760 --> 00:32:24,800 Speaker 1: But that this is a really important point. 671 00:32:24,880 --> 00:32:28,840 Speaker 2: Overnight we got thirty When does Samsung just give it up? 672 00:32:28,920 --> 00:32:30,720 Speaker 1: The report overnight was not good. 673 00:32:31,240 --> 00:32:34,560 Speaker 7: Look Samsung, ever, it's like Uphill Battle, another sort of 674 00:32:34,600 --> 00:32:37,520 Speaker 7: black eye for them. And I think ultimately it's just 675 00:32:37,960 --> 00:32:40,920 Speaker 7: it continues to be more and more share games for Apple, 676 00:32:40,960 --> 00:32:43,640 Speaker 7: and I think, look Samsung, it reminds you know, it 677 00:32:43,840 --> 00:32:47,400 Speaker 7: just it's a continued struggle that they have again again. 678 00:32:47,680 --> 00:32:49,480 Speaker 6: Then it's gonna catch up. Then we're gonna do this 679 00:32:49,520 --> 00:32:51,240 Speaker 6: again in the next way. I'm gonna I'm looking forward 680 00:32:51,280 --> 00:32:51,960 Speaker 6: to it. Thank you, buddy. 681 00:32:51,960 --> 00:32:55,280 Speaker 2: I'm gonna put this out on Twitter ives unfiltered, unfiltered. 682 00:32:55,480 --> 00:32:58,360 Speaker 6: Yeah, it's just a picture of a sneaks Yeah, okay, 683 00:32:58,720 --> 00:33:02,520 Speaker 6: then nice of wet push. 684 00:33:03,680 --> 00:33:06,719 Speaker 2: This is the conversation of the day. If you are 685 00:33:06,720 --> 00:33:09,720 Speaker 2: in Local twenty five in Boston and you grew up 686 00:33:09,840 --> 00:33:12,640 Speaker 2: with three generations of teamsters, and. 687 00:33:12,640 --> 00:33:15,640 Speaker 1: Then you take on all of what we know, all 688 00:33:15,680 --> 00:33:15,960 Speaker 1: of the. 689 00:33:16,000 --> 00:33:19,320 Speaker 2: Decades and decades of history of the Teamsters, and you 690 00:33:19,760 --> 00:33:24,000 Speaker 2: revolutionize unions in America. You come to a moment like 691 00:33:24,040 --> 00:33:28,080 Speaker 2: we saw yesterday with big brown Ups. Sean O'Brien has 692 00:33:28,080 --> 00:33:30,680 Speaker 2: provided the leadership on this. He's General President of the 693 00:33:30,680 --> 00:33:34,600 Speaker 2: International Brotherhood of Teamsters and joins us this morning. Sean, 694 00:33:34,880 --> 00:33:38,840 Speaker 2: congratulations on this pre vote agreement, this handshake agreement you 695 00:33:38,880 --> 00:33:43,160 Speaker 2: have with UPS. In your comments and others, you say 696 00:33:43,320 --> 00:33:44,880 Speaker 2: Amazon is next. 697 00:33:45,080 --> 00:33:46,240 Speaker 1: Where do you move. 698 00:33:46,040 --> 00:33:51,480 Speaker 2: From this successful agreement to the next transportation company? Is 699 00:33:51,480 --> 00:33:52,160 Speaker 2: it Amazon? 700 00:33:52,520 --> 00:33:55,160 Speaker 4: Amazon's definitely going to be a target to organize. We're 701 00:33:55,160 --> 00:33:58,400 Speaker 4: going to take this historic agreement and use it as 702 00:33:58,400 --> 00:34:01,800 Speaker 4: a template to show the Amazon work what they will 703 00:34:02,040 --> 00:34:04,360 Speaker 4: receive when they joined the teams to union and we 704 00:34:04,480 --> 00:34:05,120 Speaker 4: organize them. 705 00:34:05,640 --> 00:34:10,120 Speaker 2: The significance of this agreement speaks to a new Teamsters. 706 00:34:10,360 --> 00:34:15,359 Speaker 2: Does all of America, including I'm going to call capitalist America, 707 00:34:15,880 --> 00:34:19,600 Speaker 2: misunderstand the modern labored dynamic? 708 00:34:20,840 --> 00:34:23,040 Speaker 4: Well, I'm not sure if they misunderstand it. But the 709 00:34:23,040 --> 00:34:26,000 Speaker 4: one thing that we were able to achieve with this 710 00:34:26,160 --> 00:34:31,480 Speaker 4: agreement is that we showed the entire country what you 711 00:34:31,520 --> 00:34:34,399 Speaker 4: can do when you have the support of your rank 712 00:34:34,440 --> 00:34:38,240 Speaker 4: and file members. I think we put some more energy 713 00:34:38,719 --> 00:34:42,040 Speaker 4: into the labor movement. But also we got the largest 714 00:34:42,040 --> 00:34:45,400 Speaker 4: deal done without having to strike the company, So I 715 00:34:45,440 --> 00:34:50,680 Speaker 4: think we added credibility to the process, and also more importantly, 716 00:34:50,680 --> 00:34:53,840 Speaker 4: we set the tone for what organized labor can achieve 717 00:34:54,200 --> 00:34:57,600 Speaker 4: against Corporate America and these high profits. And we want 718 00:34:57,600 --> 00:34:59,360 Speaker 4: to be rewarded. Our members need to be rewarded. 719 00:34:59,480 --> 00:35:02,480 Speaker 5: Shaan, you said that UPS blinked in a statement to 720 00:35:02,560 --> 00:35:05,480 Speaker 5: your three hundred and forty thousand members. Do you get 721 00:35:05,480 --> 00:35:08,600 Speaker 5: the sense that corporations are more willing to blink now 722 00:35:08,719 --> 00:35:12,120 Speaker 5: because of the labor shortages, that your negotiating power is 723 00:35:12,160 --> 00:35:14,240 Speaker 5: stronger than it's been in a very long time. 724 00:35:14,920 --> 00:35:17,480 Speaker 4: Yeah, I think we've got We've got tremendous leverage right 725 00:35:17,520 --> 00:35:23,320 Speaker 4: now because you know, we can leverage our ability. We've provided. 726 00:35:23,560 --> 00:35:29,200 Speaker 4: We've provided tremendous support during the pandemic, providing goods and services, 727 00:35:29,480 --> 00:35:33,160 Speaker 4: and I think now it's the time to capitalize. I mean, 728 00:35:33,239 --> 00:35:36,280 Speaker 4: we fought too long. We kept seeing CEO pay increasing 729 00:35:37,520 --> 00:35:41,040 Speaker 4: and stock options increasing, and our members pay, not just 730 00:35:41,080 --> 00:35:44,080 Speaker 4: in the Teamsters Union but throughout the labor movement, we're 731 00:35:44,080 --> 00:35:46,440 Speaker 4: not increasing. So I think right now we have the 732 00:35:46,480 --> 00:35:50,560 Speaker 4: ability to really really showcase and be the model and 733 00:35:50,719 --> 00:35:53,799 Speaker 4: encourage other unions to stand up and fight. 734 00:35:54,160 --> 00:35:57,040 Speaker 5: How do you decide, Sean, when you're negotiating what the 735 00:35:57,120 --> 00:36:01,760 Speaker 5: threshold is between workers' rights and we're pay increases versus 736 00:36:01,800 --> 00:36:04,400 Speaker 5: the health of a company, of what's sustainable over a 737 00:36:04,440 --> 00:36:08,200 Speaker 5: longer period of time, given that prices are increasing and 738 00:36:08,320 --> 00:36:09,840 Speaker 5: this is an inflationary environment. 739 00:36:11,000 --> 00:36:12,640 Speaker 4: Well, I think, first off, I mean, we had a 740 00:36:12,640 --> 00:36:15,640 Speaker 4: great situation here with UPS because of our members and 741 00:36:15,680 --> 00:36:18,480 Speaker 4: their hard work. They made one hundred billion dollars. So 742 00:36:18,680 --> 00:36:22,080 Speaker 4: a healthy company should share the profits and should share 743 00:36:22,120 --> 00:36:26,040 Speaker 4: the wealth. Look, we take every negotiation, we do a 744 00:36:26,080 --> 00:36:28,839 Speaker 4: deep dive. We're a lot more sophisticated than we were 745 00:36:28,920 --> 00:36:33,879 Speaker 4: thirty or forty years ago, So we obviously study the finances, 746 00:36:34,320 --> 00:36:37,319 Speaker 4: study the projections, and make certain that you know, we 747 00:36:37,400 --> 00:36:41,279 Speaker 4: understand what we can get out of these companies. But 748 00:36:41,600 --> 00:36:44,799 Speaker 4: you know, far too long. You know, everybody uses the 749 00:36:44,840 --> 00:36:47,320 Speaker 4: economy saying hey, we could probably go into a recession, 750 00:36:48,040 --> 00:36:49,719 Speaker 4: and that's all well and good. We always come out 751 00:36:49,760 --> 00:36:52,640 Speaker 4: of bad situations at some point in time. So we 752 00:36:52,880 --> 00:36:55,680 Speaker 4: always just stay focused on what our members need. We're 753 00:36:55,680 --> 00:36:58,600 Speaker 4: not too concerned about Wall Street or anything else. What 754 00:36:58,760 --> 00:37:01,000 Speaker 4: is going to help our members buy and provide middle 755 00:37:01,000 --> 00:37:02,920 Speaker 4: class opportunities for their families. 756 00:37:03,120 --> 00:37:05,680 Speaker 2: Mister Brian in the time that we have left, I mean, 757 00:37:05,680 --> 00:37:08,120 Speaker 2: your sons are involved in this. Your father was Local 758 00:37:08,160 --> 00:37:12,279 Speaker 2: twenty five as well. You've lived this for your entire lifetime. 759 00:37:13,000 --> 00:37:18,080 Speaker 2: How do we change the atomization of labor in America, 760 00:37:18,160 --> 00:37:23,000 Speaker 2: the deunionization of America. Do you perceive a sea change 761 00:37:23,280 --> 00:37:24,200 Speaker 2: with this agreement? 762 00:37:25,239 --> 00:37:25,439 Speaker 1: Yeah? 763 00:37:25,440 --> 00:37:27,440 Speaker 4: I think this agreement is going to be a template 764 00:37:28,960 --> 00:37:34,279 Speaker 4: to show the entire workforce, union and non union what 765 00:37:34,400 --> 00:37:36,160 Speaker 4: you get when you join a union. You're going to 766 00:37:36,200 --> 00:37:38,680 Speaker 4: get wage increases, You're gonna get health and welfare, you're 767 00:37:38,680 --> 00:37:41,480 Speaker 4: gonna get pension, but more potently going at dignitium, respect 768 00:37:41,560 --> 00:37:45,200 Speaker 4: and a future. This agreement that we negotiated, you know, 769 00:37:45,239 --> 00:37:49,480 Speaker 4: we protected against technology. We provided for full time job opportunities. 770 00:37:49,680 --> 00:37:53,080 Speaker 4: That's the leverage that you have when you're working for 771 00:37:53,160 --> 00:37:55,960 Speaker 4: the best contract in the industry, and we achieve that. 772 00:37:56,440 --> 00:37:58,359 Speaker 2: Seana, you were just going to run out of time here. 773 00:37:58,360 --> 00:38:01,040 Speaker 2: I want you to speak to the Bloomberg Surveillance office. 774 00:38:01,080 --> 00:38:03,960 Speaker 2: There are a lot of fancy people, let's be blunt. 775 00:38:04,239 --> 00:38:05,760 Speaker 2: They're probably less pro. 776 00:38:05,719 --> 00:38:08,360 Speaker 1: Union than many What do unions. 777 00:38:08,400 --> 00:38:11,719 Speaker 2: What do the teamsters bring to capitalists to provide for 778 00:38:11,800 --> 00:38:13,000 Speaker 2: better productivity? 779 00:38:13,920 --> 00:38:16,040 Speaker 4: Hey, we bring the best work for us in America. 780 00:38:16,080 --> 00:38:18,880 Speaker 4: We prove that during the pandemic, not just in ups, 781 00:38:18,920 --> 00:38:23,000 Speaker 4: but picking up rubbish, delivering groceries. We provided goods and services. 782 00:38:23,040 --> 00:38:25,279 Speaker 4: We prove we're essential, and we're going to continue that 783 00:38:25,880 --> 00:38:28,360 Speaker 4: post pandemic, and we've got the best workforce in America. 784 00:38:28,600 --> 00:38:31,799 Speaker 2: Shawn O'Brien, congratulations. All I ask is after ups, you 785 00:38:31,880 --> 00:38:35,080 Speaker 2: do something about the Red Sox Shawn O'Brien Local twenty 786 00:38:35,080 --> 00:38:38,560 Speaker 2: five in Boston and also with the International Brotherhood of 787 00:38:38,640 --> 00:38:42,680 Speaker 2: Teamsters there as well. Subscribe to the Bloomberg Surveillance podcast 788 00:38:42,760 --> 00:38:46,560 Speaker 2: on Apple, Spotify and anywhere else you get your podcasts. 789 00:38:47,000 --> 00:38:51,000 Speaker 2: Listen live every weekday starting at seven am Eastern on 790 00:38:51,120 --> 00:38:54,760 Speaker 2: Bloomberg dot Com, the iHeartRadio app, tune In. 791 00:38:54,920 --> 00:38:56,400 Speaker 1: And the Bloomberg Business app. 792 00:38:56,840 --> 00:39:00,520 Speaker 2: You can watch us live on Bloomberg Television and always. 793 00:39:00,840 --> 00:39:04,719 Speaker 1: I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, 794 00:39:04,920 --> 00:39:06,719 Speaker 1: and this is Bloomberg