WEBVTT - Congress Should Think Bigger Than TikTok Ban 0:00:02.920 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg business Week inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.760 --> 0:00:29.680 Last week, you know, the House of Representatives here in 0:00:29.680 --> 0:00:32.880 the United States passing a bipartisan bill that would effectively 0:00:32.880 --> 0:00:36.880 ban TikTok from the US unless it's Chinese parent company, ByteDance, 0:00:36.960 --> 0:00:40.240 divests the app. The measure now moves to the Senate. 0:00:40.520 --> 0:00:44.440 President Biden, who has previously blocked TikTok excuse me from 0:00:44.479 --> 0:00:47.760 government devices and titaned restrictions on data sharing, says he 0:00:47.840 --> 0:00:50.000 will sign it if it ultimately passes. 0:00:50.200 --> 0:00:53.640 Okay, yet, Carol, A TikTok you know ban may not 0:00:53.720 --> 0:00:55.840 be enough, so notes a story featured in the new 0:00:55.880 --> 0:00:58.640 issue of BusinessWeek magazine, which is available on newstands, on 0:00:58.680 --> 0:01:01.760 the Bloomberg Terminal and at Bloomberg Slash BusinessWeek. This story 0:01:01.760 --> 0:01:05.360 by Anna Edgerton, Bloomberg News Seattle Bureau chief and Alex Brinka, 0:01:05.400 --> 0:01:08.479 Bloomberg News Technology reporter. Ana joining us from Seattle, Alex 0:01:08.800 --> 0:01:11.000 from our Los Angeles Bureau, and I do want to 0:01:11.040 --> 0:01:12.840 start with you and just take a step back here 0:01:12.840 --> 0:01:15.080 before we get going on the intricacies of privacy and 0:01:15.080 --> 0:01:17.320 what these privacy advogets are saying. Just give us the 0:01:17.400 --> 0:01:21.480 latest on a potential TikTok ban or divestment. What is 0:01:21.520 --> 0:01:22.400 the most recent news. 0:01:23.400 --> 0:01:25.120 Yeah, So what we did with the story was we 0:01:25.200 --> 0:01:28.640 wanted to look at where the opposition is unified. The 0:01:28.640 --> 0:01:31.600 opposition to this bill is unified. So this bill passed 0:01:31.800 --> 0:01:35.560 overwhelmingly in the House. There's a lot of bipartisan support 0:01:35.560 --> 0:01:37.360 for it, but about I think it was sixty two 0:01:38.000 --> 0:01:41.400 members from both Republicans and Democrats voted against it, and 0:01:41.480 --> 0:01:42.199 almost all. 0:01:42.080 --> 0:01:42.720 Of them said. 0:01:43.200 --> 0:01:47.160 The way to safeguard US user data is not by 0:01:47.200 --> 0:01:51.200 banning one company or even forcing its parent company to sell. 0:01:51.360 --> 0:01:54.320 The way to protect US user data is to pass 0:01:54.400 --> 0:01:57.680 a federal data privacy standard that applies to all companies. 0:01:57.800 --> 0:02:02.720 So China can still have access to that's my dog 0:02:03.320 --> 0:02:06.720 can still have access to UH to US user data, 0:02:07.240 --> 0:02:08.520 buying it from data brokers. 0:02:08.560 --> 0:02:11.040 You know that's got it, that got it from from Facebook. 0:02:11.240 --> 0:02:13.600 So there are other ways for Chinese authorities to get 0:02:13.600 --> 0:02:17.720 this information that's not TikTok, and so just banning this 0:02:17.760 --> 0:02:20.560 one company is not going to solve the problem. And 0:02:20.600 --> 0:02:22.400 that's where we see, you know, a lot of the 0:02:22.400 --> 0:02:24.840 opposition in the House and also some of that's starting 0:02:24.840 --> 0:02:26.560 to bubble up in the Senate. And that's where this 0:02:26.639 --> 0:02:29.160 is really going to be important, is to see how 0:02:29.280 --> 0:02:32.000 senators line up either in support of this measure or 0:02:32.120 --> 0:02:33.400 wanting to take a different approach. 0:02:33.440 --> 0:02:35.120 And don't tell me, Anna, but your dog is a 0:02:35.120 --> 0:02:37.800 TikTok store star, but we'll we'll maybe talk about that later. 0:02:38.200 --> 0:02:40.680 Has the potential, that's the potential, don't we all. 0:02:41.400 --> 0:02:44.520 Alex come on in on this. You understand the tech community. 0:02:44.880 --> 0:02:46.520 You're out there on the West coast, but you've been 0:02:46.520 --> 0:02:49.400 reporting on the sector for a long time. Is there 0:02:49.520 --> 0:02:52.200 rumblings that they're nervous and concerned that there could be 0:02:52.280 --> 0:02:55.240 more regulatory oversight or they're like, yeah, we've heard this before. 0:02:55.280 --> 0:02:59.000 Because it is kind of staggering right that there is 0:02:59.120 --> 0:03:01.640 a lot of freedom still in the social media space 0:03:01.639 --> 0:03:02.720 when it comes to oversight. 0:03:03.560 --> 0:03:06.320 We have certainly heard concerns about that privacy before. We 0:03:06.360 --> 0:03:09.919 have certainly seen transgressions by the likes of Meta when 0:03:09.919 --> 0:03:13.520 it was called Facebook by other companies. The CEOs have 0:03:13.560 --> 0:03:16.280 been trotted down to DC to have these conversations. What 0:03:16.360 --> 0:03:19.360 we haven't seen is any kind of legislation that over 0:03:19.560 --> 0:03:22.799 arches the entire industry in the same way that this 0:03:22.960 --> 0:03:27.040 TikTok bill does for the byte danced own social media app. Now. Look, 0:03:27.280 --> 0:03:30.919 a lot of the executives from TikTok's rivals have largely 0:03:30.960 --> 0:03:34.480 said we would love to see federal privacy regulation because 0:03:34.520 --> 0:03:37.360 currently there's a patchwork of laws in different states, So 0:03:37.440 --> 0:03:40.840 give us the rules and we'll follow them. That being said, Carol, 0:03:40.880 --> 0:03:44.880 we've also seen them fight every bill and legislation and 0:03:44.920 --> 0:03:48.280 different legal venues. That wouldn't necessarily be an easy path. 0:03:48.360 --> 0:03:52.640 So while we did have reporting of Meta in the 0:03:52.680 --> 0:03:56.200 past kind of lobbying against TikTok in past years, we 0:03:56.320 --> 0:03:58.840 haven't heard a lot of that just yet. That doesn't 0:03:58.840 --> 0:04:03.840 mean it's not happening, but certainly the companies like Meta 0:04:03.920 --> 0:04:07.200 or Alphabet's YouTube would stand to benefit if TikTok, word 0:04:07.240 --> 0:04:10.040 it Snap disappear because of this legislation. 0:04:13.400 --> 0:04:17.159 Alex is absolutely right, But I think there is also 0:04:17.240 --> 0:04:21.000 concern from these companies that what the US does in 0:04:21.320 --> 0:04:24.960 forcing by Dance to sell TikTok could set a really 0:04:24.960 --> 0:04:28.640 bad precedent for you know, the operations of Meta abroad. 0:04:28.880 --> 0:04:33.120 So I think while they would not mind TikTok or disappearing, 0:04:33.360 --> 0:04:36.360 there is a lot of concern about the government forcing 0:04:36.360 --> 0:04:37.000 that to happen. 0:04:37.320 --> 0:04:38.920 Well, I want to I want to Anna for you 0:04:39.040 --> 0:04:40.920 to for a moment talk a little bit about what 0:04:40.960 --> 0:04:44.839 these privacy advocates would actually like to see here, because yes, 0:04:44.880 --> 0:04:47.680 these companies say they you know, quote unquote want regulation, 0:04:48.480 --> 0:04:50.440 but we've seen, as Alex mentioned, what they've done in 0:04:50.440 --> 0:04:53.320 the past. When the bills are up, what do these 0:04:53.320 --> 0:04:56.799 companies or what do these critics say the regulation should 0:04:56.800 --> 0:04:58.719 exist for these companies, like, what would that look like? 0:05:00.080 --> 0:05:02.960 So the best example to look at is a bill 0:05:03.000 --> 0:05:05.080 that was passed by the House Energy and Commerce Committee 0:05:05.160 --> 0:05:09.560 last years. I think the ADPPA, the American Data Privacy 0:05:09.600 --> 0:05:13.240 Protection Addicts and that has kind of the like agreed 0:05:13.320 --> 0:05:16.039 upon tenants of data privacy. Now, a lot of these 0:05:16.279 --> 0:05:18.880 are similar to the GDPR in Europe. They're similar to 0:05:18.880 --> 0:05:21.080 the standards that some of the states have set. But 0:05:21.160 --> 0:05:23.599 the most important thing for tech companies is that it 0:05:23.760 --> 0:05:27.919 preempts all of the all of the state standards, so 0:05:27.960 --> 0:05:30.240 that way they would have one standard that they would 0:05:30.279 --> 0:05:33.000 have to comply with in the US. There's also a 0:05:33.040 --> 0:05:34.960 question about how it would be enforced, whether it be 0:05:35.080 --> 0:05:37.480 up to the Attorney General, or whether there would be 0:05:37.520 --> 0:05:39.760 a private right of action where individuals could sue these 0:05:39.800 --> 0:05:45.039 tech companies. But the most important elements are being able 0:05:45.200 --> 0:05:48.800 having the option to delete your data, having the option 0:05:49.120 --> 0:05:53.440 to withdraw consent for being collected, knowing to whom it's 0:05:53.480 --> 0:05:56.520 being sold. So a lot of this is about giving 0:05:57.400 --> 0:06:01.280 users in the US more control over what happens their 0:06:01.360 --> 0:06:05.840 data in just the normal kind of interactions of existing 0:06:05.880 --> 0:06:07.960 online as so much of ours. 0:06:08.040 --> 0:06:09.760 This is where we've got to jump in. And I'm 0:06:09.800 --> 0:06:12.760 curious because we are certainly hearing the drum beat for 0:06:12.800 --> 0:06:17.440 that for individuals like you me Tim, for us to 0:06:17.480 --> 0:06:20.920 have more control on our data. Having said that, I'm 0:06:20.960 --> 0:06:24.520 looking at this nineteen sixty five US Supreme Court case 0:06:24.560 --> 0:06:27.520 that unanimously struck down rules for the US Post Office 0:06:27.520 --> 0:06:30.600 to restrict the spread of communist propaganda from the Chinese 0:06:30.640 --> 0:06:33.640 Communist Party. So, I mean, I know there's national security 0:06:33.640 --> 0:06:36.359 concerns about TikTok, but there's also concerns about all of 0:06:36.360 --> 0:06:39.560 our data and how it's being used Alex. If that 0:06:39.640 --> 0:06:43.360 didn't happen, what hope is there for lawmakers to come 0:06:43.400 --> 0:06:46.880 together and say it's time to really rain in these 0:06:46.880 --> 0:06:50.520 social media companies. We've already seen the implications politically and 0:06:50.560 --> 0:06:54.680 on individuals, the negative implications. That's not critics saying it, 0:06:54.680 --> 0:06:57.479 it's just a reality. So how likely is it that 0:06:57.640 --> 0:07:01.839 something really comes down hard regulatory on the social media universe. 0:07:03.000 --> 0:07:06.360 What I'm hearing from experts, particularly in the privacy space, 0:07:06.440 --> 0:07:08.400 is they are looking at this moment and saying, look, 0:07:08.440 --> 0:07:10.840 there's a lot of energy. People are really energized behind 0:07:10.840 --> 0:07:14.320 the idea of raining and TikTok. Maybe we can expand 0:07:14.320 --> 0:07:17.520 the scope as to whether or not that would happen. Look, 0:07:17.560 --> 0:07:20.040 this is this TikTok bill has kind of gone the 0:07:20.080 --> 0:07:22.480 furthest that any of these bills have ever gone in 0:07:22.520 --> 0:07:25.440 getting and passing a vote in one of the chambers. 0:07:25.480 --> 0:07:31.160 So in terms of actual federal privacy regulation, this moment 0:07:31.280 --> 0:07:34.120 seems to be one. That is why we see the 0:07:34.160 --> 0:07:38.000 opposition to this bill potentially circling around this idea because 0:07:38.040 --> 0:07:40.600 there's a lot of energy here. But we've had I 0:07:40.640 --> 0:07:43.560 was in the room for hearings about child safety and 0:07:43.680 --> 0:07:46.280 child data privacy. I was in the room for hearings 0:07:46.280 --> 0:07:50.320 with TikTok CEO where they were talking about kind of 0:07:49.000 --> 0:07:54.280 broader data privacy issues. And we've also had some legislation 0:07:54.400 --> 0:07:57.720 that's been introduced around data brokers, those third parties who 0:07:57.840 --> 0:08:01.040 vacuum up information on the Internet and sell it for 0:08:01.160 --> 0:08:03.480 a price to kind of whoever would want it for 0:08:03.560 --> 0:08:06.880 an adversary or otherwise. So we've heard about this. The 0:08:06.920 --> 0:08:10.640 social media era is almost what a decade old, and 0:08:10.680 --> 0:08:13.160 this is kind of the furthest legislation we've seen, So 0:08:13.440 --> 0:08:17.040 I'd be hard pressed to put a percentage on it yet, Carol, Yeah, 0:08:17.120 --> 0:08:20.120 but will certainly be keeping an air to the Senate 0:08:20.160 --> 0:08:21.120 to see what happens. 0:08:21.160 --> 0:08:23.080 Well, you both have great perspectives on this. You both 0:08:23.080 --> 0:08:25.360 are now on the West coast. But and I used 0:08:25.360 --> 0:08:28.920 to be certainly covering DC and understood politics in a big, 0:08:28.920 --> 0:08:31.040 big way. I mean, I do wonder, as we all 0:08:31.080 --> 0:08:34.000 watched TikTok last week, how much of it was politics 0:08:34.080 --> 0:08:38.360 versus real kind of needs and want to change policy. 0:08:38.440 --> 0:08:41.000 So politics versus policy, how do you kind of game 0:08:41.040 --> 0:08:41.319 it out? 0:08:41.360 --> 0:08:41.640 Anna? 0:08:42.679 --> 0:08:44.520 Yeah, there's a lot of that going on. 0:08:44.960 --> 0:08:46.880 I mean when this first kind of appeared to come 0:08:46.880 --> 0:08:48.600 out of nowhere, you know, Alex and I were following 0:08:48.640 --> 0:08:51.280 us really closely last year, and then it kind of 0:08:51.600 --> 0:08:54.960 got overtaken by AI, and I could it was really 0:08:54.960 --> 0:08:56.599 hard to find someone on the Hill who wanted to 0:08:56.640 --> 0:08:58.440 talk about TikTok, you know, summer. 0:08:58.080 --> 0:08:58.760 Of last year. 0:08:59.720 --> 0:09:02.440 When came back up, my first thought was, well, House 0:09:02.480 --> 0:09:05.080 Republicans want to make this awkward for Biden because he 0:09:05.200 --> 0:09:06.560 just started a TikTok. 0:09:06.200 --> 0:09:07.880 Account for his campaign. 0:09:08.320 --> 0:09:10.800 And I think that is part of it in you know, 0:09:10.840 --> 0:09:14.600 trying to create this hippocrisy for Biden and saying it's 0:09:14.600 --> 0:09:15.880 a national security threat, but. 0:09:15.960 --> 0:09:18.720 I'm going to use it to reach young voters. However, 0:09:18.920 --> 0:09:20.360 I think there. 0:09:19.840 --> 0:09:22.120 Are a lot of people in Capitol Hill who are 0:09:22.200 --> 0:09:27.560 genuinely concerned about Chinese ownership of this really powerful app. 0:09:27.600 --> 0:09:29.960 You know, this is not you know, while Facebook is 0:09:30.440 --> 0:09:33.280 perhaps the still still the biggest, you know, has the 0:09:33.280 --> 0:09:36.959 most users. You know, other apps have their kind of 0:09:37.040 --> 0:09:39.800 niche uses. There are one hundred and fifty one hundred 0:09:39.800 --> 0:09:44.360 and seventy million Americans that spend hours on TikTok every 0:09:44.440 --> 0:09:48.040 day and have a very kind of emotional connection to 0:09:48.280 --> 0:09:50.440 the app, and you know, Alex can talk more about that. 0:09:50.840 --> 0:09:53.320 But the concern you know here over and over again 0:09:53.360 --> 0:09:58.760 about national security is that the Chinese Communist Party can 0:09:58.800 --> 0:10:01.000 get access to US users data and also like kind 0:10:01.000 --> 0:10:04.120 of aggregate level of like patterns of USB behavior, and 0:10:04.200 --> 0:10:05.160 also that they could put a. 0:10:05.120 --> 0:10:07.839 Thumb on the algorithm to show not necessarily a. 0:10:07.840 --> 0:10:11.760 Communist propaganda, but harmful content to US users. 0:10:11.760 --> 0:10:13.240 Hey guys, we're gonna have to run. We know this 0:10:13.240 --> 0:10:17.040 conversation that will continue again in the future. Anna Edgerton 0:10:17.040 --> 0:10:20.600 and Alex Barinka, both of Bloomberg News, joining us with 0:10:20.640 --> 0:10:23.080 what's next maybe for social media. 0:10:23.679 --> 0:10:27.199 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:27.240 --> 0:10:30.480 Live weekday afternoons from two to five pm Eastern Listen 0:10:30.520 --> 0:10:32.679 on Apple car Play and then brout Auto with a 0:10:32.679 --> 0:10:35.680 Bloomberg Business app, or watch us Live on YouTube. 0:10:37.280 --> 0:10:39.640 We did also get some economic news this morning, new 0:10:39.720 --> 0:10:42.640 US home construction bouncing back sharply last month from weather 0:10:42.679 --> 0:10:45.000 related weakness at the start of the year. This is 0:10:45.040 --> 0:10:48.160 builders benefit from slightly more favorable mortgage rates and a 0:10:48.240 --> 0:10:49.960 dearth of existing houses for sale. 0:10:50.000 --> 0:10:53.440 Team Yeah, building permits a proxy for future construction made 0:10:53.440 --> 0:10:55.560 it rise to a rate that's the fastest since August. 0:10:55.640 --> 0:10:59.440 Both permits and starts figures for January were also revised higher. 0:10:59.600 --> 0:11:01.800 And yet for investors, the focus is all about tomorrow's 0:11:01.920 --> 0:11:04.959 FOMC meeting, which of course kicked off this morning. 0:11:04.960 --> 0:11:07.000 All right, everybody with a preview what to watch out for? 0:11:07.120 --> 0:11:09.720 Back with us as doctor Steve Skanky, chief economic advisor 0:11:09.760 --> 0:11:12.120 of a keel Point. He's a former US Treasury in 0:11:12.160 --> 0:11:15.000 White House National Security Council staff member. And then right 0:11:15.040 --> 0:11:18.319 here in studio we've got Bloomberg Economics US economist Stuart Paul. 0:11:18.559 --> 0:11:20.720 Steve is in Palm Beach, Florida. Stuart, as I said, 0:11:20.760 --> 0:11:22.840 right here in studio, Stuart, I want to start with 0:11:22.920 --> 0:11:25.440 you first up, remind us of what the data backdrop 0:11:25.559 --> 0:11:28.240 is that FED chair and the FOMC members will be 0:11:28.280 --> 0:11:31.320 reviewing today and tomorrow ahead of that decision. 0:11:31.400 --> 0:11:33.079 The thing that's going to be most pressing and that's 0:11:33.120 --> 0:11:34.640 going to be most front of mind for them, is 0:11:34.679 --> 0:11:36.840 just a hot inflation prints that we've seen so far 0:11:36.920 --> 0:11:39.640 this year. That's of course Number one. Other side of 0:11:39.640 --> 0:11:42.320 their mandate is focusing unemployment, and again we've seen hot 0:11:42.920 --> 0:11:46.040 We've seen hot non farm payroll print so far to 0:11:46.080 --> 0:11:48.360 start the year, the household survey has been a little 0:11:48.400 --> 0:11:50.319 bit weaker. We've seen it not taken the unemployment rate. 0:11:50.760 --> 0:11:52.960 But if we're seeing the pace of hiring that we've 0:11:53.000 --> 0:11:54.800 seen over two one hundred thousand jobs a month to 0:11:54.800 --> 0:11:57.840 start the year, plus hot and hot inflation, they're going 0:11:57.880 --> 0:12:00.520 to feel comfortable keeping their foot on the breaks, messaging 0:12:00.559 --> 0:12:02.640 relatively hawkishly perhaps in the state. 0:12:03.040 --> 0:12:05.160 That's right, okay, Stuart, So what does it all mean 0:12:05.280 --> 0:12:07.680 for the summary of economic projections the dot plot? What 0:12:07.679 --> 0:12:09.760 are you and the folks over at Bloomberg Economics thinking 0:12:09.800 --> 0:12:14.000 in terms of a median part the median rate that 0:12:14.040 --> 0:12:15.680 the Fed participants are expecting. 0:12:15.880 --> 0:12:18.959 We're still expecting to see them showing seventy five bases 0:12:19.000 --> 0:12:22.160 points of cuts this year, and that's really weighing the 0:12:22.200 --> 0:12:25.240 two things we've had. Hot inflation. So in their summary 0:12:25.240 --> 0:12:27.960 of the economic projections, we're going to expect to see 0:12:28.000 --> 0:12:31.680 an upward revision of their core inflation forecast for twenty 0:12:31.720 --> 0:12:33.880 twenty four up to maybe two and a half percent 0:12:33.880 --> 0:12:37.240 from two point four percent. Not huge, but taking into 0:12:37.280 --> 0:12:40.400 account the printed inflation that we've seen. And then we 0:12:40.440 --> 0:12:43.280 could also see a upward division of their unemployment forecast again, 0:12:43.320 --> 0:12:45.119 because we've seen the uptick already. 0:12:44.880 --> 0:12:46.680 And they're going to see two Percent's never going to happen. No, 0:12:46.760 --> 0:12:48.600 I'm just kidding. I'm just kidding. All right, Steve, come 0:12:48.640 --> 0:12:51.480 on in on this conversation. What are you expecting from 0:12:51.520 --> 0:12:52.520 the Fed and why? 0:12:54.160 --> 0:12:54.319 Well? 0:12:54.360 --> 0:12:56.520 I think, as Stuart says, they're they're not going to 0:12:56.520 --> 0:12:58.560 give any guidance one worthy the other about what they're 0:12:58.559 --> 0:13:01.760 going to do with interest rates. Jerome Powell was probably 0:13:01.880 --> 0:13:06.200 most forthcoming when he did is semi annual congressional testimony 0:13:06.200 --> 0:13:09.880 a couple of weeks ago, in which he said that 0:13:11.160 --> 0:13:14.000 you know, when they get the confidence, and he added, 0:13:14.120 --> 0:13:17.120 and we are not far from it, it'll be appropriate 0:13:17.160 --> 0:13:19.640 to dial back the level of restrictions so that we 0:13:19.760 --> 0:13:23.760 don't drive the economy into recession. So I think the 0:13:24.120 --> 0:13:28.040 real pivot point is at what point do they have 0:13:28.559 --> 0:13:32.800 what's the balance between believing that the economy is not 0:13:32.880 --> 0:13:37.280 close to tipping into recession and also that inflation is 0:13:37.960 --> 0:13:41.800 not taking back up. You know, when we when we 0:13:41.800 --> 0:13:45.160 look at the numbers, when when we were on at 0:13:45.160 --> 0:13:50.680 the end of January, the core personal consumption expenditures inflation 0:13:50.840 --> 0:13:55.120 metric was annualizing at one point nine percent, below their 0:13:55.160 --> 0:14:01.120 two percent target, and now after January it was up 0:14:01.160 --> 0:14:04.920 to two point four percent. And just based on a 0:14:05.000 --> 0:14:07.320 construction of what it would be like based on what 0:14:07.360 --> 0:14:10.760 we've seen with the CPI and PPI data, it'll probably 0:14:10.760 --> 0:14:14.679 be two point nine percent annualized over the last six months. 0:14:15.600 --> 0:14:21.280 And that doesn't give the Fed a justification to start 0:14:21.320 --> 0:14:21.960 cutting rates. 0:14:22.760 --> 0:14:25.240 See if you think that. Do you agree with Stewart 0:14:25.240 --> 0:14:28.240 and the team of Bloomberg Economics that the median FMC 0:14:28.320 --> 0:14:31.920 participant will still see seventy five bases points and cuts 0:14:32.120 --> 0:14:32.560 this year? 0:14:33.920 --> 0:14:40.000 I do. I do that that sort of has been 0:14:40.040 --> 0:14:42.800 where they've been, and when you hear what some of 0:14:42.840 --> 0:14:48.160 the Fed Fed Bank presidents have said, there is growing 0:14:48.320 --> 0:14:54.320 concern about the specter of recession and not sticking the 0:14:55.120 --> 0:15:00.760 soft landing. I grew Stewart that they are going to 0:15:00.760 --> 0:15:03.520 come in with MEETI and inflation at two point four 0:15:03.600 --> 0:15:07.240 or two point five percent. That's not a big difference. 0:15:08.680 --> 0:15:11.720 But I don't think that they're going to change the 0:15:11.760 --> 0:15:16.000 medium projection calling you know, four for three cuts sometime 0:15:16.040 --> 0:15:16.960 in twenty twenty four. 0:15:17.040 --> 0:15:19.360 So nothing's changed from the end of the last stop 0:15:19.440 --> 0:15:21.200 line is that what's happened Stewart. I mean, it's right, 0:15:21.240 --> 0:15:21.960 because that's what it was. 0:15:22.120 --> 0:15:22.240 Three. 0:15:22.400 --> 0:15:24.120 I think a lot of the data has changed. 0:15:23.840 --> 0:15:24.680 Well, has it, though? 0:15:24.800 --> 0:15:25.280 That's right? 0:15:25.360 --> 0:15:29.160 So it's interesting how it nets out, right, Because with 0:15:29.280 --> 0:15:31.040 inflation running as hot as it has so far to 0:15:31.040 --> 0:15:33.080 start the year, you would think so much has happened 0:15:33.160 --> 0:15:35.880 during the intermeting period. But if we look at some 0:15:35.920 --> 0:15:38.920 of our growth surprise indices, and we keep track of 0:15:38.960 --> 0:15:42.200 something like sixty eight sixty nine seventy different growth indices 0:15:42.200 --> 0:15:46.000 and economic activity indicies, about forty of them forty out 0:15:46.000 --> 0:15:49.160 of the sixty eight or so surprise to the downside. Right, 0:15:49.200 --> 0:15:51.640 So the FED is keeping track of everything on its 0:15:51.640 --> 0:15:54.360 own dashboard as well, right, And so yes, we've seen 0:15:54.360 --> 0:15:57.560 hot inflation, but we've also seen growth balancing the other side. 0:15:57.800 --> 0:16:00.360 I mean, how important. Not every one of the those 0:16:00.640 --> 0:16:04.000 economic indicators has created equal though. I mean sure inflation 0:16:04.400 --> 0:16:07.600 and the jobs numbers are those are pretty important ones start. 0:16:07.600 --> 0:16:11.680 That's right. Yeah, So absolutely within the Fed's balance of risk, 0:16:11.760 --> 0:16:13.840 the two things that are on either side of the 0:16:13.840 --> 0:16:17.400 seesaw are inflation and full employment. Now, yes, we've seen 0:16:17.480 --> 0:16:19.720 hot NFP on the other side of the seesaw, but 0:16:19.760 --> 0:16:22.920 we've also seen a weak household survey for the past 0:16:22.960 --> 0:16:23.520 two months. 0:16:24.560 --> 0:16:26.480 Steven Stewart, I want to get your both thoughts on this. 0:16:26.600 --> 0:16:29.080 The economic data points that's we're talking about that, I mean, 0:16:29.920 --> 0:16:32.720 are they showing that it's getting easier for the FED 0:16:32.760 --> 0:16:36.120 to navigate manage policy without tipping the US economy into 0:16:36.240 --> 0:16:39.280 recession or is it getting tricker trickier? And Stuart, let 0:16:39.320 --> 0:16:42.400 me start with you first, Like the data points giving 0:16:42.440 --> 0:16:46.280 the FED more runway to kind of manage things, making 0:16:46.360 --> 0:16:50.440 it easier for them in terms of not tipping the 0:16:50.600 --> 0:16:53.360 and then so not tipping the economy into recession. 0:16:53.080 --> 0:16:53.960 Or is it getting harder. 0:16:54.280 --> 0:16:57.360 I think that overall, I think is a data point 0:16:57.440 --> 0:17:00.840 to the FED having more of a runway, allowing the 0:17:00.920 --> 0:17:02.480 data all allow the FED to keep its front of 0:17:02.480 --> 0:17:04.280 the break for a little bit longer. Yeah, growth has 0:17:04.280 --> 0:17:07.080 been relatively resilient, despite the fact that a lot of 0:17:07.080 --> 0:17:11.280 the indicators underneath the surface have been surprising to the downside. 0:17:11.440 --> 0:17:13.440 Of course, the FED is trying to scape to where 0:17:13.440 --> 0:17:16.880 the puck is going. So we're going to expect the FED, 0:17:16.920 --> 0:17:18.840 and we all should be expecting the FED start cutting 0:17:18.880 --> 0:17:21.040 before it hits the two percent inflation targeting, before we 0:17:21.040 --> 0:17:22.800 were to drive off that cliff, so to speak. 0:17:23.160 --> 0:17:25.120 Hey, do you want to bring a headline to everyone's 0:17:25.119 --> 0:17:28.159 attention this crossing the Bloomberg terminal? Just moments ago? Supreme 0:17:28.160 --> 0:17:32.479 Court allows Texas deportation law in lass for President Biden. 0:17:32.600 --> 0:17:33.960 All right, well, keep an eye on that. Give you 0:17:33.960 --> 0:17:36.800 some more context on that in just a moment. Having 0:17:37.000 --> 0:17:39.040 said that, actually we're getting a little bit more context. 0:17:39.040 --> 0:17:39.840 So let's go through at the. 0:17:39.880 --> 0:17:43.119 US Supreme Court letting Texas to start arresting and deporting 0:17:43.160 --> 0:17:46.720 people who enter the country illegally. Refusing to block a 0:17:46.760 --> 0:17:49.479 new law that the Biden administration says will be an 0:17:49.560 --> 0:17:53.960 unprecedented intrusion on federal power to set immigration policy. 0:17:54.280 --> 0:17:56.960 Yeah, over three percents of the justices rejected the administration's 0:17:56.960 --> 0:17:58.960 request to keep the Texas law on hold while a 0:17:58.960 --> 0:18:01.520 illegal fight goes forward at a lower court, as is 0:18:01.520 --> 0:18:04.200 customary with emergency orders. The court as a whole gave 0:18:04.280 --> 0:18:05.359 no explanation, and I. 0:18:05.320 --> 0:18:07.479 Should put out the rebuff. Definitely a blow to President 0:18:07.520 --> 0:18:10.560 Biden's administration on an issue that is defined really up 0:18:10.600 --> 0:18:13.400 to this point. The twenty twenty four presidential election campaign. 0:18:13.680 --> 0:18:15.639 Let's go to Steve. Steve, let me put that question 0:18:15.680 --> 0:18:17.880 to you that Stewart has talked about. Do you think 0:18:17.880 --> 0:18:20.840 the economic points show that it's getting easier for the 0:18:20.880 --> 0:18:23.600 FED to navigate and manage policy without tipping the US 0:18:23.720 --> 0:18:26.560 economy ultimately into recession or is it getting trickier. 0:18:28.359 --> 0:18:30.760 I believe it's getting trickier, and I believe that the 0:18:30.800 --> 0:18:37.000 FED is becoming increasingly nervous about how sensitive things can be. 0:18:37.320 --> 0:18:41.200 You know, the thing about unemployment is well, none of 0:18:41.280 --> 0:18:44.680 these data are linear. When the unemployment rate starts going up, 0:18:45.520 --> 0:18:48.639 it tends to continue to move in that direction for 0:18:48.680 --> 0:18:52.280 a period of time. And the FED certainly doesn't want 0:18:52.280 --> 0:18:57.920 to see unemployment above four percent. And we're basically there 0:18:58.040 --> 0:19:03.600 now with the with the last data, as Stewart does 0:19:03.640 --> 0:19:06.560 point out, there there is increasing weakness in the economy, 0:19:06.560 --> 0:19:10.439 although some in the metrics still look pretty good. The 0:19:10.480 --> 0:19:13.879 other thing is the inflation data have just been peculiar. 0:19:14.400 --> 0:19:18.920 But you know, when we look at the January PC 0:19:19.160 --> 0:19:25.480 inflation core where we're owner equivalent rent, what was up 0:19:25.760 --> 0:19:31.080 way I aligned with what new leases have been. Portfolio 0:19:31.160 --> 0:19:35.400 management fees also contributed that, and then you look at February, 0:19:36.520 --> 0:19:40.119 and we see a huge vehicle. Right, we use vesical 0:19:40.160 --> 0:19:45.919 prices up, which is inconsistent with the associated data, and 0:19:46.000 --> 0:19:47.800 I think the FED is trying to figure that out, 0:19:47.880 --> 0:19:50.520 but I just think they're having a harder time, okay, 0:19:51.400 --> 0:19:52.480 to know which way to go. 0:19:52.560 --> 0:19:53.960 All Right, we got to leave it on that note, 0:19:54.160 --> 0:19:56.760 Doctor Steve Skanky, chief economic advisor of at keel Point 0:19:56.800 --> 0:20:02.680 Bloomberg Economics, US economist Stuart Paul. Right here in our studio, you're. 0:20:02.520 --> 0:20:06.440 Listening to the Bloomberg Business Week podcast. Listen live each 0:20:06.480 --> 0:20:09.400 weekday starting a two pm Eastern at Apple Car Play 0:20:09.440 --> 0:20:12.320 and Android Auto with the Bloomberg Business ad You can 0:20:12.359 --> 0:20:15.560 also listen live on Amazon Alexa from our flagship New 0:20:15.640 --> 0:20:19.280 York station. Just say Alexa Play Bloomberg eleven thirty. 0:20:20.520 --> 0:20:22.720 Well, the Biden administration is preparing to roll out the 0:20:22.880 --> 0:20:25.919 toughest ever limits on pollution from the nation's cars and 0:20:26.000 --> 0:20:29.960 light trucks, after making changes likely to mollify some automakers. 0:20:30.000 --> 0:20:32.920 All right, So, tim emission limits set to be finalized 0:20:32.920 --> 0:20:36.399