1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and a Marie Hortern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:35,840 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. 10 00:00:36,240 --> 00:00:36,879 Speaker 1: We'll begin this. 11 00:00:36,840 --> 00:00:39,040 Speaker 3: Hour with stocks looking to bounce back after a week 12 00:00:39,040 --> 00:00:42,600 Speaker 3: payrolls report, fueled rate cut expectations and your d any 13 00:00:42,640 --> 00:00:45,400 Speaker 3: of your Danny research writing. Traders might be starting to 14 00:00:45,440 --> 00:00:48,760 Speaker 3: take profits before going on their August vacations. They may 15 00:00:48,840 --> 00:00:51,600 Speaker 3: also be betting that September could be a week month 16 00:00:51,920 --> 00:00:52,519 Speaker 3: for stocks. 17 00:00:52,640 --> 00:00:54,640 Speaker 1: Ed joins us now, and let's start. 18 00:00:54,480 --> 00:00:57,280 Speaker 3: With the growth picture and just your reaction to Friday's 19 00:00:57,480 --> 00:01:01,880 Speaker 3: labor market data, especially those massive downwards revisions. For you 20 00:01:02,040 --> 00:01:03,640 Speaker 3: right now, is it a cause of concern? 21 00:01:04,959 --> 00:01:05,119 Speaker 4: Not? 22 00:01:05,200 --> 00:01:07,400 Speaker 5: Really? Not the way the market took a dive, and 23 00:01:08,080 --> 00:01:10,640 Speaker 5: I'm happy to see that the market may very well 24 00:01:10,680 --> 00:01:14,679 Speaker 5: rebound today. The reality is we did have a lot 25 00:01:14,720 --> 00:01:18,120 Speaker 5: of uncertainty during May and June when we had these 26 00:01:18,200 --> 00:01:21,800 Speaker 5: big downward revisions. Honestly, it seems to me the downward 27 00:01:21,840 --> 00:01:25,200 Speaker 5: revisions actually make more sense given that if I was 28 00:01:25,280 --> 00:01:29,440 Speaker 5: an employer during May and June, I wouldn't have fired anybody. 29 00:01:29,440 --> 00:01:33,080 Speaker 5: But I wouldn't have hired anybody given all the uncertaintly 30 00:01:33,160 --> 00:01:37,959 Speaker 5: unleashed by what I call Trump's tariff turmoil. And so yeah, 31 00:01:38,120 --> 00:01:41,920 Speaker 5: all in all, those numbers didn't surprise me all that much, 32 00:01:42,200 --> 00:01:45,880 Speaker 5: with the benefit of hindsight obviously. And then of course 33 00:01:46,440 --> 00:01:50,840 Speaker 5: we did see that the labor supply, the labor force 34 00:01:51,480 --> 00:01:55,280 Speaker 5: has been kind of flatted down since the beginning of 35 00:01:55,320 --> 00:01:59,440 Speaker 5: the year. So this is a combination of weakness in 36 00:01:59,720 --> 00:02:04,120 Speaker 5: May related that may be temporarily related to the turmoil 37 00:02:04,160 --> 00:02:08,320 Speaker 5: on tariffs that should I think be abait over the 38 00:02:08,360 --> 00:02:10,520 Speaker 5: next few months. And at the same time we may 39 00:02:10,639 --> 00:02:12,600 Speaker 5: actually have a shortage of workers. 40 00:02:12,919 --> 00:02:15,760 Speaker 3: Well, the President didn't like the jobs number on Friday, 41 00:02:15,760 --> 00:02:18,680 Speaker 3: and he fired the head of the Bureau of Labor Statistics. 42 00:02:18,680 --> 00:02:21,200 Speaker 3: Do you think that undercuts market confidence? 43 00:02:22,639 --> 00:02:27,080 Speaker 5: Well, this is a very bad situation. The President in 44 00:02:27,120 --> 00:02:30,560 Speaker 5: my opinion, shouldn't have done that. I agree with what 45 00:02:31,080 --> 00:02:34,960 Speaker 5: your collie Danny just said, and that is he should 46 00:02:35,000 --> 00:02:38,600 Speaker 5: be throwing more money at the Bureau of Labor Statistics 47 00:02:38,600 --> 00:02:43,520 Speaker 5: that he can do a better job settling workers and 48 00:02:43,560 --> 00:02:47,840 Speaker 5: the unemployed to see what's really going on here. Firing 49 00:02:48,200 --> 00:02:53,239 Speaker 5: the commissioner it does raise some questions of the confidence 50 00:02:53,240 --> 00:02:55,160 Speaker 5: that people are going to have in the data, especially 51 00:02:55,200 --> 00:02:58,200 Speaker 5: if he puts in a loyalist as a statistician, which 52 00:02:58,200 --> 00:02:59,000 Speaker 5: he's likely to do. 53 00:02:59,360 --> 00:03:00,960 Speaker 6: So what do you do then, ed, if you get 54 00:03:00,960 --> 00:03:03,800 Speaker 6: a loyalist put in as a top statistician there, do 55 00:03:03,840 --> 00:03:06,120 Speaker 6: we still trade on the data? Do you take it 56 00:03:06,120 --> 00:03:08,880 Speaker 6: more skeptically? Do you use private measures more? How will 57 00:03:08,880 --> 00:03:11,239 Speaker 6: it change how you interpret labor market data? 58 00:03:11,880 --> 00:03:15,000 Speaker 5: Well? Yeah, I think right now there's a lot of 59 00:03:15,040 --> 00:03:19,320 Speaker 5: skepticism about the labor market data, the employment data, I 60 00:03:19,320 --> 00:03:23,880 Speaker 5: should say, because of what you mentioned before the fact 61 00:03:23,880 --> 00:03:28,240 Speaker 5: that response rates have gone down, and look, the economy 62 00:03:29,639 --> 00:03:32,480 Speaker 5: moves a lot faster these days, and I'm not sure 63 00:03:32,520 --> 00:03:37,040 Speaker 5: the statistical techniques that the BLS has move is rapidly. 64 00:03:37,080 --> 00:03:39,760 Speaker 5: So I would throw more money at him rather than 65 00:03:39,840 --> 00:03:43,320 Speaker 5: become partisan partisan about it. So all I'm saying is 66 00:03:43,320 --> 00:03:47,160 Speaker 5: that data was already suspect for other reasons. And we've all, 67 00:03:47,600 --> 00:03:51,600 Speaker 5: all of us economist types have looked at all the 68 00:03:51,800 --> 00:03:57,880 Speaker 5: employment data, both private and public. So I think nothing 69 00:03:58,000 --> 00:04:01,480 Speaker 5: dramatically changes in terms of the way the markets look 70 00:04:01,520 --> 00:04:02,720 Speaker 5: at data. 71 00:04:02,840 --> 00:04:06,480 Speaker 6: Even so ed nothing dramatically changes. But Friday did demonstrate 72 00:04:06,480 --> 00:04:09,080 Speaker 6: a vulnerability in the market with that huge move in 73 00:04:09,120 --> 00:04:10,840 Speaker 6: the front end. You could even see what happened with 74 00:04:10,880 --> 00:04:13,400 Speaker 6: copper prices demonstrated a vulnerability. 75 00:04:13,480 --> 00:04:14,480 Speaker 1: Given that we've had. 76 00:04:14,320 --> 00:04:17,719 Speaker 6: This slow melt up to the summer, you're still bullish ed, 77 00:04:17,920 --> 00:04:20,599 Speaker 6: But are you concerned about some of these short term 78 00:04:20,640 --> 00:04:22,960 Speaker 6: blips that traders aren't properly hedged for. 79 00:04:23,880 --> 00:04:27,440 Speaker 5: Well, you quoted me saying that a lot of traders, 80 00:04:27,480 --> 00:04:30,200 Speaker 5: a lot of investors are going on vacation. They certainly 81 00:04:30,200 --> 00:04:33,560 Speaker 5: don't want to be exposed to the volatility of the market, 82 00:04:33,600 --> 00:04:36,480 Speaker 5: at least not from a trading perspective. So I think 83 00:04:36,520 --> 00:04:37,800 Speaker 5: we're going to see a lot of that kind of 84 00:04:37,880 --> 00:04:41,080 Speaker 5: activity slow down. I think it already has slowed down. 85 00:04:41,080 --> 00:04:44,320 Speaker 5: Maybe it started that on Fridays. Some people said, you 86 00:04:44,360 --> 00:04:46,840 Speaker 5: know what I'm going to take. I'll be taking vacation 87 00:04:46,960 --> 00:04:49,800 Speaker 5: for the next week, two weeks. Let me just close 88 00:04:50,000 --> 00:04:53,240 Speaker 5: my books here. And then, of course there is a 89 00:04:53,279 --> 00:04:58,799 Speaker 5: seasonality issue. Septembers have a tendency to be a week months, 90 00:04:58,839 --> 00:05:02,000 Speaker 5: so I would miss prize if this market just kind 91 00:05:02,000 --> 00:05:05,479 Speaker 5: of chops around here in August and September, and maybe 92 00:05:05,520 --> 00:05:09,800 Speaker 5: we make some sort of low or bottom in October 93 00:05:09,880 --> 00:05:10,920 Speaker 5: for a year end rally. 94 00:05:11,240 --> 00:05:13,200 Speaker 3: Good luck to anyone who's trying to take a vacation 95 00:05:13,400 --> 00:05:15,960 Speaker 3: with all these headlines coming out, and also this week 96 00:05:16,000 --> 00:05:18,480 Speaker 3: we have this new deadline when it comes to the 97 00:05:18,520 --> 00:05:21,479 Speaker 3: tariff rates on Thursday. Do you think the market is 98 00:05:21,600 --> 00:05:24,360 Speaker 3: ready to basically put the trade war behind them? 99 00:05:24,839 --> 00:05:26,719 Speaker 5: I think the markets would love to put the trade 100 00:05:26,720 --> 00:05:29,440 Speaker 5: war behind them, and I really thought that by now 101 00:05:29,760 --> 00:05:33,720 Speaker 5: the President would really be sort of in the same camp, 102 00:05:33,800 --> 00:05:36,719 Speaker 5: because he's going to start focusing on the midterm elections 103 00:05:36,760 --> 00:05:42,520 Speaker 5: next year. He does love to talk at these large conventions, 104 00:05:42,880 --> 00:05:47,479 Speaker 5: these large rallies in sports stadiums, and he's going to 105 00:05:47,480 --> 00:05:50,599 Speaker 5: need to do that in order to shore up his 106 00:05:51,080 --> 00:05:56,080 Speaker 5: Republican Party during the midterm elections. And he's going to 107 00:05:56,120 --> 00:06:00,560 Speaker 5: really start to focus on just saying what has been 108 00:06:00,560 --> 00:06:05,480 Speaker 5: accomplished and avoid doing things that might backfire on the midterms. 109 00:06:06,160 --> 00:06:08,560 Speaker 5: So yeah, I think the other issue, of course, is 110 00:06:08,600 --> 00:06:11,200 Speaker 5: the courts are probably about to rule it. He doesn't 111 00:06:11,200 --> 00:06:14,119 Speaker 5: really have the legal authority to do what he's been doing. 112 00:06:14,839 --> 00:06:15,920 Speaker 5: I don't know if it's going to go all the 113 00:06:15,920 --> 00:06:18,760 Speaker 5: way up to the Supreme Court. The Appeals Court has 114 00:06:18,800 --> 00:06:20,640 Speaker 5: a love in judges, and if all I loved of 115 00:06:20,720 --> 00:06:24,000 Speaker 5: him rule that way, which is possible, the Supreme Court 116 00:06:24,040 --> 00:06:27,120 Speaker 5: may not take it up. So we may be entering 117 00:06:27,360 --> 00:06:30,200 Speaker 5: even a more volatile period with regards to what's going 118 00:06:30,240 --> 00:06:31,440 Speaker 5: on here on the tariff side. 119 00:06:31,520 --> 00:06:33,560 Speaker 3: But you don't expect the terrors to go away, do you, 120 00:06:33,680 --> 00:06:36,520 Speaker 3: Because there are other tools they can use to enact them. 121 00:06:37,120 --> 00:06:41,400 Speaker 5: There are other tools, but they're not as quick or 122 00:06:41,400 --> 00:06:46,520 Speaker 5: efficient as the Emergency Act that he called upon. That 123 00:06:46,560 --> 00:06:50,320 Speaker 5: the courts may rule he just doesn't have the power 124 00:06:50,360 --> 00:06:52,960 Speaker 5: to declare an emergency when there doesn't seem to be 125 00:06:52,960 --> 00:06:58,919 Speaker 5: an emergency. But again, I think he and the administration 126 00:06:59,400 --> 00:07:03,159 Speaker 5: may conclude that it's time to downplay the whole thing 127 00:07:03,480 --> 00:07:04,040 Speaker 5: and move on. 128 00:07:04,839 --> 00:07:07,080 Speaker 6: What does that mean for corporate America ed Some of 129 00:07:07,120 --> 00:07:10,040 Speaker 6: these companies are just starting to wrap their heads around 130 00:07:10,040 --> 00:07:11,480 Speaker 6: what it needs for them, or you have the legend 131 00:07:11,480 --> 00:07:13,600 Speaker 6: of Amazon last week, who said, we just don't know 132 00:07:13,640 --> 00:07:16,400 Speaker 6: what's going to happen moving forward. Is there enough clarity 133 00:07:16,440 --> 00:07:19,520 Speaker 6: after Friday for corporations to move forward with things like 134 00:07:19,560 --> 00:07:21,120 Speaker 6: spending and hiring plans. 135 00:07:21,720 --> 00:07:23,560 Speaker 5: I think we have to see what the courts rule 136 00:07:23,600 --> 00:07:27,600 Speaker 5: and how the administration responds to that. The reality is, 137 00:07:27,720 --> 00:07:30,520 Speaker 5: if we just take it at face value that the 138 00:07:30,560 --> 00:07:35,480 Speaker 5: President wants to basically achieve a fifteen percent tariff across 139 00:07:35,520 --> 00:07:39,040 Speaker 5: the board on everybody and raise something like four or 140 00:07:39,080 --> 00:07:42,840 Speaker 5: five hundred billion dollars, well, the corporate income tax raises 141 00:07:42,880 --> 00:07:46,440 Speaker 5: about six hundred billion dollars. In effect, the tariffs are 142 00:07:46,440 --> 00:07:51,000 Speaker 5: attack and there are direct tax on importers businesses, and 143 00:07:51,040 --> 00:07:55,600 Speaker 5: so it is a negative for corporate profitability. And again 144 00:07:56,240 --> 00:07:59,160 Speaker 5: we've heard some bad news out of GM and Ford 145 00:07:59,400 --> 00:08:02,440 Speaker 5: anticipate this, but other companies said, we just don't know 146 00:08:02,640 --> 00:08:05,160 Speaker 5: enough to really figure out what this is going to 147 00:08:05,200 --> 00:08:08,480 Speaker 5: cost us. So that's still a known unknown. 148 00:08:08,640 --> 00:08:10,840 Speaker 3: But still a little bit more clarity in terms of 149 00:08:10,880 --> 00:08:13,440 Speaker 3: the bottom line rate for tariffs. We do have a 150 00:08:13,440 --> 00:08:16,480 Speaker 3: weakening jobs report on Friday. Do you think the Fed 151 00:08:16,520 --> 00:08:18,200 Speaker 3: is in position to cut in September? 152 00:08:19,600 --> 00:08:24,400 Speaker 5: Well, the market certainly thought so on Friday, maybe today 153 00:08:24,760 --> 00:08:28,560 Speaker 5: there'll be a change of opinion. I think on Friday 154 00:08:28,600 --> 00:08:32,160 Speaker 5: we got the probability of a rate cut according to 155 00:08:32,200 --> 00:08:37,280 Speaker 5: the CME Fedwatch tracking tool, going up to a ninety 156 00:08:37,280 --> 00:08:42,640 Speaker 5: percent probability. Then over the weekend that you know, that 157 00:08:42,720 --> 00:08:45,400 Speaker 5: actually simmer down by the end of Friday down to 158 00:08:45,840 --> 00:08:49,480 Speaker 5: eighty percent. I wouldn't be surprised if there is no 159 00:08:49,600 --> 00:08:52,839 Speaker 5: rate cut on September because we still have a batch 160 00:08:52,880 --> 00:08:56,640 Speaker 5: of data up ahead here, particularly on the inflation front. 161 00:08:56,679 --> 00:08:59,880 Speaker 5: We are seeing that the tariffs are having an impact 162 00:09:00,040 --> 00:09:03,560 Speaker 5: on inflation. A lot of people saying, well, it's not there, 163 00:09:03,600 --> 00:09:06,240 Speaker 5: but the reality is, if you look at durable goods inflation, 164 00:09:06,720 --> 00:09:11,600 Speaker 5: durable goods prices typically fall. That's what they did before 165 00:09:12,440 --> 00:09:15,679 Speaker 5: the pandemic. Then they had that inflation spike, but then 166 00:09:15,720 --> 00:09:18,080 Speaker 5: they came right back and started falling again, and now 167 00:09:18,080 --> 00:09:20,880 Speaker 5: they're rising again, mostly because of the tariffs. 168 00:09:21,679 --> 00:09:23,319 Speaker 3: ED thanks so much for your time this morning, to 169 00:09:23,400 --> 00:09:36,679 Speaker 3: great point at your Denny of your Denny research. IPOs 170 00:09:36,760 --> 00:09:39,480 Speaker 3: are making a comeback this summer, with the latest FIGMA 171 00:09:39,520 --> 00:09:42,840 Speaker 3: share surging more than two hundred and fifty percent in 172 00:09:42,880 --> 00:09:44,120 Speaker 3: its debut last week. 173 00:09:44,200 --> 00:09:45,439 Speaker 1: So excited for this conversation. 174 00:09:45,520 --> 00:09:48,200 Speaker 3: Joining us now is Nicey President Lynn Martin lind Good morning, 175 00:09:48,400 --> 00:09:49,359 Speaker 3: thanks for joining. 176 00:09:49,160 --> 00:09:50,280 Speaker 7: Us, Thanks for having me. 177 00:09:50,440 --> 00:09:50,520 Speaker 8: So. 178 00:09:50,679 --> 00:09:51,600 Speaker 1: You told John. 179 00:09:51,480 --> 00:09:55,160 Speaker 3: Leson myself in May that you saw quote unprecedented levels 180 00:09:55,160 --> 00:09:58,040 Speaker 3: of volume following the April second Liberation Day, but for 181 00:09:58,040 --> 00:10:00,920 Speaker 3: the IPO landscape, you were optimistic, but the timeline was 182 00:10:00,960 --> 00:10:03,640 Speaker 3: shifted out. Where are we now in that timeline in 183 00:10:03,640 --> 00:10:04,439 Speaker 3: that pipeline? 184 00:10:04,520 --> 00:10:07,640 Speaker 7: Well, I think as a result of the successful deals 185 00:10:07,679 --> 00:10:11,560 Speaker 7: we've been able to bring to market, really starting in 186 00:10:11,600 --> 00:10:17,160 Speaker 7: that end of May timeframe, but most manifestly over the 187 00:10:17,240 --> 00:10:20,280 Speaker 7: last two weeks when we had seven IPOs, I think 188 00:10:20,320 --> 00:10:23,160 Speaker 7: it's fair to say that the markets are open for IPOs. 189 00:10:23,600 --> 00:10:27,200 Speaker 6: Our markets open for all IPOs, though, d do we 190 00:10:27,240 --> 00:10:29,440 Speaker 6: still need to be selective among those that are being 191 00:10:29,440 --> 00:10:31,840 Speaker 6: brought in and they need to be tech companies for example, 192 00:10:32,080 --> 00:10:34,120 Speaker 6: or can we start to see some of the smaller 193 00:10:34,160 --> 00:10:35,240 Speaker 6: midcaps come back too. 194 00:10:35,320 --> 00:10:39,439 Speaker 7: Yeah, we've seen a variety of sizes and companies across 195 00:10:39,559 --> 00:10:42,560 Speaker 7: different sectors come to market in the last few months. 196 00:10:43,040 --> 00:10:46,679 Speaker 7: UH Tech in particular, has, as you point out, had 197 00:10:46,679 --> 00:10:49,160 Speaker 7: a great reception in the market. You know, in the 198 00:10:49,240 --> 00:10:51,280 Speaker 7: last two weeks we saw Nils and IQ. We saw 199 00:10:51,360 --> 00:10:54,320 Speaker 7: McGrath Hill, we saw Figma as you just had the 200 00:10:54,400 --> 00:10:56,880 Speaker 7: screen up, and then a couple months ago we saw 201 00:10:56,880 --> 00:11:00,440 Speaker 7: a Circle come to market, also Hinge Health and Mountain, 202 00:11:00,640 --> 00:11:05,959 Speaker 7: so some really tech led companies, but mostly pretty much 203 00:11:05,960 --> 00:11:06,600 Speaker 7: all sectors. 204 00:11:07,000 --> 00:11:09,200 Speaker 6: The market rate a bit of a split screen though, 205 00:11:09,280 --> 00:11:11,600 Speaker 6: in because you start to have some IPOs coming back, 206 00:11:12,000 --> 00:11:14,200 Speaker 6: and at the same time you have these private equity 207 00:11:14,240 --> 00:11:17,559 Speaker 6: players coming up with liquidity solutions that just allows companies 208 00:11:17,760 --> 00:11:20,199 Speaker 6: to be private for longer, be it secondary funds, be 209 00:11:20,280 --> 00:11:23,880 Speaker 6: it perpetual capital. And their argument is companies just don't 210 00:11:23,880 --> 00:11:25,800 Speaker 6: want to be public and we're giving the option not 211 00:11:25,880 --> 00:11:28,720 Speaker 6: to be longer term. Does that hinder IPOs? 212 00:11:28,880 --> 00:11:32,000 Speaker 7: Well, I think what it means is that the companies 213 00:11:32,000 --> 00:11:35,120 Speaker 7: that come to market are better companies. You look at 214 00:11:35,120 --> 00:11:37,360 Speaker 7: the companies that have come to market, it's not the 215 00:11:37,400 --> 00:11:40,960 Speaker 7: first time that they've been in the news about an 216 00:11:41,000 --> 00:11:44,760 Speaker 7: IPO bo Look at Circle for example, they were talking 217 00:11:44,800 --> 00:11:47,760 Speaker 7: about going public back in twenty twenty one when they 218 00:11:47,800 --> 00:11:50,000 Speaker 7: came to market. Though they're a better company. They have 219 00:11:50,000 --> 00:11:53,120 Speaker 7: a more refined strategy, a more refined P and L, 220 00:11:53,880 --> 00:11:58,160 Speaker 7: a story for the investors that generates a tremendous amount 221 00:11:58,160 --> 00:12:01,360 Speaker 7: of excitement. And I think what you're seeing with the 222 00:12:01,440 --> 00:12:04,920 Speaker 7: reception of the companies that have come to market is 223 00:12:04,960 --> 00:12:08,880 Speaker 7: that pent up demand in the public markets, that pent 224 00:12:09,040 --> 00:12:12,960 Speaker 7: up excitement in the public markets for new issues to 225 00:12:13,080 --> 00:12:16,360 Speaker 7: come to market. It's something that I talk with long 226 00:12:16,400 --> 00:12:20,680 Speaker 7: only investors, something I talk with retail about how they 227 00:12:20,800 --> 00:12:24,199 Speaker 7: really want to see these new names, these growth companies 228 00:12:24,240 --> 00:12:26,280 Speaker 7: come to market to add to their portfolio. 229 00:12:26,520 --> 00:12:28,880 Speaker 3: That pent up demand. Was it being held back because 230 00:12:28,920 --> 00:12:30,240 Speaker 3: of regulation in Washington? 231 00:12:30,679 --> 00:12:33,320 Speaker 7: It was really being held back because of volatility and 232 00:12:33,400 --> 00:12:38,200 Speaker 7: uncertainty in markets. There've been a variety of events that 233 00:12:38,240 --> 00:12:42,840 Speaker 7: have occurred over the last three three and a half years, wars, 234 00:12:43,679 --> 00:12:49,040 Speaker 7: geopolitical uncertainty that have fueled that volatility. Now that there 235 00:12:49,120 --> 00:12:54,960 Speaker 7: is more certainty, more certainty around the geopolitical landscape, more 236 00:12:55,040 --> 00:12:59,120 Speaker 7: certainty around the market and the trajectory of the market, 237 00:12:59,200 --> 00:13:01,960 Speaker 7: that's why you're seeing these companies finally come to market. 238 00:13:02,120 --> 00:13:04,520 Speaker 3: How has the change in regulatory leadership though the SEC 239 00:13:04,640 --> 00:13:08,559 Speaker 3: regulates the nicey, how has that potentially changed your business 240 00:13:08,600 --> 00:13:09,200 Speaker 3: going forward? 241 00:13:09,600 --> 00:13:12,280 Speaker 7: We're very optimistic. We had a great relationship with the 242 00:13:12,320 --> 00:13:17,280 Speaker 7: past administration and the past SEC, but We're very excited. 243 00:13:16,800 --> 00:13:19,080 Speaker 3: About blackinso's very different than Garrigance. 244 00:13:19,240 --> 00:13:21,680 Speaker 7: He is he is, and we've had a long relationship 245 00:13:21,720 --> 00:13:25,000 Speaker 7: with Paul Atkins. This isn't Paul Akins' first time in 246 00:13:25,080 --> 00:13:28,520 Speaker 7: the SEC, and we had a very productive working relationship 247 00:13:28,559 --> 00:13:32,079 Speaker 7: with him. We've already had a very productive working relationship 248 00:13:32,440 --> 00:13:35,280 Speaker 7: in the short time that he's been chair, and a 249 00:13:35,320 --> 00:13:41,120 Speaker 7: lot of the modifications that he's looking to make I 250 00:13:41,160 --> 00:13:43,560 Speaker 7: think are going to benefit the public markets. 251 00:13:43,760 --> 00:13:45,920 Speaker 6: So we have a moment where public market volatility has 252 00:13:45,960 --> 00:13:48,640 Speaker 6: started to edd But even so, you have the rebirth 253 00:13:48,720 --> 00:13:50,960 Speaker 6: of memestocks, and you have these weird things happening where 254 00:13:50,960 --> 00:13:53,200 Speaker 6: you have open Door, for example, on one day, can 255 00:13:53,200 --> 00:13:56,319 Speaker 6: account for ten percent of all equity trading volume. What 256 00:13:56,360 --> 00:13:58,920 Speaker 6: do you make of just the health of these markets 257 00:13:58,960 --> 00:14:01,000 Speaker 6: at this moment as some of that starts to bubble up. 258 00:14:01,480 --> 00:14:03,720 Speaker 7: I think the markets are incredibly healthy. I mean, our 259 00:14:03,760 --> 00:14:06,960 Speaker 7: markets are the envy of the world. The breath, the depth, 260 00:14:07,040 --> 00:14:12,280 Speaker 7: the liquidity, the trade certainty. Any one day, though there 261 00:14:12,320 --> 00:14:16,120 Speaker 7: could be excitement about a different name. I think what 262 00:14:16,160 --> 00:14:18,320 Speaker 7: you're seeing is a lot of the pent up demand 263 00:14:18,920 --> 00:14:21,400 Speaker 7: looking for the new issues and new things to treat. 264 00:14:21,320 --> 00:14:23,680 Speaker 6: It's very different though than twenty twenty one, where those 265 00:14:23,720 --> 00:14:26,000 Speaker 6: retail investors have had all the money to go. 266 00:14:26,320 --> 00:14:27,760 Speaker 1: So when you look at that, you're like, Okay, this 267 00:14:27,840 --> 00:14:28,080 Speaker 1: is just. 268 00:14:28,080 --> 00:14:30,320 Speaker 6: A temporary phenomenon, or do we just need to get 269 00:14:30,400 --> 00:14:34,040 Speaker 6: used to single names getting this wind sweep of various 270 00:14:34,080 --> 00:14:36,600 Speaker 6: excitement built up online and that's just the new normal 271 00:14:36,640 --> 00:14:37,000 Speaker 6: we live in. 272 00:14:37,120 --> 00:14:39,720 Speaker 7: No, I really can't speak to what's driving a stock 273 00:14:39,840 --> 00:14:46,120 Speaker 7: any on any given day. Certainly the social media and 274 00:14:46,320 --> 00:14:52,200 Speaker 7: the conversation around stocks overall, I think is actually a 275 00:14:52,200 --> 00:14:55,600 Speaker 7: good thing. It means that people aren't interested in investing, 276 00:14:55,640 --> 00:14:59,040 Speaker 7: they're interested in adding to their portfolio. They're also interested 277 00:14:59,080 --> 00:15:00,840 Speaker 7: in diversifying their portfolio. 278 00:15:01,080 --> 00:15:02,160 Speaker 1: Speaking of diversification. 279 00:15:02,400 --> 00:15:04,240 Speaker 3: On Thursday, at and T says they're going to have 280 00:15:04,240 --> 00:15:06,240 Speaker 3: this dual listing and the icy in Texas. 281 00:15:06,320 --> 00:15:08,160 Speaker 1: What's the business like in Texas. 282 00:15:08,480 --> 00:15:12,720 Speaker 7: Yeah, Well, we're very supportive of all of the changes 283 00:15:12,760 --> 00:15:15,440 Speaker 7: that Governor Abbit has rolled out in the state of 284 00:15:15,480 --> 00:15:19,440 Speaker 7: Texas to really foster that pro growth environment. Since we 285 00:15:19,600 --> 00:15:24,800 Speaker 7: announced NYC Texas and launched the exchange, which was the 286 00:15:24,960 --> 00:15:28,400 Speaker 7: end of March this year, we've added twenty new listings 287 00:15:28,880 --> 00:15:33,120 Speaker 7: to the exchange. So we're very optimistic and grateful for 288 00:15:33,200 --> 00:15:35,520 Speaker 7: a governor abbit for really leading the way on pro 289 00:15:35,600 --> 00:15:36,440 Speaker 7: business atmosphere. 290 00:15:36,440 --> 00:15:38,200 Speaker 1: Do you see more money leaving New York though? 291 00:15:39,120 --> 00:15:42,840 Speaker 7: You know, I don't really, I don't know. I don't 292 00:15:42,880 --> 00:15:45,800 Speaker 7: think so. I think New York's always going to be 293 00:15:45,880 --> 00:15:49,480 Speaker 7: an important at the center for markets. But I think 294 00:15:49,520 --> 00:15:53,240 Speaker 7: it's interesting the pro business moves and then ultimately what 295 00:15:53,640 --> 00:15:56,280 Speaker 7: the pro business moves in Texas will lead to. 296 00:15:57,120 --> 00:15:59,640 Speaker 1: On the federal level. More than anything, Lynn, thanks so 297 00:15:59,720 --> 00:16:00,240 Speaker 1: much for time. 298 00:16:00,280 --> 00:16:03,080 Speaker 3: Thanks for having great insight, and I see President Lynn Martin. 299 00:16:13,360 --> 00:16:17,160 Speaker 3: Michelle Meyer of MasterCard Economics Institute writing, consumers are the 300 00:16:17,160 --> 00:16:19,480 Speaker 3: heartbeat of the economy and they are resilient. 301 00:16:19,560 --> 00:16:20,440 Speaker 1: Michelle joins us. 302 00:16:20,440 --> 00:16:23,040 Speaker 3: Now, so you say they're resilient, what kind of cracks Michelle, 303 00:16:23,080 --> 00:16:25,000 Speaker 3: and good morning, thanks for joining us. Do you think 304 00:16:25,160 --> 00:16:26,840 Speaker 3: the economy is seeing right now when it comes to 305 00:16:26,880 --> 00:16:27,400 Speaker 3: the consumer? 306 00:16:27,840 --> 00:16:28,880 Speaker 1: Well, I think it goes back to. 307 00:16:28,800 --> 00:16:31,240 Speaker 9: What we learned over the last few days on Friday 308 00:16:31,240 --> 00:16:34,320 Speaker 9: with the jobs report that clearly there has been an 309 00:16:34,360 --> 00:16:38,440 Speaker 9: certainty impact in the economy that has mattered for companies 310 00:16:38,480 --> 00:16:41,440 Speaker 9: when they think about the labor demand numbers. So the 311 00:16:41,680 --> 00:16:43,840 Speaker 9: slow down in job creation within the May, and the 312 00:16:43,880 --> 00:16:46,880 Speaker 9: Junie report looking distinctly different than we thought it was 313 00:16:46,880 --> 00:16:49,840 Speaker 9: in real time, shows that's something that uncertainty mattered, that 314 00:16:49,960 --> 00:16:53,040 Speaker 9: there probably was some pausing in terms of the pace 315 00:16:53,080 --> 00:16:57,320 Speaker 9: of job creation. But importantly, there's very little evidence of 316 00:16:57,360 --> 00:17:00,000 Speaker 9: firing happening, whether you look at the jobless claims now 317 00:17:00,480 --> 00:17:03,040 Speaker 9: or you look at the JOLT survey. And I think 318 00:17:03,080 --> 00:17:06,359 Speaker 9: for consumers, what that results in is a labor market 319 00:17:06,400 --> 00:17:09,760 Speaker 9: that is still supportive right, an unemployment rate of four 320 00:17:09,800 --> 00:17:12,920 Speaker 9: point two percent, wage growth that is still running above 321 00:17:13,600 --> 00:17:17,920 Speaker 9: underlying inflation, even with some of the tariff inflation impulses starting. 322 00:17:17,560 --> 00:17:18,080 Speaker 1: To move in. 323 00:17:18,560 --> 00:17:22,000 Speaker 9: So consumers are managing this, I think quite remarkably. 324 00:17:21,600 --> 00:17:23,760 Speaker 6: And things like sales and the earnings we've seen look 325 00:17:23,840 --> 00:17:27,240 Speaker 6: really strong. But Andrew lapthorn Over at Softgen noted that 326 00:17:27,240 --> 00:17:28,879 Speaker 6: two thirds of the companies in the S and P 327 00:17:29,359 --> 00:17:32,639 Speaker 6: reported declining profit margins. In other words, for now, the 328 00:17:32,680 --> 00:17:35,679 Speaker 6: companies are eating the higher costs. If they turn around 329 00:17:35,800 --> 00:17:38,639 Speaker 6: and start to rise and raise costs, will the consumer 330 00:17:38,720 --> 00:17:39,480 Speaker 6: still be resilient. 331 00:17:39,920 --> 00:17:40,840 Speaker 1: Well, I think it's. 332 00:17:40,680 --> 00:17:43,119 Speaker 9: Happening, and it's happening slowly, And this is important to 333 00:17:43,200 --> 00:17:45,560 Speaker 9: keep in mind, which is that I think relative to 334 00:17:45,560 --> 00:17:48,439 Speaker 9: the initial expectations and the fear of terrists was that 335 00:17:48,480 --> 00:17:51,239 Speaker 9: it was going to impact the economy immediately and all 336 00:17:51,280 --> 00:17:53,560 Speaker 9: of a sudden, consumers won't be able to get items 337 00:17:53,640 --> 00:17:56,359 Speaker 9: or they won't be able to afford certain goods. And 338 00:17:56,400 --> 00:17:59,960 Speaker 9: the reality is that it's happening slowly. It's moving into 339 00:18:00,119 --> 00:18:03,040 Speaker 9: the economy. It's starting more on the supplier side than 340 00:18:03,080 --> 00:18:06,000 Speaker 9: the companies and into consumers. And if you look at 341 00:18:06,000 --> 00:18:09,520 Speaker 9: the last inflation report, it's starting to show in certain 342 00:18:09,560 --> 00:18:12,440 Speaker 9: categories a lot of the durable goods, discretionary goods, whether 343 00:18:12,440 --> 00:18:16,400 Speaker 9: you're looking at appliances or auto tires or even into apparel, 344 00:18:16,440 --> 00:18:18,320 Speaker 9: it's starting to show up. So I would argue that 345 00:18:18,359 --> 00:18:21,960 Speaker 9: consumers are ready starting to face some of those higher prices. 346 00:18:22,119 --> 00:18:25,080 Speaker 9: It's happening gradually, and it's happening uneven, which means that 347 00:18:25,160 --> 00:18:27,639 Speaker 9: consumers still have some choices in terms of how to 348 00:18:27,720 --> 00:18:30,920 Speaker 9: navigate this and move around some of these price shocks. 349 00:18:30,960 --> 00:18:33,760 Speaker 6: In terms of the unevenness, it's also interesting to look 350 00:18:34,080 --> 00:18:36,399 Speaker 6: and see what the hottest parts of this economy are, 351 00:18:36,440 --> 00:18:39,080 Speaker 6: and it's hard to argue it's anything but tech and AI, 352 00:18:39,560 --> 00:18:42,399 Speaker 6: but these are the very companies that are firing on 353 00:18:42,440 --> 00:18:45,879 Speaker 6: a headline level and only hiring at the top echelons 354 00:18:45,880 --> 00:18:48,000 Speaker 6: where you get the most pay. When you look at 355 00:18:48,000 --> 00:18:50,760 Speaker 6: that trend, do you see what you're talking about, the uneveness. 356 00:18:50,800 --> 00:18:53,240 Speaker 6: Does it start to get exacerbated by some of these 357 00:18:53,280 --> 00:18:53,840 Speaker 6: tech moves. 358 00:18:54,480 --> 00:18:56,600 Speaker 9: Well, I think the fact that you're seeing all this 359 00:18:56,760 --> 00:19:01,359 Speaker 9: investment focus on technology is actually really positive secular trend 360 00:19:01,359 --> 00:19:04,199 Speaker 9: that hopefully can help get us through some of this 361 00:19:04,280 --> 00:19:07,240 Speaker 9: sick legal adjustment that's happening as a result of tariffs. 362 00:19:07,440 --> 00:19:09,520 Speaker 9: But yes, to your point, what it also does is 363 00:19:09,520 --> 00:19:11,480 Speaker 9: it creates a lot of wealth in the economy. So 364 00:19:11,480 --> 00:19:13,240 Speaker 9: if you look at the equity market, we'll see what 365 00:19:13,480 --> 00:19:16,200 Speaker 9: results today. But the trend has clearly been very positive, 366 00:19:16,200 --> 00:19:21,320 Speaker 9: notwithstanding Friday, and therefore that's positive wealth gains, and those 367 00:19:21,359 --> 00:19:24,639 Speaker 9: positive wealth gains will filter into consumer spending amongst the 368 00:19:24,680 --> 00:19:27,600 Speaker 9: cohort that can realize those gains, that can invest and 369 00:19:27,680 --> 00:19:28,919 Speaker 9: can see that wealth creation. 370 00:19:29,200 --> 00:19:31,200 Speaker 1: That's the upper achalance of society. 371 00:19:31,720 --> 00:19:33,480 Speaker 3: Do you feel like we're going into a K shape 372 00:19:33,480 --> 00:19:35,359 Speaker 3: economy or we're just already in one? 373 00:19:35,720 --> 00:19:38,199 Speaker 9: You know, that's been a conversation that's been on and 374 00:19:38,240 --> 00:19:40,439 Speaker 9: off for the past several years. And I think the 375 00:19:40,480 --> 00:19:43,800 Speaker 9: reality is that it's there's always an unevenness about any 376 00:19:43,880 --> 00:19:47,600 Speaker 9: business cycle, and I think when you consider the start 377 00:19:47,880 --> 00:19:50,960 Speaker 9: of this cycle coming out of the pandemic, it was 378 00:19:50,960 --> 00:19:53,440 Speaker 9: certainly one that was much more driven by lower income 379 00:19:53,440 --> 00:19:55,800 Speaker 9: consumers than we have seen in recent history because of 380 00:19:55,840 --> 00:19:58,080 Speaker 9: the amount of stimulus that pumped in, because of the 381 00:19:58,160 --> 00:20:00,840 Speaker 9: movement of labor market, red hot labor mark, very strong 382 00:20:00,840 --> 00:20:03,840 Speaker 9: wage growth, and that has shifted over the last two 383 00:20:03,920 --> 00:20:07,399 Speaker 9: years or so where lower income consumers aren't saying that 384 00:20:07,440 --> 00:20:11,439 Speaker 9: same wave of stimulus clearly, and wage growth has slowed 385 00:20:11,440 --> 00:20:13,720 Speaker 9: a bit more for that population than for others, and 386 00:20:13,960 --> 00:20:16,159 Speaker 9: the balance sheet is just frankly not going to be 387 00:20:16,200 --> 00:20:17,639 Speaker 9: a supportive We have a. 388 00:20:17,680 --> 00:20:20,320 Speaker 3: Viewer writing in Loving to get your thoughts on real 389 00:20:20,359 --> 00:20:22,920 Speaker 3: PC turning negative in the first six months of twenty 390 00:20:22,960 --> 00:20:25,000 Speaker 3: twenty five. They say it's the first time we've seen 391 00:20:25,000 --> 00:20:27,400 Speaker 3: that since twenty ten, excluding of course the pandemic. 392 00:20:27,960 --> 00:20:29,960 Speaker 9: Well, real PC turning negative I think we can debate, 393 00:20:30,000 --> 00:20:32,359 Speaker 9: but certainly there's been a slow down in measures of 394 00:20:32,400 --> 00:20:34,359 Speaker 9: real PC if you look at the GDP reports in 395 00:20:34,440 --> 00:20:37,200 Speaker 9: Q one and Q two, and that reflects what we 396 00:20:37,200 --> 00:20:40,120 Speaker 9: were just talking about in terms of higher prices. Right 397 00:20:40,160 --> 00:20:42,880 Speaker 9: the consumer has already started to see some of those 398 00:20:42,920 --> 00:20:43,760 Speaker 9: price increases. 399 00:20:43,760 --> 00:20:44,520 Speaker 1: And what that does. 400 00:20:44,600 --> 00:20:48,440 Speaker 9: It means that real spending starts to slow. We saw 401 00:20:48,480 --> 00:20:52,879 Speaker 9: it during the pandemic inflationary burst. The nominal economy was 402 00:20:52,960 --> 00:20:56,800 Speaker 9: running at extraordinarily high levels and the real economy was 403 00:20:57,400 --> 00:21:01,040 Speaker 9: much much slower because consumers and companies have to absorb 404 00:21:01,080 --> 00:21:03,520 Speaker 9: those higher prices. So when you have a price shock 405 00:21:03,560 --> 00:21:05,639 Speaker 9: today is a lot more muted than it was during 406 00:21:05,720 --> 00:21:09,960 Speaker 9: the post pandemic period, But the real economy has to 407 00:21:10,440 --> 00:21:13,200 Speaker 9: moderate in order to absorb some of those inflation camps. 408 00:21:13,359 --> 00:21:16,000 Speaker 6: Michelle, you look at a lot of alternative data sources, 409 00:21:16,520 --> 00:21:18,720 Speaker 6: and right now we're in a moment where we're starting 410 00:21:18,760 --> 00:21:21,439 Speaker 6: to question the official data we're getting, not least of 411 00:21:21,480 --> 00:21:23,440 Speaker 6: which if we do get an appointment at the BOS, 412 00:21:23,480 --> 00:21:26,520 Speaker 6: which is blatantly political, if that does happen, would you 413 00:21:26,600 --> 00:21:29,600 Speaker 6: be prepared to lean in to those alternative data sources. 414 00:21:29,640 --> 00:21:31,840 Speaker 6: Does it change the inputs that you use to see 415 00:21:31,840 --> 00:21:32,800 Speaker 6: where we go from here? 416 00:21:33,560 --> 00:21:36,040 Speaker 9: Well, I am a big, big advocate of many different 417 00:21:36,119 --> 00:21:39,560 Speaker 9: data sources. At the massacret Economics Institute, we're sitting on 418 00:21:39,560 --> 00:21:41,879 Speaker 9: one of the most amazing ones which is understanding the 419 00:21:41,960 --> 00:21:46,400 Speaker 9: consumer in real time by looking at consumer payments. So yes, 420 00:21:46,480 --> 00:21:50,280 Speaker 9: I think it's extremely important to rely on many, many 421 00:21:50,280 --> 00:21:54,000 Speaker 9: different sources and forms of data. The great thing about 422 00:21:54,280 --> 00:21:56,480 Speaker 9: as being an economist here in the US is that 423 00:21:56,520 --> 00:21:59,640 Speaker 9: we have a very long time series of data coming 424 00:21:59,640 --> 00:22:03,280 Speaker 9: out of the government, which has been an extraordinary support 425 00:22:03,480 --> 00:22:05,359 Speaker 9: for us in terms of how we think about modeling 426 00:22:05,359 --> 00:22:09,040 Speaker 9: the economy. But the economy is dynamic, the economy is shifting, 427 00:22:09,160 --> 00:22:12,080 Speaker 9: and therefore I think you have to be really mindful 428 00:22:12,119 --> 00:22:14,440 Speaker 9: of using a variety of different data sources. So trying 429 00:22:14,480 --> 00:22:17,879 Speaker 9: to see really that pulse of the consumer in particular 430 00:22:17,920 --> 00:22:21,680 Speaker 9: and how consumers are evolving their spending trends has been 431 00:22:21,760 --> 00:22:24,000 Speaker 9: a critical impet for US, and I think a real 432 00:22:24,040 --> 00:22:25,360 Speaker 9: distinguishing factor. 433 00:22:25,119 --> 00:22:27,400 Speaker 3: With the president though firing the head of the BLS, 434 00:22:27,640 --> 00:22:30,359 Speaker 3: do you still put credibility in the job support going forward? 435 00:22:31,200 --> 00:22:31,960 Speaker 1: I think you do. 436 00:22:32,080 --> 00:22:34,720 Speaker 9: I mean, look, I think there's a huge staff of 437 00:22:34,760 --> 00:22:37,520 Speaker 9: economists at the BLS that are doing their. 438 00:22:37,440 --> 00:22:40,080 Speaker 1: Josh doesn't really even touch the data until the very end. 439 00:22:40,040 --> 00:22:43,760 Speaker 9: And they've been doing their job for decades and I 440 00:22:43,760 --> 00:22:46,800 Speaker 9: think that's hard to shift overnight. But they're contending with 441 00:22:46,840 --> 00:22:49,720 Speaker 9: the fact that the response rate has been declining for 442 00:22:50,560 --> 00:22:53,280 Speaker 9: surveys across all different types of government. 443 00:22:53,040 --> 00:22:54,480 Speaker 1: Data, and that's a challenge. 444 00:22:54,480 --> 00:22:57,840 Speaker 9: So I think continuing to adapt, continuing to find new methodologies, 445 00:22:58,240 --> 00:23:01,160 Speaker 9: new innovative ways to gather data, it will be really important. 446 00:23:01,359 --> 00:23:03,280 Speaker 3: Michelle Meyer, thank you so much for your time this morning. 447 00:23:03,359 --> 00:23:16,520 Speaker 3: Of course, Michelle Meyer of the Massacard Economics Institute. Former 448 00:23:16,520 --> 00:23:19,119 Speaker 3: New York Fed President Bill Dudley, writing this morning, quote, 449 00:23:19,320 --> 00:23:21,600 Speaker 3: don't be fooled by the drama in terms of how 450 00:23:21,640 --> 00:23:24,960 Speaker 3: the Fed manages the economy. It's mostly a tempest in 451 00:23:25,000 --> 00:23:26,760 Speaker 3: a teapot. Bill joins us. 452 00:23:26,800 --> 00:23:28,480 Speaker 1: Now, all right, Bill, I won't be distracted by all 453 00:23:28,520 --> 00:23:28,919 Speaker 1: the drama. 454 00:23:28,920 --> 00:23:30,680 Speaker 3: But there's a lot of noise right now coming out 455 00:23:30,680 --> 00:23:34,280 Speaker 3: of Washington, DC when it comes to who potentially take 456 00:23:34,320 --> 00:23:37,440 Speaker 3: this role. Do you think this administration wants to put 457 00:23:37,440 --> 00:23:39,040 Speaker 3: in a shadow FED chair. 458 00:23:40,440 --> 00:23:42,719 Speaker 4: I don't know if that's their intention or not. 459 00:23:42,880 --> 00:23:46,000 Speaker 8: But obviously the next governor appointment that seemed to be 460 00:23:46,040 --> 00:23:48,760 Speaker 8: on a faster timeline than we thought will be important 461 00:23:48,760 --> 00:23:51,240 Speaker 8: because that person could end up being the next FED chair, 462 00:23:51,280 --> 00:23:53,719 Speaker 8: and so people pay a particular attention to who that 463 00:23:53,760 --> 00:23:55,360 Speaker 8: person is and what their views are. 464 00:23:56,119 --> 00:23:58,440 Speaker 6: So in that case, And I know as you write, 465 00:23:58,520 --> 00:24:01,800 Speaker 6: Bill that you did see boers desire to succeed Powell 466 00:24:01,880 --> 00:24:04,480 Speaker 6: and Bowman's thank you to Trump for appointing her as 467 00:24:04,520 --> 00:24:06,640 Speaker 6: part of the reason behind their descents. 468 00:24:06,920 --> 00:24:08,560 Speaker 1: Bill, if I can just push. 469 00:24:08,280 --> 00:24:10,040 Speaker 6: You on that, because many people have looked at this 470 00:24:10,080 --> 00:24:12,840 Speaker 6: economy and said there are reasons for a cut, and 471 00:24:12,920 --> 00:24:16,399 Speaker 6: Friday vindicated that with weaker labor market data. Is there 472 00:24:16,440 --> 00:24:18,359 Speaker 6: an issue where we look at all these descents and 473 00:24:18,400 --> 00:24:21,600 Speaker 6: say they are just political or is there real evidence 474 00:24:21,640 --> 00:24:23,879 Speaker 6: that perhaps the Fed should be leaning towards a cut. 475 00:24:24,640 --> 00:24:26,040 Speaker 4: Well, the FED is leaning towards a cut. 476 00:24:26,080 --> 00:24:27,639 Speaker 8: If you go back and look at the June Summary 477 00:24:27,640 --> 00:24:31,080 Speaker 8: of Economic projections, everybody sees the path of race is 478 00:24:31,240 --> 00:24:31,960 Speaker 8: going downward. 479 00:24:32,160 --> 00:24:34,280 Speaker 4: It's just a question of magnitude and timing. 480 00:24:34,520 --> 00:24:37,960 Speaker 8: So the degree of disagreement with in the FED is actually, 481 00:24:37,960 --> 00:24:40,240 Speaker 8: I think dramatically overstated, because everybody thinks. 482 00:24:40,080 --> 00:24:41,640 Speaker 4: The next direction of moves is down. 483 00:24:41,880 --> 00:24:43,920 Speaker 8: Just a question of when to do it and how 484 00:24:43,960 --> 00:24:47,400 Speaker 8: to manage the inflation risk caused by the higher terrorists. 485 00:24:47,400 --> 00:24:49,919 Speaker 6: So Bill, the direction of descent or the amount of 486 00:24:49,960 --> 00:24:53,359 Speaker 6: descent is overstated. So too is the ability for this 487 00:24:53,520 --> 00:24:57,200 Speaker 6: FMC to be swayed. What happens though, if the data 488 00:24:57,280 --> 00:25:00,800 Speaker 6: becomes less reliable if a more political figurehead is put 489 00:25:00,880 --> 00:25:02,960 Speaker 6: in at the BLS bill. You've been in the room 490 00:25:03,000 --> 00:25:06,320 Speaker 6: evaluating this data with colleagues. How does that change and 491 00:25:06,359 --> 00:25:09,440 Speaker 6: the FEDS evaluation of said data if changes are made 492 00:25:09,480 --> 00:25:11,520 Speaker 6: at the Bureau of Labor Statistics. 493 00:25:11,600 --> 00:25:13,879 Speaker 8: Well, it depends on whether the change is made at 494 00:25:13,920 --> 00:25:17,280 Speaker 8: the Bureau Labor Sittays actually result in poor quality data 495 00:25:17,400 --> 00:25:20,639 Speaker 8: or not. Obviously, if the data is rigged, then the 496 00:25:20,680 --> 00:25:22,240 Speaker 8: Federal Reserve is going to have to go to other 497 00:25:22,280 --> 00:25:24,920 Speaker 8: sources of data. There's a lot more data available now 498 00:25:24,960 --> 00:25:26,560 Speaker 8: than there was in the past. You know, there's a 499 00:25:26,600 --> 00:25:28,280 Speaker 8: lot of data that you can scrape off the Internet, 500 00:25:28,320 --> 00:25:28,880 Speaker 8: for example. 501 00:25:29,119 --> 00:25:30,920 Speaker 4: So I think that obviously we want. 502 00:25:30,800 --> 00:25:34,399 Speaker 8: The BLS data to be excellent quality and trusted, and 503 00:25:34,520 --> 00:25:35,840 Speaker 8: that's very important, and. 504 00:25:35,800 --> 00:25:36,919 Speaker 4: So we have to keep an eye on that. 505 00:25:37,200 --> 00:25:38,879 Speaker 8: But the idea that the Fed would be sort of 506 00:25:39,000 --> 00:25:42,439 Speaker 8: unable to conduct mantrat policy because the BLS data was corrupt, 507 00:25:42,720 --> 00:25:43,720 Speaker 8: I don't think that's the case. 508 00:25:43,880 --> 00:25:46,159 Speaker 3: Well, going to the BLS data on Friday now, the 509 00:25:46,240 --> 00:25:48,560 Speaker 3: average three month payroll gain went from one hundred and 510 00:25:48,560 --> 00:25:52,119 Speaker 3: fifty thousand before Friday is released to now just thirty 511 00:25:52,160 --> 00:25:55,680 Speaker 3: five thousand. Going back to those two dissenters, doesn't governor 512 00:25:55,720 --> 00:25:58,440 Speaker 3: Waller have a point the crack has already emerged. 513 00:25:58,520 --> 00:26:00,240 Speaker 1: Is the FED going to be behind the curve? 514 00:26:01,280 --> 00:26:03,199 Speaker 8: Well? I think the FED probably will be behind the 515 00:26:03,200 --> 00:26:07,040 Speaker 8: curve because the terroriffs creates so much uncertainty about what's 516 00:26:07,080 --> 00:26:09,080 Speaker 8: going to dominate the risk of inflation or the risk 517 00:26:09,119 --> 00:26:10,920 Speaker 8: of growth. Everyone said the terrorists are going to push 518 00:26:11,000 --> 00:26:14,280 Speaker 8: up prices and push down economic activity, and the questions 519 00:26:14,320 --> 00:26:16,679 Speaker 8: which is going to predominate. So the fact that the 520 00:26:16,720 --> 00:26:19,359 Speaker 8: FED might be late is because the arraft policies created 521 00:26:19,400 --> 00:26:22,520 Speaker 8: this tremendous uncertainty about which force is going to be dominant. 522 00:26:22,800 --> 00:26:26,000 Speaker 3: J Powell really honed in on the unemployment rate last week, 523 00:26:26,040 --> 00:26:28,200 Speaker 3: talking about the fact that's the main number is going. 524 00:26:28,080 --> 00:26:29,560 Speaker 1: To look at. We did see a tick up to 525 00:26:29,600 --> 00:26:30,840 Speaker 1: four point two percent. 526 00:26:31,200 --> 00:26:33,240 Speaker 3: What do you think the line is for him where 527 00:26:33,359 --> 00:26:36,960 Speaker 3: the unemployment rate ticking to what would get him really uncomfortable? 528 00:26:38,160 --> 00:26:39,840 Speaker 8: I think, you know, a couple more in tents would 529 00:26:39,840 --> 00:26:42,320 Speaker 8: definitely get him uncomfortable, because then you start to think 530 00:26:42,359 --> 00:26:44,440 Speaker 8: that the whole labor market was starting to give way, 531 00:26:44,920 --> 00:26:46,880 Speaker 8: and when that happens, it can be a self fulfilling 532 00:26:46,960 --> 00:26:49,439 Speaker 8: prophecy because it scares people. They pull back on their 533 00:26:49,440 --> 00:26:52,280 Speaker 8: own their spending, and that makes the labor market still weaker. 534 00:26:52,400 --> 00:26:54,160 Speaker 4: The important part points that Paul. 535 00:26:53,960 --> 00:26:56,840 Speaker 8: Made, though, is it's not about the payroll employment changes, 536 00:26:57,080 --> 00:26:59,639 Speaker 8: it's basically how that actually reflects in the unemploying rate. 537 00:26:59,640 --> 00:27:02,680 Speaker 8: Because what's basically happening this year is the growth rate 538 00:27:02,800 --> 00:27:05,840 Speaker 8: of labor demand has fallen, but the growth rate of 539 00:27:05,920 --> 00:27:10,159 Speaker 8: labor supply has also fallen dramatically because of deportations and 540 00:27:10,240 --> 00:27:13,200 Speaker 8: the crackdown and immigration. So both sides of the labor 541 00:27:13,200 --> 00:27:15,560 Speaker 8: market are less robust than there were before. 542 00:27:15,640 --> 00:27:18,320 Speaker 6: And the jobs that were added Bill about seventy five 543 00:27:18,359 --> 00:27:21,359 Speaker 6: of them came from healthcare, the cyclical parts of the economy. 544 00:27:21,440 --> 00:27:24,399 Speaker 6: Really we're not adding jobs. The lack of breath in 545 00:27:24,440 --> 00:27:27,320 Speaker 6: Friday's data. Does that concern you at all? 546 00:27:27,440 --> 00:27:27,600 Speaker 5: Well? 547 00:27:27,640 --> 00:27:27,920 Speaker 4: I think. 548 00:27:28,200 --> 00:27:29,720 Speaker 8: I mean, I'm worried that we're going to be in 549 00:27:29,720 --> 00:27:31,920 Speaker 8: a sort of stagflationary environment where we're going to have 550 00:27:31,960 --> 00:27:34,800 Speaker 8: at both higher prices and a weaker economy. And the 551 00:27:34,880 --> 00:27:36,959 Speaker 8: question is which one do you put more weight on. 552 00:27:37,320 --> 00:27:39,280 Speaker 8: I think the direction of rates is down. I think 553 00:27:39,280 --> 00:27:41,440 Speaker 8: the question is just, you know, what meeting does the 554 00:27:41,520 --> 00:27:44,240 Speaker 8: FED finally to see enough evidence to warrant a cut. 555 00:27:44,480 --> 00:27:46,359 Speaker 8: As I said in the piece that I published in 556 00:27:46,480 --> 00:27:49,120 Speaker 8: Biolberg Opinion, you know, there's not that much disagreement about 557 00:27:49,160 --> 00:27:49,400 Speaker 8: the FED. 558 00:27:49,440 --> 00:27:52,560 Speaker 4: It's all about timing and magnitudes, not about direction. 559 00:27:53,119 --> 00:27:56,320 Speaker 6: Well, what happens if Bill we have Adrinic Googler stepping down, 560 00:27:56,320 --> 00:27:58,520 Speaker 6: so that's certainly a Trump appointment, and then you get 561 00:27:58,520 --> 00:28:01,560 Speaker 6: Shairpowell who decides not to stay on as a governor 562 00:28:01,600 --> 00:28:04,600 Speaker 6: through twenty twenty eight. In total, you add to that 563 00:28:04,640 --> 00:28:07,800 Speaker 6: both Bowman and Waller. That means for Trump appointees on 564 00:28:07,840 --> 00:28:12,000 Speaker 6: the FLMC, does that an aggregate just mean at the 565 00:28:12,160 --> 00:28:14,800 Speaker 6: very margin a more doves shift to this FED? 566 00:28:15,520 --> 00:28:16,240 Speaker 4: Oh? Absolutely? 567 00:28:16,280 --> 00:28:18,240 Speaker 8: I mean I think you know, when it's a close 568 00:28:18,320 --> 00:28:21,600 Speaker 8: call in that kind of situation, the ties. 569 00:28:21,320 --> 00:28:22,520 Speaker 4: Are going to go to the doves. 570 00:28:23,040 --> 00:28:24,679 Speaker 8: But at the end of the day, the economy is 571 00:28:24,720 --> 00:28:27,119 Speaker 8: going to drive the story. You know, I think, you know, 572 00:28:27,160 --> 00:28:30,639 Speaker 8: the chairman can't take the FED wherever he or she wants. 573 00:28:30,640 --> 00:28:33,560 Speaker 8: It depends on how the economy is motivating. What's the 574 00:28:33,640 --> 00:28:36,119 Speaker 8: right thing to do in terms of monetary policy. The 575 00:28:36,200 --> 00:28:38,440 Speaker 8: chair has to convince the rest of the FOMC to 576 00:28:38,480 --> 00:28:41,120 Speaker 8: go along. Now, obviously, if you have four governors all 577 00:28:41,160 --> 00:28:44,000 Speaker 8: lined up on one side, that that gives the chair 578 00:28:44,120 --> 00:28:47,800 Speaker 8: quite a bit of momentum to get his or her way. 579 00:28:48,200 --> 00:28:50,440 Speaker 8: But you know, I think the feder Reserve presidents are 580 00:28:50,440 --> 00:28:52,240 Speaker 8: going to continue to vote their conscience in terms of 581 00:28:52,240 --> 00:28:54,640 Speaker 8: what's right for the for the macro economy. 582 00:28:54,920 --> 00:28:57,960 Speaker 3: The markets this morning are rebounding off of the lows 583 00:28:58,000 --> 00:29:00,960 Speaker 3: on Friday, following the fact that everyone's starting to bake 584 00:29:01,000 --> 00:29:03,440 Speaker 3: in this idea of a September rate cup. But Bill, 585 00:29:03,480 --> 00:29:06,320 Speaker 3: what if we get a hot CPI print, what's going 586 00:29:06,320 --> 00:29:06,680 Speaker 3: to happen? 587 00:29:06,720 --> 00:29:06,880 Speaker 7: Then? 588 00:29:07,920 --> 00:29:09,720 Speaker 8: Well, I think it's too soon to say that we're 589 00:29:09,720 --> 00:29:11,440 Speaker 8: going to get a September rateco. I mean, we just 590 00:29:11,520 --> 00:29:14,520 Speaker 8: saw how the market for September has moved dramatically just 591 00:29:14,560 --> 00:29:18,160 Speaker 8: in the last week. When Paul made his remarks that 592 00:29:18,240 --> 00:29:20,200 Speaker 8: the press conference, people said, oh, they're not going to 593 00:29:20,240 --> 00:29:21,840 Speaker 8: cut in September, and then we got the week in 594 00:29:21,880 --> 00:29:24,240 Speaker 8: payroll and plumber report on Friday and everyone says, oh, 595 00:29:24,240 --> 00:29:25,760 Speaker 8: they are going to cut in September. So it's a 596 00:29:25,760 --> 00:29:28,440 Speaker 8: long time between now and September. You know, I think 597 00:29:28,480 --> 00:29:30,800 Speaker 8: the prospects are pretty good that the FED is going 598 00:29:30,800 --> 00:29:32,680 Speaker 8: to cut rates later this year. Whether it turns out 599 00:29:32,720 --> 00:29:34,680 Speaker 8: to be September or not really is going to turn 600 00:29:34,720 --> 00:29:36,280 Speaker 8: out to depend on the data bill. 601 00:29:36,440 --> 00:29:38,880 Speaker 6: To what degree, could this just be a post Liberation 602 00:29:38,960 --> 00:29:41,240 Speaker 6: Day fallout the jobs data we've had over the past 603 00:29:41,280 --> 00:29:44,480 Speaker 6: three months and something that might rebound in August given 604 00:29:44,520 --> 00:29:47,040 Speaker 6: more certainty on which tariff levels are being set. 605 00:29:47,880 --> 00:29:50,040 Speaker 8: I think you're making a good point that the terriffs 606 00:29:50,080 --> 00:29:52,520 Speaker 8: have caused people to sort of stand back in terms 607 00:29:52,560 --> 00:29:55,360 Speaker 8: of business hiring and business investment because they don't really 608 00:29:55,360 --> 00:29:57,960 Speaker 8: know what the landscape is. And as we get past 609 00:29:58,080 --> 00:30:02,760 Speaker 8: August first and get more clarity on what the tariff 610 00:30:02,800 --> 00:30:06,040 Speaker 8: packages are going to be country by country, that presumably 611 00:30:06,080 --> 00:30:10,400 Speaker 8: will make businesses more willing to move forward in terms 612 00:30:10,400 --> 00:30:12,600 Speaker 8: of their investment and hiring plans. So it certainly could 613 00:30:12,640 --> 00:30:14,840 Speaker 8: go that way, or it could go that the higher 614 00:30:14,960 --> 00:30:17,800 Speaker 8: terraffts are raising prices, that's crimping real income, and that's 615 00:30:17,840 --> 00:30:21,320 Speaker 8: affecting consumer spending, and that's leading to weakness and employment 616 00:30:21,520 --> 00:30:23,200 Speaker 8: that it's going to motivate the FED to cut rates. 617 00:30:23,200 --> 00:30:25,360 Speaker 4: We still don't know which way, which direction is going 618 00:30:25,400 --> 00:30:25,920 Speaker 4: to predominate. 619 00:30:26,040 --> 00:30:27,760 Speaker 1: What we do know, though, is we know most of 620 00:30:27,760 --> 00:30:28,120 Speaker 1: the rates. 621 00:30:28,120 --> 00:30:30,400 Speaker 3: As a handful of countries potentially could get better deals 622 00:30:30,400 --> 00:30:32,239 Speaker 3: and better rates, but for the most part, we do 623 00:30:32,320 --> 00:30:34,200 Speaker 3: know the rates going forward and they're going to take 624 00:30:34,200 --> 00:30:36,720 Speaker 3: effect this Thursday. How much time do you think the 625 00:30:36,760 --> 00:30:39,320 Speaker 3: FED needs to see this work through the economy? 626 00:30:40,320 --> 00:30:42,080 Speaker 8: Well, I think the FED would like to see, you know, 627 00:30:42,280 --> 00:30:44,600 Speaker 8: a lot of time, a lot more than six weeks 628 00:30:44,640 --> 00:30:45,880 Speaker 8: to the next FOMC meeting. 629 00:30:46,080 --> 00:30:47,400 Speaker 4: I think they think it's probably going. 630 00:30:47,320 --> 00:30:49,560 Speaker 8: To take six months to get to see the full 631 00:30:49,560 --> 00:30:51,840 Speaker 8: effects of the teriffs because it takes quite a bit 632 00:30:51,880 --> 00:30:55,040 Speaker 8: of time between the good landing on US shores and 633 00:30:55,040 --> 00:30:58,320 Speaker 8: it actually ending up being sold in a department store 634 00:30:58,400 --> 00:31:01,440 Speaker 8: and other retail establishment. So I think the FED thinks 635 00:31:01,440 --> 00:31:03,880 Speaker 8: it's going to be a slow process, And Paul basically 636 00:31:03,880 --> 00:31:05,840 Speaker 8: said that at his press conference last week. 637 00:31:06,360 --> 00:31:08,480 Speaker 3: Former New York Fed President Bill Dudley, thank you so 638 00:31:08,600 --> 00:31:09,680 Speaker 3: much for your time this morning. 639 00:31:10,480 --> 00:31:14,040 Speaker 2: This is the Bloomberg Surveillance podcast, bringing you the best 640 00:31:14,040 --> 00:31:17,360 Speaker 2: in markets, economics, and geopolitics. You can watch the show 641 00:31:17,440 --> 00:31:20,360 Speaker 2: live on Bloomberg TV weekday mornings from six am to 642 00:31:20,480 --> 00:31:24,240 Speaker 2: nine am. Eastern, Subscribe to the podcast on Apple, Spotify 643 00:31:24,400 --> 00:31:26,640 Speaker 2: or anywhere else you listen, and as always, on the 644 00:31:26,640 --> 00:31:29,080 Speaker 2: Bloomberg terminal and the Bloomberg Business app.