1
00:00:00,080 --> 00:00:06,760
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:11,960 --> 00:00:15,560
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

3
00:00:15,600 --> 00:00:18,960
Speaker 2: with Paul Sweeney. Join us each day for insight from

4
00:00:18,960 --> 00:00:23,160
Speaker 2: the best in economics, finance, investment, and international relations. You

5
00:00:23,160 --> 00:00:26,520
Speaker 2: can also watch the show live on YouTube. Visit the

6
00:00:26,520 --> 00:00:31,280
Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday

7
00:00:31,280 --> 00:00:34,320
Speaker 2: mornings from seven to ten am Eastern from our global

8
00:00:34,360 --> 00:00:39,000
Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

9
00:00:39,360 --> 00:00:42,920
Speaker 2: or anywhere else you listen. And always I'm Bloomberg Radio,

10
00:00:43,080 --> 00:00:46,800
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. I'm going

11
00:00:46,880 --> 00:00:48,959
Speaker 2: to go a little bit nerdy here right now as

12
00:00:49,000 --> 00:00:51,960
Speaker 2: a precursor to get into Bill Dudley with his exceptionally

13
00:00:52,000 --> 00:00:55,720
Speaker 2: important essay of the morning. And I'll be quick about this, folks.

14
00:00:56,440 --> 00:00:59,520
Speaker 2: When we have Richard Clareda, I'm the former vice chairman

15
00:00:59,680 --> 00:01:04,120
Speaker 2: of the FED. There's a whole academics behind him that

16
00:01:04,200 --> 00:01:07,759
Speaker 2: has a big fancy name that's called DSGE Dynamic stochastic

17
00:01:07,800 --> 00:01:12,319
Speaker 2: general equilibrium theory. This is PhD work. A guy named

18
00:01:12,360 --> 00:01:15,800
Speaker 2: Carl Walsher came out of the same Berkeley combine. Is

19
00:01:15,880 --> 00:01:20,120
Speaker 2: Bill Dudley years ago wrote on the contracts, the agreements,

20
00:01:20,360 --> 00:01:23,800
Speaker 2: the beliefs that a central bank has. Ben Bernanke said

21
00:01:23,800 --> 00:01:26,360
Speaker 2: it was one of the three most important papers on

22
00:01:26,400 --> 00:01:30,319
Speaker 2: how central banks think. Joining us now on how this

23
00:01:30,480 --> 00:01:34,240
Speaker 2: central bank thinks. William Dudley, the former president of the

24
00:01:34,280 --> 00:01:39,640
Speaker 2: New York Fed, bill we've shattered ex post ex anti beliefs.

25
00:01:40,040 --> 00:01:42,959
Speaker 2: How far behind is this central bank?

26
00:01:44,760 --> 00:01:47,240
Speaker 3: Well hard to say with any precision, but I think

27
00:01:47,280 --> 00:01:50,800
Speaker 3: it's pretty simple to say that the dual mandate objectives

28
00:01:50,840 --> 00:01:55,040
Speaker 3: of Claysian employment now are pretty close imbalanced. Yet matre

29
00:01:55,120 --> 00:01:59,720
Speaker 3: policy's still quite restrictive. Most people think that neutral is

30
00:01:59,720 --> 00:02:02,720
Speaker 3: somewhere between three and four percent on the federal fund rate.

31
00:02:02,880 --> 00:02:06,120
Speaker 3: So call us one hundred and fifty bases points away

32
00:02:06,120 --> 00:02:06,960
Speaker 3: from where we should be.

33
00:02:07,800 --> 00:02:11,679
Speaker 2: If we have a vector of whatever it is, economic growth, disinflation,

34
00:02:11,840 --> 00:02:16,679
Speaker 2: whatever we drop up in our minds. Peter orzag would

35
00:02:16,720 --> 00:02:19,680
Speaker 2: call it a glide path, which is a glide path

36
00:02:19,800 --> 00:02:23,840
Speaker 2: right now. That matters to Bill Dudley says, this Fed's

37
00:02:23,880 --> 00:02:25,000
Speaker 2: got to get up and go.

38
00:02:26,800 --> 00:02:29,720
Speaker 3: I think the main issue is the fact that when

39
00:02:29,720 --> 00:02:32,960
Speaker 3: the labor market tends to deteriorate, either tends to deteriorate

40
00:02:33,040 --> 00:02:34,680
Speaker 3: a little or a lot, So you don't want to

41
00:02:34,720 --> 00:02:37,800
Speaker 3: go past that threshold where the labor market starts to

42
00:02:37,840 --> 00:02:41,040
Speaker 3: feed on itself and continue to worsen. That's why you

43
00:02:41,080 --> 00:02:44,240
Speaker 3: want to take on insurance now by going more rapidly

44
00:02:44,320 --> 00:02:45,920
Speaker 3: rather than going gradually.

45
00:02:47,200 --> 00:02:49,880
Speaker 4: So, Bill, in your Bloomberg opinion piece today, you note

46
00:02:49,880 --> 00:02:52,400
Speaker 4: that the two objectives of the feds dual mandate, that is,

47
00:02:52,400 --> 00:02:56,160
Speaker 4: price stability and maximum sustainable employment, that they've come into

48
00:02:56,240 --> 00:02:59,600
Speaker 4: much closer balance, agjecting the monetary policies should be neutral,

49
00:03:00,200 --> 00:03:02,480
Speaker 4: but we're pretty far from neutral. So how do we

50
00:03:02,480 --> 00:03:04,240
Speaker 4: get to neutral? And how quickly do we do that?

51
00:03:04,280 --> 00:03:07,919
Speaker 3: Bill, Well, I think the reason why the Federal Reserve

52
00:03:07,960 --> 00:03:09,800
Speaker 3: is going to do fifty basis points this week is

53
00:03:09,800 --> 00:03:12,399
Speaker 3: to get there more quickly. Now, the good news there's

54
00:03:12,400 --> 00:03:14,840
Speaker 3: a lot of easing's already priced in over the next

55
00:03:14,960 --> 00:03:17,200
Speaker 3: year and a half. So the market's priced in two

56
00:03:17,240 --> 00:03:20,000
Speaker 3: hundred and fifty basis points by the end of twenty

57
00:03:20,040 --> 00:03:24,040
Speaker 3: twenty five, so it's not absolutely critical that they do

58
00:03:24,080 --> 00:03:26,960
Speaker 3: fifty versus twenty five to day, but doing twenty five

59
00:03:26,960 --> 00:03:30,919
Speaker 3: would have been awkward because it would have disappointed market expectations.

60
00:03:30,960 --> 00:03:33,720
Speaker 3: They probably would have shown only another fifty basis points

61
00:03:33,720 --> 00:03:36,240
Speaker 3: in their summary wreck and out projections, so the FED

62
00:03:36,280 --> 00:03:38,520
Speaker 3: would be essentially saying we're only going to do seventy

63
00:03:38,520 --> 00:03:40,680
Speaker 3: five basis points this year when the market was priced

64
00:03:40,680 --> 00:03:43,560
Speaker 3: for about one hundred and twenty. So I think doing

65
00:03:43,600 --> 00:03:46,520
Speaker 3: fifty brings the FED more in alignment with the market,

66
00:03:46,920 --> 00:03:49,240
Speaker 3: and it also fits the logic of the moment.

67
00:03:50,000 --> 00:03:52,560
Speaker 4: Bill are you do you have a concern or a

68
00:03:52,640 --> 00:03:56,000
Speaker 4: reasonable concern that by maybe going slower than they should,

69
00:03:56,040 --> 00:04:00,360
Speaker 4: that inflation gets back, recession gets pulled back onto the table.

70
00:04:01,680 --> 00:04:03,080
Speaker 3: Well, I think there's a risk of that. I mean,

71
00:04:03,120 --> 00:04:05,200
Speaker 3: every time the unimpluying rate has risen by more than

72
00:04:05,240 --> 00:04:07,600
Speaker 3: a half a percent on a three month moving average

73
00:04:07,640 --> 00:04:10,560
Speaker 3: basis over a twelve month period in the United States,

74
00:04:10,560 --> 00:04:13,640
Speaker 3: you've always had a recession. We've actually hit that trigger. Now.

75
00:04:13,640 --> 00:04:15,400
Speaker 3: I don't think that trigger is a hard and fast

76
00:04:15,480 --> 00:04:17,760
Speaker 3: rule that has to hold every time, but it does

77
00:04:17,800 --> 00:04:19,760
Speaker 3: tell you that when the layer market deterioration goes on

78
00:04:19,960 --> 00:04:23,280
Speaker 3: beyond a certain point, it tends to become self reinforcing.

79
00:04:23,880 --> 00:04:27,200
Speaker 3: The next stop after a half a percent increase is

80
00:04:27,240 --> 00:04:29,640
Speaker 3: one point nine percentage points at a full blown recession.

81
00:04:29,680 --> 00:04:32,400
Speaker 3: So that's the risk the FED is taking by waiting.

82
00:04:33,279 --> 00:04:37,320
Speaker 4: Hey, if the FED only goes twenty five basis points,

83
00:04:38,440 --> 00:04:40,240
Speaker 4: do you think we'll get a dissenting vote there?

84
00:04:42,160 --> 00:04:43,719
Speaker 3: I would think so at this point. I mean, I

85
00:04:43,720 --> 00:04:47,720
Speaker 3: think what's essentially happened is the change expectations last week

86
00:04:47,920 --> 00:04:49,719
Speaker 3: with those two articles that came out on the Wall

87
00:04:49,720 --> 00:04:52,200
Speaker 3: Street in Turnal and the Financial Times, sort of suspicious

88
00:04:52,279 --> 00:04:55,920
Speaker 3: articles because they basically reopened the possibility of fifty when

89
00:04:55,920 --> 00:04:59,039
Speaker 3: that was sort of getting closed off. Since that time,

90
00:04:59,120 --> 00:05:02,040
Speaker 3: we haven't had any you know, FED intervention in any

91
00:05:02,040 --> 00:05:04,760
Speaker 3: way that's visible. So it seems at least that the

92
00:05:04,800 --> 00:05:08,880
Speaker 3: FED is comfortable with the shifting expectations away from twenty

93
00:05:08,920 --> 00:05:11,840
Speaker 3: five to fifty. So I don't think I mean, you know,

94
00:05:11,880 --> 00:05:14,240
Speaker 3: as time passes, I think what's gonna happen is we're

95
00:05:14,240 --> 00:05:17,080
Speaker 3: going to continue to price more in the direction of fifty.

96
00:05:17,120 --> 00:05:19,760
Speaker 2: I'm gonna go nuts here, And you know, thanks Marty

97
00:05:19,800 --> 00:05:23,000
Speaker 2: emailed it. Marty, thank you so much for listening this morning.

98
00:05:23,520 --> 00:05:23,719
Speaker 5: Bill.

99
00:05:23,800 --> 00:05:28,400
Speaker 2: I'm sorry we've got a shattered way of communicating. We

100
00:05:28,480 --> 00:05:31,480
Speaker 2: have we have basically back x number of meetings of

101
00:05:31,560 --> 00:05:34,360
Speaker 2: dissent free FED. I mean every love, love, peace, love,

102
00:05:34,360 --> 00:05:34,799
Speaker 2: and dope.

103
00:05:35,000 --> 00:05:38,560
Speaker 5: I get it. We are the world. We are committing.

104
00:05:39,600 --> 00:05:43,679
Speaker 2: FED policy and discussion through a reporter at the journal.

105
00:05:43,720 --> 00:05:44,880
Speaker 2: Who's the reporter at the ft?

106
00:05:45,560 --> 00:05:45,880
Speaker 5: Smith?

107
00:05:45,920 --> 00:05:46,040
Speaker 1: Oh?

108
00:05:46,080 --> 00:05:50,200
Speaker 5: Colbysby Smith? Yeah, Coloby Smith. Okay, come on, Bill, this

109
00:05:50,279 --> 00:05:52,400
Speaker 5: is belogoney. How did we get here?

110
00:05:52,640 --> 00:05:53,400
Speaker 2: Do you blame?

111
00:05:53,520 --> 00:05:55,520
Speaker 5: Alan Greenspan? Lawrence Meyer?

112
00:05:55,760 --> 00:05:58,599
Speaker 2: Washington University Saint Louis would say it was a term

113
00:05:58,600 --> 00:06:01,560
Speaker 2: at the FED where Alan read everything? Is that where

114
00:06:01,600 --> 00:06:02,200
Speaker 2: this started?

115
00:06:02,200 --> 00:06:07,520
Speaker 3: Bill Dugley, I'm not really sure why why we've landed

116
00:06:07,520 --> 00:06:09,720
Speaker 3: where we've landed. I agree with you, this is sort

117
00:06:09,720 --> 00:06:12,240
Speaker 3: of awkward. You really shouldn't be communicating through these sort

118
00:06:12,279 --> 00:06:16,000
Speaker 3: of articles in such a subtle way that some people

119
00:06:16,000 --> 00:06:17,720
Speaker 3: get it and some people don't. That doesn't seem to

120
00:06:17,760 --> 00:06:20,720
Speaker 3: be very fair for people to get the right signal

121
00:06:20,720 --> 00:06:24,240
Speaker 3: from the FED. I think what basically happened was the

122
00:06:24,279 --> 00:06:27,080
Speaker 3: issue of twenty five versus fifty was getting sort of

123
00:06:27,080 --> 00:06:31,120
Speaker 3: closed off as you approached the blackout period. Cal didn't

124
00:06:31,160 --> 00:06:33,479
Speaker 3: want it to be closed off because he was actually

125
00:06:33,560 --> 00:06:36,719
Speaker 3: thinking pretty strobably about fifty basis points, and this was

126
00:06:36,760 --> 00:06:38,920
Speaker 3: the way to keep it open. And I think what's

127
00:06:38,920 --> 00:06:41,000
Speaker 3: happened is people have reflected on it a bit more.

128
00:06:41,400 --> 00:06:44,360
Speaker 3: The logic for fifty has become very compelling to people,

129
00:06:44,720 --> 00:06:46,440
Speaker 3: and that's why I think that's what the Fed's going

130
00:06:46,480 --> 00:06:47,360
Speaker 3: to do at.

131
00:06:47,080 --> 00:06:48,000
Speaker 5: This meeting this week.

132
00:06:48,160 --> 00:06:50,080
Speaker 2: I want to make a distinction here. This is not

133
00:06:50,160 --> 00:06:52,920
Speaker 2: an Alan Meltzer fifty. I mean, we're not showing up

134
00:06:52,920 --> 00:06:56,479
Speaker 2: at the discount window because the world's falling apart. Is

135
00:06:56,520 --> 00:06:59,679
Speaker 2: just like an original fifty beep cut that we're getting

136
00:07:00,200 --> 00:07:06,120
Speaker 2: because of pandemic mysteries, because of unknowns or frankly, doctor Dudley,

137
00:07:06,120 --> 00:07:07,720
Speaker 2: because of too much information.

138
00:07:08,800 --> 00:07:10,640
Speaker 3: Well, I think they're just started a little late. I mean,

139
00:07:10,640 --> 00:07:13,400
Speaker 3: I you know, a month ago or so, I said

140
00:07:13,400 --> 00:07:16,440
Speaker 3: that rates in July. So if they've done twenty five

141
00:07:16,480 --> 00:07:18,600
Speaker 3: in July and twenty five in September, they'd be in

142
00:07:18,640 --> 00:07:20,600
Speaker 3: the same place. So I think it's a little bit

143
00:07:20,640 --> 00:07:24,880
Speaker 3: because the labor market has weakened more quickly than they

144
00:07:24,920 --> 00:07:27,720
Speaker 3: were anticipating. Remember we had those very large downward revisions

145
00:07:27,720 --> 00:07:30,400
Speaker 3: to payroll employment, and then the last three months in

146
00:07:30,480 --> 00:07:32,640
Speaker 3: terms of the payroll gains, it's the lowest three month

147
00:07:32,680 --> 00:07:36,760
Speaker 3: period since twenty twenty. So there's been a distinct chilling

148
00:07:36,800 --> 00:07:39,920
Speaker 3: of the labor market, and that's happened fairly rapidly. Now

149
00:07:39,960 --> 00:07:43,600
Speaker 3: the FED is reasonably comfortable that that's mostly due to

150
00:07:43,640 --> 00:07:46,320
Speaker 3: the fact that the labor force is increasing and that's

151
00:07:46,320 --> 00:07:49,800
Speaker 3: what's pushing up the unemployer rate. But you know, there

152
00:07:49,840 --> 00:07:51,600
Speaker 3: are quite a few signs that the laver market's a

153
00:07:51,640 --> 00:07:53,800
Speaker 3: little softer than it was, and I think that's what's

154
00:07:53,880 --> 00:07:55,960
Speaker 3: maybe surprised that FED how quickly that's come on.

155
00:07:57,040 --> 00:07:59,200
Speaker 4: Is there is just following up on that labor point bill.

156
00:07:59,280 --> 00:08:01,880
Speaker 4: Is there a level of the unemployment rate, I don't

157
00:08:01,920 --> 00:08:05,200
Speaker 4: know a headline number that would really get their attention,

158
00:08:05,480 --> 00:08:08,560
Speaker 4: or is this trend higher that you mentioned before, Is

159
00:08:08,600 --> 00:08:10,160
Speaker 4: that what's going to push this FED forward?

160
00:08:11,480 --> 00:08:14,000
Speaker 3: Well, I think you're exactly right. The labor market holds

161
00:08:14,000 --> 00:08:16,840
Speaker 3: the key here. So if the unemployer rate keeps drifting up,

162
00:08:16,880 --> 00:08:19,720
Speaker 3: that will continue to motivate the FED to go more quickly,

163
00:08:20,000 --> 00:08:22,320
Speaker 3: because at that point the risk won't be balanced. The

164
00:08:23,000 --> 00:08:26,160
Speaker 3: risk will be tilted to the downside on the labor market.

165
00:08:26,640 --> 00:08:28,680
Speaker 3: So right now, think of the risk as balanced. We

166
00:08:28,680 --> 00:08:31,520
Speaker 3: want to go to neutral. Labor market continues to deteriorate,

167
00:08:31,600 --> 00:08:34,880
Speaker 3: unemployer rate keeps going up, the Federal then start to think, oh,

168
00:08:34,880 --> 00:08:37,280
Speaker 3: we don't want to push policy to neutral, we might

169
00:08:37,320 --> 00:08:39,440
Speaker 3: want we might want to push policy to easy.

170
00:08:39,760 --> 00:08:42,600
Speaker 2: Bill Dudley, you've got a key paragraph where you touch

171
00:08:42,720 --> 00:08:45,440
Speaker 2: upon what you know Vice Chairman Claren has talked about

172
00:08:45,440 --> 00:08:49,120
Speaker 2: in many others. Three old folks have Fed decides on Wednesday.

173
00:08:49,320 --> 00:08:51,160
Speaker 2: I can't believe it'll be better than the last time

174
00:08:51,160 --> 00:08:53,559
Speaker 2: we did it six weeks ago, but we'll try. And

175
00:08:53,840 --> 00:08:57,160
Speaker 2: the answer is, Doctor Dudley, is the vectors in place

176
00:08:57,200 --> 00:09:01,240
Speaker 2: of let's say disinflation for conversation, But are we getting

177
00:09:01,280 --> 00:09:02,520
Speaker 2: back to two point oh?

178
00:09:02,559 --> 00:09:03,840
Speaker 5: Do you simply.

179
00:09:03,559 --> 00:09:09,040
Speaker 2: Discard what I'm going to call a John Taylor two

180
00:09:09,080 --> 00:09:13,040
Speaker 2: point oh banded end point? Is there a new end

181
00:09:13,040 --> 00:09:15,720
Speaker 2: point that jumbles up all of our thinking.

182
00:09:17,000 --> 00:09:18,959
Speaker 3: I think the Fed thinks that they're going to get

183
00:09:19,000 --> 00:09:21,360
Speaker 3: back to something close to two percent. I mean, if

184
00:09:21,400 --> 00:09:23,680
Speaker 3: you look at the labor market right now, for example,

185
00:09:23,760 --> 00:09:27,680
Speaker 3: labor job openings are at a level consistent with where

186
00:09:27,720 --> 00:09:30,560
Speaker 3: we were in twenty nineteen, where inflation was actually below

187
00:09:30,640 --> 00:09:33,679
Speaker 3: two percent. The other thing I'd started making making more

188
00:09:33,679 --> 00:09:36,000
Speaker 3: confident that is what's been having a wage inflation that's

189
00:09:36,040 --> 00:09:38,920
Speaker 3: come down below four percent. So I think the fed

190
00:09:39,160 --> 00:09:41,120
Speaker 3: is not like giving up and saying, oh, two and

191
00:09:41,120 --> 00:09:43,120
Speaker 3: a half percent inflation is good enough. I think they

192
00:09:43,200 --> 00:09:45,880
Speaker 3: do think that we'll see further disinflation in the months ahead.

193
00:09:46,840 --> 00:09:49,800
Speaker 4: So Bill, we look at the two year treasury. I mean,

194
00:09:50,000 --> 00:09:51,880
Speaker 4: you know, just a couple of coffee goes. Tom would say,

195
00:09:51,960 --> 00:09:54,040
Speaker 4: was it five percent? We're down down to three point

196
00:09:54,160 --> 00:09:57,600
Speaker 4: five to five percent on the two year treasury. I mean,

197
00:09:57,720 --> 00:09:59,920
Speaker 4: the market's already doing the hard work here, aren't they.

198
00:10:01,240 --> 00:10:03,720
Speaker 3: No, you're absolutely right. I mean, financial conditions have eased

199
00:10:03,760 --> 00:10:05,960
Speaker 3: a lot, even though the federally surviving had cut rates,

200
00:10:06,000 --> 00:10:08,920
Speaker 3: and that obviously makes Madre policy work more quickly than

201
00:10:08,960 --> 00:10:11,520
Speaker 3: it has in the past. But that said, you know

202
00:10:11,600 --> 00:10:14,160
Speaker 3: how you know, low and modern income households, you know,

203
00:10:14,280 --> 00:10:16,840
Speaker 3: are affected by the current level of short term rates

204
00:10:16,840 --> 00:10:19,360
Speaker 3: in terms of credit card dead auto yet so it's

205
00:10:19,520 --> 00:10:21,640
Speaker 3: so the level the current level of short term rates

206
00:10:21,640 --> 00:10:22,559
Speaker 3: still matters a bit.

207
00:10:23,200 --> 00:10:25,280
Speaker 2: One of the great moments of my career, folks, and

208
00:10:25,320 --> 00:10:28,480
Speaker 2: I'm sure doctor Dudley doesn't remember this. We're at some whatever,

209
00:10:28,559 --> 00:10:31,520
Speaker 2: you know, the coffee was expensive and Bill Dudley was

210
00:10:31,600 --> 00:10:34,480
Speaker 2: chowing down the cross once as I remember, and we're

211
00:10:34,520 --> 00:10:37,640
Speaker 2: talking about an America in the age of retirement, and

212
00:10:37,679 --> 00:10:40,800
Speaker 2: Bill went mental and full gold and sex mental, and

213
00:10:40,920 --> 00:10:44,120
Speaker 2: he said, Tom, some people have to retire at sixty

214
00:10:44,160 --> 00:10:47,480
Speaker 2: because their bodies are broken. Bill, that was an indication

215
00:10:47,640 --> 00:10:51,320
Speaker 2: of your work, mechanical work, which is there's two Americas

216
00:10:51,360 --> 00:10:55,600
Speaker 2: out there. Are we committing monetary policy for the halves,

217
00:10:56,160 --> 00:11:00,440
Speaker 2: the elite, the major financial system people that to fit

218
00:11:00,800 --> 00:11:06,360
Speaker 2: from financialization, and this whole debate ignores and America essentially

219
00:11:06,400 --> 00:11:07,280
Speaker 2: flat on their back.

220
00:11:08,720 --> 00:11:11,800
Speaker 3: Well, I actually think the priory motivation for the interest

221
00:11:11,880 --> 00:11:14,880
Speaker 3: rates cuts is the deterioration for the low and modern

222
00:11:14,920 --> 00:11:17,400
Speaker 3: income workers. You sort of think about the you know,

223
00:11:17,440 --> 00:11:18,960
Speaker 3: the consumer spending reports.

224
00:11:18,679 --> 00:11:19,600
Speaker 5: Have gotten recently.

225
00:11:19,920 --> 00:11:21,800
Speaker 3: It's all about stress at the low end, and I

226
00:11:21,840 --> 00:11:24,360
Speaker 3: think that's what's motivating the FIT to cut rates more quickly.

227
00:11:24,800 --> 00:11:27,560
Speaker 3: I think they're definitely taking that into consideration.

228
00:11:27,679 --> 00:11:28,400
Speaker 2: Doctor Dudley.

229
00:11:28,440 --> 00:11:29,200
Speaker 5: Thank you so much.

230
00:11:29,240 --> 00:11:31,640
Speaker 2: Bill Dudley, without question the essay of the day at

231
00:11:31,720 --> 00:11:35,080
Speaker 2: move markets worldwide, look to Bloomberg Opinion. I'll get that

232
00:11:35,160 --> 00:11:37,880
Speaker 2: out on Twitter and LinkedIn here any moment, but it'll

233
00:11:37,880 --> 00:11:42,360
Speaker 2: be widely distributed today. Bill and Dudley of Berkeley, and

234
00:11:42,400 --> 00:11:44,920
Speaker 2: of course of Gold and Sax. The former president of

235
00:11:44,960 --> 00:11:48,280
Speaker 2: the New York Federal Reserve System for Bloomberg.

236
00:11:48,440 --> 00:11:49,199
Speaker 5: At Pie.

237
00:11:59,679 --> 00:12:03,280
Speaker 2: Without further ado in a different conversation than we would

238
00:12:03,320 --> 00:12:07,880
Speaker 2: have had Friday, Henrietta Trees joins with VEDA partners.

239
00:12:08,880 --> 00:12:10,320
Speaker 5: Henriette America is violent.

240
00:12:10,400 --> 00:12:14,240
Speaker 2: We all know that whatever our political persuasions are, our

241
00:12:14,360 --> 00:12:18,960
Speaker 2: candidates going to really have to start limiting their exposure

242
00:12:19,080 --> 00:12:21,440
Speaker 2: after this second assassination attempt.

243
00:12:22,559 --> 00:12:23,800
Speaker 6: You know, it's an interesting question.

244
00:12:23,840 --> 00:12:26,720
Speaker 7: The Secret Service has talked for a while now about

245
00:12:26,760 --> 00:12:29,760
Speaker 7: how the golf courses in particular, and President former President

246
00:12:29,800 --> 00:12:31,920
Speaker 7: Trump's time on the golf courses supposed is a unique

247
00:12:31,920 --> 00:12:34,880
Speaker 7: problem to them. I would say that members on Capitol

248
00:12:34,920 --> 00:12:38,599
Speaker 7: Hill and the task force associated with the first assassination

249
00:12:38,679 --> 00:12:42,520
Speaker 7: attempt are going to explore that pretty robustly. And then

250
00:12:42,559 --> 00:12:45,839
Speaker 7: they've been concerned about these outdoor rallies and then also

251
00:12:45,960 --> 00:12:48,320
Speaker 7: golf courses. I'm not aware of any other areas that

252
00:12:48,400 --> 00:12:50,480
Speaker 7: are a major concern for them, but those.

253
00:12:50,280 --> 00:12:53,720
Speaker 6: Are two, and that's obviously what happened yesterday.

254
00:12:54,000 --> 00:12:57,200
Speaker 2: Are we but numbed to the chaos? I mean, you know,

255
00:12:57,240 --> 00:13:01,080
Speaker 2: the headline gunfire at Trump Golf Club, the latest Jolden

256
00:13:01,200 --> 00:13:06,880
Speaker 2: chaotic twenty twenty four race, Henrietta, is this American numb

257
00:13:07,320 --> 00:13:09,000
Speaker 2: in this odd election campaign.

258
00:13:09,920 --> 00:13:12,520
Speaker 7: I think at this point it's it's not wrong to

259
00:13:12,600 --> 00:13:15,360
Speaker 7: say that. I would just you know, point to the

260
00:13:15,400 --> 00:13:17,960
Speaker 7: market and point to the reaction that we have not

261
00:13:18,160 --> 00:13:20,960
Speaker 7: seen from markets and the way that we saw back

262
00:13:21,040 --> 00:13:23,600
Speaker 7: in the early part of this summer when there was

263
00:13:23,640 --> 00:13:27,079
Speaker 7: sort of an explosive response to the first assassination attempt.

264
00:13:27,600 --> 00:13:29,880
Speaker 7: So I do think there is a bit of numbing. Obviously,

265
00:13:29,920 --> 00:13:31,959
Speaker 7: no one was farmed in this case, thankfully, so it's

266
00:13:32,080 --> 00:13:35,120
Speaker 7: very different start to start contrast to the first one,

267
00:13:35,320 --> 00:13:37,040
Speaker 7: and it would maybe point out that the problem we

268
00:13:37,120 --> 00:13:39,880
Speaker 7: have here, the sort of very discomforting piece for me,

269
00:13:40,000 --> 00:13:43,040
Speaker 7: is we're going to have data to back up where

270
00:13:43,080 --> 00:13:47,560
Speaker 7: people feel this attempt was resonating from. Was it from

271
00:13:47,559 --> 00:13:50,440
Speaker 7: a lone gunman, was it from you know, members of

272
00:13:50,440 --> 00:13:52,560
Speaker 7: one political party or another. We're going to have data

273
00:13:52,600 --> 00:13:56,200
Speaker 7: that contrasts yesterday to earlier this summer, and that's going

274
00:13:56,240 --> 00:13:57,800
Speaker 7: to be a really start comp that I wish I

275
00:13:57,800 --> 00:13:59,720
Speaker 7: didn't have to look at Henrietta.

276
00:13:59,800 --> 00:14:03,240
Speaker 4: Is there any any way or I guess the question

277
00:14:03,280 --> 00:14:06,240
Speaker 4: is how will both campaigns deal with this latest piece

278
00:14:06,280 --> 00:14:06,600
Speaker 4: of news?

279
00:14:06,640 --> 00:14:09,320
Speaker 7: Do you think, well, I guess i'd back out just

280
00:14:09,360 --> 00:14:11,560
Speaker 7: a little bit and say what investors should expect and

281
00:14:11,559 --> 00:14:13,280
Speaker 7: what posters should be looking out of what we're.

282
00:14:13,200 --> 00:14:13,760
Speaker 3: Going to get.

283
00:14:14,200 --> 00:14:16,600
Speaker 7: The next data set is going to be the lag

284
00:14:16,840 --> 00:14:20,640
Speaker 7: of data from the debate. So what I published for

285
00:14:20,760 --> 00:14:23,320
Speaker 7: clients last night was that Harris has seen a pretty

286
00:14:23,360 --> 00:14:25,480
Speaker 7: momentous rise in the polls. She was at you know,

287
00:14:25,520 --> 00:14:28,160
Speaker 7: plus one, plus two, plus three. Now she's in plus

288
00:14:28,160 --> 00:14:30,920
Speaker 7: four to plus six range. And that doesn't even include

289
00:14:30,960 --> 00:14:33,680
Speaker 7: the state specific data. So the next round of information

290
00:14:33,760 --> 00:14:36,920
Speaker 7: we're going to receive is should be very positive for

291
00:14:37,000 --> 00:14:39,560
Speaker 7: Kamala Harris, and that's going to be really confusing because

292
00:14:39,560 --> 00:14:42,680
Speaker 7: we just got this starkly negative data point against President

293
00:14:42,720 --> 00:14:45,920
Speaker 7: Trump for and President Trump with the attempted assassination. So

294
00:14:46,520 --> 00:14:49,680
Speaker 7: there's going to be this very discordinate release of data

295
00:14:49,760 --> 00:14:51,400
Speaker 7: from polls that's obviously.

296
00:14:51,040 --> 00:14:54,280
Speaker 6: Lagging and giving us last Tuesday's debate versus what has

297
00:14:54,440 --> 00:14:55,120
Speaker 6: just happened.

298
00:14:55,200 --> 00:14:57,880
Speaker 7: So I think it's probably going to be superseded rather quickly,

299
00:14:58,680 --> 00:15:01,680
Speaker 7: and then we won't see anything president Trump's uptake, if

300
00:15:01,680 --> 00:15:04,200
Speaker 7: there is any in the polls, until next week. I

301
00:15:04,200 --> 00:15:05,800
Speaker 7: guess if you wanted to see it, quicker than that.

302
00:15:05,880 --> 00:15:09,520
Speaker 7: Look at fundraising data and Republican voter registration data.

303
00:15:09,720 --> 00:15:11,080
Speaker 6: That's probably the best we're going to get.

304
00:15:11,880 --> 00:15:14,760
Speaker 4: So, Henrietta, what's the schedule for the coming week for

305
00:15:14,960 --> 00:15:16,280
Speaker 4: both of these candidates?

306
00:15:16,280 --> 00:15:16,400
Speaker 6: Here?

307
00:15:16,440 --> 00:15:19,600
Speaker 4: Are they campaigning hard? And are they focusing just on

308
00:15:19,640 --> 00:15:21,720
Speaker 4: these you know six or seven swing states?

309
00:15:22,600 --> 00:15:28,000
Speaker 7: Right, we're pretty much camped out in the swing states Michigan, Nevada, Arizona, Pennsylvania, Wisconsin.

310
00:15:28,600 --> 00:15:32,520
Speaker 7: The candidates are fanning out and going to different locales

311
00:15:32,560 --> 00:15:35,760
Speaker 7: to the extent possible. The next big event we have

312
00:15:36,240 --> 00:15:39,760
Speaker 7: isn't until October first, with the vice presidential debate. As

313
00:15:39,760 --> 00:15:41,600
Speaker 7: you know, there have been no agreements on a second

314
00:15:41,600 --> 00:15:45,920
Speaker 7: presidential debate, so we're really just wearing down the clock

315
00:15:45,960 --> 00:15:46,960
Speaker 7: to October first.

316
00:15:47,320 --> 00:15:48,160
Speaker 5: I got the calendar.

317
00:15:48,360 --> 00:15:50,920
Speaker 2: Paul was warbling daily folks, and I was looking at

318
00:15:50,920 --> 00:15:55,960
Speaker 2: the Fame Bloomberg calendar. Tomorrow, folks, September seventeenth. It is

319
00:15:56,000 --> 00:16:00,800
Speaker 2: two weeks to Lafayette College and CBS in a vice

320
00:16:00,880 --> 00:16:01,880
Speaker 2: presidential debate.

321
00:16:02,280 --> 00:16:04,000
Speaker 5: Henriette, you gotta sell me on this.

322
00:16:04,080 --> 00:16:07,400
Speaker 2: Do I really have to stay up past surveillance bedtime

323
00:16:07,800 --> 00:16:10,120
Speaker 2: for a vice presidential debate?

324
00:16:11,360 --> 00:16:11,440
Speaker 6: No?

325
00:16:11,640 --> 00:16:13,160
Speaker 7: I don't think you do, and I know you wake

326
00:16:13,240 --> 00:16:16,640
Speaker 7: up early, so definitely you do not unless you want

327
00:16:16,640 --> 00:16:18,440
Speaker 7: to see it. What's interesting about this one is that

328
00:16:18,520 --> 00:16:21,200
Speaker 7: it is the most popular candidate on the traiout Tim Walls,

329
00:16:21,360 --> 00:16:23,600
Speaker 7: who has an approval rating that is above water at

330
00:16:23,640 --> 00:16:27,440
Speaker 7: plus three point five percent, Versus the most unpopular candidate

331
00:16:27,520 --> 00:16:30,200
Speaker 7: on the ballot this year, which is jd Vance, who's

332
00:16:30,240 --> 00:16:32,440
Speaker 7: at negative ten point five percent nationally.

333
00:16:32,840 --> 00:16:34,680
Speaker 6: So you're going to have a pretty start.

334
00:16:34,720 --> 00:16:37,560
Speaker 7: Contrast, what I saw on the first presidential debate between

335
00:16:37,600 --> 00:16:42,320
Speaker 7: Harrison Biden Trump was that a lot of viewers, several million,

336
00:16:42,680 --> 00:16:45,640
Speaker 7: tens of millions of viewers saw their information afterwards the

337
00:16:45,720 --> 00:16:48,200
Speaker 7: next day. Is there sort of a lag time in

338
00:16:48,280 --> 00:16:51,560
Speaker 7: terms of how voters are receiving this information, particularly under

339
00:16:51,560 --> 00:16:52,520
Speaker 7: the age of forty five?

340
00:16:53,120 --> 00:16:55,240
Speaker 6: So I think you can afford to go to sleep.

341
00:16:55,240 --> 00:16:56,640
Speaker 6: You'll see the highlights the next day.

342
00:16:56,520 --> 00:16:58,440
Speaker 3: With that question, you know, you bring that up.

343
00:16:58,560 --> 00:17:01,600
Speaker 2: How's the youth vote look up this weekend? What are

344
00:17:01,640 --> 00:17:04,760
Speaker 2: young Latinos going to do? Young blacks, young this young

345
00:17:04,840 --> 00:17:05,760
Speaker 2: that are.

346
00:17:05,640 --> 00:17:06,640
Speaker 5: They going to show up?

347
00:17:07,600 --> 00:17:07,840
Speaker 6: Yeah?

348
00:17:08,080 --> 00:17:11,120
Speaker 7: It really does look that way. Voter registration is through

349
00:17:11,160 --> 00:17:12,960
Speaker 7: the roof. It was through the roof at about one

350
00:17:13,040 --> 00:17:16,399
Speaker 7: hundred and eighty four percent for uptake from Black women

351
00:17:16,720 --> 00:17:20,080
Speaker 7: following the DNC, one hundred and forty three percent from

352
00:17:20,119 --> 00:17:22,840
Speaker 7: Latino women following the DNC, and then in the wake

353
00:17:22,920 --> 00:17:26,920
Speaker 7: of Taylor Swift's endorsement, you saw over seven hundred thousand

354
00:17:26,960 --> 00:17:29,600
Speaker 7: people in twenty four hours go to vote dot org

355
00:17:29,640 --> 00:17:33,600
Speaker 7: to try to register. Those are principally youth voters. Four

356
00:17:33,680 --> 00:17:36,119
Speaker 7: hundred some one thousand of those were just from Taylor

357
00:17:36,160 --> 00:17:39,280
Speaker 7: Swift's link alone. So yeah, I would say there's going

358
00:17:39,320 --> 00:17:42,440
Speaker 7: to be a pretty material uptick or robust turnout from

359
00:17:42,440 --> 00:17:45,360
Speaker 7: the youth demographic, and those would be your silent voters

360
00:17:45,359 --> 00:17:47,240
Speaker 7: this year because those people are not going to be

361
00:17:47,280 --> 00:17:49,760
Speaker 7: on voter pools that are being Paul Guy.

362
00:17:50,640 --> 00:17:55,280
Speaker 5: So Paul the hoople, not the hoop, will endorse somebody.

363
00:17:55,480 --> 00:17:55,680
Speaker 2: Well.

364
00:17:56,240 --> 00:17:59,199
Speaker 4: Final things have a big effect there. Henriette I Kate

365
00:18:00,280 --> 00:18:04,080
Speaker 4: Vice president Harris. Should she be doing media, Should she

366
00:18:04,160 --> 00:18:06,400
Speaker 4: be doing a town hall? Should she be making herself

367
00:18:06,480 --> 00:18:09,840
Speaker 4: putting yourself out there for the median answering questions? She

368
00:18:09,880 --> 00:18:10,960
Speaker 4: has not done much to date.

369
00:18:11,920 --> 00:18:14,880
Speaker 7: Yeah, I think that what the debate showed is that

370
00:18:15,080 --> 00:18:19,000
Speaker 7: not only did voters have reticence to vote for her

371
00:18:19,040 --> 00:18:20,200
Speaker 7: because they didn't know about.

372
00:18:20,040 --> 00:18:21,119
Speaker 6: Her policy positions.

373
00:18:21,320 --> 00:18:22,800
Speaker 7: I want to say it was something like twenty four

374
00:18:22,840 --> 00:18:25,040
Speaker 7: percent of voters said they wanted to learn more about

375
00:18:25,040 --> 00:18:28,120
Speaker 7: her positions. And then you had the debate where obviously

376
00:18:28,200 --> 00:18:30,720
Speaker 7: both candidates had an opportunity to talk about their positions

377
00:18:30,960 --> 00:18:34,119
Speaker 7: and voters responded very positively to what they heard.

378
00:18:34,440 --> 00:18:36,840
Speaker 6: So, if the Harris campaign is looking for a.

379
00:18:36,880 --> 00:18:40,560
Speaker 7: Reason to either go into the media or not, the

380
00:18:40,600 --> 00:18:43,719
Speaker 7: debate suggests that voters not only want the information, but

381
00:18:43,760 --> 00:18:48,120
Speaker 7: were enthusiastic about what they heard. That's why Harris's numbers

382
00:18:48,400 --> 00:18:51,399
Speaker 7: have widened against Trump. Her polling has risen into the

383
00:18:51,440 --> 00:18:54,840
Speaker 7: fifty to fifty one percent range, while Trump's has declined.

384
00:18:54,920 --> 00:18:57,600
Speaker 7: So she serves as a contrast and they like what

385
00:18:57,640 --> 00:18:58,240
Speaker 7: they see.

386
00:18:58,480 --> 00:18:59,800
Speaker 5: So what do you do in this week?

387
00:19:00,000 --> 00:19:02,439
Speaker 2: I mean, you know, we got all this stuff swirling around,

388
00:19:02,760 --> 00:19:04,960
Speaker 2: what's Henrietta Trey's's date calendar?

389
00:19:05,320 --> 00:19:09,320
Speaker 5: Things to do in this election? This Monday and Tuesday.

390
00:19:10,400 --> 00:19:12,320
Speaker 6: I'm so glad you asked. I'm going to Fenway.

391
00:19:15,280 --> 00:19:17,679
Speaker 7: I'll be traveling up and down in the East Coast

392
00:19:17,920 --> 00:19:20,640
Speaker 7: this week starting tomorrow in Philly and then New York

393
00:19:20,680 --> 00:19:21,400
Speaker 7: and then Boston.

394
00:19:21,480 --> 00:19:23,679
Speaker 6: And I am gonna go to Fenway on thrilled.

395
00:19:24,440 --> 00:19:24,919
Speaker 3: Look at that?

396
00:19:25,240 --> 00:19:29,840
Speaker 5: Look at that? Can we get? Can we get Henrietta?

397
00:19:29,880 --> 00:19:34,400
Speaker 2: That morning after she's at Fenway, you know, she slides

398
00:19:34,480 --> 00:19:38,720
Speaker 2: over across a turnpike to the cask and flaggon Brockton.

399
00:19:38,800 --> 00:19:41,040
Speaker 2: I know you've Brockton shut the cask and.

400
00:19:41,080 --> 00:19:42,800
Speaker 5: Flagging down that one night.

401
00:19:42,840 --> 00:19:43,560
Speaker 4: All right, very good.

402
00:19:43,640 --> 00:19:45,280
Speaker 2: She's gonna be over there, you know, under the sit

403
00:19:45,400 --> 00:19:45,880
Speaker 2: CO sign.

404
00:19:46,240 --> 00:19:47,280
Speaker 5: You know, I can just see her.

405
00:19:47,960 --> 00:19:48,680
Speaker 2: What a trooper.

406
00:19:48,880 --> 00:19:50,040
Speaker 5: I don't even know where they're playing.

407
00:19:50,200 --> 00:19:53,280
Speaker 2: No, I mean they're done, right, They're done. Philly's won

408
00:19:53,440 --> 00:19:56,119
Speaker 2: ninety games, so I want to see, like, you know,

409
00:19:56,240 --> 00:19:59,720
Speaker 2: Ken Rosenthal, tell me, you know, like it's ninety.

410
00:19:59,440 --> 00:20:02,680
Speaker 5: The new on in three games. Yep, it's really impressive.

411
00:20:03,480 --> 00:20:04,240
Speaker 5: Henry the trays.

412
00:20:04,280 --> 00:20:05,720
Speaker 2: You need to talk to you the day after you

413
00:20:05,760 --> 00:20:10,440
Speaker 2: go to Finlay. Very important VATA partners, Henya to trace. Seriously,

414
00:20:10,520 --> 00:20:14,520
Speaker 2: there're folks on the shock in this nation, the embarrassment

415
00:20:14,680 --> 00:20:22,720
Speaker 2: in this nation of our violence on the equity market,

416
00:20:22,840 --> 00:20:26,960
Speaker 2: the ramifications of what the central Bank will do. Laurie Calvisina,

417
00:20:27,480 --> 00:20:30,639
Speaker 2: RBC Capital Markets. Laurie, if we get fifty beeps, what

418
00:20:30,680 --> 00:20:32,080
Speaker 2: will stocks do well.

419
00:20:32,119 --> 00:20:34,960
Speaker 1: I think it depends, as always Tom, when we have

420
00:20:35,080 --> 00:20:37,720
Speaker 1: these events. When we have these meetings, you may do

421
00:20:37,800 --> 00:20:39,919
Speaker 1: one thing right after you get the announcement, and you

422
00:20:39,960 --> 00:20:41,720
Speaker 1: may do an entirely different thing once you get to

423
00:20:41,760 --> 00:20:44,400
Speaker 1: the press conference. So I think it depends on what

424
00:20:44,440 --> 00:20:46,880
Speaker 1: the FED ends up saying. I think investors are really

425
00:20:46,960 --> 00:20:49,360
Speaker 1: focused on the idea of whether or not we're going

426
00:20:49,400 --> 00:20:52,040
Speaker 1: to have that soft landing. Are we tipping into a recession?

427
00:20:52,440 --> 00:20:54,919
Speaker 1: I am still in the camp, all due respect to

428
00:20:54,960 --> 00:20:56,919
Speaker 1: those who have said otherwise, but I am still in

429
00:20:56,960 --> 00:20:59,600
Speaker 1: the camp. At a fifty basis point move does run

430
00:20:59,640 --> 00:21:02,840
Speaker 1: the risk of spooking markets if we don't frame it properly.

431
00:21:03,760 --> 00:21:06,480
Speaker 4: So, Laurie, whether it's twenty five basis points are fifty

432
00:21:06,480 --> 00:21:08,840
Speaker 4: basis points, it appears that the FED is on a

433
00:21:08,960 --> 00:21:13,240
Speaker 4: downward trajectory in rates. That's number one. Number two. Earnings

434
00:21:13,240 --> 00:21:16,600
Speaker 4: are pretty darn solid here. Is it difficult not to

435
00:21:16,640 --> 00:21:18,480
Speaker 4: be constructive on equities at this point?

436
00:21:19,760 --> 00:21:23,480
Speaker 1: I think at this point it depends on your time horizon, Paul,

437
00:21:23,600 --> 00:21:25,199
Speaker 1: is how I would put it. So I see some

438
00:21:25,320 --> 00:21:28,080
Speaker 1: differences when I do my valuation modeling for twenty twenty

439
00:21:28,160 --> 00:21:31,280
Speaker 1: five versus twenty twenty four, twenty twenty four. I'll save

440
00:21:31,320 --> 00:21:33,280
Speaker 1: you all the math, but I think that we're fully valued.

441
00:21:33,280 --> 00:21:35,320
Speaker 1: I think we're already baking in a pretty good move

442
00:21:35,400 --> 00:21:37,560
Speaker 1: lower in inflation and a pretty good, you know, move

443
00:21:37,640 --> 00:21:40,199
Speaker 1: lower in tenure yields and fed rate cuts. So I

444
00:21:40,240 --> 00:21:43,240
Speaker 1: can't really justify a higher number on the multiple and

445
00:21:43,280 --> 00:21:46,000
Speaker 1: the earnings for this year. That being said, markets can

446
00:21:46,040 --> 00:21:49,000
Speaker 1: run hot. Our model's not perfect. It's just a rough guide.

447
00:21:49,119 --> 00:21:51,919
Speaker 1: I can though, when I even have some really conservative

448
00:21:51,920 --> 00:21:53,680
Speaker 1: modeling for next year, I can get you to sixty

449
00:21:53,680 --> 00:21:56,280
Speaker 1: one fifty sixty two hundred or so for the S

450
00:21:56,359 --> 00:21:59,320
Speaker 1: and P and twenty twenty five. So again, I think,

451
00:21:59,359 --> 00:22:01,120
Speaker 1: you know, I sort of like in the short term

452
00:22:01,200 --> 00:22:05,160
Speaker 1: we're kind of full I keep using that word. Longer term, though,

453
00:22:05,200 --> 00:22:07,240
Speaker 1: I can make a case for stock. So again, it

454
00:22:07,280 --> 00:22:08,760
Speaker 1: really depends on your time horizon.

455
00:22:08,960 --> 00:22:13,119
Speaker 2: What's the rotation from the magnificent eight whatever it is,

456
00:22:13,800 --> 00:22:16,160
Speaker 2: out to your Russell two thousand. I'm going to say

457
00:22:16,480 --> 00:22:20,200
Speaker 2: one thousand point year to date difference. One's up seventeen percent,

458
00:22:20,480 --> 00:22:21,720
Speaker 2: the other's up seven percent.

459
00:22:21,760 --> 00:22:22,720
Speaker 5: Whatever the numbers are.

460
00:22:23,200 --> 00:22:25,919
Speaker 2: But the answer is, can you hedge that bet and

461
00:22:26,000 --> 00:22:30,640
Speaker 2: maybe go short, Mag seven go long the Kelvisena two thousand.

462
00:22:32,440 --> 00:22:35,000
Speaker 1: Oh Look, I'm not someone who's short bets, you know,

463
00:22:35,040 --> 00:22:38,480
Speaker 1: tend to sit well with in general. But I think

464
00:22:38,480 --> 00:22:40,360
Speaker 1: the reality is that if you look at the earnings

465
00:22:40,359 --> 00:22:43,560
Speaker 1: growth dynamics between the Mag seven and the Russell two thousand,

466
00:22:43,720 --> 00:22:46,439
Speaker 1: something really exciting is happening, which is that if you

467
00:22:46,440 --> 00:22:49,280
Speaker 1: look at the forecast, you've got a ramp down, kind

468
00:22:49,320 --> 00:22:52,920
Speaker 1: of a slowing, a deceleration in earning's growth expectations for

469
00:22:53,119 --> 00:22:56,080
Speaker 1: the Mag seven bucket still fantastic growth, but just not

470
00:22:56,200 --> 00:22:59,080
Speaker 1: nearly as hot as it was. Basically, they had an

471
00:22:59,080 --> 00:23:01,880
Speaker 1: earning's recession and twenty twenty two, a big fat recovery

472
00:23:01,880 --> 00:23:03,720
Speaker 1: in twenty twenty three, and now they're kind of coming

473
00:23:03,760 --> 00:23:05,520
Speaker 1: back to earth a little bit. If you look at

474
00:23:05,600 --> 00:23:08,720
Speaker 1: Russell two thousand, it had its earnings recession basically a

475
00:23:08,800 --> 00:23:11,280
Speaker 1: year year and a half later, and it's starting to

476
00:23:11,280 --> 00:23:13,440
Speaker 1: come out of that earnings recession now if you look

477
00:23:13,440 --> 00:23:15,920
Speaker 1: at the forecast data, and it's expected to really ramp

478
00:23:16,000 --> 00:23:18,800
Speaker 1: up next year and actually have faster growth rates than

479
00:23:18,840 --> 00:23:21,000
Speaker 1: the Mag seven. So I don't know if that's necessarily

480
00:23:21,119 --> 00:23:24,000
Speaker 1: a cause a case to be made for being short

481
00:23:24,000 --> 00:23:26,280
Speaker 1: on the mag seven, but it does certainly make the

482
00:23:26,320 --> 00:23:27,960
Speaker 1: case for broadening out. Now you have to have a

483
00:23:28,000 --> 00:23:30,080
Speaker 1: lot of other things go right as well. Those earnings

484
00:23:30,160 --> 00:23:32,400
Speaker 1: estimates for Russell two thousand are not going to come

485
00:23:32,440 --> 00:23:36,000
Speaker 1: through if the economy has a hard landing. But I

486
00:23:36,040 --> 00:23:38,560
Speaker 1: think just on the earnings data alone, you can make

487
00:23:38,600 --> 00:23:39,840
Speaker 1: a case for rotation.

488
00:23:39,800 --> 00:23:48,600
Speaker 2: MAG seven, Russell two thousand, vac Site, FTAI, Aviation insmd Ready, Sprouts,

489
00:23:48,600 --> 00:23:53,600
Speaker 2: Farmers Market, Nice, Ensign Group, Fabrinet, this name, I know,

490
00:23:53,680 --> 00:23:54,639
Speaker 2: Muller Industries.

491
00:23:55,720 --> 00:23:59,200
Speaker 4: So, Laurie, are there some sectors here that are screening well?

492
00:23:59,400 --> 00:24:00,120
Speaker 3: If you guys are.

493
00:24:02,160 --> 00:24:04,680
Speaker 1: So, I would say sector decisions, it feels like they're

494
00:24:04,720 --> 00:24:06,720
Speaker 1: really tough right now. I think it does depend on

495
00:24:06,760 --> 00:24:09,600
Speaker 1: which part of the market cap spectrum you're looking at.

496
00:24:09,920 --> 00:24:12,960
Speaker 1: If we're looking at financials, for example, they look good

497
00:24:12,960 --> 00:24:15,359
Speaker 1: to me in large cap we're still overweight there, but

498
00:24:15,359 --> 00:24:17,200
Speaker 1: they actually look a lot more interesting to me down

499
00:24:17,240 --> 00:24:19,880
Speaker 1: in small cap from evaluation perspective, So I would say

500
00:24:19,920 --> 00:24:22,160
Speaker 1: that one's, you know, screening really really well.

501
00:24:22,560 --> 00:24:22,720
Speaker 2: You know.

502
00:24:22,760 --> 00:24:25,240
Speaker 1: By contrast, if I look at a sector like industrials,

503
00:24:25,320 --> 00:24:27,320
Speaker 1: we're market weight that one. It looks new, you know,

504
00:24:27,359 --> 00:24:29,760
Speaker 1: it looks over valued frankly in both large cap and

505
00:24:29,800 --> 00:24:32,280
Speaker 1: small cap. But when I compare the multiples between small

506
00:24:32,320 --> 00:24:34,280
Speaker 1: and large I get a lot more excited about them

507
00:24:34,320 --> 00:24:36,240
Speaker 1: in the small cap space. So I think it really

508
00:24:36,480 --> 00:24:39,200
Speaker 1: it depends on how far market cap you're willing down

509
00:24:39,200 --> 00:24:41,480
Speaker 1: market cap you're willing to go, and I think you

510
00:24:41,480 --> 00:24:43,520
Speaker 1: can also, you know, link it up with certain fundamental

511
00:24:43,560 --> 00:24:44,400
Speaker 1: narratives as well.

512
00:24:44,920 --> 00:24:48,280
Speaker 2: Is Apple a growth stock, a value stock or a

513
00:24:48,359 --> 00:24:49,119
Speaker 2: value trap?

514
00:24:50,440 --> 00:24:51,840
Speaker 1: I'm going to punt that one or I'm going to

515
00:24:51,840 --> 00:24:54,720
Speaker 1: get a call from the compliance people later just because

516
00:24:54,720 --> 00:24:57,000
Speaker 1: we're not allowed to talk about individual stocks. But what

517
00:24:57,080 --> 00:24:57,920
Speaker 1: I will wait wait.

518
00:24:57,760 --> 00:25:00,960
Speaker 2: Wait, wait, wait your compliance How does lead craft right?

519
00:25:01,920 --> 00:25:05,200
Speaker 1: No, no, no, no, she's our rock story a resident

520
00:25:05,320 --> 00:25:05,760
Speaker 1: rock star.

521
00:25:07,040 --> 00:25:10,800
Speaker 2: Or can you tell auditing at RBC the amount of

522
00:25:10,840 --> 00:25:15,240
Speaker 2: food Kalemacroft put down at the Pioneer Grill for breakfast?

523
00:25:15,800 --> 00:25:19,480
Speaker 2: I mean she had a wyoming, full wyoming It was unbelievable.

524
00:25:19,720 --> 00:25:24,640
Speaker 1: Check that Bill Klimacroft is multi talented on many facets.

525
00:25:24,680 --> 00:25:26,080
Speaker 1: I've worked with her for a number of years, so

526
00:25:26,119 --> 00:25:28,320
Speaker 1: that does not surprise me at all. But you know,

527
00:25:28,359 --> 00:25:30,080
Speaker 1: going back to the tech space, Tom though, what I

528
00:25:30,119 --> 00:25:32,200
Speaker 1: will tell you is the Tech Hardware and Equipment group

529
00:25:32,359 --> 00:25:34,520
Speaker 1: is one that does screen pretty good to us in

530
00:25:34,560 --> 00:25:37,720
Speaker 1: the technology space. It's cheap, it's got up for Herne's

531
00:25:37,720 --> 00:25:41,280
Speaker 1: revision trends. Software frankly looks pretty good too. Kind of

532
00:25:41,320 --> 00:25:44,960
Speaker 1: neutral on valuation, positive on revisions. The semis are still

533
00:25:45,000 --> 00:25:47,919
Speaker 1: problematic in the tech space. They're looking overvalued with negative

534
00:25:47,920 --> 00:25:48,800
Speaker 1: revisions to us right.

535
00:25:48,760 --> 00:25:51,119
Speaker 2: Now, single point, where's SPX a year from now?

536
00:25:51,240 --> 00:25:51,560
Speaker 5: Right now?

537
00:25:51,600 --> 00:25:53,960
Speaker 2: Fifty six hundred? Where are we you a year from now?

538
00:25:55,200 --> 00:25:57,600
Speaker 1: So we haven't put out a target next for next year,

539
00:25:57,640 --> 00:26:00,840
Speaker 1: but the valuation modeling I mentioned to you, you know,

540
00:26:00,920 --> 00:26:02,520
Speaker 1: it can sort of get you to sort of sixty

541
00:26:02,560 --> 00:26:05,199
Speaker 1: one fifty sixty two hundred by year end. I do

542
00:26:05,320 --> 00:26:07,240
Speaker 1: have some other models that get you to a similar

543
00:26:07,320 --> 00:26:08,520
Speaker 1: number at midyear as well.

544
00:26:08,720 --> 00:26:12,200
Speaker 2: See that's ring twenties with yep, you know. Lauri Kelvin, yeh,

545
00:26:12,400 --> 00:26:16,000
Speaker 2: lauryd Kelvisina, thank you so much, RBC Capital Markets greatly.

546
00:26:16,640 --> 00:26:29,439
Speaker 2: I appreciate it. The daily look at the front page

547
00:26:29,560 --> 00:26:31,520
Speaker 2: is the Lisa Matteo moment.

548
00:26:31,800 --> 00:26:33,080
Speaker 5: Good morning, Lisa.

549
00:26:32,920 --> 00:26:34,920
Speaker 8: Good morning. This one stood up to me on the

550
00:26:35,080 --> 00:26:35,840
Speaker 8: Washington Post.

551
00:26:35,840 --> 00:26:38,680
Speaker 9: You've heard about children's savings account programs, more of them

552
00:26:39,040 --> 00:26:42,399
Speaker 9: popping up in disadvantaged school districts. They pointed out the

553
00:26:42,400 --> 00:26:45,240
Speaker 9: Bradbury Heights Elementary School over in Maryland is a.

554
00:26:45,280 --> 00:26:46,040
Speaker 8: Title one school.

555
00:26:46,320 --> 00:26:48,280
Speaker 9: So parents went to you know, the back to school night,

556
00:26:48,320 --> 00:26:50,639
Speaker 9: they were told that their kids will be eligible for

557
00:26:50,680 --> 00:26:53,879
Speaker 9: at least thirteen thousand dollars to cover the cost of college,

558
00:26:54,080 --> 00:26:57,560
Speaker 9: vacational training, build up their wealth once they graduated, any

559
00:26:57,560 --> 00:26:59,520
Speaker 9: one of those things. So it's kids from the classes

560
00:26:59,520 --> 00:27:03,480
Speaker 9: of twenty thirty seven, twenty thirty eight, one thousand dollars

561
00:27:03,520 --> 00:27:06,679
Speaker 9: each year from kindergarten through senior year of high school

562
00:27:06,720 --> 00:27:09,480
Speaker 9: if they stay in the school system and graduate. So

563
00:27:09,520 --> 00:27:11,119
Speaker 9: the parents are really happy. They say it's going to

564
00:27:11,160 --> 00:27:13,680
Speaker 9: give their kids this health, this kind of jump start

565
00:27:13,720 --> 00:27:15,920
Speaker 9: in life. So I thought it was a really really

566
00:27:15,960 --> 00:27:18,960
Speaker 9: good story because because more you're seeing this more often nowadays.

567
00:27:19,040 --> 00:27:21,399
Speaker 8: Where does that money come from? This one is a

568
00:27:21,400 --> 00:27:23,080
Speaker 8: Greater Washington Community Foundation.

569
00:27:23,200 --> 00:27:25,679
Speaker 9: They had this brilliant futures program, so they get the

570
00:27:25,720 --> 00:27:28,440
Speaker 9: funding for it and then it goes into it started

571
00:27:28,480 --> 00:27:30,800
Speaker 9: back in June, this particular program, and now they had

572
00:27:30,840 --> 00:27:31,840
Speaker 9: like about four hundred sears.

573
00:27:31,840 --> 00:27:34,560
Speaker 2: I'm seeing that I'm seeing a new sense of desperation.

574
00:27:35,000 --> 00:27:38,600
Speaker 2: I mean across rich people in the middle. For there's Paul,

575
00:27:38,640 --> 00:27:41,200
Speaker 2: there's a whole new sense of this is just insane.

576
00:27:41,240 --> 00:27:43,520
Speaker 4: Well, I mean the cost of higher education is crazy

577
00:27:43,520 --> 00:27:45,720
Speaker 4: and it's it's called into I mean some of these

578
00:27:45,880 --> 00:27:48,040
Speaker 4: you know, you go into the trades. That is a

579
00:27:48,160 --> 00:27:51,679
Speaker 4: for a lot of people, a way better opportunities. Alder

580
00:27:51,720 --> 00:27:53,440
Speaker 4: bit to kind of come pursuing a contratract.

581
00:27:53,520 --> 00:27:55,919
Speaker 2: Good morning listening in the evening of Australia where they

582
00:27:55,920 --> 00:27:56,440
Speaker 2: get it right.

583
00:27:56,480 --> 00:27:57,479
Speaker 5: They're just all they do.

584
00:27:57,560 --> 00:28:00,280
Speaker 2: You go to school, you get out, and they take

585
00:28:00,320 --> 00:28:02,600
Speaker 2: a teen sweenze amount of your paycheck forever.

586
00:28:03,119 --> 00:28:04,080
Speaker 5: I don't know the details.

587
00:28:04,359 --> 00:28:07,240
Speaker 2: Uve Rhinar at the Giant at Princeton once told me that, Okay,

588
00:28:07,440 --> 00:28:08,520
Speaker 2: Australia gets it right.

589
00:28:08,640 --> 00:28:10,359
Speaker 5: America does it next.

590
00:28:11,440 --> 00:28:14,560
Speaker 9: More states are requiring students of publicly funded colleges to

591
00:28:14,680 --> 00:28:18,000
Speaker 9: complete a CIVIS course, so they get it in high school.

592
00:28:18,000 --> 00:28:20,840
Speaker 8: There's the saying they were made you do this. No,

593
00:28:21,119 --> 00:28:25,280
Speaker 8: she did not. This is the Associated Press. Here's the thing.

594
00:28:25,320 --> 00:28:27,600
Speaker 9: So studies showed that a third of American adults they

595
00:28:27,600 --> 00:28:29,960
Speaker 9: can't name the three branches of the federal government. No,

596
00:28:30,240 --> 00:28:33,359
Speaker 9: there's another study that shows ten percent of college graduates

597
00:28:33,400 --> 00:28:36,640
Speaker 9: thinks that TV's judge Judy is on the Supreme Court.

598
00:28:36,880 --> 00:28:40,320
Speaker 8: So this goes to show you is killing where it's

599
00:28:41,880 --> 00:28:44,400
Speaker 8: so now you have these colleges that want to do it.

600
00:28:44,440 --> 00:28:46,560
Speaker 9: So they spoke with this professor at University of South

601
00:28:46,600 --> 00:28:50,240
Speaker 9: Carolina Beavert. He said that he gives out the citizenship

602
00:28:50,320 --> 00:28:53,600
Speaker 9: test to his students and thirty five percent of them

603
00:28:53,600 --> 00:28:56,320
Speaker 9: will pass it. So it just goes to show you

604
00:28:56,320 --> 00:28:59,720
Speaker 9: that this is the reasoning behind why more publicly funded

605
00:28:59,720 --> 00:29:03,040
Speaker 9: college is want to bring back civics to a curriculum.

606
00:29:03,640 --> 00:29:06,600
Speaker 2: Chris jeff Sack said years ago in his seminal book

607
00:29:06,640 --> 00:29:10,440
Speaker 2: on the Dumbing Down America Great book, he said, we're

608
00:29:10,440 --> 00:29:12,920
Speaker 2: now at the point where the kids are dumb, the

609
00:29:13,040 --> 00:29:16,000
Speaker 2: parents are dumb, even the grandparents are dumb. I mean,

610
00:29:16,400 --> 00:29:20,080
Speaker 2: we are so far from civics of our ute is

611
00:29:20,480 --> 00:29:23,520
Speaker 2: to be like if I said right now to one

612
00:29:23,560 --> 00:29:30,080
Speaker 2: hundred people who's Andrew Johnson, you know they have no clue.

613
00:29:30,280 --> 00:29:33,360
Speaker 2: I mean, you know, first President Peach coming off of

614
00:29:33,400 --> 00:29:37,160
Speaker 2: Lincoln and all that. Richard O. Haas has the book

615
00:29:37,200 --> 00:29:40,360
Speaker 2: on this, folks. I'm not going to mince words. The

616
00:29:40,400 --> 00:29:44,640
Speaker 2: Bill of Obligations. Read it throat a child hit him

617
00:29:44,680 --> 00:29:47,080
Speaker 2: on the head. The smartmouth college not that there's any

618
00:29:47,120 --> 00:29:49,720
Speaker 2: smartmouth college kids at Lisa's house.

619
00:29:50,600 --> 00:29:52,760
Speaker 5: The Bill of Obligations. What are you got next?

620
00:29:53,200 --> 00:29:56,400
Speaker 8: I gotta talk about Showgun. Okay, you think you talked

621
00:29:56,400 --> 00:29:56,760
Speaker 8: about it.

622
00:29:56,800 --> 00:29:58,800
Speaker 9: I mean, I know you love the show top any

623
00:29:59,080 --> 00:30:01,120
Speaker 9: Emmy first time in nineteen years.

624
00:30:01,760 --> 00:30:03,800
Speaker 8: So they did. They got four wards at the Emmys.

625
00:30:04,040 --> 00:30:04,640
Speaker 8: But here's the thing.

626
00:30:04,640 --> 00:30:06,400
Speaker 9: It's set this record for the most wins by a

627
00:30:06,440 --> 00:30:09,000
Speaker 9: single show in the year eighteen if you include the

628
00:30:09,040 --> 00:30:10,360
Speaker 9: Primetime Emmys and then the.

629
00:30:10,360 --> 00:30:11,680
Speaker 8: Creative Arts Awards.

630
00:30:11,760 --> 00:30:12,000
Speaker 5: Wow.

631
00:30:12,120 --> 00:30:14,280
Speaker 9: So it really got all these and they also want

632
00:30:14,800 --> 00:30:17,520
Speaker 9: so the Bear. Yeah, so Disney's out in front, beat

633
00:30:17,560 --> 00:30:21,200
Speaker 9: out Netflix, Warner Brothers, Discovery for the most Emmys.

634
00:30:21,240 --> 00:30:23,600
Speaker 8: So it just goes to show you I would love

635
00:30:23,680 --> 00:30:24,240
Speaker 8: for Lucas.

636
00:30:24,280 --> 00:30:26,800
Speaker 2: It is wonderful panel coming up in LA. When they

637
00:30:26,840 --> 00:30:31,040
Speaker 2: talked to Shilgun people, were they advantaged by having a

638
00:30:31,080 --> 00:30:36,280
Speaker 2: pandemic because the pandemic slowed down the production. They wrote

639
00:30:36,320 --> 00:30:41,880
Speaker 2: the original screenplay which was touchy feely, woke American, and

640
00:30:41,920 --> 00:30:44,720
Speaker 2: they said, this ain't working. It doesn't sound like Japanese.

641
00:30:45,280 --> 00:30:49,720
Speaker 2: And they took the production to Japan and literally had

642
00:30:49,800 --> 00:30:54,640
Speaker 2: Japanese do the screenplay and Japanese then translate it back

643
00:30:55,000 --> 00:30:58,920
Speaker 2: to English rewrites. But I wonder if it would have

644
00:30:58,960 --> 00:31:02,480
Speaker 2: been as successful without the delay of the pandemic to

645
00:31:02,520 --> 00:31:03,720
Speaker 2: give them time to get it right.

646
00:31:03,840 --> 00:31:06,600
Speaker 5: Yeah, very quick. I can't say enough about it.

647
00:31:06,680 --> 00:31:11,320
Speaker 2: Folks, all all of the actors that the stars just wow,

648
00:31:11,560 --> 00:31:12,520
Speaker 2: what do you got anything?

649
00:31:13,280 --> 00:31:15,400
Speaker 9: Yeah, So, you know, you talk about the younger generation

650
00:31:15,560 --> 00:31:20,080
Speaker 9: and corporate life and what their views are. So when

651
00:31:20,120 --> 00:31:23,040
Speaker 9: you're gonna like it says that gen z ers are

652
00:31:23,080 --> 00:31:25,600
Speaker 9: actually bragging about how happy.

653
00:31:25,240 --> 00:31:27,160
Speaker 8: They are about their jobs in corp world.

654
00:31:27,360 --> 00:31:29,160
Speaker 9: This is the oldest members of gen Z are like

655
00:31:29,200 --> 00:31:31,280
Speaker 9: twenty seven, so this gives you kind of an idea.

656
00:31:31,600 --> 00:31:34,720
Speaker 9: But younger workers previously they talked about, you know, people

657
00:31:34,720 --> 00:31:38,320
Speaker 9: should quit their corporate jobs. But on gen Z they're

658
00:31:38,360 --> 00:31:41,520
Speaker 9: posting on social media. They like the structure, They're appreciative

659
00:31:41,560 --> 00:31:42,320
Speaker 9: of the jobs.

660
00:31:42,680 --> 00:31:42,880
Speaker 2: You have.

661
00:31:43,000 --> 00:31:46,320
Speaker 9: These people that are called corporate girlies, so they post there.

662
00:31:46,280 --> 00:31:48,760
Speaker 5: It's a corporate are you a corporate girlies?

663
00:31:49,120 --> 00:31:58,720
Speaker 8: They post their outfits.

664
00:31:55,160 --> 00:31:57,600
Speaker 9: Bow tie of the day, you gotta do it. But

665
00:31:57,640 --> 00:32:00,479
Speaker 9: they just say they're happy. So they're kind of changing

666
00:32:00,560 --> 00:32:03,320
Speaker 9: that narrative a little bit. Where As the younger generation

667
00:32:03,480 --> 00:32:06,520
Speaker 9: was pushing to not go corporate, they're pushing that it's

668
00:32:06,520 --> 00:32:07,320
Speaker 9: all about corporate.

669
00:32:07,360 --> 00:32:11,040
Speaker 4: Well stop in this story. Gen Z Tom has overtaken

670
00:32:11,080 --> 00:32:14,040
Speaker 4: Baby boomers in the workforce this year, with twenty one

671
00:32:14,200 --> 00:32:16,800
Speaker 4: million of them employed full time in the US.

672
00:32:16,960 --> 00:32:18,560
Speaker 5: About that, so.

673
00:32:18,480 --> 00:32:22,120
Speaker 4: We're yet again, I'm minority baby.

674
00:32:22,160 --> 00:32:25,600
Speaker 2: Thank you Lisa for making us feel so so ancient.

675
00:32:26,680 --> 00:32:30,840
Speaker 2: Lisa Mateo there with all right the newspapers this morning.

676
00:32:31,040 --> 00:32:34,240
Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best

677
00:32:34,240 --> 00:32:39,040
Speaker 2: in economics, finance, investment, and international relations. You can also

678
00:32:39,120 --> 00:32:43,160
Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast

679
00:32:43,280 --> 00:32:47,320
Speaker 2: channel on YouTube to see the show weekday mornings from

680
00:32:47,360 --> 00:32:50,600
Speaker 2: seven to ten am Eastern from our global headquarters in

681
00:32:50,680 --> 00:32:54,400
Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify,

682
00:32:54,720 --> 00:32:58,280
Speaker 2: or anywhere else you listen, and always on Bloomberg Radio,

683
00:32:58,480 --> 00:33:09,840
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business APPHM