1 00:00:10,039 --> 00:00:13,720 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Always 2 00:00:14,000 --> 00:00:17,560 Speaker 1: with Michael McKee. Daily we bring you insight from the 3 00:00:17,560 --> 00:00:22,760 Speaker 1: best in economics, finance, investment, and international relations. Find Bloomberg 4 00:00:22,840 --> 00:00:27,240 Speaker 1: Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,760 --> 00:00:35,720 Speaker 1: on the Bloomberg with us is Ellen Sentner Morgan Stanley, 6 00:00:35,880 --> 00:00:39,680 Speaker 1: whose research and her team research is really the talk 7 00:00:39,720 --> 00:00:42,959 Speaker 1: of the industry. This morning, she has been one of caution, 8 00:00:43,080 --> 00:00:46,720 Speaker 1: among others on economic growth. She reaffirms that sub two 9 00:00:46,720 --> 00:00:51,280 Speaker 1: percent g d P and the entire equities, bonds, currency, 10 00:00:51,320 --> 00:00:55,520 Speaker 1: commodity team at Morgan Stanley adjust to the locomotive being 11 00:00:55,560 --> 00:00:58,480 Speaker 1: a little more subpar. Let's start with how you get 12 00:00:59,040 --> 00:01:03,320 Speaker 1: in economics from economic growth over to an interst rate call. 13 00:01:03,560 --> 00:01:07,199 Speaker 1: How does your interest rate team link those two together? Well, 14 00:01:07,760 --> 00:01:10,600 Speaker 1: someone like Matt Hornback, our global rates strategist, has to 15 00:01:10,640 --> 00:01:14,800 Speaker 1: take into account all of the global economics teams UH 16 00:01:14,920 --> 00:01:20,440 Speaker 1: calls for various monetary policy movements UH, and so there's 17 00:01:20,560 --> 00:01:23,880 Speaker 1: very much many moving parts UH. And that's not the 18 00:01:23,959 --> 00:01:27,000 Speaker 1: only thing. Looking at risk premiums around the world, global 19 00:01:27,040 --> 00:01:31,880 Speaker 1: flows and other UH anticipating other events, but monetary policy 20 00:01:31,959 --> 00:01:34,479 Speaker 1: making is a big piece of that. And when your 21 00:01:34,480 --> 00:01:38,880 Speaker 1: economics team takes all further rate hikes off the table, uh, 22 00:01:38,920 --> 00:01:41,680 Speaker 1: you know, that's going to play into how you think 23 00:01:41,720 --> 00:01:46,399 Speaker 1: about yields. And he's got a very uh interesting let's say, 24 00:01:46,480 --> 00:01:50,760 Speaker 1: and and uh forecast for the tenure that's raised eyebrows. 25 00:01:50,960 --> 00:01:54,080 Speaker 1: I'm lost. And more importantly, if I stand in my 26 00:01:54,800 --> 00:01:57,520 Speaker 1: h hallway with this is my library at home and 27 00:01:57,520 --> 00:02:01,480 Speaker 1: look at my economic books, I'm law sub two percent 28 00:02:01,680 --> 00:02:06,640 Speaker 1: yield amid an inflation curve moving up and critically a 29 00:02:06,680 --> 00:02:10,320 Speaker 1: core inflation curve. It has a life of its own. 30 00:02:10,880 --> 00:02:13,600 Speaker 1: It's not a very irving Fisher morning, is it now? 31 00:02:13,680 --> 00:02:16,520 Speaker 1: And and for for core inflation? And we're focused, like 32 00:02:16,560 --> 00:02:20,280 Speaker 1: the Fed, of course, on on core PC prices. Uh. 33 00:02:20,320 --> 00:02:22,680 Speaker 1: You know, it's an interesting story there because there are 34 00:02:22,720 --> 00:02:26,880 Speaker 1: some structural dynamics that are holding it down. Uh. And 35 00:02:26,960 --> 00:02:29,680 Speaker 1: but we're also dealing with a good deal of of 36 00:02:29,880 --> 00:02:33,839 Speaker 1: disinflation that we're importing from abroad, particularly China, which has 37 00:02:33,880 --> 00:02:36,000 Speaker 1: nothing to do with our dollar index. It has to 38 00:02:36,040 --> 00:02:39,440 Speaker 1: do with global oversupply. And when our global teams are 39 00:02:39,480 --> 00:02:42,080 Speaker 1: telling us that global demand is going to continue to flag, 40 00:02:42,880 --> 00:02:45,960 Speaker 1: that's going to keep downward pressure on core goods prices 41 00:02:46,000 --> 00:02:48,720 Speaker 1: that we import in the US, and and basically our 42 00:02:48,800 --> 00:02:53,560 Speaker 1: forecast for core PC growth inflation growth over our forecast horizons, 43 00:02:53,639 --> 00:02:57,160 Speaker 1: that just stays an extremely tight band fluctuating between one 44 00:02:57,200 --> 00:03:01,200 Speaker 1: six and one seven. That's not shoot. People talking about 45 00:03:01,280 --> 00:03:03,840 Speaker 1: FED would love to overshoot. That's definitely not. Here's what 46 00:03:03,880 --> 00:03:07,960 Speaker 1: I'm fascinated buying. Can they manage a policy to get 47 00:03:08,040 --> 00:03:12,040 Speaker 1: to and overshoot. The only thing that monetary policymakers know 48 00:03:12,160 --> 00:03:15,960 Speaker 1: is to keep policy is accommodative as possible and try 49 00:03:16,040 --> 00:03:18,720 Speaker 1: to get to that inflation overshoot, and it's not working 50 00:03:18,760 --> 00:03:20,959 Speaker 1: for them so far. The thing that I do is 51 00:03:20,960 --> 00:03:23,560 Speaker 1: a macroeconomist story, is I'm not trying to predict what 52 00:03:23,639 --> 00:03:27,239 Speaker 1: the FED should do um and how they should change 53 00:03:27,320 --> 00:03:30,560 Speaker 1: their policies. I'm predicting what they will do. I get 54 00:03:30,639 --> 00:03:33,880 Speaker 1: up every morning and I put on my FED goggles, 55 00:03:33,960 --> 00:03:36,839 Speaker 1: and I look at the world through monetary policymaker's eyes 56 00:03:36,880 --> 00:03:38,800 Speaker 1: when I'm trying to predict what they'll do. And it's 57 00:03:38,880 --> 00:03:41,520 Speaker 1: one reason why it led us to expect only a 58 00:03:41,600 --> 00:03:45,040 Speaker 1: disaverate heighten that last year horse in kart. I've got 59 00:03:45,480 --> 00:03:48,840 Speaker 1: where the economy is and I've got a fed trying 60 00:03:48,920 --> 00:03:51,440 Speaker 1: to do good things or to not do bad things. 61 00:03:51,520 --> 00:03:57,680 Speaker 1: We all understand that can they affect yields higher to 62 00:03:58,040 --> 00:04:01,880 Speaker 1: create inflation, That is not an argument that I think 63 00:04:01,960 --> 00:04:07,280 Speaker 1: that they would follow a right, So there is a 64 00:04:07,360 --> 00:04:10,120 Speaker 1: lot of hope there, right, and and and what really 65 00:04:10,200 --> 00:04:13,240 Speaker 1: gets under their skin right now is that no matter 66 00:04:13,360 --> 00:04:16,440 Speaker 1: what they do, how accommodated they remain owned. The oil 67 00:04:16,560 --> 00:04:19,480 Speaker 1: prices are off the bottom and well supported around fifty 68 00:04:19,520 --> 00:04:24,680 Speaker 1: dollars of barrel, it has not raised inflation expectations. And 69 00:04:24,880 --> 00:04:28,960 Speaker 1: that gets at the core of monetary policy making. What 70 00:04:29,160 --> 00:04:32,640 Speaker 1: they've learned, right, what they grew up knowing, was that 71 00:04:32,880 --> 00:04:35,760 Speaker 1: if inflation is low and inflation expectations are falling, you 72 00:04:35,880 --> 00:04:39,520 Speaker 1: do not touch rates. UH. And it's very difficult for 73 00:04:39,560 --> 00:04:42,159 Speaker 1: them to get over that hurdle when that is at 74 00:04:42,200 --> 00:04:46,680 Speaker 1: the core of monetary policy thinking. UH. And Jannet Yellen 75 00:04:46,760 --> 00:04:51,279 Speaker 1: has been very good at being realistic and admitting and look, 76 00:04:51,360 --> 00:04:54,320 Speaker 1: we have limited tools. We have limited policy tools left, 77 00:04:54,560 --> 00:04:57,520 Speaker 1: and therefore we have to be extraordinarily cautious. And would 78 00:04:57,600 --> 00:05:01,599 Speaker 1: would she love to in private conversation say fiscal policy 79 00:05:01,680 --> 00:05:03,960 Speaker 1: makers did pull their heads out of the sand and 80 00:05:04,360 --> 00:05:07,160 Speaker 1: give us help around the globe. One of your advantages is, 81 00:05:07,200 --> 00:05:10,560 Speaker 1: like every other major firm, is a great cell side component. 82 00:05:10,640 --> 00:05:14,320 Speaker 1: Betsy gray Set is pretty pretty pretty good on the banks, 83 00:05:14,400 --> 00:05:18,400 Speaker 1: and her research reports, which are hyper numerical, clearly go 84 00:05:18,600 --> 00:05:20,800 Speaker 1: through all the major And I don't mean like Morgan 85 00:05:20,839 --> 00:05:23,440 Speaker 1: Stanley because you're not doing deposits and you're not you're 86 00:05:23,440 --> 00:05:25,960 Speaker 1: not giving out to the toasters, right, No, you're not 87 00:05:26,080 --> 00:05:28,760 Speaker 1: doing nothing. I haven't gotten Morgan Stanley, but it banking 88 00:05:28,839 --> 00:05:32,000 Speaker 1: in general that's got to affect the animals bear because 89 00:05:32,040 --> 00:05:35,479 Speaker 1: net interesting margin isn't there with your Morgan Stanley call 90 00:05:35,560 --> 00:05:39,159 Speaker 1: on yields? Is it exactly dovetail Betsy's world into your world. 91 00:05:39,320 --> 00:05:42,360 Speaker 1: Nim is slim um And I know that one, and 92 00:05:42,640 --> 00:05:44,800 Speaker 1: Betsy's incredible, And I know one thing that we've been 93 00:05:44,880 --> 00:05:47,440 Speaker 1: focused on, Betsy has been focused on, Adam Parker, our 94 00:05:47,520 --> 00:05:52,080 Speaker 1: chief US been focused on, is that consumer balance sheet 95 00:05:52,400 --> 00:05:55,960 Speaker 1: and the areas where consumer credit is growing uh and 96 00:05:56,160 --> 00:05:59,000 Speaker 1: growing in a very positive and healthy way. And that 97 00:05:59,160 --> 00:06:02,000 Speaker 1: is that we are seeing in credit demand grow. It's 98 00:06:02,040 --> 00:06:05,560 Speaker 1: not anything of your at growth rates that we had prior, 99 00:06:05,680 --> 00:06:08,679 Speaker 1: but there are some very attractive areas of consumer credit 100 00:06:08,760 --> 00:06:12,720 Speaker 1: that are growing. Okay, consumer credit is growing, but the 101 00:06:13,040 --> 00:06:19,600 Speaker 1: artificiality of this fixed income market has to impinge upon everyone, 102 00:06:20,200 --> 00:06:24,360 Speaker 1: including our economic growth. You, this is surreal what we're 103 00:06:24,400 --> 00:06:27,360 Speaker 1: living in, right. It does impends common It does keep 104 00:06:27,440 --> 00:06:32,360 Speaker 1: interest rates capped from rising very much because one of 105 00:06:32,480 --> 00:06:36,440 Speaker 1: the the things that happens post financial crisis when you 106 00:06:36,600 --> 00:06:38,600 Speaker 1: keep rates low for a very long time is that 107 00:06:38,760 --> 00:06:43,400 Speaker 1: gradual transformation of a bank's balance sheet. UM. Think of 108 00:06:43,480 --> 00:06:46,400 Speaker 1: the Harp and Hamp programs where we refined every living 109 00:06:46,520 --> 00:06:50,000 Speaker 1: being with a mortgage into a very low thirty year 110 00:06:50,120 --> 00:06:53,920 Speaker 1: fixed rate. The effective yield on all outstanding mortgages is 111 00:06:54,000 --> 00:06:57,000 Speaker 1: three point eight percent. It's extraordinary, it's a record low. 112 00:06:57,040 --> 00:07:00,080 Speaker 1: It's eye popping, and that means that nim compression and 113 00:07:00,240 --> 00:07:04,160 Speaker 1: happens much more quickly when the FED is raising race. UM. 114 00:07:04,240 --> 00:07:06,800 Speaker 1: But that is one reason why policymakers do expect that 115 00:07:06,920 --> 00:07:09,320 Speaker 1: the end game, let's say that they're able to continue 116 00:07:09,400 --> 00:07:12,160 Speaker 1: to raise interest rates in this whatever we could call 117 00:07:12,800 --> 00:07:15,640 Speaker 1: a normalization. I don't think we know what normal is, 118 00:07:15,720 --> 00:07:18,040 Speaker 1: but they do know that the normal is much lower 119 00:07:18,120 --> 00:07:21,760 Speaker 1: than where it was before because nim compression happens much 120 00:07:21,840 --> 00:07:25,120 Speaker 1: sooner and you tip the economy into recession with a 121 00:07:25,240 --> 00:07:27,640 Speaker 1: much lower and I'll totally take your point in the 122 00:07:27,760 --> 00:07:31,040 Speaker 1: rated change of the financial system than affecting the FED 123 00:07:31,120 --> 00:07:34,320 Speaker 1: to bring it back to the FED. You've clearly said 124 00:07:34,400 --> 00:07:37,679 Speaker 1: July is a dead meeting. September is a dead meeting. 125 00:07:38,280 --> 00:07:39,400 Speaker 1: What do we do at the end of the year, 126 00:07:39,480 --> 00:07:42,400 Speaker 1: just go home and show up again in two thousand seventeen. 127 00:07:42,560 --> 00:07:44,800 Speaker 1: I think we lick our wounds after the election and 128 00:07:45,160 --> 00:07:47,600 Speaker 1: and try to come up with an idea of what 129 00:07:47,760 --> 00:07:50,800 Speaker 1: the economy looks like under a new leadership. I understanding 130 00:07:50,840 --> 00:07:54,000 Speaker 1: the balance sheets. The low coupons help everybody within a 131 00:07:54,080 --> 00:07:57,480 Speaker 1: balance sheet environment. But there's at some point where we 132 00:07:57,560 --> 00:08:00,640 Speaker 1: have a new net present value of low trust rates. 133 00:08:01,200 --> 00:08:05,320 Speaker 1: It means you must amend valuations in a new MILLI 134 00:08:05,480 --> 00:08:09,160 Speaker 1: a new terminal rate. Right. Yeah. I think that there 135 00:08:09,240 --> 00:08:13,040 Speaker 1: are growing voices out there that are presuming that what 136 00:08:13,200 --> 00:08:16,000 Speaker 1: we need is another good downturn in order to reset, 137 00:08:16,400 --> 00:08:17,840 Speaker 1: sort of like saying we need an know the good war, 138 00:08:18,080 --> 00:08:21,560 Speaker 1: which yeah, I mean in a perverse way, you get 139 00:08:21,600 --> 00:08:24,200 Speaker 1: the same result. Um, But let's not let's hope that 140 00:08:24,240 --> 00:08:26,520 Speaker 1: it doesn't come to that. I think you know when 141 00:08:26,560 --> 00:08:30,840 Speaker 1: you're in this world where you can borrow uh practically 142 00:08:31,160 --> 00:08:36,400 Speaker 1: negative rates, the opportunity cost for expanded federal government spending 143 00:08:36,559 --> 00:08:40,199 Speaker 1: is extraordinarily low. One of the interesting things about the 144 00:08:40,200 --> 00:08:41,920 Speaker 1: whole debate about what the Feds you do and where 145 00:08:41,960 --> 00:08:45,600 Speaker 1: interest rates are going is financial conditions. The Fed watches 146 00:08:45,679 --> 00:08:49,000 Speaker 1: financial conditions and they have been surprised to see, as 147 00:08:49,040 --> 00:08:51,960 Speaker 1: many people have that since Brexit. Since the Brexit vote, 148 00:08:52,080 --> 00:08:55,959 Speaker 1: financial conditions have gotten easier. Yeah, I think that is 149 00:08:56,000 --> 00:08:58,679 Speaker 1: an interesting thing that they will be talking about um 150 00:08:59,000 --> 00:09:01,600 Speaker 1: as as we've moved into the blackout period before next 151 00:09:01,640 --> 00:09:04,600 Speaker 1: week's fo MC meeting. You know, on net, financial conditions 152 00:09:04,679 --> 00:09:08,199 Speaker 1: have eased, and probably the biggest piece of that is 153 00:09:08,280 --> 00:09:12,280 Speaker 1: lower bond yields. But as Janet Yellen has noted in 154 00:09:12,360 --> 00:09:16,520 Speaker 1: the past, uh, those lower bond yields reflect the fact 155 00:09:16,600 --> 00:09:20,559 Speaker 1: that investors adjust their expectation for the future course of 156 00:09:20,720 --> 00:09:26,120 Speaker 1: policy and therefore provide those more favorable financial conditions to 157 00:09:26,320 --> 00:09:30,200 Speaker 1: support the uncertain outlook. You know, I think policymakers, as 158 00:09:30,240 --> 00:09:33,480 Speaker 1: they chew on what's happened since Brexit at next week's meeting, 159 00:09:33,679 --> 00:09:36,640 Speaker 1: at the very least they can conclude and we've seen 160 00:09:36,720 --> 00:09:40,079 Speaker 1: this in some of the recent speeches that uncertainty over 161 00:09:40,120 --> 00:09:42,079 Speaker 1: the outlook has risen. I don't think they'll want to 162 00:09:42,160 --> 00:09:46,880 Speaker 1: characterize the risk. I don't think they'll reinsert uh an 163 00:09:46,920 --> 00:09:49,080 Speaker 1: assessment of the balance of risk. But I think they 164 00:09:49,240 --> 00:09:54,640 Speaker 1: certainly can insert language that that talks about uncertainty around 165 00:09:54,679 --> 00:09:58,360 Speaker 1: the outlook has risen. You think uncertain how you think 166 00:09:58,400 --> 00:10:02,559 Speaker 1: that working day? That's a pretty fair comment. I think 167 00:10:02,600 --> 00:10:05,000 Speaker 1: that it's something that would be taken as as dovish. 168 00:10:05,040 --> 00:10:07,520 Speaker 1: It certainly doesn't sound like a statement that's setting them 169 00:10:07,600 --> 00:10:09,959 Speaker 1: up to raise rates in September. No, she doesn't want it. 170 00:10:10,280 --> 00:10:12,360 Speaker 1: She doesn't want anybody to walk away from that meeting. 171 00:10:12,400 --> 00:10:14,360 Speaker 1: Think they're going with an idea of where they're going 172 00:10:14,440 --> 00:10:15,920 Speaker 1: to go or what they're gonna do. Right. I think 173 00:10:15,960 --> 00:10:20,000 Speaker 1: ambiguity is what we're looking for in the statement next week. Yeah, 174 00:10:20,080 --> 00:10:23,000 Speaker 1: that which just makes it hard on us, right, and 175 00:10:23,120 --> 00:10:27,319 Speaker 1: markets market like an they want to know where we're going. 176 00:10:27,559 --> 00:10:30,199 Speaker 1: But still, and here's the here's where people push back 177 00:10:30,200 --> 00:10:32,400 Speaker 1: against you and you're in your no fed rate call. 178 00:10:32,920 --> 00:10:36,040 Speaker 1: Is where we are is, as somebody said this morning, 179 00:10:36,120 --> 00:10:38,719 Speaker 1: price for armageddon, and we're a long way from that. 180 00:10:39,160 --> 00:10:41,000 Speaker 1: I was Ian Shepherdson this morning said, you know this 181 00:10:41,200 --> 00:10:43,319 Speaker 1: is not two thousand eight. We didn't go into depression 182 00:10:43,360 --> 00:10:45,400 Speaker 1: then we're certainly not going into depression now, So why 183 00:10:45,440 --> 00:10:48,480 Speaker 1: do you need rates at this level? Right? So I agree, 184 00:10:48,720 --> 00:10:50,559 Speaker 1: I agree that it is not two thousand eight, and 185 00:10:50,559 --> 00:10:52,679 Speaker 1: I think pretty quickly we could see that Brexit was 186 00:10:52,760 --> 00:10:56,400 Speaker 1: not a systemic two thousand eight like issue. But every 187 00:10:56,720 --> 00:11:01,280 Speaker 1: single time something like Brexit occurs in the world, it 188 00:11:01,320 --> 00:11:03,319 Speaker 1: reminds us that the world is a scary place. And 189 00:11:03,400 --> 00:11:05,480 Speaker 1: where do you go when the world is a scary place? 190 00:11:06,120 --> 00:11:09,439 Speaker 1: Believe it or not, that that reach freield does include 191 00:11:09,520 --> 00:11:12,800 Speaker 1: US treasuries, which are attractive relatively speaking, when you look 192 00:11:12,840 --> 00:11:15,719 Speaker 1: at the rest of the world. Are we priced for armageddon? 193 00:11:16,200 --> 00:11:18,679 Speaker 1: I would have to disagree, and I think many policymakers 194 00:11:18,760 --> 00:11:22,920 Speaker 1: would as well. I mean, Janet Yellen, Stan Fisher others 195 00:11:22,960 --> 00:11:26,840 Speaker 1: have said that the appropriate equilibrium real equilibrium rate right 196 00:11:26,880 --> 00:11:30,080 Speaker 1: now is about flat and they really don't know if 197 00:11:30,160 --> 00:11:32,640 Speaker 1: and when that will pick. I mean, I interrupt. I 198 00:11:32,679 --> 00:11:35,520 Speaker 1: think this is the heart of the stimulating debate we've 199 00:11:35,559 --> 00:11:39,000 Speaker 1: had this morning. Ian Shepherdson much more optimistic. Mike, you 200 00:11:39,200 --> 00:11:44,400 Speaker 1: highlighted that is well. Ellen Zentner with a more cautious view. Mike, 201 00:11:44,520 --> 00:11:48,079 Speaker 1: the operative phrase for me is we really don't know. No, 202 00:11:48,400 --> 00:11:50,600 Speaker 1: we don't And that's what Ellen and I were just saying, 203 00:11:50,600 --> 00:11:53,480 Speaker 1: in a sense of the models don't work anymore. We're 204 00:11:53,559 --> 00:11:56,880 Speaker 1: using up slack certainly in the labor market, and inflation 205 00:11:56,960 --> 00:12:00,079 Speaker 1: expectations are still going down. Yeah, And I think that 206 00:12:00,360 --> 00:12:04,600 Speaker 1: that is the true conundrum for the FED that really 207 00:12:04,640 --> 00:12:07,120 Speaker 1: gets under its skin. How do we have more stable 208 00:12:07,160 --> 00:12:10,439 Speaker 1: oil prices that are higher at fifty dollars a barrel? Um, 209 00:12:10,720 --> 00:12:14,760 Speaker 1: How is it that we've we've presumably escaped the perils 210 00:12:14,800 --> 00:12:17,920 Speaker 1: of of Brexit and the U S economy continues to expand, 211 00:12:18,120 --> 00:12:21,559 Speaker 1: and yet um, we we don't see the need to 212 00:12:21,800 --> 00:12:24,040 Speaker 1: to raise interest rates further or be pressured on the 213 00:12:24,040 --> 00:12:27,000 Speaker 1: inflation front, and investors are telling us you're never going 214 00:12:27,040 --> 00:12:37,280 Speaker 1: to get to your two Michael, I just looked at 215 00:12:37,320 --> 00:12:42,000 Speaker 1: the real clear politics like poles, like they're like four 216 00:12:42,400 --> 00:12:44,760 Speaker 1: of them. My eyes are glazing over a lot of 217 00:12:44,800 --> 00:12:48,959 Speaker 1: people doing uh horse race poles this year. Gallop is 218 00:12:49,040 --> 00:12:52,079 Speaker 1: not among them. Gallup has been holding back on that 219 00:12:52,240 --> 00:12:54,679 Speaker 1: sort of thing, um, And I think probably for a 220 00:12:54,960 --> 00:12:58,320 Speaker 1: very good reason. Frank Newport is the editor in chief 221 00:12:58,440 --> 00:13:01,640 Speaker 1: of The Gallop Pole and Frank, it's really hard to 222 00:13:01,720 --> 00:13:04,920 Speaker 1: make heads or tails out of these numbers at this point, 223 00:13:05,080 --> 00:13:07,839 Speaker 1: and there's so volatile based on the headlines that were 224 00:13:07,880 --> 00:13:10,560 Speaker 1: so far away from the election that imagine you wouldn't 225 00:13:10,559 --> 00:13:12,280 Speaker 1: put a whole lot of stock in what we're seeing. 226 00:13:12,720 --> 00:13:16,360 Speaker 1: That's right, I mean the big complex subject clearly in 227 00:13:16,520 --> 00:13:19,800 Speaker 1: terms of putting stock. As you just said, you cannot 228 00:13:19,960 --> 00:13:22,120 Speaker 1: use these in any way whatsoever to try to predict 229 00:13:22,160 --> 00:13:24,439 Speaker 1: what's going to happen in November. So they do give 230 00:13:24,480 --> 00:13:27,280 Speaker 1: you an interesting look at where people's reactions are now 231 00:13:27,320 --> 00:13:28,760 Speaker 1: when you call them up and ask them who they're 232 00:13:28,760 --> 00:13:30,319 Speaker 1: going to vote for. But we've got the rest of 233 00:13:30,400 --> 00:13:32,640 Speaker 1: this week in Cleveland and next week in Philadelphia and 234 00:13:32,760 --> 00:13:35,600 Speaker 1: much much to come. So at this point they tell 235 00:13:35,679 --> 00:13:38,120 Speaker 1: us nothing in general about what's going to happen when 236 00:13:38,200 --> 00:13:40,600 Speaker 1: people actually vote. Well, let's look at a little bit 237 00:13:40,640 --> 00:13:44,640 Speaker 1: of history, leaving aside what happened last night and the 238 00:13:44,679 --> 00:13:49,160 Speaker 1: way the convention is open normally, what kind of advantage 239 00:13:49,200 --> 00:13:51,640 Speaker 1: does the convention give to a candidate? I know they 240 00:13:51,720 --> 00:13:54,080 Speaker 1: get a bounce, but is there an average? Is there's 241 00:13:54,080 --> 00:13:57,520 Speaker 1: something we should sort of look for, uh, if if 242 00:13:57,559 --> 00:14:00,719 Speaker 1: everything went right for Donald Trump. Yeah, yeah, we're back 243 00:14:00,800 --> 00:14:03,959 Speaker 1: to those poles you're talking about. We had quantified it 244 00:14:04,040 --> 00:14:05,880 Speaker 1: at some point in the pass like a five point 245 00:14:05,960 --> 00:14:08,559 Speaker 1: quote bounce end quote coming out of the poles on 246 00:14:08,640 --> 00:14:11,800 Speaker 1: the gap of where how somebody's leading somebody else. Uh, 247 00:14:11,880 --> 00:14:14,559 Speaker 1: and it varies widely. Uh. It is interesting to go 248 00:14:14,600 --> 00:14:18,080 Speaker 1: back to Trump would love to do what Bill Clinton 249 00:14:18,160 --> 00:14:20,120 Speaker 1: did then when he kind of turned everything around and 250 00:14:20,240 --> 00:14:23,120 Speaker 1: became a hero. Of course, Ross Parrot dropped out at 251 00:14:23,160 --> 00:14:25,560 Speaker 1: that same time, which helped him. But that's an example, 252 00:14:25,640 --> 00:14:28,360 Speaker 1: probably the example in contemporary polling where we see the 253 00:14:28,360 --> 00:14:31,840 Speaker 1: biggest shift. So yes, I would expect, we would expect 254 00:14:31,880 --> 00:14:34,640 Speaker 1: everything else being equal, that at the end of this week, 255 00:14:34,680 --> 00:14:37,720 Speaker 1: Trump would be better positioned on whatever indicator you're using 256 00:14:38,120 --> 00:14:40,600 Speaker 1: a favorable image your horse race, than he was going in. 257 00:14:40,840 --> 00:14:42,760 Speaker 1: But every convention is difference. We're gonna have to wait 258 00:14:42,760 --> 00:14:45,400 Speaker 1: and see. Well, it's kind of was I was getting at, 259 00:14:45,480 --> 00:14:48,600 Speaker 1: not necessarily the polls, and but you do get You 260 00:14:48,680 --> 00:14:53,120 Speaker 1: do normally dominate the publicity, right, and it usually is 261 00:14:53,200 --> 00:14:57,240 Speaker 1: to your advantage. You're totally dominating the news coverage, and 262 00:14:57,360 --> 00:14:59,600 Speaker 1: typically you come out looking better than you did when 263 00:14:59,600 --> 00:15:01,400 Speaker 1: you went in. So this will be fascinating to see 264 00:15:01,400 --> 00:15:04,080 Speaker 1: if it happens with with the Donald Trump and the 265 00:15:04,120 --> 00:15:08,520 Speaker 1: Republicans this time. Frank, I am fascinated by the character, 266 00:15:08,680 --> 00:15:13,400 Speaker 1: the quality, the makeup of undecided voters this time. If 267 00:15:13,440 --> 00:15:17,680 Speaker 1: they're undecided, how many are there is a percent and 268 00:15:17,800 --> 00:15:22,960 Speaker 1: is there ultimate outcome they just simply choose not to vote? Well, no, 269 00:15:23,280 --> 00:15:26,200 Speaker 1: it's it's unclear. I mean when people say they're undecided 270 00:15:26,240 --> 00:15:28,560 Speaker 1: at this point, that could mean a variety of different things. 271 00:15:29,080 --> 00:15:30,880 Speaker 1: Some of these people are going to be people who 272 00:15:30,880 --> 00:15:33,680 Speaker 1: are just less involved in the process. Uh, some of 273 00:15:33,760 --> 00:15:36,680 Speaker 1: them have hidden preferences that we just can't pick up yet, 274 00:15:36,760 --> 00:15:38,640 Speaker 1: and some of them will come along and actually vote. 275 00:15:38,680 --> 00:15:41,400 Speaker 1: We've learned in pulling them over the years that if 276 00:15:41,440 --> 00:15:43,400 Speaker 1: you say would you vote for Trump or Clinton? Or 277 00:15:43,440 --> 00:15:45,400 Speaker 1: haven't you made your mind up yet? A huge percent 278 00:15:45,480 --> 00:15:48,040 Speaker 1: will choose the I haven't made my mind up yet. 279 00:15:48,560 --> 00:15:50,480 Speaker 1: So you don't do that and you try to force people, 280 00:15:50,520 --> 00:15:52,160 Speaker 1: but actually when they lean one way or the other, 281 00:15:52,240 --> 00:15:54,720 Speaker 1: they end up voting that way. But typically if we 282 00:15:54,880 --> 00:15:57,360 Speaker 1: follow up and say, but is there a chance you'd 283 00:15:57,400 --> 00:15:59,080 Speaker 1: vote for the other candidate? You can get up to 284 00:15:59,120 --> 00:16:02,200 Speaker 1: a third of people who we call uncommitted, who really 285 00:16:02,240 --> 00:16:04,640 Speaker 1: could shift one way or the other. So the way 286 00:16:04,680 --> 00:16:06,760 Speaker 1: I look at the world is you've got hardcore people 287 00:16:07,320 --> 00:16:09,640 Speaker 1: on one side, hardcore people on the other side, and 288 00:16:09,760 --> 00:16:12,000 Speaker 1: in some group in the middle who could move one 289 00:16:12,040 --> 00:16:13,800 Speaker 1: way or the other. What is it like this time 290 00:16:14,000 --> 00:16:18,080 Speaker 1: in terms of the undecided vote, because usually you do 291 00:16:18,200 --> 00:16:21,280 Speaker 1: see this this flow back and forth, but we usually 292 00:16:21,320 --> 00:16:24,480 Speaker 1: don't see candidates as well known or people with as 293 00:16:24,560 --> 00:16:28,640 Speaker 1: strong and opinions about the two candidates. Certainly people have 294 00:16:28,720 --> 00:16:31,440 Speaker 1: strong opinions about the candidates. And again we're not I 295 00:16:31,480 --> 00:16:34,080 Speaker 1: don't have an exact reader from us on ondecided voters 296 00:16:34,080 --> 00:16:36,120 Speaker 1: because we're not asking the horse race. As you said, 297 00:16:36,360 --> 00:16:40,200 Speaker 1: they clearly people have strong opinions. We used our skilometer rating, 298 00:16:40,280 --> 00:16:42,680 Speaker 1: which is a minus five to a plus five to 299 00:16:42,840 --> 00:16:45,680 Speaker 1: rape them, which is something that George Gallup used to use. 300 00:16:45,760 --> 00:16:47,680 Speaker 1: He would show people this card, would go into their 301 00:16:47,720 --> 00:16:49,640 Speaker 1: house and say where would you put them on this card? 302 00:16:49,760 --> 00:16:52,800 Speaker 1: So we went back and use that uh in a pull, 303 00:16:52,920 --> 00:16:55,000 Speaker 1: so we could go back in history and look at 304 00:16:55,000 --> 00:16:57,480 Speaker 1: where the candidates stand and lo and behold, not a 305 00:16:57,520 --> 00:17:00,360 Speaker 1: great shock the percent who put themselves out on that 306 00:17:00,480 --> 00:17:03,680 Speaker 1: highly unfavorable into the spectrum for both Trump and for Clinton. 307 00:17:03,720 --> 00:17:06,879 Speaker 1: More so, for Trump is as negative as we've ever 308 00:17:06,960 --> 00:17:09,359 Speaker 1: seen it, more so than Goldwater, for example, who was 309 00:17:09,400 --> 00:17:12,199 Speaker 1: pretty unpopular back in nineteen sixty four. So we've got 310 00:17:12,359 --> 00:17:15,240 Speaker 1: candidates here about whom people have strong opinions, and those 311 00:17:15,240 --> 00:17:17,520 Speaker 1: strong opinions tend to be on the negative side of 312 00:17:17,600 --> 00:17:19,880 Speaker 1: the spectrum. You just raised an interesting question. I hadn't 313 00:17:19,920 --> 00:17:23,000 Speaker 1: thought about this till you just mentioned Barry Goldwater in 314 00:17:23,080 --> 00:17:26,760 Speaker 1: those days lost Yes he did, he lost by a 315 00:17:26,840 --> 00:17:30,200 Speaker 1: few a few states. But in those days you had 316 00:17:30,960 --> 00:17:34,600 Speaker 1: three television really at sixty four to television networks to 317 00:17:34,960 --> 00:17:37,920 Speaker 1: speak of doing the news, and you had a couple 318 00:17:37,960 --> 00:17:40,760 Speaker 1: of national papers in the wire services. But today with 319 00:17:40,960 --> 00:17:46,040 Speaker 1: social media, and can we really compare popularity unpopularity or uh, 320 00:17:46,160 --> 00:17:48,080 Speaker 1: you know, is there's just so much more information out 321 00:17:48,119 --> 00:17:53,119 Speaker 1: there now that people develop a much deeper opinion of 322 00:17:53,280 --> 00:17:56,200 Speaker 1: people than they might have in those days. Well, we 323 00:17:56,240 --> 00:17:59,600 Speaker 1: can certainly compare what you're saying. Is there maybe some 324 00:17:59,680 --> 00:18:01,840 Speaker 1: reason is why it would be different right back in 325 00:18:01,920 --> 00:18:05,119 Speaker 1: the old days? You know, that's that's a doctoral dissertation. 326 00:18:05,200 --> 00:18:07,120 Speaker 1: What you were just talking about You know, the old days, 327 00:18:07,160 --> 00:18:09,679 Speaker 1: we shared media. Everybody looked at the common newspaper when 328 00:18:09,720 --> 00:18:11,720 Speaker 1: you got up in the morning, as you said, you 329 00:18:11,800 --> 00:18:14,040 Speaker 1: turned on one of the three major networks, and we 330 00:18:14,160 --> 00:18:19,400 Speaker 1: got Huny Hutley Brinkley or Walter Concite or Frank Reynolds 331 00:18:19,560 --> 00:18:22,399 Speaker 1: right and giving us the news and so forth on 332 00:18:22,480 --> 00:18:24,960 Speaker 1: the major networks. And now it's totally different. So yeah, 333 00:18:25,000 --> 00:18:27,399 Speaker 1: it's a vastly different way in which we get news 334 00:18:27,560 --> 00:18:31,040 Speaker 1: and has a lot of implications for how we form opinions. 335 00:18:31,119 --> 00:18:33,880 Speaker 1: But nevertheless, it is a good comparison, regardless of where 336 00:18:33,920 --> 00:18:36,399 Speaker 1: the information comes from. People to more negative now than that, 337 00:18:36,480 --> 00:18:40,399 Speaker 1: we're about gold water. Are these people speaking to the nation? 338 00:18:40,920 --> 00:18:45,600 Speaker 1: I watched an all last night and now inside it 339 00:18:45,760 --> 00:18:47,800 Speaker 1: felt I grant, it's the first night of the convention. 340 00:18:47,880 --> 00:18:50,960 Speaker 1: I get that, but would you propose here and for 341 00:18:51,119 --> 00:18:55,960 Speaker 1: that matter, in Philadelphia, it has become an inward process 342 00:18:56,600 --> 00:19:00,680 Speaker 1: versus reaching out again to undecided. Uh. You know, that's 343 00:19:00,720 --> 00:19:04,199 Speaker 1: a good question. And clearly this uh you know, all 344 00:19:04,280 --> 00:19:07,000 Speaker 1: the bashing that went on last night was aimed at 345 00:19:07,240 --> 00:19:09,600 Speaker 1: the partisans. But I think you've got a good point. 346 00:19:10,080 --> 00:19:12,560 Speaker 1: I look at the people as a whole that's my job, 347 00:19:12,680 --> 00:19:15,119 Speaker 1: and I see coming emanating up from them, is this 348 00:19:15,359 --> 00:19:17,960 Speaker 1: major complaint about Congress in the way it's working, and 349 00:19:18,040 --> 00:19:20,879 Speaker 1: how disenfranchised people feel from these people they elect and 350 00:19:20,960 --> 00:19:23,879 Speaker 1: send off to represent. The second, I see people are 351 00:19:23,880 --> 00:19:27,359 Speaker 1: concerned about jobs in the economy. Naturally, we always had 352 00:19:27,400 --> 00:19:29,920 Speaker 1: as a third pillar in this tool people concerned about 353 00:19:30,000 --> 00:19:32,359 Speaker 1: terrorism and national security. But I would think that's what 354 00:19:32,440 --> 00:19:35,200 Speaker 1: they should be addressing in a more positive way. I 355 00:19:35,280 --> 00:19:37,560 Speaker 1: didn't watch every single second last night, but I'm not 356 00:19:37,640 --> 00:19:40,280 Speaker 1: sure I heard tremendous ideas about how they were going 357 00:19:40,359 --> 00:19:44,119 Speaker 1: to fix working with Congress and again create more jobs. No, 358 00:19:44,240 --> 00:19:47,760 Speaker 1: it was very focused on obviously Hillary Clinton bashing and 359 00:19:47,960 --> 00:19:51,920 Speaker 1: based around national security and the threats that we face. 360 00:19:52,119 --> 00:19:56,280 Speaker 1: Very negative group of speeches. Does your polling show that 361 00:19:56,720 --> 00:20:02,160 Speaker 1: that works better than positive? Each is a positive tone? Well, 362 00:20:02,320 --> 00:20:05,600 Speaker 1: you know, I think it's hard to say. Communications experts 363 00:20:05,680 --> 00:20:08,720 Speaker 1: might say it kind of varies from each candidate in 364 00:20:08,800 --> 00:20:11,440 Speaker 1: each situation, So I'm not sure I could generalize to 365 00:20:11,480 --> 00:20:14,159 Speaker 1: say it's always better to be positive and uplifting like 366 00:20:14,320 --> 00:20:16,920 Speaker 1: Reagan was in eighty four. Look it's morning in America. 367 00:20:17,000 --> 00:20:19,200 Speaker 1: How wonderful we are, and all that is opposed to say, 368 00:20:19,280 --> 00:20:22,320 Speaker 1: look how terrible we are in and you've got to 369 00:20:22,400 --> 00:20:24,440 Speaker 1: elect this other person as a reason for that. So 370 00:20:24,480 --> 00:20:26,520 Speaker 1: I'm not sure which of those things works well. But 371 00:20:26,640 --> 00:20:29,600 Speaker 1: you know, Trump outside the convention has been pretty positive, right, 372 00:20:30,240 --> 00:20:32,720 Speaker 1: America great again? You know, I'm gonna be the greatest 373 00:20:32,800 --> 00:20:36,080 Speaker 1: jobs president since creation. He says things along these lines. 374 00:20:36,160 --> 00:20:38,639 Speaker 1: So his rhetoric has actually been pretty uplifting in some 375 00:20:38,760 --> 00:20:42,480 Speaker 1: ways when you look at him about positive outcomes down 376 00:20:42,560 --> 00:20:46,520 Speaker 1: the way. So that wasn't necessarily represented last night. Seconds here. 377 00:20:46,720 --> 00:20:51,680 Speaker 1: Device presidents matter, Device presidents matter, Well, I don't think so. 378 00:20:51,880 --> 00:20:54,359 Speaker 1: There's not much data the show they do. Nobody knows Pence. 379 00:20:54,400 --> 00:20:56,159 Speaker 1: We were in an interviewed about him over the weekend. 380 00:20:56,240 --> 00:20:59,480 Speaker 1: By the way, he's an unknown most people deny. We 381 00:20:59,560 --> 00:21:01,880 Speaker 1: asked him directly in answer to your question. We said, 382 00:21:01,920 --> 00:21:03,560 Speaker 1: to the public, is this gonna make you more likely 383 00:21:03,640 --> 00:21:05,720 Speaker 1: or less likely to vote for Trump? In the vast 384 00:21:05,760 --> 00:21:08,240 Speaker 1: majority said no difference. So there's your answer right there. 385 00:21:08,560 --> 00:21:10,680 Speaker 1: All right, now, I've got one for you, Frank, and 386 00:21:10,960 --> 00:21:15,080 Speaker 1: for you Tom nineteen sixty four, Barry Goldwater running for 387 00:21:15,160 --> 00:21:18,520 Speaker 1: president against Lyndon Johnson, who was the anchor of ABC 388 00:21:18,800 --> 00:21:25,680 Speaker 1: News it wasn't. It was Ron Cochrane who yeah, exactly. 389 00:21:26,119 --> 00:21:28,959 Speaker 1: He was followed in February of nine six five by 390 00:21:29,000 --> 00:21:31,200 Speaker 1: the young Peter Jennings. Remember he only lasted a couple 391 00:21:31,200 --> 00:21:34,920 Speaker 1: of years and then came back in the eighties as Canadian. 392 00:21:34,960 --> 00:21:39,000 Speaker 1: At that point, right, it was very, very, very different 393 00:21:39,080 --> 00:21:43,280 Speaker 1: time than I remember the wonderful Frank McGhee inventing much 394 00:21:43,320 --> 00:21:46,320 Speaker 1: of what ABC does. Frank, thank you, sir Frank Newport 395 00:21:46,440 --> 00:21:58,159 Speaker 1: at Gallop this morning. Well, Mari Harris, Mari Harris is 396 00:21:58,240 --> 00:22:02,840 Speaker 1: the chief economist for the folks at ubs. You heard 397 00:22:02,880 --> 00:22:07,040 Speaker 1: any uh day saying well, uh economists expected no change 398 00:22:07,040 --> 00:22:09,959 Speaker 1: and we got this big move in housing starts. Reminds 399 00:22:09,960 --> 00:22:11,639 Speaker 1: me of a joke my friend Megan sent me the 400 00:22:11,680 --> 00:22:15,800 Speaker 1: other day, um Paul Krugman saying that the Irish economics 401 00:22:15,960 --> 00:22:20,080 Speaker 1: is like LEPrecon economics, and the Irish Central Bank had 402 00:22:20,160 --> 00:22:24,719 Speaker 1: saying Paul, that's ridiculous. Nobody believes in economics anymore. I mean, 403 00:22:25,119 --> 00:22:28,399 Speaker 1: at this point it's really hard to tell. What's going 404 00:22:28,440 --> 00:22:31,200 Speaker 1: to happen, is that the models don't work. Well. I 405 00:22:31,400 --> 00:22:34,440 Speaker 1: tell you, it seemed that housing starts were due to 406 00:22:34,520 --> 00:22:38,560 Speaker 1: go up, that we've had very good consumer confidence readings, 407 00:22:39,040 --> 00:22:43,680 Speaker 1: we've got very very cheap money. Uh, it's not you know, 408 00:22:44,000 --> 00:22:47,800 Speaker 1: although economists didn't forecast it, it's not completely surprising that 409 00:22:47,960 --> 00:22:50,280 Speaker 1: starts would be as strong as they were in June, 410 00:22:50,960 --> 00:22:54,560 Speaker 1: and I would not be surprised to see starts even 411 00:22:54,640 --> 00:22:57,480 Speaker 1: stronger than this and coming months. Well, this is important 412 00:22:57,520 --> 00:23:01,520 Speaker 1: because starts going to GDP. Men, this is actual economic activity, 413 00:23:02,160 --> 00:23:05,960 Speaker 1: that's right, and this will feed into second quarter GDP, 414 00:23:06,280 --> 00:23:09,720 Speaker 1: which has been tracking at various points in time during 415 00:23:09,760 --> 00:23:12,280 Speaker 1: the quarter anywhere between two percent and two and three 416 00:23:12,359 --> 00:23:17,399 Speaker 1: quarters percent, depending on which week you attracted and with 417 00:23:17,680 --> 00:23:21,440 Speaker 1: what data set you were using. But you know what, 418 00:23:21,600 --> 00:23:24,880 Speaker 1: it also happened in the quarter that's even more important 419 00:23:24,920 --> 00:23:29,520 Speaker 1: than housing was consumer spending. That we think consumer spending 420 00:23:29,960 --> 00:23:32,679 Speaker 1: after even after you adjust for inflation, was probably up 421 00:23:32,720 --> 00:23:34,920 Speaker 1: at about a four and a half percent annual rate. 422 00:23:35,080 --> 00:23:38,080 Speaker 1: So the consumers the really strong part of the economy. 423 00:23:38,200 --> 00:23:41,160 Speaker 1: That the housing starts were a reminder of that this morning. 424 00:23:41,680 --> 00:23:44,320 Speaker 1: And we need the consumer to pitch in right here 425 00:23:44,920 --> 00:23:49,119 Speaker 1: because the week part of the economy is business spending 426 00:23:49,200 --> 00:23:52,919 Speaker 1: on capital goods. So we need this strong consumer sector 427 00:23:53,359 --> 00:23:57,400 Speaker 1: to offset that weakness and business spending alright, two part questions. 428 00:23:57,400 --> 00:23:59,240 Speaker 1: We'll get back to the business spending in just a second, 429 00:23:59,280 --> 00:24:03,240 Speaker 1: But in terms of consumer spending. Ian Shepherdson from Panton 430 00:24:03,320 --> 00:24:06,520 Speaker 1: Economics was on Bloomberg Surveillance earlier today said he thinks 431 00:24:06,680 --> 00:24:08,840 Speaker 1: given the data we're getting, we could get three handles 432 00:24:08,880 --> 00:24:12,520 Speaker 1: on GDP for the third and fourth quarters. Would you 433 00:24:12,800 --> 00:24:15,720 Speaker 1: agree that's not out of the question. That seems a 434 00:24:15,800 --> 00:24:19,520 Speaker 1: little bit on the high side. Uh. And to get 435 00:24:19,760 --> 00:24:22,840 Speaker 1: the three handle on GDP in the second half of 436 00:24:22,880 --> 00:24:26,040 Speaker 1: the year, which you would need to see, is a 437 00:24:26,160 --> 00:24:30,639 Speaker 1: comeback in capital spending. Because your consumer spending right now 438 00:24:30,920 --> 00:24:32,880 Speaker 1: is doing well, but it's about all that you can 439 00:24:32,960 --> 00:24:36,520 Speaker 1: expect of it. Something else has to kick in. And 440 00:24:37,480 --> 00:24:40,440 Speaker 1: if if you are that strong, which isn't out of 441 00:24:40,480 --> 00:24:43,840 Speaker 1: the question, it would be capital goods. I suspect you're 442 00:24:43,880 --> 00:24:48,120 Speaker 1: probably going to be closer to two though. Well, the uh. 443 00:24:49,080 --> 00:24:51,320 Speaker 1: The question becomes then, as the following I want to 444 00:24:51,359 --> 00:24:55,720 Speaker 1: ask is at what point is consumer spending the economy 445 00:24:55,800 --> 00:24:58,800 Speaker 1: strong enough that it forces capital spending. Mean, you've got 446 00:24:58,920 --> 00:25:02,000 Speaker 1: to catch up to your customers need. Well, even with 447 00:25:02,119 --> 00:25:05,200 Speaker 1: some pretty good consumer spending, the reality is that you 448 00:25:05,359 --> 00:25:08,040 Speaker 1: still have plenty of spare capacity at least when you 449 00:25:08,119 --> 00:25:12,840 Speaker 1: look at the FEDS industrial production and industrial output capacity 450 00:25:12,960 --> 00:25:17,800 Speaker 1: utilization numbers. So we we need, uh, the string of 451 00:25:17,880 --> 00:25:22,120 Speaker 1: a number of further quarters of good consumer spending before 452 00:25:22,359 --> 00:25:28,199 Speaker 1: it raises capital spending to a better level. Now, I think, uh, 453 00:25:28,520 --> 00:25:32,800 Speaker 1: there's factors other than demand and capacity utilization that are 454 00:25:32,840 --> 00:25:35,840 Speaker 1: affecting capital spending right now. On the top of that 455 00:25:36,000 --> 00:25:40,280 Speaker 1: list would be political uncertainty, and we have only about 456 00:25:40,400 --> 00:25:42,560 Speaker 1: four more months of that to go. Well, you know, 457 00:25:43,080 --> 00:25:47,159 Speaker 1: we had Greek uncertainty, We had this uncertainty, that uncertainty. 458 00:25:47,640 --> 00:25:50,879 Speaker 1: Do you think that after we get a president elected 459 00:25:50,960 --> 00:25:53,720 Speaker 1: whomever it is, that business finally says it's time to 460 00:25:53,760 --> 00:25:55,040 Speaker 1: get on with it or is there just going to 461 00:25:55,119 --> 00:25:57,680 Speaker 1: be something else? Well, I think that the type of 462 00:25:58,160 --> 00:26:02,960 Speaker 1: uncertainty that American businesses face with what are the policies 463 00:26:03,000 --> 00:26:05,200 Speaker 1: going to be under a new president, whether it's a 464 00:26:05,280 --> 00:26:12,040 Speaker 1: President Clinton or President Trump, those uncertainties are more important than, 465 00:26:12,240 --> 00:26:14,680 Speaker 1: let's say, worrying about how much you're going to sell 466 00:26:14,760 --> 00:26:17,600 Speaker 1: to UK or Europe. Michael McKee and Tom Keane the 467 00:26:17,760 --> 00:26:21,680 Speaker 1: esteem Murray Harris with us leading the award winning economics 468 00:26:22,119 --> 00:26:26,159 Speaker 1: UH team at UBS. We are thrilled to Dr Harris 469 00:26:26,560 --> 00:26:29,240 Speaker 1: is with us, Maria. I have never seen a polarity 470 00:26:29,400 --> 00:26:33,840 Speaker 1: of opinion in American economics and American market economics like 471 00:26:34,000 --> 00:26:37,639 Speaker 1: we have right now. Is that because of the distortion 472 00:26:37,720 --> 00:26:42,200 Speaker 1: of interest rates filtering in to the goods producing economy 473 00:26:42,640 --> 00:26:46,240 Speaker 1: and the banking economy, leading to a jumble that nobody 474 00:26:46,280 --> 00:26:48,959 Speaker 1: can get their hands on. Well, it's hard to get 475 00:26:49,040 --> 00:26:51,400 Speaker 1: your hands on what's happening because you have so many 476 00:26:51,480 --> 00:26:54,560 Speaker 1: unusual factors, as you pointed out, going on with interest 477 00:26:54,680 --> 00:26:57,920 Speaker 1: rates being as low as they are. Uh. What also, 478 00:26:58,080 --> 00:27:01,360 Speaker 1: I think is a factor that chain just the ability 479 00:27:01,440 --> 00:27:05,680 Speaker 1: of economists to understand the economy is the growing globalization 480 00:27:05,800 --> 00:27:08,639 Speaker 1: over time, not just in trades and goods and services, 481 00:27:09,160 --> 00:27:12,400 Speaker 1: but also in financial markets. Here's the key point, Joe 482 00:27:12,480 --> 00:27:17,040 Speaker 1: Stiglet's is it a different globalization than two thousand and six? 483 00:27:17,400 --> 00:27:20,160 Speaker 1: I would say it's a different globalization in the sense 484 00:27:20,280 --> 00:27:24,720 Speaker 1: that it's it's larger. The row of the Third World, 485 00:27:24,760 --> 00:27:29,600 Speaker 1: where I shouldn't use the term third world emerging market countries, Uh, 486 00:27:29,720 --> 00:27:33,400 Speaker 1: in the economy and financial markets is larger than it's 487 00:27:33,440 --> 00:27:36,080 Speaker 1: been in the past. You know that that was ten 488 00:27:36,200 --> 00:27:38,240 Speaker 1: years ago and a lot of changes in ten years. 489 00:27:38,880 --> 00:27:43,040 Speaker 1: The economy is, as we see with housing starts today, 490 00:27:43,160 --> 00:27:46,760 Speaker 1: has been coming in stronger than forecast. I think every 491 00:27:47,000 --> 00:27:50,159 Speaker 1: bank has a economic surprise index and they're all running 492 00:27:50,400 --> 00:27:53,399 Speaker 1: hot right now. They're they're all the trend is up, 493 00:27:54,000 --> 00:27:58,560 Speaker 1: but inflation expectations are going down. If we're using up slack, 494 00:27:59,080 --> 00:28:02,320 Speaker 1: why aren't we genderate eating inflation? And why is the 495 00:28:02,400 --> 00:28:05,320 Speaker 1: market so convinced we're not going to see any well? 496 00:28:05,520 --> 00:28:09,200 Speaker 1: You know, Uh, the inflation is more evident in the 497 00:28:09,359 --> 00:28:14,119 Speaker 1: numbers than it is in the inflation expectations measures. And 498 00:28:15,000 --> 00:28:19,080 Speaker 1: what's interesting here is that the core inflation, the ex 499 00:28:19,160 --> 00:28:21,480 Speaker 1: food and energy, the one that the Fed pays the 500 00:28:21,560 --> 00:28:25,199 Speaker 1: most attention to, is already running up around two percent 501 00:28:25,560 --> 00:28:28,880 Speaker 1: UH this year, and it doesn't seem to have had 502 00:28:28,960 --> 00:28:32,120 Speaker 1: that much effect on the public. And typically these measures 503 00:28:32,160 --> 00:28:35,480 Speaker 1: of inflation expectations move up and down with oil prices. 504 00:28:35,560 --> 00:28:38,200 Speaker 1: But you could understand why at the start of the 505 00:28:38,280 --> 00:28:41,680 Speaker 1: year inflation expectations would be low. But it's a bit 506 00:28:41,720 --> 00:28:44,760 Speaker 1: of a puzzle right now because in fact, oil prices 507 00:28:44,800 --> 00:28:47,920 Speaker 1: have picked up until very very recently and they're not 508 00:28:48,080 --> 00:28:51,920 Speaker 1: down that much. And your headline CPI numbers have been 509 00:28:51,960 --> 00:28:56,320 Speaker 1: picking up. My hunch is that these public measures of 510 00:28:56,400 --> 00:28:59,400 Speaker 1: inflation expectations probably you're going to pick up in the 511 00:28:59,480 --> 00:29:03,160 Speaker 1: next couple one mins. Well, if they do, what does 512 00:29:03,200 --> 00:29:07,800 Speaker 1: that imply for the Fed and policy going forward, Because 513 00:29:07,840 --> 00:29:10,960 Speaker 1: at this point the feed is still way above where 514 00:29:11,000 --> 00:29:13,360 Speaker 1: the market is in terms of where the terminal rate 515 00:29:13,400 --> 00:29:15,760 Speaker 1: should be in the path you take to get there. Well, 516 00:29:16,600 --> 00:29:19,560 Speaker 1: for the time being, you know, the fetist said, we're 517 00:29:19,640 --> 00:29:23,400 Speaker 1: worried about the effect of Brexit on the economy, but 518 00:29:24,000 --> 00:29:27,600 Speaker 1: I think by the time you've looked at everything for 519 00:29:27,680 --> 00:29:30,320 Speaker 1: this year, when they're at the December FL and C meeting, 520 00:29:30,680 --> 00:29:33,040 Speaker 1: they're going to see, in fact that Brexit was not 521 00:29:33,200 --> 00:29:35,720 Speaker 1: such a big deal for the US economy, that in 522 00:29:35,880 --> 00:29:38,560 Speaker 1: fact core inflation has already picked up to around the 523 00:29:38,600 --> 00:29:40,920 Speaker 1: two percent where they wanted to be, and I think 524 00:29:40,960 --> 00:29:43,000 Speaker 1: they get back on the tightening path by the end 525 00:29:43,040 --> 00:29:45,720 Speaker 1: of the year. More. I just mentioned this John Farrell 526 00:29:45,760 --> 00:29:47,960 Speaker 1: over on Bloomberg Television. Of course John knows this a 527 00:29:48,000 --> 00:29:50,360 Speaker 1: lot better than any of us us do with his 528 00:29:51,200 --> 00:29:54,560 Speaker 1: living in England. But I would just suggest the most 529 00:29:54,560 --> 00:29:57,120 Speaker 1: important announcement of the day, as well as Fargo, like 530 00:29:57,320 --> 00:30:02,120 Speaker 1: your ubs is in London and in the city. They're 531 00:30:02,120 --> 00:30:05,200 Speaker 1: gonna take a building. They're gonna buy a building near 532 00:30:05,320 --> 00:30:08,040 Speaker 1: King Williams Street, near the Bank of England. And to 533 00:30:08,160 --> 00:30:10,920 Speaker 1: me it's the first he leave of what people actually 534 00:30:11,440 --> 00:30:14,640 Speaker 1: do with their money. Like ubs and your Liverpool Street 535 00:30:15,280 --> 00:30:18,280 Speaker 1: said we're gonna stay here years ago. I mean it's 536 00:30:18,320 --> 00:30:22,560 Speaker 1: it's again pushing against that Brexit gloom. Well, uh, one 537 00:30:22,640 --> 00:30:27,000 Speaker 1: thing that happens in London post the Brexit vote is 538 00:30:27,120 --> 00:30:31,120 Speaker 1: that stuff all of a sudden gets cheaper, Prices come 539 00:30:31,200 --> 00:30:33,440 Speaker 1: down and that can make it more attractive to stay 540 00:30:33,520 --> 00:30:36,120 Speaker 1: in certain types of real estate. What does the world 541 00:30:36,200 --> 00:30:37,479 Speaker 1: look like to you? I was gonna say, is there 542 00:30:37,560 --> 00:30:39,160 Speaker 1: bright spot in the world, But what does the overall 543 00:30:39,200 --> 00:30:41,959 Speaker 1: global growth say to you? You have this Morgan Stanley 544 00:30:42,000 --> 00:30:45,200 Speaker 1: call for one percent in US Treasury ten year yields 545 00:30:45,520 --> 00:30:49,000 Speaker 1: next year because their view is global growth is slowing tremendously. 546 00:30:49,160 --> 00:30:52,120 Speaker 1: I got another research note from people today saying six 547 00:30:52,200 --> 00:30:54,120 Speaker 1: reasons why yields are gonna be going up, and their 548 00:30:54,160 --> 00:30:57,200 Speaker 1: reason number one is that global growth is picking up. 549 00:30:58,200 --> 00:31:02,120 Speaker 1: So who's right? Well, I think in fact of the 550 00:31:02,280 --> 00:31:06,080 Speaker 1: global growth probably is picking up. That you had some 551 00:31:06,440 --> 00:31:10,840 Speaker 1: very soft spots with the emerging market countries that won't 552 00:31:10,880 --> 00:31:14,040 Speaker 1: be as soft next year. UH. In the United States 553 00:31:14,480 --> 00:31:17,080 Speaker 1: will probably have a slightly better year next year than 554 00:31:17,160 --> 00:31:20,840 Speaker 1: we had last year. And I think Europe weathers the 555 00:31:21,080 --> 00:31:25,360 Speaker 1: storm and uncertainty over the Brexit. So I think that 556 00:31:25,760 --> 00:31:27,640 Speaker 1: fifteen months from now, when we look at how the 557 00:31:28,560 --> 00:31:31,080 Speaker 1: seven work out, it's probably going to be a little 558 00:31:31,120 --> 00:31:33,960 Speaker 1: bit better than two thousand and sixteen two thousand and 559 00:31:34,040 --> 00:31:37,120 Speaker 1: seventeen ow to look better. More is a fed using 560 00:31:37,480 --> 00:31:41,840 Speaker 1: conventional theory now? The fact is you've done so well 561 00:31:41,920 --> 00:31:45,360 Speaker 1: with your team of gaining the path out of this 562 00:31:45,560 --> 00:31:49,480 Speaker 1: financial crisis. It's been a little sloggy recently for the GDP, 563 00:31:49,640 --> 00:31:53,240 Speaker 1: no question about that. Are we using conventional theory now 564 00:31:53,800 --> 00:31:56,880 Speaker 1: or is it really ad hoc announcement to announcement. I 565 00:31:57,040 --> 00:31:59,920 Speaker 1: think it's closer to add hockery than it is convention. 566 00:32:00,040 --> 00:32:03,200 Speaker 1: No ferry for global central banks, when you're starting to 567 00:32:03,320 --> 00:32:08,280 Speaker 1: experiment with negative rates, you're certainly getting into, as you 568 00:32:08,400 --> 00:32:11,680 Speaker 1: called it at hockery. But even here in the United States, 569 00:32:11,720 --> 00:32:13,840 Speaker 1: if you look at what's happened over the last couple 570 00:32:13,880 --> 00:32:18,120 Speaker 1: of years, UH, with you know, having this tremendous amount 571 00:32:18,120 --> 00:32:22,600 Speaker 1: of quee UH, that is something that just was very unconventional. 572 00:32:23,040 --> 00:32:25,800 Speaker 1: And they're still holding all those bonds off the market, 573 00:32:25,880 --> 00:32:28,200 Speaker 1: so there still is a big key effect on rates. 574 00:32:28,520 --> 00:32:32,080 Speaker 1: Marie Hurst, thank you so much, greatly appreciate it. With UBS, 575 00:32:40,960 --> 00:32:48,640 Speaker 1: I take immense issue with Wikipedia, it says Michael Barone parentheses, pundent, 576 00:32:49,280 --> 00:32:53,800 Speaker 1: closed parentheses. Michael Barone is far removed from being a 577 00:32:53,960 --> 00:32:58,240 Speaker 1: pundent of any pundent I know is the Almanac of 578 00:32:58,280 --> 00:33:04,080 Speaker 1: American Politics is absolutely definitive. Everybody owns it. The hard 579 00:33:04,120 --> 00:33:08,720 Speaker 1: covers a hundred dollars. That's what I have. He is 580 00:33:08,840 --> 00:33:12,240 Speaker 1: the bible maker of all the punditry out there and 581 00:33:12,360 --> 00:33:15,640 Speaker 1: does it with math and acuity. And we're honored afrom 582 00:33:15,640 --> 00:33:19,800 Speaker 1: the Washington Examiner and other venues that he has. Michael, 583 00:33:19,840 --> 00:33:24,840 Speaker 1: with the polarization of our political process, with jerrymandering, and 584 00:33:25,560 --> 00:33:29,160 Speaker 1: in the incumbency that we're with, obviously it's a different 585 00:33:29,200 --> 00:33:32,880 Speaker 1: book than it was years ago. Well, how does it 586 00:33:33,000 --> 00:33:36,120 Speaker 1: color the House of Representatives when you put that book together? 587 00:33:36,520 --> 00:33:38,080 Speaker 1: What do you see that we don't see in the 588 00:33:38,200 --> 00:33:43,440 Speaker 1: everyday discourse. Well, you've got an increasing number of voters, 589 00:33:43,560 --> 00:33:46,719 Speaker 1: not just districts, not just jerrymander districts, but voters who 590 00:33:46,800 --> 00:33:49,360 Speaker 1: have been voting pretty consistently for one party or for 591 00:33:49,440 --> 00:33:51,719 Speaker 1: the other. I mean, Harry, So often you read an 592 00:33:51,760 --> 00:33:55,680 Speaker 1: article about, well, there's four people who say they're independence today. Yeah, 593 00:33:55,720 --> 00:33:58,040 Speaker 1: but when you look at how they vote, some independence 594 00:33:58,120 --> 00:34:00,920 Speaker 1: vote for all the Republicans. So dependents vote for all 595 00:34:00,960 --> 00:34:04,480 Speaker 1: the Democrats, and they're they're not acting very independent. They're 596 00:34:04,480 --> 00:34:07,840 Speaker 1: acting like supporters of one party another, which all legitimate 597 00:34:07,920 --> 00:34:09,960 Speaker 1: thing to be. I think part of it is that 598 00:34:10,400 --> 00:34:13,080 Speaker 1: when I started writing all that American politics in the 599 00:34:13,200 --> 00:34:16,400 Speaker 1: late nineteen sixties early nineteen seventies, you still had a 600 00:34:16,480 --> 00:34:19,560 Speaker 1: lot of people that were voting their Civil War preference 601 00:34:19,960 --> 00:34:24,720 Speaker 1: from a hundred years before. You still had people voting 602 00:34:24,960 --> 00:34:27,560 Speaker 1: up and down, whether they were for Franklin or those developed, 603 00:34:27,600 --> 00:34:31,480 Speaker 1: whether they were for the industrial unions or for management 604 00:34:31,719 --> 00:34:35,000 Speaker 1: of the big industrial companies, like in my home state 605 00:34:35,040 --> 00:34:37,520 Speaker 1: of Michigan. And what's happened in the meantime is that 606 00:34:37,640 --> 00:34:42,160 Speaker 1: politics has become morally more highly correlated with cultural issues, 607 00:34:42,640 --> 00:34:45,200 Speaker 1: which I would argue is actually sort of the default 608 00:34:45,280 --> 00:34:48,279 Speaker 1: mode in American history. But that's a side argument to 609 00:34:48,400 --> 00:34:52,000 Speaker 1: your quest, and those issues are often very personal and 610 00:34:52,080 --> 00:34:55,680 Speaker 1: important where do you feel on you know, issues of abortion, 611 00:34:55,840 --> 00:34:58,960 Speaker 1: same sex marriage, a variety of other cultural issues that 612 00:34:59,040 --> 00:35:03,040 Speaker 1: have come forward. So you have the demographic factor most 613 00:35:03,080 --> 00:35:06,200 Speaker 1: highly polied with voting behavior has turned out, you know, 614 00:35:06,239 --> 00:35:08,560 Speaker 1: in the recent past, at least to be religion or 615 00:35:08,640 --> 00:35:13,680 Speaker 1: degree of religiosity within each sectarian group. That's different from 616 00:35:14,000 --> 00:35:17,399 Speaker 1: you know, nineteen sixty one, according to Gallup, se percent 617 00:35:17,480 --> 00:35:20,319 Speaker 1: of Catholics voted for John Kennedy and six of white 618 00:35:20,360 --> 00:35:24,399 Speaker 1: Protestants voted for Richard Nixon. If you lookate Catholics, white 619 00:35:24,440 --> 00:35:27,919 Speaker 1: Catholics now a white Protestants, they vote pretty much the same. 620 00:35:28,320 --> 00:35:30,200 Speaker 1: You know, if they're more religious, they tend to vote 621 00:35:30,200 --> 00:35:33,120 Speaker 1: more Republican. If they're less religious servants, they tend to 622 00:35:33,239 --> 00:35:37,720 Speaker 1: vote Democratic. And so in that situation, people don't change 623 00:35:37,800 --> 00:35:42,279 Speaker 1: their party that office. In addition, you had the generations 624 00:35:42,400 --> 00:35:45,840 Speaker 1: of Americans that experienced and went through the Great Depression 625 00:35:45,880 --> 00:35:49,400 Speaker 1: in World War two. They were inclined. They knew what 626 00:35:49,480 --> 00:35:52,040 Speaker 1: a depression was like, they knew what a world war 627 00:35:52,239 --> 00:35:54,320 Speaker 1: was like. When the lost not four thousand people, the 628 00:35:54,480 --> 00:35:58,240 Speaker 1: four hundred thousand people, and when they had a president 629 00:35:58,280 --> 00:36:01,799 Speaker 1: who seemed to produce peace and prosperity, they rewarded him 630 00:36:01,920 --> 00:36:06,719 Speaker 1: with a landslide wins nineteen fifty six, sixty four, seventy two, 631 00:36:06,960 --> 00:36:11,000 Speaker 1: eighty four. Um, that that hasn't happened since nineteen eighty four. 632 00:36:11,000 --> 00:36:13,280 Speaker 1: And I think one reason is we've got an electorate 633 00:36:13,360 --> 00:36:16,600 Speaker 1: that doesn't remember the Great Depression. We've got an electorate 634 00:36:16,760 --> 00:36:19,800 Speaker 1: that doesn't have firsthand memory of World War Two, and 635 00:36:20,320 --> 00:36:24,239 Speaker 1: they're not willing to cast aside their usual partists and preferences, 636 00:36:24,320 --> 00:36:26,920 Speaker 1: which are based very often on personal issues that are 637 00:36:27,000 --> 00:36:29,759 Speaker 1: very important in their personal lives. They're not willing to 638 00:36:29,880 --> 00:36:33,000 Speaker 1: cast those aside because they haven't had a great depression. 639 00:36:33,680 --> 00:36:35,600 Speaker 1: You know, we did have a financial crisis, but not 640 00:36:35,719 --> 00:36:38,799 Speaker 1: a great depression. We haven't had a world war. We've 641 00:36:38,800 --> 00:36:42,240 Speaker 1: been you know, bemoaning the fact that the four thousand 642 00:36:42,320 --> 00:36:45,040 Speaker 1: people died in the racket at four hundred thousand World 643 00:36:45,080 --> 00:36:47,480 Speaker 1: War so, and some people stick would have been sticking 644 00:36:47,520 --> 00:36:50,200 Speaker 1: with their parties and things. Now two thousand and sixteen 645 00:36:50,760 --> 00:36:52,600 Speaker 1: could turn out to be the end of that period, 646 00:36:52,920 --> 00:36:56,520 Speaker 1: with Donald Trump in particular scrambling the party lines. But 647 00:36:56,640 --> 00:36:59,120 Speaker 1: we'll see about that. Can I ask you very quickly, uh, 648 00:36:59,239 --> 00:37:01,319 Speaker 1: if we only have about a minute left here, Um, 649 00:37:01,360 --> 00:37:04,640 Speaker 1: you gotta buy the Almanacive American Politics. You know what's 650 00:37:04,680 --> 00:37:09,080 Speaker 1: happening in the second District Congressional district of Indiana, very 651 00:37:09,160 --> 00:37:12,239 Speaker 1: working class. The bottom line question is the man who 652 00:37:12,360 --> 00:37:14,480 Speaker 1: is going to be the vice presidential candidate going to 653 00:37:14,560 --> 00:37:17,440 Speaker 1: help carry that district for Donald Trump? Does the vice 654 00:37:17,480 --> 00:37:21,520 Speaker 1: presidential selection mean anything? Well, I don't think that. You know, 655 00:37:21,640 --> 00:37:24,040 Speaker 1: my Penser is going to add huge numbers of votes. 656 00:37:24,080 --> 00:37:26,160 Speaker 1: I think that Donald Trump was probably going to carry 657 00:37:26,200 --> 00:37:29,319 Speaker 1: Indiana in the general election. Any case, it's more Republican 658 00:37:29,440 --> 00:37:34,520 Speaker 1: than the surrounding Midwestern states Ohio, Illinois, Michigan, um an 659 00:37:34,560 --> 00:37:38,160 Speaker 1: election after election. I think, you know, it's interesting, Pences, 660 00:37:38,200 --> 00:37:41,879 Speaker 1: the cover of Indiana. Indiana is the number one manufacturing state. 661 00:37:42,040 --> 00:37:43,920 Speaker 1: You know, Trump has talked a lot going to bring 662 00:37:44,000 --> 00:37:48,040 Speaker 1: back manufacturing jobs Indiana typically, and you know it's statistically 663 00:37:48,080 --> 00:37:50,000 Speaker 1: exchange a little bit from day year of the year, 664 00:37:50,080 --> 00:37:53,200 Speaker 1: but it really means the number one state in UM 665 00:37:53,560 --> 00:37:56,360 Speaker 1: in manufacturing as a percentage of jobs and as a 666 00:37:56,400 --> 00:37:59,520 Speaker 1: percentage g g DP. It is the number one state 667 00:37:59,600 --> 00:38:04,040 Speaker 1: in terms of producing engineer graduates at least Perdue University, 668 00:38:04,080 --> 00:38:07,600 Speaker 1: which is a state university. Or former Governer MC Daniels 669 00:38:07,719 --> 00:38:10,359 Speaker 1: is the president, and he produces more engineers than any 670 00:38:10,400 --> 00:38:13,520 Speaker 1: other university America. Michael Brown, We've got to throw you 671 00:38:13,640 --> 00:38:17,879 Speaker 1: off air because you just mentioned Purdue University. Our executive 672 00:38:18,000 --> 00:38:21,520 Speaker 1: producer is from Purdue University and Mike McKee and I 673 00:38:21,680 --> 00:38:28,400 Speaker 1: hear about Purdue. You for seven, Michael Barone, Thank you 674 00:38:28,560 --> 00:38:32,279 Speaker 1: so much. Greatly appreciated with The Washington Examiner and of 675 00:38:32,400 --> 00:38:38,800 Speaker 1: course the classic textbook, The Almanac of American Politics. Thanks 676 00:38:38,840 --> 00:38:42,960 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 677 00:38:43,280 --> 00:38:48,640 Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 678 00:38:49,239 --> 00:38:52,680 Speaker 1: I'm on Twitter at Tom Keane. Michael McKee is at 679 00:38:52,840 --> 00:38:57,080 Speaker 1: Economy Before the podcast. You can always catch us worldwide. 680 00:38:57,480 --> 00:38:58,480 Speaker 1: I'm Bloomberg Radio.