WEBVTT - Single Best Idea with Tom Keene: Neil Dutta & Steve Ricchiuto

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news single best idea out

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<v Speaker 1>on Apple podcasts, and trust me, not six minutes, not

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<v Speaker 1>five minutes. This could be a thirty minute single best idea.

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<v Speaker 1>I'm not going to flick that on you in August,

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<v Speaker 1>but a set of incredible conversations today. Front center was

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<v Speaker 1>our conversation on this merger of Kellogg's snack food division

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<v Speaker 1>into the private company Mars. They make Mars bars and Snickers,

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<v Speaker 1>I guess, and things like that. But we covered that

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<v Speaker 1>very carefully and I think maybe that's a precursor of

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<v Speaker 1>things to come. I'm really fascinated by to the end

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<v Speaker 1>of the year what we see in terms of m

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<v Speaker 1>and A really at all capitalization levels. First, on inflation,

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<v Speaker 1>interesting report double earl it PPI before CPI. Thank you

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<v Speaker 1>to Bob Sinchump in Connecticut for the observation that what

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<v Speaker 1>was key here is PPI was out front of CPI.

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<v Speaker 1>So maybe we didn't get the glory today, we got

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<v Speaker 1>it yesterday. But there's a tinge of disinflation certainly within

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<v Speaker 1>those two reports. Retail sales tomorrow on CPI want to

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<v Speaker 1>watch some very interesting observations out on lagging shelter inflation.

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<v Speaker 1>Neil Dotta of Renmac on the mortgage rate.

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<v Speaker 2>Well, I mean, I certainly think that mortgage rates need

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<v Speaker 2>to follow a lot more from here in order to

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<v Speaker 2>juice the housing market, which means that the Fed has

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<v Speaker 2>a little bit of work to do. You know, it's interesting,

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<v Speaker 2>you're if you look at mortgage rates, I mean, they're

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<v Speaker 2>basically running at the lowest level since I think last spring.

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<v Speaker 2>But you haven't really seen home sales or purchased demand

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<v Speaker 2>run at the best level since last spring. So why

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<v Speaker 2>would that be? And that's because I think inflation has

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<v Speaker 2>slowed more rapidly. So six and a half percent on

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<v Speaker 2>to your fixed looks a lot better when inflation's four

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<v Speaker 2>and a half percent then when it's two and so

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<v Speaker 2>just a reminder that real rights are still quite elevated.

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<v Speaker 1>Neil Dunna of Renmac there on inflation and again retail

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<v Speaker 1>sales tomorrow. Retail sales is quoted before you take out inflation.

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<v Speaker 1>What's called nominally and is Mike McKee does he take

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<v Speaker 1>it out and adjust for inflation. He's sort of kind

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<v Speaker 1>of like, but retail sales will be important tomorrow as

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<v Speaker 1>we slide into an August. We can on the e

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<v Speaker 1>CEO GO terminal screen. There are twenty lines of economic

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<v Speaker 1>data tomorrow that gives you an idea of the import

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<v Speaker 1>of it. I could do a one hour discussion, a

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<v Speaker 1>monologue and bore you all to death over our conversation

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<v Speaker 1>today with Stephen Rashudo of Miszuo Stevershudo is one of

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<v Speaker 1>the most Prussian people in the game. He was absolutely

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<v Speaker 1>spellbinding on the death of the study of knesy and economics,

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<v Speaker 1>the Hicksian John Hicks ISLM model. Not going to go

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<v Speaker 1>into the details on it, but basically, the LM curve

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<v Speaker 1>of the X is the financial markets, and the IS

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<v Speaker 1>curve of the X is the real economy markets, and

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<v Speaker 1>we spend a lot of time talking about the real economy.

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<v Speaker 1>The summation of it is, he looks for an imputed

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<v Speaker 1>larger inflation in America. Is the IS curve shift to

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<v Speaker 1>the right. Don't keep score at home on us, don't

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<v Speaker 1>draw any maps in your car. But the answer is

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<v Speaker 1>he looks for a nudge to a more persistent inflation

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<v Speaker 1>in America. Pushing against that is a global disinflation. Where

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<v Speaker 1>does it meet. It meets in the currency market. Stephen

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<v Speaker 1>Rashudo of miszuo. The importance of the dollar.

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<v Speaker 3>Watch the currency. The currency is critical here because it's

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<v Speaker 3>a debate. It's a battle in the US be between

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<v Speaker 3>domestic cyclical forces and global deflationary forces. And those global

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<v Speaker 3>deflationary forces are real, they're palpable. I understand them. You

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<v Speaker 3>don't have to go much beyond the just looking at

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<v Speaker 3>the latest numbers news coming out of out of China

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<v Speaker 3>and have to look at what's happening in terms of

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<v Speaker 3>Europe and other parts around the world. Global deflation is real,

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<v Speaker 3>but so is domestic cyclical inflation, and the currency has

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<v Speaker 3>been the factor. D x Y, your Bloomberg measure on

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<v Speaker 3>the currency, went from parody one hundred to one sixteen.

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<v Speaker 3>We're now coming back. We're at one o two. I

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<v Speaker 3>don't know what it is right now, but we broke

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<v Speaker 3>through the one oh three level. We're heading towards one

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<v Speaker 3>o two. Early day you get back to parody, and

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<v Speaker 3>guess what the dollars no longer allowing global disinflation to

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<v Speaker 3>be imported into the US economy.

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<v Speaker 1>Steven Rashudo of MISSOUI there are d x Y quoted

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<v Speaker 1>it one oh two. Issu ishu means, you know, take

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<v Speaker 1>the decimal points into account and it has come down

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<v Speaker 1>from one O four one o three, one oh two.

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<v Speaker 1>The Bloomberg Dollar Index, which I call bb d x

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<v Speaker 1>y Bloomberg get it. Bb DXY is twelve forty something

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<v Speaker 1>and that's actually mathematically a much more interesting index. It

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<v Speaker 1>it takes into account em and China and the rest.

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<v Speaker 1>Were DXY is only the major traditional European trading partners

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<v Speaker 1>with Japanese yen. As well as that that was too

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<v Speaker 1>much for an August you know, that was just way

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<v Speaker 1>too much. We need to exit. Let's exit with this

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<v Speaker 1>android auto Apple car play. Thank you for the note

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<v Speaker 1>out on Apple car Play today. I didn't know that

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<v Speaker 1>when our guests come up, they come up on Apple CarPlay,

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<v Speaker 1>which is very cool on YouTube. Thank you so much.

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<v Speaker 1>Subscribe to Bloomberg Podcasts. I can't say enough about the

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