1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,440 Speaker 2: Terminal and the Bloomberg Business App. David Kelly of JP 10 00:00:37,520 --> 00:00:41,400 Speaker 2: Morgan Asset Management, Tom Porcelli of p JIM Fixed Income Gents, 11 00:00:41,440 --> 00:00:44,840 Speaker 2: Good morning to you, David. First to you. Your reaction, Well, 12 00:00:44,880 --> 00:00:45,280 Speaker 2: I think. 13 00:00:45,159 --> 00:00:48,519 Speaker 3: What we've got is a moderates moderation in the US economy, 14 00:00:48,560 --> 00:00:53,040 Speaker 3: both in terms of growth and inflation. Inflation is it's 15 00:00:53,159 --> 00:00:55,279 Speaker 3: taking a sweet time coming down, but we still think 16 00:00:55,280 --> 00:00:57,600 Speaker 3: it's a downward trend. And I think you know the 17 00:00:57,640 --> 00:00:59,680 Speaker 3: reason for the market reaction is that we didn't get 18 00:00:59,760 --> 00:01:02,120 Speaker 3: enough surprise. So we've now had three reports. Who've had 19 00:01:02,280 --> 00:01:06,120 Speaker 3: the jobs report, then we have the consumer Sentimental Report, 20 00:01:06,200 --> 00:01:08,279 Speaker 3: and now I've had the retail sales, repoard. They're all saying, 21 00:01:08,520 --> 00:01:11,320 Speaker 3: you know, overall things are moderating here. When you look 22 00:01:11,360 --> 00:01:13,240 Speaker 3: at the Jill's number, things are moderating, and we've got 23 00:01:13,240 --> 00:01:15,440 Speaker 3: fewer job opening. So it looks like the economy is 24 00:01:15,480 --> 00:01:18,240 Speaker 3: just easy itself into sort of a two percent card 25 00:01:18,400 --> 00:01:21,600 Speaker 3: or of two percent growth, inflation gradually coming down. 26 00:01:21,480 --> 00:01:23,000 Speaker 4: Towards two percent, And that's very good news. 27 00:01:23,000 --> 00:01:25,199 Speaker 3: And I think the good news is that we didn't 28 00:01:25,240 --> 00:01:27,280 Speaker 3: get another upside surprise in CPI today. 29 00:01:27,360 --> 00:01:29,120 Speaker 2: Does that whisper of a July cut get up a 30 00:01:29,120 --> 00:01:31,560 Speaker 2: little bit louder after this, or is July still too soon? 31 00:01:31,880 --> 00:01:34,000 Speaker 5: I don't know if the whisper, I mean, it's already 32 00:01:34,000 --> 00:01:35,800 Speaker 5: been a whisper. I don't know if it can become less. 33 00:01:35,640 --> 00:01:36,240 Speaker 4: Of a whisper. 34 00:01:36,680 --> 00:01:38,240 Speaker 6: I think it sort of stays where it is. 35 00:01:38,160 --> 00:01:40,199 Speaker 5: Which is to say, you know what, around twenty five percent. 36 00:01:40,600 --> 00:01:42,800 Speaker 5: I think that's probably reasonable. It doesn't go away, though. 37 00:01:42,800 --> 00:01:44,399 Speaker 5: I think that's the important thing on the back of this, 38 00:01:44,480 --> 00:01:47,200 Speaker 5: So I think he'd probably still linger. But I think 39 00:01:47,319 --> 00:01:49,920 Speaker 5: as a practical matter, it's probably going to get pushed 40 00:01:49,920 --> 00:01:51,440 Speaker 5: a little bit. And I have no challenge with that. 41 00:01:51,520 --> 00:01:55,000 Speaker 5: In fact, one of the things that I've actually look, 42 00:01:55,040 --> 00:01:57,720 Speaker 5: I've been sort of critical of Pal when it's been 43 00:01:57,720 --> 00:01:58,960 Speaker 5: mostly deserved. 44 00:01:59,240 --> 00:02:02,040 Speaker 2: But I pushed back around this type. 45 00:02:02,880 --> 00:02:04,520 Speaker 6: But recently I think he's done a good job with 46 00:02:04,520 --> 00:02:05,120 Speaker 6: the narrative, right. 47 00:02:05,280 --> 00:02:07,400 Speaker 5: I think after the last presser and actually the pressure before, 48 00:02:07,680 --> 00:02:09,440 Speaker 5: where he said, hey, look, we're not going to overreact 49 00:02:09,480 --> 00:02:11,480 Speaker 5: to a couple of you know, sort of strong string 50 00:02:11,680 --> 00:02:15,720 Speaker 5: of inflation reports, just like we didn't overreact to a 51 00:02:15,760 --> 00:02:19,040 Speaker 5: really soft string the last go around. So I think 52 00:02:19,080 --> 00:02:21,720 Speaker 5: that this, to me, is a chair who wants to cut. 53 00:02:21,840 --> 00:02:24,200 Speaker 5: I think that, and you can easily see one. And 54 00:02:24,240 --> 00:02:26,040 Speaker 5: I think I think if he has the opening, I 55 00:02:26,040 --> 00:02:28,040 Speaker 5: think he'll do two. And I think data like this, 56 00:02:28,120 --> 00:02:30,960 Speaker 5: if it persists, I think that that'll give him that opening. 57 00:02:31,120 --> 00:02:32,760 Speaker 5: And sorry, I'll meet this one last point. And I 58 00:02:32,760 --> 00:02:35,760 Speaker 5: think David rightly highlighted this. You know, if if you 59 00:02:35,800 --> 00:02:39,160 Speaker 5: look at that control number on retail sales, I mean 60 00:02:39,200 --> 00:02:42,880 Speaker 5: it was pretty weak. And again, no one's making the 61 00:02:42,919 --> 00:02:44,840 Speaker 5: case that we're sort of falling off a cliff here, 62 00:02:44,840 --> 00:02:47,359 Speaker 5: but I think things are slowing down and that'd be 63 00:02:47,440 --> 00:02:48,040 Speaker 5: consistent with. 64 00:02:47,960 --> 00:02:50,200 Speaker 6: The FED having the ability to cut. 65 00:02:50,280 --> 00:02:52,040 Speaker 1: We were just speaking with Ed Yar Denny, and he 66 00:02:52,120 --> 00:02:54,400 Speaker 1: doesn't necessarily have the same kind of sanguine outlick that 67 00:02:54,440 --> 00:02:56,840 Speaker 1: you do with respect to j. Powell, because he says, honestly, 68 00:02:56,840 --> 00:02:59,040 Speaker 1: the consumer is strong that yeah, there was weakness to 69 00:02:59,080 --> 00:03:00,519 Speaker 1: the control group, but it's Mike was saying. 70 00:03:00,520 --> 00:03:01,720 Speaker 2: It has to do with auto sales. 71 00:03:01,840 --> 00:03:03,840 Speaker 1: It's not the sort of broad based people not going 72 00:03:03,840 --> 00:03:06,280 Speaker 1: out and spending things. So at what point, David, do 73 00:03:06,320 --> 00:03:08,360 Speaker 1: you look at that and say, you know what, things 74 00:03:08,400 --> 00:03:10,880 Speaker 1: are fine? Now? Why the rush to cut? I know 75 00:03:10,919 --> 00:03:12,760 Speaker 1: you are in the police cut now and you should 76 00:03:12,760 --> 00:03:15,520 Speaker 1: have already cut camp. Well, why is it not that 77 00:03:15,560 --> 00:03:17,600 Speaker 1: we see things are just fine and you should stay 78 00:03:17,600 --> 00:03:19,880 Speaker 1: in here and only a cut with turbocharge a rally, 79 00:03:19,880 --> 00:03:21,680 Speaker 1: which is exactly the reaction we're getting today. 80 00:03:21,800 --> 00:03:25,040 Speaker 4: Well, I think you should normalize interest rates. 81 00:03:25,080 --> 00:03:26,799 Speaker 3: I think the Federal Reserve for a long time has 82 00:03:26,800 --> 00:03:29,359 Speaker 3: been trying to micro manage the economy with race that 83 00:03:29,440 --> 00:03:32,079 Speaker 3: got too low and too high. I think it messes 84 00:03:32,120 --> 00:03:35,240 Speaker 3: with financial markets. And you know, the more the Federal Reserve, 85 00:03:36,440 --> 00:03:38,800 Speaker 3: you know, tease all financial markets, the more financial markets 86 00:03:38,840 --> 00:03:40,520 Speaker 3: sort of act like sort of babies here. I mean, 87 00:03:40,560 --> 00:03:43,040 Speaker 3: you shouldn't have had this much of a reaction. But 88 00:03:43,320 --> 00:03:46,080 Speaker 3: you get this reaction because of because you know, the 89 00:03:46,080 --> 00:03:48,520 Speaker 3: Federal Reserve is so sensitive about saying anything that might 90 00:03:48,560 --> 00:03:49,960 Speaker 3: offend the markets one way or the other than the 91 00:03:50,120 --> 00:03:53,080 Speaker 3: when when you know, when economic numbers are a little 92 00:03:53,080 --> 00:03:53,760 Speaker 3: bit off one way. 93 00:03:53,760 --> 00:03:55,840 Speaker 2: There, I just say that reaction function is set up 94 00:03:56,160 --> 00:03:56,920 Speaker 2: for us to be hind. 95 00:03:57,880 --> 00:04:01,240 Speaker 4: I think market markets have an over reaction function. That's 96 00:04:01,280 --> 00:04:02,960 Speaker 4: the problem. And so market does. 97 00:04:02,880 --> 00:04:05,200 Speaker 3: Overreact and so the Federal Reserve you kind of have 98 00:04:05,280 --> 00:04:09,720 Speaker 3: to expose the markets to normal policy, normal policies. If 99 00:04:09,760 --> 00:04:12,440 Speaker 3: the economy is doing okay, rates ought to get back 100 00:04:12,480 --> 00:04:14,800 Speaker 3: to normal levels. And I do think, you know, I 101 00:04:15,040 --> 00:04:17,840 Speaker 3: don't think July, but I do think September is possible. 102 00:04:17,880 --> 00:04:19,520 Speaker 3: It's it's there, and I think one of the I 103 00:04:19,520 --> 00:04:22,040 Speaker 3: think j Powe himself will actually make a decision as 104 00:04:22,080 --> 00:04:24,279 Speaker 3: he heads towards this about whether he wants it himself, 105 00:04:24,440 --> 00:04:26,359 Speaker 3: because the one thing that we've seen about Jay Powell 106 00:04:26,360 --> 00:04:29,160 Speaker 3: which is very clear, is he wants to build consensus 107 00:04:29,200 --> 00:04:31,600 Speaker 3: and he works hard and actually lobbying. I wouldn't say 108 00:04:31,640 --> 00:04:35,000 Speaker 3: lobbing necessary is the right word, but he does talk. 109 00:04:35,200 --> 00:04:37,440 Speaker 3: I think it's amazing that he talks to all nineteen 110 00:04:37,440 --> 00:04:41,560 Speaker 3: participants in the fmc C meeting before the meeting and 111 00:04:41,680 --> 00:04:43,120 Speaker 3: just you know, this is my view and so forth, 112 00:04:43,120 --> 00:04:45,080 Speaker 3: and that's why he's been able to get so much consensus. 113 00:04:45,120 --> 00:04:47,800 Speaker 3: So if he thinks that, look, let's get going on 114 00:04:47,839 --> 00:04:51,520 Speaker 3: a slow rate cut cycle before the election, so you know, 115 00:04:51,560 --> 00:04:54,400 Speaker 3: and let's let's get it going here so we can't 116 00:04:54,440 --> 00:04:56,479 Speaker 3: be accused of playing politics, I think I think he 117 00:04:56,720 --> 00:04:58,440 Speaker 3: might well do that in September. 118 00:04:58,080 --> 00:05:00,600 Speaker 6: To No, I agree. 119 00:05:00,800 --> 00:05:03,960 Speaker 5: I think David is completely spot on. Look, I think 120 00:05:03,960 --> 00:05:06,720 Speaker 5: this is just a recalibration cycle. You know, this is 121 00:05:06,760 --> 00:05:08,680 Speaker 5: not you know, people here cuts, and I think that 122 00:05:08,760 --> 00:05:10,960 Speaker 5: immediate immediately conscious of the images of the FED like 123 00:05:10,960 --> 00:05:12,960 Speaker 5: getting aggressive, like, we don't think that that's the case. 124 00:05:12,960 --> 00:05:14,479 Speaker 5: We think that this is going to be a sort 125 00:05:14,480 --> 00:05:16,359 Speaker 5: of a very modest reduction in funds. 126 00:05:16,480 --> 00:05:19,159 Speaker 1: But talking about markets as baby his babies, right, this 127 00:05:19,240 --> 00:05:22,240 Speaker 1: question of how they react react has been basically a 128 00:05:22,279 --> 00:05:24,359 Speaker 1: feature and not a book of financial policy. This was 129 00:05:24,360 --> 00:05:27,120 Speaker 1: the transmission mechanism we've been talking about. 130 00:05:26,880 --> 00:05:29,120 Speaker 4: This also, how much do we get a. 131 00:05:29,160 --> 00:05:30,960 Speaker 1: Rally on the on the idea that we're going to 132 00:05:30,960 --> 00:05:32,240 Speaker 1: get a cut, And that's going to be a problem. 133 00:05:32,240 --> 00:05:34,000 Speaker 6: It's going to set us back further and. 134 00:05:34,040 --> 00:05:37,600 Speaker 1: Actually cause this to be more of a problem and 135 00:05:37,640 --> 00:05:38,200 Speaker 1: more sticky. 136 00:05:38,279 --> 00:05:40,960 Speaker 3: Well, I think the Federals, Federal you know, the Federal Reserve, 137 00:05:41,000 --> 00:05:43,080 Speaker 3: makes a big deal about how they don't lack politics 138 00:05:43,120 --> 00:05:46,760 Speaker 3: over overall what they're doing. They should also do the 139 00:05:46,800 --> 00:05:48,159 Speaker 3: same thing about market reactions. 140 00:05:48,200 --> 00:05:49,960 Speaker 4: So they should not overreact. 141 00:05:49,440 --> 00:05:52,000 Speaker 3: To how the market reacts to either economic numbers of 142 00:05:52,000 --> 00:05:54,640 Speaker 3: their own policy. But also what they need to do 143 00:05:54,720 --> 00:05:56,480 Speaker 3: is and I completely agree with you on a recalib 144 00:05:56,839 --> 00:05:59,320 Speaker 3: calibration here, because what they just talk about is not 145 00:05:59,480 --> 00:06:02,880 Speaker 3: monetary easing, but monetary normalization. The truth is, I don't 146 00:06:02,880 --> 00:06:05,440 Speaker 3: think that we're heading into a you know, a higher 147 00:06:05,440 --> 00:06:07,479 Speaker 3: for longer environment. I think we're heading into a normal, 148 00:06:07,560 --> 00:06:10,719 Speaker 3: for longer environment. There's nothing there's nothing wrong with four 149 00:06:10,720 --> 00:06:11,800 Speaker 3: and a half percent on a. 150 00:06:11,839 --> 00:06:14,040 Speaker 4: Ten year treasury That's actually about right. 151 00:06:14,200 --> 00:06:17,680 Speaker 3: Given two percent normal for Fed funds, I think, I 152 00:06:17,720 --> 00:06:19,880 Speaker 3: personally think normal for Fed funds is somewhere between three 153 00:06:20,000 --> 00:06:22,560 Speaker 3: fifty and four. I mean, in the fifty years before 154 00:06:22,560 --> 00:06:26,239 Speaker 3: the financial crisis it was two percent above core CPI inflation. 155 00:06:26,279 --> 00:06:28,400 Speaker 4: That would be four in the long run. 156 00:06:28,720 --> 00:06:31,200 Speaker 3: I think, you know, someone three fifty three, seventy five 157 00:06:31,200 --> 00:06:31,720 Speaker 3: to for me? 158 00:06:31,760 --> 00:06:33,360 Speaker 6: Bet right, No, I mean I just found my new 159 00:06:33,400 --> 00:06:33,919 Speaker 6: best friend. 160 00:06:35,279 --> 00:06:37,080 Speaker 2: I love carry on. 161 00:06:37,360 --> 00:06:39,040 Speaker 6: No, I think I. 162 00:06:38,680 --> 00:06:41,160 Speaker 5: Yes, I agree, I mean I think that's I think 163 00:06:41,200 --> 00:06:44,000 Speaker 5: it's exactly quite right. I think that this, to me 164 00:06:44,320 --> 00:06:47,040 Speaker 5: is I think this is the right way of thinking 165 00:06:47,120 --> 00:06:49,640 Speaker 5: about about where we're going. I think, you know, three 166 00:06:49,640 --> 00:06:53,360 Speaker 5: and a half to four percent is probably the right range. 167 00:06:53,120 --> 00:06:54,120 Speaker 6: To consider this in. 168 00:06:54,520 --> 00:06:57,039 Speaker 5: And you know the good thing about that is, you 169 00:06:57,080 --> 00:06:59,080 Speaker 5: know that is that that is roughly what the market 170 00:06:59,120 --> 00:07:01,120 Speaker 5: is expecting. So I don't think that there has to 171 00:07:01,160 --> 00:07:03,680 Speaker 5: be some big recalibration as it leads to the market, 172 00:07:03,839 --> 00:07:07,120 Speaker 5: because expectations seem to be roughly right, although the market 173 00:07:07,320 --> 00:07:09,000 Speaker 5: has tended to take things way too far. 174 00:07:09,360 --> 00:07:10,280 Speaker 6: Let's be honest on that. 175 00:07:10,320 --> 00:07:12,120 Speaker 2: We'll get to the market right now. Equity features are 176 00:07:12,200 --> 00:07:14,240 Speaker 2: positive off the back of this economic data. I know 177 00:07:14,360 --> 00:07:16,280 Speaker 2: a few of you just tuning in, this is what 178 00:07:16,360 --> 00:07:19,080 Speaker 2: you miss. Zero point three percent is the number for CPI. 179 00:07:19,200 --> 00:07:21,520 Speaker 2: Zero point four was the estimate on a headline basis, 180 00:07:21,520 --> 00:07:24,160 Speaker 2: stripping out food and energy zero point three against an 181 00:07:24,240 --> 00:07:26,400 Speaker 2: estimate of zero point three. The rustle out perform and 182 00:07:26,440 --> 00:07:29,200 Speaker 2: a small caps up by one point four percent. Thank 183 00:07:29,240 --> 00:07:31,720 Speaker 2: you to the bond market, treasuries running and yields drop 184 00:07:31,720 --> 00:07:33,640 Speaker 2: in across the curve. The two yet down about seven 185 00:07:33,680 --> 00:07:37,040 Speaker 2: basis points now to four seventy four. Mike McKee, still 186 00:07:37,040 --> 00:07:39,360 Speaker 2: alongside us, Mike, you've had longer to read through this. 187 00:07:39,400 --> 00:07:40,280 Speaker 2: What stands out now? 188 00:07:40,840 --> 00:07:43,600 Speaker 7: Well, A couple of the categories that people watch closely 189 00:07:43,760 --> 00:07:47,920 Speaker 7: perform pretty much as expected, in that used cars were 190 00:07:47,960 --> 00:07:51,800 Speaker 7: down one point four percent, insurance health insurance only up 191 00:07:51,800 --> 00:07:55,240 Speaker 7: three tenths of eight percent, but unfortunately auto insurance still 192 00:07:55,320 --> 00:07:57,680 Speaker 7: posting a big gain one point eight percent, down a 193 00:07:57,680 --> 00:08:00,760 Speaker 7: little bit from last month, but still an our size gain. 194 00:08:00,880 --> 00:08:03,880 Speaker 7: And John, you had a probably good discount on your 195 00:08:03,920 --> 00:08:07,560 Speaker 7: trip to Paris this week because airfares were down eight 196 00:08:07,600 --> 00:08:09,440 Speaker 7: tenths of eight percent, which is. 197 00:08:09,440 --> 00:08:11,680 Speaker 6: Kind of interesting because the CPI tends to. 198 00:08:11,640 --> 00:08:15,240 Speaker 7: Include what people are buying for vacation time ahead. So 199 00:08:15,720 --> 00:08:19,320 Speaker 7: we'll see if airline fars can continue to behave. 200 00:08:19,800 --> 00:08:22,440 Speaker 2: Just for the record, it was Taylor Swift weekend in Paris, 201 00:08:23,160 --> 00:08:25,960 Speaker 2: and I booked the flight I think a day before 202 00:08:26,000 --> 00:08:28,400 Speaker 2: I got it, So Mike McKay, that was not cheap 203 00:08:28,440 --> 00:08:29,920 Speaker 2: at all. Just for the record, did you. 204 00:08:29,960 --> 00:08:30,680 Speaker 4: Enjoy the concert? 205 00:08:30,800 --> 00:08:32,720 Speaker 2: I didn't get to watch the concept, but it was 206 00:08:32,840 --> 00:08:34,760 Speaker 2: very busy. Can you imagine me a Tyler Swift conw 207 00:08:34,880 --> 00:08:36,920 Speaker 2: Mohammed went, I know, Mohamma's going to be in a 208 00:08:36,920 --> 00:08:38,200 Speaker 2: program on Friday. 209 00:08:37,920 --> 00:08:39,280 Speaker 1: Great pink, fantastic. 210 00:08:39,640 --> 00:08:40,320 Speaker 6: It was amazing. 211 00:08:40,400 --> 00:08:42,280 Speaker 2: Did he really think he wouldn't be seen on that 212 00:08:42,360 --> 00:08:42,800 Speaker 2: T shirt? 213 00:08:42,800 --> 00:08:42,920 Speaker 6: Oh? 214 00:08:42,960 --> 00:08:44,320 Speaker 8: I know he's now a swifty. 215 00:08:44,480 --> 00:08:46,440 Speaker 2: Mohamma's going to join us Friday for a review of 216 00:08:46,440 --> 00:08:49,520 Speaker 2: the economic data and apparently a review of the Taylor 217 00:08:49,520 --> 00:08:52,640 Speaker 2: Swift performance in Paris, France over the weekend. David Kelly, 218 00:08:52,679 --> 00:08:54,120 Speaker 2: I want to come back to the Federal Reserve, certainly 219 00:08:54,160 --> 00:08:57,120 Speaker 2: not on Tyler Swift. You've said repeatedly that the Federal 220 00:08:57,120 --> 00:08:59,320 Speaker 2: Reserve should just have faith in the calendar. This is 221 00:08:59,320 --> 00:09:01,800 Speaker 2: going to work its self foul for the next twelve months, 222 00:09:01,880 --> 00:09:04,400 Speaker 2: regardless of how restrictive they think they are. Is that's 223 00:09:04,400 --> 00:09:05,080 Speaker 2: still your stunce. 224 00:09:05,160 --> 00:09:05,640 Speaker 4: Absolutely. 225 00:09:05,960 --> 00:09:08,120 Speaker 3: If you look at airline fares, I mean, you know, 226 00:09:08,400 --> 00:09:11,720 Speaker 3: we've got we've actually got to air travel back above 227 00:09:11,760 --> 00:09:12,760 Speaker 3: pre pandemic levels. 228 00:09:12,760 --> 00:09:13,559 Speaker 4: There's plenty of. 229 00:09:13,480 --> 00:09:16,240 Speaker 3: Demand out there, but the airline industry is competitive enough 230 00:09:16,280 --> 00:09:19,240 Speaker 3: for airline fers to come down. But overall, you know, 231 00:09:19,280 --> 00:09:22,400 Speaker 3: in some areas of services and throughout the goods industries. 232 00:09:22,559 --> 00:09:26,040 Speaker 3: What we're seeing is enough competition to gradually push inflation down. 233 00:09:26,360 --> 00:09:28,880 Speaker 3: So this is not an inflationary economy. The only time 234 00:09:28,880 --> 00:09:31,120 Speaker 3: it's an inflationary economy is when you have a huge 235 00:09:31,160 --> 00:09:35,319 Speaker 3: supply chain disruption and you have huge fiscal stimus where 236 00:09:35,320 --> 00:09:38,040 Speaker 3: you're giving money to low and middle income households. That 237 00:09:38,200 --> 00:09:41,080 Speaker 3: is the one way you can generate long stant or 238 00:09:41,240 --> 00:09:44,520 Speaker 3: significant inflation year. Once you take that away, inflation will 239 00:09:44,520 --> 00:09:46,400 Speaker 3: gradually drift down, and that's exactly what it's doing. 240 00:09:46,440 --> 00:09:47,840 Speaker 4: It's just very gradual. Tom. 241 00:09:47,880 --> 00:09:49,439 Speaker 9: Do you think a lot of this market reaction though, 242 00:09:49,480 --> 00:09:51,720 Speaker 9: is actually the CPI or the retail sales because CPI 243 00:09:51,840 --> 00:09:54,160 Speaker 9: is pretty much in line. Retail sales was much softer. 244 00:09:54,360 --> 00:09:56,000 Speaker 5: Yeah, I mean, you know, it could also be a 245 00:09:56,040 --> 00:09:58,439 Speaker 5: sort of a better than feared because as we were saying, 246 00:09:58,480 --> 00:10:00,240 Speaker 5: I think before we were on camera, you know, could 247 00:10:00,240 --> 00:10:02,520 Speaker 5: have easily been a four tenth. So I think it 248 00:10:02,559 --> 00:10:05,200 Speaker 5: could be some of some of that for for sure. 249 00:10:05,520 --> 00:10:07,600 Speaker 5: You know the thing too about inflation, I just think, look, 250 00:10:08,240 --> 00:10:10,640 Speaker 5: I don't know about the wisdom of stripping out an 251 00:10:10,679 --> 00:10:13,600 Speaker 5: assortment of different things, like you know, super core, I mean, 252 00:10:13,640 --> 00:10:15,680 Speaker 5: you're stripping out fifty percent or more of the weight 253 00:10:15,679 --> 00:10:17,720 Speaker 5: of inflation, which I look, I have no problem stripping 254 00:10:17,760 --> 00:10:20,800 Speaker 5: things out of inflation. But what I would say is, 255 00:10:20,840 --> 00:10:24,920 Speaker 5: if you want to do that, then go the next step, right, 256 00:10:24,920 --> 00:10:27,040 Speaker 5: because what we know is that auto insurance has been 257 00:10:27,040 --> 00:10:30,200 Speaker 5: a thorn in the side of inflation. That is, there's 258 00:10:30,320 --> 00:10:32,840 Speaker 5: nothing the FED can do about that, and if you 259 00:10:32,840 --> 00:10:34,880 Speaker 5: strip that out, inflation looks even a little bit better. 260 00:10:34,960 --> 00:10:38,200 Speaker 5: So to me, that's the Just keep in mind there 261 00:10:38,200 --> 00:10:42,040 Speaker 5: are some idiosyncratic sort of sectors that are really impacting 262 00:10:42,040 --> 00:10:44,280 Speaker 5: inflation that the FED has no ability to control. So 263 00:10:44,280 --> 00:10:46,080 Speaker 5: in that context, I think it's even better. 264 00:10:46,120 --> 00:10:47,960 Speaker 3: And also, I mean, the FED have a good reason 265 00:10:48,520 --> 00:10:50,880 Speaker 3: sets a target of two percent, but no conomists will 266 00:10:50,880 --> 00:10:52,800 Speaker 3: honestly tell you there's a big difference between one or 267 00:10:52,840 --> 00:10:55,040 Speaker 3: two and three. You know, so long as you're there 268 00:10:55,080 --> 00:10:58,160 Speaker 3: or thereabouts, you know you're okay. And then what you 269 00:10:58,200 --> 00:11:00,679 Speaker 3: do is do no evil, do not do or financial 270 00:11:00,720 --> 00:11:04,120 Speaker 3: markets by having rates at a significantly incorrect level. 271 00:11:04,280 --> 00:11:06,000 Speaker 9: So then should the that just be targeting two to 272 00:11:06,040 --> 00:11:06,600 Speaker 9: three percent? 273 00:11:07,160 --> 00:11:09,960 Speaker 3: Well, in Canada they have a range of one to 274 00:11:10,000 --> 00:11:11,840 Speaker 3: three percent, and I kind of like the idea of 275 00:11:11,840 --> 00:11:14,079 Speaker 3: a range of one to three percent as a target. 276 00:11:14,160 --> 00:11:15,480 Speaker 4: We get in that range, we're fine. 277 00:11:15,520 --> 00:11:17,960 Speaker 5: I totally agree. In fact, I always used the RBA. 278 00:11:18,040 --> 00:11:18,839 Speaker 5: I know it is terrible. 279 00:11:18,840 --> 00:11:24,040 Speaker 2: I'm sorry for you all the weight condemn. 280 00:11:25,679 --> 00:11:28,560 Speaker 6: It was using Canada. I've used the RBA as a 281 00:11:28,559 --> 00:11:29,080 Speaker 6: great example. 282 00:11:29,160 --> 00:11:31,200 Speaker 5: The RBA has a range, and I think a range 283 00:11:31,240 --> 00:11:34,400 Speaker 5: is a saying two point zero percent to me, like 284 00:11:34,559 --> 00:11:38,000 Speaker 5: just strikes me as like the pinnacle of hubris. I mean, 285 00:11:38,080 --> 00:11:40,240 Speaker 5: like you rarely see it at two point zero percent 286 00:11:40,280 --> 00:11:42,240 Speaker 5: for any period of time. I think a range is 287 00:11:42,400 --> 00:11:43,680 Speaker 5: really the right way of thinking. 288 00:11:43,679 --> 00:11:47,320 Speaker 3: And it actually caused tremendous problems last decade because they 289 00:11:47,400 --> 00:11:49,480 Speaker 3: kept raids way too low for way too long as 290 00:11:49,480 --> 00:11:51,240 Speaker 3: they were trying to get inflation up to that two 291 00:11:51,280 --> 00:11:53,400 Speaker 3: percent target, and that fueled a lot of the asset 292 00:11:53,440 --> 00:11:56,360 Speaker 3: bubbles and real estate bubbles that they were now suffering from. 293 00:11:56,480 --> 00:11:59,160 Speaker 1: So anyone who took the survey, the University of Michigan 294 00:11:59,280 --> 00:12:01,760 Speaker 1: survey last Frido was listening to this, says, what are 295 00:12:01,800 --> 00:12:05,360 Speaker 1: they talking about? They're in goldilocks land. Everything is amazing. 296 00:12:05,600 --> 00:12:07,760 Speaker 1: It's going to be a great economy. Stocks are going 297 00:12:07,800 --> 00:12:11,120 Speaker 1: to keep rallying. We can sustain this. J Powell is great. 298 00:12:11,480 --> 00:12:14,800 Speaker 1: Where is the disconnect here between the important Okay. 299 00:12:14,720 --> 00:12:17,800 Speaker 5: Yeah, sorry, So it's an important idea. I think about 300 00:12:17,840 --> 00:12:20,280 Speaker 5: like my parents, right who having the foggiest idea what 301 00:12:20,320 --> 00:12:20,880 Speaker 5: I do for a living? 302 00:12:20,920 --> 00:12:22,600 Speaker 6: I mean, after me trying to explain it to them. 303 00:12:22,880 --> 00:12:25,440 Speaker 5: But you know when I when I tell them, when 304 00:12:25,440 --> 00:12:27,840 Speaker 5: I tell them, look, you know inflation is because they 305 00:12:27,960 --> 00:12:30,040 Speaker 5: was asking what's happening when inflation's like, oh, it's improving, 306 00:12:30,080 --> 00:12:30,800 Speaker 5: you know, not to fear. 307 00:12:30,840 --> 00:12:33,120 Speaker 6: And my father loves to say, like, what the hell 308 00:12:33,120 --> 00:12:33,840 Speaker 6: are you talking about. 309 00:12:33,880 --> 00:12:35,280 Speaker 5: He's like, I'm going to the store. I'm still paying 310 00:12:35,280 --> 00:12:37,720 Speaker 5: a lot more for stuff. And that's the disconnect between 311 00:12:37,720 --> 00:12:40,280 Speaker 5: Main Street and Wall Street. Like we look at the 312 00:12:40,640 --> 00:12:43,160 Speaker 5: percent change and they look at price level terms, and 313 00:12:43,200 --> 00:12:46,600 Speaker 5: price level terms, it's still incredibly elevated. And that's a problem, 314 00:12:46,640 --> 00:12:49,480 Speaker 5: by the way, from a consumption perspective, because a lot 315 00:12:49,520 --> 00:12:52,240 Speaker 5: of these things are fixed costs, like auto insurance or 316 00:12:52,280 --> 00:12:55,160 Speaker 5: like food prices that will actually continue to chew into 317 00:12:55,200 --> 00:12:55,960 Speaker 5: disposable income. 318 00:12:56,000 --> 00:12:57,640 Speaker 1: Okay, that's been basically the theory. 319 00:12:58,200 --> 00:13:00,400 Speaker 3: I have to say, you need to fade that University 320 00:13:00,400 --> 00:13:03,000 Speaker 3: of Michigan Sentiment Index surprise because they had a change 321 00:13:03,000 --> 00:13:05,480 Speaker 3: in methodology and they started they're starting interviewing people on 322 00:13:05,520 --> 00:13:06,840 Speaker 3: the web as opposed on the phone. 323 00:13:06,880 --> 00:13:08,520 Speaker 4: And apparently people I've. 324 00:13:08,360 --> 00:13:10,240 Speaker 2: Been waiting for that cod for agous. 325 00:13:12,040 --> 00:13:12,480 Speaker 8: Lucky people. 326 00:13:12,480 --> 00:13:15,680 Speaker 3: Well, yeah, exactly exactly one that now you get. You 327 00:13:15,720 --> 00:13:17,480 Speaker 3: get asked on the web and apparently you're more gloomy 328 00:13:17,520 --> 00:13:18,320 Speaker 3: when you look on the screen. 329 00:13:18,480 --> 00:13:20,240 Speaker 9: How antiquated is callings on the phone? 330 00:13:20,559 --> 00:13:21,880 Speaker 4: No problem, no problem at all. 331 00:13:21,920 --> 00:13:22,760 Speaker 2: But the problem. 332 00:13:22,760 --> 00:13:25,640 Speaker 3: But the problem is that they moved, they changed methodology, 333 00:13:25,760 --> 00:13:28,280 Speaker 3: and they didn't do a level adjustment for the bias 334 00:13:28,280 --> 00:13:30,640 Speaker 3: that they know it's actually causing their data. They put 335 00:13:30,640 --> 00:13:32,880 Speaker 3: something out, I mean, it's this is really technical. 336 00:13:32,440 --> 00:13:37,080 Speaker 2: But just it's not what's going to happen. They filed answers. 337 00:13:37,400 --> 00:13:39,440 Speaker 2: I think inflations can be twenty percent if they. 338 00:13:39,320 --> 00:13:41,040 Speaker 3: Don't, If they don't do a fix to this, the 339 00:13:41,120 --> 00:13:44,040 Speaker 3: University of Michigan survey will be about six point six 340 00:13:44,040 --> 00:13:47,120 Speaker 3: percentage or index points below where it was a few 341 00:13:47,160 --> 00:13:50,480 Speaker 3: months ago forever. So so it's it just this change 342 00:13:50,480 --> 00:13:52,880 Speaker 3: in methodology actually messes up the number. So I know, 343 00:13:52,920 --> 00:13:55,160 Speaker 3: if it gets excited for a number of misses consensus 344 00:13:55,200 --> 00:13:56,240 Speaker 3: by a loss and that. 345 00:13:56,240 --> 00:13:59,760 Speaker 4: Happened, but it was just a technical technical web. 346 00:14:00,320 --> 00:14:02,120 Speaker 5: You're again just the Apple fire. I mean, just keep 347 00:14:02,160 --> 00:14:05,440 Speaker 5: in mind, for whatever the confidence numbers are worth. Confidence 348 00:14:05,440 --> 00:14:08,960 Speaker 5: has been pretty downbeat, yet spending has been pretty robust 349 00:14:09,000 --> 00:14:09,880 Speaker 5: on relative basis. 350 00:14:09,960 --> 00:14:12,800 Speaker 6: Right, So we're feeders of the Michigan numbers. Two But 351 00:14:13,240 --> 00:14:15,000 Speaker 6: I think now, yeah. 352 00:14:14,640 --> 00:14:17,559 Speaker 5: Exactly, but I think, but I think the the inflation 353 00:14:17,800 --> 00:14:20,600 Speaker 5: expectations numbers within Michigan I think are really useful. 354 00:14:20,760 --> 00:14:22,800 Speaker 2: Sometimes it's nice to get along chance. This was great, 355 00:14:23,000 --> 00:14:37,680 Speaker 2: Thank you. Alongside David Kelly, f JP Morgan, President Biden 356 00:14:37,760 --> 00:14:40,680 Speaker 2: unfanning a sweeping new round of tariffs on Chinese imports 357 00:14:40,720 --> 00:14:43,720 Speaker 2: ahead of the November election. The decision looks to escalate 358 00:14:43,760 --> 00:14:46,760 Speaker 2: measures first put in place by former President Donald Trump. 359 00:14:46,960 --> 00:14:50,240 Speaker 2: The former House Speaker Kevin McCarthy joins US now speak, McCarthy, 360 00:14:50,280 --> 00:14:51,680 Speaker 2: go to see you, good to see you, great to 361 00:14:51,720 --> 00:14:53,240 Speaker 2: catch up, sir. What did you think of that from 362 00:14:53,240 --> 00:14:55,840 Speaker 2: President Biden? Did Biden just out Trump? Trump? 363 00:14:56,200 --> 00:14:57,080 Speaker 8: No, he can't do that. 364 00:14:57,120 --> 00:15:01,440 Speaker 10: I mean, Biden opposed these terrorists will four and I 365 00:15:01,520 --> 00:15:04,120 Speaker 10: actually believe when it was only Nixon can go to China. 366 00:15:04,240 --> 00:15:07,640 Speaker 10: I think a Republican administration always has a better relationship 367 00:15:07,680 --> 00:15:10,120 Speaker 10: with China and a stronger one. We've watched in this 368 00:15:10,240 --> 00:15:14,440 Speaker 10: current administration. They've created like an access of evil with Russia, 369 00:15:14,800 --> 00:15:18,480 Speaker 10: Iran and China, something we haven't seen since the nineteen thirties. 370 00:15:18,520 --> 00:15:20,160 Speaker 8: And you know, there's an interesting. 371 00:15:19,840 --> 00:15:22,840 Speaker 10: Piece by Henry Kissinger before he passed in Graham Allison 372 00:15:23,320 --> 00:15:28,080 Speaker 10: seventy nine, seventy nine and nine seventy nine years since 373 00:15:28,080 --> 00:15:32,000 Speaker 10: a Great War, seventy nine years since a nuclear weapon 374 00:15:32,080 --> 00:15:35,160 Speaker 10: was used, and only nine countries with the potential of 375 00:15:35,160 --> 00:15:38,440 Speaker 10: a nuclear which in the seventies you thought there would 376 00:15:38,480 --> 00:15:39,680 Speaker 10: be twenty five or thirty. 377 00:15:40,280 --> 00:15:41,600 Speaker 8: That doesn't just happen. 378 00:15:41,960 --> 00:15:45,360 Speaker 10: So foreign policy really matters. The world is in a 379 00:15:45,400 --> 00:15:49,040 Speaker 10: different place that they're looking for a strong kind of 380 00:15:49,080 --> 00:15:53,200 Speaker 10: American Western leadership, and I think that's the challenges that 381 00:15:53,240 --> 00:15:58,200 Speaker 10: we have. And Biden's decision in Afghanistan and what he's 382 00:15:58,240 --> 00:16:01,840 Speaker 10: just doing with Israel, it's really harming the world known 383 00:16:01,800 --> 00:16:05,760 Speaker 10: in America, and I think greater stability will go a. 384 00:16:05,720 --> 00:16:08,240 Speaker 9: Long way when it comes to China. Though Biden and 385 00:16:08,280 --> 00:16:10,760 Speaker 9: Trump are largely on the same path. Trump is talking 386 00:16:10,800 --> 00:16:14,280 Speaker 9: about sixty percent tariffs on imports coming from China on 387 00:16:14,360 --> 00:16:17,520 Speaker 9: top of potentially a ten percent tariff wall for all imports. 388 00:16:17,840 --> 00:16:18,960 Speaker 8: Isn't that trajectory? 389 00:16:19,400 --> 00:16:21,360 Speaker 9: Isn't that the only place you know this well that 390 00:16:21,360 --> 00:16:23,760 Speaker 9: there's bipartisanship in Washington. 391 00:16:23,400 --> 00:16:25,200 Speaker 8: When it comes to China, well, you want to look 392 00:16:25,200 --> 00:16:25,440 Speaker 8: at it. 393 00:16:26,600 --> 00:16:29,480 Speaker 10: Trump's policies on China he believed long before he was 394 00:16:29,480 --> 00:16:33,240 Speaker 10: ever elected. Biden has flipped his position on China in 395 00:16:33,280 --> 00:16:36,440 Speaker 10: the last year, So it's kind of what you believe. 396 00:16:36,480 --> 00:16:39,280 Speaker 10: And I think in China's position, China always looks long term, 397 00:16:39,440 --> 00:16:42,160 Speaker 10: so if they have somebody in there with a strong position, 398 00:16:42,320 --> 00:16:44,440 Speaker 10: you usually can negotiate something there. 399 00:16:44,960 --> 00:16:46,120 Speaker 8: I believe, and I. 400 00:16:46,080 --> 00:16:49,440 Speaker 10: Think looking at the New York Times latest polling Trump 401 00:16:49,760 --> 00:16:52,080 Speaker 10: election is today, Trump would win it probably pretty big. 402 00:16:52,160 --> 00:16:55,040 Speaker 10: Republicans would have a very big night that you would 403 00:16:55,080 --> 00:16:58,520 Speaker 10: have an agreement with China. You might think there's another tension, 404 00:16:58,520 --> 00:17:00,320 Speaker 10: you'll get a lot of good news for a while, 405 00:17:00,520 --> 00:17:02,880 Speaker 10: but I think we would be in a much stronger 406 00:17:02,920 --> 00:17:04,879 Speaker 10: place because there'd be greater respect on each side, and 407 00:17:04,880 --> 00:17:06,120 Speaker 10: that's where you could come to an agreement. 408 00:17:06,200 --> 00:17:08,919 Speaker 8: But an agreement on what I think you could get a. 409 00:17:08,920 --> 00:17:12,640 Speaker 10: Lot of places on agreement on trade, agreement on the 410 00:17:12,640 --> 00:17:17,119 Speaker 10: movement of China and Russia and Iran. I think China 411 00:17:17,160 --> 00:17:21,200 Speaker 10: moving into the Middle East, bringing Iran and Saudi Arabia together, 412 00:17:21,200 --> 00:17:23,400 Speaker 10: you wouldn't see that as much anymore. I think America 413 00:17:23,440 --> 00:17:25,960 Speaker 10: would take back the place that they've stood before. 414 00:17:26,080 --> 00:17:28,280 Speaker 9: So you were at the former president last night according 415 00:17:28,320 --> 00:17:31,120 Speaker 9: to photos I saw online. What are you hearing from 416 00:17:31,160 --> 00:17:33,000 Speaker 9: him and his team about what two point zero would 417 00:17:33,000 --> 00:17:36,280 Speaker 9: look like? Would that also maybe include someone like yourself. 418 00:17:36,840 --> 00:17:39,640 Speaker 10: Look, you never prejudge where it is, but I think 419 00:17:39,720 --> 00:17:41,439 Speaker 10: the president is very upbeat. 420 00:17:41,520 --> 00:17:44,000 Speaker 8: You look at what he's going through. Interesting thing. 421 00:17:44,600 --> 00:17:46,440 Speaker 10: I think the White House has taken a position, and 422 00:17:46,480 --> 00:17:49,239 Speaker 10: almost every position they're taking is all political, like this 423 00:17:49,359 --> 00:17:51,440 Speaker 10: China position, Israel position. 424 00:17:51,920 --> 00:17:52,720 Speaker 8: What he's looking at. 425 00:17:52,760 --> 00:17:54,399 Speaker 10: And I mean, if you look at Biden in the 426 00:17:54,480 --> 00:17:58,560 Speaker 10: last elections, and you're a station that plays with numbers, 427 00:17:59,200 --> 00:18:03,439 Speaker 10: Biden won the election by forty eight nine and eighteen votes, 428 00:18:04,440 --> 00:18:06,520 Speaker 10: but his favorability. 429 00:18:05,960 --> 00:18:08,600 Speaker 8: Rating at that time was plus ten. Now it's minus twenty. 430 00:18:09,119 --> 00:18:13,320 Speaker 10: You've got six states that are swing states and Trump 431 00:18:13,400 --> 00:18:14,160 Speaker 10: has been leading in. 432 00:18:14,160 --> 00:18:16,160 Speaker 8: Five of them for like fourteen months. 433 00:18:16,160 --> 00:18:18,760 Speaker 10: And now Minnesota, which a Republican has not won since 434 00:18:18,840 --> 00:18:22,840 Speaker 10: nineteen seventy two, when Ronald Reagan swept forty nine states. 435 00:18:22,880 --> 00:18:25,960 Speaker 10: He didn't win Minnesota, but now it's a tie within Minnesota. 436 00:18:26,040 --> 00:18:29,679 Speaker 10: So it's a much different play going forward. And I 437 00:18:29,760 --> 00:18:34,240 Speaker 10: think their position they thought going after Trump in a 438 00:18:34,400 --> 00:18:38,000 Speaker 10: judicial way would help them, I think it's hurt them. 439 00:18:38,400 --> 00:18:40,440 Speaker 8: You also see independence now. 440 00:18:40,840 --> 00:18:44,440 Speaker 10: I mean, by a margin of fifty three to forty two, 441 00:18:44,480 --> 00:18:49,200 Speaker 10: Independents believe another four years of Biden will harm democracy, 442 00:18:49,240 --> 00:18:51,440 Speaker 10: and they say democracy is on the ballot. So it's 443 00:18:51,480 --> 00:18:54,720 Speaker 10: interesting what they had planned out. And my advice to 444 00:18:54,760 --> 00:18:57,480 Speaker 10: the Biden administration, if you're in denial, you're not going 445 00:18:57,480 --> 00:18:59,640 Speaker 10: to solve your problems, and they're kind of in denial of. 446 00:18:59,560 --> 00:19:00,280 Speaker 8: The problems they have. 447 00:19:00,440 --> 00:19:02,120 Speaker 9: Can I just ask you follow up though you didn't 448 00:19:02,119 --> 00:19:05,119 Speaker 9: answer my question, would you consider going into a Trump administration? 449 00:19:05,440 --> 00:19:07,560 Speaker 10: Look, I would consider to serve anywhere if I'm the 450 00:19:07,560 --> 00:19:10,879 Speaker 10: best person. I think in America we need the best 451 00:19:10,920 --> 00:19:14,040 Speaker 10: and brightest. But I think that's the last thing you 452 00:19:14,080 --> 00:19:16,160 Speaker 10: look at. You want to lay out, make sure it's 453 00:19:16,160 --> 00:19:18,600 Speaker 10: good policies. You want an election to be about policies 454 00:19:18,640 --> 00:19:21,320 Speaker 10: and ideas, then people can govern in a better way. 455 00:19:21,440 --> 00:19:23,600 Speaker 1: I want to try to strip away some of the 456 00:19:23,600 --> 00:19:27,159 Speaker 1: politics from the policy and try to understand looking forward, 457 00:19:27,560 --> 00:19:30,880 Speaker 1: you talk about under a Trump administration this idea of 458 00:19:30,880 --> 00:19:33,800 Speaker 1: some agreement with China. I'm more focused on Europe, frankly, 459 00:19:34,080 --> 00:19:36,680 Speaker 1: because under a Trump administration it was America go to loone, 460 00:19:36,880 --> 00:19:39,880 Speaker 1: America first going out of NATO, really pressuring the. 461 00:19:39,800 --> 00:19:41,399 Speaker 6: European Union to do more. 462 00:19:41,720 --> 00:19:44,560 Speaker 1: How much is that going to be basically the state 463 00:19:44,600 --> 00:19:47,560 Speaker 1: of play going forward, and then a Republican administration at 464 00:19:47,600 --> 00:19:48,840 Speaker 1: a time where a lot of people are saying, you 465 00:19:48,920 --> 00:19:52,320 Speaker 1: need an alliance to really counter some of these threats 466 00:19:52,400 --> 00:19:53,240 Speaker 1: that you're talking about. 467 00:19:53,400 --> 00:19:55,800 Speaker 10: That's a great question we should look because now we 468 00:19:55,880 --> 00:19:59,280 Speaker 10: have time to compare what transpired in the Trump administration 469 00:19:59,280 --> 00:20:01,800 Speaker 10: and what happened now was Trump tough with NATO? Yeah, 470 00:20:01,840 --> 00:20:05,160 Speaker 10: but now you're watching the European nations actually spend more 471 00:20:05,200 --> 00:20:07,560 Speaker 10: what they had promised to do on their defense, which 472 00:20:07,600 --> 00:20:08,240 Speaker 10: they hadn't time. 473 00:20:08,320 --> 00:20:11,040 Speaker 8: But let me answer your question. Okay, Now what you had, 474 00:20:11,160 --> 00:20:12,680 Speaker 8: you didn't have war in Europe. 475 00:20:12,840 --> 00:20:16,199 Speaker 10: For the first time in any American administration in modern history. 476 00:20:16,320 --> 00:20:19,480 Speaker 10: Putin had not invaded another country. Now we have warn there. 477 00:20:19,640 --> 00:20:21,919 Speaker 10: But let me finish your answer to your question. You 478 00:20:21,960 --> 00:20:25,880 Speaker 10: have five American embassies that have now had to be evacuated. 479 00:20:26,119 --> 00:20:29,200 Speaker 10: We now have a base in Africa where the Russians 480 00:20:29,200 --> 00:20:30,480 Speaker 10: are now coming into, where you. 481 00:20:30,520 --> 00:20:32,800 Speaker 8: Have a thousand US troops leaving out. It's the place 482 00:20:32,840 --> 00:20:34,080 Speaker 8: we use our drones and others. 483 00:20:34,400 --> 00:20:38,920 Speaker 10: So I know what the topic is and maybe the 484 00:20:38,960 --> 00:20:43,520 Speaker 10: brushness of Trump's message, but we actually had positive returns 485 00:20:43,840 --> 00:20:46,240 Speaker 10: within there. So it's a difference of opinion whether you 486 00:20:46,359 --> 00:20:48,639 Speaker 10: like the headlines or not, but you really have actual 487 00:20:48,760 --> 00:20:52,560 Speaker 10: facts on the basis of what a Biden administration looks 488 00:20:52,600 --> 00:20:54,960 Speaker 10: like in Europe and what a Trump administration looks although 489 00:20:55,000 --> 00:20:55,600 Speaker 10: there are long and. 490 00:20:55,640 --> 00:20:57,520 Speaker 1: Variable lags with a lot of policies, so it's hard 491 00:20:57,520 --> 00:21:00,880 Speaker 1: to identify exactly where some of the games come from depending. 492 00:21:00,520 --> 00:21:03,240 Speaker 10: On who you've had the Abraham Accords, which I believe 493 00:21:03,240 --> 00:21:05,520 Speaker 10: people should have got a Nobel Peace Prize over, But 494 00:21:05,640 --> 00:21:08,920 Speaker 10: had Biden embraced the Abraham Accords, I don't think you 495 00:21:08,920 --> 00:21:10,920 Speaker 10: would have had October seventh, My. 496 00:21:10,920 --> 00:21:13,360 Speaker 1: Question was with Europe and particularly on the commercial side 497 00:21:13,359 --> 00:21:14,000 Speaker 1: of things. 498 00:21:13,840 --> 00:21:15,600 Speaker 6: Because what we hear from a lot of executives is. 499 00:21:15,560 --> 00:21:17,959 Speaker 1: They don't know how to even shape policy given they 500 00:21:17,960 --> 00:21:20,399 Speaker 1: don't understand what the policy in the US is going 501 00:21:20,400 --> 00:21:22,680 Speaker 1: to be two European goods. Are they going to start 502 00:21:22,720 --> 00:21:25,639 Speaker 1: to put up walls to those two to try to 503 00:21:26,160 --> 00:21:29,000 Speaker 1: really enhance the industrial production of the United States? 504 00:21:29,200 --> 00:21:30,600 Speaker 8: Are they going to work together? 505 00:21:30,760 --> 00:21:32,960 Speaker 1: Is there going to be cohesiveness at a time where 506 00:21:33,000 --> 00:21:35,840 Speaker 1: France seems to open to the idea of accepting electric 507 00:21:35,920 --> 00:21:40,120 Speaker 1: vehicles from China? How does a Trump administration deal with 508 00:21:40,240 --> 00:21:42,600 Speaker 1: issues given the fact that a lot of people say, 509 00:21:42,600 --> 00:21:44,600 Speaker 1: we need these alliances in order to actually win on 510 00:21:44,640 --> 00:21:45,359 Speaker 1: some of these issues. 511 00:21:45,480 --> 00:21:47,440 Speaker 10: Well, I think we have strong alliances. I remember the 512 00:21:47,480 --> 00:21:50,520 Speaker 10: Trump administration. I was there with McCrone in the White House. 513 00:21:50,600 --> 00:21:53,159 Speaker 10: I mean, look, every country is going to want to 514 00:21:53,160 --> 00:21:55,600 Speaker 10: compete with one another. I think what America wants to 515 00:21:55,600 --> 00:21:58,959 Speaker 10: see is a level playing field. It's a disadvantage if 516 00:21:58,960 --> 00:22:02,639 Speaker 10: America starts further behind and France. They want to have 517 00:22:02,680 --> 00:22:04,840 Speaker 10: a level playing field. But every country is going to 518 00:22:04,880 --> 00:22:08,320 Speaker 10: compete in different ways. And I just believe at the 519 00:22:08,440 --> 00:22:10,960 Speaker 10: end of the day, you will find the policies we 520 00:22:11,040 --> 00:22:13,600 Speaker 10: had under the Trump administration the policies we have today. 521 00:22:13,960 --> 00:22:17,800 Speaker 10: America didn't have inflation, we were stronger around the world, 522 00:22:18,760 --> 00:22:21,040 Speaker 10: incomes were rising, and what you're finding in the new 523 00:22:21,119 --> 00:22:24,520 Speaker 10: York Times Polls America sees that too, And I think 524 00:22:24,560 --> 00:22:26,520 Speaker 10: the number one issue people are going to drive is 525 00:22:26,520 --> 00:22:29,399 Speaker 10: going to be inflation the border. Are they going to 526 00:22:29,400 --> 00:22:32,120 Speaker 10: be the two largest drivers of this election? 527 00:22:32,520 --> 00:22:34,960 Speaker 2: You don't think the birth control and abortion are going 528 00:22:35,040 --> 00:22:36,119 Speaker 2: to be a big factor as well. 529 00:22:36,320 --> 00:22:38,520 Speaker 10: I do think it'll be, but it'll be in certain spots. 530 00:22:38,600 --> 00:22:41,199 Speaker 10: It was a big factor in the last election. But 531 00:22:41,720 --> 00:22:43,800 Speaker 10: remember this, I mean you also look to what's going 532 00:22:43,880 --> 00:22:45,320 Speaker 10: to happen in the Senate and what's going to happen 533 00:22:45,359 --> 00:22:48,360 Speaker 10: in the House. I was leader for five years, and 534 00:22:48,760 --> 00:22:52,680 Speaker 10: every single cycle when I was leader, Republicans picked up seats, 535 00:22:52,720 --> 00:22:56,679 Speaker 10: even though Republicans lost everywhere else. When Biden was on 536 00:22:56,760 --> 00:22:59,480 Speaker 10: the ticket, it was the first time since nineteen ninety 537 00:22:59,480 --> 00:23:02,720 Speaker 10: four not one Republican in the House lost. And the 538 00:23:02,800 --> 00:23:06,200 Speaker 10: last election, abortion was a very big issue. But as leader, 539 00:23:06,240 --> 00:23:08,440 Speaker 10: I picked up five seats in New York and five 540 00:23:08,480 --> 00:23:10,800 Speaker 10: seats in California. You would say abortion would be the 541 00:23:10,840 --> 00:23:14,960 Speaker 10: top issues there. So I believe in pockets, Arizona could 542 00:23:14,960 --> 00:23:17,640 Speaker 10: be an issue, Florida could be an issue, but. 543 00:23:18,040 --> 00:23:19,560 Speaker 8: I think it'll be more in a pocket than it 544 00:23:19,600 --> 00:23:20,240 Speaker 8: will be national. 545 00:23:20,280 --> 00:23:21,720 Speaker 6: You talk about your leadership. 546 00:23:21,960 --> 00:23:25,040 Speaker 9: Speaker Johnson had eleven Republicans vote to oust him, You 547 00:23:25,119 --> 00:23:28,240 Speaker 9: only had eight Democrats came to save him. Are the 548 00:23:28,280 --> 00:23:30,240 Speaker 9: Democrats in charge of the House at this point? 549 00:23:30,600 --> 00:23:34,200 Speaker 8: Akeem thinks so. I mean he says it on sixty minutes, they. 550 00:23:34,200 --> 00:23:35,240 Speaker 4: Saved Speaker Johnson. 551 00:23:36,280 --> 00:23:40,520 Speaker 9: Look, he actually had more Republicans vote against him than 552 00:23:40,560 --> 00:23:42,120 Speaker 9: you did, but you lost your job. 553 00:23:42,440 --> 00:23:43,040 Speaker 8: That's not right. 554 00:23:43,160 --> 00:23:47,080 Speaker 10: Uh. Look, I don't believe in the motion to vacate. 555 00:23:47,680 --> 00:23:50,800 Speaker 10: I think Democrats play politics on both sides. If they 556 00:23:50,840 --> 00:23:53,040 Speaker 10: didn't think the motion vakate was right, then why did 557 00:23:53,040 --> 00:23:53,760 Speaker 10: they think it? Under me? 558 00:23:54,119 --> 00:23:55,640 Speaker 8: But it is what it is is politics. 559 00:23:55,680 --> 00:23:57,840 Speaker 10: They think they're going to play it for a political 560 00:23:57,840 --> 00:24:01,440 Speaker 10: purpose to win. Republicans have a better chance on winning 561 00:24:01,480 --> 00:24:03,639 Speaker 10: seats this election in the House than they did in 562 00:24:03,640 --> 00:24:05,880 Speaker 10: the last two elections we want, so I think it's 563 00:24:05,880 --> 00:24:07,480 Speaker 10: going to be a big night. You watch what happened 564 00:24:07,560 --> 00:24:12,479 Speaker 10: in the primaries last night in Maryland. Hogan is going 565 00:24:12,560 --> 00:24:16,280 Speaker 10: to make Maryland competitive and what that does it expands 566 00:24:16,280 --> 00:24:18,520 Speaker 10: the playing field. The Republicans are going to win the Senate. 567 00:24:18,560 --> 00:24:23,240 Speaker 10: It's a simple math question. The presidential election, it's still 568 00:24:23,280 --> 00:24:25,359 Speaker 10: up in the air, but you look at every polling today, 569 00:24:25,880 --> 00:24:28,240 Speaker 10: Trump is in the lead and Biden's doing nothing to 570 00:24:28,359 --> 00:24:32,880 Speaker 10: change that. In the House, there's a better opportunity for Republicans. 571 00:24:32,920 --> 00:24:35,520 Speaker 10: The only challenge and advantage the Democrats have is they're 572 00:24:35,560 --> 00:24:38,679 Speaker 10: beating us now on money rather largely, and that will 573 00:24:38,720 --> 00:24:39,240 Speaker 10: make a difference. 574 00:24:39,240 --> 00:24:40,840 Speaker 2: I've got about ten seconds left. Can you give us 575 00:24:40,840 --> 00:24:42,679 Speaker 2: a ninth VP? What do you think? Who would you 576 00:24:42,680 --> 00:24:43,480 Speaker 2: like to see in that seat? 577 00:24:43,920 --> 00:24:48,080 Speaker 10: Look, there's some great people and I sat with like Tim. Look, 578 00:24:48,119 --> 00:24:49,560 Speaker 10: I think Jim Scott is great. 579 00:24:50,400 --> 00:24:53,320 Speaker 8: I think our governor in North Dakota is. 580 00:24:53,320 --> 00:24:54,840 Speaker 6: Excellent, Nick Hyley. 581 00:24:55,320 --> 00:24:57,320 Speaker 10: Look, if he picked Nicki Hayley, I would say the 582 00:24:57,400 --> 00:24:59,280 Speaker 10: race is over. Yeah, I think the race is over 583 00:25:00,200 --> 00:25:02,000 Speaker 10: if you look at the primaries, even India. 584 00:25:03,240 --> 00:25:05,400 Speaker 2: To the break, now, Kevin, we've got to go speak McCarthy. 585 00:25:05,400 --> 00:25:09,280 Speaker 2: Thank you, sir. This is the Bloomberg Surveillance Podcast, bringing 586 00:25:09,320 --> 00:25:12,919 Speaker 2: you the best in markets, economics, angio politics. You can 587 00:25:12,960 --> 00:25:15,719 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 588 00:25:15,760 --> 00:25:19,040 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 589 00:25:19,080 --> 00:25:22,280 Speaker 2: on Apple, Spotify or anywhere else you listen, and as 590 00:25:22,280 --> 00:25:25,200 Speaker 2: always on the Bloomberg terminal and the Bloomberg Business app