WEBVTT - Bloomberg Surveillance TV: September 9, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.480 terminal and the Bloomberg Business app. Search for nor data. 0:00:37.640 --> 0:00:39.600 We've pulled you a quote, Neil. I want to share 0:00:39.600 --> 0:00:41.720 the quote with our audience and get your response to it. 0:00:41.880 --> 0:00:44.320 I'm seeing a lot of wildly optimistic takes out there. 0:00:44.680 --> 0:00:47.519 Almost feels like people are allowing a political narrative to 0:00:47.520 --> 0:00:50.320 cloud their analysis of the data. The fact is conditions 0:00:50.320 --> 0:00:52.640 are getting worse, not better. There will be a time 0:00:52.680 --> 0:00:54.760 to be bullish. I'm not sure now is the time 0:00:54.800 --> 0:00:56.720 the Fed should go fifty when they can not when 0:00:56.760 --> 0:00:58.920 they must now, Neil, the obvious thing to jump off 0:00:58.960 --> 0:01:01.600 the page there there's a couple, but the political one's interesting. 0:01:02.200 --> 0:01:04.000 What is your view on that? Are you suggesting that 0:01:04.000 --> 0:01:06.800 there's some economists sound there, maybe even FED officials that 0:01:06.840 --> 0:01:08.880 have got a political narrative. What's that line about? 0:01:09.880 --> 0:01:15.040 Well, not feed officials really, but you know, certain economists 0:01:15.480 --> 0:01:18.480 on the street are sounding like that. I mean, the 0:01:18.520 --> 0:01:21.080 same folks that told us, you know, are at a 0:01:21.120 --> 0:01:25.760 sustainably higher run rage for employment with two hundred thousand 0:01:25.840 --> 0:01:28.000 because of immigration, and now all of a sudden telling 0:01:28.080 --> 0:01:28.600 us that. 0:01:28.480 --> 0:01:29.440 Well, don't worry about it. 0:01:29.440 --> 0:01:31.760 One hundred thousand is fine because that's what full employment 0:01:31.800 --> 0:01:32.120 looks like. 0:01:32.160 --> 0:01:34.360 I mean, it's a bit ridiculous, don't you think, Well, hold. 0:01:34.280 --> 0:01:36.240 On a second meal, because this is actually something that 0:01:36.400 --> 0:01:38.600 I've given quite a bit of thought to. Are you 0:01:38.720 --> 0:01:42.959 accusing the current status quo opinion on Wall Street that 0:01:43.120 --> 0:01:47.200 recession is not imminent as a political construct designed to 0:01:47.600 --> 0:01:50.840 help the incumbent Democratic Party. 0:01:51.000 --> 0:01:53.080 I don't think, well, I mean, I know, I don't 0:01:53.080 --> 0:01:55.640 think that that's the accusation. I think that there are 0:01:55.960 --> 0:01:59.040 certain quarters of people that I don't know, maybe they're 0:01:59.080 --> 0:02:01.560 joking for jobs in administration, who knows. I mean, but 0:02:02.080 --> 0:02:05.640 I do think that there's a I mean, look, no 0:02:05.680 --> 0:02:08.120 one needs to talk to me about being optimistic. I'm 0:02:08.160 --> 0:02:10.560 one of the most optimistic people historically that's been. 0:02:10.400 --> 0:02:10.880 On the street. 0:02:11.000 --> 0:02:11.280 Me too. 0:02:11.480 --> 0:02:18.519 You can't help yourself. But wonder these wildly optimistic takes seem. 0:02:18.440 --> 0:02:21.359 A little bit out of place. I mean, this notion that. 0:02:22.800 --> 0:02:26.840 You know, this is soft landing, this is boring. Things 0:02:26.880 --> 0:02:29.680 are good, hooray, we're at full employment. I mean, at 0:02:29.680 --> 0:02:31.519 the end of the day, up is up and down 0:02:31.639 --> 0:02:34.200 is down. Okay, I mean it's really that simple. 0:02:34.200 --> 0:02:36.400 Okay, But what is sort of the base case, Neil 0:02:36.480 --> 0:02:39.079 that you're talking about here in terms of where people 0:02:39.120 --> 0:02:41.440 are getting it wrong? How bad do you think it 0:02:41.520 --> 0:02:44.120 actually is? And why do you then think that the 0:02:44.120 --> 0:02:46.600 Fed should go twenty five basis points rather than fifty 0:02:46.639 --> 0:02:49.480 basis points, even though everyone on the street doesn't seem 0:02:49.480 --> 0:02:50.400 to think it's that bad. 0:02:51.760 --> 0:02:53.120 Well, I think things are getting worse. 0:02:53.160 --> 0:02:54.840 I mean, at the end of the day, since Powell 0:02:54.880 --> 0:02:57.360 talked about we don't seek or welcome further cooling in 0:02:57.360 --> 0:03:00.240 the labor market. Literally every single labor market indicator that's 0:03:00.280 --> 0:03:04.320 come out has been worse than expected. ADP, the non 0:03:04.360 --> 0:03:10.360 farm payroll number, job vacancies, the regional manufacturing employment indicators, 0:03:10.360 --> 0:03:11.880 the ISM employment indicators. 0:03:11.919 --> 0:03:14.000 I mean, the labor differential from the conference board. 0:03:14.000 --> 0:03:16.600 Literally, you can go on and on and on, and 0:03:17.440 --> 0:03:19.880 you know, we're told to say, oh, well, don't worry, 0:03:19.960 --> 0:03:22.920 layoffs are low, as if that's a leading indicator of 0:03:22.960 --> 0:03:24.960 the labor market to begin with, which it's not, by 0:03:24.960 --> 0:03:27.000 the way, I mean, the hiring rate has collapsed. 0:03:27.560 --> 0:03:29.400 You know, I mentioned immigration before. 0:03:29.560 --> 0:03:34.240 Look at college unemployment rates. The unemployment rate for people 0:03:34.240 --> 0:03:37.960 with a bachelor's degree, that's half a percentage point higher 0:03:38.040 --> 0:03:40.440 than it was the same month in twenty nineteen. 0:03:41.440 --> 0:03:44.200 Right, So how does immigration explain that? 0:03:44.600 --> 0:03:47.840 So I think it's a little bit you know, off putting, frankly, 0:03:47.960 --> 0:03:51.600 and to the extent that you know, I think for me, 0:03:51.640 --> 0:03:54.920 I think the important story is that I think the 0:03:54.960 --> 0:03:57.320 economy is evolving in a way that the FED may 0:03:57.320 --> 0:04:00.760 not be anticipating. And to the extent that that's true, 0:04:01.160 --> 0:04:03.360 I think it creates the risk of an accident later, 0:04:03.600 --> 0:04:06.360 which is something we've been arguing obviously since June. And 0:04:06.440 --> 0:04:09.040 the only reason to expect fifty and yes, I still 0:04:09.080 --> 0:04:11.600 believe that a fifty basis point rapecut is possible at 0:04:11.640 --> 0:04:12.440 the September meeting. 0:04:12.480 --> 0:04:14.120 That's our call to our clients. 0:04:14.320 --> 0:04:16.640 Is because of Jerome Powell we can talk about Waller, 0:04:16.760 --> 0:04:20.520 New York Fed President Williams. All Jerome Powell needs to 0:04:20.520 --> 0:04:24.320 do is get out there and before his colleagues around 0:04:24.320 --> 0:04:26.680 that table and say I think we should go fifty, 0:04:26.960 --> 0:04:29.040 and they'll all fall into place. And in fact, a 0:04:29.080 --> 0:04:31.119 lot of the people on the street that have twenty 0:04:31.120 --> 0:04:34.080 five basis point radcut calls, they'd have no problem with 0:04:34.120 --> 0:04:35.320 the Fed going fifty either. 0:04:36.640 --> 0:04:40.280 But Neil, how political could it be for the Fed 0:04:40.360 --> 0:04:42.720 to go fifty if Jerome Powell is the one almost 0:04:42.720 --> 0:04:46.240 dictating it, not a consensus building from the ground up. 0:04:46.720 --> 0:04:49.640 I mean, I think that a consensus would come around 0:04:49.640 --> 0:04:51.920 to the chairman, I mean, Henry, if they didn't go 0:04:52.000 --> 0:04:55.839 fifty and they only go twenty five, and that potentially 0:04:55.880 --> 0:04:58.160 fuels bets that the FED will be behind the curb 0:04:58.240 --> 0:05:01.920 later and then we're talking about in larger moves after 0:05:01.960 --> 0:05:02.440 the election. 0:05:02.600 --> 0:05:03.960 How would that not be political? 0:05:04.520 --> 0:05:07.880 It's I mean to me, they have full clearance to 0:05:07.920 --> 0:05:11.440 go fifty as it is, And I do find this 0:05:11.520 --> 0:05:13.800 sort of argument, Well, if they go fifty to start, it. 0:05:13.720 --> 0:05:15.920 Would be a panic that would be a panic move. Well, 0:05:15.920 --> 0:05:17.760 by that logic, maybe they shouldn't go at all. 0:05:18.560 --> 0:05:21.760 Show so much so so much confidence in the market 0:05:21.800 --> 0:05:24.839 that it's why not just not do anything? 0:05:24.920 --> 0:05:27.320 Then, Neil, we know you think they should go fifty. 0:05:27.480 --> 0:05:29.080 What do you actually think they will do? 0:05:29.600 --> 0:05:30.400 I told you I. 0:05:30.320 --> 0:05:32.839 Think they will go fifty because I think Jerome Powell 0:05:32.920 --> 0:05:34.760 is going to give them a license to go fifty. 0:05:34.800 --> 0:05:37.000 I think he thinks that they should go fifty. 0:05:37.400 --> 0:05:39.240 So now let's build on that the kind of communication 0:05:39.320 --> 0:05:42.320 you're expecting September eighteenth, together with the signal we could 0:05:42.320 --> 0:05:44.680 get from the projections in the SCP as well. Do 0:05:44.760 --> 0:05:47.640 they characterize that as a mid cycle adjustment, a rush 0:05:47.680 --> 0:05:49.680 to get to neutral? How do you think they'll frame 0:05:49.680 --> 0:05:50.080 that move. 0:05:51.200 --> 0:05:53.080 I think that they'll go fifty and they'll say that 0:05:53.080 --> 0:05:55.840 they're willing to do more so long to stabilize the 0:05:55.920 --> 0:05:56.560 labor market. 0:05:57.520 --> 0:06:00.000 That's how thyough. That's how they'll they'll they'll frame it. 0:06:00.080 --> 0:06:03.600 They'll say that the inflation story is over, inflation has 0:06:03.640 --> 0:06:07.000 been quelled, and we'd like to stabilize labor market conditions 0:06:08.200 --> 0:06:10.000 at our estimates of full employment. 0:06:10.240 --> 0:06:13.000 Will you feel better if there's descent on the FMC. 0:06:14.839 --> 0:06:17.080 Yeah, I mean, I do think that the consensus building 0:06:17.160 --> 0:06:21.320 nature of the FED historically is it creates an institutional 0:06:21.360 --> 0:06:23.000 bias for them to be late. There are lots of 0:06:23.000 --> 0:06:25.599 central banks all over the world that have more descents. 0:06:27.120 --> 0:06:29.200 And you know, I mean, who are we really to 0:06:29.279 --> 0:06:32.719 I mean, if you're Jerome Powell, I mean to me, 0:06:32.800 --> 0:06:35.599 it's like, okay, someone's dissenting, So what I mean, who cares? 0:06:35.640 --> 0:06:37.719 I mean some of these people that'll that will dissent 0:06:38.600 --> 0:06:41.040 have been absolutely wrong about the overall tone of the 0:06:41.160 --> 0:06:43.599 data for the last six months. I mean, if Mickey 0:06:43.640 --> 0:06:46.159 Bauman disint is descents, is that really a big deal? 0:06:46.200 --> 0:06:48.840 I mean to me, it's like, I mean, it's not. 0:06:48.880 --> 0:06:54.000 It's not It's like being you know, kicked by a 0:06:54.080 --> 0:06:56.320 lesser then, so I think it's it's sort of it's 0:06:56.360 --> 0:07:01.600 sort of not really worth trying to build consensus in 0:07:01.600 --> 0:07:04.159 that regard, especially when they've been rolled wrong about the 0:07:04.200 --> 0:07:06.000 overall slope of the data. I mean, some of these 0:07:06.000 --> 0:07:10.800 people also have been completely headfaked by Q one inflation, right, 0:07:10.880 --> 0:07:14.360 I mean so true. Look, so I just what's the 0:07:14.400 --> 0:07:17.120 point of building consensus with people that have been absolutely 0:07:17.160 --> 0:07:19.200 wrong about the overall slope of the data for the 0:07:19.280 --> 0:07:21.200 last you know, three six nine months. 0:07:21.360 --> 0:07:23.000 Now you've said it. Whoever, the sins. We're going to 0:07:23.000 --> 0:07:26.240 say they're auditioning. No, thank you, sir, No datta runmack 0:07:26.320 --> 0:07:28.440 a free shared it just the clinic has always from Neil. 0:07:37.960 --> 0:07:40.240 We begin with our top story, Stock's looking to snap 0:07:40.280 --> 0:07:43.760 a four day losing street following Friday's payrolls report. Jim 0:07:43.760 --> 0:07:46.600 Bianco of Bianco Research is not buying the gloom. I'm 0:07:46.640 --> 0:07:49.360 a no leander. I still do not see a broad 0:07:49.400 --> 0:07:51.920 slow down in the economy. The labor market is showing 0:07:51.960 --> 0:07:55.320 signs of cooling, but these may be measurement problems. Jim 0:07:55.400 --> 0:07:57.440 joined us now for more. So, Jim, let's go to 0:07:57.480 --> 0:08:00.200 the bond market first, Why is everyone bullish bomb? It's 0:08:00.200 --> 0:08:02.760 given what you just said, because. 0:08:02.560 --> 0:08:04.280 The Fed's going to cut rates and they're going to 0:08:04.320 --> 0:08:07.880 lower financing costs, and we're having a debate between twenty 0:08:07.920 --> 0:08:10.880 five and fifty basis points. And I might add too, 0:08:10.960 --> 0:08:13.760 when you set everyone's bullish bonds. If you look at 0:08:13.840 --> 0:08:16.160 most of the surveys, whether you're talking about the BFA 0:08:16.240 --> 0:08:19.640 Global Fund Manager Survey or the Commitment of Traders Report, 0:08:20.240 --> 0:08:22.760 we've got some record bullishness across the board in the 0:08:22.760 --> 0:08:26.440 bond market. So everybody's positioned for a continued fall in 0:08:26.440 --> 0:08:29.200 interest rates, and usually when they get that extreme, you're 0:08:29.320 --> 0:08:30.480 very close to the end of the move. 0:08:30.880 --> 0:08:33.319 So, Jim, you said these measurement problems, can you walk 0:08:33.360 --> 0:08:34.840 me through what you meant plant that. 0:08:36.080 --> 0:08:38.760 Remember that when we do the survey, when we do payrolls, 0:08:38.800 --> 0:08:40.680 when we look at employment in the United States, we 0:08:40.720 --> 0:08:44.360 do surveys, and those surveys are adjusted by population growth. 0:08:44.720 --> 0:08:47.559 The population growth in the United States has exploded higher 0:08:47.600 --> 0:08:50.040 in the last three years or so because of migration. 0:08:50.559 --> 0:08:53.720 We've gone from about one point two percent population growth 0:08:53.960 --> 0:08:57.160 in twenty twenty to one point one percent population growth, 0:08:57.200 --> 0:09:00.439 and that's a gigantic move for that. And so all 0:09:00.480 --> 0:09:03.840 these surveys are being adjusted by population growth, and we 0:09:04.240 --> 0:09:06.080 have to ask the question as to whether or not 0:09:06.160 --> 0:09:09.800 we're actually measuring it correctly. If we had stable population, 0:09:10.400 --> 0:09:13.160 the answer would probably be yes. But under this flux 0:09:13.200 --> 0:09:15.839 of population that we've seen, you know, there's a lot 0:09:15.840 --> 0:09:17.840 of questions, and I think it really comes down to 0:09:17.960 --> 0:09:21.120 more in the household survey, where the unemployment rate is 0:09:21.240 --> 0:09:23.840 measured less so on the payroll survey. 0:09:24.679 --> 0:09:28.800 You're speaking in tandem with your no landing compatriot over 0:09:29.000 --> 0:09:31.800 at Apollo, Torsten Slack, who put out research over the 0:09:31.840 --> 0:09:35.319 weekend pointing to just response rates, declining that the current 0:09:35.360 --> 0:09:38.720 population survey has gone from about a ninety percent response 0:09:38.760 --> 0:09:41.079 rate in twenty twelve to about a seventy percent response 0:09:41.160 --> 0:09:43.880 rate today. I'm just wondering, Jim, what gives you confidence 0:09:44.320 --> 0:09:46.720 that the lack of clarity that we're getting speaks to 0:09:46.720 --> 0:09:49.600 bullishness and not bearishness in the labor market. 0:09:50.120 --> 0:09:52.440 Because when you look beyond the labor market and let's 0:09:52.520 --> 0:09:55.439 take a look at consumption or retail sales, retail sales 0:09:55.800 --> 0:09:58.720 has beaten the Wall Street estimate twenty five the last 0:09:58.720 --> 0:10:02.400 thirty one months, and the consumption numbers are very strong, 0:10:02.520 --> 0:10:06.200 especially where they were pre pandemic. And so what that 0:10:06.320 --> 0:10:08.280 says is that there's a lot of spending going on 0:10:08.320 --> 0:10:10.520 in this economy. Well, what's the big driver of spending 0:10:10.559 --> 0:10:12.600 is income and must mean that there's a lot of 0:10:12.679 --> 0:10:14.840 jobs out there. People have a lot of income. Yes, 0:10:15.360 --> 0:10:18.880 the savings rate has been falling, and that can explain 0:10:19.040 --> 0:10:20.959 some of it, but not all of it. Now, I 0:10:21.000 --> 0:10:24.960 think what it does do is it masks The payroll 0:10:25.000 --> 0:10:28.199 report and the household survey are masking the jobs that 0:10:28.240 --> 0:10:30.520 are created that you actually are seeing in like the 0:10:30.559 --> 0:10:33.400 retail sales and the consumption numbers because of how high 0:10:33.400 --> 0:10:34.200 and strong they are. 0:10:34.600 --> 0:10:36.520 That said, we are seeing some real weakness. When you 0:10:36.559 --> 0:10:40.360 talk to executives of retail companies or beyond, they all 0:10:40.400 --> 0:10:43.280 talk about how they are seeing more choicefulness if you 0:10:43.360 --> 0:10:45.560 like that word. I think it's a little confusing, but 0:10:45.960 --> 0:10:49.400 people are being more discerning and how much money they spend. 0:10:50.000 --> 0:10:52.560 Where do you place that in this trajectory of no 0:10:52.679 --> 0:10:54.000 landingness that you see. 0:10:54.800 --> 0:10:56.679 Well, the economy when it grows, you know, if you 0:10:56.720 --> 0:10:59.760 look historically at all of the cycles to use this 0:10:59.840 --> 0:11:02.880 toatistical term, it has a wide standard deviation, So it 0:11:02.960 --> 0:11:05.040 might grow at two two and a half percent, but 0:11:05.160 --> 0:11:07.199 you'll have quarters in there where it might grow less 0:11:07.240 --> 0:11:09.360 than one and quarters that it grows more than three. 0:11:09.800 --> 0:11:12.600 And I think what we're seeing with that discrimination among 0:11:13.040 --> 0:11:16.120 consumers and especially don't forget that it's an election season 0:11:16.120 --> 0:11:18.440 two and that has a big effect on them, that 0:11:18.520 --> 0:11:21.120 we're seeing probably more of that normal noise that you 0:11:21.160 --> 0:11:25.400 would see around an economy that is growing nearer at potential. Yeah, 0:11:25.600 --> 0:11:27.880 we had some quarters late last year when we were 0:11:27.880 --> 0:11:30.400 growing at three or four percent. We had a very 0:11:30.440 --> 0:11:33.320 weak first quarter this year, we're looking at low two's 0:11:33.440 --> 0:11:36.800 probably for the third quarter on GDP growth. So that's 0:11:36.920 --> 0:11:39.440 kind of in the normal range of things you would 0:11:39.480 --> 0:11:42.280 see with the economy. But add it all up, average 0:11:42.280 --> 0:11:44.559 it out, and it does look like an economy that 0:11:44.679 --> 0:11:47.319 is not at risk of recession at this point. 0:11:47.480 --> 0:11:50.439 What's the biggest catalyst though that could have you maybe 0:11:50.480 --> 0:11:52.560 back off as no landing scenario. 0:11:53.640 --> 0:11:58.040 Probably if the inflation rate were to continue to move lower. 0:11:58.080 --> 0:12:00.880 Now I'm on for our arguments. Say care, I'm going 0:12:00.920 --> 0:12:02.280 to use a year over year CPI. 0:12:02.840 --> 0:12:03.439 In June of. 0:12:03.400 --> 0:12:06.320 Twenty three, it was three percent, and everybody said we're 0:12:06.320 --> 0:12:09.120 on the last mile. Well, now it's two point nine. 0:12:09.160 --> 0:12:12.320 It's taken fourteen months to go from three percent to 0:12:12.360 --> 0:12:14.520 two point nine, and it did make a move to 0:12:14.679 --> 0:12:17.760 towards three point seven percent in the middle, there hasn't 0:12:17.760 --> 0:12:21.200 been much progress in terms of inflation moving lower. If 0:12:21.240 --> 0:12:24.720 you look at like Cleveland fed mediaan CPI, or you 0:12:24.720 --> 0:12:28.160 look at the Dallas trimmean PCE numbers, these I think 0:12:28.160 --> 0:12:32.200 are better core measures of inflation than ex food and energy. 0:12:32.640 --> 0:12:35.520 Those numbers have kind of stalled out too at very 0:12:35.559 --> 0:12:38.960 high levels. If the economy is really slowing. We should 0:12:39.000 --> 0:12:42.280 see the inflation numbers continue to move lower, and we haven't. 0:12:42.400 --> 0:12:45.080 We've seen them settle out at a late rate, well 0:12:45.120 --> 0:12:47.880 above where the Fed wants, and we just assume that 0:12:47.920 --> 0:12:50.319 they're going to move lower. So if they do start 0:12:50.360 --> 0:12:52.559 to move lower, then I would start to say, then 0:12:52.600 --> 0:12:54.240 there is some broad based weakness. 0:12:54.480 --> 0:12:56.600 So you have concerned that potentially or do you have 0:12:56.640 --> 0:13:00.760 concern that a rate cut would mean somewhat potentially reacceleration 0:13:00.800 --> 0:13:01.320 of inflation. 0:13:02.720 --> 0:13:05.360 Yeah, that's my biggest concern. I'm in the camp that 0:13:05.600 --> 0:13:08.920 the new inflation rate is somewhere between three and four percent, 0:13:09.320 --> 0:13:11.800 and I might add that's exactly what it's been for 0:13:11.920 --> 0:13:14.160 as I mentioned before, the last fourteen months or so, 0:13:14.400 --> 0:13:18.040 between three and four percent. And whether or not we 0:13:18.120 --> 0:13:21.960 get a Harris or a Trump administration after the election, 0:13:22.440 --> 0:13:24.800 it looks like we're going to have spending, we might 0:13:24.840 --> 0:13:29.040 have tariffs, and we're going to see a big fiscal 0:13:29.080 --> 0:13:32.200 response out of the federal government. You added to that 0:13:32.360 --> 0:13:35.640 easy monetary policy, and yeah, I could see where we 0:13:35.679 --> 0:13:37.880 could be looking at the second half of twenty five 0:13:38.240 --> 0:13:42.360 and talking about a reassurgent, a reacceleration of inflation, not 0:13:42.480 --> 0:13:45.640 to nine percent or anything like that, but solidly staying 0:13:45.640 --> 0:13:48.840 above that three percent level and being very worrisome for 0:13:48.880 --> 0:13:51.640 a FED that's got a target of two percent and 0:13:51.679 --> 0:13:53.800 said that they will get to that target of two percent. 0:13:53.960 --> 0:13:56.160 So, Jim, this riises some big, big questions about the 0:13:56.160 --> 0:13:59.160 projections that we get next week in the SAP the 0:13:59.240 --> 0:14:01.240 summary if they can projections, and I can share with 0:14:01.280 --> 0:14:04.000 you where CPI is right now in those projections called 0:14:04.040 --> 0:14:07.240 PSEA two point eight percent for twenty four, two point 0:14:07.280 --> 0:14:10.199 three for twenty five, two percent for twenty six. Can 0:14:10.240 --> 0:14:12.280 you share with us why you think that will be 0:14:12.320 --> 0:14:15.000 come next Wednesday on how high they be provised up 0:14:15.520 --> 0:14:17.120 by the time it gets to twenty twenty five. 0:14:18.120 --> 0:14:20.560 Well, I don't think next Wednesday that those numbers for 0:14:20.600 --> 0:14:22.880 at least for twenty five and twenty six are going 0:14:22.960 --> 0:14:26.000 to get revised much. But the story with the FED 0:14:26.560 --> 0:14:29.440 SEP is always the two year out numbers, always at 0:14:29.440 --> 0:14:32.640 two percent, and then as that two year number becomes 0:14:32.680 --> 0:14:35.400 one year and six months, they start to revise it higher. 0:14:35.800 --> 0:14:37.720 And I think that that's going to be probably more 0:14:37.720 --> 0:14:40.480 of the same when it comes to where the FED is. 0:14:40.560 --> 0:14:43.520 And let's remember in June the FED did acknowledge that 0:14:43.560 --> 0:14:46.440 there is a base effect in the inflation numbers, meaning 0:14:46.440 --> 0:14:50.600 that the seasonal data, the seasonal factors are turning positive, 0:14:50.680 --> 0:14:53.400 meaning they're going to push the numbers up through the 0:14:53.440 --> 0:14:55.560 second half of the year, which is why back in 0:14:55.640 --> 0:14:58.200 June they upped their forecast to two point six percent 0:14:58.480 --> 0:15:01.160 for twenty twenty four. So I don't suspect we're going 0:15:01.160 --> 0:15:03.560 to see a lot of movement in the twenty four number. 0:15:03.560 --> 0:15:07.520 Probably the twenty sixth number will stay at zero excuse me, 0:15:07.520 --> 0:15:11.960 a two percent or right on their target. So you 0:15:12.000 --> 0:15:14.000 know that's going to be the key though, is whether 0:15:14.120 --> 0:15:16.080 or not the inflation rate does move down. 0:15:17.040 --> 0:15:22.560 Jim, this was great, Jimpianco at Pianco Research. Jim, thank you, buddy. 0:15:30.320 --> 0:15:33.600 But here's the latest Republican presidential nominee Donald Trump threatening 0:15:33.640 --> 0:15:36.600 one hundred percent tariffs on countries who shift away from 0:15:36.600 --> 0:15:38.680 the US dollar. The comments coming at a rally in 0:15:38.680 --> 0:15:41.480 the battleground state of Wisconsin. The latest polling showing the 0:15:41.560 --> 0:15:43.960 race and a dead heat, with momentum beginning to shift 0:15:44.200 --> 0:15:46.520 in the form of President's favor. Johining us Now round 0:15:46.520 --> 0:15:50.000 the table. Congressman Frenchhill of Arkansas Congressman. Good to see you, sir. 0:15:50.040 --> 0:15:52.120 Good morning, Jonathur grew to be with you. I know 0:15:52.160 --> 0:15:54.560 you're in town for the Barkley's Global Financial Services Conference, 0:15:54.600 --> 0:15:56.400 and we can talk about regulation a little bit later. 0:15:56.440 --> 0:15:58.840 First of all, the big challenge, can you translate that? 0:15:59.040 --> 0:16:02.000 Was that vibes or policy? Because that's been the criticism 0:16:02.000 --> 0:16:03.280 of the other side. What was that? 0:16:04.000 --> 0:16:05.760 I think is President Trump having a good time at 0:16:05.800 --> 0:16:11.480 a rally. Because back when William McKinley was president, of course, 0:16:11.520 --> 0:16:13.800 we financed the whole federal government through tariffs. That was 0:16:13.840 --> 0:16:16.560 the principal source of federal revenue. I don't think that's 0:16:16.600 --> 0:16:19.760 a relevant issue. I think the biggest risk to the 0:16:19.840 --> 0:16:23.080 dollar being the principal reserve currency of the world is 0:16:23.120 --> 0:16:26.960 really our own fiscal situation. We're not going to be 0:16:27.000 --> 0:16:30.480 supplanted by a group of countries who want to replace 0:16:30.560 --> 0:16:33.000 the dollar. In my view, Instead, the biggest risk is 0:16:33.000 --> 0:16:35.280 our own sustainable fiscal situation. 0:16:35.640 --> 0:16:37.720 Do you see an agenda a campaign that's willing to 0:16:37.720 --> 0:16:41.640 address that on the Republican side, Well, I. 0:16:41.600 --> 0:16:44.560 Don't see an agenda to address that in either political party. 0:16:44.600 --> 0:16:47.000 It's been concerning to a lot of members of Congress 0:16:47.160 --> 0:16:52.359 because to get our country in a sustainable fiscal situation. 0:16:52.480 --> 0:16:55.560 We need to make long term reforms to our mandatory 0:16:55.560 --> 0:17:01.600 spending programs such as veterans benefits or Social Security or Medicare, 0:17:01.800 --> 0:17:05.480 and healthcare costs drive a lot of that non sustainable finance. 0:17:06.040 --> 0:17:07.720 But that can only be done, you know, on a 0:17:07.720 --> 0:17:13.400 bipartisan basis, and it's been attempted on and off for 0:17:13.400 --> 0:17:16.600 forty years, with really only one material change, which was 0:17:17.440 --> 0:17:21.280 Ronald Reagan's work with then Democratic Speaker Tip O'Neil to 0:17:21.280 --> 0:17:24.320 perform Social Security back in eighty three and eighty four. 0:17:24.760 --> 0:17:28.439 But it's that kind of targeted by partson approach I 0:17:28.440 --> 0:17:30.920 think we need, and all we're doing is trying to 0:17:30.920 --> 0:17:34.920 lower the growth rate of those programs over a long term. 0:17:35.560 --> 0:17:39.760 Because we have the best economy, the best rule of 0:17:39.840 --> 0:17:43.080 law system, the best litigation and legal court system in 0:17:43.119 --> 0:17:46.560 the world, and we have the best banking and capital 0:17:46.600 --> 0:17:48.800 market system in the world. Those are all in dsha 0:17:49.080 --> 0:17:54.360 of a good reserve currency. But you also want global 0:17:54.359 --> 0:17:58.240 confidence and domestic confidence in a long term sustainable fiscal situation. 0:17:58.320 --> 0:18:01.280 Speaking of confidence, are confident that the government will not 0:18:01.359 --> 0:18:03.920 shut down? We're facing a government shut down September thirtieth, 0:18:04.000 --> 0:18:06.920 and you'll be back in DC for about three weeks, right, 0:18:07.000 --> 0:18:09.080 that's it to really hammer this out. 0:18:09.320 --> 0:18:11.359 Well, I Amory, I'm I am confident that we won't have 0:18:11.400 --> 0:18:13.800 a government shut down because we're just a few weeks 0:18:13.800 --> 0:18:15.879 away from a national election, and I don't think that 0:18:16.000 --> 0:18:19.280 benefits anybody running for reelection. So I think we will 0:18:20.080 --> 0:18:24.040 navigate the need for a continuing resolution to get fiscal 0:18:24.080 --> 0:18:28.720 twenty five spending moved to beyond the election. And in 0:18:28.760 --> 0:18:31.760 the House we've gotten seventy percent of funding passed and 0:18:31.800 --> 0:18:34.960 across the House floor. Over in the Senate, they've not 0:18:36.000 --> 0:18:38.679 gotten across the Senate floor spending. So we're going to 0:18:38.680 --> 0:18:40.800 be confronted with a CR. But I do think we'll 0:18:40.840 --> 0:18:42.480 get that down before September thirtieth. 0:18:42.520 --> 0:18:44.720 I guess my question is, then, is this a CR 0:18:44.800 --> 0:18:47.560 that's clean? Because Schumer put out a Dear colleague letter 0:18:47.640 --> 0:18:49.480 last night talking about the fact that there can't be 0:18:49.480 --> 0:18:51.600 any poison pills in it. Will it be a clean 0:18:51.640 --> 0:18:53.800 CR that Republicans and Democrats can agree to? You is 0:18:53.880 --> 0:18:56.120 just basically funding the government until the end of the year. 0:18:56.440 --> 0:18:59.560 That may be ultimately what happens, but I think Speaker 0:18:59.600 --> 0:19:04.879 Johnson proposed that we do a clean r with three editions, 0:19:04.920 --> 0:19:12.680 some disaster money that's needed, some two Virginia Class submarines 0:19:12.840 --> 0:19:16.160 be added into it, and then finally the Save Act, 0:19:16.400 --> 0:19:18.920 which would be a Republican proposal what passed the House 0:19:18.960 --> 0:19:24.040 with bipartisan support, reminding states that only citizens can vote 0:19:24.040 --> 0:19:27.080 in federal elections and giving the states some guidance on 0:19:27.119 --> 0:19:29.920 how to make sure that's the case. With nearly ten 0:19:29.960 --> 0:19:32.800 million people in the country, of a huge majority of 0:19:32.840 --> 0:19:37.440 which are not citizens, audits have found some non citizens 0:19:37.480 --> 0:19:40.080 attempting to vote in federal elections. It's a big issue. 0:19:40.119 --> 0:19:42.960 When I was home in Arkansas just the last few weeks, 0:19:43.000 --> 0:19:45.120 it came up at time and time again at events 0:19:45.119 --> 0:19:47.800 that I went to, So people are concerned about that. 0:19:47.880 --> 0:19:51.879 Speaker Johnson proposes that we put that bill, the Save Act, 0:19:52.040 --> 0:19:53.200 attached to the CR. 0:19:53.440 --> 0:19:55.200 Yeah, it doesn't look like the Senate's willing to take 0:19:55.200 --> 0:19:57.240