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Speaker 2: the table eron good morning to you, Good morning you send.
Speaker 2: The bar is a little bit too high. Maybe finnuations
Speaker 2: are a little bit too stretched straight side around this scene.
Speaker 3: So I don't think that valuations are actually that stress
Speaker 3: that stretched at this point, and I think that that
Speaker 3: might be a little bit of a shock to say.
Speaker 1: But at the same time, if you look.
Speaker 3: At we're in the videos trading a couple of years ago,
Speaker 3: three years ago was treating at about thirty one times
Speaker 3: I was trading at that same valuation today. That said,
Speaker 3: there's a lot of attention with the stock up as
Speaker 3: much as it is year to date, all eyes have
Speaker 3: been on Navidia, and I actually think that there's opportunities
Speaker 3: outside of just Navidia to play the AI theme, and
Speaker 3: so I like looking under the surface more less discovered names.
Speaker 2: Well, let's get to opportunities in a second. Let's talk
Speaker 2: about what people have been doing stateside. They've been looking
Speaker 2: to utilities. They're up eight percent month to day. Yes,
Speaker 2: when we think about what's at risk a little bit
Speaker 2: later on this afternoon, is it just the semis, the chips,
Speaker 2: the whole attack, or is it the whole of this market.
Speaker 3: Well, so, the utility names that have been really the
Speaker 3: ones in the firing line for people buying right now
Speaker 3: have been the ones that are more IPPs, that are
Speaker 3: more independent producers, that have the ability to really lean
Speaker 3: into the AI theme, and that's really brought the entire
Speaker 3: utility market up. I actually think this is one of
Speaker 3: the sweet spots of the market's utilities have been under
Speaker 3: owned for a very long time. Throughout most of last year,
Speaker 3: they've underperformed pretty significantly. I think now with rates starting
Speaker 3: to peak and with the FED likely starting to cut
Speaker 3: at least towards a up latter part of this year,
Speaker 3: utilities will look really attractive. That said, yes, if Navidia
Speaker 3: goes down today, the whole market's going down, I think
Speaker 3: that that's probably a short term dip, and you likely
Speaker 3: buy because right now it's just about playing the expectations
Speaker 3: of the rollout of the next chip and the GPU
Speaker 3: for a Navidia versus what we know is going to
Speaker 3: be a very strong earnings picture over the next couple
Speaker 3: of years for the company.
Speaker 4: I'm hoping Jensen Huang actually clarifies how you pronounce the name,
Speaker 4: because I hear people say Navidia and I hear people
Speaker 4: say in Nvidia, and it would be very nice for
Speaker 4: me to decide which one we're actually going to be
Speaker 4: talking about. You're talking about industrial policy fueling some of
Speaker 4: these ideas in terms of utilities, in terms of just
Speaker 4: industrial stocks more generally. Has that trade basically been played
Speaker 4: in the US, and now it's really outside of this
Speaker 4: country that you're seeing new industrial policy put into place
Speaker 4: and not yet fully priced.
Speaker 3: So the first answer is no, it has not been
Speaker 3: fully priced in the US yet. With respect to the
Speaker 3: utility usage, the power usage, the water usage that's going
Speaker 3: to be needed to fuel the AI revolution that the
Speaker 3: US is envisioning it's going to acquire a lot more
Speaker 3: infrastructure and build out into really the picks and the
Speaker 3: shovels of the AI trade. Who's going to be providing
Speaker 3: the grid lines, the power lines, the water for the cooling,
Speaker 3: all of that I think is still very early stages.
Speaker 3: That said, while the US at least has some focus
Speaker 3: on this sort of industrial policy going forward, you look
Speaker 3: at Europe and you look at outside of the US,
Speaker 3: and we're in very very early stages.
Speaker 1: So I think we are likely to see a.
Speaker 3: Lot more investment and a lot more focus from a
Speaker 3: government side in terms of being able to provide the
Speaker 3: infrastructure in order to fuel the revolution that AI is coming.
Speaker 4: Do you have any angst or concern that people are
Speaker 4: maybe getting a little too excited about infrastructure week on repeat,
Speaker 4: just this idea. We were talking to Jack Caffrey of
Speaker 4: JP Morgan earlier this week and he said, it takes
Speaker 4: years to even get the perm let alone the actual
Speaker 4: picks in the ground, and people are using this to play.
Speaker 4: They're using copper as a play, but we're not seeing
Speaker 4: the economic activity to back it up.
Speaker 1: It probably won't for a very long time.
Speaker 4: What's your fear factor with sort of overpricing at this point.
Speaker 1: So I think that's a huge concern right now.
Speaker 3: I think that the market in some respects has run
Speaker 3: ahead of itself on the cyclical impacts that this is
Speaker 3: going to be, not on the secular so I think
Speaker 3: they've probably frontloaded a lot of the performance this is
Speaker 3: likely to play out over not just the next three
Speaker 3: to five years, but really over the next ten to
Speaker 3: twenty years. And so yes, I think that there has
Speaker 3: been a lot of optimism priced in in the short end,
Speaker 3: but I think that you will see earnings continue to
Speaker 3: inflect higher. You are starting to see real ramps in
Speaker 3: some of these new chips which are going to require
Speaker 3: a lot more power usage over the near term. And
Speaker 3: the challenges is that there's significant capacity constraints in terms
Speaker 3: of regulation hurdles in order to build out new power supply,
Speaker 3: and that's going to create I think prices keep prices
Speaker 3: elevated over the short term. But certainly there's a lot
Speaker 3: of sentiment that's positive right now, and so we're being
Speaker 3: very selective in terms of being dynamic in terms of
Speaker 3: how we're trading these stocks right now.
Speaker 5: You like the United States, you're looking at Europe, what
Speaker 5: about Asia where we see a lot of build out
Speaker 5: in the semiconductor supply chain and data centers.
Speaker 3: Korea we think is a sweet spot for the markets
Speaker 3: right now. It's under owned, It's been you know, bought
Speaker 3: in the last couple of months, but broadly underperformed pretty
Speaker 3: significantly Visavi Taiwan over the last year or so. You're
Speaker 3: starting to see an inflection now in semiconductor exports that
Speaker 3: just went positive over the last two months coming out
Speaker 3: of Korea. We think that's a real sweet spot. China,
Speaker 3: you know, we're cautious on still. Certainly we're starting to
Speaker 3: see some signs of the tides turning, but we think
Speaker 3: that China's stabilizing, not necessarily growing, And so I think
Speaker 3: that that creates a challenge for investors really meaningfully sizing
Speaker 3: their positions in China, just because the property marked that
Speaker 3: we think is going to continue to be a fairly
Speaker 3: significant overhang on overall GDP growth.
Speaker 2: Looking at twelve months, as you look across the world,
Speaker 2: who do you think has the most favorable growth policy
Speaker 2: mix right now?
Speaker 6: Who do you think it is?
Speaker 3: So I think that the US still does just because
Speaker 3: of the fiscal overhang is going to continue to create
Speaker 3: divergence and economic growth in the US versus the rest
Speaker 3: of the world. I think you are starting to see
Speaker 3: an inflection stabilization in Europe, and so that means given
Speaker 3: how you know, sort of under owned and cheap Europe
Speaker 3: is you can start to look back into European.
Speaker 1: Cyclicals in particular.
Speaker 3: But I think the US by far is still going
Speaker 3: to be the outperformer with respective growth.
Speaker 2: As that improves abroad. Do you want to play that
Speaker 2: through bonds effects or stocks? You mentioned equities? What do
Speaker 2: I do with fixed income?
Speaker 3: So with fixed income, I think we like duration here,
Speaker 3: but really like European, UK Canadian duration. We think that
Speaker 3: they're going to be much faster in terms of the
Speaker 3: cutting cycle, and probably more extended in terms of the
Speaker 3: cutting cycle. Then what's currently priced into market when you
Speaker 3: really interesting when you look what's priced into markets right
Speaker 3: now across fixed income, they're all pretty much pricing in
Speaker 3: the same interest rate path, and so that to us
Speaker 3: is probably very mistaked.
Speaker 6: Think that is.
Speaker 3: I think historically you see convergence in terms of central
Speaker 3: bank interest rate policy. The FED them stillselves are still
Speaker 3: expecting this to be a fairly normal FED cutting cycle.
Speaker 3: Of two hundred and twenty five basis points between now
Speaker 3: and the end of twenty twenty six, with about seventy
Speaker 3: five basis points of cuts each year, that's a pretty
Speaker 3: normal FED cutting cycle. We expect that's likely going to
Speaker 3: be more of a mid cycle adjustment, and so you're
Speaker 3: going to probably see about half of those cuts than
Speaker 3: what the FED is currently anticipating. And I think you're
Speaker 3: going to get some hint of that in the Summary
Speaker 3: of Economic Projections.
Speaker 2: In June June twelve for the SEPA of the FED decision.
Speaker 2: Sanctaez the inflation print and it's been too long. We
Speaker 2: haven't done this in person for years. It's going to
Speaker 2: see it.
Speaker 1: Thanks you see too.
Speaker 6: Aaron Brown, a fincove.
Speaker 2: To break it down to the very best in places,
Speaker 2: say joining us now, J Briceon of Wells Fargo alongside
Speaker 2: Adam Posen of the Peterson Institute.
Speaker 6: Jay, can I come to you first?
Speaker 2: I want to get your review of the assessment from
Speaker 2: Governor Wallach just yesterday. Given that inflation print from the
Speaker 2: last week or so, a C plus grade, would you
Speaker 2: give it the same grade?
Speaker 6: You know, B minus C plus.
Speaker 1: You know.
Speaker 7: The good thing is it's coming down right, and I
Speaker 7: think we're going to continue to see that as we
Speaker 7: go forward. You know, the big sticky part here has
Speaker 7: been the service sector sort of inflation and what we
Speaker 7: know about the leading indicators of housing process. If you
Speaker 7: look at what's happening in rents in the economy, you're
Speaker 7: going to continue to see disinflation there. And then when
Speaker 7: you look at wage growth, and when we saw this
Speaker 7: in the average hourly earnings print earlier this month, wage
Speaker 7: growth by measured by average earnings only up zero point
Speaker 7: two percent. If you look at that and you annualize
Speaker 7: that over the last three months, we're below three percent
Speaker 7: right now. So all that's pointing in the direction of
Speaker 7: inflation continuing to receive as we go forward.
Speaker 2: Adam, to Jay's point, is the evidence building that things
Speaker 2: truly a downshifting.
Speaker 8: Not really.
Speaker 9: We hosted Governor Waller yesterday for the speech, and I
Speaker 9: think what was striking John was that he was trying
Speaker 9: to put a dubvish spin on what was actually a
Speaker 9: pretty hawkish message. I mean, he basically said, I have
Speaker 9: to see real slowing in the US economy before I
Speaker 9: want to cut and he ridiculed the fact I think
Speaker 9: rightly that you know they're parsing now the second decimal
Speaker 9: place on the inflation print, which I thought was very
Speaker 9: well taken from Chris. So I think the message is no,
Speaker 9: they don't want to admit that there's a possibility they'll
Speaker 9: have to hike, but they are backing off cutting.
Speaker 4: I love this feed speak is a Rushock test because
Speaker 4: earlier we had Andrew Hollenhorse saying that it was really
Speaker 4: aduvish message under the hood, because several could mean anything.
Speaker 4: You're saying that it's a hawkish message. Are you getting
Speaker 4: anything from some of the commentary considering that it really
Speaker 4: is sort of a choose your own adventure.
Speaker 8: Adam Well I watched before I came over this morning.
Speaker 9: Least I saw Andrew, and like me and Andrew, I mean,
Speaker 9: we've been both on the same side on the FED
Speaker 9: calling that they were going to hike a lot, and
Speaker 9: then calling they weren't going to cut a lot. And
Speaker 9: this is my first divergence with him in a while.
Speaker 9: I think, you look at Mester, you look at Collins,
Speaker 9: you look at Bostik, you look at Waller, you look
Speaker 9: at all this fed speak.
Speaker 8: It's all back to Phillip's curve.
Speaker 9: It's all back, even Chris who was the one who
Speaker 9: said you could have disinflation with vacancy dropping no unemployment rising,
Speaker 9: and yesterday he made very clear that at this point
Speaker 9: we're back on the flat part of the beverage curve
Speaker 9: and you would have to see unemployment rise. So I
Speaker 9: don't view it as dubbush at all.
Speaker 4: Jay, Why do you sort of, I don't know, maybe disagree,
Speaker 4: or would you push back at all saying that actually
Speaker 4: there still is room especially if you get weakness maybe
Speaker 4: in the labor market.
Speaker 7: Yeah, I certainly think that's true. I mean, things can
Speaker 7: fall apart really quickly. I'm not suggesting that's going to happen,
Speaker 7: but you were mentioning just earlier, you know, with when
Speaker 7: to look at Walmart and some of those other retailers.
Speaker 7: You're starting to see cracks in terms of the consumer.
Speaker 7: You know, delinquencies are going up. You know, monetary policy
Speaker 7: right now, measured by conventional sort of measures, real monetary policy,
Speaker 7: real rate still remains restrictive. And so I think you
Speaker 7: will see continued slowing as we go forward. Now certainly
Speaker 7: not looking for a rate cut anytime soon. I think
Speaker 7: the Fed is going to hold the line on that
Speaker 7: and make sure that we're coming back to two percent
Speaker 7: on a sustained sort of basis. But things can you know,
Speaker 7: things can downshift here pretty quickly as we go forward,
Speaker 7: and particularly is what we're seeing in terms of the
Speaker 7: consumer right now.
Speaker 8: Adam, Yeah, I think.
Speaker 9: I mean, Jay, I know well, and he's made a
Speaker 9: legitimate point, but I think downshifting in the consumer after
Speaker 9: the run of the consumer, the Nvidia like run of
Speaker 9: the consumer for the last couple of years, is not
Speaker 9: necessarily for tending. In fact, is very unlikely before attending
Speaker 9: a massive down shift. But more importantly, what the Fed's
Speaker 9: not allowed to talk about, but you hear in surveillance
Speaker 9: and I and Jay and everybody can talk about is
Speaker 9: what happens after the election. Right you were talking a
Speaker 9: minute ago, Lisa about whack them all and targeted policies. Right,
Speaker 9: So what happens after the election is probably we get
Speaker 9: fiscal boom, particularly under Biden, and if it's under Trump,
Speaker 9: we get a huge energy shift towards go go go
Speaker 9: drills or baby drill and internal combustion engines. Either way,
Speaker 9: you're gonna get probably an unsustainable boom in twenty twenty five.
Speaker 9: And I think the Fed's gonna have to start raising You.
Speaker 6: Think they're gonna be hiking interest rights again next year?
Speaker 9: Yeah, really, very reluctantly quickly.
Speaker 2: And what's the lesson, say, of twenty sixteen, twenty seventeen,
Speaker 2: when we're all waiting for those tax cuts. The FED
Speaker 2: knew that we were coming, but they couldn't change their
Speaker 2: plans until they actually saw them.
Speaker 6: It's that decent experience.
Speaker 8: I think, John, that's a relevant example.
Speaker 9: I mean, because they supposedly the tax is from twenty
Speaker 9: seventeen are going to expire by the end of twenty
Speaker 9: twenty five, and depending on who's in Congress and who's
Speaker 9: in the White House, there'll be a very protracted messing negotiation.
Speaker 9: But if you're Biden, you have to spend more on defense,
Speaker 9: you have to spend more on energy, you have to
Speaker 9: keep spending on the industrial policy. If you're Trump, you're
Speaker 9: busy pushing out deregulation, tax cuts, whatever it is. Both
Speaker 9: of them are pushing towards a very big fiscal swing.
Speaker 8: And whatever result.
Speaker 9: We get on the taxes, it's by the end of
Speaker 9: twenty twenty five. It's not going to be tax rates
Speaker 9: jumping up.
Speaker 2: I'm so pleased you've brought this up because I do
Speaker 2: think we're flying blind into twenty twenty five. I get
Speaker 2: the same finning, and you're the first person when he's
Speaker 2: come on this probagram and actually sort of la out
Speaker 2: where your thing's going to happen. Why you're finish Federal
Speaker 2: serve that's going to have to hike interest rights. So
Speaker 2: they said, I've not heard that before on this show.
Speaker 8: I got something to talk about.
Speaker 4: Well, yeah, I mean I'm sitting here thinking to myself,
Speaker 4: if you have a boom on top of what we've
Speaker 4: already had, that's a real boom for stocks and a
Speaker 4: real negative for bonds. Jay, what's your reaction to that?
Speaker 7: Well, so what I would say is, you know, we're
Speaker 7: talking about President Biden, we're talking about potential President Trump.
Speaker 7: It's really going to depend on what the congressional makeup
Speaker 7: looks like as well. And so in order to get
Speaker 7: those big fiscal swings, you pretty much need to have
Speaker 7: Congress and the White House kind of aligned. And if
Speaker 7: we have a split decision come November, and nobody knows
Speaker 7: what's obviously going to happen, but you know, we'll see
Speaker 7: what happens there.
Speaker 8: In terms of fiscal policy.
Speaker 7: But between now and the end of the year, I
Speaker 7: mean we start looking at five months way of that,
Speaker 7: and I could potentially see a lot of downshifting here
Speaker 7: in terms of the economy. And you know, if you
Speaker 7: potentially you could see some FED rate cuts at the
Speaker 7: end of the year, but a lot of it's going
Speaker 7: to hinge, as Adam points out, a lot of it's
Speaker 7: going to hinge on what happens in the election and
Speaker 7: again what the election outcome is in terms of not
Speaker 7: only the president, but in terms of what the congressional
Speaker 7: makeup looks like as well.
Speaker 6: And jay is.
Speaker 4: Juma's pointing out it's very hard to have any visibility
Speaker 4: whatsoever and what's going to happen. And it makes a
Speaker 4: very compelling case for why either way you'd get a
Speaker 4: fiscal boom. Either way, though, why would the Federal Reserve
Speaker 4: want to cut rates ahead of that, knowing that there
Speaker 4: could be some upside that could force them to reverse course.
Speaker 7: Well, again, I'm not looking for them to cut rates
Speaker 7: anytime soon. I mean, I think the earliest, the potential
Speaker 7: early as you would see a rate cut, it depends
Speaker 7: on what was happening with the data between now and
Speaker 7: then would be in September. The election obviously complicates that
Speaker 7: a little bit as well. There's another fom seating meeting
Speaker 7: right after the election, two days after the election.
Speaker 6: Do they cut rates there?
Speaker 7: I mean, that's going to complicate things as well at
Speaker 7: that point, but they're really going to have to see
Speaker 7: how the smoke clears. And again, just because you're going
Speaker 7: to potentially get a fiscal boom, it's not going to
Speaker 7: happen right away. I mean, and so this is going
Speaker 7: to be legislated sometime in twenty twenty five. We're still
Speaker 7: at least a year out from things being legislated, and
Speaker 7: the federal will be responding to where the economy is
Speaker 7: at that point in time.
Speaker 5: Jay, I'm glad you brought up Congress Adam, this kind
Speaker 5: of idea you have about the feed having to hike
Speaker 5: because of this fiscal spending is dependent on the makeup
Speaker 5: of Congress.
Speaker 10: Biden, if he was going to.
Speaker 5: Spend like that, would need a democratic House and a
Speaker 5: Democratic Senate.
Speaker 9: Correct, Yes, and no, Emery, You're absolutely right, but I
Speaker 9: think less so than in the past because remember two things.
Speaker 9: First is that the bills already passed in IRA and CHIPS,
Speaker 9: they're mostly open ended subsidies. They do not require reauthorization
Speaker 9: from Congress. They can be interfered with if Trump comes in,
Speaker 9: but that spending goes second that the defense spending generally
Speaker 9: gets taken out and voted on separately and often bipartisan
Speaker 9: or at least more bipartisan.
Speaker 8: So I think two of the big places.
Speaker 9: Where you're going to get spending are not going to
Speaker 9: be subject to withholding by even a Republican Senate the
Speaker 9: way it might have been in the past.
Speaker 2: Interesting, just when it comes back to you on this
Speaker 2: down shift that you're looking for, I'll ask you the
Speaker 2: question asked Andrew, can you put some numbers on it.
Speaker 2: With a three month roll in average on payrolls north
Speaker 2: of two hundred k, what are you expecting to see
Speaker 2: to this summer? What does that come down to? Andrew said,
Speaker 2: support fifty. What are you looking for?
Speaker 7: Yeah, we're looking for roughly the same. I mean, if
Speaker 7: you look at our average for the third quarter, I
Speaker 7: think we're looking at one fifty and then slowing to
Speaker 7: roughly one hundred and twenty or so by the fourth
Speaker 7: quarter of the year. And we're also looking for the
Speaker 7: unemployment rate by the end of the year to be
Speaker 7: up to four point one percent, you know, and if
Speaker 7: you believe in the sal rule, if you get up
Speaker 7: to four point one percent, then the economy should be
Speaker 7: tipping into recession. Now we're not looking for that, but
Speaker 7: we are looking for subtrend economic growth later this year.
Speaker 7: Prints of you know, less than two percent, not being
Speaker 7: dragged down by inventories, not being dragged down by a
Speaker 7: big import surge, being dragged down by downshift, and consumer
Speaker 7: spending it as well as investment spending that is lackluster
Speaker 7: at best.
Speaker 2: Jay, this was great, super thoughtful, Ja Bryce in there
Speaker 2: of Wells Fargo, Adam Posen, they Institute for International Economic
Speaker 2: still with us around the table, Adam, I wanted to
Speaker 2: save sometimes talk about trade. Yeah, We've got some really
Speaker 2: strong thoughts on this, and I think it's going to
Speaker 2: be a valuable portion of this program this morning. Do
Speaker 2: you think we're turning on back on economic liberalization at
Speaker 2: a time when global challenges actually could benefit from it.
Speaker 9: That's a great big picture question, John, and I appreciate
Speaker 9: the fact that you and Lisa and Marie keep coming
Speaker 9: back to this. It is a huge shift, whether it's
Speaker 9: Biden or Trump. Biden I think is drawing the line
Speaker 9: at some of the most crazy Trump tariff policies that
Speaker 9: are proposed, but he's done nothing to reverse and now
Speaker 9: added on some there's an anti China element which has
Speaker 9: national security over hyped. But there is more about what
Speaker 9: this does to US relationships, business relationships, technology, market opportunities,
Speaker 9: investment flows throughout the world, and we've been writing on
Speaker 9: this at Peterson Institute. We just published two days ago
Speaker 9: a great new piece by Kimberly Classing and Mary Lovely
Speaker 9: on how the proposed Trump tariffs would be a huge
Speaker 9: hit to middle class and work especially working class family.
Speaker 9: So what they did was they looked at the proposals
Speaker 9: through the lens of being taxes. So you had David
Speaker 9: malpes On talking about tariffs's taxes, which they are, and
Speaker 9: so they use the same apparatus people look at to
Speaker 9: look at tax increases for what's the incidents, meaning which
Speaker 9: parts of the income distribution get what and lose what
Speaker 9: on net, And the average American household would lose seventeen
Speaker 9: hundred dollars a year if the Trump tax cuts went through,
Speaker 9: excuse me, if the Trump tariffs went through. And the
Speaker 9: distribution is highly regressive, so even if you continued the
Speaker 9: tax cuts from twenty seventeen, you would still on net
Speaker 9: be hurting the lower ten twenty percent of the income
Speaker 9: distribution even more.
Speaker 8: And this just goes to what you were saying, Emory about.
Speaker 9: How purchasing power of households, feelings of inflation, feeling of
Speaker 9: high prices, which sometimes gets muddled, but anyway is really core.
Speaker 9: And so Biden could make that better by cutting t
Speaker 9: arras that were left to him by Trump that are
Speaker 9: not national security, not China. He could do it through
Speaker 9: executive order boom increase people's purchasing power. But the worst
Speaker 9: thing is if they go crazy as convicted felon. Peter
Speaker 9: Navarro said in an interview that this is the policy
Speaker 9: that Trump's going to do. If they actually do the
Speaker 9: policy they say they're going to do, they're going to
Speaker 9: cost American households.
Speaker 4: We had David Malpas and you referenced that conversation. He
Speaker 4: was saying that lower taxes and targeted tariffs could be
Speaker 4: a growth policy that will actually get the US to
Speaker 4: a place that could allow the deficit to be manageable.
Speaker 1: Do you agree, No.
Speaker 9: That's essentially what the right wing populist governments tried in
Speaker 9: Latin America in the seventies, eighties, and nineties, and it
Speaker 9: was a.
Speaker 8: Huge anti growth policy.
Speaker 9: There's a reason the World Bank, which David used to run,
Speaker 9: has recommended against that for development for millions of people
Speaker 9: around the world. It's taking the US into Banana Republic territory.
Speaker 9: It is revenue positive for the treasure. I mean that
Speaker 9: is true, but when you're choosing how you're going to
Speaker 9: raise revenue, it's one of the most distortionary ways to
Speaker 9: raise revenue with the most negative impact and the most
Speaker 9: intrusiveness of government.
Speaker 8: And mostly when people like David Malpass and.
Speaker 9: Others talk about the Vangist task cuts, it's about getting
Speaker 9: government out of business this way. Tariffs are the most
Speaker 9: intrusive way you get government the people's.
Speaker 5: Decisions, unlike concerns that you have about a fiscal boom
Speaker 5: next year, which is reliance to get a lot of
Speaker 5: those things you're talking about the makeup of Congress. Trump
Speaker 5: could come in and edit tariffs yep. Immediately, Yes, So
Speaker 5: how inflationary can those be that the Fed needs to
Speaker 5: start thinking about within days of a potentially Trump two
Speaker 5: point zero.
Speaker 9: You're right to raise an emory and I think that's
Speaker 9: a key point that both Biden and Trump, but especially Trump,
Speaker 9: is able to do a lot of stuff through executive order.
Speaker 9: So he can change migration policy through executive order. He
Speaker 9: can raise terrorists through executive order. He can bar foreign
Speaker 9: direct investment through executive order. He can change energy regulations
Speaker 9: executive or all of which is boom and the levels
Speaker 9: of inflation we're talking about if he does that. We're
Speaker 9: about to release some studies of this later in a
Speaker 9: few weeks, I hope, But you know, order of magnitude,
Speaker 9: you see a jump in inflation one to two percent
Speaker 9: immediately just on the tariffs alone. If you do the
Speaker 9: kind of crazy and humane migration deportation policy they're talking about,
Speaker 9: we're seeing much bigger numbers because you're completely disrupting labor
Speaker 9: markets and causing shortages of certain types of labor beyond
Speaker 9: the human cost, and creating huge uncertainty for small business.
Speaker 9: So you're looking at very large jumps in inflation, and
Speaker 9: the Fed may not want to explicitly address that because
Speaker 9: it's seen as political, but I would put the odds
Speaker 9: of them being able to do the cuts in twenty
Speaker 9: twenty five is very low.
Speaker 2: Wow, we're gonna have a lot to talk about this year.
Speaker 2: Look forward to covenant with you, Adam Pous and that
Speaker 2: at they paid uson Institute for International Economics. President Joe
Speaker 2: Biden narrows the gap. The two are separated by no
Speaker 2: more than two percentage points in Michigan, Pennsylvania, and Wisconsin,
Speaker 2: according to the latest Bloomberg Morning Consolet poll. Jennifer Flitton
Speaker 2: of Investigo righting this like twenty twenty, this presidential election
Speaker 2: will likely be decided by less than ten percent of
Speaker 2: voters in the battleground states of Arizona, Georgia, Michigan, Nevada, Pennsylvania.
Speaker 6: And Wisconsin.
Speaker 2: Jennifer joins us now for more Jennifer, going into year end,
Speaker 2: going into November, what are the policy options in the
Speaker 2: White House? Has left? What levers can they pull?
Speaker 11: Well, I think they just did one this past week
Speaker 11: in announcing the release of oil reserves.
Speaker 5: They're going to have to try to find some way
Speaker 5: of affecting those prices.
Speaker 11: That people are feeling when they go to the gas, thing,
Speaker 11: when they pay for the food, when they're looking at
Speaker 11: their mortgage rates. Right now, the Fed isn't very hopeful,
Speaker 11: and so this administration is going to have to do
Speaker 11: things that at least allow for the feeling of the
Speaker 11: economy loosening right, for folks to feel like more is
Speaker 11: in their pocket because right now, compared to three years ago,
Speaker 11: everything just costs more.
Speaker 10: Jennifer one policy lever.
Speaker 5: Potentially the White House may pull again they did this morning,
Speaker 5: and this has to do its student day.
Speaker 10: Does that resonate with the electorate?
Speaker 11: I think it depends on who is affected, and sometimes
Speaker 11: it actually sort of alienates those who don't go to college.
Speaker 10: We sometimes forget that there's a huge segment.
Speaker 11: Of the population of people who don't go on and
Speaker 11: further educate themselves post high school, and those blue collar
Speaker 11: workers or small businesses, entrepreneurs. Sometimes those folks aren't affected
Speaker 11: by that, And sometimes there's a disconnect between those who
Speaker 11: feel like they're paying for those student payoffs and those
Speaker 11: who are actually receiving them.
Speaker 5: Looking at Michigan, Pennsylvania, Wisconsin, it is very very tight
Speaker 5: in our latest polling data shows that amongst a slew
Speaker 5: of other polls have comeing out in.
Speaker 10: The past few weeks.
Speaker 5: How critical are these three states to Joe Biden? I mean,
Speaker 5: can he even win without holding the Blue Wall?
Speaker 10: Yeah? That's an excellent point. That is exactly what he
Speaker 10: has to do. I mean, his.
Speaker 11: Pathway to a second term is through the states of Pennsylvania, Wisconsin, Michigan,
Speaker 11: and then biting off one of those sun belt states.
Speaker 10: And it's sort of the reverse for Trumps.
Speaker 11: We're looking at these polls that his best route is
Speaker 11: probably through Nevada, Arizona, and Georgia and then biting off
Speaker 11: one of the Steel belt the northern states.
Speaker 10: So this is where their focus is going to be.
Speaker 12: And we're one hundred and sixty sixties away from the election,
Speaker 12: we know it's going to tighten, and it's going to
Speaker 12: tighten further once folks really start.
Speaker 11: Focusing, which is when the kids go back to school
Speaker 11: in September.
Speaker 4: Jennifer, A lot of people have been talking about not
Speaker 4: voting at all because of Israel policy.
Speaker 6: At least.
Speaker 10: We hear a lot of articles about that.
Speaker 6: We hear a lot of.
Speaker 4: People saying that vocally, are we overstating just how significant
Speaker 4: this issue will be to getting voters out or keeping
Speaker 4: them home in some of those blue state in some
Speaker 4: of those swing states.
Speaker 11: Yeah, yes, I think once you do the cross tabs,
Speaker 11: I mean, you're going to find demographics, you're going to
Speaker 11: find people, you know, swing voters sometimes or those who
Speaker 11: are willing to swing.
Speaker 10: Progressives, young people.
Speaker 11: These are folks who aren't necessarily going to go and
Speaker 11: vote for Trump, but they may stay home, they may
Speaker 11: have their vote depressed. And that really matters when you're
Speaker 11: in a state like Michigan and you know you're ten
Speaker 11: twenty thousand voters that you're really pining for. But I
Speaker 11: think the fundamentals of this election are still staying true
Speaker 11: when we're seeing this and pulling. It comes down to
Speaker 11: the issues of inflation and immigration, crime, and then on
Speaker 11: the other side, abortion and sort of that democracy chaos
Speaker 11: sort of issue on the democratic side.
Speaker 4: Is there anything the Biden administration could do around inflation
Speaker 4: given the fact that it might be actually decelerating, but
Speaker 4: the inflation that's baked in isn't going to change between
Speaker 4: now and the election.
Speaker 11: You know, Some suggest that it may be about messaging
Speaker 11: and having a better message and looking forward to the future.
Speaker 11: But I think you've you've hit on the question, and
Speaker 11: that's the question that the Biden campaign are wrestling wrestling with,
Speaker 11: you know, sort of constantly, and they probably will up
Speaker 11: to election day, especially if our economic circumstances and the
Speaker 11: way that people are feeling the economy stay the.
Speaker 2: Same, Jennifer, forgive me for the hunk bus, but I
Speaker 2: want to talk about financial regulation and the future of
Speaker 2: it as well. The head of the FDI, say is
Speaker 2: stepping down. We can talk about the why the bank
Speaker 2: lobby or the common sense lobby seems to have won
Speaker 2: out over capital requirements potentially being unfound over the next
Speaker 2: several months as well. What do you think the future
Speaker 2: financial regulation is going to be regardless of who wins
Speaker 2: the White House come November.
Speaker 11: Well, and I'll first say that mister Gruenberg has announced.
Speaker 10: That he will resign, but only he'll step down only.
Speaker 11: When his seat is filled by a confirmed new director,
Speaker 11: so our chairman. So I do think that we may
Speaker 11: have a little more time with him.
Speaker 10: And then, of course, you know the bank lobby.
Speaker 12: To your point, there is a real push to get
Speaker 12: a reproposal, and I think the FDI C and o
Speaker 12: c C would potentially just like to make some minor
Speaker 12: changes on the Basel three issue, but the Fed seems
Speaker 12: to be a little more open to reproposal and you're
Speaker 12: going to see Congress continue to push on this issue.
Speaker 10: There have been some really interesting hearings where you've seen.
Speaker 11: Some bipartisan concern with the proposal and the request for reproposal.
Speaker 10: So I think this is going to continue to play
Speaker 10: throughout the rest of the year.
Speaker 5: Do you think we'll see anything substantial when it comes
Speaker 5: to this ahead of the election?
Speaker 12: Well, if I had to sort of armshore armchair, sort
Speaker 12: of look at this issue as the likelihood of the.
Speaker 11: Time that we really have here in Washington prior to
Speaker 11: the election, I think it's unlikely. But I do think
Speaker 11: it's very possible that we see a reproposal.
Speaker 10: I know that many folks downtown and.
Speaker 11: Those who are on the hill are constantly working to.
Speaker 10: See that happen.
Speaker 5: Jennifer, I know you focus on policy, and one of
Speaker 5: the biggest policy fights next year is going to be
Speaker 5: taxes as well in terms of the financial umbrella. What
Speaker 5: are you expecting in terms of the extension of the
Speaker 5: Trump error tax cuts? At what level do you think
Speaker 5: they get extended?
Speaker 11: Well, And no matter who is president next year, You're right,
Speaker 11: at twenty twenty five, we have a.
Speaker 12: Number of provisions that are expiring from the TCGA was
Speaker 12: passed in twenty seventeen. It's going to look very different
Speaker 12: depending on the makeup of Congress and the presidency so
Speaker 12: much as writing on this election as it relates to
Speaker 12: tax and so if you do have a say it's
Speaker 12: a Trump presidency with a majority in the House for
Speaker 12: a Republican and Senate, then you could have a much
Speaker 12: larger reconciliation package on taxes, something similar to twenty seventeen,
Speaker 12: and it's broad, right, But if it is a Biden
Speaker 12: presidency and you have a split Congress, it's really going
Speaker 12: to have to be a negotiated package because you have
Speaker 12: a number of different provisions from salt to the individual
Speaker 12: tax rates and tax child tax credits. Those are all
Speaker 12: going to be part of the negotiation. So it's going
Speaker 12: to have to be a bipartisan package.
Speaker 4: Jennifer, We're about eight minutes away from the expected release
Speaker 4: of target earnings, and this comes at a time when,
Speaker 4: just to go back to your point earlier, it's going
Speaker 4: to be really key at this White House to see
Speaker 4: what kind of messaging they can do to make people
Speaker 4: feel better about the thing of the fact that things
Speaker 4: are more expensive than they were four years ago, three
Speaker 4: years ago. The White House came out with this on Monday,
Speaker 4: basically calling on grocery chains to lower their prices, welcoming
Speaker 4: the fact that Target had lowered prices, saying they are delivering.
Speaker 4: Is this what will win when it comes to messaging.
Speaker 10: Yeah, that's a great question.
Speaker 11: I think we saw this in the State of the Union,
Speaker 11: this whole idea of translation and sort of forcing the
Speaker 11: issue onto corporations, onto those who deliver services, onto those
Speaker 11: who deliver goods. I don't see that that is where
Speaker 11: Americans are focusing their concern and I do know that
Speaker 11: you know, as far as institutions go, grocery stores are
Speaker 11: pretty high in the support of the American people.
Speaker 10: Institutions in Washington.
Speaker 11: Much lower, So I think that might be a difficult
Speaker 11: one to selling.
Speaker 10: The American people.
Speaker 6: Jennifer, thank you Fearing for this morning. Jennifer Flytten there
Speaker 6: of Investco.
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