Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot com, and of course on the Bloomberg Tyler
Speaker 1: Ricks dropping bout the studio to get us up to space.
Speaker 1: The taker white title once again, net interest income, right,
Speaker 1: I think the price action that you were talking about
Speaker 1: down about one half of one percent sort of says
Speaker 1: it all. This feels sort of exactly what we were expecting.
Speaker 1: This is all in line with all of the other banks.
Speaker 1: We knew that the net interest income was going to
Speaker 1: miss slightly. Of course this did, but not by a ton.
Speaker 1: I think the outlook will be for Bank of America
Speaker 1: what they can forecast going forward now because we know
Speaker 1: that margins and net interest income needs to come down
Speaker 1: slightly for that full year. We've got a great top
Speaker 1: blog on the bloombook term it or just sort of
Speaker 1: breaking down the numbers and the commentary as these earnings
Speaker 1: come through from Wall Street and won't take away just
Speaker 1: the consumer business taking away revenue up, netting come up,
Speaker 1: credit provision staple. It's just taking over nicely, isn't it. John.
Speaker 1: This is my theme. I think this is a healthy consumer.
Speaker 1: We heard this from City Group, we heard this from
Speaker 1: JP Morgan. I spoke with the Wells Fargo CFO last night.
Speaker 1: They're saying that they are still very very much betting
Speaker 1: on the consumer. So despite the fact that loans are
Speaker 1: growing a little bit slowly, you have some mortgages that
Speaker 1: are coming in low low, You're having the credit card
Speaker 1: business really BEI as standout performer both within the branded
Speaker 1: cards of City Group in JP Morgan, I think the
Speaker 1: consumer here is still a very very strong story and
Speaker 1: something that the banks are betting on going forward. Well,
Speaker 1: Bank of America pretty much unchanged now in the pre market.
Speaker 1: We have the good fortune of having Chris Marangue in
Speaker 1: the studio as well. CA Belly Funds Co Chief Investment Officer. Chris,
Speaker 1: good morning to you your early take. Please, You've seen
Speaker 1: a lot of commonalities between Bank America Bank in New
Speaker 1: York and the banks yesterday. That is, um the impact
Speaker 1: of a flat curve UH and then offset by cost
Speaker 1: cuts UH, investment of technology and very large capital returns.
Speaker 1: Big buy back from Bank of America slightly smaller one
Speaker 1: from Bank and you or, but pretty impressive. Nonetheless, the
Speaker 1: single line John that I saw when hearings came out,
Speaker 1: it was about two thirds of the way down the
Speaker 1: you know, the propaganda seven percent of shares in the
Speaker 1: last twelve months. That's what we call intel, Like, that's
Speaker 1: what Intel did. They invented we almost twenty or thirty
Speaker 1: years ago. The use of cash by these banks speaks
Speaker 1: of everything Ben Bernanky talked about in the heat of
Speaker 1: early two thousand and eight. Well, they've had the big
Speaker 1: green light from the record. Can we do a shout
Speaker 1: out to Charles Peabody, I mean he called this absolutely
Speaker 1: nailed this four years ago. So we've got to try
Speaker 1: to understand where the news hit. Where is the news hit, Chris,
Speaker 1: because sure then an interest income story is going to
Speaker 1: be weighing down some of these banks as the Federal
Speaker 1: Reserve cuts interest rates. That shouldn't be news for so
Speaker 1: many people. The buying back plants shouldn't be news. I
Speaker 1: think I think it's it's in the strength of the
Speaker 1: consumer franchise, the consumer business. Um. You know, again, we're
Speaker 1: seeing kind of mixed data on the economy. Industrial is
Speaker 1: rolling over, but the consumer hanging in there of good
Speaker 1: retail sales yesterday obviously, and the consumer has got to
Speaker 1: put their spending somewhere, and they're putting it on the
Speaker 1: credit card. Isn't that what's amazing about this particular regime
Speaker 1: in the markets, that the data is still good, that
Speaker 1: the earnings look okay, and the federal reserves about a
Speaker 1: cut interest rates maybe not just once, maybe twice, maybe
Speaker 1: even three times in the next twelve months. Chris, Yeah,
Speaker 1: So it makes you wonder what the FETE is seeing.
Speaker 1: And I guess the hope is that the FETE is
Speaker 1: wrong if they're seeing, you know, some really dark clouds
Speaker 1: on the horizon. Taylor, what else do you see here?
Speaker 1: I'll highlight trading revenue just because we know that we're
Speaker 1: looking at equity and fit. We do see that the
Speaker 1: trading revenue was abroad match I guess across the board,
Speaker 1: which is a good thing. Usually we've seen companies miss.
Speaker 1: The fit came in better than expected two point one
Speaker 1: versus two point oh eight billion dollars. So I like
Speaker 1: FI because you did see a big bond move at
Speaker 1: the end of the second quarter that helped them a
Speaker 1: little bit despite the low ball in the acquity market. Chris,
Speaker 1: you've been in Wall Street Observer for years. Deutsche Bank
Speaker 1: going through massive triage right now, What is your view
Speaker 1: of New York trading? As Taylor mentions Thick and the
Speaker 1: rest of it. It's not that it's a dinosaur. I
Speaker 1: know that's too inflammatory. But is there a future for
Speaker 1: these big banks to lock up capital to affect trading
Speaker 1: or does it drift away? Yeah? The outlook is not
Speaker 1: good and I mean you've seen that again, um in
Speaker 1: the earnings today for Bank of New York, which is
Speaker 1: obviously a very large custody business. Um. You know, the
Speaker 1: capital is going elsewhere. UM. You know, trading is a
Speaker 1: much less profitable business for a lot of reasons. UM.
Speaker 1: So you know, the bright spot has been certainly in
Speaker 1: the consumer and um, and it's not been in the
Speaker 1: New York trading. You own away from the too big
Speaker 1: to fail banks. American Express is a large holding, but
Speaker 1: you've got many other holdings that are removed. Is that
Speaker 1: like a sidecar banking or do you look at it
Speaker 1: almost as a separate industry from the banks. We're talking
Speaker 1: about this week that the big banks have a habit
Speaker 1: of blowing themselves up every decade or so. I don't
Speaker 1: know that. So you know, you know, one of the
Speaker 1: things that we're not talking about this morning, of course,
Speaker 1: our credit our charge offs because they've been pretty good.
Speaker 1: That's not gonna last forever. At some point that's going
Speaker 1: to turn over, and these companies, these banks are going
Speaker 1: to report losses. We try to stay away from those
Speaker 1: by owning um, you know, fee based banks like the
Speaker 1: trust banks for example. I've got to talk about the
Speaker 1: technology sector with you as well, Chris, not just the
Speaker 1: financials before we let you go. G seven finance ministers
Speaker 1: meeting today to discuss the French proposal of a digital
Speaker 1: tax in Washington, d C. More tech hearings. What are
Speaker 1: your thoughts on what's going on just from a regulatory standford,
Speaker 1: from the tax standpoint, Not to get too cosmic at
Speaker 1: this hour of the morning before drinks, but you know,
Speaker 1: I think the this is a governments around the world
Speaker 1: trying to put the genie back in the bottle. They've
Speaker 1: seen these tech companies disert to mediate a lot of companies,
Speaker 1: costing a lot of job just youate local taxing authorities
Speaker 1: and now DISERTI mediating potentially the core function of government.
Speaker 1: Which is to issue and maintain a currency. Um. So
Speaker 1: they probably gone a little bit far, and the governments
Speaker 1: are pushing back along a lot of vectors antitrust, um,
Speaker 1: privacy and obviously cryptome to these issues shape the kind
Speaker 1: of companies, shape the kind of ideas that you have
Speaker 1: on the companies that you want to own. Well, listen,
Speaker 1: I think we look at regulatory risk across a lot
Speaker 1: of different industries. Certainly in media it is the key
Speaker 1: risk always will be the key risk, you know, owning
Speaker 1: cable companies for example, and so that's that's probably true
Speaker 1: for the for the tech companies as well, and that's
Speaker 1: time we got left. Give us some ringuey gabelly media update.
Speaker 1: You've been extraordinary in long term ownership of that, particularly
Speaker 1: with the elevation of Comcast over the last decade as well.
Speaker 1: Is the enthusiasm still there? It is. I guess what
Speaker 1: the media world is changing, and the way to play
Speaker 1: it is to own the broadband pipes, and that's Comcast
Speaker 1: and Charter in the US, liberty Global outside the US.
Speaker 1: And then you've got to be selective on the content.
Speaker 1: You need the scale companies Disney, or you need the
Speaker 1: niches like sports content the Braves MSG. Will the tech
Speaker 1: companies go after those sports rights? Are they going to
Speaker 1: rip those away from the traditional vendors? So they're gonna
Speaker 1: I think they will bid for them. Whether they win
Speaker 1: them or not is another question. I think the NFL
Speaker 1: would like to maintain football on broadcast for the foreseeable feature.
Speaker 1: Chris Rank, thank you so much, appreciated. Particularly thank you
Speaker 1: to the Bank Analysis Taylor Riggs, thank you so much
Speaker 1: as well to the Bank of America. With an erneys,
Speaker 1: John Fair and I felt that we really should touch
Speaker 1: and what is truly a changing day for the United
Speaker 1: States of Europe. Maria today, it's knee deep in this.
Speaker 1: She is in Shantilly. Is that how you pronounce it?
Speaker 1: Maria Chantilly, France Shante And this is where whipped cream
Speaker 1: was invented. What's important for you to know. It's Maria's
Speaker 1: uh talking to us on her phone from from the castle.
Speaker 1: It's like this Gorgiosity castle where you think they do
Speaker 1: a you know, a fancy French film, and it's the
Speaker 1: place of the gastrom the whipped cream, where they figured
Speaker 1: out sugar and cream years ago. You were there with
Speaker 1: a French finance minister. Uh, Maria and I thought he
Speaker 1: was extraordinary about the new Europe and their pushback to
Speaker 1: technology and particularly Libra. What was his tone about Facebook's
Speaker 1: technical effort. I think Tom and very simple terms. They
Speaker 1: hate it. They hate the idea behind uh Libra. They
Speaker 1: just don't like it because they don't understand what is
Speaker 1: the endgame. They don't like the idea that Facebook to
Speaker 1: almost vibally row the Europeans are trying to prop up
Speaker 1: the euro This is an issue, and also that they
Speaker 1: take the scandals with the data and the privacy issues
Speaker 1: very seriously. So they really don't like it. John. The bitcoin,
Speaker 1: if I'm thinking French now, the bitcoin has moved forced
Speaker 1: standard deviations plus two the minus two in like six days.
Speaker 1: I mean that's the volatility of So Tom, you've identified
Speaker 1: a space, an area where there is some unity at
Speaker 1: the G seven today for finance ministers. It's the era
Speaker 1: of division that I think is going to be revealing
Speaker 1: through the day between the Treasury Secretary Stephen Manuchin and
Speaker 1: Bruno La Maire. Maria talked to me about the digital
Speaker 1: tax that the French want to implement, who it impacts,
Speaker 1: and the pushback we could get from the United States. Today. Well,
Speaker 1: the French will tell you this is a country that
Speaker 1: is a sovereign nation, and uh, they want to go
Speaker 1: ahead with this, and they have already in fact voted
Speaker 1: and favor up this and the Senate. So what happened
Speaker 1: unless there's an agreement and an we ce D level,
Speaker 1: which is frankly what the French are hoping for, But
Speaker 1: it hasn't really happened as quickly as they wanted to.
Speaker 1: They just decided to go ahead and do it alone.
Speaker 1: The Americans will do it. They think there's an almost
Speaker 1: anti American bias in many of the decisions that are
Speaker 1: taken in France, and that companies are punished just because
Speaker 1: they do well in the Europeans simply don't have that
Speaker 1: kind of technology, so that could be an issue. And
Speaker 1: also the dollar. I think that the Europeans are aware
Speaker 1: the Trump's like the weak dollar and that could have
Speaker 1: an impact on the Europe. What's a digital tax? I mean,
Speaker 1: what do we tell who's taxing what when where? Well,
Speaker 1: this is the whole point of this thing. The French said,
Speaker 1: let's just uh not being naive. We know that in
Speaker 1: Europe there's many low tax your dedctions like the Irish Republic,
Speaker 1: and we know the money that gets made in France
Speaker 1: ultimately goes UH Channeled or Ireland, so we don't like
Speaker 1: that companies and main money here will have to pay
Speaker 1: taxes in this country. It is also strange because these
Speaker 1: companies will tell you you don't really understand how we operate,
Speaker 1: and the French will tell you, well, we need to
Speaker 1: raise money. This is something that the president has said
Speaker 1: he wants to do. The French are very keen on
Speaker 1: this idea of new capitalists and mostly respondent to the
Speaker 1: Yellow vest and they want to go ahead with this. Okay, fine,
Speaker 1: but great. What's the Irish response to this? Well, this
Speaker 1: is where it gets very tricky because the Irish will
Speaker 1: tell you we don't want our situation to change because
Speaker 1: jobs are on the line and we have to speak
Speaker 1: as one voice. We don't like the fact that the
Speaker 1: French just came in and stormed the European Union with
Speaker 1: this idea and didn't actually to conscious like the Dutch
Speaker 1: the Irish and they're against it. So you can see
Speaker 1: it's so problematic to get done at an EU level.
Speaker 1: I recommend uh Maria la Capentannier like Cuisine de Vatel
Speaker 1: Chateau chant Oh, I love it when you speak French
Speaker 1: people say toma, but if but if I can just
Speaker 1: stay very quickly. Their French are actually down playing the
Speaker 1: whole lavishness here, like his Amadal Macron and one his
Speaker 1: ministers was caught up in his Scandalcauds of his very
Speaker 1: lavish The French are pulling back from that. Well, what
Speaker 1: are you telling me? They're going to McDonald's and shenti
Speaker 1: all the number two value meal. Well they'll tell you.
Speaker 1: You know, we can just call back. Wait, wait, wait,
Speaker 1: we don't have to go all out. We gotta make
Speaker 1: some news today, Maria. Have you ever have you ever
Speaker 1: been into McDonald's. I happen many times. Thank you so much,
Speaker 1: John Farewn, Tom Keane. Right now with what has become
Speaker 1: always an interesting and interview, but particularly across all of
Speaker 1: the Bloomberg world, has become exceptionally important. He is Mitchell Rochelle,
Speaker 1: and he's not selling real estate. He's an accountant at
Speaker 1: PwC where he counts the beans. Let's start with what
Speaker 1: Bloomberg eleven three oh Boston, one of six one FM
Speaker 1: in Washington care about, which is the taxes on real estate?
Speaker 1: Now we're on a number of quarters. What have we
Speaker 1: learned about the Trump tax effect on real estate for
Speaker 1: these big Democratic cities that they went after. You used
Speaker 1: to have a partner when you own real estate in
Speaker 1: one of these states, which was the federal government, because
Speaker 1: you could could you could deduct your property taxes, which
Speaker 1: are exorbitant in some of those jurisdictions. And that partner's gone.
Speaker 1: And when people are making the decision to buy versus rent,
Speaker 1: absent that partner, they're thinking rent makes it better. What
Speaker 1: have you learned in the last two quarters about what
Speaker 1: people are doing when they see those that decision tree
Speaker 1: of cash out the door. A lot of the are
Speaker 1: staying put. So if they're renting, um, they're staying in
Speaker 1: the in the place where they're renting. If they have
Speaker 1: a starter home, they're staying in the starter home UM.
Speaker 1: Or they're just picking up and moving to Florida or Texas.
Speaker 1: And and that is a force of nature we're seeing it. Mitch,
Speaker 1: would love your thoughts on the economictics we've got this
Speaker 1: morning as well. We had to drop an apartment building
Speaker 1: outweighed by a pickup in single family projects. Is that
Speaker 1: something you're seeing play out too well. But it's interesting
Speaker 1: about apartment John is that's probably overbuilt. There's clearly the shift,
Speaker 1: and I would argue that it's almost become secular. People
Speaker 1: are just saying I'm never gonna own um. So there.
Speaker 1: That's been happening for a while. Apartment developers and reads
Speaker 1: and have been building apartments and they're just pumping the
Speaker 1: brakes there because in some markets they're seeing rent reductions
Speaker 1: because they just have too much product in the market.
Speaker 1: We've seen that in New York City a little bit.
Speaker 1: New York is an island metaphorically and in reality. So
Speaker 1: it's hard to tell because there's a lot of gratification
Speaker 1: and what's going on the market. But if you look
Speaker 1: at you mentioned University of Michigan, you look at ann Arbor,
Speaker 1: rents are dropping. My son's a student there and rents
Speaker 1: have fall in. That's what he says. No, that's for
Speaker 1: I'm the guarante or in the least. No, it's not
Speaker 1: all going into his venmo on the side. When you
Speaker 1: when you look at real estate, we're gonna have you
Speaker 1: come back here. But when you look at the national
Speaker 1: picture right now, and everybody wants to know, is when
Speaker 1: the prices actually start going up with that enthusiasm, which
Speaker 1: you were we not. It ain't out there, is it. Well,
Speaker 1: what the problem is if you look at data nationally,
Speaker 1: home prices continue to go up because of the supply
Speaker 1: and demand in balance. But if you're selling your home
Speaker 1: and if it's above a maybe a six d thousand
Speaker 1: dollar price point, it certainly doesn't feel that way because
Speaker 1: there's a lot less demand above that price point. The
Speaker 1: starter home market's interesting. What's going on right now? You
Speaker 1: have baby boomers who are selling their home and downsizing
Speaker 1: and competing with the millennial generation Asian buying their first
Speaker 1: so they're actually competing. Children are competing with their parents
Speaker 1: because starter homes in Washington, starter homes in New York,
Speaker 1: starter homes in Boston, and four other Sanford, good morning,
Speaker 1: San Francisco. What's a what's the starter home? John in
Speaker 1: New York? One point five million? Right? But that's on again,
Speaker 1: this crazy island. That's the problem, isn't it. You take
Speaker 1: an hour car ride or train ride away, and the
Speaker 1: starter home can be four hundred thousand dollars and that's
Speaker 1: a conventional mortgage that's very accessible, and but that could
Speaker 1: be the same home that you know, a baby boomers
Speaker 1: moving up and trying to get a smaller home. Mitch,
Speaker 1: I'd love you thought some more monetary policy hasn't hasn't done.
Speaker 1: We've seen a load of mortgage refinancing activity as rights
Speaker 1: have dropped, blower. Have we seen any increase in purchasing now?
Speaker 1: It's interestingly enough, John, I would have thought that it
Speaker 1: would have fueled more. But the problem is, I've said
Speaker 1: probably before on this show, you can't buy a house
Speaker 1: that's not for sale. And when existing home inventory nationally
Speaker 1: is four point three months, it doesn't matter how they
Speaker 1: load the rates go, you just can't buy a house
Speaker 1: that's not Alowe, but you just said, you just said that.
Speaker 1: I contradict myself, you know, but you just said above
Speaker 1: six hundred thousand, there's a ton of houses for sale.
Speaker 1: There's a ton of house But the problem is the
Speaker 1: buyers that they don't have a bid that high. Right,
Speaker 1: So the buyers are very robust in the six hundred
Speaker 1: thousand and below and then the six thousand above, because
Speaker 1: what's happening is those are the people who are downsizing
Speaker 1: in many cases and going into that lower price point.
Speaker 1: Let's come back, Mr Show with US always fascinating with
Speaker 1: p WC and some of the real estate trends that
Speaker 1: we see nationwide. There are little jewels you can get
Speaker 1: from JP Morgan. We protect the copyright of all our guests.
Speaker 1: One m Feroli with two simple pages in one more
Speaker 1: paragraph that is absolutely brilliant on the global ramifications, the
Speaker 1: global dimensions of all this, our starred Bologna of the
Speaker 1: modern federal bank. We begin with Michael farrowle looking at
Speaker 1: martially and crosses of our current accounts and global interest rates.
Speaker 1: Michael is Jerome Powell's central banker to the world. Uh. Well,
Speaker 1: the set has always been pretty central, at least in
Speaker 1: the post war period. Uh. And he has been, of
Speaker 1: course of the past few weeks or months more sensitive
Speaker 1: to global development. So the set has always been influencing
Speaker 1: global developments, and more recently they've been taking I think
Speaker 1: larger account of what's happening abroadect. But even without global
Speaker 1: influences our start in the US, what would have come
Speaker 1: down meaningfully over the past twenty years. So we're in
Speaker 1: a disinflation lower terminal rate mode which you canonize four
Speaker 1: or five years ago. Michael, explain the global ammifications. Is
Speaker 1: it just as simple is there exporting disinflation and outright
Speaker 1: deflation to the United States. Right, So interest rates are
Speaker 1: obviously low in the US, and we often talk about
Speaker 1: economists often talk about that as reflecting slower trend growth
Speaker 1: due to demographics, productivity, etcetera. However, there's an important global
Speaker 1: dimension here, which is that the US obviously has run
Speaker 1: a large current account deficit over the past couple of decades,
Speaker 1: which means we import more financial capital, are a net
Speaker 1: importer of financial capital and all else equel that's pushing
Speaker 1: down interest rates in the US. So it's not just
Speaker 1: the saving and investment balance in the US that's influencing
Speaker 1: our interest rates, but the saving and investment balance abroad,
Speaker 1: and those factories seem like they are almost surely pushing
Speaker 1: down interest rates in the US. And Paul, you know
Speaker 1: the equation, I are equals g plus omega alpha over
Speaker 1: are my eyes are alpha over tow. I think, what's
Speaker 1: he doing with all the Greek letters in the summer, Michael,
Speaker 1: I was, I was sticking with the pictures, the graphs. So, Michael,
Speaker 1: I mean, we talk about in the globalization, the world's
Speaker 1: getting smaller, but boy, you take a look at the
Speaker 1: U s economy still relatively strong in the face of
Speaker 1: you know, just extraordinary weakness in Europe, deceleration in China.
Speaker 1: What's the great No one's really sure. How do you
Speaker 1: kind of square that circle here? How long do you
Speaker 1: expect the US to kind of remain relatively strong rest
Speaker 1: versus the rest of the world. Well, I think the
Speaker 1: strength has really to two factors. One is, most importantly
Speaker 1: has been the consumer, which we saw yesterday, continues to
Speaker 1: just power ahead right through June and probably into the
Speaker 1: rest of the summer. The second factor is that government
Speaker 1: has actually been pretty strong at all levels state, local,
Speaker 1: and federal government spending. That is so I think that
Speaker 1: has those two factors that helped inflate the US. UH.
Speaker 1: You know, we as in Greenspan famous words, we can't
Speaker 1: remain an island of prosperity forever, but we do think
Speaker 1: that we'll see some slowing in the second half, but
Speaker 1: that you know, some of these domestic factors should keep
Speaker 1: us doing all right in the second half, maybe a
Speaker 1: little a little flower than Michael. What is global autarchy
Speaker 1: or estimated at what are we talking about? Our tarchy
Speaker 1: is a a state of the world, uh, an economic
Speaker 1: concept of a country that doesn't trade with the rest
Speaker 1: of the world. So you know, country like North Korea
Speaker 1: would be considered autarchy. Okay, but it's also at the
Speaker 1: margin the country the president Trump wines in that direction. Yes, yes,
Speaker 1: in that direction, that's called at the margin, professor. To
Speaker 1: the extent we close ourselves off to trade to the
Speaker 1: rest of the world, we're also gonna close ourselves off
Speaker 1: to capital flows to the rest of the world. Just
Speaker 1: as a matter of arithmetic. Uh, that probably wouldn't be
Speaker 1: a good idea because the rest of the globe is
Speaker 1: financing a lot of our investment right now. We're not
Speaker 1: saving enough now, we couldn't move in a direction of
Speaker 1: saving more, which would involve, at least at the policy level,
Speaker 1: reducing federal deficits. But that doesn't seem to be you know,
Speaker 1: a big priority right now. So an absence of higher
Speaker 1: domestic saving, we need for and say, I think to
Speaker 1: finance our investment. We need investment to continue to you know,
Speaker 1: increase growth and increase living standards. So, mich I'm just
Speaker 1: looking on my Bloomberg screen right now, the German tenure
Speaker 1: minus point to eight eight. How much longer can negative
Speaker 1: interest rates around the world, particularly in Europe, remain what's
Speaker 1: the solution, if there is one. I mean, in Europe
Speaker 1: and Japan, they're in a more difficult spot than we are, obviously.
Speaker 1: I think the solution, uh you know, probably is to
Speaker 1: first of all, it's like when you're on antibiotics, you
Speaker 1: don't want to get off it before the work is done.
Speaker 1: I think in those countries you are seeing progress towards
Speaker 1: tighter labor markets, and maybe over time and time being
Speaker 1: measured in years, we could start to see that show
Speaker 1: up in higher price pressures and inflation, which would invite
Speaker 1: eventually get us away from these negative interest rates. Fiscal
Speaker 1: policy could probably also help, particularly in the Eurozone, where
Speaker 1: uh you know, they're not they're no longer moving our
Speaker 1: direction of austerlity, but they're certainly not using the physical
Speaker 1: space that could be there. Mica Faroli, your colleague Dr
Speaker 1: Casman was on with us the other day for a
Speaker 1: quick phone call, and he really emphasized JP Morgaret is
Speaker 1: certainly not going to go to a fifty bay fifty
Speaker 1: rate cut dynamic. I don't want to get in the
Speaker 1: parlor game with twenty five or fifty beeves. But what's
Speaker 1: your vector. If we get a twenty five basis point cut,
Speaker 1: is that that we're measured and that sets in place
Speaker 1: in inertial force to ever lower interest rates or can
Speaker 1: it actually be one and done and wait to see. Well,
Speaker 1: I think after after the July meeting later in two
Speaker 1: weeks from today, when we are expecting a twenty five
Speaker 1: basis point cut, I think it becomes more data to
Speaker 1: and and I think we all agree that the July
Speaker 1: meeting is basically not data dependent. The FED as all
Speaker 1: but promise they're going to cut rates in two weeks.
Speaker 1: And I think the further you go in time, the
Speaker 1: more the data does matter. And I think if we
Speaker 1: get data like we have received over the past four weeks,
Speaker 1: which have been quite stellar, that that continues for the
Speaker 1: next two months, and I think September is not a
Speaker 1: done deal in terms of the cut. However, if we
Speaker 1: do see some of the global UH weakness we talked
Speaker 1: about feed into some of the domestic measures, and then
Speaker 1: we probably UH stay on a meeting until we feel
Speaker 1: that those risks are no longer there. So, Michael, you've
Speaker 1: mentioned earlier the relatively strong consumer consumer remains resilient. Do
Speaker 1: you think the consumer strength is enough to keep the
Speaker 1: US economy out of a possible recession in certainly, I
Speaker 1: think we saw something like that play out in twenty
Speaker 1: fifteen when we also had a global slowdown, somewhat different
Speaker 1: in nature of a you know, the same same general idea,
Speaker 1: which is the globe flowed um manufacturing sload captex was
Speaker 1: even we domestically, even weaker than then it is now,
Speaker 1: but the consumer kept us going. And so I think
Speaker 1: that's a pretty recent template for how we can like
Speaker 1: recession next. Michael, I hate you. I'm gonna have to
Speaker 1: read every single word of US Global Dimensions of the
Speaker 1: Load Domestic are started as a terrific essay, clearly the
Speaker 1: lead for research piece of the summer. By that, I
Speaker 1: mean it's exactly two pages, one paragraph long, which is
Speaker 1: my kind of research piece. Michael Faroli is the Jpe Morgan,
Speaker 1: always thinking outside the box. Right now, we want to
Speaker 1: talk to uh Nathan Hagar right now about John Paul Stevens. Nathan, Uh,
Speaker 1: he is a giant of the judiciary and he has
Speaker 1: died at a ripe old age. Tell us about John
Speaker 1: Paul Stevens. Yeah, it's a solemn occasion. Tom. In this
Speaker 1: often Divided City. Retired Supreme Court Justice John Paul Stevens
Speaker 1: was ninety nine years old when he died yesterday. Seen
Speaker 1: as a moderate conservative when first selected to join the
Speaker 1: federal bench by Richard Nixon in n Seventy five years later,
Speaker 1: Stevens was nominated to the Supreme Court by Gerald Ford.
Speaker 1: Judge Stevens is held in the highest esteem by his
Speaker 1: colleagues and the legal profession and the judiciary, and has
Speaker 1: had an outstanding career in the practice and the teaching
Speaker 1: of law. As well as i'm the Federal Bench, I
Speaker 1: am confident that he will bring both professional and personal
Speaker 1: qualities of the highest order to the Supreme Court. The
Speaker 1: Republican President appointed him. Stevens went on to become a
Speaker 1: leading liberal voice on presidential powers, individual rights, and the
Speaker 1: death penalty, an issue he addressed recently in an appearance
Speaker 1: on the PBS News Hour My Own Thing. It took
Speaker 1: quite a well to really reach the inclusion that the
Speaker 1: death penalty does more harm than good. Is it terribly
Speaker 1: expensive and really pointless process because it I think it
Speaker 1: accomplishes very little that can't be accomplished with more humane punishment.
Speaker 1: Stevens also voted in the majority of the controversial Roe v.
Speaker 1: Wade decision on abortion, no matter he discussed as recently
Speaker 1: as this year. In the long run, it seems to
Speaker 1: me that the abortion is a necessary procedure that will
Speaker 1: be recognized and will be performed lawfully. Stevens was fond
Speaker 1: of writing separate opinions to make fine legal distinctions. He
Speaker 1: eventually evolved into a coalition builder whose handiwork included the
Speaker 1: two thousand four opinion that said US courts had authority
Speaker 1: over suspected terrorists held at Guantanamo Bay. Stevens retired in
Speaker 1: two during the presidency of Barack Obama. At the age
Speaker 1: of ninety. He was the second oldest justice in US history.
Speaker 1: Justice Stevens has courageously served his country from the moment
Speaker 1: he enlisted the day before Pearl Harbor to his long
Speaker 1: and distinguished tenure on the Supreme Court. During that tenure,
Speaker 1: he has stood as an impartial guardian of the law.
Speaker 1: He's worn the judicial robe with honor and humility. In retirements,
Speaker 1: Stevens remained engaged in public debate. Just last year, he
Speaker 1: called for the repeal of the constitution Second Amendment. Stephen
Speaker 1: spoke about the push to curb gun rights with ABC
Speaker 1: S George Stephanopolis, the amendment would merely prevent UH our
Speaker 1: humans being made that Congress doesn't have the power to
Speaker 1: do what I think is in the best public interest.
Speaker 1: But to be clear, if Congress passed a national ban
Speaker 1: on individual gun ownership, that would be constitutional under your amendment.
Speaker 1: I think that's right. And following word of Justice Stevens,
Speaker 1: passing the White House, issued a statement saying his work
Speaker 1: will continue to shape the legal framework of our nation
Speaker 1: for years to come. In his passion for the law
Speaker 1: and for our country will not soon be forgotten. And
Speaker 1: a Chief Justice John Roberts says that Stevens brought kindness, humility,
Speaker 1: wisdom and independence to the Supreme Court again. John Paul
Speaker 1: Stevens died at a hospital in Fort Lauderdale, Florida, yesterday,
Speaker 1: complications following a stroke at the age of nine. And
Speaker 1: Tom and Paul really does hearken back to a different
Speaker 1: time in the Supreme Court where nowadays you can see
Speaker 1: the divide so starkly on the High Court. UH, the
Speaker 1: kind of consensus building that Stevens aimed for UH seems
Speaker 1: to be at times a lost art. In Washington, Nathan
Speaker 1: Hager Thank you so much. Just a terrific summer there.
Speaker 1: Of the Justices live Paul Sweeney, what's extraordinary about the
Speaker 1: span of his American history? As a child, he was
Speaker 1: at the game where Babe Ruth pointed to center and
Speaker 1: he has recollections of Ruth pointing to center field. And
Speaker 1: of course part of the Greatest Generation World War Two
Speaker 1: with enlisting. Uh oh, yeah, absolutely, but you know, yeah,
Speaker 1: the only equivalences I know in the modern time would
Speaker 1: be April Harriman. And to go back to the middle
Speaker 1: of the history, John Hay who was of course a
Speaker 1: Lincoln secretary uh and then ended up at Secretary of
Speaker 1: State with Teddy Roosevelt. But uh, an extraordinary public and
Speaker 1: private life of John Paul Stephen. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm
Speaker 1: on Twitter at Tom Keane before the podcast. You can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio.