WEBVTT - Markets, Apple and ESPN, and Mecum Auctions (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.000 --> 0:00:22.880 Kielta's CEO Ta's Asset Management. 0:00:22.880 --> 0:00:25.560 He joins us here in our Bloomberg Interactive Broker studio. 0:00:25.560 --> 0:00:27.920 And if you spelled your name t Oe w S 0:00:28.280 --> 0:00:29.720 No way am I getting Ta's out of that? 0:00:29.800 --> 0:00:31.479 Yeah? So actually there's a V in there. It's like 0:00:31.520 --> 0:00:33.440 waves of the ocean with a T. 0:00:33.960 --> 0:00:34.559 Where's that from? 0:00:34.840 --> 0:00:35.279 Where do you get? 0:00:35.880 --> 0:00:36.000 Oh? 0:00:36.080 --> 0:00:38.120 Yeah, well would have been an o um lot, which 0:00:38.159 --> 0:00:41.159 is pronounceable in the English language, And so they converted 0:00:41.159 --> 0:00:43.840 it to something that people could say, but not like say, 0:00:43.920 --> 0:00:45.400 if you look at the spelling right. 0:00:45.520 --> 0:00:52.000 So yeah, despite for example, koenig or which means king. 0:00:53.200 --> 0:00:56.600 You know, it's just impossible, even for someone like me 0:00:56.640 --> 0:00:58.760 who spent ten years living in Germany, I can never 0:00:58.840 --> 0:01:01.800 pronounce the O with an O out over it. So 0:01:03.080 --> 0:01:04.600 I think tas is the only. 0:01:04.440 --> 0:01:06.319 Choice Yeah, so we're going all in. We're trying to 0:01:06.319 --> 0:01:10.000 get lows to change their pronunciation, like we're like, we're 0:01:10.000 --> 0:01:10.560 on a mission. 0:01:10.680 --> 0:01:13.039 Yeah, I just because I totally you weared your name 0:01:13.160 --> 0:01:16.039 a little earlier today. But I'm not apologizing because there's 0:01:16.120 --> 0:01:17.160 no way you get tased out of that. 0:01:17.160 --> 0:01:18.160 But I'll go with it. 0:01:18.280 --> 0:01:20.520 You're in our studio. We appreciate you coming in. Yeah, 0:01:20.560 --> 0:01:22.240 what are you doing with this market here? 0:01:22.520 --> 0:01:22.759 Phil? 0:01:22.800 --> 0:01:25.240 I mean people were just kind of figuring we're going 0:01:25.280 --> 0:01:27.160 to the moon a few weeks ago, and then August 0:01:27.240 --> 0:01:28.039 has a been so great? 0:01:28.080 --> 0:01:28.360 What are you? 0:01:28.480 --> 0:01:29.360 How are you thinking about it? 0:01:29.480 --> 0:01:29.720 Yeah? 0:01:29.800 --> 0:01:34.200 So it's you know, the markets are just big optimism machines. 0:01:34.200 --> 0:01:35.880 I don't know, do we get that? Yeah, And so 0:01:35.880 --> 0:01:38.040 there can be a couple of things that that cause 0:01:38.080 --> 0:01:40.680 a dentin optimism. We all know about China rates. You know, 0:01:40.720 --> 0:01:42.880 I'm not loving the move higher in the tenure again 0:01:42.920 --> 0:01:46.160 today to sort of fresh highs. That's definitely weighing on it. 0:01:46.200 --> 0:01:48.320 Are there going to be things that develop as a 0:01:48.320 --> 0:01:50.120 result of those higher rates like we saw back in 0:01:50.200 --> 0:01:53.280 March with the regional bank issues. We don't know. At 0:01:53.280 --> 0:01:55.240 the same time, it feels to me a little bit 0:01:55.360 --> 0:01:59.120 like pulling the hair nail off the finger. Is a 0:01:59.200 --> 0:02:01.120 time to buy in this streets. You know, there's no 0:02:01.160 --> 0:02:03.120 blood in the streets, right, And if we could make 0:02:03.120 --> 0:02:05.400 it through the regional banking issue, why not this? 0:02:06.120 --> 0:02:07.520 Uh Really, it's. 0:02:07.320 --> 0:02:09.160 Interesting you're talking about in video because I think what 0:02:09.200 --> 0:02:11.200 we need is just a little injection of something that 0:02:11.240 --> 0:02:13.320 creates optimism. So if you get a really good report 0:02:13.360 --> 0:02:15.960 out of that, because the AI theme going again, I 0:02:15.960 --> 0:02:18.359 can think we could rally out of this. However, we 0:02:18.400 --> 0:02:22.000 actually went defensive on our US stocks, which means fully 0:02:22.000 --> 0:02:23.320 defensive last week. 0:02:23.639 --> 0:02:25.679 What's the defensive stock for you mean? Is it a 0:02:25.680 --> 0:02:27.000 big bounce, lots of cash? 0:02:27.040 --> 0:02:27.799 What's what's it mean? 0:02:27.919 --> 0:02:30.840 So hey, when we say defensive, we mean defensive like 0:02:30.880 --> 0:02:33.600 as in T bills. Oh right, So we have a 0:02:33.600 --> 0:02:36.400 bunch of different funds we have. We have an option 0:02:36.480 --> 0:02:39.440 hedged ETF and we're SKY that's always in the markets, 0:02:39.480 --> 0:02:41.920 but hedged right with options. But we have a couple 0:02:41.919 --> 0:02:44.880 of funds too that can go fully fully out of 0:02:44.919 --> 0:02:47.280 the markets. And so those went out of the markets 0:02:47.320 --> 0:02:49.440 in T bills. We can also be in aggregate bonds 0:02:49.440 --> 0:02:51.080 and other types of things. Of those win into T bills. 0:02:51.120 --> 0:02:54.680 That's purely just reactive to price trends, and so we 0:02:54.680 --> 0:02:56.520 don't know what's going to happen. So that's you know, 0:02:56.560 --> 0:02:58.760 that's the perspective we bring, is that we we have 0:02:58.840 --> 0:03:01.160 fun talking about the market, but we can actually make 0:03:01.240 --> 0:03:03.760 huge shifts, so we don't care as much as a 0:03:03.800 --> 0:03:06.200 normal market player if things fall off the rails because 0:03:06.200 --> 0:03:08.360 we can can you know, hedge against that. 0:03:08.800 --> 0:03:11.120 You can understand though, why the market's an optimism machine 0:03:11.120 --> 0:03:13.640 if you just look at any long term chart of 0:03:14.240 --> 0:03:17.120 you know, the Dow or the S and P five hundred. 0:03:17.240 --> 0:03:21.040 I mean, obviously over the long term it's going up 0:03:21.080 --> 0:03:24.600 into the right do you think the other you know, 0:03:24.680 --> 0:03:27.959 four hundred and ninety three stocks and the S and 0:03:28.000 --> 0:03:29.880 P are going to start to catch up with the 0:03:29.919 --> 0:03:32.440 top seven? Maybe? 0:03:32.520 --> 0:03:34.200 And you know it was broadening up before we saw 0:03:34.240 --> 0:03:36.440 this little move down in the last three weeks or so, 0:03:36.440 --> 0:03:39.560 so maybe. But when I say optimism machine, it's sort 0:03:39.560 --> 0:03:41.320 of like a little different take on it in the 0:03:41.360 --> 0:03:44.640 sense that as fast as you can go from optimism 0:03:44.680 --> 0:03:47.400 to pessimism, you can go from a great market to 0:03:48.000 --> 0:03:51.640 significant losses, right, And so I think everyone looks at 0:03:51.640 --> 0:03:54.960 the fundamentals and just puts so much weight on that, 0:03:55.280 --> 0:03:57.160 and you know, over the long term that is that 0:03:57.200 --> 0:04:00.320 does weigh heavily. But it's really all about what sent is, 0:04:00.360 --> 0:04:03.840 what the vibe is. And you know, you could argue 0:04:03.840 --> 0:04:05.400 that we shouldn't be as high as we are right 0:04:05.440 --> 0:04:07.320 now and the seven stock shouldn't have let us where 0:04:07.320 --> 0:04:09.240 we are, but it is the way it is based 0:04:09.240 --> 0:04:11.920 on just market momentum. And you know, I think fifteen 0:04:11.920 --> 0:04:13.800 percent year to date on the S and P is 0:04:13.840 --> 0:04:16.000 still awesome compared to those te bills that we just 0:04:16.040 --> 0:04:18.360 did into last week, and so that could be enough. 0:04:18.400 --> 0:04:20.640 If we just go bring it up another couple percent 0:04:21.720 --> 0:04:23.520 and see the market take off, it could be enough 0:04:23.520 --> 0:04:24.599 to get us back on the road again. 0:04:24.680 --> 0:04:27.840 The cool thing about treasuries is if you get in, 0:04:28.080 --> 0:04:29.640 you know, at a great rate, and what are you 0:04:29.640 --> 0:04:33.680 getting on the tee bills? Like five percent? Sure, I 0:04:33.720 --> 0:04:36.320 guess in that sense you have reinvestment risk, but if 0:04:36.360 --> 0:04:39.160 you go a little bit out the curve, you could 0:04:39.279 --> 0:04:41.599 top tick the rate and so not only are you 0:04:41.680 --> 0:04:46.679 getting a decent return, but you're gonna get capital appreciation. 0:04:46.240 --> 0:04:48.080 Right totally, And I think there will be a day 0:04:48.120 --> 0:04:49.960 for that. I'm not sure it's right now. Though I'm 0:04:50.000 --> 0:04:51.680 not trying to love that trade because just you know, 0:04:51.720 --> 0:04:52.919 if we don't hit it, don't hit it into our 0:04:52.960 --> 0:04:56.320 session and the market normalizes, the yield curve normalizes. I mean, 0:04:56.360 --> 0:04:57.640 I think you're still sort of where we are on 0:04:57.680 --> 0:04:58.760 the tenure potentially. 0:04:58.920 --> 0:05:00.960 So don't I don't know, to get into a recession. 0:05:00.960 --> 0:05:04.039 If the FED really wants to control inflation, don't they 0:05:04.080 --> 0:05:06.600 have to push us into a recession. 0:05:06.880 --> 0:05:09.320 I mean that go back into the optimism machine questions 0:05:09.160 --> 0:05:10.840 is like, so many people think maybe it's not gonna 0:05:10.839 --> 0:05:15.440 happen now, So I mean, look, I mean it's it's 0:05:15.480 --> 0:05:17.600 the one thing that's that's interesting is it's so hard 0:05:17.600 --> 0:05:20.080 to make these market calls, these economic calls, because so 0:05:20.120 --> 0:05:22.760 many times, you know, over the last ten fifteen years, 0:05:22.800 --> 0:05:24.600 you see something seems obvious and then it goes the 0:05:24.640 --> 0:05:25.000 other way. 0:05:25.080 --> 0:05:27.200 But you know, the fore most optimistic words in the 0:05:27.200 --> 0:05:30.600 English language, what are those? It's different this time? 0:05:30.640 --> 0:05:33.280 Oh yeah, of course, no, I get that. I get that. 0:05:33.640 --> 0:05:36.680 Yeah, all right, So what's the catalysts or catalyst plural 0:05:37.040 --> 0:05:38.840 that would take some of that ninety percent of your 0:05:38.920 --> 0:05:41.599 assets sets in cash now and deployed into. 0:05:41.440 --> 0:05:43.480 This Okay, So all would take is a trend higher, right, 0:05:43.520 --> 0:05:46.320 so good good get good in video earnings gets enough. 0:05:46.680 --> 0:05:48.920 Maybe maybe it's not so much what good news could happen, 0:05:48.960 --> 0:05:51.880 but whether we see receiving bad news, especially out of China, 0:05:51.920 --> 0:05:54.040 And I mean, uh, you know, it's hard to make 0:05:54.080 --> 0:05:57.279 the connection between all this bad news and shadow banks 0:05:57.279 --> 0:05:59.479 and everything in China and how it could actually impact 0:05:59.720 --> 0:06:02.240 US investors. And I think that's what we're all waiting for, 0:06:02.480 --> 0:06:04.520 right because a credit crisis, it's all about things that 0:06:04.600 --> 0:06:06.799 seemed like it's not going to really affect the markets broadly, 0:06:06.960 --> 0:06:09.280 and then all of a sudden it totally does, like 0:06:09.520 --> 0:06:13.400 financial crisis everything else like that. So I think, you know, 0:06:13.640 --> 0:06:18.120 some good earnings, see the ten years stop going higher. 0:06:18.520 --> 0:06:21.000 You know, we're four point thirty two. If we could 0:06:21.040 --> 0:06:24.320 stay there, I think that could potentially be enough. Okay, 0:06:24.360 --> 0:06:26.960 We've got bad couple of months seasonality coming up in 0:06:27.000 --> 0:06:30.320 September and October, so maybe if. 0:06:30.240 --> 0:06:34.440 You remember that, all right, so you know, how about 0:06:34.440 --> 0:06:37.000 a pullback in this market? Is there a evaluation call here? 0:06:37.040 --> 0:06:38.760 We just kind of got through the earning cycle, We 0:06:39.000 --> 0:06:41.960 kind of got reset on earning's outlooks from a lot 0:06:41.960 --> 0:06:44.159 of these companies is what did you take away from 0:06:44.160 --> 0:06:45.599 the earning season we just got through. 0:06:45.760 --> 0:06:48.200 Well, I mean, I think it's enough to keep us 0:06:48.240 --> 0:06:50.839 going in the Bowl market, Like I don't think. I 0:06:50.880 --> 0:06:53.919 don't think we weren't hit too hard in any particular place. 0:06:54.640 --> 0:06:56.600 So I think it's enough to keep us going. And 0:06:57.360 --> 0:06:59.440 you know, so I'm talking really here when I talk 0:06:59.480 --> 0:07:01.640 about where the markets are going, it's all really basically 0:07:01.680 --> 0:07:03.360 short term. Short term. I'm thinking about it what the 0:07:03.360 --> 0:07:05.600 next three months six months is, because that's all people 0:07:05.640 --> 0:07:06.479 seem to care about. 0:07:06.600 --> 0:07:06.760 Right. 0:07:07.080 --> 0:07:10.119 There are much bigger issues, and I think China plays 0:07:10.160 --> 0:07:13.160 into that in terms of global debt. You've seen the 0:07:13.200 --> 0:07:16.480 movie Interstellar where Matthew McConaughey's there on his spaceship and. 0:07:16.400 --> 0:07:18.720 It's like eight times there's this there's what looks like. 0:07:18.640 --> 0:07:21.400 A mountainscape in the background, and then they figure out 0:07:21.480 --> 0:07:25.280 us a giant wave. Yes, okay, So here's the pessimistic 0:07:25.480 --> 0:07:28.600 Felipe coming out, which is that that's still there right 0:07:28.640 --> 0:07:30.920 in these record global debt. The presentation I've been doing 0:07:30.960 --> 0:07:33.680 all across the country this year is the hidden implications 0:07:33.720 --> 0:07:35.360 of global debt. And so if you want to zoom 0:07:35.400 --> 0:07:37.360 out a bit for if you'll go there and not 0:07:37.480 --> 0:07:40.520 care about next month. I think those are some huge implications. 0:07:40.560 --> 0:07:43.920 And and you know China, they're they're well to GDP 0:07:44.120 --> 0:07:47.280 is around eight eight x. So the only time we've 0:07:47.280 --> 0:07:51.400 seen that historically is in Japan back in nineteen eighty nine, 0:07:51.480 --> 0:07:54.400 the last time that they had a good stock market. Right, 0:07:54.640 --> 0:07:56.720 and so that you know, you have three x in 0:07:56.760 --> 0:08:00.680 the US. And so bringing that demand li equation back 0:08:00.680 --> 0:08:04.080 into bounds, which means bringing wealth down and GDP up, 0:08:05.240 --> 0:08:07.040 that can sometimes be painfulfully that. 0:08:07.920 --> 0:08:11.280 Just and right, Yeah, it could be leaving wealth there 0:08:11.320 --> 0:08:12.400 and bringing GDP up. 0:08:12.440 --> 0:08:15.040 Potentially we can have a whole conversation about that because 0:08:15.040 --> 0:08:16.600 I've got like a whole hour presentation. I can make 0:08:16.600 --> 0:08:18.280 it into five minutes for you guys if you want so. 0:08:18.720 --> 0:08:20.240 All right, so we don't have time now, but I 0:08:20.280 --> 0:08:22.400 want to see that presentation the next time you're going 0:08:22.480 --> 0:08:22.800 to give it. 0:08:22.880 --> 0:08:24.600 Well, so I do it, just I do it in person. 0:08:24.960 --> 0:08:25.920 You know that's happening. 0:08:25.920 --> 0:08:27.240 Oh, I see we have to hire you to come 0:08:27.240 --> 0:08:27.840 into the office. 0:08:27.880 --> 0:08:29.800 Yeah, right, yeah, how that'd be awesome. 0:08:29.920 --> 0:08:33.680 All right, thirty seconds the FED, what are they gonna 0:08:33.679 --> 0:08:36.600 do next? Well? Next, next, Thursday. What are they gonna 0:08:36.640 --> 0:08:37.640 do on Friday? 0:08:37.679 --> 0:08:41.280 Sorry etentally, but I mean assom nothing there So, but. 0:08:41.760 --> 0:08:43.120 That's what I think. I mean. There have been a 0:08:43.120 --> 0:08:44.680 couple of times this year when I've said it totally 0:08:44.679 --> 0:08:46.920 doesn't matter what Powell says, and he says something important 0:08:46.920 --> 0:08:48.559 and the market's really changed, so I have to I think. 0:08:48.559 --> 0:08:49.800 I mean, I said that the last time I was 0:08:49.800 --> 0:08:54.400 on with you guys. So I think just just like 0:08:54.840 --> 0:08:57.120 nothing Burger is where we are in terms of like 0:08:57.280 --> 0:09:00.480 because we're all expecting a you know, maybe another twenty 0:09:00.480 --> 0:09:03.640 five BIPs out of the fad. It's just not the 0:09:03.640 --> 0:09:05.440 same Newsmaker was over the past. 0:09:05.480 --> 0:09:05.680 World. 0:09:05.679 --> 0:09:07.640 We're going to turn that narrative around because otherwise, why 0:09:07.679 --> 0:09:09.960 are we saying the whole surveillance team there? Exactly in 0:09:10.000 --> 0:09:13.000 Michael mckeasey, it's gonna be the most important FED gathering 0:09:13.040 --> 0:09:14.640 that we've had all year long. 0:09:15.559 --> 0:09:17.640 Whatever Fisher out there they're running, we'll call it that. 0:09:17.840 --> 0:09:20.040 Phil Tays, thanks so much for joining us. Phil Taste 0:09:20.120 --> 0:09:22.360 is the CEO of Tay's Asset Management. 0:09:23.400 --> 0:09:26.760 You're listening to the Team Ken's Are Live program Bloomberg 0:09:26.880 --> 0:09:30.280 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:09:30.320 --> 0:09:33.440 the iHeartRadio app, and the Bloomberg Business app, or listen 0:09:33.520 --> 0:09:35.640 on demand wherever you get your podcasts. 0:09:37.520 --> 0:09:40.960 Claudia sam joins us here founder and independent economist at 0:09:41.000 --> 0:09:42.960 some consulting, but she was all over the place. She 0:09:43.040 --> 0:09:47.840 was at the Federal Reserve, Senior conmfs of Council Economic Advisors, 0:09:47.840 --> 0:09:49.480 at the White House, on and on and on. She's 0:09:49.520 --> 0:09:53.880 got PhDs from Michigan, not the Ohio State University, but Michigan. 0:09:54.320 --> 0:09:56.480 She went to Dennison undergrad That's most importantly. 0:09:56.640 --> 0:09:59.080 That's most important because I read state the great state 0:09:59.080 --> 0:09:59.520 of Ohio. 0:09:59.559 --> 0:10:02.000 I was there for one ill fated year ninety one, 0:10:02.120 --> 0:10:02.640 ninety two. 0:10:02.840 --> 0:10:05.880 Didn't work out for you? No, did they ask you 0:10:05.920 --> 0:10:07.679 to leave, mister Miller, it might be better. 0:10:07.480 --> 0:10:09.080 For it was. 0:10:09.440 --> 0:10:14.120 It was, I think a mutual agreement, and it's under 0:10:14.160 --> 0:10:15.240 sealed and we can't go there. 0:10:15.559 --> 0:10:18.080 Uh, Claudia, I would like to talk to you about heat. 0:10:18.160 --> 0:10:21.200 It's hot out there, and not just in the southern 0:10:21.360 --> 0:10:23.440 and western part of the United States, but all over 0:10:23.480 --> 0:10:26.719 the world. It seems like what does heat mean for 0:10:26.800 --> 0:10:28.120 this economy? 0:10:29.000 --> 0:10:29.160 Right? 0:10:29.240 --> 0:10:32.280 So the Bloomberg opinion piece that I wrote was focusing 0:10:32.320 --> 0:10:35.960 on heat and its effects. In particularly it's economic effects. 0:10:36.160 --> 0:10:37.920 Like we know there's a lot of human cost to 0:10:38.120 --> 0:10:41.160 you know, heat waves and very high temperatures, and this 0:10:41.280 --> 0:10:43.840 instead was looking at, okay, what are the effects of 0:10:43.840 --> 0:10:46.480 this on the economy, And these can be even if 0:10:46.480 --> 0:10:49.240 we're not the ones in a high heat area, it 0:10:49.280 --> 0:10:52.280 can affect us, right if the labor productivity is lower, 0:10:52.320 --> 0:10:55.720 growth is lower, costs of a lot of these goods, 0:10:55.800 --> 0:10:59.160 you know, agriculture goods is higher. So the effects are 0:10:59.160 --> 0:11:03.400 broad based. And when you start to go through the 0:11:03.640 --> 0:11:07.920 list of all the ways that high heat, rising temperatures 0:11:08.080 --> 0:11:13.160 affect labor productivity is a really long list, and there's 0:11:13.200 --> 0:11:17.559 a lot of variation. Whether you're thinking about geographic where 0:11:18.080 --> 0:11:20.920 Arizona and Texas are going to bear the brunt of this, 0:11:21.320 --> 0:11:24.240 and they certainly, and there are effects the summer, Phoenix 0:11:24.320 --> 0:11:28.200 is the hottest city in the country, right so, and 0:11:28.280 --> 0:11:32.959 there's also industry differences. Agriculture is hard hit, but agriculture 0:11:33.000 --> 0:11:37.360 is not the only place that workers are exposed to 0:11:37.480 --> 0:11:40.920 high heat. I mean, twenty percent of US workers are 0:11:40.960 --> 0:11:43.440 exposed to high heat. So you don't have to do 0:11:43.480 --> 0:11:46.040 too much math to figure out if these workers are 0:11:46.760 --> 0:11:49.120 having a rough time doing their work. It's going to 0:11:49.200 --> 0:11:52.480 show up in a measurable way and growth well. 0:11:52.360 --> 0:11:55.840 No construction. I was talking to some construction workers in 0:11:55.880 --> 0:11:59.520 Texas who said they can't do the work during the day. 0:11:59.840 --> 0:12:01.800 Was last month. They couldn't do the work during the 0:12:01.880 --> 0:12:05.000 day because it was far too hot, and then they 0:12:05.040 --> 0:12:07.280 try to do it at night, but they have their 0:12:07.320 --> 0:12:13.720 noise issues in residential areas. So it really is incredibly 0:12:13.760 --> 0:12:16.480 expensive and in some cases they can't even get jobs 0:12:16.520 --> 0:12:19.040 done because when you're laying cement, for example, it's got 0:12:19.040 --> 0:12:21.760 to cure in a certain way and the heat doesn't 0:12:21.760 --> 0:12:25.080 allow it. In any case. It's not the only effect 0:12:25.160 --> 0:12:28.480 of climate change, right The storms, the massive storms that 0:12:28.520 --> 0:12:33.480 we're seeing, the wildfires that we're seeing, also have an effect, 0:12:33.520 --> 0:12:38.000 and that just builds up the costs on the country. 0:12:38.040 --> 0:12:40.720 Is this just, I guess, a new normal or worsening 0:12:40.760 --> 0:12:42.040 normal that we have to get used to. 0:12:43.160 --> 0:12:45.800 Right, So, there's a lot of arguments about why we 0:12:45.920 --> 0:12:49.000 have this high heat, why we had these droughts, and 0:12:49.040 --> 0:12:51.360 regardless of whether you get into the climate change debate, 0:12:51.400 --> 0:12:53.720 which will get you to this problem will get worse. 0:12:54.160 --> 0:12:57.440 Like right now, we are seeing cost because as you 0:12:57.480 --> 0:13:00.000 said there's high heat, not just in the US. Europe 0:13:00.040 --> 0:13:02.760 has really struggled with this also, and so it is 0:13:02.840 --> 0:13:06.240 like these costs are here right now, you know, and 0:13:06.280 --> 0:13:08.600 to the extent like you were saying the construction workers, 0:13:08.600 --> 0:13:11.600 we can only adapt so much, right, and then it 0:13:11.640 --> 0:13:14.480 really starts to bite on productivity. And we see it 0:13:14.520 --> 0:13:16.920 in a lot of places like food. I mean, we 0:13:16.920 --> 0:13:18.280 see this already a lot of times. 0:13:18.280 --> 0:13:21.199 And we see it like within cities. So I'm looking 0:13:21.200 --> 0:13:24.160 at your your opinion piece. Here in Washington, DC, there's 0:13:24.200 --> 0:13:28.160 at times a seventeen degree difference between wealthy and poor 0:13:28.360 --> 0:13:29.679 neighborhoods in Washington, d C. 0:13:30.280 --> 0:13:31.360 How does that come about? 0:13:33.360 --> 0:13:35.120 Well, one of the and I mean I double check 0:13:35.160 --> 0:13:39.640 that number several times, right, Like that's just wow, seventeen degrees, 0:13:39.800 --> 0:13:42.680 Like that's a big difference. So what happens in a 0:13:42.679 --> 0:13:46.560 lot of cities is you get these heat islands. Right, 0:13:46.600 --> 0:13:49.400 So in poor areas, you don't have the trees, you 0:13:49.440 --> 0:13:52.360 don't have you know, the grass, the wider spaces to 0:13:52.440 --> 0:13:55.040 kind of absorb that heat. Instead, in a lot of 0:13:55.040 --> 0:13:58.600 these lower income it's just you've got the you know, concrete, 0:13:58.720 --> 0:14:01.280 the buildings that absorb the heat. And then push it 0:14:01.360 --> 0:14:04.240 back out right like it's and so that can make 0:14:04.280 --> 0:14:07.720 a big difference in terms of uh, you know, these 0:14:07.760 --> 0:14:11.120 these heat islands can be much hotter in some places 0:14:11.160 --> 0:14:12.680 than others. And then it's like, well, what makes a 0:14:12.679 --> 0:14:13.320 heat island? 0:14:13.720 --> 0:14:13.880 Right? 0:14:14.000 --> 0:14:16.240 Is this lack of vegetation and all of this. So 0:14:16.280 --> 0:14:18.600 that's another There are lots of ways that this high 0:14:18.600 --> 0:14:22.960 heat creates disparities across those with less income and those 0:14:23.000 --> 0:14:23.440 with more. 0:14:24.320 --> 0:14:26.120 Yeah, I know, like here in a metro New York area, 0:14:26.120 --> 0:14:27.880 whenever they put up the maps on TV of the 0:14:27.960 --> 0:14:31.480 of the temperatures, seems like always the highest temperatures Newark, 0:14:31.560 --> 0:14:33.800 New Jersey, you know, by like three or four degrees 0:14:33.840 --> 0:14:34.920 relative to everybody else. 0:14:35.040 --> 0:14:36.200 Really, what about Midtown? 0:14:36.520 --> 0:14:39.240 No, it's Newark is oil and I don't know why, 0:14:39.280 --> 0:14:41.520 but the poor folks there have to deal with that sometimes. 0:14:41.600 --> 0:14:45.160 Any case, it's a great piece, and I recommend if 0:14:45.160 --> 0:14:48.680 you have a Bloomberg terminal type op I go if 0:14:48.720 --> 0:14:51.000 you are are on the internet, you can just go 0:14:51.080 --> 0:14:54.480 look at Bloomberg dot com and search for Cloudia some Cloudia. 0:14:54.800 --> 0:14:57.560 I want to get to the FED because your your 0:14:57.600 --> 0:15:03.360 psalm role has become famous. With three month moving average 0:15:03.360 --> 0:15:05.800 of unemployment. When it rises by half a percent relative 0:15:05.840 --> 0:15:08.640 to the low point during the previous twelve months, that 0:15:08.680 --> 0:15:13.640 means the economy is contracting. How does it look to 0:15:13.640 --> 0:15:16.440 you right now? We're not in a recession, but are 0:15:16.480 --> 0:15:17.240 we headed for that? 0:15:19.480 --> 0:15:24.320 So the labor market is pretty strong still right consumers 0:15:24.320 --> 0:15:28.040 are still spending. That's almost seventy percent of GDP. So 0:15:28.160 --> 0:15:31.000 it's pretty clear that we are not in a recession 0:15:31.320 --> 0:15:34.800 right now. I think some of the conversation in Jackson Hole, 0:15:34.880 --> 0:15:36.880 the decisions that are made by the Fed over the 0:15:36.880 --> 0:15:40.000 coming months, I mean that could have a real impact 0:15:40.040 --> 0:15:42.840 on whether we go into a recession or not. The 0:15:42.880 --> 0:15:45.840 sam rule says nothing about where we are headed. And 0:15:45.880 --> 0:15:48.680 there's been a lot of indicators that normally are pretty 0:15:48.720 --> 0:15:52.200 good at saying a recession is coming that are really 0:15:52.280 --> 0:15:56.120 flashing red. I think they're too pessimistic. 0:15:55.480 --> 0:15:55.640 But. 0:15:57.680 --> 0:16:00.000 There, you know, not being in a recession now is 0:16:00.240 --> 0:16:02.720 no guarantee of not being in a recession end of 0:16:02.800 --> 0:16:04.360 year going into next year. 0:16:04.720 --> 0:16:06.720 Well, do we have to get into a recession in 0:16:06.800 --> 0:16:11.160 order to the Fed? For the FED to really control inflation? 0:16:11.440 --> 0:16:15.680 Is that a necessary part of getting inflation? The inflation 0:16:15.760 --> 0:16:16.800 genie back in the Bottle. 0:16:18.800 --> 0:16:22.080 I firmly disagree with the idea that we need a recession, 0:16:22.600 --> 0:16:27.360 and that messaging has been very clear from the FED officials, and. 0:16:27.440 --> 0:16:28.120 We don't need one. 0:16:28.200 --> 0:16:31.080 We may get one, and if we get one, we 0:16:31.160 --> 0:16:33.520 may see inflation come down a lot, but that does 0:16:33.560 --> 0:16:36.120 not mean that we need one or needed one if 0:16:36.160 --> 0:16:40.800 we get to that place. This special factor this time 0:16:41.080 --> 0:16:44.680 is we are unwinding a lot of disruptions in the 0:16:44.720 --> 0:16:47.280 economy from COVID. I mean, that's what a lot of 0:16:47.320 --> 0:16:51.240 the disinflation we've seen this summer is coming from. That's 0:16:51.280 --> 0:16:55.200 really giving the FED an assist here, right. It also 0:16:55.240 --> 0:16:57.720 makes their job harder to figure out how much they 0:16:57.760 --> 0:17:00.560 need to do. But if the stars all line and 0:17:00.600 --> 0:17:04.399 they could, we have the ingredients. We don't have a 0:17:04.440 --> 0:17:06.639 contraction where it's a very mild contraction. 0:17:07.160 --> 0:17:08.520 And that's kind of where I think a lot of 0:17:08.560 --> 0:17:11.760 folks are because they just look at the employment environment 0:17:11.800 --> 0:17:13.639 and we're still at our near full employment. 0:17:14.080 --> 0:17:16.720 How do you think about the labor market? Right? 0:17:16.720 --> 0:17:19.080 So I found it fascinating that over the past two 0:17:19.160 --> 0:17:21.560 years the markets have kind of like a recession is coming. 0:17:21.600 --> 0:17:24.159 It's not coming, it's coming, you know, So we move 0:17:24.240 --> 0:17:30.720 back and forth. I've been steadying the call. I you 0:17:30.720 --> 0:17:33.800 know this, this is very important with the recession, yep, 0:17:34.119 --> 0:17:37.560 where we're headed. And I think you know, the FED 0:17:37.600 --> 0:17:41.560 tells everybody their data driven, right, so I can't fault 0:17:41.600 --> 0:17:46.640 anyone for looking obsessively at the data. And yet one 0:17:46.760 --> 0:17:49.840 release of inflation or like this is not going to 0:17:49.880 --> 0:17:53.240 tell us anything. And with the labor market, the tide 0:17:53.280 --> 0:17:57.400 can turn pretty fast. Yep, right, like it again, there's 0:17:57.400 --> 0:17:59.920 no guarantee that we stay here, but I mean, my goodness, 0:18:00.040 --> 0:18:03.000 this has been a good labor market. Yes, workers particuarly 0:18:03.000 --> 0:18:04.800