WEBVTT - Bloomberg Surveillance Television: March 13, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.440 Terminal and the Bloomberg Business app. David Rosenberg, President of 0:00:37.520 --> 0:00:40.720 Rosenberg Research, writing quote, there is nothing in the CPI 0:00:40.800 --> 0:00:43.239 report to get the FED in a position to be 0:00:43.280 --> 0:00:46.640 cutting raids anytime soon. I'm pleased to say that David 0:00:46.720 --> 0:00:48.720 joined us now for more. David, great to catch up 0:00:48.720 --> 0:00:50.159 with you, sir, It's been too long. I just think 0:00:50.200 --> 0:00:52.839 you're perfectly positioned to run through this for us in detail, 0:00:53.159 --> 0:00:55.840 the pieces of this that will spill over to PCEE, 0:00:55.960 --> 0:00:58.560 the bits that matter to the FED, and ultimately the 0:00:58.600 --> 0:01:00.680 parts that won't right. 0:01:01.200 --> 0:01:05.119 Well. Look, I think that the bottom line is that 0:01:05.120 --> 0:01:08.160 the FED does not target the CPI or the core CPI. 0:01:08.920 --> 0:01:12.360 It targets the PC to flavor and the core PC 0:01:12.560 --> 0:01:16.840 to flavor, and I think that one of the I 0:01:16.880 --> 0:01:21.880 think more welcoming elements in yesterday's CPI data was the 0:01:21.880 --> 0:01:25.600 fact that medical care goods and services were flat as 0:01:25.600 --> 0:01:29.520 a pancake, and that features much larger in the PC 0:01:29.680 --> 0:01:33.640 to flavor, And I wouldn't be surprised when you rewate 0:01:33.760 --> 0:01:37.399 the components of the CPI to the PC to flavor 0:01:38.000 --> 0:01:40.800 that the core ends up coming in closer to point 0:01:40.840 --> 0:01:42.880 three or point two than the point four we saw 0:01:42.880 --> 0:01:46.920 on the core CPI. So my view was that yesterday's 0:01:46.920 --> 0:01:51.000 consumer Price report is going to be a distant memory 0:01:51.720 --> 0:01:54.680 within the next three to four weeks, So I'm not 0:01:54.960 --> 0:01:57.160 as fussed about it as a lot of the other 0:01:57.200 --> 0:01:58.680 commentators you had on your show. 0:01:59.240 --> 0:02:01.720 It seems like, David, that the markets agree with you. 0:02:01.840 --> 0:02:04.960 Are the markets responding appropriately to report that you think 0:02:05.480 --> 0:02:07.120 is maybe a bit misleading? 0:02:07.880 --> 0:02:11.000 Well, look, the stock market is really operating on a 0:02:11.520 --> 0:02:18.600 set of momentum and technical factors and not really I 0:02:18.600 --> 0:02:21.880 don't think paying attention much to what's happening in the economy. 0:02:21.919 --> 0:02:23.840 I mean, you have a stock market up thirty percent 0:02:23.880 --> 0:02:26.680 in the past year thereabouts and earnings are up four percent, 0:02:27.919 --> 0:02:30.359 so it's really been a multiple driven market. The bottom 0:02:30.360 --> 0:02:33.320 market sold off moderately, as you would have expected on 0:02:33.360 --> 0:02:38.920 a higher and expected especially core CPI print. But in 0:02:38.960 --> 0:02:41.400 the overall scheme of things, I mean, you have people 0:02:41.400 --> 0:02:43.960 on your show saying that, you know, inflation is taking 0:02:44.000 --> 0:02:48.760 its time coming down, and inflation usually does that. It's 0:02:48.800 --> 0:02:51.360 like a race between watching grass grow and pain dry. 0:02:51.440 --> 0:02:55.480 It's not you know, Inflation isn't bitcoin or the CRB 0:02:55.639 --> 0:02:59.640 index or Nvidia stock. It usually is glacial. 0:03:00.360 --> 0:03:01.520 But the bigger picture is this. 0:03:01.680 --> 0:03:03.760 You know, when we strip out the shelter components of 0:03:03.800 --> 0:03:06.919 the CPI, which we all know are flawed in their 0:03:06.960 --> 0:03:11.720 treatment that and their legged headline, inflation x shelter is 0:03:11.800 --> 0:03:15.000 running at one point eight percent year of year. It's 0:03:15.040 --> 0:03:18.520 already below target. This time last year it was running 0:03:18.520 --> 0:03:21.840 at five percent. So I would just suggest let's move 0:03:21.880 --> 0:03:24.959 away from focusing exclusively on the monthly wiggles on the 0:03:25.040 --> 0:03:28.080 data and look at the bigger picture, because the broader 0:03:28.120 --> 0:03:31.680 trends at inflation and core are moving down, and I 0:03:31.720 --> 0:03:35.080 think moving down in a rather impressive fashion, notwithstanding yesterday's 0:03:35.160 --> 0:03:35.640 data point. 0:03:35.840 --> 0:03:37.720 I guess what strikes me David, it seems like the 0:03:37.760 --> 0:03:41.240 balance of risks is perhaps a little bit more skewed 0:03:41.400 --> 0:03:44.840 to higher inflation after this report, especially because it doesn't 0:03:44.840 --> 0:03:48.120 seem like rates where they are now are particularly restrictive 0:03:48.120 --> 0:03:50.280 when it comes to capital markets and when it comes 0:03:50.320 --> 0:03:54.200 to risk asset valuations. So why should the Fed go 0:03:54.280 --> 0:03:56.280 ahead with cutting rates at a time where it doesn't 0:03:56.320 --> 0:03:59.280 seem like their higher rates are really affecting the economy 0:03:59.360 --> 0:04:02.520 or markets And it seems like there still our questions 0:04:02.520 --> 0:04:03.280 around inflation. 0:04:05.080 --> 0:04:10.000 Well, there's no doubt that financial conditions have eased rather 0:04:10.080 --> 0:04:13.120 dramatically in the course of the past few months, but 0:04:13.200 --> 0:04:16.520 I don't think that's why the economy did as well 0:04:16.800 --> 0:04:19.640 as it did last year and then of the fourth quarter. 0:04:19.720 --> 0:04:22.960 It was really a lot of fiscal juice. It wasn't 0:04:23.000 --> 0:04:27.760 really about financial conditions. You got a rapid decline in 0:04:27.800 --> 0:04:30.760 the equity cost of capital, high yield spreads are super tight. 0:04:30.800 --> 0:04:32.840 But where's the cap X boom coming out of that? 0:04:33.680 --> 0:04:36.160 We're not really seeing it last year's story. I mean, 0:04:36.200 --> 0:04:38.680 two thirds of the growth in the economy last year 0:04:39.200 --> 0:04:43.839 came from the direct and indirect impact of fiscal stimulus, which, 0:04:43.839 --> 0:04:46.039 frankly I wasn't expecting. I don't know if you were 0:04:46.080 --> 0:04:48.360 expecting it. I wasn't expecting that the deficit was going 0:04:48.440 --> 0:04:51.680 to expand twenty five percent last year the context of 0:04:51.720 --> 0:04:54.800 a sub four percent on employment rate that's never happened before. Sides, 0:04:55.320 --> 0:04:57.919 so a lot of the growth was really fiscal financial 0:04:57.920 --> 0:05:01.120 conditions have eased, but I'm not really seeing dramatic impulse 0:05:02.200 --> 0:05:05.240 on economic activity from the easy and financial conditions. And 0:05:05.279 --> 0:05:07.279 the one thing I'm going to point out is, you know, 0:05:07.320 --> 0:05:10.160 the FED is telling us increasingly that it is, you know, 0:05:10.200 --> 0:05:13.000 shifting its focus from the month to month gyrations and 0:05:13.080 --> 0:05:15.880 the data of course that grab the headlines until the 0:05:15.920 --> 0:05:18.440 next month's data come out, and they're focused on what 0:05:18.480 --> 0:05:22.640 business contacts are telling them. And quite frankly, when you 0:05:22.680 --> 0:05:25.800 look at the swathe of comments coming out of the 0:05:25.839 --> 0:05:28.919 base book, the latest facebook out of the FED, what 0:05:28.960 --> 0:05:32.200 did it say? It said that businesses found it harder 0:05:32.560 --> 0:05:36.839 to pass through higher cost to their consumers, who became 0:05:36.920 --> 0:05:40.760 increasingly sensitive to price changes. So that's what's happening in 0:05:40.760 --> 0:05:43.440 the real world and in the CPI world. We have 0:05:43.520 --> 0:05:46.720 over forty percent of the items in that index are 0:05:46.839 --> 0:05:51.880 imputed guesswork by bls statisticians as the proteins to services. 0:05:52.440 --> 0:05:54.000 So when you look at the real world, what did 0:05:54.040 --> 0:05:57.280 the Walmart CFO tell us a couple of weeks ago 0:05:57.440 --> 0:06:01.600 about pricing trends at Walmart, the world's largest retailer, is 0:06:01.640 --> 0:06:05.719 that their pricing momentum is actually dissipating. So I'm not 0:06:05.760 --> 0:06:09.400 getting too fussed by one monthly CPI number, that's for sure. 0:06:09.600 --> 0:06:11.400 Devi Loo got about forty five seconds left with you 0:06:11.400 --> 0:06:13.039 when it's to squeeze this in. There's a phrase I 0:06:13.040 --> 0:06:16.320 see a lot from research at the moment, and it's 0:06:16.400 --> 0:06:20.000 not nineteen ninety nine. And I just wonder, from your perspective, 0:06:20.040 --> 0:06:22.560 what is the value of benchmarking to such an extreme 0:06:22.640 --> 0:06:24.200 time in the equity market? 0:06:24.240 --> 0:06:25.760 Is there any value in that at all. 0:06:27.200 --> 0:06:32.360 I don't think that it's useful to compare it to today's world, 0:06:32.400 --> 0:06:35.560 to any other world, anymore than inn seven people comparing 0:06:35.600 --> 0:06:40.200 it to previous cycles. Every cycle has its unique characteristics, 0:06:40.400 --> 0:06:43.880 Every cycle has its similar patterns. No, I'm not saying 0:06:43.880 --> 0:06:47.560 this is like nineteen ninety nine or the dot com bubble, 0:06:47.600 --> 0:06:50.200 because most of those companies didn't have a business model 0:06:50.279 --> 0:06:54.960 and didn't have earnings. However, However, we do have a 0:06:55.000 --> 0:06:58.440 situation where the forward multiple now in the SMP is 0:06:58.480 --> 0:07:01.920 twenty one, and it is in the top ten percent 0:07:01.960 --> 0:07:04.719 to the top death style evaluations in history. So it 0:07:04.760 --> 0:07:06.880 doesn't detract I mean people like to say it's not 0:07:06.960 --> 0:07:10.160 nineteen ninety nine. We'll go go knock yourself out on 0:07:10.200 --> 0:07:13.640 that comparison. But whether you're taking a look at corporate credit, 0:07:14.120 --> 0:07:17.360 you're taking a look at the equity market, it's a 0:07:17.400 --> 0:07:21.280 noseblee territory in terms of valuations, and so that's where 0:07:21.280 --> 0:07:23.160 I come out of it. That is still a very 0:07:23.200 --> 0:07:28.000 expensive set of circumstances in across most awnset classes. 0:07:28.000 --> 0:07:30.280 It's David, We're going to continue this conversations. 0:07:30.440 --> 0:07:31.680 Wasn't ninety nine, but it's. 0:07:31.680 --> 0:07:32.440 It's a little time. 0:07:33.000 --> 0:07:45.119 David Rosenberg of Rosenberg Research, David appreciate it set. Former 0:07:45.160 --> 0:07:47.520 New York Fed President Bill Dudley warning the next goal 0:07:47.840 --> 0:07:51.640 is reducing QT writing this in Bloomberg Opinion, a final 0:07:51.680 --> 0:07:53.600 plan should be in place by the middle of the year. 0:07:53.640 --> 0:07:56.720 Whatever happens, the destination matches a lot more than the 0:07:56.760 --> 0:07:59.520 speed and places say that Bill Dudley joined us. Now 0:07:59.520 --> 0:08:01.440 for more, Bill, let's talk about this. What kind of 0:08:01.480 --> 0:08:04.640 considerations go into making a decision like this one. 0:08:04.760 --> 0:08:06.560 They want to behave in a way that does not 0:08:06.920 --> 0:08:10.560 risk causing turbulence and financial markets. So the reason to 0:08:10.600 --> 0:08:12.400 do the taper is you're not really sure what the 0:08:12.440 --> 0:08:15.360 desired level or reserves is in the banking system, so 0:08:15.400 --> 0:08:19.040 you want to approach the runway very very shallowly, steeply, 0:08:19.280 --> 0:08:21.720 especially when you don't know where that runway exactly is. 0:08:22.160 --> 0:08:24.920 So I think the taper is proven course of action. 0:08:25.400 --> 0:08:27.320 It doesn't really matter if you get to the desired 0:08:27.400 --> 0:08:30.120 level reserves in two years versus one year. It's just 0:08:30.200 --> 0:08:32.080 the fact that you get there. So I think that 0:08:32.600 --> 0:08:34.360 they're going to discuss it at the March meeting. That 0:08:34.520 --> 0:08:37.440 was made clear by Paul's press conflext press conference, and 0:08:37.440 --> 0:08:39.840 then the fem C minutes, and then they'll talk about 0:08:39.840 --> 0:08:42.319 the staffs proposal, and I think we'll see a final 0:08:42.320 --> 0:08:44.360 plan by midyear. 0:08:44.800 --> 0:08:47.160 Bill, you've said the Central Bank needs to strengthen the 0:08:47.200 --> 0:08:50.520 balance sheet enough to rebuild the stimulus arsenal. I just 0:08:50.520 --> 0:08:52.320 want to get into that a little bit more. I've 0:08:52.320 --> 0:08:53.880 said this to you before. I feel like this is 0:08:53.920 --> 0:08:55.760 some kind of Jedi mind trick at the Federal reserve. 0:08:55.760 --> 0:08:58.240 They want you to simultaneously believe that QE stimulates and 0:08:58.320 --> 0:08:59.240 QT does nothing. 0:09:00.000 --> 0:09:01.200 What does QT actually do? 0:09:02.720 --> 0:09:07.200 QT does withdraw restraint that they've put into the system previously. 0:09:07.720 --> 0:09:11.720 But economics economist who have looked at QE versus QT 0:09:11.880 --> 0:09:15.000 find big effects when there's QE announcements, very little effects 0:09:15.000 --> 0:09:16.400 when there's QT announcements. 0:09:16.520 --> 0:09:19.160 And the reason is sort of obvious. You don't ever 0:09:19.240 --> 0:09:21.440 know when q E u Q program is going to 0:09:21.440 --> 0:09:24.480 be implemented. Kanye has to really really falling apart. 0:09:24.600 --> 0:09:25.720 Interest rates have to be at the. 0:09:25.760 --> 0:09:29.720 Zero lore bound, So QE is usually a surprise QT 0:09:29.880 --> 0:09:32.080 that once you've done QE, you know QT is going 0:09:32.120 --> 0:09:34.120 to fall at some point that the FED is going 0:09:34.160 --> 0:09:36.600 to ultimately unwind the Q that they did earlier. So 0:09:36.840 --> 0:09:39.120 when QT happens, it's really a question of timing and 0:09:39.240 --> 0:09:41.600 magnitude duration, not whether it's going to happen or not, 0:09:41.760 --> 0:09:43.840 So it has pretty much more milder effects. 0:09:44.080 --> 0:09:46.360 There's also a Jedi mind trick going on Bill when 0:09:46.360 --> 0:09:49.760 it comes to financial just in general conditions. The fact 0:09:49.760 --> 0:09:52.760 that we've seen dramatic easing in financial conditions and that 0:09:52.800 --> 0:09:54.800 doesn't seem to be weighing on the FED in terms 0:09:54.840 --> 0:09:57.600 of how that affects their ability to get to two percent. 0:09:57.880 --> 0:10:00.480 But when you saw a sell off that was and 0:10:00.520 --> 0:10:03.200 some sort of restriction, does that concern you that the 0:10:03.200 --> 0:10:05.559 easing and financial conditions doesn't seem to be anywhere on 0:10:05.600 --> 0:10:07.080 the radar of FED officials. 0:10:09.040 --> 0:10:10.720 Well, I think it's in the radar in the sense 0:10:10.760 --> 0:10:13.720 that the reason why financial conditions have eased is because 0:10:13.720 --> 0:10:16.679 people expect the FED to cut rates this year, but 0:10:16.720 --> 0:10:18.880 the Fed actually actually has to cut those rates to 0:10:18.920 --> 0:10:20.800 keep financial conditions where they are today. 0:10:21.679 --> 0:10:23.720 I think at this point we know that March is 0:10:23.720 --> 0:10:25.800 off the table. May is probably off the table too. 0:10:26.280 --> 0:10:28.520 We're really talking about what you know, FED cutting rates 0:10:28.520 --> 0:10:29.760 probably sometimes this summer. 0:10:30.040 --> 0:10:31.800 The focus at the meeting, as I said, is going 0:10:31.840 --> 0:10:32.920 to be Paul's. 0:10:32.600 --> 0:10:34.760 Gonna get a lot of questions about the QT taper, 0:10:34.840 --> 0:10:37.040 since that people know that's on the table. 0:10:37.120 --> 0:10:38.120 But the other thing that's going to. 0:10:38.040 --> 0:10:40.000 Get a lot of attention is the summary of economic 0:10:40.000 --> 0:10:43.720 rejections and how many rate cuts do FIT officials pencil 0:10:43.760 --> 0:10:45.280 in in their forecast. 0:10:45.360 --> 0:10:47.920 Last time, the medium was three. I would guess the 0:10:47.960 --> 0:10:50.640 medium will be three again this time, but there's some 0:10:50.960 --> 0:10:53.960 possibility given the firmness and the inflation data that maybe 0:10:54.360 --> 0:10:55.920 maybe those are only the meet The meeting is going 0:10:55.960 --> 0:10:58.199 to shrink to two, but I bet they keep where 0:10:58.240 --> 0:10:59.080 they were last time. 0:10:59.160 --> 0:11:01.000 There's still plenty of time and still plenty. 0:11:00.840 --> 0:11:02.600 Of meetings this year to cut rays three times. 0:11:02.679 --> 0:11:04.160 But this goes back to the question that we've been 0:11:04.200 --> 0:11:07.760 asking all morning. Has the balance of risks, arguably on 0:11:07.840 --> 0:11:10.920 a minor way, shifted just a bit after the CPI 0:11:11.040 --> 0:11:13.680 print to the fact that maybe it makes sense for 0:11:13.720 --> 0:11:16.200 them to hold rates higher for a bit longer because 0:11:16.200 --> 0:11:18.680 it doesn't seem like it's dampening some of the economic 0:11:18.720 --> 0:11:21.319 activity are materially harming the US economy. 0:11:22.520 --> 0:11:24.319 I think it has, but I think that's that's been 0:11:24.320 --> 0:11:26.280 their strategy how long. I think the market got way 0:11:26.320 --> 0:11:28.160 ahead of the Fed earlier this year, when the market 0:11:28.200 --> 0:11:30.360 is pricing in six to seven rate cuts this year, 0:11:30.360 --> 0:11:31.640 and the Fed was saying, no, we're going to do 0:11:31.720 --> 0:11:33.959 quite a bit less than that, for the very reason 0:11:34.000 --> 0:11:35.839 that you said that the FED wants to be sure 0:11:35.840 --> 0:11:38.360 that they're actually be successful in getting inflation all the 0:11:38.360 --> 0:11:40.920 way down to two percent, and you know, the not 0:11:41.000 --> 0:11:44.720 so good inflation prints that we saw recently just reinforce that. 0:11:45.200 --> 0:11:48.319 So I think the world is started going the way 0:11:48.360 --> 0:11:50.640 the Fed Reserve was expecting rather than the way markets 0:11:50.679 --> 0:11:52.720 were expecting. And I think that, you know, I think 0:11:52.720 --> 0:11:54.679 there's plenty of time to see how the balance between 0:11:54.720 --> 0:11:57.800 growth and inflation plays out. As you know, these are 0:11:57.840 --> 0:12:00.240 balancing acts. Now the Fed is focused on both sides. 0:12:00.280 --> 0:12:02.839 That it's still mandate not just inflation, but also what's 0:12:02.840 --> 0:12:05.320 happening to the economy. While the Knoye is held up 0:12:05.360 --> 0:12:07.720 quite well, there are signs that it is slowing, and 0:12:07.800 --> 0:12:10.720 so the FET is trying to get balance right between 0:12:10.720 --> 0:12:11.440 these two risks. 0:12:11.520 --> 0:12:11.760 Bill. 0:12:11.760 --> 0:12:13.760 This is the total opposite of the conversation we had 0:12:13.760 --> 0:12:15.679 post GFC. I was talking about this a little bit 0:12:15.679 --> 0:12:17.200 earlier in the program. I want to do it again 0:12:17.240 --> 0:12:19.200 with you. I think it's important coming out of the 0:12:19.320 --> 0:12:23.040 Great Financial Crisis I seven and eaight nine, we always 0:12:23.120 --> 0:12:25.360 had these charts that came out and it was basically 0:12:25.400 --> 0:12:27.840 Wall Street looking for lift offf at the federal serve 0:12:27.880 --> 0:12:30.440 and then you had Fed funds just doing nothing for years, 0:12:30.520 --> 0:12:32.760 and every single year was lift off liftoffs coming. It 0:12:32.840 --> 0:12:35.520 was full storm, full storm, full storm, and were looking 0:12:35.559 --> 0:12:37.959 at a situation that could be the total reverse of that, 0:12:38.400 --> 0:12:40.880 where we have again and again just to full storm 0:12:40.960 --> 0:12:43.440 looking for cuts that never come because the suspancsion just 0:12:43.480 --> 0:12:45.200 looks so much better than people thought it would be. 0:12:46.480 --> 0:12:49.160 Well, that really depends on how tape monitor policy is, 0:12:49.240 --> 0:12:51.280 and that's one thing we don't really know. Every time 0:12:51.400 --> 0:12:54.000 the economy turns out to be stronger than expected, people 0:12:54.040 --> 0:12:56.400 start to talk about, well, maybe monitor posse is not 0:12:56.480 --> 0:12:59.080 as restricted as we thought. This is coming back to 0:12:59.120 --> 0:13:03.280 the discussion of our star the neutral federal fund rate. 0:13:04.280 --> 0:13:05.960 Other thing that's going to be interesting in the upcoming 0:13:05.960 --> 0:13:09.560 meeting is whether FED officials raise their estimate of what 0:13:09.600 --> 0:13:11.920 a neutral maitre policy looks like. If you look at 0:13:11.960 --> 0:13:14.720 the current projections, they think that at two percent inflation, 0:13:14.800 --> 0:13:17.080 the federal fund rate to be neutral should be two 0:13:17.120 --> 0:13:19.400 and a half percent. And it's very possible, given the 0:13:19.400 --> 0:13:21.280 strength of the economy that we've seen over the last year, 0:13:21.320 --> 0:13:23.400 that they're going to start to push up those estimates. 0:13:23.600 --> 0:13:24.760 Well, that's exactly where I wanted to go. 0:13:24.880 --> 0:13:27.160 Kati Kamiski earlier was saying, there's a real signal from 0:13:27.160 --> 0:13:30.040 the fact the financial conditions have eased so much in 0:13:30.080 --> 0:13:33.120 the face of rates that have remained so high. Do 0:13:33.200 --> 0:13:34.880 you take that signal? Do you think that the Fed 0:13:35.000 --> 0:13:39.680 should be lifting there are star rate their neutral rate expectations, Yes, 0:13:39.800 --> 0:13:40.120 I do. 0:13:40.240 --> 0:13:42.440 I think there's lots of reason to think that our 0:13:42.480 --> 0:13:44.520 star is higher than it was in the path. In 0:13:44.559 --> 0:13:48.920 the recent past, fiscal policy has been very expansive. The 0:13:48.960 --> 0:13:52.199 government has put in place a number of new investment 0:13:52.280 --> 0:13:56.600 programs Chips Act, infrastructure spending, climate finance. So all those 0:13:56.640 --> 0:14:00.040 things are increasing investment relative to a diminished say, I 0:14:00.040 --> 0:14:01.800 think it's bull that we should raise our star over 0:14:01.840 --> 0:14:04.360 the longer run. I also think that financial conditions are 0:14:04.400 --> 0:14:06.600 the right way to think about major policy, and so 0:14:06.679 --> 0:14:08.920 to your point, if financial conditions are easier, then there's 0:14:09.000 --> 0:14:10.160 less easy for the. 0:14:10.120 --> 0:14:12.200 FED to do bill. Just a final question from me. 0:14:12.280 --> 0:14:14.280 You've alluded to this, but just to speak a little 0:14:14.280 --> 0:14:16.960 bit more clearly on the topic, how uncomfortable should they be? 0:14:17.080 --> 0:14:19.160 Will they be with yesterday CPI print? 0:14:20.840 --> 0:14:22.640 I don't think the FED takes a lot of signal 0:14:22.720 --> 0:14:25.800 from one or two inflation prints after a series of 0:14:25.920 --> 0:14:28.080 very good inflation prints. But I think you know the 0:14:28.120 --> 0:14:31.280 fact that it's now too rather than one is getting 0:14:32.040 --> 0:14:33.200 it's now on their raiders. 0:14:33.000 --> 0:14:36.800 Screen Bill Dudley if Bloomberg opinion, Bill appreciate it. Thank you, sir, 0:14:46.120 --> 0:14:48.720 FCC Commission of Brendon Katjo and just now for more, Commissioner, 0:14:48.840 --> 0:14:51.240 been looking forward to this conversation. I've got your comments 0:14:51.280 --> 0:14:53.200 in front of me on TikTok. You've called it before 0:14:53.240 --> 0:14:56.080 a clear and present danger to national security. I'm sure 0:14:56.120 --> 0:14:59.240 TikTok would disagree with that characterization as well. Can you 0:14:59.280 --> 0:15:02.240 give some concrete examples of why you think that's the case. 0:15:03.400 --> 0:15:07.320 Yeah, the track record with TikTok's malign conduct is very 0:15:07.320 --> 0:15:10.000 clear at this point. For years they told us lawmakers, 0:15:10.000 --> 0:15:14.480 don't worry us. User data isn't even existing inside China, 0:15:14.520 --> 0:15:16.920 and then a blockbuster report came out in twenty twenty 0:15:16.960 --> 0:15:20.280 two that showed no, in fact, quote, everything is seen. 0:15:20.200 --> 0:15:22.400 Inside of China based on leak materials. 0:15:22.400 --> 0:15:27.480 That's key struck patterns, biometrics, search and browsing history location. Then, 0:15:27.560 --> 0:15:30.720 second of all, what the CCP are doing with that 0:15:30.880 --> 0:15:34.240 data is very nefarious. They use access that did data 0:15:34.400 --> 0:15:38.440 personnel in Beijing did to surveil the locations of specific 0:15:38.520 --> 0:15:43.200 Americans journalists that were writing negative stories about TikTok. Third, 0:15:43.600 --> 0:15:46.200 TikTok said, Okay, you caught us red handed. We're going 0:15:46.280 --> 0:15:49.760 to wall off US user data. But lo and behold, 0:15:49.760 --> 0:15:51.840 the Wall Street Journal report came out and found that 0:15:52.080 --> 0:15:55.800 personnel in Beijing are still getting access to that data 0:15:55.960 --> 0:16:00.240 sensitive US user data after agreeing to walllet off. And 0:16:00.520 --> 0:16:03.360 the record goes on from there, including TikTok's parent Bike 0:16:03.440 --> 0:16:07.480 Dance having a CCP sell embedded in its leadership. So 0:16:07.520 --> 0:16:10.880 this is about the malign conduct that an entity that 0:16:10.920 --> 0:16:14.000 it is beholden to the CCP has been engaged in. 0:16:14.120 --> 0:16:16.120 When you talk about walling off that data, you're talking 0:16:16.120 --> 0:16:19.400 about Project Texas. Has it not worked at all? 0:16:20.720 --> 0:16:21.400 No, not at all. 0:16:21.440 --> 0:16:23.960 So one of the leak materials had TikTok Trust and 0:16:24.000 --> 0:16:27.640 safety officials themselves saying that it remains to be seen 0:16:28.040 --> 0:16:32.240 whether product and engineering meaning Beijing can still get access 0:16:32.280 --> 0:16:35.880 to US user data after mitigations like Project Texas are 0:16:35.960 --> 0:16:38.840 put in place. Second of all, that walling off of 0:16:38.920 --> 0:16:41.480 data that we just talked about was part of Project Texas, 0:16:41.520 --> 0:16:44.040 and again Beijing still got access to it. And even 0:16:44.040 --> 0:16:47.680 TikTok's CEO has said, Project Texas will keep data from 0:16:47.720 --> 0:16:50.520 going to Beijing except when we allow it pursued to 0:16:50.600 --> 0:16:53.480 what they claim are new control. So Project Texas is 0:16:53.480 --> 0:16:55.080 about as secure as a SIEV at the end of 0:16:55.120 --> 0:16:55.440 the day. 0:16:55.720 --> 0:16:59.320 In a day of interesting and odd political bedfellows that 0:16:59.360 --> 0:17:01.680 we saw yesterday in Kapa Hill's a lot of individuals 0:17:01.680 --> 0:17:03.920 come out and talk about free speech on the progressive 0:17:04.000 --> 0:17:06.320 left and the right, Ron Paul saying he's going to 0:17:06.359 --> 0:17:08.760 block anything that's contrary to the Constitution. 0:17:09.760 --> 0:17:10.640 Do you agree? 0:17:10.840 --> 0:17:13.040 Is there a free speech issue at play here? 0:17:14.400 --> 0:17:14.720 Yok? 0:17:14.720 --> 0:17:18.359 Grandpa's been great on these liberty issues. This particular bill 0:17:18.400 --> 0:17:21.800 does not trigger a First Amendment concern for one main reason. 0:17:22.119 --> 0:17:24.879 The Supreme Court has drawing a clear line between regulations 0:17:24.920 --> 0:17:27.920 based on content of speech on the one hand, and 0:17:28.040 --> 0:17:30.680 regulation of conduct on the other. And this plainly is 0:17:30.720 --> 0:17:35.080 a conduct law, meaning we're acting because of the demonstrated 0:17:35.200 --> 0:17:38.600 malign national security threat of TikTok, not because of the 0:17:38.640 --> 0:17:41.920 content of anybody's speech. And the bill is narrowly tailored, 0:17:41.960 --> 0:17:44.760 which is key for First Amendment analysis, because it simply 0:17:44.760 --> 0:17:48.480 requires divestment, meaning the millions of Americans that love TikTok, 0:17:48.600 --> 0:17:50.719 I'm not one of them, but they can continue to 0:17:50.920 --> 0:17:54.200 use the application, but just in a more secure way. 0:17:54.280 --> 0:17:57.680 So because of the conduct at issue here, the Constitution 0:17:57.800 --> 0:18:00.840 does not compel us to require a national security threat 0:18:00.880 --> 0:18:02.040 to continue to persist. 0:18:02.359 --> 0:18:05.639 Well, there's one politician in DCU certainly likes TikTok, and 0:18:05.640 --> 0:18:08.360 that's President Biden. The sense of his campaign, they feel 0:18:08.400 --> 0:18:11.320 like they're able to reach the youth by using TikTok. 0:18:11.640 --> 0:18:15.439 So if TikTok is divested, there's a sale, would that 0:18:15.520 --> 0:18:16.760 mean that the Biden campaign can. 0:18:16.680 --> 0:18:18.800 Continue using it? But do you think it'll be safer? 0:18:20.119 --> 0:18:20.720 Yeah, that's right. 0:18:20.720 --> 0:18:21.960 You know a lot of people will raise that concern 0:18:22.000 --> 0:18:25.440 about the Biden administration being on TikTok, but Biden adminstration 0:18:25.560 --> 0:18:28.400 officials have been very clear that there's a national security 0:18:28.400 --> 0:18:31.040 threat here. That's why passed this bill actually squares the 0:18:31.080 --> 0:18:34.320 circle because then the campaign or anybody's campaign could continue 0:18:34.440 --> 0:18:37.600 or start to be on TikTok, but without that serious 0:18:37.680 --> 0:18:39.439 national security risk that's present today. 0:18:39.720 --> 0:18:43.119 Commissioner, given the fact that we've heard that from President Biden, 0:18:43.160 --> 0:18:46.280 I'm curious about your comments from the former President Trump, 0:18:46.320 --> 0:18:48.919 who seems to be, I don't know less clear about 0:18:48.920 --> 0:18:51.720 what he thinks of this bill, saying you know that. 0:18:51.640 --> 0:18:53.119 There's a lot of good there's a lot. 0:18:52.960 --> 0:18:55.960 Of bad with TikTok, talking about how it increases the 0:18:56.240 --> 0:18:59.120 prevalence of meta. What do you make of his comments? 0:19:00.359 --> 0:19:02.400 I think, first of all, President Trump, you know, fundamentally 0:19:02.680 --> 0:19:07.119 reshaped washing DC to understand the serious threat posed by 0:19:07.280 --> 0:19:07.960 the CCP. 0:19:08.320 --> 0:19:09.960 He's also raised concerns. 0:19:09.520 --> 0:19:12.359 As I have, with the conduct of big tech companies 0:19:12.400 --> 0:19:14.919 that are based right here in Silicon Valley, and those 0:19:14.960 --> 0:19:17.800 are real concerns. He pushed for Section two thirty reform, 0:19:18.000 --> 0:19:20.160 which I supported and had hope we would have gotten 0:19:20.160 --> 0:19:20.560 across the. 0:19:20.480 --> 0:19:23.159 Finish line at the SEC by now, and we had it. 0:19:23.400 --> 0:19:26.040 But TikTok presents obviously sort of a threat that's fundamentally 0:19:26.040 --> 0:19:28.800 different than US big tech companies. For all of my 0:19:28.840 --> 0:19:32.000 concerns with their conduct, and I have many, once we 0:19:32.119 --> 0:19:35.520