1
00:00:00,120 --> 00:00:06,760
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:11,640 --> 00:00:15,440
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

3
00:00:15,480 --> 00:00:18,680
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

4
00:00:18,720 --> 00:00:22,280
Speaker 2: for insight from the best in markets, economics, and geopolitics

5
00:00:22,400 --> 00:00:24,920
Speaker 2: from our global headquarters in New York City. We are

6
00:00:24,920 --> 00:00:27,680
Speaker 2: live on Bloomberg Television weekday mornings from six to nine

7
00:00:27,720 --> 00:00:31,280
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

8
00:00:31,320 --> 00:00:33,960
Speaker 2: anywhere else you listen, and as always on the Bloomberg

9
00:00:34,040 --> 00:00:37,239
Speaker 2: Terminal and the Bloomberg Business app. Let's turn to retail.

10
00:00:37,479 --> 00:00:40,320
Speaker 2: Lululemon up in its full year outlook thanks to strong

11
00:00:40,400 --> 00:00:43,520
Speaker 2: sales in international markets. The company seeing flat sales in

12
00:00:43,360 --> 00:00:46,800
Speaker 2: the United States last quarter, but a thirty nine percent

13
00:00:46,880 --> 00:00:50,520
Speaker 2: rise in China. Sigurary to Gatalia Forrester, saying, athletic gear

14
00:00:50,560 --> 00:00:53,559
Speaker 2: still seems to be strong. The affluent, fitness focus consumer

15
00:00:53,680 --> 00:00:56,360
Speaker 2: is still spending sigury to join us now for more

16
00:00:56,400 --> 00:00:59,040
Speaker 2: Sigurary to welcome to the program. What is Lulu get

17
00:00:59,120 --> 00:00:59,880
Speaker 2: him right this time?

18
00:01:01,320 --> 00:01:03,400
Speaker 3: Well, I think a lot of this is just the

19
00:01:03,520 --> 00:01:06,280
Speaker 3: entire sector is doing really, really well. When you look

20
00:01:06,319 --> 00:01:11,040
Speaker 3: at the numbers for other companies that are selling similar products,

21
00:01:11,080 --> 00:01:14,680
Speaker 3: whether it's on running or you're looking at Dick's boarding goods,

22
00:01:14,720 --> 00:01:19,039
Speaker 3: they are doing incredibly well as well. So the shopper

23
00:01:19,280 --> 00:01:23,240
Speaker 3: is just spending in this category. Lulu has been performing

24
00:01:23,400 --> 00:01:27,559
Speaker 3: incredibly well for years, and this year it was more

25
00:01:28,040 --> 00:01:30,520
Speaker 3: just because of some lower guidance that some of the

26
00:01:30,600 --> 00:01:33,680
Speaker 3: numbers are soft and it's been underperforming the market. But

27
00:01:33,920 --> 00:01:37,240
Speaker 3: the story is that their overall top line has been

28
00:01:37,280 --> 00:01:40,400
Speaker 3: strong and some of these international sales, as you point out,

29
00:01:40,440 --> 00:01:42,840
Speaker 3: have been a big driver in its success, which is

30
00:01:42,880 --> 00:01:46,800
Speaker 3: interesting because that is perhaps one of the areas where

31
00:01:46,920 --> 00:01:51,160
Speaker 3: it may have some softness in the future if tariff's

32
00:01:51,200 --> 00:01:53,680
Speaker 3: actually become more prevalent.

33
00:01:53,400 --> 00:01:55,520
Speaker 2: Well situated to It's interesting also because so many have

34
00:01:55,560 --> 00:02:00,640
Speaker 2: struggled in international markets, particularly in China. What undepends success

35
00:02:00,800 --> 00:02:01,480
Speaker 2: that that have a.

36
00:02:02,480 --> 00:02:04,760
Speaker 3: Yeah, it could a lot of it is likely just

37
00:02:04,920 --> 00:02:09,680
Speaker 3: newness to the Chinese consumer. Chinese consumers, like many consumers

38
00:02:09,720 --> 00:02:12,960
Speaker 3: around the world, are often interested in purchasing whatever is

39
00:02:13,000 --> 00:02:16,600
Speaker 3: on trend, whatever is new there is influenced by social

40
00:02:16,639 --> 00:02:19,919
Speaker 3: media as consumers anywhere in the world, and I think

41
00:02:19,960 --> 00:02:23,920
Speaker 3: that Lulu has had a strong formula for success and

42
00:02:24,000 --> 00:02:27,320
Speaker 3: that is that that has been an enormous driver in

43
00:02:27,360 --> 00:02:31,079
Speaker 3: the US. Some of it's interesting that some of these

44
00:02:31,160 --> 00:02:34,080
Speaker 3: numbers were softer in Q three, but I expect in

45
00:02:34,200 --> 00:02:38,960
Speaker 3: the next quarter, particularly as that will be the holiday numbers,

46
00:02:39,000 --> 00:02:40,600
Speaker 3: it should be even stronger.

47
00:02:40,880 --> 00:02:42,920
Speaker 1: We'll see treated I might be revealing too much about

48
00:02:42,919 --> 00:02:46,800
Speaker 1: my social media habits, but all over TikTok Instagram, I

49
00:02:46,840 --> 00:02:49,960
Speaker 1: see all these influencers saying, hey, these pair of sweatpants

50
00:02:49,960 --> 00:02:52,200
Speaker 1: from Lululemon, you can get the exact same thing on

51
00:02:52,280 --> 00:02:55,080
Speaker 1: Amazon for a third of the costs. What is the

52
00:02:55,080 --> 00:02:58,720
Speaker 1: bigger threat to Lulu? Is it the Alo Yoga, the Viory's,

53
00:02:58,760 --> 00:03:01,000
Speaker 1: the high ends of the world, or is it Amazon

54
00:03:01,040 --> 00:03:01,840
Speaker 1: in fast fashion?

55
00:03:03,000 --> 00:03:03,680
Speaker 4: Well, that's a.

56
00:03:03,639 --> 00:03:07,639
Speaker 3: Great question, because the biggest threat to Lulu is likely

57
00:03:07,919 --> 00:03:11,200
Speaker 3: that competition where they could be become the new middle

58
00:03:11,280 --> 00:03:14,520
Speaker 3: and that's absolutely where they don't want to be. They

59
00:03:14,600 --> 00:03:18,440
Speaker 3: need to continue preserving their premium positioning. They need to

60
00:03:18,440 --> 00:03:21,480
Speaker 3: be very very careful about promotions and discounting, because you're

61
00:03:21,520 --> 00:03:26,320
Speaker 3: absolutely right, they're competitive threats that are at the high

62
00:03:26,400 --> 00:03:29,560
Speaker 3: end and they're absolutely the knockoffs at the low end,

63
00:03:29,919 --> 00:03:32,040
Speaker 3: and you don't want to be either. You need to

64
00:03:32,080 --> 00:03:35,520
Speaker 3: make sure that every part of the brand, the logo,

65
00:03:36,200 --> 00:03:40,680
Speaker 3: all of those elements are preserved and protected, and that

66
00:03:40,920 --> 00:03:44,880
Speaker 3: discounting doesn't become too prevalent in its business model.

67
00:03:45,280 --> 00:03:47,840
Speaker 1: How are they on that front on inventories and fighting

68
00:03:47,880 --> 00:03:50,680
Speaker 1: off discounting suit tread Are they doing a good job

69
00:03:50,720 --> 00:03:53,040
Speaker 1: there to fend off falling into the middle.

70
00:03:54,160 --> 00:03:57,800
Speaker 3: It seems at the moment that they are fairly strong.

71
00:03:58,440 --> 00:04:02,200
Speaker 3: This is a company that seems to have pricing power

72
00:04:02,360 --> 00:04:06,040
Speaker 3: and seems to be able to get away with minimal discounting.

73
00:04:06,800 --> 00:04:12,480
Speaker 3: You don't necessarily see the huge, huge Cyber Week and

74
00:04:12,560 --> 00:04:16,200
Speaker 3: Black Friday promotions that other brands and the deep discounts

75
00:04:16,200 --> 00:04:19,279
Speaker 3: that other brands are forced to reckon with. They did

76
00:04:19,279 --> 00:04:22,000
Speaker 3: have an inventory situation earlier in the year, it seems

77
00:04:22,040 --> 00:04:25,600
Speaker 3: like it has stabilized a bit, so it appears to

78
00:04:25,720 --> 00:04:28,839
Speaker 3: have some They seem to be in a better position

79
00:04:28,920 --> 00:04:31,960
Speaker 3: going in to Q four and I expect that that

80
00:04:32,000 --> 00:04:34,200
Speaker 3: will also carry through twenty twenty five.

81
00:04:34,680 --> 00:04:36,960
Speaker 5: So true to when it comes to the international business

82
00:04:37,160 --> 00:04:39,840
Speaker 5: analyst for noting that it was the legans category that

83
00:04:40,120 --> 00:04:41,960
Speaker 5: was seen as strength for the first time in a while,

84
00:04:42,240 --> 00:04:44,440
Speaker 5: But I thought the Lulu problem was the fact that

85
00:04:44,440 --> 00:04:48,159
Speaker 5: they were leaning too much into tight fitting clothing and

86
00:04:48,200 --> 00:04:50,400
Speaker 5: how to go into a more baggy look. Which one

87
00:04:50,440 --> 00:04:52,560
Speaker 5: is it well.

88
00:04:53,279 --> 00:04:56,000
Speaker 3: A lot of this is also very dependent on regional

89
00:04:56,040 --> 00:05:02,320
Speaker 3: preferences too, So the challenges are that that certainly that

90
00:05:02,360 --> 00:05:05,560
Speaker 3: they're going to have to figure out from their merchandising standpoint,

91
00:05:05,640 --> 00:05:10,040
Speaker 3: from their product development standpoint, what is appropriate in which markets, where,

92
00:05:10,360 --> 00:05:14,920
Speaker 3: which colors, which styles are going to resonate more with shoppers.

93
00:05:15,120 --> 00:05:17,040
Speaker 3: A lot of that is going to be influenced by

94
00:05:17,080 --> 00:05:19,760
Speaker 3: social media, much of it is going to be influenced

95
00:05:19,760 --> 00:05:22,760
Speaker 3: by even store associates in stores, So a lot of

96
00:05:22,800 --> 00:05:25,919
Speaker 3: this is going to fluctuate it. That is one of

97
00:05:25,920 --> 00:05:29,440
Speaker 3: the challenges of being a fashion retailer. But also what

98
00:05:29,560 --> 00:05:34,320
Speaker 3: Lulu has is the ability to actually shape what shoppers

99
00:05:34,400 --> 00:05:36,720
Speaker 3: want by what it has in the store and what

100
00:05:36,760 --> 00:05:41,279
Speaker 3: it's positioning as what is on trend at any given moment.

101
00:05:41,400 --> 00:05:43,480
Speaker 5: When you look at the US and also consumers around

102
00:05:43,480 --> 00:05:45,520
Speaker 5: the world, which do you see right now in terms

103
00:05:45,560 --> 00:05:48,240
Speaker 5: of who is the most picky, where's the pickiest consumer?

104
00:05:49,920 --> 00:05:50,960
Speaker 4: I will, oh, that's.

105
00:05:50,800 --> 00:05:55,200
Speaker 3: A great question, because consumers everywhere are pretty picky, and

106
00:05:55,600 --> 00:05:58,080
Speaker 3: this is one of the things that we are certainly

107
00:05:58,120 --> 00:06:01,719
Speaker 3: seeing is that certainly at the low end, consumers are

108
00:06:01,760 --> 00:06:05,720
Speaker 3: incredibly fickle because they're the most economically distressed. But even

109
00:06:05,800 --> 00:06:08,320
Speaker 3: at the high end, we see a lot of fickleness

110
00:06:08,360 --> 00:06:12,760
Speaker 3: because those consumers, while they're still flush with cash, they

111
00:06:12,760 --> 00:06:15,479
Speaker 3: have so much choice. And we see that in some

112
00:06:15,560 --> 00:06:19,599
Speaker 3: of those US numbers. And that's absolutely an issue that

113
00:06:19,600 --> 00:06:24,640
Speaker 3: that every business that is trying to to attract higher

114
00:06:24,720 --> 00:06:26,200
Speaker 3: end customers has to face.

115
00:06:27,040 --> 00:06:30,480
Speaker 2: To catch jump. As always sat there forrest the research.

116
00:06:40,440 --> 00:06:42,880
Speaker 2: I want to cross to Tom post of page Jim.

117
00:06:42,920 --> 00:06:45,359
Speaker 2: Tom joins us now for more. Tom, your first reaction

118
00:06:45,400 --> 00:06:46,800
Speaker 2: today one what jumps out to you.

119
00:06:47,480 --> 00:06:49,080
Speaker 4: Yeah, it's so good to be with you all.

120
00:06:49,360 --> 00:06:51,240
Speaker 6: Look, I think at the end of the day, you know,

121
00:06:51,279 --> 00:06:53,560
Speaker 6: this report is pretty consistent with what our you has been,

122
00:06:53,600 --> 00:06:56,000
Speaker 6: which is to say, you know, the labor backdrops has

123
00:06:56,040 --> 00:06:57,000
Speaker 6: slowed down quite a bit.

124
00:06:57,240 --> 00:06:59,120
Speaker 4: I think there are some cracks in the.

125
00:06:59,080 --> 00:07:01,640
Speaker 6: Labor backdrop, but if the floor is not falling out

126
00:07:01,640 --> 00:07:03,680
Speaker 6: from beneath this year, I mean, if I look, we

127
00:07:03,800 --> 00:07:05,719
Speaker 6: like to look at something called cyclical hiring, and so

128
00:07:05,720 --> 00:07:07,919
Speaker 6: basically you just take private jobs, you strip out healthcare.

129
00:07:08,400 --> 00:07:10,400
Speaker 4: You know, we we gain one hundred and twenty one

130
00:07:10,400 --> 00:07:11,400
Speaker 4: thousand jobs this month.

131
00:07:11,440 --> 00:07:13,960
Speaker 6: I mean, you know, even if we exclude the prime month,

132
00:07:13,960 --> 00:07:16,360
Speaker 6: which was you know, impacted by all the things that

133
00:07:16,400 --> 00:07:19,280
Speaker 6: we know at this point, Boeing and the hurricane, you're

134
00:07:19,320 --> 00:07:21,640
Speaker 6: averaging about one hundred thousand jobs from a sickle go

135
00:07:21,760 --> 00:07:25,240
Speaker 6: hiring perspective. So again, our view has been that continued

136
00:07:25,280 --> 00:07:29,440
Speaker 6: economic expansion will roll into the coming year, but you know,

137
00:07:29,440 --> 00:07:31,760
Speaker 6: you're going to do it with a labor backdrop that

138
00:07:31,760 --> 00:07:33,880
Speaker 6: that has slowed down, and I think, you know, we'll

139
00:07:33,960 --> 00:07:36,080
Speaker 6: kind of will remain soft.

140
00:07:36,360 --> 00:07:39,440
Speaker 1: Tom. Just to be clear, does this change anything when

141
00:07:39,440 --> 00:07:42,560
Speaker 1: it comes to December to December cuts the rhetoric we've

142
00:07:42,560 --> 00:07:44,040
Speaker 1: heard from FED officials.

143
00:07:44,120 --> 00:07:46,520
Speaker 6: No, Danny, I think I think you're quite right to

144
00:07:46,560 --> 00:07:48,640
Speaker 6: ask this question. No, I don't think it changes anything.

145
00:07:49,040 --> 00:07:50,160
Speaker 6: I think at the end of the day, I think

146
00:07:50,200 --> 00:07:52,320
Speaker 6: that this is a kind of number that will support

147
00:07:52,840 --> 00:07:55,800
Speaker 6: the FED cutting rates in December. I think that you know,

148
00:07:56,160 --> 00:07:57,760
Speaker 6: looking for you know, two or three more cuts in

149
00:07:57,760 --> 00:08:00,440
Speaker 6: the coming year. I think is completely reasonable. But again,

150
00:08:00,560 --> 00:08:03,320
Speaker 6: I think it's interesting, right because people were really looking for,

151
00:08:03,640 --> 00:08:05,840
Speaker 6: you know, sort of that are hopeful that this report

152
00:08:05,880 --> 00:08:09,640
Speaker 6: will really bounced back in a more notable way than

153
00:08:09,680 --> 00:08:12,080
Speaker 6: what we've seen, and it didn't. And I think that

154
00:08:12,120 --> 00:08:13,760
Speaker 6: really drives home that when you look at all this

155
00:08:13,840 --> 00:08:16,880
Speaker 6: other labor market data, all those other labor data really

156
00:08:17,000 --> 00:08:18,880
Speaker 6: have really slowed down quite a bit. I mean, if

157
00:08:18,880 --> 00:08:22,400
Speaker 6: you're waiting for the payroll report to crack, it's too late.

158
00:08:22,480 --> 00:08:24,560
Speaker 4: I mean, this is one of the most lagging of.

159
00:08:24,560 --> 00:08:27,880
Speaker 6: Economic indicators, and as I think we all appreciate now,

160
00:08:28,240 --> 00:08:31,480
Speaker 6: is revised relentlessly. So I think when we look at

161
00:08:31,520 --> 00:08:33,400
Speaker 6: some of the leading metrics, it does seem like things

162
00:08:33,400 --> 00:08:34,080
Speaker 6: are slowing down.

163
00:08:34,240 --> 00:08:36,480
Speaker 1: Does that mean that the bigger risk for volatility in

164
00:08:36,520 --> 00:08:39,520
Speaker 1: this market, for volatility of policy is next week CPI

165
00:08:39,679 --> 00:08:41,640
Speaker 1: PPI import prices.

166
00:08:41,960 --> 00:08:43,839
Speaker 6: Yeah, Danie, And that's again one of the sort of

167
00:08:43,880 --> 00:08:46,000
Speaker 6: the unfortunate realities, right. I mean, when you think about

168
00:08:46,000 --> 00:08:48,840
Speaker 6: the things that really drive monetary policy decisions, a lot

169
00:08:48,840 --> 00:08:51,319
Speaker 6: of them are lagging indicators like the payroll report, like CPI.

170
00:08:52,040 --> 00:08:53,520
Speaker 4: So I think you're again, I think you're right.

171
00:08:53,559 --> 00:08:56,360
Speaker 6: I think that we're probably going to be swung around

172
00:08:56,360 --> 00:08:59,360
Speaker 6: by some of this data because while this report at

173
00:08:59,400 --> 00:09:02,400
Speaker 6: twenty seven and it's pretty reasonable, I mean, you can't

174
00:09:02,440 --> 00:09:04,400
Speaker 6: discount that next month you're gonna have a low one handle.

175
00:09:04,440 --> 00:09:07,040
Speaker 6: I mean, that's how the data have been rolling. And

176
00:09:07,120 --> 00:09:08,600
Speaker 6: then of course you then build.

177
00:09:08,400 --> 00:09:10,360
Speaker 4: In the revisions. It's like you're not just looking at

178
00:09:10,360 --> 00:09:11,320
Speaker 4: the current month anymore.

179
00:09:11,880 --> 00:09:13,559
Speaker 6: You have to look at what the prior month did

180
00:09:13,559 --> 00:09:15,200
Speaker 6: from a revisions perspective.

181
00:09:15,240 --> 00:09:17,120
Speaker 4: So yeah, I do. I think that things actually might

182
00:09:17,160 --> 00:09:18,560
Speaker 4: have been pretty bolts on that regard.

183
00:09:18,679 --> 00:09:20,640
Speaker 2: If you are just joining us, welcome to the program.

184
00:09:20,679 --> 00:09:22,680
Speaker 2: You just missed out on the job's number two twenty

185
00:09:22,679 --> 00:09:25,160
Speaker 2: seven a small upside surprise. The media estimate was two

186
00:09:25,240 --> 00:09:28,120
Speaker 2: twenty unemployment came at four point two percent. That is

187
00:09:28,160 --> 00:09:30,040
Speaker 2: the wrong kind of upside surprise. We were looking for

188
00:09:30,120 --> 00:09:32,760
Speaker 2: four point one percent. Way, just come again, just a

189
00:09:32,800 --> 00:09:35,320
Speaker 2: little bit hotter than expected, in line with the previous

190
00:09:35,320 --> 00:09:37,880
Speaker 2: month at zero zero point four percent. Joining us now,

191
00:09:37,920 --> 00:09:40,440
Speaker 2: Muhammad al Erman a, Queen's College, Chambridge, Mohammed, You've had

192
00:09:40,480 --> 00:09:43,400
Speaker 2: about seven eight minutes to choose over these numbers. What

193
00:09:43,480 --> 00:09:44,400
Speaker 2: stands out to you, sir?

194
00:09:45,800 --> 00:09:49,000
Speaker 7: Thank you? John. As Jim Bianco pointed out, the challenge

195
00:09:49,000 --> 00:09:51,000
Speaker 7: for the market and for policy would have been a

196
00:09:51,360 --> 00:09:55,680
Speaker 7: consistently strong report. This is a somewhat strong report, but

197
00:09:55,760 --> 00:09:59,560
Speaker 7: not consistently strong. So it is strong on the earning side.

198
00:09:59,760 --> 00:10:03,480
Speaker 7: It is is strong on the labor participation coming downside,

199
00:10:03,559 --> 00:10:07,720
Speaker 7: let's supply, and is also strong on a small beat unemployment.

200
00:10:07,840 --> 00:10:11,560
Speaker 7: But the fact that the unemployment weight went up means

201
00:10:11,640 --> 00:10:15,640
Speaker 7: that the FED will be comfortable cutting by twenty five

202
00:10:15,640 --> 00:10:18,679
Speaker 7: basis points means that the market will increase the probability

203
00:10:18,679 --> 00:10:22,319
Speaker 7: of this happening. So on the policy front, this did

204
00:10:22,360 --> 00:10:26,480
Speaker 7: not complicate what would have been in messy situations for

205
00:10:26,520 --> 00:10:29,600
Speaker 7: the reasons that Jim pointed out. On the economy side,

206
00:10:29,640 --> 00:10:33,360
Speaker 7: join just a confirmation that the labor market remains solid

207
00:10:33,800 --> 00:10:36,320
Speaker 7: and that US exceptionalism is set to continue.

208
00:10:36,920 --> 00:10:39,240
Speaker 2: But it makes a decision easy to cut twenty five.

209
00:10:39,440 --> 00:10:42,800
Speaker 2: Maybe still got to wait for CPI next Wednesday. I wonder, though,

210
00:10:42,920 --> 00:10:45,480
Speaker 2: if it's still just as hard to signal anything for

211
00:10:45,520 --> 00:10:48,160
Speaker 2: twenty twenty five in the news conference, what is that

212
00:10:48,240 --> 00:10:50,520
Speaker 2: exercise going to look like in two weeks time?

213
00:10:52,040 --> 00:10:54,319
Speaker 7: So it would be hard for this FED because this

214
00:10:54,400 --> 00:10:58,480
Speaker 7: FED is so reactive, is so data dependent, that it

215
00:10:58,520 --> 00:11:03,280
Speaker 7: will simply tell us that it will remain la data dependent.

216
00:11:03,320 --> 00:11:05,440
Speaker 7: And I suspect that while their range is going to

217
00:11:05,440 --> 00:11:07,800
Speaker 7: compress a little bit, he's still going to have quite

218
00:11:07,800 --> 00:11:12,400
Speaker 7: a wide range in terms of the terminal rate. You know,

219
00:11:12,640 --> 00:11:15,240
Speaker 7: the FAT always has two options. The option it took

220
00:11:15,240 --> 00:11:18,040
Speaker 7: in twenty twenty one and got completely wrong, which is

221
00:11:18,040 --> 00:11:20,800
Speaker 7: to look forward, And now it's shied away from that

222
00:11:21,240 --> 00:11:23,520
Speaker 7: and went to the option of being excessively data dependent.

223
00:11:23,600 --> 00:11:26,080
Speaker 7: And I suspect they'll stay excessively data dependent. So we're

224
00:11:26,080 --> 00:11:30,680
Speaker 7: not going to get any strong signals other than we

225
00:11:30,720 --> 00:11:31,960
Speaker 7: will remain data dependent.

226
00:11:32,480 --> 00:11:34,480
Speaker 1: Tom, can I get your opinion on this? What it

227
00:11:34,520 --> 00:11:37,400
Speaker 1: looks like in December with the summary of economic projections,

228
00:11:37,440 --> 00:11:40,720
Speaker 1: looks like what they can project forward if at all?

229
00:11:40,840 --> 00:11:43,440
Speaker 6: Yeah, Look, I think Muhammad is quite right. I think,

230
00:11:43,640 --> 00:11:45,920
Speaker 6: you know, prudence, I think is demanded right now. You know,

231
00:11:46,280 --> 00:11:49,040
Speaker 6: Powell's in a he's in a slightly tricky spot, and

232
00:11:49,080 --> 00:11:50,920
Speaker 6: I think he's laid the groundwork for that, right Like

233
00:11:51,080 --> 00:11:53,840
Speaker 6: you think about his speech at the Deal Book the

234
00:11:53,880 --> 00:11:57,000
Speaker 6: other day, you know, I think what he laid out

235
00:11:57,000 --> 00:11:58,839
Speaker 6: there to me, I think made a lot of sort

236
00:11:58,840 --> 00:12:01,920
Speaker 6: of practical sense. You know, they're just going to continue

237
00:12:01,960 --> 00:12:04,600
Speaker 6: to wait and see how the data unfold from here.

238
00:12:04,679 --> 00:12:05,880
Speaker 4: They're not going to pre commit.

239
00:12:05,640 --> 00:12:07,440
Speaker 6: Him, and he's already sort of put He's already laid

240
00:12:07,440 --> 00:12:11,120
Speaker 6: the groundwork for you know, sort of a skip after

241
00:12:11,200 --> 00:12:13,280
Speaker 6: the December meeting. I mean he's been pretty clear and

242
00:12:13,280 --> 00:12:16,040
Speaker 6: that not just that that the Deal Book meeting, but

243
00:12:16,120 --> 00:12:18,480
Speaker 6: during the last press or two so so I think,

244
00:12:18,520 --> 00:12:19,959
Speaker 6: you know, when I think about the sort of the

245
00:12:20,240 --> 00:12:22,800
Speaker 6: step at large, I mean, look, I don't know that

246
00:12:22,800 --> 00:12:24,800
Speaker 6: they have to make any wholesale changes here. I mean,

247
00:12:24,960 --> 00:12:27,440
Speaker 6: you know, the economy is more or less evolving in

248
00:12:27,480 --> 00:12:29,720
Speaker 6: a similar fashion to what they have there for.

249
00:12:30,640 --> 00:12:31,480
Speaker 4: Twenty twenty five.

250
00:12:32,000 --> 00:12:33,440
Speaker 6: So again, I think it would be in their best

251
00:12:33,440 --> 00:12:37,200
Speaker 6: interest to not really make any wholesale changes.

252
00:12:37,240 --> 00:12:39,600
Speaker 4: This is a nipping and tucking outcome.

253
00:12:39,600 --> 00:12:41,360
Speaker 5: I think, Well, when it comes to the data, and

254
00:12:41,360 --> 00:12:44,280
Speaker 5: we're still waiting on CPI next week, Muhammad, last time

255
00:12:44,320 --> 00:12:46,439
Speaker 5: you were on for the job Suport, you said inflation

256
00:12:46,600 --> 00:12:48,679
Speaker 5: is not dead. What kind of number could we see

257
00:12:48,880 --> 00:12:51,520
Speaker 5: that could potentially change the fence of thinking at this

258
00:12:51,600 --> 00:12:54,559
Speaker 5: upcoming meeting, Denry, and you.

259
00:12:54,559 --> 00:12:57,840
Speaker 7: Heard from from the chair saying that inflation has been

260
00:12:57,880 --> 00:13:02,680
Speaker 7: more stubborn than he extended he and the FED expected. Look,

261
00:13:02,720 --> 00:13:05,000
Speaker 7: we're going to see inflation stuck in the two and

262
00:13:05,080 --> 00:13:09,880
Speaker 7: a half to three percent range for the Fed's preferred measure.

263
00:13:09,920 --> 00:13:12,360
Speaker 7: The core measure, and the FED is going to have

264
00:13:12,360 --> 00:13:15,000
Speaker 7: to make a decision. My gut feeling is that it

265
00:13:15,120 --> 00:13:19,440
Speaker 7: will run with this number there, promising us two percent

266
00:13:19,559 --> 00:13:23,040
Speaker 7: down the road, and I suspect we'll see seventy five

267
00:13:23,080 --> 00:13:26,600
Speaker 7: basis points of cut still, but they're going to be

268
00:13:26,600 --> 00:13:29,760
Speaker 7: spread out like like you just heard. It's going to

269
00:13:29,840 --> 00:13:33,080
Speaker 7: be cut, pause or skip and then cut, and then

270
00:13:33,080 --> 00:13:37,040
Speaker 7: we're going to have a huge conversation. Was this a

271
00:13:37,120 --> 00:13:40,280
Speaker 7: Hawkish skip? Was it a Dubs skip? So we're going

272
00:13:40,320 --> 00:13:42,400
Speaker 7: to we're going to go to the third differential now

273
00:13:43,200 --> 00:13:46,160
Speaker 7: because we don't we lack proper policy guidance.

274
00:13:46,320 --> 00:13:48,319
Speaker 2: Maham as you went there, So what kind of skip

275
00:13:48,440 --> 00:13:51,640
Speaker 2: or cut? Are you expecting? A Davish cut, a Hawkish cut?

276
00:13:51,720 --> 00:13:52,600
Speaker 2: What are you looking for?

277
00:13:53,400 --> 00:13:56,120
Speaker 7: Look, no one is going to predict this when when

278
00:13:56,160 --> 00:13:58,360
Speaker 7: you know that the reaction function of the FED is

279
00:13:58,400 --> 00:14:01,800
Speaker 7: backward looking because it will depend on the latest number.

280
00:14:02,040 --> 00:14:06,440
Speaker 2: Unfortunately, and CPI drops next Wednesday. Bon yolds right now

281
00:14:06,640 --> 00:14:09,480
Speaker 2: are lower by about four basis points on a tenure,

282
00:14:09,520 --> 00:14:12,160
Speaker 2: We're down by about two basis points. Equity futures still

283
00:14:12,240 --> 00:14:14,040
Speaker 2: higher on a session on the S and P five

284
00:14:14,120 --> 00:14:16,400
Speaker 2: hundred by close to two tens of one percent. The

285
00:14:16,480 --> 00:14:18,559
Speaker 2: numbers topped about twelve minutes ago. I want to cross

286
00:14:18,559 --> 00:14:20,800
Speaker 2: back over to Mi McKee for a little bit more.

287
00:14:21,040 --> 00:14:24,000
Speaker 2: Mikey went through what was behind that uptick in unemployment,

288
00:14:24,280 --> 00:14:26,320
Speaker 2: the snap back that we didn't really get. I think

289
00:14:26,360 --> 00:14:27,760
Speaker 2: a lot of people in the market were looking for

290
00:14:27,800 --> 00:14:30,920
Speaker 2: a big snapback in payrolls. Where did we get some

291
00:14:31,000 --> 00:14:33,080
Speaker 2: growth and where did we miss out?

292
00:14:33,400 --> 00:14:37,120
Speaker 8: Well, what's really interesting is we saw a decline in

293
00:14:37,240 --> 00:14:41,200
Speaker 8: retail sales hiring minus twenty eight thousand in the month

294
00:14:41,240 --> 00:14:44,400
Speaker 8: of November, when people are usually staffing up, which leads

295
00:14:44,400 --> 00:14:46,600
Speaker 8: you to believe that there may be some seasonal effects

296
00:14:46,600 --> 00:14:49,960
Speaker 8: to this. The seasonal adjustment factors may be holding down

297
00:14:50,040 --> 00:14:53,040
Speaker 8: the number of jobs created a little bit. Trade and

298
00:14:53,080 --> 00:14:57,360
Speaker 8: transportation jobs also down twenty three thousand, and that's usually

299
00:14:57,400 --> 00:15:00,920
Speaker 8: when we're seeing the additional ups and X drivers and

300
00:15:01,000 --> 00:15:02,840
Speaker 8: that sort of thing, So a little bit of a

301
00:15:02,840 --> 00:15:06,920
Speaker 8: surprise there. We did see manufacturing rebound with thirty four

302
00:15:06,960 --> 00:15:11,120
Speaker 8: thousand jobs, so good news there. Construction only ten thousand,

303
00:15:11,360 --> 00:15:15,600
Speaker 8: and we're looking at the government hiring is one of

304
00:15:15,600 --> 00:15:17,880
Speaker 8: the highest at thirty three thousand, but almost all that

305
00:15:18,000 --> 00:15:21,520
Speaker 8: was state in local federal government lost two thousand jobs,

306
00:15:21,760 --> 00:15:25,600
Speaker 8: and our old friend leisure in hospitality did rebound fifty

307
00:15:25,680 --> 00:15:28,600
Speaker 8: three thousand jobs totally. About twenty eight thousand of those

308
00:15:28,960 --> 00:15:32,920
Speaker 8: were in the restaurant business, so people getting jobs there.

309
00:15:33,040 --> 00:15:35,320
Speaker 8: And then I do want to point out the three

310
00:15:35,400 --> 00:15:41,200
Speaker 8: digit unemployment rates four point two four to six for November,

311
00:15:41,280 --> 00:15:45,800
Speaker 8: so basically just below a four point three percent reading

312
00:15:46,280 --> 00:15:48,440
Speaker 8: would have gotten the Fed's attention if not worried them.

313
00:15:48,480 --> 00:15:51,680
Speaker 8: Remember they forecast in September four point four percent by

314
00:15:51,680 --> 00:15:52,360
Speaker 8: the end of the year.

315
00:16:02,040 --> 00:16:03,520
Speaker 2: Good catch, MI, because we can't get down to the

316
00:16:03,560 --> 00:16:05,760
Speaker 2: open and bound in about forty six minutes time. You'll

317
00:16:05,760 --> 00:16:08,560
Speaker 2: see the outperformance on a small caps the Rustle by

318
00:16:08,640 --> 00:16:10,680
Speaker 2: something like eight tens of one percent at the moment

319
00:16:10,680 --> 00:16:13,480
Speaker 2: on the screen, by point eighty one off the back

320
00:16:13,520 --> 00:16:14,840
Speaker 2: of this move lower at the front end of the

321
00:16:14,920 --> 00:16:17,760
Speaker 2: yield curve, with yields down something like four basis points.

322
00:16:17,840 --> 00:16:20,200
Speaker 2: Jeff Rosenberg of Black Rock joins US now to get

323
00:16:20,200 --> 00:16:22,480
Speaker 2: his input on the program. Jeff, Welcome to the program.

324
00:16:22,480 --> 00:16:24,440
Speaker 2: The panel is so far suggesting the door is still

325
00:16:24,440 --> 00:16:27,360
Speaker 2: pretty much wide open for twenty five basis point reduction.

326
00:16:27,440 --> 00:16:29,320
Speaker 2: It's not your sense of thing as well for two

327
00:16:29,320 --> 00:16:29,800
Speaker 2: weeks time.

328
00:16:31,120 --> 00:16:33,840
Speaker 9: Yeah, I think that's the read. This is clearly just

329
00:16:34,000 --> 00:16:37,720
Speaker 9: reiterating a gradual slowing in the labor markets. As Mike

330
00:16:37,840 --> 00:16:42,120
Speaker 9: just pointed out to three digits that unemployment rate kind

331
00:16:42,120 --> 00:16:45,080
Speaker 9: of helps the FED come in December to cut. The

332
00:16:45,120 --> 00:16:47,960
Speaker 9: market was already pricing seventy percent of an outlook for that,

333
00:16:48,200 --> 00:16:50,800
Speaker 9: and I think the bond market reaction, the initial reaction,

334
00:16:51,240 --> 00:16:53,760
Speaker 9: is just kind of increasing that on the kind of

335
00:16:53,760 --> 00:16:56,760
Speaker 9: gradual labor market slow down. So I think that's very

336
00:16:56,800 --> 00:16:59,160
Speaker 9: much the read. And as the panel was just discussing,

337
00:16:59,400 --> 00:17:02,720
Speaker 9: we're going to pay to this, you know, pause skip

338
00:17:02,840 --> 00:17:06,760
Speaker 9: debate and what kind of message that means. But the

339
00:17:06,760 --> 00:17:11,280
Speaker 9: big debate is over the degree to which cuts have

340
00:17:11,359 --> 00:17:14,320
Speaker 9: to take place in twenty twenty five, and the disconnect

341
00:17:14,520 --> 00:17:18,480
Speaker 9: between financial conditions which are going to be easier after today,

342
00:17:19,440 --> 00:17:22,000
Speaker 9: and the degree of restrictiveness that you still see some

343
00:17:22,040 --> 00:17:27,199
Speaker 9: of the committee members believe justifies that that number of

344
00:17:27,240 --> 00:17:29,640
Speaker 9: cuts that they're forecasting into twenty twenty five.

345
00:17:30,040 --> 00:17:32,679
Speaker 1: Jeff, are you arguing then that you need to have

346
00:17:32,720 --> 00:17:36,080
Speaker 1: a FED who starts paying attention more to these financial conditions.

347
00:17:36,080 --> 00:17:38,920
Speaker 1: That conversation is kind of gone by the wayside. Are

348
00:17:38,920 --> 00:17:41,080
Speaker 1: they going to have to rethink cuts because of what

349
00:17:41,119 --> 00:17:41,960
Speaker 1: this market is doing?

350
00:17:43,400 --> 00:17:44,760
Speaker 4: You know, it's gone by the wayside.

351
00:17:44,800 --> 00:17:46,719
Speaker 9: But then there was a little bit of acknowledgment of

352
00:17:46,760 --> 00:17:49,919
Speaker 9: it in Powell, kind of acknowledging, yeah, we cut fifty

353
00:17:50,000 --> 00:17:52,880
Speaker 9: and then the data revised. You know, the whole issue

354
00:17:52,920 --> 00:17:54,959
Speaker 9: is really about the strength of the economy. And as

355
00:17:55,000 --> 00:17:58,800
Speaker 9: Muhammad rightly points out, this is a very very data

356
00:17:58,880 --> 00:18:02,960
Speaker 9: dependent and reactive fed and the data that's key here

357
00:18:03,119 --> 00:18:06,679
Speaker 9: on how restrictive policy is is really economic growth. And

358
00:18:06,720 --> 00:18:09,920
Speaker 9: you don't see economic growth well below potential. You see

359
00:18:09,960 --> 00:18:14,159
Speaker 9: economic growth above potential, and that's telling you that monetary

360
00:18:14,160 --> 00:18:16,840
Speaker 9: policy is not as restrictive as they think it is. Now,

361
00:18:16,840 --> 00:18:18,680
Speaker 9: there's a little bit of a disconnect between whether you're

362
00:18:18,680 --> 00:18:20,960
Speaker 9: looking at the growth measures, whether you're looking at the

363
00:18:21,040 --> 00:18:23,959
Speaker 9: labor market. Take out about one hundred thousand from today's

364
00:18:23,960 --> 00:18:27,959
Speaker 9: payroll print, that's hurricane and strike payback. The labor markets

365
00:18:27,960 --> 00:18:31,359
Speaker 9: are moderating, that's the best evidence of the restrictiveness. But

366
00:18:31,440 --> 00:18:35,760
Speaker 9: outside of that, you really see the impact of financial conditions.

367
00:18:35,840 --> 00:18:40,720
Speaker 9: Animal spirits is a very supportive financial conditions environment, and

368
00:18:40,760 --> 00:18:43,520
Speaker 9: that's how monetary policy transmits so maybe you don't need

369
00:18:43,560 --> 00:18:48,159
Speaker 9: to keep pushing into financial conditions easing by this degree

370
00:18:48,160 --> 00:18:49,440
Speaker 9: of cuts that they've been signaling.

371
00:18:49,480 --> 00:18:52,400
Speaker 5: Well, Mohammad mentioned it earlier about now in the third degree,

372
00:18:52,600 --> 00:18:54,679
Speaker 5: if the door's open for this cut and there's going

373
00:18:54,720 --> 00:18:57,119
Speaker 5: to be a bias to twenty five basis points, then

374
00:18:57,160 --> 00:18:59,320
Speaker 5: what is the tone and the rhetoric around that. Is

375
00:18:59,320 --> 00:19:01,800
Speaker 5: it going to be a hawkish cut because they're going

376
00:19:01,800 --> 00:19:03,280
Speaker 5: into twenty twenty five and there's going to be a

377
00:19:03,280 --> 00:19:05,280
Speaker 5: lot of change of fiscal policy in Washington.

378
00:19:07,400 --> 00:19:11,040
Speaker 9: Well, it's hawkish in this relative to expectations. Right, So

379
00:19:11,960 --> 00:19:14,720
Speaker 9: two weeks ago, four weeks ago, the market was expecting,

380
00:19:15,000 --> 00:19:17,840
Speaker 9: you know, a very aggressive pace of FED cuts. Now

381
00:19:17,840 --> 00:19:21,040
Speaker 9: we've priced that out from the markets, and so there's

382
00:19:21,080 --> 00:19:24,040
Speaker 9: a little bit less of a disconnect between the Fed

383
00:19:24,280 --> 00:19:27,359
Speaker 9: moderating the pace of cuts into twenty twenty five in

384
00:19:27,440 --> 00:19:30,080
Speaker 9: market expectations. So that may read hawkish, but if it

385
00:19:30,119 --> 00:19:34,400
Speaker 9: confirms market expectations, not so problematic. If there's a even

386
00:19:34,480 --> 00:19:37,280
Speaker 9: greater acknowledgment of that, I think that would be surprising

387
00:19:37,320 --> 00:19:38,640
Speaker 9: and that would read hawkish.

388
00:19:38,840 --> 00:19:39,880
Speaker 4: I think when you get.

389
00:19:39,680 --> 00:19:42,560
Speaker 9: Into twenty twenty five, it is going to be about

390
00:19:42,880 --> 00:19:47,760
Speaker 9: understanding this pace of cuts has to slow because the

391
00:19:47,840 --> 00:19:52,280
Speaker 9: economy and the data doesn't support the amount of restrictiveness

392
00:19:52,280 --> 00:19:52,960
Speaker 9: that the FED thinks.

393
00:19:52,960 --> 00:19:56,399
Speaker 2: They currently have another round of FED speed coming up today,

394
00:19:56,400 --> 00:19:58,320
Speaker 2: and then obviously we're going get into the quid period.

395
00:19:58,359 --> 00:20:00,440
Speaker 2: I think they've been quite consistent for the weeks so far.

396
00:20:00,680 --> 00:20:03,080
Speaker 2: We've mentioned this quote from Governor Waller in a speech

397
00:20:03,119 --> 00:20:05,800
Speaker 2: from him earlier this week, cuts or skip, this is

398
00:20:05,800 --> 00:20:07,720
Speaker 2: what he has to sound the neutral rate. There is

399
00:20:07,760 --> 00:20:10,680
Speaker 2: still some distance to go in reducing the policy rate

400
00:20:11,000 --> 00:20:13,200
Speaker 2: to neutral, to post sudy over a PHM. I just

401
00:20:13,240 --> 00:20:14,919
Speaker 2: want to give you a final word, just quickly, on

402
00:20:15,000 --> 00:20:17,760
Speaker 2: the neutral rate. They think they're a long way away

403
00:20:17,960 --> 00:20:21,120
Speaker 2: from neutral. They think they've got space here, which means

404
00:20:21,160 --> 00:20:23,920
Speaker 2: they can carry on cunning interest rates. How much distance

405
00:20:23,920 --> 00:20:25,639
Speaker 2: do you think there is between where we are and

406
00:20:25,640 --> 00:20:26,600
Speaker 2: where neutral might be.

407
00:20:28,080 --> 00:20:30,400
Speaker 4: It depends which Fed officially you ask, right. I mean,

408
00:20:30,600 --> 00:20:32,359
Speaker 4: think about the dispersion.

409
00:20:32,440 --> 00:20:35,679
Speaker 6: In the estimates of what neutral is. I mean the

410
00:20:35,760 --> 00:20:38,560
Speaker 6: low end is two and a quarter and the upper

411
00:20:38,640 --> 00:20:39,800
Speaker 6: end is three seventy five.

412
00:20:39,880 --> 00:20:42,280
Speaker 4: Right per thelong term dot obviously nominal we're talking.

413
00:20:42,040 --> 00:20:44,520
Speaker 6: Here, there's one hundred and fifty basis points have spread,

414
00:20:45,280 --> 00:20:48,320
Speaker 6: so depending that you ask it, could you could be

415
00:20:48,960 --> 00:20:50,760
Speaker 6: really far away from it. I think, what's going to

416
00:20:50,800 --> 00:20:52,879
Speaker 6: wind up happening, John, is this so if you look

417
00:20:52,920 --> 00:20:55,840
Speaker 6: at the feeds twenty five dot, the.

418
00:20:55,840 --> 00:20:57,479
Speaker 4: Meeting is three point four percent.

419
00:20:58,200 --> 00:20:59,600
Speaker 6: I think what's going to wind up happening is that's

420
00:20:59,600 --> 00:21:01,720
Speaker 6: going to shifre higher, right And I think, and I

421
00:21:01,760 --> 00:21:04,040
Speaker 6: think to Jeff for a point, I think I think

422
00:21:04,080 --> 00:21:07,280
Speaker 6: it'll wind up shifting higher to where the where the

423
00:21:07,280 --> 00:21:08,920
Speaker 6: market is right. The market is percing here, I think

424
00:21:08,960 --> 00:21:10,760
Speaker 6: three seventy right now by the end of the year.

425
00:21:11,080 --> 00:21:12,240
Speaker 4: So you take out.

426
00:21:12,119 --> 00:21:14,399
Speaker 6: One of those one of those four cuts that they

427
00:21:14,400 --> 00:21:16,399
Speaker 6: have priced in for next year. I think it falls

428
00:21:16,400 --> 00:21:19,040
Speaker 6: in line with what the market is thinking. And I

429
00:21:19,040 --> 00:21:21,320
Speaker 6: don't think that has to be terribly disruptive.

430
00:21:21,760 --> 00:21:24,320
Speaker 2: Tom Post Sally pagm Tom, I appreciate your time, sir.

431
00:21:24,400 --> 00:21:26,440
Speaker 2: Thank you, Muhammad. I want to come back to you

432
00:21:26,720 --> 00:21:28,879
Speaker 2: on the same question. I think this is an important debate.

433
00:21:29,160 --> 00:21:31,760
Speaker 2: How we reconcile our differences here between whether the market

434
00:21:31,880 --> 00:21:34,800
Speaker 2: might believe neutral is and what this Federal Reserve is signaling.

435
00:21:34,880 --> 00:21:36,119
Speaker 2: How do you think we close that gap?

436
00:21:37,840 --> 00:21:40,840
Speaker 7: I think we close it by fudging. A very key

437
00:21:40,920 --> 00:21:43,960
Speaker 7: variable to all this is what is the inflation target? John.

438
00:21:44,119 --> 00:21:48,679
Speaker 7: If your inflation target is two percent, then you should

439
00:21:48,720 --> 00:21:53,200
Speaker 7: not cut in December. If your inflation target is somewhere

440
00:21:53,240 --> 00:21:56,359
Speaker 7: between two and a half and three, which is justified

441
00:21:56,480 --> 00:21:59,879
Speaker 7: by all the changes, all the structural long term changes

442
00:21:59,880 --> 00:22:03,479
Speaker 7: going on the economy, then you cut and we are

443
00:22:03,520 --> 00:22:05,520
Speaker 7: fudging this. No one wants to talk about this. I

444
00:22:05,560 --> 00:22:07,800
Speaker 7: don't know if you saw if your Fridays ago in

445
00:22:07,840 --> 00:22:11,720
Speaker 7: the afternoon the feed put out what it's discussion of

446
00:22:11,320 --> 00:22:14,320
Speaker 7: the monitored framework coming up and set explicitly we will

447
00:22:14,359 --> 00:22:17,199
Speaker 7: not discuss the inflation target. But critical to all this

448
00:22:17,600 --> 00:22:21,479
Speaker 7: is what the facto inflation target. What they run with

449
00:22:22,040 --> 00:22:23,679
Speaker 7: my own gut feeling, as I said, John, they're going

450
00:22:23,720 --> 00:22:27,800
Speaker 7: to run with slightly higher and that means that ultimately

451
00:22:28,040 --> 00:22:30,960
Speaker 7: they'll end up somewhere between three and three quarters and four.

452
00:22:31,200 --> 00:22:34,320
Speaker 1: Mohammad, what about the argument that they can't abandon what

453
00:22:34,359 --> 00:22:36,880
Speaker 1: they have now is their inflation target, because it's important

454
00:22:36,880 --> 00:22:40,160
Speaker 1: in setting expectations. It's important not to have people run

455
00:22:40,200 --> 00:22:42,520
Speaker 1: away and think that we're going to have higher sustained

456
00:22:42,520 --> 00:22:46,080
Speaker 1: inflation and therefore change consumer habits. Is there any credence

457
00:22:46,119 --> 00:22:46,800
Speaker 1: to that argument.

458
00:22:48,160 --> 00:22:50,120
Speaker 7: I think there is, and I think you can. There's

459
00:22:50,440 --> 00:22:52,760
Speaker 7: many ways to do it, and people have come up

460
00:22:52,800 --> 00:22:53,800
Speaker 7: with different ways.

461
00:22:54,119 --> 00:22:55,480
Speaker 4: My concern is.

462
00:22:55,480 --> 00:22:58,800
Speaker 7: If they truly believe that two percent is somehow given

463
00:22:59,240 --> 00:23:02,280
Speaker 7: to them, It's not an arbortuary number, and if they

464
00:23:02,359 --> 00:23:05,760
Speaker 7: try to get there and stick to that inflation target,

465
00:23:06,160 --> 00:23:10,080
Speaker 7: they will sacrifice the American exceptionalism. That's what I'm worried about.

466
00:23:10,119 --> 00:23:11,840
Speaker 7: But then at the end of the day, I think

467
00:23:11,840 --> 00:23:14,400
Speaker 7: they're going to fudge it by saying two percent down

468
00:23:14,400 --> 00:23:16,000
Speaker 7: the road and it's just going to be a very

469
00:23:16,040 --> 00:23:16,560
Speaker 7: long road.

470
00:23:17,080 --> 00:23:19,280
Speaker 5: Jeff, do you agree with Mohammad that two percent down

471
00:23:19,320 --> 00:23:20,520
Speaker 5: the road is going to be very long?

472
00:23:22,160 --> 00:23:22,320
Speaker 4: You know?

473
00:23:22,359 --> 00:23:24,520
Speaker 9: I do, And I think this is a really important debate,

474
00:23:24,600 --> 00:23:26,960
Speaker 9: and the VET has had this debate, and I agree

475
00:23:27,000 --> 00:23:29,359
Speaker 9: with Mohammad. They're not going to announce a change to

476
00:23:29,440 --> 00:23:32,479
Speaker 9: the inflation target. They're going to stick to the target,

477
00:23:32,640 --> 00:23:34,160
Speaker 9: d Any, for the reasons you point out.

478
00:23:34,440 --> 00:23:35,360
Speaker 4: They agree as well.

479
00:23:35,359 --> 00:23:38,960
Speaker 9: It's very important to expectations, but there's a lot of

480
00:23:39,040 --> 00:23:41,919
Speaker 9: room for interpretation. And so two two and a half,

481
00:23:41,960 --> 00:23:44,439
Speaker 9: two point six, two point seven, and I agree with

482
00:23:44,520 --> 00:23:48,000
Speaker 9: Mohammad that the cut in twenty in December of twenty

483
00:23:48,000 --> 00:23:51,280
Speaker 9: five basis points is kind of telling you where they

484
00:23:51,400 --> 00:23:54,760
Speaker 9: lean on inflation versus growth. I think there are some

485
00:23:54,880 --> 00:23:58,400
Speaker 9: long term consequences for that, because if the bond market

486
00:23:58,680 --> 00:24:01,880
Speaker 9: wakes up to the fact that there's a tolerance for inflation,

487
00:24:02,040 --> 00:24:04,959
Speaker 9: and the real test is as long as inflation is

488
00:24:05,040 --> 00:24:09,120
Speaker 9: gradually moving lower, and even if it's moving sideways, they

489
00:24:09,119 --> 00:24:11,960
Speaker 9: can kind of play this fudget game. The real test

490
00:24:12,080 --> 00:24:16,360
Speaker 9: is what happens if the acceleration and growth, the impact

491
00:24:16,359 --> 00:24:20,560
Speaker 9: on financial conditions starts to press on inflation. And the

492
00:24:20,560 --> 00:24:22,520
Speaker 9: one thing we didn't talk a lot about and you know,

493
00:24:22,560 --> 00:24:25,679
Speaker 9: it's hard to see here whether the wage number today

494
00:24:25,800 --> 00:24:28,119
Speaker 9: and the slight uptick is just a mix shift or not.

495
00:24:28,480 --> 00:24:31,320
Speaker 9: But you haven't really seen the wage numbers kind of

496
00:24:31,359 --> 00:24:35,880
Speaker 9: conforming two depends on productivity, the two percent inflation target.

497
00:24:36,040 --> 00:24:37,800
Speaker 9: The real challenge is going to be what do they

498
00:24:37,840 --> 00:24:41,040
Speaker 9: do if inflation starts to go back up. Not predicting that,

499
00:24:41,119 --> 00:24:43,200
Speaker 9: but that's where you kind of are going to put

500
00:24:43,200 --> 00:24:46,520
Speaker 9: this two versus fudging to two and a half really

501
00:24:47,160 --> 00:24:47,680
Speaker 9: to task.

502
00:24:47,840 --> 00:24:49,960
Speaker 2: That's the risk of twenty twenty five. Jeff Rosenberg of

503
00:24:50,000 --> 00:24:52,280
Speaker 2: Blank Rock, Jeff thank you, sir, if you want just

504
00:24:52,359 --> 00:24:55,080
Speaker 2: joining us once again, welcome to twenty seven is the number.

505
00:24:55,080 --> 00:24:58,720
Speaker 2: It's an upside surprise against a two twenty estimate. Unemployment

506
00:24:59,240 --> 00:25:01,480
Speaker 2: just creeping a little bit higher four point two and

507
00:25:01,600 --> 00:25:03,800
Speaker 2: very close to four point three. The estimate was four

508
00:25:03,840 --> 00:25:06,200
Speaker 2: point one percent. The takeaway for a lot of people

509
00:25:06,200 --> 00:25:08,359
Speaker 2: in this market. It leaves the door wide open for

510
00:25:08,400 --> 00:25:10,920
Speaker 2: an interest rate reduction on December eighteenth, still one more

511
00:25:10,960 --> 00:25:15,119
Speaker 2: data point still to go CPI next Wednesday. Muhammadal arians

512
00:25:15,119 --> 00:25:17,160
Speaker 2: still with us for some final thoughts. Muhammad, we all

513
00:25:17,200 --> 00:25:19,679
Speaker 2: notice that you published the ft column ahead of this

514
00:25:19,720 --> 00:25:23,280
Speaker 2: conversation this time, and I noticed the content of that

515
00:25:23,320 --> 00:25:26,800
Speaker 2: piece as well. It's not about whether the US will outperform.

516
00:25:27,040 --> 00:25:29,960
Speaker 2: It will, it's the extent to which it will diverge

517
00:25:29,960 --> 00:25:32,440
Speaker 2: from the rest of the world you noted earlier this week,

518
00:25:32,600 --> 00:25:34,359
Speaker 2: and I think it's a perfect time just to finish

519
00:25:34,359 --> 00:25:36,920
Speaker 2: and think about the rest of the global economy as

520
00:25:36,960 --> 00:25:40,000
Speaker 2: we get two twenty seven in America and start to

521
00:25:40,000 --> 00:25:42,520
Speaker 2: complain about whether that's good enough. The rest of the

522
00:25:42,520 --> 00:25:46,600
Speaker 2: world is struggling. You noted China and a potential japanification

523
00:25:46,720 --> 00:25:49,800
Speaker 2: of China's economy. We've noted Europe's inability to govern it

524
00:25:49,840 --> 00:25:53,480
Speaker 2: south for the whole week so far in a tripolar world, Muhammad,

525
00:25:53,520 --> 00:25:54,919
Speaker 2: what does twenty twenty five look like?

526
00:25:56,400 --> 00:25:57,560
Speaker 7: It's a world of dispurgon.

527
00:25:57,680 --> 00:25:57,920
Speaker 4: John.

528
00:25:58,080 --> 00:25:59,800
Speaker 7: You know I've been saying with you for the last

529
00:25:59,800 --> 00:26:01,639
Speaker 7: few months, the good, the bad, and the ugly of

530
00:26:01,720 --> 00:26:04,320
Speaker 7: the of the global economy or the follow The good

531
00:26:04,359 --> 00:26:07,800
Speaker 7: is the US, the bad is China, the ugly is Europe.

532
00:26:08,000 --> 00:26:12,000
Speaker 7: And we've had confirmation of that over the last few weeks.

533
00:26:12,280 --> 00:26:16,320
Speaker 7: It is a world where there's going to be significant

534
00:26:16,359 --> 00:26:21,359
Speaker 7: differences in the three systemically important economies, and that's going

535
00:26:21,400 --> 00:26:23,960
Speaker 7: to play out in the currency market first and foremost.

536
00:26:24,040 --> 00:26:26,320
Speaker 7: It's also is going to play out in yields, but

537
00:26:26,400 --> 00:26:30,159
Speaker 7: it will continue to suck capital into the US. And

538
00:26:30,240 --> 00:26:33,320
Speaker 7: that's the good news for US markets that if you

539
00:26:33,359 --> 00:26:35,800
Speaker 7: think of Tina, there is no alternative. There is right

540
00:26:35,840 --> 00:26:40,120
Speaker 7: now no alternative to American exceptionalism in relative.

541
00:26:39,760 --> 00:26:43,240
Speaker 1: Terms, Muhammad. Just just to hang on the point of Europe.

542
00:26:43,560 --> 00:26:47,040
Speaker 1: Robin Brooks of Brookings wrote a column yesterday basically saying

543
00:26:47,359 --> 00:26:50,680
Speaker 1: Europe desperately needs a weaker euro and now should be

544
00:26:50,800 --> 00:26:53,560
Speaker 1: the moment where the ECBD couples from the FED where

545
00:26:53,600 --> 00:26:56,320
Speaker 1: they cut, and they cut aggressively because they need some

546
00:26:56,359 --> 00:26:59,439
Speaker 1: sort of stimulus that's not coming through governments in Europe.

547
00:26:59,480 --> 00:27:00,480
Speaker 1: Would you agree with that.

548
00:27:01,720 --> 00:27:03,840
Speaker 7: A weaker euro will be like pushing on a string.

549
00:27:04,280 --> 00:27:09,520
Speaker 7: What Europe needs is fundamental structural reforms. The Drug Report

550
00:27:09,640 --> 00:27:14,680
Speaker 7: sets out the fundamental problem they have with productivity, with competitiveness.

551
00:27:14,920 --> 00:27:17,960
Speaker 7: A weaker euro stimulus doesn't address.

552
00:27:17,840 --> 00:27:18,560
Speaker 4: Or structural issues.

553
00:27:18,600 --> 00:27:21,119
Speaker 7: So, Danny, I think it's much deeper than that, and

554
00:27:21,160 --> 00:27:24,439
Speaker 7: I think that Europe has to understand that unless it

555
00:27:24,480 --> 00:27:31,160
Speaker 7: takes serious steps, it will fall further behind. Unfortunately, diminished

556
00:27:31,240 --> 00:27:34,159
Speaker 7: is a further step. You need political leadership, and we

557
00:27:34,600 --> 00:27:36,840
Speaker 7: know what the situation is like in France, we know

558
00:27:36,880 --> 00:27:39,560
Speaker 7: what it's like in Germany, and there is no European

559
00:27:39,640 --> 00:27:42,560
Speaker 7: policy without France and Germany leading right now.

560
00:27:42,440 --> 00:27:45,520
Speaker 2: There is very little leadership, that's for sure. Mohammed, We're

561
00:27:45,560 --> 00:27:46,600
Speaker 2: lucky to get some time with you.

562
00:27:46,640 --> 00:27:47,240
Speaker 4: I'm apreciate it.

563
00:27:47,280 --> 00:27:50,239
Speaker 2: Mohammed el aerin there of Queen's Collors, Cambridge. This is

564
00:27:50,280 --> 00:27:54,639
Speaker 2: the Bloomberg Sevenans podcast, bringing you the best in markets, economics,

565
00:27:54,680 --> 00:27:57,119
Speaker 2: an gio politics. You can watch the show live on

566
00:27:57,160 --> 00:28:00,840
Speaker 2: Bloomberg TV weekday mornings from six am to nine am Eastern.

567
00:28:01,119 --> 00:28:04,480
Speaker 2: Subscribe to the podcast on Apple, Spotify, or anywhere else

568
00:28:04,480 --> 00:28:07,119
Speaker 2: you listen, and as always, on the Bloomberg Terminal and

569
00:28:07,200 --> 00:28:08,400
Speaker 2: the Bloomberg Business app.

570
00:28:12,680 --> 00:28:12,760
Speaker 7: HM