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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,

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Speaker 1: SoundCloud and at Bloomberg dot com. Of course, of the

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Speaker 1: United States overnight attacking in the Assyrian air field, Stephen

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Speaker 1: Cook as a senior fellow for Middle Eastern Studies at

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Speaker 1: the Council on Foreign Relations, and he joins us now. Stephen,

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Speaker 1: thank you for being with me. Um. You know, this

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Speaker 1: decision comes about three and a half years after President

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Speaker 1: Obama's effort to threaten assad with Basher Alissa, the president

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Speaker 1: of Syria, with military action after an earlier chemical weapons

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Speaker 1: attack that killed hundreds of people. He even used the

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Speaker 1: term a red line. What does this say about what's

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Speaker 1: happened in the last three and a half years and

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Speaker 1: whether there needs to be a policy change. Well, I

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Speaker 1: think the last evening strike is a reflective effect that

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Speaker 1: you have a different administration, uh, and that President Trump,

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Speaker 1: who ran hard obviously against President Obama's record and ran

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Speaker 1: on restoring American strength and credibility around the world. Couldn't

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Speaker 1: ignore uhhar lassa chemical attack. Uh it is um. I

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Speaker 1: think a strike that is intended to send a message

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Speaker 1: to the Syrian leader as well as his Russian and

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Speaker 1: Iranian backers, But I don't think it augurs a major

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Speaker 1: shift in American policy towards Syria. Does it send a

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Speaker 1: message to other nations such as China. We know that

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Speaker 1: the President is a meeting with the President Jijing Ping

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Speaker 1: of China and Mara Lago. Well, it's a that's a

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Speaker 1: very interesting question. Certainly, the timing with a major world

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Speaker 1: leader having bilateral meetings with the president is uh. It

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Speaker 1: makes for an important demonstration of American resolve, especially since

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Speaker 1: the President is going to be talking to the Chinese

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Speaker 1: leader about North Korea. What my contacts in China are

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Speaker 1: telling me is that she is probably going to shrug

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Speaker 1: this off, take note of it, and actually welcome further

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Speaker 1: American entanglement in the Middle East. Why is that because

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Speaker 1: they feel that the United States will protect their oil

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Speaker 1: lifeline in importing oil from the Middle East to China. Well,

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Speaker 1: it tends the United States down in the Middle East. Um.

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Speaker 1: While and takes its attention away from developments in for example,

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Speaker 1: of the South China Sea or in relations to North Korea. UM.

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Speaker 1: This is from the Chinese perspective. Those parts of the

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Speaker 1: world are within China's um sphere of influence, and as

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Speaker 1: long as the United States is engaged in the Middle East,

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Speaker 1: there's less attention that can be paid to Asia. Well,

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Speaker 1: you know, Steven, earlier in the program, I was speaking

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Speaker 1: with Leonard Burschitsky, Bloomberview columnist joining us from Bear Lynn,

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Speaker 1: and he made it clear that Russian President Vladimir Putin

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Speaker 1: is not interested in a direct military confrontation with the

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Speaker 1: United States. Having said that, then why place Russian troops

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Speaker 1: and or aircraft in a particularly well in a harm's

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Speaker 1: way perhaps, but also to play this kind of game

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Speaker 1: of chicken flying over the Baltic and Eastern Europe. What

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Speaker 1: is the intent? Well, I think it's clear that the

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Speaker 1: Russian president is interested in re establishing Russia as a

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Speaker 1: global power. UH. Syria in particular has been a bridgehead

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Speaker 1: for the Russians to re establish their influence throughout the

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Speaker 1: Middle East. During the Soviet era of the Russians were

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Speaker 1: quite active in the Middle East. UH and Putin clearly

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Speaker 1: has strategy UH in order to UM make Russia great

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Speaker 1: again in the Middle East at the very least. Okay,

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Speaker 1: but having us But I want I want to then

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Speaker 1: turn that on to what you just said having to

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Speaker 1: do with China. That if the Chinese are are in

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Speaker 1: a sense happy that the United States is going to

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Speaker 1: be pulled or is moving more into the Middle East

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Speaker 1: in terms of its attention, that wouldn't the same be

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Speaker 1: true for Russia. And if it is, then you know

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Speaker 1: what does Vladimir Putin want? I mean, you give them

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Speaker 1: a medal that says, all right, you are a world power.

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Speaker 1: Great now stop trying to turn things into a fight.

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Speaker 1: I think the Russians and the Chinese have very different calculations.

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Speaker 1: The Chinese pursue a foreign policy that's essentially a mercantile

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Speaker 1: ist one, and you alluded to it before, h that

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Speaker 1: is to ensure UM that energy supplies flow out of

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Speaker 1: the region, and thus for the United States has been

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Speaker 1: willing to ensure that provide the kind of security for

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Speaker 1: that UM that allows the Chinese to enjoy um, enjoy

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Speaker 1: the energy resources of the Middle East unfettered. The Russians

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Speaker 1: have a very different calculation UM, from the perspective of

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Speaker 1: Vladimir Putin, the end of the Soviet Union was the

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Speaker 1: worst day in the world, and that Russia is a

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Speaker 1: great power that should be directly involved in the Middle

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Speaker 1: East because the Middle East is relatively close to the

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Speaker 1: Russian homeland. Russia has problems of its own with Islamic extremism,

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Speaker 1: and well, you had the bomb blast in St. Petersburg,

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Speaker 1: but Russia in the subway that began the week on Monday,

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Speaker 1: that's exactly right. And the Russians believe that UM support

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Speaker 1: for leaders like Bashar al assad Uh in contrast to

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Speaker 1: UH the United States. And this is from the Russian perspective,

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Speaker 1: which welcomed uprisings against these leaders UM. The Russians perceived

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Speaker 1: that if these leaders follow these authoritarian dictators in the

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Speaker 1: region fall, it'll bring to power Islamist Islamis Islamist extremists.

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Speaker 1: De pardon me. It's kind of ironic, isn't it, though.

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Speaker 1: I Mean, on the one hand, they're talking about combating terrorism,

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Speaker 1: and yet the terrorism continues UH and then still keep

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Speaker 1: the same people in place. That is an irony. Of course,

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Speaker 1: the United States attack Syrian air base with a barrage

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Speaker 1: of cruise missiles last night retaliation for this week's chemical

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Speaker 1: weapons attack against civilians. President Donald Trump casting the US

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Speaker 1: assault that's vital to deter future use of poison gas.

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Speaker 1: He also called on other nations to join in seeking

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Speaker 1: to quote end the slaughter and bloodshed in Syria. Here

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Speaker 1: to tell us more is Tony Capacio. He is our

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Speaker 1: Pentagon and National Security porter for Bloomberg and he joins

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Speaker 1: us from Washington, d C. Tony, what can detail can

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Speaker 1: you add to what we already know about these attacks? Okay? Well,

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Speaker 1: I picked up this morning at the operation and the

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Speaker 1: operation came together in about twenty four hours. So the

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Speaker 1: Navy actually did two rehearsals of it. The two vessels

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Speaker 1: involved the two rehearsals of it. And this is the

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Speaker 1: US s ROSS in the US S Porter, correct, right,

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Speaker 1: they I'll give you some detail. The Ross fired Dity

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Speaker 1: six of the latest model rate theon Block four E

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Speaker 1: Tomahawk cruise missiles. The porter fired thirty four of them.

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Speaker 1: Each missile took up minutes to sixty minutes to hit

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Speaker 1: its target. And there were backups in the with the

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Speaker 1: Bush Strike Group in the Persian Gulf in case any

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Speaker 1: of these missiles and malfunctions and those those both those

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Speaker 1: ships took the two rehearsals from what I was told

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Speaker 1: where they went to the dry runs of lunch sequence

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Speaker 1: and actually launching. So it came together pretty fast. Now,

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Speaker 1: the governor the Syrian government, uh, the governor of the

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Speaker 1: homes of province Talala Bazari. He said that some Syrians

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Speaker 1: had been killed and others wounded, but there were no

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Speaker 1: precise details. Do we know anything about the results, not yet,

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Speaker 1: but I mean, it's plausible they picked that time for

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Speaker 1: forty am. Whenever is minimal would there the minimal activity

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Speaker 1: of the air base. So that's pretty standard for these

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Speaker 1: type of operations. You know, it's conceivable that some some

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Speaker 1: people were killed. I'm not going to discount it, but

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Speaker 1: I don't have any incident into that. Now, all right,

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Speaker 1: and let's talk about the implications for this. With the

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Speaker 1: meeting that President Donald Trump is currently having with Chinese

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Speaker 1: President j Ping. What kind of signal do you think

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Speaker 1: that sends to him about one of their big topics,

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Speaker 1: which is North Korea's nuclear program. Well, I think the

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Speaker 1: Chinese and North Koreans, now we'll have to reckon with

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Speaker 1: the fact that They're dealing with a US president who

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Speaker 1: moved pretty quickly, albeit with a precision limited strike. But

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Speaker 1: he moved pretty quickly to retaliate with the minimal consultation

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Speaker 1: with Congress he recalled during the Vietnam War, the Nixon

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Speaker 1: wanted to invoke the kind of a madman theory with

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Speaker 1: North North Vietnam in terms of whether he you know,

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Speaker 1: just how much he would do what he would do. Well,

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Speaker 1: maybe there's a madman theory at play here. Trump showing

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Speaker 1: that he's quick, impulsive, fast on the draw, and that

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Speaker 1: might ship send a chill of North Korea or China

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Speaker 1: spins Well. Rex Tillis, and Secretary of States, says, it

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Speaker 1: clearly indicates the president is willing to take decisive action

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Speaker 1: when called for. What does this mean for the U. S.

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Speaker 1: Relationship with Russia, because, of course the President has called

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Speaker 1: for greater counter terrorism cooperation with Russia. I think the

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Speaker 1: impact will be minimal because the U. S took pains.

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Speaker 1: They contacted the Russians through they called this deconfliction link

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Speaker 1: that was set up there because over air strikes. You know,

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Speaker 1: we did we tipped the Russians off, and locally we

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Speaker 1: didn't tip them off through at the Moscow level, but

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Speaker 1: we tipped the Russians off locally that this was gonna

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Speaker 1: happen the US, that those cruise misses were precise enough,

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Speaker 1: they did not hit the airfield areas where the Russians

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Speaker 1: were sleeping or are stationed. You know, we give him

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Speaker 1: advanced warning, and you know, Pim, I think it's going

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Speaker 1: to show that the Russians did not tip the Syrians off.

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Speaker 1: That we don't know that definitively, will know that later today.

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Speaker 1: But I don't think the Russians tipped the Syrians off.

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Speaker 1: But there's no indications of planes taking off ahead of time.

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Speaker 1: So I'm met sure what the long term implications on

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Speaker 1: the US Russian relations are. I leaned towards it might

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Speaker 1: reinforce the fact that we can be trusted allies. Does

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Speaker 1: it also change the dynamic when it comes to Vladimir

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Speaker 1: Putin's support of President bush are Alissa that indeed, perhaps

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Speaker 1: they are not as strong allies as previously thought if

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Speaker 1: the Russian reaction is muted. I tend to agree with

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Speaker 1: you there that the rush the relationship with Syrias not

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Speaker 1: as a close as we thought. I mean, it depends

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Speaker 1: on the reaction from Russian and so far it's been

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Speaker 1: freely muted. Well, the UN ambassador the Russians, a deputy

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Speaker 1: UN Ambassador of Vladimir sorokof Is he warned that any

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Speaker 1: negative consequences from the strike would be quote on the

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Speaker 1: shoulders of those who initiated such a doubtful and tragic enterprise.

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Speaker 1: Is he just using diplomatic language because he's got nothing

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Speaker 1: else to say? Well, that's that's the first cut outrage.

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Speaker 1: I mean the follow up will be more important in

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Speaker 1: terms of what impact that's going to have in Syria.

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Speaker 1: If the Russians start painting or illuminating US planes with

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Speaker 1: their radars and act in an active peak or retaliation subtle,

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Speaker 1: not subtle, but a retaliation short of firing missiles, that'll

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Speaker 1: be more of a leading indicator than whatever words come

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Speaker 1: out of the U. N Ambassador Tony, What about Steve

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Speaker 1: Bannon and his departure for the National Security Council. He

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Speaker 1: has previously spoken about the US being overextended outside America.

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Speaker 1: Do you think that the National Security Council's changed anything

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Speaker 1: to do with this? Yeah? I think one of one

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Speaker 1: changes that the Pentagon was allowed to plan this on

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Speaker 1: their own, really quickly, without a lot of back and

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Speaker 1: forth was to National Security Council. I think that accounts

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Speaker 1: in some respect for the fast, for the rapid nature

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Speaker 1: of the the operation that the Pentagon was able to

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Speaker 1: pose together on its own without without a lot of

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Speaker 1: mother may I from the National Security Council. Indeed, just

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Speaker 1: the last point to you, Tony, what's next? Do we

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Speaker 1: just wait and see or is there going to be

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Speaker 1: some detail about some change in policy? I think it

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Speaker 1: will be a what what we're gonna learn more from

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Speaker 1: the Pentagon? Today's the battle damage assessment, you know, the

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Speaker 1: nuts and bolts of military attack aftermath. I think you're

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Speaker 1: going to see maybe a letter to Congress from the

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Speaker 1: White House asking for an authorization for the use of

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Speaker 1: military force on Syria. I think that that's one possible

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Speaker 1: the plausible follow up. All right, what we leave it there,

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Speaker 1: but we look forward to you covering this topic for US.

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Speaker 1: Tony Capacio as our Pentagon and National Security reporter for

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Speaker 1: Bloomberg joining us from Washington, d C. This is Bloomberg.

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Speaker 1: The unemployment rate falling to four and a half percent,

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Speaker 1: that's down from four point seven percent. Why no, cheers? Well,

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Speaker 1: payrolls only adding ninety eight thousand jobs last month. Economists,

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Speaker 1: we're looking for about a hundred and eighty thousand to

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Speaker 1: be added. Here to tell us more about the report

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Speaker 1: and it's the factor of wages is al A Grissani.

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Speaker 1: He is a former assistant Labor Secretary under President Ronald Reagan.

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Speaker 1: Al thanks for being in the studio and also joining

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Speaker 1: us is Carlick Godnna. He's the chief US economist for

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Speaker 1: Bloomberg Intelligence out. Let's come to you first and just

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Speaker 1: make your case about wage growth. Two point seven percent

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Speaker 1: increase year over year. You say that's not enough, No,

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Speaker 1: it's not. In good morning, pim um. If you look

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Speaker 1: at wage growth over the last twenty years, it's been

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Speaker 1: steadily going down. And there was hope that with this recovery,

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Speaker 1: which really started eight years ago when the Fed ease

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Speaker 1: monetary rates in the Obama administration, that now with the

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Speaker 1: pickup in the with the Trump administration and the change

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Speaker 1: and all the things people are talking about, that we

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Speaker 1: would finally see wages get back to growth, which would

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Speaker 1: be really an indication of a real, sustained, long term recovery.

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Speaker 1: What kind of number are you looking for if you

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Speaker 1: don't like two point seven percent? What what what do

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Speaker 1: you think would work well? If you go back to

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Speaker 1: the historical standards when really we were in real, real

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Speaker 1: three to four percent GDP growth UH rates in the

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Speaker 1: in the growing economy, you're looking at four to five

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Speaker 1: percent wage growth that's needed to sustain a long term recovery.

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Speaker 1: All right, let's go to car Record Dona, chief US

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Speaker 1: economists for Bloomberg Intelligence. What do you think about this

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Speaker 1: four to five percent wage increase? Do you think that

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Speaker 1: would do it? I think that would certainly help four

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Speaker 1: to economic momentum and maybe push us back towards UH

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Speaker 1: let's say eighties or nineties style growth rates from the

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Speaker 1: two percent which has plagued the economy over the last

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Speaker 1: eight years. What's the what's the relationship though between wage

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Speaker 1: growth and productivity? Well, as workers become more expensive than

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Speaker 1: employers will look for ways to minimize that input cost,

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Speaker 1: and so they invest in capital. And you're seeing it

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Speaker 1: from automated UH register clerks at fast food joints or

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Speaker 1: no clerks at all when you do the check out

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Speaker 1: yourself that's increasingly exactly or self check out in a

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Speaker 1: grocery or retail outlet. And so as wage pressures pick up,

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Speaker 1: you'll get more productivity gains. But we've had relatively cheap

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Speaker 1: labor over the last ten years or so, so there's

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Speaker 1: not been a lot of incentive for employers to make

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Speaker 1: those types of investments. That's changing now because we are

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Speaker 1: seeing a bit more wage pressure. Alright, what, having having

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Speaker 1: said that out to you, if indeed we are entering

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Speaker 1: a period of more rapid automation, where will the wage

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Speaker 1: growth come from. If indeed the wages that employers will

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Speaker 1: have to pay can alternatively be put into artificial intelligence

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Speaker 1: robots and even dare I say it offshore, Yes, well,

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Speaker 1: we have a let's add this to the equation. We

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Speaker 1: have a secular change going on in the economy that

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Speaker 1: speaks to this. The secular change is what you're talking about,

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Speaker 1: the move from labor to tomorrow automation, etcetera. And you

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Speaker 1: can see it in the retail job numbers today thirty

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Speaker 1: thou down. That may be the beginning of what we're

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Speaker 1: starting to see as all these malls are closing and

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Speaker 1: the retailers are pulling back. So that's a sign of

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Speaker 1: what I'm talking about and the secular change. And do

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Speaker 1: you think that that comes what from the competition from

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Speaker 1: Amazon and other online retailers that that sort of stands

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Speaker 1: in the way of this increases. And that's code for automation,

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Speaker 1: isn't it. And I see it my business too. We're

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Speaker 1: all data and from nation businesses and the turnaround business

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Speaker 1: are now becoming commoditized. So where's the value add going

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Speaker 1: to come from the drive's wages in the future. It's

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Speaker 1: got to be from intellectual capital businesses. It's got to

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Speaker 1: be from value add from people that are providing insights.

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Speaker 1: And that's the only place that I see where you're

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Speaker 1: going to have the ability to demand more wages. That

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Speaker 1: sounds like high skilled workforce absolutely, Carca Donna. I mean,

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Speaker 1: is there a chance that you're gonna see this wage

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Speaker 1: increase of indeed what you just described increasing automation, so

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Speaker 1: that really the only wage increase you're gonna see is

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Speaker 1: people who have some kind of intellectual property that puts

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Speaker 1: them in absolute that's where it will be concentrated. But

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Speaker 1: I mean, there's less job security, whether it's lower union

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Speaker 1: membership or robots taking jobs, or just the internationalization of

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Speaker 1: the or the globalization of the workforce, and so that

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Speaker 1: means that the Phillips curve still works. Uh, this is

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Speaker 1: a trade off between unemployment and inflation, but it's flatter

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Speaker 1: than it has bend in past economic cycles. And I

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Speaker 1: don't want to make too much of us, because clearly

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Speaker 1: this is not the focus of the wage the two

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Speaker 1: point seven percent year over year wage increase. But we

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Speaker 1: learned earlier in the week that black Rock, for example,

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Speaker 1: moving away from some managed funds to replace them with

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Speaker 1: more automated exchange traded fund or indexed products. That also

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Speaker 1: is part of this trend. Absolutely. So the point here

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Speaker 1: is that you're not getting as much inflation or wage

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Speaker 1: bang for your buck as the unemployment rate moves lower

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Speaker 1: compared to pass cycles, which means that maybe full employment

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Speaker 1: going into the cycle were fed forecasters and whatnot. We're

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Speaker 1: thinking it could be five and a quarter percent, was

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Speaker 1: five percent, then it was just below five percent or

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Speaker 1: four and a half, and so last of all, if

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Speaker 1: you recall Janet Yellen throughout the idea in an academic

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Speaker 1: forum that maybe full employment is materially lower than forecasters

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Speaker 1: currently anticipate, and as we see unemployment rate grinding grinding

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Speaker 1: down and we're not getting the wage pressures yet, that

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Speaker 1: reinforces that notion. Al Agressoni, what's your prescription for an

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Speaker 1: increase in wages? Well, I think that back to the

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Speaker 1: secular trends. I mean, while there's a change moving on

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Speaker 1: to automation and lower skilled jobs are going to be replaced,

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Speaker 1: you have to look at the positive side of the

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Speaker 1: secular trend. And we talked about this on one of

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Speaker 1: your shows a couple of years ago, where we discussed

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Speaker 1: that we could potentially become again a nation of entrepreneurs,

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Speaker 1: people who are either and either have skills that are

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Speaker 1: can command a higher wage like in the ellectual capital businesses,

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Speaker 1: or people who have the ability to start and start

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Speaker 1: and sustain and run their own business. But aren't those

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Speaker 1: people already doing that? I mean by definition, I mean,

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Speaker 1: what is going to move the two point seven percent

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Speaker 1: number higher? Well, what's gonna what's gonna move it higher

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Speaker 1: is if you're uh, if you're making a choice to

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Speaker 1: become an entrepreneur, right and you're in a startup business,

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Speaker 1: that you're going to have a more greater demand and

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Speaker 1: to hire somebody than somebody who's in a big corporation

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Speaker 1: like Walmart, who can replace that body at any point

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Speaker 1: in time. So if you're looking for wage growth, I

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Speaker 1: think it's going to come from the very high end

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Speaker 1: of the intellectual scale, and it's going to come from

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Speaker 1: the more entrepreneurial end of our economies. Thanks very much,

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Speaker 1: Al Agrisani, he is the former assistant Labor Secretary under

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Speaker 1: President Ronald Reagan. And our thanks of course to Carricka Donna,

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Speaker 1: chief US economist for Bloomberg Intelligence. Always a pleasure. All right,

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Speaker 1: let's turn our attention now to headline economic news. The

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Speaker 1: unemployment rate down to four and a half percent from

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Speaker 1: four point seven, the economy adding just ninety eight thousand

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Speaker 1: jobs last month. Economists were looking to add about a

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Speaker 1: hundred and eighty thousand jobs. One of those economists was

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Speaker 1: Vincent Reinhardt. He is chief economist Standish Melon Asset Management.

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Speaker 1: He joins us from Boston, home to Bloomberg twelve hundred. Vincent,

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Speaker 1: thank you for being with us. How did you get

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Speaker 1: it wrong? Great introduction, PIM, I like starting on the

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Speaker 1: positive note, and the answer is most of us just

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Speaker 1: forgot it was cold in March. Uh. Part of this weather.

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Speaker 1: Part of it is let's calm down a little bit.

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Speaker 1: The payroll employment is a erratic number. The Bureau of

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Speaker 1: Labor Statistics tells us that a nine confidence interval around

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Speaker 1: monthly changes and met payrolls is a hundred and a

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Speaker 1: hundred thousand plus or minus. What does that mean? That

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Speaker 1: means that if you thought it was a hundred and

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Speaker 1: eighty thousand expected this month. Uh, you wouldn't be statistically

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Speaker 1: proved to be wrong if the number came in between

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Speaker 1: eighty and two undred and eighty thousand. Oh well, I

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Speaker 1: guess that that makes it very easy, doesn't it. It

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Speaker 1: makes it perfectly. The good news is, in a statistical sense,

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Speaker 1: I wasn't wrong. Okay, all right, that's like bumpers, you know,

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Speaker 1: in a bowling alley. All right, so your contains So

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Speaker 1: if let's take the you know, let's take this in perspective. First,

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Speaker 1: there were weather dislocations. Uh, that's and we see very

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Speaker 1: strong employment growth from the household survey and week on

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Speaker 1: the establishment survey. That's probably because when the BLS comes

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Speaker 1: around to a household at at home because they're not

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Speaker 1: working because of bad weather, they they believe they're employed.

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Speaker 1: Whereas you go to the establishment and ask them, are

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Speaker 1: you how many people are working for you today? Uh,

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Speaker 1: they give them a lower number, so average the two

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Speaker 1: UM a low number nine number. Okay, so we're not

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Speaker 1: gonna go We're not gonna go crazy about this, UH

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Speaker 1: seemingly what the bond market is doing with that big

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Speaker 1: move higher in the long pond. If that's the case,

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Speaker 1: then what are the particulars of the report that you

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Speaker 1: think are specifically interesting? Is that the labor participation rate?

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Speaker 1: Is that the two point seven wage growth year over

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Speaker 1: year number, or what part of the report do you

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Speaker 1: find most useful? That's a great thing about the peril Fridays.

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Speaker 1: If the DLS puts out of twenty plus page report,

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Speaker 1: there's always gonna be something that's interesting. I think there's

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Speaker 1: a couple of things of note. One is Chenney Ellen's

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Speaker 1: basically been right. You run accommodative monetary policy and you

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Speaker 1: marry very well draw workers into the labor force. UH.

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Speaker 1: In fact, there were very large games in household households,

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Speaker 1: on the order of four hundred and seventy two thousand

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Speaker 1: people coming into the labor force. UM. That's why the

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Speaker 1: unemployment rate UH goes down. We have peril rather unemployment. UH.

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Speaker 1: Persons in the household reports fell by thousand, So that's

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Speaker 1: good news. That's so, that's good news. So why would

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Speaker 1: people be bidding up the price of the thirty year

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Speaker 1: by fifteen thirty seconds? Why are we at two point

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Speaker 1: nine six? Well, the world's are as key plays, uh

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Speaker 1: and uh. But it was risky last week too, Yeah,

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Speaker 1: but maybe it feels a little risky, okay. Uh. The

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Speaker 1: other I think part of it is actually averagary earnings

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Speaker 1: that came in as an increase of two tents of

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Speaker 1: a percent on the month, and the twelve month change

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Speaker 1: picked lower to two point seven. So if you think

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Speaker 1: the Fed is going to be acting because they're worried

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Speaker 1: about inflation, then the Fed should explain to you where's

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Speaker 1: the cost pressure got it? So don't worry about that

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Speaker 1: at least right now, worry about something else. Right the Fed.

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Speaker 1: Fed's got a plan that it's going to be renormalizing

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Speaker 1: monetary policy gradually. Nothing in this report says they can

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Speaker 1: fulfill that plan. Well, Vincent, you know, just to pick

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Speaker 1: up on that. On that point, I want to go

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Speaker 1: back to the f O M meeting minutes that were

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Speaker 1: released earlier this week about unwinding or dealing with the

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Speaker 1: four and a half trillion dollar balance sheet at the

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Speaker 1: Federal Reserve. What are your thoughts there? So what first

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Speaker 1: thing to observe, They're trying to telegraph it as as

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Speaker 1: clearly as possible, because most of the people making those

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Speaker 1: decisions are still shell shocked from the paper tantrum when

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Speaker 1: slowing asset purchases a threat to produce such a big

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Speaker 1: reaction in markets. Uh. Second thing to note is um

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Speaker 1: that they view it as in part of substitute for

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Speaker 1: rate action. So they're basically telling you there's three more

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Speaker 1: press conference meetings this year. The next to they'll raise

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Speaker 1: the funds right at a quarter point. The third one

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Speaker 1: they'll tell you they're slowing asset purchases UH reinvestments so

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Speaker 1: that it's a balance sheet will vary gradually shrink. That's

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Speaker 1: a good way to put it. Thank you very seccinctly

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Speaker 1: appreciate it. Vincent Reinhardt, as always he's he's the chief economist,

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Speaker 1: standish melon asset management. He wasn't wrong. He was within

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Speaker 1: the margin of arab This is Bloomberg. Thanks for listening

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Speaker 1: to the Bloomberg pian L podcast. You can subscribe and

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Speaker 1: you prefer. I'm pim Fox. I'm out there on Twitter

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Speaker 1: at pim Fox. I'm out there on Twitter at Lisa Abramo.

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Speaker 1: It's one before the podcast. You can always catch us

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