1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,119 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,480 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,480 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,320 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,880 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:46,280 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app. 11 00:00:47,520 --> 00:00:48,200 Speaker 3: This is a joy. 12 00:00:48,200 --> 00:00:49,840 Speaker 2: We're gonna get this out of the way right now. 13 00:00:49,880 --> 00:00:52,560 Speaker 2: That's a seasonal traditionary. We go to David blench Flower. 14 00:00:52,640 --> 00:00:55,920 Speaker 2: He is in Hannover, New Hampshire, or he's in Florida, 15 00:00:56,120 --> 00:00:58,800 Speaker 2: or he's in where he's traveling in Wales or that 16 00:01:00,520 --> 00:01:03,760 Speaker 2: David Danny blenched Flower described as we get to the 17 00:01:03,800 --> 00:01:09,000 Speaker 2: job economy, describe the black full season in Handover, New Hampshire. 18 00:01:09,160 --> 00:01:12,840 Speaker 3: It's like worse than the planet, isn't it it is? 19 00:01:13,080 --> 00:01:18,800 Speaker 4: We we're now in mud season and we've had frozen 20 00:01:18,840 --> 00:01:20,039 Speaker 4: ground for a very long time. 21 00:01:20,360 --> 00:01:21,640 Speaker 3: I came back it from Florida. 22 00:01:21,640 --> 00:01:25,360 Speaker 4: We've had two snowstorms since, and then what happens eventually 23 00:01:25,560 --> 00:01:30,200 Speaker 4: is the frozen stuff in the ground eventually melts and 24 00:01:31,120 --> 00:01:34,360 Speaker 4: water flows down and the black flies appear. So this 25 00:01:34,480 --> 00:01:37,520 Speaker 4: is this is not the greatest month to be in Hannovany, Hampshire, 26 00:01:37,520 --> 00:01:39,760 Speaker 4: but it's great to be with the students and it's 27 00:01:39,800 --> 00:01:42,360 Speaker 4: been great. And when it stops snowing, it's been raining 28 00:01:42,400 --> 00:01:44,720 Speaker 4: every day. So it makes you yearn for Florida and 29 00:01:44,760 --> 00:01:47,600 Speaker 4: yearn for New York City. But you know, you do 30 00:01:47,720 --> 00:01:48,440 Speaker 4: what you do. 31 00:01:48,560 --> 00:01:49,440 Speaker 3: Right, David. 32 00:01:49,720 --> 00:01:51,720 Speaker 2: I want to go back to the wage curve, and 33 00:01:51,760 --> 00:01:55,520 Speaker 2: you're a correct study of the agony the pain of 34 00:01:55,600 --> 00:01:59,960 Speaker 2: wage dynamics in the labor economy. The biggest single debate 35 00:02:00,320 --> 00:02:03,400 Speaker 2: that I get in mail is people with bow tie 36 00:02:03,480 --> 00:02:07,919 Speaker 2: saying the economy is pretty good, And thousands of people 37 00:02:07,920 --> 00:02:11,120 Speaker 2: are telling me, Tom, you don't know what you're talking about. 38 00:02:11,160 --> 00:02:12,120 Speaker 3: In three zip codes in. 39 00:02:12,160 --> 00:02:17,200 Speaker 2: Manhattan, the labor economy is really weak, Professor Blanche Flower, 40 00:02:17,480 --> 00:02:18,080 Speaker 2: Which is it? 41 00:02:19,600 --> 00:02:24,040 Speaker 4: Well, obviously there's kind of two worlds, but I think 42 00:02:24,120 --> 00:02:26,600 Speaker 4: the story actually, if you'd go back to the wage 43 00:02:26,639 --> 00:02:30,560 Speaker 4: curve and subsequent stuff. The unemployment rate actually no longer 44 00:02:30,680 --> 00:02:33,720 Speaker 4: tells you much of anything about the economy. Just to 45 00:02:33,760 --> 00:02:37,880 Speaker 4: put it technically, it's unrelated to wages. So I think 46 00:02:37,919 --> 00:02:41,119 Speaker 4: people give you the wrong steer from that. The right 47 00:02:41,160 --> 00:02:44,960 Speaker 4: thing to look at is basically employment, and the US 48 00:02:44,960 --> 00:02:46,320 Speaker 4: has a really big puzzle. 49 00:02:46,400 --> 00:02:47,560 Speaker 3: Unlike every other. 50 00:02:47,440 --> 00:02:50,440 Speaker 4: Country in the world, in the employment rate in the 51 00:02:50,520 --> 00:02:52,799 Speaker 4: US today is below what it was in two thousand 52 00:02:52,840 --> 00:02:55,240 Speaker 4: and eight and below what it was in two thousand, 53 00:02:55,800 --> 00:02:58,840 Speaker 4: So that's an element of weakness. The other thing to 54 00:02:58,880 --> 00:03:01,440 Speaker 4: say in that bas to back the conversation that you 55 00:03:01,600 --> 00:03:04,000 Speaker 4: just had, if you look at what's happened on the 56 00:03:04,080 --> 00:03:08,120 Speaker 4: employment on the household account, the decline in jobs in 57 00:03:08,160 --> 00:03:11,240 Speaker 4: the last eight months or so is greater than it 58 00:03:11,440 --> 00:03:15,040 Speaker 4: was in the months from February two thousand and eight 59 00:03:15,080 --> 00:03:19,359 Speaker 4: through two thousand and seven. So there's conflicting evidence. Some 60 00:03:19,440 --> 00:03:23,280 Speaker 4: people are really feeling weakness, other people are seeing strength. 61 00:03:23,320 --> 00:03:25,919 Speaker 4: And I was just looking to think about that question, Tom. 62 00:03:26,280 --> 00:03:28,640 Speaker 4: Obviously you look at the non van pails and it 63 00:03:28,680 --> 00:03:32,760 Speaker 4: looks really good, and obviously the economy has been pretty resilient. 64 00:03:33,000 --> 00:03:34,640 Speaker 4: But I was just looking at it in front of 65 00:03:34,639 --> 00:03:39,520 Speaker 4: me as the conference Board, consumer confidence surveys, the Expectations Index, 66 00:03:39,560 --> 00:03:44,080 Speaker 4: which basically predicts recession, is essentially saying we're in recession 67 00:03:44,080 --> 00:03:46,440 Speaker 4: and been in recession for quite a long time. So 68 00:03:46,480 --> 00:03:48,920 Speaker 4: there's this conflict, and obviously part of it is a 69 00:03:48,960 --> 00:03:53,160 Speaker 4: political conflict. Republicans say the economy is doing pretty badly, 70 00:03:53,200 --> 00:03:55,840 Speaker 4: and the Democrats say is doing pretty well. So it's 71 00:03:55,880 --> 00:03:59,960 Speaker 4: a really pretty confusing picture. I think the answer is 72 00:04:00,000 --> 00:04:02,280 Speaker 4: the economy has been more resilient, but we've had to 73 00:04:02,320 --> 00:04:04,440 Speaker 4: put up with with an inflation shop. So it's a 74 00:04:04,520 --> 00:04:07,640 Speaker 4: kind of poised answer. But I think, and I have 75 00:04:07,680 --> 00:04:09,400 Speaker 4: a new paper that people can go and see in 76 00:04:09,480 --> 00:04:13,200 Speaker 4: Economica where Phillips published his original paper, showing you that 77 00:04:13,400 --> 00:04:15,920 Speaker 4: there's much more weakness here than you would have thought 78 00:04:15,920 --> 00:04:17,279 Speaker 4: for the strength of the economy. 79 00:04:17,400 --> 00:04:20,600 Speaker 5: Professor blanche are casting shade on the household survey Tom. 80 00:04:20,640 --> 00:04:23,440 Speaker 5: I mean, it's clear he's an establishment survey kind of guy, but. 81 00:04:23,400 --> 00:04:25,480 Speaker 3: No cruel and unusual. 82 00:04:26,360 --> 00:04:29,240 Speaker 5: The big question facing markets, Professor Blanchard, for me anyway, 83 00:04:29,279 --> 00:04:31,080 Speaker 5: isn't you know whether the Fed will cut reads? 84 00:04:31,240 --> 00:04:33,040 Speaker 6: But why talk to us a little. 85 00:04:32,800 --> 00:04:35,520 Speaker 5: Bit about whether or not you feel below target inflation 86 00:04:35,760 --> 00:04:37,919 Speaker 5: is enough of a case for the FED to justify 87 00:04:38,000 --> 00:04:40,680 Speaker 5: rate cuts this year, Well. 88 00:04:40,560 --> 00:04:41,800 Speaker 4: It's probably not enough. 89 00:04:41,839 --> 00:04:42,839 Speaker 3: I mean the analogy I. 90 00:04:42,839 --> 00:04:45,000 Speaker 4: Always like to give is go back to think where 91 00:04:45,000 --> 00:04:47,520 Speaker 4: you were in the say eightpril May June July two 92 00:04:47,520 --> 00:04:50,920 Speaker 4: thousand and eight, and the discussion was much like this one, saying, 93 00:04:51,040 --> 00:04:54,039 Speaker 4: you know our rate the cuts coming inflation is five percent, 94 00:04:54,600 --> 00:04:56,240 Speaker 4: you know where it's going to be eight percent in 95 00:04:56,279 --> 00:05:01,080 Speaker 4: the future. Well that story was clearly wrong. So the 96 00:05:01,160 --> 00:05:03,880 Speaker 4: answer is, well, what is the FED going to do? 97 00:05:04,000 --> 00:05:06,159 Speaker 4: I mean, I think the answer is we're waiting for 98 00:05:06,240 --> 00:05:09,840 Speaker 4: some data. I mean I think the really important data 99 00:05:10,080 --> 00:05:13,760 Speaker 4: is spent. Despite the consumer confidence there I've just talked about, 100 00:05:14,200 --> 00:05:18,159 Speaker 4: people have continued to spend on services they coause, continue 101 00:05:18,200 --> 00:05:20,840 Speaker 4: to go to the Broadway shows, the question is is 102 00:05:20,880 --> 00:05:24,640 Speaker 4: there anything that's going to prevent that. The other thing 103 00:05:24,640 --> 00:05:28,320 Speaker 4: I would say Damian to Tom And is that it 104 00:05:28,320 --> 00:05:30,560 Speaker 4: always strikes me as kind of funny. I mean, I 105 00:05:30,600 --> 00:05:33,080 Speaker 4: always thought when you said interest rates, your job was 106 00:05:33,120 --> 00:05:35,719 Speaker 4: to think about what inflation was going to be in 107 00:05:35,760 --> 00:05:39,840 Speaker 4: eighteen months time. So what the inflation print was this 108 00:05:39,920 --> 00:05:42,919 Speaker 4: month or next month or the month after was only 109 00:05:43,000 --> 00:05:45,760 Speaker 4: relevant if it was a surprise. So I just find 110 00:05:45,800 --> 00:05:48,320 Speaker 4: it really hard to understand for someone who said interest 111 00:05:48,400 --> 00:05:51,920 Speaker 4: rates thirty six times, why people think that a single 112 00:05:52,040 --> 00:05:54,640 Speaker 4: data point is going to impact what the FED does. 113 00:05:54,720 --> 00:05:57,200 Speaker 4: The FED should be thinking about what inflation is going 114 00:05:57,240 --> 00:05:58,920 Speaker 4: to be in eighteen months, and as far as I 115 00:05:58,920 --> 00:06:01,400 Speaker 4: can tell, all the indication are that it's going to 116 00:06:01,400 --> 00:06:04,240 Speaker 4: be well below the target, which actually says you should 117 00:06:04,279 --> 00:06:06,720 Speaker 4: be doing rate cuts. So that's the really big debate. 118 00:06:07,080 --> 00:06:11,239 Speaker 4: Why does the FED think that a inflation print next 119 00:06:11,279 --> 00:06:14,280 Speaker 4: month is going to severely change their feel about what 120 00:06:14,440 --> 00:06:15,839 Speaker 4: interest rates will be an eighteen months. 121 00:06:15,880 --> 00:06:17,280 Speaker 3: I mean, the reason being. 122 00:06:17,320 --> 00:06:19,560 Speaker 4: That it takes eighteen months for anything for you to 123 00:06:19,600 --> 00:06:22,400 Speaker 4: do to have an impact. So I find this discussion 124 00:06:22,880 --> 00:06:26,160 Speaker 4: wholly disheartening. And in a sense it's like, well, well, 125 00:06:26,160 --> 00:06:28,839 Speaker 4: why do they think changing interest rates will affect inflation 126 00:06:28,920 --> 00:06:30,800 Speaker 4: in a week's time. It doesn't make any sense. 127 00:06:30,839 --> 00:06:32,640 Speaker 3: Then we got to go, don't be a stranger. 128 00:06:32,680 --> 00:06:34,440 Speaker 2: Thank you so much there, But I really wanted to 129 00:06:34,440 --> 00:06:37,600 Speaker 2: get Professor Blanchet around with this huge response to time. 130 00:06:37,680 --> 00:06:39,000 Speaker 3: You don't know what you're talking about. 131 00:06:50,200 --> 00:06:53,240 Speaker 2: We're you're in a really eventful friday, JP Morgan, I'm 132 00:06:53,240 --> 00:06:56,960 Speaker 2: with Alison Miller. I'm looking below you know I'm looking 133 00:06:56,960 --> 00:07:00,320 Speaker 2: below the headline data rich is JP Morgan still down 134 00:07:00,400 --> 00:07:03,240 Speaker 2: like four percent or something? Is it still like you know, 135 00:07:03,360 --> 00:07:06,760 Speaker 2: underperformance City group was up one two as well. 136 00:07:06,760 --> 00:07:09,280 Speaker 3: We'll see it's sort of a stew in futures toteriorate 137 00:07:09,320 --> 00:07:11,080 Speaker 3: negative at thirty four. 138 00:07:11,400 --> 00:07:14,760 Speaker 2: The conversation of the day, if not the week, on 139 00:07:15,040 --> 00:07:20,240 Speaker 2: China Leland Miller is definitive China basebook. He's out of Darden, Charlottesville, 140 00:07:20,560 --> 00:07:23,520 Speaker 2: absolutely a student of the microdata. 141 00:07:24,040 --> 00:07:27,640 Speaker 3: China is Leland. As simple as I can thumb up 142 00:07:27,800 --> 00:07:32,440 Speaker 3: or thumb down on China nominal GDP. 143 00:07:34,920 --> 00:07:38,640 Speaker 7: I think thumbs up. But everything is relative. What are 144 00:07:38,640 --> 00:07:41,400 Speaker 7: we basing this off of. I'd say, look, things are 145 00:07:41,400 --> 00:07:44,720 Speaker 7: going relatively well early in the year, particularly compared to 146 00:07:45,080 --> 00:07:48,440 Speaker 7: some of the disappointing data last year. But remember their 147 00:07:48,520 --> 00:07:51,880 Speaker 7: goal is not to rock at GDP skyward. They're not 148 00:07:52,000 --> 00:07:55,280 Speaker 7: trying to hit some high figure. They probably aren't even 149 00:07:55,320 --> 00:07:58,040 Speaker 7: trying to hit the GDP growth target this year. What 150 00:07:58,080 --> 00:08:01,880 Speaker 7: they're trying to do is establish some stabil some upward momentum, 151 00:08:02,400 --> 00:08:04,840 Speaker 7: bring back a little bit of consumer confidence which has 152 00:08:04,880 --> 00:08:07,160 Speaker 7: been crushed for the last several years. If they can 153 00:08:07,200 --> 00:08:08,760 Speaker 7: do that, then this year will be a success even 154 00:08:08,800 --> 00:08:10,560 Speaker 7: if they missed the GDP growth target. 155 00:08:10,880 --> 00:08:13,840 Speaker 5: Leland all of Yon sold off this week. It's rallied 156 00:08:13,880 --> 00:08:15,640 Speaker 5: a bit, but I mean it's now down one point 157 00:08:15,640 --> 00:08:17,520 Speaker 5: seven percent this year, I think twelve point nine percent 158 00:08:17,520 --> 00:08:18,480 Speaker 5: since twenty twenty one. 159 00:08:18,640 --> 00:08:21,360 Speaker 6: It's been down in each of the last two years. 160 00:08:21,760 --> 00:08:25,000 Speaker 5: We have claims of outright fraud at China Evergrand now 161 00:08:25,160 --> 00:08:28,800 Speaker 5: you know, I think China Bank communicator, they're trying to 162 00:08:28,920 --> 00:08:32,320 Speaker 5: go after Chimeo. You know, talk to us about the 163 00:08:32,320 --> 00:08:35,160 Speaker 5: property sector, talk to us about Chinese deflation, what is 164 00:08:35,200 --> 00:08:37,320 Speaker 5: going on there and how can investors take advantage? 165 00:08:38,520 --> 00:08:42,720 Speaker 7: Well, first point is deflation. Everyone's been talking about Chinese deflation. 166 00:08:43,000 --> 00:08:45,800 Speaker 7: China is not in broad deflation. You know, there's there 167 00:08:45,800 --> 00:08:48,360 Speaker 7: have been you know, there has been a close calls 168 00:08:48,360 --> 00:08:51,240 Speaker 7: at the end of last year. There is deflationary pressure, 169 00:08:51,760 --> 00:08:54,680 Speaker 7: but there's not broad deflation in China. You're still seeing 170 00:08:54,880 --> 00:08:58,120 Speaker 7: gains even though they've been much much slower than everywhere 171 00:08:58,120 --> 00:09:00,640 Speaker 7: else in the world. So you know, that's reflection the 172 00:09:00,640 --> 00:09:03,520 Speaker 7: fact that Chinese economy hasn't been doing particularly well. So 173 00:09:03,760 --> 00:09:06,520 Speaker 7: you've got problems there, but you don't yet have this 174 00:09:06,800 --> 00:09:09,360 Speaker 7: you know, deflationary way that's being exported out, like a 175 00:09:09,400 --> 00:09:11,840 Speaker 7: lot of people are claiming. You know, property is interesting 176 00:09:11,880 --> 00:09:15,640 Speaker 7: because it was an disaster last year. It's it's not 177 00:09:15,679 --> 00:09:17,439 Speaker 7: going to be great at any time soon, but they 178 00:09:17,480 --> 00:09:19,360 Speaker 7: have stabilized it in the first quarter. And I think 179 00:09:19,400 --> 00:09:21,959 Speaker 7: the most important thing to take into consideration when you're 180 00:09:21,960 --> 00:09:24,600 Speaker 7: talking about property is this is not a one year, 181 00:09:24,720 --> 00:09:27,240 Speaker 7: two year, three year battle. This is a decade plus 182 00:09:27,280 --> 00:09:30,120 Speaker 7: long battle. And what they need to do is essentially 183 00:09:30,240 --> 00:09:34,480 Speaker 7: make sure that they're you know, lessening the impact of 184 00:09:34,760 --> 00:09:36,480 Speaker 7: property as a growth driver. They want to take it 185 00:09:36,520 --> 00:09:38,680 Speaker 7: down from twenty five percent of the economy or so 186 00:09:39,000 --> 00:09:41,120 Speaker 7: down to much much lower, but at the same time 187 00:09:41,440 --> 00:09:44,040 Speaker 7: not do it so precipitously that they shock the rest 188 00:09:44,080 --> 00:09:45,680 Speaker 7: of the economy that they send it to a doom 189 00:09:45,679 --> 00:09:48,520 Speaker 7: loop of confidence. This is really really tough to do. 190 00:09:48,679 --> 00:09:51,000 Speaker 7: So they're being you know, they're tightening, they're tightening, they're 191 00:09:51,000 --> 00:09:54,040 Speaker 7: tightening credit, and then when things get bad and cash 192 00:09:54,040 --> 00:09:57,240 Speaker 7: flow freezes up, contagionous, threatened, then they step in and 193 00:09:57,280 --> 00:09:59,600 Speaker 7: ease conditions a little bit, then they start over. So 194 00:09:59,720 --> 00:10:02,120 Speaker 7: this is a long cycle and it's a really difficult one. 195 00:10:02,200 --> 00:10:05,360 Speaker 5: Leland President, she hosted Business execs out of the US 196 00:10:05,440 --> 00:10:08,199 Speaker 5: C suite executives just last week, trying to entice them, 197 00:10:08,320 --> 00:10:10,840 Speaker 5: tell them, hey, China is open for business. Then just 198 00:10:10,880 --> 00:10:13,840 Speaker 5: today China's telling telco carriers to phase out the use 199 00:10:13,880 --> 00:10:17,040 Speaker 5: of foreign chips. Intel A MD. You know, what should 200 00:10:17,040 --> 00:10:19,080 Speaker 5: we believe here? I mean, it's China really open for 201 00:10:19,120 --> 00:10:21,160 Speaker 5: business from the perspective of a foreign investor. 202 00:10:22,400 --> 00:10:25,160 Speaker 7: No, of course, not always watch what they do, not 203 00:10:25,200 --> 00:10:26,959 Speaker 7: what they say. You know, we joke about that. On 204 00:10:27,000 --> 00:10:29,240 Speaker 7: the stimulus front. They talk about stimulus every day of 205 00:10:29,240 --> 00:10:31,120 Speaker 7: the week, but they're not stimulating in a big. 206 00:10:31,000 --> 00:10:31,640 Speaker 3: Way, you know. 207 00:10:31,720 --> 00:10:33,480 Speaker 7: So this, you know, it's the same thing applies to 208 00:10:33,480 --> 00:10:36,560 Speaker 7: foreign investment. Twenty twenty three was the year of foreign 209 00:10:36,559 --> 00:10:39,240 Speaker 7: investment in China, and how did they celebrate it by 210 00:10:39,280 --> 00:10:42,720 Speaker 7: cracking down on foreign businesses, by shutting down external data sources, 211 00:10:42,720 --> 00:10:45,679 Speaker 7: by shutting down internal data sources. Now, this is this 212 00:10:45,760 --> 00:10:49,280 Speaker 7: is the incoherence that that characterizes China policy these days. 213 00:10:49,559 --> 00:10:49,839 Speaker 8: Lela. 214 00:10:49,960 --> 00:10:51,880 Speaker 2: You know, Damie and I really like to talk. We 215 00:10:51,960 --> 00:10:54,720 Speaker 2: went to China. We're experts on China. We go to 216 00:10:54,760 --> 00:10:57,400 Speaker 2: the Mandarin in Hong Kong, we go to the Piece 217 00:10:57,400 --> 00:11:02,000 Speaker 2: Hotel in Shanghai. You know's sometimes it's Saint Regis in 218 00:11:02,040 --> 00:11:05,920 Speaker 2: Beijing and we say we went deep into China. Leland Miller, 219 00:11:05,960 --> 00:11:10,680 Speaker 2: what's China's consumer like right now, away from the madness 220 00:11:10,760 --> 00:11:13,320 Speaker 2: of Global Wall Street, going to three zip codes in 221 00:11:13,400 --> 00:11:14,199 Speaker 2: mainland China. 222 00:11:16,080 --> 00:11:20,040 Speaker 7: That's exactly the right way to characterize it. Cyclically, March, 223 00:11:20,360 --> 00:11:23,120 Speaker 7: the first quarter looked better than it has been for 224 00:11:23,160 --> 00:11:25,800 Speaker 7: a while. We were seeing retail pickup services pick up, 225 00:11:26,120 --> 00:11:30,640 Speaker 7: So cyclically speaking, you know, the consumer was better off 226 00:11:30,760 --> 00:11:33,400 Speaker 7: in the first quarter. You know, spent more than they 227 00:11:33,400 --> 00:11:35,600 Speaker 7: had in a long time. So that's it's it's it's 228 00:11:35,600 --> 00:11:38,880 Speaker 7: bullish cyclically, but the most important backdrop is always the 229 00:11:38,920 --> 00:11:42,280 Speaker 7: structural backdrop consumpt There is no consumer wave, there is 230 00:11:42,320 --> 00:11:45,079 Speaker 7: no consumption push. There is no shift from investment to 231 00:11:45,120 --> 00:11:50,360 Speaker 7: consumption happening in China because the Chinese economic model disincentivizes households, 232 00:11:50,360 --> 00:11:54,439 Speaker 7: it disincentivizes consumer spending. So you're not going to see 233 00:11:54,480 --> 00:11:58,760 Speaker 7: any big time shift. Structurally speaking, China is slowing down massively. 234 00:11:58,800 --> 00:12:03,079 Speaker 7: There's enormous pressure on consumption. But look sickly speaking, we 235 00:12:03,400 --> 00:12:05,480 Speaker 7: had a nice month in March and we had a 236 00:12:05,520 --> 00:12:06,319 Speaker 7: solid first quarter. 237 00:12:06,480 --> 00:12:08,720 Speaker 5: Leel, I've got some pretty weak data on the trade 238 00:12:08,720 --> 00:12:11,240 Speaker 5: front overnight, but I'm looking ahead to Tuesday of next week. 239 00:12:11,320 --> 00:12:14,280 Speaker 5: Property prices, activity data, retail sales IP, you get your 240 00:12:14,280 --> 00:12:15,120 Speaker 5: GDP print. 241 00:12:15,480 --> 00:12:17,640 Speaker 6: What are you looking for there? What data point is 242 00:12:17,640 --> 00:12:18,320 Speaker 6: most important to you? 243 00:12:19,920 --> 00:12:22,880 Speaker 7: Well, most of these things were ignoring the trade for instance. 244 00:12:22,880 --> 00:12:24,400 Speaker 7: You know the numbers are weak, but it's off a 245 00:12:24,440 --> 00:12:27,600 Speaker 7: pretty high base from last year. This makes it somewhat difficult. 246 00:12:27,880 --> 00:12:30,400 Speaker 7: I think the most important thing to keep in mind 247 00:12:30,480 --> 00:12:33,680 Speaker 7: is how are retail and services doing. How's the consumption 248 00:12:33,800 --> 00:12:36,640 Speaker 7: side of the economy doing compared to last year. The 249 00:12:36,679 --> 00:12:39,720 Speaker 7: answer is it's doing better so far. Has property stabilized? 250 00:12:40,160 --> 00:12:44,280 Speaker 7: Property is stabilized so far this year. How's manufacturing doing. 251 00:12:44,880 --> 00:12:47,000 Speaker 7: Manufacturing did well in March, it didn't do well in 252 00:12:47,080 --> 00:12:49,800 Speaker 7: January February, but everyone thought it was collapsing last year, 253 00:12:49,800 --> 00:12:51,120 Speaker 7: and I think we were the only people in the 254 00:12:51,120 --> 00:12:53,640 Speaker 7: world saying no, it's actually doing fine, and it is 255 00:12:53,720 --> 00:12:56,719 Speaker 7: doing fine. So the economy's up from last year, and 256 00:12:56,760 --> 00:12:58,760 Speaker 7: I think that's positive, but you just have to have 257 00:12:58,920 --> 00:13:01,680 Speaker 7: mild expectations in terms of where that's going. 258 00:13:01,840 --> 00:13:03,880 Speaker 3: Leland, thank you so much. Never enough time. 259 00:13:03,880 --> 00:13:05,480 Speaker 2: We've got to get you on for three hours at 260 00:13:05,480 --> 00:13:12,720 Speaker 2: some point the Leland Miller Show. She was at Harvard 261 00:13:13,080 --> 00:13:17,400 Speaker 2: and went downstreamed the Massachusetts Institute of Technology, one of 262 00:13:17,440 --> 00:13:22,040 Speaker 2: the most prestigious professorships in economics, the gramlk Professor of 263 00:13:22,160 --> 00:13:25,840 Speaker 2: Public Policy at Michigan and now holding court at the 264 00:13:25,880 --> 00:13:29,840 Speaker 2: Boston Fed. It is a perfect time for Susan Collins 265 00:13:29,880 --> 00:13:31,960 Speaker 2: to speak to our Michael McKee. 266 00:13:32,080 --> 00:13:35,520 Speaker 3: Let's listen, let's start with the elephant in the room. 267 00:13:35,600 --> 00:13:40,000 Speaker 9: CPI came in hotter than expected this past month, and 268 00:13:40,200 --> 00:13:44,160 Speaker 9: now you have yourself and others suggesting we're not in 269 00:13:44,200 --> 00:13:47,480 Speaker 9: any hurry to cut interest rates. Market seemed to be 270 00:13:47,559 --> 00:13:50,640 Speaker 9: taking this as a policy turning point, is it? 271 00:13:51,520 --> 00:13:54,400 Speaker 10: I wouldn't characterize it as a turning point. So let 272 00:13:54,440 --> 00:13:58,320 Speaker 10: me you're absolutely right that the inflation numbers that came 273 00:13:58,360 --> 00:14:01,079 Speaker 10: in this week were on what I would call a 274 00:14:01,200 --> 00:14:03,839 Speaker 10: high end of what was expected, and if you look 275 00:14:03,880 --> 00:14:08,559 Speaker 10: at the first quarter, certainly inflation is elevated compared to 276 00:14:08,559 --> 00:14:11,679 Speaker 10: where it was as we ended twenty twenty three. At 277 00:14:11,679 --> 00:14:15,360 Speaker 10: the same time, it doesn't change my baseline outlook that 278 00:14:15,800 --> 00:14:20,120 Speaker 10: inflation will continue to come down with a healthy labor market. 279 00:14:20,320 --> 00:14:23,840 Speaker 10: I just think it will take more time, and it's 280 00:14:23,880 --> 00:14:27,720 Speaker 10: premature to tell whether the elevated numbers that we just 281 00:14:27,760 --> 00:14:31,359 Speaker 10: saw are a bump along that path or something more concerning. 282 00:14:31,440 --> 00:14:34,080 Speaker 10: So I don't see it as a significant turn, but 283 00:14:34,160 --> 00:14:38,120 Speaker 10: important to continue to look at the data holistically and 284 00:14:38,200 --> 00:14:40,480 Speaker 10: let the data tell us what's really going on. 285 00:14:41,160 --> 00:14:43,840 Speaker 9: The markets to go back to them have priced out 286 00:14:43,880 --> 00:14:46,400 Speaker 9: everything except maybe one and a half rate cuts by 287 00:14:46,440 --> 00:14:50,000 Speaker 9: the end of the year. Is it fair to say that, 288 00:14:50,160 --> 00:14:52,760 Speaker 9: unlike them, you really don't know what. 289 00:14:52,680 --> 00:14:54,320 Speaker 11: You're going to do well. 290 00:14:54,520 --> 00:14:57,680 Speaker 10: Policy is not on a preset path, and I think 291 00:14:57,720 --> 00:15:00,840 Speaker 10: that's important. I think there's a maybe understand and desire 292 00:15:00,920 --> 00:15:03,160 Speaker 10: to have us map out exactly what's going to happen. 293 00:15:03,440 --> 00:15:07,400 Speaker 10: But in the current environment, what's really called for is 294 00:15:07,600 --> 00:15:12,840 Speaker 10: patients being very methodical and looking at the whole constellation 295 00:15:13,000 --> 00:15:16,440 Speaker 10: of information, not just focusing on one data reading or 296 00:15:16,600 --> 00:15:20,640 Speaker 10: another one. And so what I would say is that 297 00:15:21,080 --> 00:15:25,400 Speaker 10: we're continuing to form our outlook, recognizing that there are 298 00:15:25,440 --> 00:15:27,640 Speaker 10: lots there are uncertainties in their risks. So I call 299 00:15:27,680 --> 00:15:31,040 Speaker 10: myself a realistic optimist in that sense, realistic about those 300 00:15:31,120 --> 00:15:35,040 Speaker 10: risks and uncertainties, but still for lots of reasons, very 301 00:15:35,040 --> 00:15:39,680 Speaker 10: optimistic that we will see inflation come back down and 302 00:15:39,720 --> 00:15:41,440 Speaker 10: that labor markets will remain healthy. 303 00:15:41,760 --> 00:15:45,000 Speaker 9: Well, how unconvinced are you that inflation is not going 304 00:15:45,040 --> 00:15:47,400 Speaker 9: to come down as rapidly as you might have thought. 305 00:15:48,440 --> 00:15:50,680 Speaker 10: So I do think that we're going to have to 306 00:15:50,720 --> 00:15:53,080 Speaker 10: be patient and it may take more time. That is 307 00:15:53,160 --> 00:15:55,880 Speaker 10: one of my takeaways from some of the data that 308 00:15:55,920 --> 00:15:58,200 Speaker 10: we've seen. You know, at the same time, the data 309 00:15:58,200 --> 00:16:02,640 Speaker 10: are mixed, Mike. So, yes, the most recent inflation numbers 310 00:16:02,640 --> 00:16:05,320 Speaker 10: have been elevated compared to what I might have hoped for. 311 00:16:05,560 --> 00:16:07,360 Speaker 10: But at the same time, if you look at things 312 00:16:07,480 --> 00:16:10,320 Speaker 10: like wage rates, so wage growth has been faster than 313 00:16:10,360 --> 00:16:14,840 Speaker 10: it was pre pandemic, But once you factor in the 314 00:16:14,920 --> 00:16:19,560 Speaker 10: past price increases and importantly the productivity gains we've seen, 315 00:16:20,080 --> 00:16:24,360 Speaker 10: the wage growth that we're seeing is consistent with that 316 00:16:24,440 --> 00:16:28,880 Speaker 10: trajectory back down to two percent inflation, and I think 317 00:16:28,920 --> 00:16:32,040 Speaker 10: that's good news for workers as well. But my point 318 00:16:32,200 --> 00:16:34,360 Speaker 10: is that you need to look at the range of 319 00:16:34,480 --> 00:16:38,040 Speaker 10: data and not focus too much on one piece and 320 00:16:38,160 --> 00:16:42,240 Speaker 10: take the time to really see what the takeaways should be. 321 00:16:42,560 --> 00:16:45,440 Speaker 9: Well, you said yesterday that the danger of overtightening is 322 00:16:45,520 --> 00:16:48,120 Speaker 9: kind of moved out of the picture at this point. 323 00:16:48,520 --> 00:16:53,040 Speaker 9: Growth is strong, unemployment remains low, inflation is at least sticky. 324 00:16:53,080 --> 00:16:55,640 Speaker 9: If nothing else, why cut rates at all. 325 00:16:56,240 --> 00:17:00,360 Speaker 10: So I wouldn't say that that there is no risk 326 00:17:01,080 --> 00:17:04,920 Speaker 10: of us, you know, waiting too long. I do think 327 00:17:05,040 --> 00:17:09,640 Speaker 10: that it's two sided. But to your point, I certainly 328 00:17:09,680 --> 00:17:14,719 Speaker 10: do see more reason to focus on making sure that 329 00:17:14,840 --> 00:17:17,360 Speaker 10: we don't start easing too quickly. 330 00:17:17,560 --> 00:17:18,359 Speaker 1: We're resolute. 331 00:17:18,480 --> 00:17:21,680 Speaker 10: I'm certainly resolute about that commitment to bring inflation back 332 00:17:21,720 --> 00:17:24,280 Speaker 10: down to two percent. You know, I do see policy 333 00:17:24,359 --> 00:17:27,440 Speaker 10: as being moderately restrictive at this point, and in my. 334 00:17:27,520 --> 00:17:29,000 Speaker 4: View, will be appropriate. 335 00:17:29,560 --> 00:17:34,199 Speaker 10: As we get closer to that trajectory, it will be 336 00:17:34,280 --> 00:17:38,080 Speaker 10: appropriate to begin easing. But we're not there yet, so 337 00:17:38,359 --> 00:17:41,040 Speaker 10: I don't think that we would definitely certainly want to 338 00:17:41,359 --> 00:17:45,320 Speaker 10: stay where we are. My baseline would still have us 339 00:17:45,320 --> 00:17:48,520 Speaker 10: starting to ease later this year. But when I see 340 00:17:48,600 --> 00:17:52,520 Speaker 10: as likely to be later than I had been previously thinking, I. 341 00:17:52,480 --> 00:17:55,000 Speaker 9: Have to ask, because everybody's going to bring up the 342 00:17:55,080 --> 00:17:59,359 Speaker 9: question is does the election interfere with. 343 00:18:01,240 --> 00:18:06,360 Speaker 10: Absolutely not? You know, as I've said a number of times, 344 00:18:07,119 --> 00:18:11,600 Speaker 10: focusing holistically on the data is really what determines appropriate policy, 345 00:18:11,640 --> 00:18:12,920 Speaker 10: and I have to say there's enough of that to 346 00:18:13,000 --> 00:18:16,280 Speaker 10: keep us very busy. So that is my focus and 347 00:18:16,320 --> 00:18:17,840 Speaker 10: that's the focus of the committee. 348 00:18:18,119 --> 00:18:22,239 Speaker 9: You mentioned policy is moderately restrictive. What tells you that 349 00:18:22,520 --> 00:18:26,360 Speaker 9: and how do you know what level of restrictiveness you need? 350 00:18:27,440 --> 00:18:30,800 Speaker 10: So in terms of the last piece, that's where watching 351 00:18:30,840 --> 00:18:34,159 Speaker 10: the data comes from. Are we seeing the balance of 352 00:18:34,280 --> 00:18:39,040 Speaker 10: performance that we're looking for over time? You know, certainly 353 00:18:39,080 --> 00:18:44,440 Speaker 10: there's evidence of some restriction. We've seen housing market reactions, 354 00:18:44,560 --> 00:18:49,560 Speaker 10: We've seen some increase in delinquencies, We've seen some declines 355 00:18:49,760 --> 00:18:53,439 Speaker 10: in capital spending, and so there clearly is evidence in 356 00:18:53,480 --> 00:18:56,400 Speaker 10: a variety of places labor markets are coming into better balance, 357 00:18:56,440 --> 00:18:59,280 Speaker 10: and that's a really important one. At the same time, 358 00:18:59,359 --> 00:19:05,520 Speaker 10: consumption and demand have remained perhaps surprisingly strong given where 359 00:19:05,560 --> 00:19:08,439 Speaker 10: interest rates are and what we might have thought based 360 00:19:08,480 --> 00:19:11,639 Speaker 10: on history. But you know, we've seen in a lot 361 00:19:11,720 --> 00:19:15,280 Speaker 10: of contexts the ways that the current context is somewhat different. 362 00:19:15,560 --> 00:19:18,399 Speaker 10: So I would characterize where we are as policy is 363 00:19:18,480 --> 00:19:20,960 Speaker 10: having a restrictive effect, which is what we want, but 364 00:19:21,359 --> 00:19:25,840 Speaker 10: it's perhaps moderately restrictive, and that calls again for patients 365 00:19:25,960 --> 00:19:29,920 Speaker 10: and being methodical as we look at all of the data. 366 00:19:30,000 --> 00:19:34,879 Speaker 9: We've now got pricing basically for a December right cut 367 00:19:35,480 --> 00:19:39,879 Speaker 9: as markets move back and forth. But my nerdy economist 368 00:19:39,960 --> 00:19:42,119 Speaker 9: friends have spent the last two days putting PPI and 369 00:19:42,160 --> 00:19:45,640 Speaker 9: CPI into the PCE calculations, and everybody is saying PCE 370 00:19:45,840 --> 00:19:49,040 Speaker 9: is going to come in much milder than both of those. 371 00:19:49,680 --> 00:19:54,080 Speaker 9: If that's the case, can we say June might be 372 00:19:54,160 --> 00:19:54,960 Speaker 9: back on the table. 373 00:19:55,440 --> 00:19:57,639 Speaker 10: So I don't want to speculate again, you know, not 374 00:19:57,720 --> 00:19:59,760 Speaker 10: a preset path, and I think we have to wait 375 00:19:59,800 --> 00:20:02,679 Speaker 10: to se see what the data tell us. But to 376 00:20:02,800 --> 00:20:06,560 Speaker 10: my earlier point, the data have been mixed, and CPI 377 00:20:06,840 --> 00:20:10,360 Speaker 10: and PCE don't always move in lockstep. They certainly are 378 00:20:10,880 --> 00:20:13,080 Speaker 10: very closely related, and so I think we have to 379 00:20:13,119 --> 00:20:17,159 Speaker 10: wait and let the data tell us what's happening. And again, 380 00:20:17,880 --> 00:20:20,240 Speaker 10: it's not just the PCE, although that is certainly the 381 00:20:20,320 --> 00:20:24,440 Speaker 10: preferred measure that we are focusing on when we look 382 00:20:24,480 --> 00:20:27,479 Speaker 10: at our two percent target, it's all of it and 383 00:20:27,480 --> 00:20:31,359 Speaker 10: how it comes together collectively. So wage data will be important. 384 00:20:31,960 --> 00:20:34,120 Speaker 10: When I look at the price data, I also want 385 00:20:34,160 --> 00:20:37,160 Speaker 10: to disaggregate and look at what's happening to the different components, 386 00:20:37,200 --> 00:20:40,320 Speaker 10: because the dynamics there are different, and that's informative for 387 00:20:40,440 --> 00:20:43,000 Speaker 10: trying to understand where we might be going, not just 388 00:20:43,040 --> 00:20:46,240 Speaker 10: where we've been. Key question is where are we going 389 00:20:46,440 --> 00:20:50,600 Speaker 10: and what's that outlook like, and trying to get to 390 00:20:50,680 --> 00:20:54,760 Speaker 10: greater confidence before we change the policy stance for Saint Lewis. 391 00:20:54,760 --> 00:20:58,240 Speaker 9: FED President Jim Bullard once said, during the aftermath of 392 00:20:58,280 --> 00:21:00,840 Speaker 9: the financial crisis, whatever you think the right rate for 393 00:21:00,880 --> 00:21:05,919 Speaker 9: the country is, this isn't it. Are you anxious to cut? 394 00:21:06,000 --> 00:21:08,760 Speaker 9: Do you want to cut? Do we need a cut? 395 00:21:09,040 --> 00:21:11,240 Speaker 9: Or can we live with rates at this level? 396 00:21:11,960 --> 00:21:16,000 Speaker 10: Well, in the near term, I don't see urgency. I 397 00:21:16,200 --> 00:21:20,359 Speaker 10: had been a bit concerned earlier in the year, very 398 00:21:20,400 --> 00:21:22,320 Speaker 10: early in the year, that there might be some signs 399 00:21:22,320 --> 00:21:26,640 Speaker 10: of labor market fragility. I'm seeing much less reason for concern. 400 00:21:26,720 --> 00:21:28,720 Speaker 10: But that again is why I see the risks as 401 00:21:28,760 --> 00:21:31,560 Speaker 10: being too cited. So I don't see urgency, and I 402 00:21:31,600 --> 00:21:34,800 Speaker 10: see lots of reasons for patients. And over the longer term, 403 00:21:34,840 --> 00:21:38,480 Speaker 10: I think we'll My expectation is that we will ease 404 00:21:38,680 --> 00:21:42,120 Speaker 10: and that over the longer term inflation interest rates will 405 00:21:42,160 --> 00:21:45,520 Speaker 10: be at lower levels. But exactly what that looks like, 406 00:21:45,560 --> 00:21:48,119 Speaker 10: it's really premature to be too specific. 407 00:21:48,640 --> 00:21:51,119 Speaker 9: The data may be mixed, but what are CEOs in 408 00:21:51,160 --> 00:21:56,399 Speaker 9: your district saying about both employment growth and also about 409 00:21:56,560 --> 00:21:59,600 Speaker 9: whether or not they're still having to raise salaries and 410 00:21:59,600 --> 00:22:01,520 Speaker 9: whether they're going to have to raise prices. 411 00:22:02,160 --> 00:22:05,919 Speaker 10: So and we do have many conversations with people throughout 412 00:22:05,960 --> 00:22:10,240 Speaker 10: our district, large firms, small firms throughout New England. And 413 00:22:10,359 --> 00:22:13,159 Speaker 10: what I'm hearing is a couple of things. One is 414 00:22:13,280 --> 00:22:16,040 Speaker 10: quite a bit of optimism in terms of the economy's 415 00:22:16,119 --> 00:22:23,280 Speaker 10: performance overall. I'm hearing information consistent with labor markets really 416 00:22:23,320 --> 00:22:25,919 Speaker 10: coming into better balance, being easier to hire, except in 417 00:22:25,920 --> 00:22:28,399 Speaker 10: a couple of sectors like healthcare, where that can still 418 00:22:28,440 --> 00:22:32,359 Speaker 10: be quite a challenge. So you know, it's their differences 419 00:22:32,480 --> 00:22:38,000 Speaker 10: across different sectors and localities, but that firms have not 420 00:22:38,200 --> 00:22:41,400 Speaker 10: been expecting the same kinds of wage increases that they 421 00:22:41,520 --> 00:22:44,760 Speaker 10: had needed before to retain workers, quit rates or way down, 422 00:22:45,880 --> 00:22:49,880 Speaker 10: much less turnover, and that helps with productivity, right because 423 00:22:49,920 --> 00:22:53,680 Speaker 10: if you are focused continually on having to fill those 424 00:22:53,720 --> 00:22:55,679 Speaker 10: gaps because people are leaving and then you have to 425 00:22:55,720 --> 00:22:58,040 Speaker 10: train people to come up to speed, it's hard to 426 00:22:58,119 --> 00:23:01,560 Speaker 10: maintain that productivity that that firms really need. And that's 427 00:23:01,640 --> 00:23:05,520 Speaker 10: part of the good productivity story that we've seen that 428 00:23:05,600 --> 00:23:08,760 Speaker 10: has helped with economic growth and helped us to bring 429 00:23:08,800 --> 00:23:12,800 Speaker 10: inflation down as much as we did in twenty twenty three, 430 00:23:13,000 --> 00:23:16,600 Speaker 10: despite the fact that growth has been continued to be 431 00:23:16,640 --> 00:23:19,000 Speaker 10: so robust. So there's a strong supply side story there 432 00:23:19,040 --> 00:23:19,360 Speaker 10: as well. 433 00:23:19,440 --> 00:23:19,520 Speaker 7: Well. 434 00:23:19,600 --> 00:23:21,880 Speaker 9: Productivity is one half of potential growth, and you're talking 435 00:23:21,920 --> 00:23:25,080 Speaker 9: about productivity being good. A lot of argument these days 436 00:23:25,080 --> 00:23:27,960 Speaker 9: that we're seeing more immigration than we're really accounting for, 437 00:23:28,359 --> 00:23:32,840 Speaker 9: and that basically potential growth is higher than we thought 438 00:23:32,840 --> 00:23:33,239 Speaker 9: it was. 439 00:23:33,280 --> 00:23:34,640 Speaker 3: Do you agree with that? 440 00:23:34,960 --> 00:23:38,320 Speaker 10: So I certainly have seen increases and labor supply as 441 00:23:38,400 --> 00:23:42,960 Speaker 10: being a key part of that supply improvement story that 442 00:23:43,280 --> 00:23:47,600 Speaker 10: has certainly benefited the economy. And the labor supply increases 443 00:23:48,200 --> 00:23:52,200 Speaker 10: have included immigration, and there's been a lot of work 444 00:23:52,840 --> 00:23:57,800 Speaker 10: which has come from different people finding similar stories in 445 00:23:57,920 --> 00:24:00,679 Speaker 10: terms of the increase in immigration playing a role. But 446 00:24:00,720 --> 00:24:05,240 Speaker 10: we've also seen an increase in labor force participation, particularly 447 00:24:05,240 --> 00:24:09,000 Speaker 10: in prime age workers that was not anticipated, and really 448 00:24:09,080 --> 00:24:13,119 Speaker 10: notably among prime age women, even though we know that 449 00:24:13,160 --> 00:24:17,280 Speaker 10: the childcare challenges continue and those are really quite stark. 450 00:24:17,600 --> 00:24:22,480 Speaker 10: So there have been some surprising supply improvement news, and 451 00:24:23,080 --> 00:24:25,600 Speaker 10: we'll have to see the extent to which those continue, 452 00:24:25,640 --> 00:24:28,000 Speaker 10: but it's certainly been an important part of the story 453 00:24:28,080 --> 00:24:28,440 Speaker 10: so far. 454 00:24:28,960 --> 00:24:32,640 Speaker 9: One last question for our money market desk friends is 455 00:24:32,720 --> 00:24:35,639 Speaker 9: you had a staff briefing in a discussion of whether 456 00:24:35,720 --> 00:24:41,280 Speaker 9: or not and when to taper quantitative tightening. The agreement, 457 00:24:41,480 --> 00:24:44,119 Speaker 9: apparently according to the minutes, was that you should announce 458 00:24:44,160 --> 00:24:46,959 Speaker 9: it fairly soon. Can we expect something like that at 459 00:24:47,000 --> 00:24:48,600 Speaker 9: the June meeting, So. 460 00:24:48,560 --> 00:24:49,840 Speaker 10: No decisions were made. 461 00:24:50,280 --> 00:24:52,120 Speaker 3: The minutes. 462 00:24:53,560 --> 00:24:56,960 Speaker 10: Summarized the discussion that we had, and it really draws 463 00:24:57,000 --> 00:25:00,639 Speaker 10: from lessons from the past period of quant tative tightening 464 00:25:00,640 --> 00:25:03,159 Speaker 10: from twenty seventeen to twenty nineteen, and some of the 465 00:25:03,240 --> 00:25:07,920 Speaker 10: key lessons from that experience are the importance of doing 466 00:25:08,160 --> 00:25:11,760 Speaker 10: the you know, the tightening, in other words, run off 467 00:25:11,880 --> 00:25:15,080 Speaker 10: of the balance sheet in a way that is smooth 468 00:25:15,359 --> 00:25:19,560 Speaker 10: and does not cause stresses. You know that proverbial should 469 00:25:19,600 --> 00:25:23,080 Speaker 10: be like watching paint dry, right, It shouldn't be unexpected. 470 00:25:23,280 --> 00:25:28,200 Speaker 10: And so there was broad agreement that slowing the pace, 471 00:25:28,280 --> 00:25:30,920 Speaker 10: which is currently about twice as fast as it had 472 00:25:30,960 --> 00:25:34,960 Speaker 10: been in that earlier period, and doing so sooner to 473 00:25:35,400 --> 00:25:38,800 Speaker 10: ensure that it continues to be quiet and orderly and 474 00:25:38,920 --> 00:25:42,240 Speaker 10: passive in the backgrounds. Broad agreement for that and also 475 00:25:42,320 --> 00:25:46,000 Speaker 10: to start that sooner, but no specific decisions have been 476 00:25:46,000 --> 00:25:47,000 Speaker 10: made yet, so we could. 477 00:25:46,840 --> 00:25:49,880 Speaker 9: Get taper before we get a rit cut. 478 00:25:50,400 --> 00:25:53,359 Speaker 10: Those things are I see them as being independent, so 479 00:25:54,200 --> 00:25:54,960 Speaker 10: that could happen. 480 00:25:55,400 --> 00:25:57,879 Speaker 9: Susan Collins, thank you very much for joining us today 481 00:25:57,920 --> 00:26:00,440 Speaker 9: here at Bloomberg on Bloomberg Radio, on top of and World. 482 00:26:00,440 --> 00:26:03,399 Speaker 3: What will send it back to? Michael mckeeth, Thank you 483 00:26:03,440 --> 00:26:03,880 Speaker 3: so much. 484 00:26:04,040 --> 00:26:25,280 Speaker 8: With a gentle lady from the Boston said. 485 00:26:17,600 --> 00:26:18,800 Speaker 3: This is really important. 486 00:26:18,800 --> 00:26:21,320 Speaker 2: I'll put out a tweet and it'll be like some announcement. 487 00:26:21,359 --> 00:26:25,640 Speaker 2: I'll go dot dot dot anticipated. This is the anticipated 488 00:26:25,680 --> 00:26:28,919 Speaker 2: book of the fall. Christopher Whalen and his staff are 489 00:26:29,080 --> 00:26:33,040 Speaker 2: knee deep and through the summer rewrites of his classic 490 00:26:33,280 --> 00:26:38,359 Speaker 2: Inflated How Money and Debt Built the American Dream first edition. 491 00:26:38,960 --> 00:26:41,000 Speaker 2: We're gonna give you a front run on the second 492 00:26:41,160 --> 00:26:44,800 Speaker 2: edition right now. Your book's got to be radically different 493 00:26:45,160 --> 00:26:47,720 Speaker 2: given the debt and deficit mess we're in right now. 494 00:26:48,160 --> 00:26:50,960 Speaker 11: Oh, certainly, Tom, and thank you for that wonderful plug. 495 00:26:51,560 --> 00:26:55,320 Speaker 11: The last two chapters have to be rewritten. In the past, 496 00:26:55,359 --> 00:26:56,919 Speaker 11: we were more worried about the dollar. 497 00:26:57,040 --> 00:26:59,320 Speaker 3: Does the election matter to you? 498 00:26:59,359 --> 00:26:59,600 Speaker 10: No? 499 00:26:59,640 --> 00:27:01,600 Speaker 11: Not In the grand scheme of things. I think it's 500 00:27:01,880 --> 00:27:05,600 Speaker 11: we're nearing the end of the progressive wave of the 501 00:27:05,640 --> 00:27:09,639 Speaker 11: past century, which was largely driven by my ancestory. So 502 00:27:09,680 --> 00:27:14,280 Speaker 11: it's no, it's just when a society takes on too much. 503 00:27:14,359 --> 00:27:18,199 Speaker 11: Eventually the demographics tell you what's going to happen. And 504 00:27:18,240 --> 00:27:20,560 Speaker 11: we have fewer and fewer workers and more and more 505 00:27:20,600 --> 00:27:23,320 Speaker 11: old people, so we're going to be consuming capital. 506 00:27:23,480 --> 00:27:23,639 Speaker 3: You know. 507 00:27:23,680 --> 00:27:26,600 Speaker 11: Bob dougger the retired partner at Tudor, wrote a great 508 00:27:26,640 --> 00:27:31,480 Speaker 11: piece about the coming drought of savings in International Economy magazine, 509 00:27:31,520 --> 00:27:33,720 Speaker 11: and that's that's what's going to drive policy. 510 00:27:34,000 --> 00:27:37,639 Speaker 2: Bob Douggar is one of the most original, outfront thinkers 511 00:27:37,760 --> 00:27:40,000 Speaker 2: I've known in the act for years. Yes, he's like 512 00:27:40,200 --> 00:27:42,800 Speaker 2: really twisted in different Damian dives. 513 00:27:42,800 --> 00:27:45,200 Speaker 6: Well, Tom, I mean, I appreciate you. Plug. I'm gonna 514 00:27:45,200 --> 00:27:45,800 Speaker 6: plug another book. 515 00:27:45,800 --> 00:27:47,640 Speaker 5: I'm gonna take you back to twenty fourteen, Chris Well, 516 00:27:47,720 --> 00:27:50,560 Speaker 5: and let's talk about financial stability, fraud, confidence in the 517 00:27:50,560 --> 00:27:53,040 Speaker 5: wealth of the nations your book back then, let's think 518 00:27:53,080 --> 00:27:55,959 Speaker 5: about the lessons learned from the last global financial crisis 519 00:27:55,960 --> 00:27:57,760 Speaker 5: and now what we're seeing today with these markets. 520 00:27:58,040 --> 00:27:59,520 Speaker 6: I mean, how should investors be. 521 00:27:59,520 --> 00:28:03,240 Speaker 5: Looking more importantly, what indicators should they be looking at 522 00:28:03,800 --> 00:28:06,320 Speaker 5: to say, you know, hey, things aren't right here, Things. 523 00:28:06,119 --> 00:28:08,560 Speaker 11: Don't smell it well the way I look at banks. 524 00:28:08,600 --> 00:28:11,560 Speaker 11: You know, we published some bank indices earlier this year 525 00:28:11,800 --> 00:28:15,880 Speaker 11: and we weighted quality versus size. Now you can't ignore size. 526 00:28:16,119 --> 00:28:18,240 Speaker 11: But my attitude is if you want to be safe 527 00:28:18,280 --> 00:28:20,720 Speaker 11: with banks, you want to own the top twenty five 528 00:28:21,160 --> 00:28:23,480 Speaker 11: out of the top one hundred. So that's a pretty 529 00:28:23,480 --> 00:28:27,240 Speaker 11: harsh cut. You're basically saying you want to avoid two 530 00:28:27,320 --> 00:28:29,040 Speaker 11: thirds of them or three quarters of them. 531 00:28:29,160 --> 00:28:32,200 Speaker 3: Daman, JP Morgan one ninety six under one eighty eight. 532 00:28:32,320 --> 00:28:35,119 Speaker 6: Oh well, let's just talk about that, Chris. It's unpacked 533 00:28:35,119 --> 00:28:35,400 Speaker 6: that a bit. 534 00:28:35,400 --> 00:28:37,800 Speaker 5: You're talking about owning from an investors standpoint, right, you're 535 00:28:37,840 --> 00:28:40,040 Speaker 5: not talking about keeping your deposits with bak no. 536 00:28:40,160 --> 00:28:43,920 Speaker 11: But whether you care about income or alpha, you want 537 00:28:43,920 --> 00:28:46,200 Speaker 11: to know where the good ones are. And so, for example, 538 00:28:46,280 --> 00:28:50,760 Speaker 11: we just wrote a piece about BANKO'ZK George Gleeson. Well, 539 00:28:51,040 --> 00:28:53,480 Speaker 11: George is a little bank, but he produces a lot 540 00:28:53,520 --> 00:28:56,560 Speaker 11: of construction and development loans. People make the mistake of 541 00:28:56,640 --> 00:29:00,360 Speaker 11: thinking he's in commercial real estate lending. He's not in 542 00:29:00,400 --> 00:29:02,520 Speaker 11: the beginning of the life cycle of the asset. Then 543 00:29:02,560 --> 00:29:04,040 Speaker 11: he gets out very smart. 544 00:29:04,120 --> 00:29:06,000 Speaker 5: So talk to us about the big bank little bank, 545 00:29:06,040 --> 00:29:07,880 Speaker 5: you know, talk to us about that dynamic you know, 546 00:29:07,960 --> 00:29:09,680 Speaker 5: I mean, is that not going away soon? Do you 547 00:29:09,680 --> 00:29:12,640 Speaker 5: see that wedge, that divergence in the performance between big 548 00:29:12,640 --> 00:29:14,360 Speaker 5: and small banks continue well? 549 00:29:14,400 --> 00:29:17,320 Speaker 11: In terms of financial performance, the smaller banks do better. 550 00:29:17,520 --> 00:29:19,920 Speaker 11: They have more pricing power. They tend to have much 551 00:29:19,960 --> 00:29:23,680 Speaker 11: more operating leverage, too much lower efficiency ratios. And this 552 00:29:23,720 --> 00:29:26,640 Speaker 11: is why Jamie Timon is so remarkable. Since he bought 553 00:29:27,040 --> 00:29:30,600 Speaker 11: First Republic, his efficiency ratio has been in the mid fifties, 554 00:29:30,880 --> 00:29:33,200 Speaker 11: which is painful for everyone else because they're in the 555 00:29:33,240 --> 00:29:36,320 Speaker 11: sixties low seventies. If you want to compete with Jamie, 556 00:29:36,360 --> 00:29:38,360 Speaker 11: you've got to have a five handle on efficiency. 557 00:29:38,480 --> 00:29:43,360 Speaker 2: Inflated is a twisted book chapter to chapter chapter. It's 558 00:29:43,400 --> 00:29:46,000 Speaker 2: the only one I know that comes close to you 559 00:29:46,080 --> 00:29:49,520 Speaker 2: is Marianna Mosicado, who's doing a Marxist thing over in England, 560 00:29:49,920 --> 00:29:53,360 Speaker 2: and Masakado and Ugo chapter the chapter to say, hey, 561 00:29:53,400 --> 00:29:57,920 Speaker 2: you can't understand Bloomberg surveillance unless you know your history. 562 00:29:58,280 --> 00:29:59,400 Speaker 3: Are we in and towards the. 563 00:29:59,400 --> 00:30:02,760 Speaker 2: Fifth Nash Bank of the United States in a combo 564 00:30:02,840 --> 00:30:04,720 Speaker 2: of JP Morgan and Bank of America. 565 00:30:05,160 --> 00:30:08,360 Speaker 11: I think America is headed to a large restructuring that 566 00:30:08,520 --> 00:30:11,960 Speaker 11: is very similar to the nineteen thirties when the Reconstruction 567 00:30:12,080 --> 00:30:17,440 Speaker 11: Finance Corp essentially restructured everything that wasn't solving, right. 568 00:30:17,680 --> 00:30:19,440 Speaker 2: I got a shift gearser Damien, I want you to 569 00:30:19,480 --> 00:30:24,120 Speaker 2: climb on board this insight. CIRE and Wayland's led the 570 00:30:24,160 --> 00:30:27,520 Speaker 2: discussion on this is different now because we have Twitter. 571 00:30:28,000 --> 00:30:30,320 Speaker 3: So you're at home or whatever, you're out on the road. 572 00:30:30,400 --> 00:30:33,200 Speaker 2: I'm walking vet Bill and I got Twitter up and 573 00:30:33,240 --> 00:30:37,400 Speaker 2: it's one guy with a genius walk through about something 574 00:30:37,440 --> 00:30:40,880 Speaker 2: that was one hundred million is now eighteen million in 575 00:30:41,040 --> 00:30:44,680 Speaker 2: real estate, I mean social media, Damien has changed a 576 00:30:44,800 --> 00:30:45,800 Speaker 2: CRI tobacco. 577 00:30:45,920 --> 00:30:47,440 Speaker 5: No, I agree with that. And look, I mean there's 578 00:30:47,440 --> 00:30:49,200 Speaker 5: been a lot of talk about the death of cre 579 00:30:49,400 --> 00:30:51,760 Speaker 5: and clos and other securitized products for that matter in 580 00:30:51,760 --> 00:30:54,520 Speaker 5: this environment, and so you know, just to move away 581 00:30:54,560 --> 00:30:56,000 Speaker 5: from that, I really just want to kind of focus 582 00:30:56,000 --> 00:30:58,040 Speaker 5: more on this concept of the big banks and how 583 00:30:58,120 --> 00:30:59,479 Speaker 5: you know, the big twenty and those are the ones 584 00:30:59,480 --> 00:31:00,320 Speaker 5: you want to focus on. 585 00:31:00,680 --> 00:31:03,480 Speaker 6: That's still twenty banks, right, and there's a big difference between. 586 00:31:03,280 --> 00:31:06,400 Speaker 5: City Group and JP Morgan. So yeah, help educate you need, Like, 587 00:31:06,440 --> 00:31:09,240 Speaker 5: what are you looking for? How do you differentiate between 588 00:31:09,240 --> 00:31:11,840 Speaker 5: those big banks in terms of making an investment gape 589 00:31:12,000 --> 00:31:12,720 Speaker 5: one way or the other. 590 00:31:12,960 --> 00:31:14,600 Speaker 11: Well, you know, I've been doing this for a while. 591 00:31:14,680 --> 00:31:17,960 Speaker 11: We've been building bank analytics for thirty years, and over 592 00:31:18,000 --> 00:31:23,080 Speaker 11: time you decide what's important. So equity returns, total market return, 593 00:31:23,480 --> 00:31:27,440 Speaker 11: operating leverage, price to book, all of those things tell 594 00:31:27,480 --> 00:31:29,120 Speaker 11: you a kind of sort of the same thing, but 595 00:31:29,200 --> 00:31:32,920 Speaker 11: from a different perspective. You know, for example, George's got 596 00:31:32,960 --> 00:31:35,280 Speaker 11: one of the best performing banks in the country at 597 00:31:35,280 --> 00:31:39,160 Speaker 11: Banko's EK, but he's still trading around book. Yeah, American 598 00:31:39,240 --> 00:31:43,840 Speaker 11: expresses five times book. Okay, very different, right franchises? 599 00:31:43,880 --> 00:31:45,880 Speaker 2: Well, if you're a market update here, Damien, get ready 600 00:31:45,880 --> 00:31:48,640 Speaker 2: for another question with Christopher. Well, we're down two eleven 601 00:31:48,640 --> 00:31:51,680 Speaker 2: in the Dow, negative thirty two, pretty much lows here 602 00:31:51,720 --> 00:31:55,320 Speaker 2: where the market open fifty one sixty seven SPX. 603 00:31:55,400 --> 00:31:58,400 Speaker 3: We are moments away from ninety two, Brent, We're not 604 00:31:58,480 --> 00:31:58,920 Speaker 3: there yet. 605 00:31:59,080 --> 00:32:02,320 Speaker 2: Ninety one eighty four just made a dash, didn't get 606 00:32:02,360 --> 00:32:06,920 Speaker 2: there eighty seven and change on Imax Gold twenty four sixteen, 607 00:32:07,320 --> 00:32:09,280 Speaker 2: and I sound that this sounds like a data chet 608 00:32:09,360 --> 00:32:10,320 Speaker 2: from twenty years ago. 609 00:32:10,440 --> 00:32:11,760 Speaker 5: You know when you look at banks that I mean 610 00:32:11,840 --> 00:32:13,400 Speaker 5: just coming back, I mean you look at an interest 611 00:32:13,480 --> 00:32:15,680 Speaker 5: rate sensitive sector, right and so you know, I guess 612 00:32:15,680 --> 00:32:17,880 Speaker 5: for me, you know, if I'm believing all this kool 613 00:32:17,880 --> 00:32:19,240 Speaker 5: aid that's going on in the market right now, and 614 00:32:19,280 --> 00:32:21,720 Speaker 5: I want to get defensive. You know, Chris, walk me through, 615 00:32:21,840 --> 00:32:25,800 Speaker 5: how do you think about protecting investor assets in this market? 616 00:32:25,840 --> 00:32:26,400 Speaker 3: Is it gold? 617 00:32:26,680 --> 00:32:29,000 Speaker 5: Is it cash? Is it money markets? Is it something else? 618 00:32:29,560 --> 00:32:32,520 Speaker 11: Well, I would be very careful with financials because we're 619 00:32:32,600 --> 00:32:36,000 Speaker 11: still coming out of the COVID period when we had 620 00:32:36,120 --> 00:32:39,200 Speaker 11: zero interest rates. This both helped and hurt. It caused 621 00:32:39,240 --> 00:32:42,959 Speaker 11: problems and it also solved problems. But going forward, you know, 622 00:32:43,080 --> 00:32:46,000 Speaker 11: everyone was fixated on net interest margin. You guys had 623 00:32:46,000 --> 00:32:48,560 Speaker 11: a piece on the Bloomberg this morning. No, it's about 624 00:32:48,600 --> 00:32:52,480 Speaker 11: spreads and guess what is totally flat rest of the year. 625 00:32:52,600 --> 00:32:55,960 Speaker 2: What's so important, folks of Bloomberg surveyllance worldwide. 626 00:32:56,000 --> 00:32:58,720 Speaker 3: What you just heard from mister Whylan is a. 627 00:32:58,640 --> 00:33:02,880 Speaker 2: Completely different way world from Gina Martin Adams, and yet 628 00:33:02,880 --> 00:33:05,640 Speaker 2: that came to the same conclusion on financials. 629 00:33:05,680 --> 00:33:07,320 Speaker 3: That's really important to. 630 00:33:07,600 --> 00:33:12,040 Speaker 2: Twisted orinery different views, and the same conclusion is to 631 00:33:12,080 --> 00:33:12,920 Speaker 2: be careful out there. 632 00:33:12,960 --> 00:33:13,600 Speaker 6: Yeah, and dividan. 633 00:33:13,600 --> 00:33:15,440 Speaker 5: The yields are now, I mean, earning yields are now 634 00:33:15,480 --> 00:33:17,080 Speaker 5: far less than fixing the fields you can get in 635 00:33:17,080 --> 00:33:19,200 Speaker 5: fixed income, right, So I mean, you know, it's got 636 00:33:19,200 --> 00:33:21,080 Speaker 5: that mountain to climb. Also, if we go into sort 637 00:33:21,080 --> 00:33:23,520 Speaker 5: of a risk off environment, you know, last question, Chris, 638 00:33:23,520 --> 00:33:24,960 Speaker 5: I mean talk to us a little bit about you know, 639 00:33:25,000 --> 00:33:26,480 Speaker 5: when you do look at equities and you take a 640 00:33:26,480 --> 00:33:29,440 Speaker 5: step back, how do you approach that? Are you looking 641 00:33:29,480 --> 00:33:32,200 Speaker 5: at big versus small caps? Are you looking at tech 642 00:33:32,280 --> 00:33:34,760 Speaker 5: versus other sectors? I mean we talk about the banking sector, 643 00:33:34,800 --> 00:33:35,720 Speaker 5: but what else is out there? 644 00:33:36,160 --> 00:33:39,160 Speaker 11: Well, look, half of my book is either preferred or debt. 645 00:33:39,200 --> 00:33:41,840 Speaker 11: The other half is equity. I rode in Vidia UP. 646 00:33:42,160 --> 00:33:44,520 Speaker 11: I kept stepping off because it was too big. It 647 00:33:44,560 --> 00:33:47,240 Speaker 11: was a third in my portfolio at one point, and 648 00:33:47,320 --> 00:33:50,320 Speaker 11: finally I got out a couple months ago. So there 649 00:33:50,320 --> 00:33:53,200 Speaker 11: are opportunities. I owned Chevron, I owned some other things, 650 00:33:53,200 --> 00:33:55,200 Speaker 11: but in terms of the banks, I own US Bank, 651 00:33:55,240 --> 00:33:58,440 Speaker 11: Common and Wells. That's it. Everything else is a preferred. 652 00:33:58,640 --> 00:34:01,160 Speaker 11: So if you want exposure to financials, look at the 653 00:34:01,200 --> 00:34:04,680 Speaker 11: preferreds because there's a lot less folatility in Paris. 654 00:34:04,680 --> 00:34:08,200 Speaker 2: Are the real controversial book out who says we got 655 00:34:08,239 --> 00:34:11,440 Speaker 2: to get back to the time we remember where dividends matter. 656 00:34:12,239 --> 00:34:15,480 Speaker 2: Are stock buybacks a dividend equivalent, Chris Whaler? 657 00:34:15,920 --> 00:34:18,200 Speaker 11: No, No, it's a it's a different to discuss that. 658 00:34:19,040 --> 00:34:22,520 Speaker 11: Stock buybacks are basically about feeding the street. It's kind 659 00:34:22,520 --> 00:34:24,480 Speaker 11: of the big you have to pay to the guy 660 00:34:24,560 --> 00:34:27,359 Speaker 11: on the corner, you know who works for Blackstone or 661 00:34:27,560 --> 00:34:30,560 Speaker 11: you know whatever. So to me, dividends are a more 662 00:34:30,560 --> 00:34:33,160 Speaker 11: honest way to return cash to shareholders because I don't 663 00:34:33,200 --> 00:34:34,759 Speaker 11: have to pay a fee, right you know. 664 00:34:35,160 --> 00:34:36,879 Speaker 2: Yeah, we're trying to get you here in ninety two 665 00:34:36,880 --> 00:34:37,960 Speaker 2: a barrel to create something. 666 00:34:39,080 --> 00:34:40,759 Speaker 11: I'm with you talk, Come on, give me the tick. 667 00:34:40,840 --> 00:34:45,640 Speaker 3: Guys, triple digits, but I need Are you predicting triple digit. 668 00:34:45,400 --> 00:34:49,719 Speaker 11: Oil when that missile flies and hits real estate in Israel? Yes, Look, 669 00:34:49,719 --> 00:34:52,040 Speaker 11: the world is at war. We never talk about this. 670 00:34:52,400 --> 00:34:55,480 Speaker 11: The world is in a low intensity conflict that's about 671 00:34:55,480 --> 00:34:58,359 Speaker 11: to get honor. And that's why Jamie Dumman, by the way, 672 00:34:58,440 --> 00:35:01,480 Speaker 11: is talking about geopolitical when everybody else wants to talk 673 00:35:01,480 --> 00:35:02,200 Speaker 11: about Neil. 674 00:35:02,200 --> 00:35:04,120 Speaker 6: Let me think about what Chris is saying here. 675 00:35:04,200 --> 00:35:07,520 Speaker 5: Since the October seventh invasion, right and Hamas spreads are tighter, 676 00:35:07,560 --> 00:35:09,279 Speaker 5: oil is relatively I'm going to be a little bit 677 00:35:09,320 --> 00:35:12,160 Speaker 5: higher now, but really the dollars weaker data. 678 00:35:12,360 --> 00:35:14,080 Speaker 3: We can stay in the script, Damen. We got to 679 00:35:14,080 --> 00:35:14,759 Speaker 3: go to the news here. 680 00:35:14,760 --> 00:35:16,960 Speaker 2: There's a lot of news that Chris Whalen, I know 681 00:35:17,040 --> 00:35:19,719 Speaker 2: you're in from Mono video, Don't be a Stranger, Chris 682 00:35:19,719 --> 00:35:24,160 Speaker 2: Whalen with a book album that will be must must read. 683 00:35:26,360 --> 00:35:28,160 Speaker 3: Now I'll look at the front pages. 684 00:35:28,280 --> 00:35:30,040 Speaker 6: What's making news around the world? 685 00:35:30,280 --> 00:35:34,920 Speaker 2: Your daily roundup of today's headlines from major publications. Bloomberg 686 00:35:34,960 --> 00:35:40,160 Speaker 2: Surveillance our daily newspaper segment, The Lisa Matteo Hour, brought 687 00:35:40,239 --> 00:35:44,760 Speaker 2: you by Interactive Brookers. Interactive Brookers they charge dollar margin 688 00:35:44,880 --> 00:35:47,920 Speaker 2: load rates from five point eight three percent to six 689 00:35:47,960 --> 00:35:51,040 Speaker 2: point eight three percent rates subject to change. Learn more 690 00:35:51,800 --> 00:35:56,839 Speaker 2: at ibkr dot com slash compare. I thought the newspapers 691 00:35:56,840 --> 00:35:59,280 Speaker 2: were thick with stories today? What did you choose? 692 00:35:59,360 --> 00:35:59,680 Speaker 3: Lisa? 693 00:36:00,000 --> 00:36:01,600 Speaker 1: All right, so we're starting with the Wall Street Journal. 694 00:36:01,680 --> 00:36:03,520 Speaker 12: Have you noticed around the office we have them a 695 00:36:03,520 --> 00:36:06,240 Speaker 12: lot here at Bloomberg Couches, Right, they're everywhere. 696 00:36:06,280 --> 00:36:07,520 Speaker 1: Everyone loves the couches. 697 00:36:07,760 --> 00:36:09,600 Speaker 12: Companies trying to make the offices seem a little bit 698 00:36:09,640 --> 00:36:12,560 Speaker 12: less stuffy to get people to come back in. Okay, 699 00:36:12,560 --> 00:36:15,479 Speaker 12: So workers are saying they're more comfortable. Managers are saying 700 00:36:15,480 --> 00:36:16,160 Speaker 12: it helps. 701 00:36:15,880 --> 00:36:17,719 Speaker 1: Them think of these big ideas, you. 702 00:36:17,640 --> 00:36:21,000 Speaker 12: Know, but experts are saying it's actually bad for your back. 703 00:36:21,280 --> 00:36:23,200 Speaker 1: And this is the issue with you know, you're. 704 00:36:23,040 --> 00:36:26,040 Speaker 12: Balancing this laptop as you're trying to sit on the sofa. 705 00:36:26,200 --> 00:36:28,200 Speaker 1: And then you know that can be an issue. 706 00:36:28,280 --> 00:36:30,680 Speaker 12: And then it's also becoming more expensive in a way 707 00:36:30,719 --> 00:36:33,360 Speaker 12: because people are not taking care of their sofas, so 708 00:36:33,360 --> 00:36:35,240 Speaker 12: they're spilling their coffee, they're eating their food. 709 00:36:35,360 --> 00:36:37,120 Speaker 1: So now the companies have to make this expense and 710 00:36:37,160 --> 00:36:41,680 Speaker 1: have this so it's cleaned every so often. Your pretzels 711 00:36:41,680 --> 00:36:42,840 Speaker 1: are all over the place. 712 00:36:44,360 --> 00:36:47,400 Speaker 2: And I'm on the Jesus, yes, and you know I 713 00:36:47,520 --> 00:36:49,600 Speaker 2: clean up after myself with the Jesus. 714 00:36:50,000 --> 00:36:51,799 Speaker 3: This is the same, Damien, What do you think here? 715 00:36:56,560 --> 00:36:59,080 Speaker 5: I think companies have long tried to make the office 716 00:36:59,080 --> 00:37:01,239 Speaker 5: a little b less stuffy. They do, uh, you know, 717 00:37:01,400 --> 00:37:04,680 Speaker 5: restaurants out to terraces, they have signature sense, you know, 718 00:37:04,719 --> 00:37:07,640 Speaker 5: these little diffusers in the office to make it smell nice. 719 00:37:07,680 --> 00:37:09,000 Speaker 6: Smell nice. We have that in my house. 720 00:37:09,040 --> 00:37:12,960 Speaker 5: My wife loves that stuff. It smells beautiful in my house. 721 00:37:15,000 --> 00:37:15,200 Speaker 2: You know. 722 00:37:16,200 --> 00:37:18,400 Speaker 5: Now i'd say it's like that hotel collection. 723 00:37:18,480 --> 00:37:21,640 Speaker 6: I don't know my wife. I mean, I gotta ask 724 00:37:21,640 --> 00:37:24,320 Speaker 6: my interpreter. You know, she controls my names account. 725 00:37:24,480 --> 00:37:25,920 Speaker 2: So what do you think, because I mean, this is 726 00:37:25,960 --> 00:37:29,160 Speaker 2: a huge debate where people are saying. People are saying 727 00:37:29,760 --> 00:37:33,279 Speaker 2: that we're coming back to the office, and Paul and 728 00:37:33,360 --> 00:37:34,680 Speaker 2: I were really pushing against it. 729 00:37:34,719 --> 00:37:35,759 Speaker 3: We're not sure we see it. 730 00:37:35,800 --> 00:37:38,120 Speaker 1: Monday, we don't say it's it. 731 00:37:38,280 --> 00:37:41,040 Speaker 12: Mondays and Fridays it still seems kind of quiet around here. 732 00:37:41,080 --> 00:37:44,040 Speaker 12: But you know, Tuesday through Thursday, I think everyone just 733 00:37:44,080 --> 00:37:45,560 Speaker 12: needs to kind of come back. 734 00:37:45,680 --> 00:37:46,600 Speaker 1: I don't know, I'm kind of. 735 00:37:48,640 --> 00:37:49,440 Speaker 2: I have to do it. 736 00:37:49,719 --> 00:37:50,759 Speaker 5: I feel like everybody else. 737 00:37:52,840 --> 00:37:53,720 Speaker 3: What do you got next? 738 00:37:53,920 --> 00:37:57,799 Speaker 12: Okay, the battle between boomers and millennials, it's starting to 739 00:37:57,880 --> 00:38:00,440 Speaker 12: cheat a shift because millennials are now going to start 740 00:38:00,440 --> 00:38:02,160 Speaker 12: competing with other millennials. 741 00:38:02,160 --> 00:38:02,960 Speaker 1: Here's a reason why. 742 00:38:03,040 --> 00:38:05,960 Speaker 12: Okay, So when they first entered the adult world twenty tens, right, 743 00:38:06,040 --> 00:38:09,640 Speaker 12: so they bonded. They have this against adversity because it's 744 00:38:09,640 --> 00:38:11,799 Speaker 12: harder for them to say for homes, right, so they 745 00:38:11,840 --> 00:38:14,680 Speaker 12: bonded together millennials. Yes, they're going against the boomers, but 746 00:38:14,800 --> 00:38:18,840 Speaker 12: now it's changing, Boomers starting to evade enforce the new competition. 747 00:38:19,000 --> 00:38:22,960 Speaker 12: Here's a reason millennials who have benefited from family wealth. 748 00:38:23,360 --> 00:38:25,919 Speaker 1: So you see the competition, the tension there. 749 00:38:25,960 --> 00:38:28,400 Speaker 12: So now you have these millennials who can't afford to 750 00:38:28,440 --> 00:38:30,919 Speaker 12: by their home, but you have these other millennials who 751 00:38:30,960 --> 00:38:33,040 Speaker 12: can because their parents gave them the money for it. 752 00:38:33,480 --> 00:38:35,839 Speaker 5: So it's his tim I think the interesting statistic here, 753 00:38:35,920 --> 00:38:38,000 Speaker 5: I mean, Lisa, is the fact that the average millennial 754 00:38:38,200 --> 00:38:41,120 Speaker 5: had thirty has thirty percent less wealth than the average 755 00:38:41,120 --> 00:38:43,880 Speaker 5: boomer by the age of thirty five. That's an amazing statistic. 756 00:38:43,960 --> 00:38:46,759 Speaker 5: And I mean boomers they owned homes, they had you know, 757 00:38:46,800 --> 00:38:49,720 Speaker 5: home equity wealth, whereas you know, I mean today's millennial 758 00:38:49,760 --> 00:38:51,080 Speaker 5: I don't think owns all that much. 759 00:38:51,080 --> 00:38:51,480 Speaker 6: Realistic. 760 00:38:51,600 --> 00:38:53,239 Speaker 2: This is the first time I've mentioned that we're going 761 00:38:53,320 --> 00:38:55,520 Speaker 2: to feature the sub Monday with bank earnings today in 762 00:38:55,560 --> 00:38:57,480 Speaker 2: a really full schedule, which you're going to slide it 763 00:38:57,520 --> 00:39:03,800 Speaker 2: to Monday. Bloomberg News has done the absolutely definitive research 764 00:39:03,920 --> 00:39:09,240 Speaker 2: project on majors in colleges and to me, the divide, 765 00:39:09,280 --> 00:39:12,480 Speaker 2: Lisa is people that went to college like Damian Sassaur 766 00:39:13,040 --> 00:39:15,160 Speaker 2: and got a real degree. 767 00:39:14,920 --> 00:39:15,759 Speaker 3: Versus a lot of. 768 00:39:15,719 --> 00:39:18,040 Speaker 2: Other people that just sort of slid through and they 769 00:39:18,080 --> 00:39:21,040 Speaker 2: got this degree or that degree. And to me, that's 770 00:39:21,080 --> 00:39:25,080 Speaker 2: the millennial divide is people with you know, a legit 771 00:39:25,440 --> 00:39:29,640 Speaker 2: stem high energy degree. And the Bloomberg Research Paulina Kacheco 772 00:39:29,719 --> 00:39:35,280 Speaker 2: has this, The Bloomberg Research is absolutely definitive. Will feature 773 00:39:35,280 --> 00:39:35,960 Speaker 2: that on Monday. 774 00:39:36,400 --> 00:39:38,759 Speaker 12: And it's tough because colleges are so expensive too, So 775 00:39:38,800 --> 00:39:40,840 Speaker 12: that's the science that folds that into it. 776 00:39:41,320 --> 00:39:43,200 Speaker 5: Yes, pay four hundred thousand dollars to be a major 777 00:39:43,200 --> 00:39:43,880 Speaker 5: in sociology. 778 00:39:43,960 --> 00:39:44,399 Speaker 6: That's fun. 779 00:39:45,200 --> 00:39:46,200 Speaker 3: That works for you. 780 00:39:46,440 --> 00:39:47,680 Speaker 9: There you go, you. 781 00:39:47,760 --> 00:39:51,840 Speaker 1: Love radio speaking to colleges, Sorre. I want to shift 782 00:39:51,880 --> 00:39:54,120 Speaker 1: to a lot more elite schools. 783 00:39:54,280 --> 00:39:57,320 Speaker 12: They're returning to those standardized tests. So now Harvard Caltech 784 00:39:57,400 --> 00:39:58,560 Speaker 12: they're starting to bring back. 785 00:39:58,400 --> 00:40:01,120 Speaker 1: The SATs kind of did this backtrack. 786 00:40:01,160 --> 00:40:02,960 Speaker 12: They were going to make it optional for a few 787 00:40:03,000 --> 00:40:05,320 Speaker 12: more years, but they changed their mind. Caltech did the 788 00:40:05,360 --> 00:40:08,160 Speaker 12: same thing, so they're starting to bring it back. But 789 00:40:08,280 --> 00:40:10,520 Speaker 12: the shift started to happen, which is interesting after the 790 00:40:10,560 --> 00:40:13,839 Speaker 12: Supreme Court ruling that schools can't consider race and admissions. 791 00:40:13,840 --> 00:40:15,960 Speaker 1: And this is where things started to shift a little bit. 792 00:40:16,040 --> 00:40:17,080 Speaker 1: That's what the article is saying. 793 00:40:17,160 --> 00:40:18,759 Speaker 3: Damien's living this in real time. 794 00:40:18,800 --> 00:40:20,680 Speaker 5: Oh yeah, I mean, look, I mean all I know 795 00:40:20,840 --> 00:40:23,080 Speaker 5: is I'm a pan of standardized tests. 796 00:40:23,120 --> 00:40:23,359 Speaker 6: I do. 797 00:40:23,400 --> 00:40:25,640 Speaker 5: I think you need that number to kind of differentiate, 798 00:40:25,680 --> 00:40:26,759 Speaker 5: you know, the cream from the crop. 799 00:40:26,800 --> 00:40:28,160 Speaker 6: And you know, so I'm a fan of it. 800 00:40:28,200 --> 00:40:29,440 Speaker 5: But at the end of the day, if I had 801 00:40:29,480 --> 00:40:33,000 Speaker 5: a weaker student, who a son or daughter who wasn't 802 00:40:33,120 --> 00:40:35,640 Speaker 5: a great test taker, I understand that it's it can 803 00:40:35,680 --> 00:40:37,440 Speaker 5: be a pretty big ask to ask them to sit 804 00:40:37,520 --> 00:40:38,400 Speaker 5: down to spend. 805 00:40:38,360 --> 00:40:39,640 Speaker 6: Hundreds of dollars on tutors. 806 00:40:40,680 --> 00:40:44,360 Speaker 1: He's gonna say, I just amount of money tutors. 807 00:40:44,400 --> 00:40:47,200 Speaker 2: Granted, COVID was in the way, but they've had too 808 00:40:47,239 --> 00:40:51,200 Speaker 2: many professors to tell me it's been an unmitigated disaster. 809 00:40:51,640 --> 00:40:55,120 Speaker 2: They you know, finally Harvard's catching up with Dartmouths and 810 00:40:55,120 --> 00:40:57,600 Speaker 2: Brown and and there'll be a zillion. 811 00:40:57,719 --> 00:40:59,839 Speaker 3: This was like MIT and Georgetown leading away. 812 00:41:00,400 --> 00:41:00,560 Speaker 6: Yeah. 813 00:41:00,600 --> 00:41:04,440 Speaker 2: Absolutely, But the bottom line is, professor say, they got 814 00:41:04,520 --> 00:41:09,880 Speaker 2: kids in class, they just can't do the work. 815 00:41:10,640 --> 00:41:13,160 Speaker 5: That's the bottom moll Criefing is donating money to the 816 00:41:13,160 --> 00:41:15,520 Speaker 5: public school system down in Miami to address just this 817 00:41:15,560 --> 00:41:18,160 Speaker 5: issue because the COVID kids ages, and we're in grade 818 00:41:18,239 --> 00:41:19,880 Speaker 5: sixteen eight, you know, are suffering. 819 00:41:20,000 --> 00:41:23,359 Speaker 2: Lisa Mateo, thank you. Just really strong newspapers all through 820 00:41:23,360 --> 00:41:25,399 Speaker 2: the week. There, Lisa Miteo with. 821 00:41:25,440 --> 00:41:27,960 Speaker 3: One of our most popular efforts. 822 00:41:28,160 --> 00:41:31,359 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 823 00:41:31,360 --> 00:41:36,160 Speaker 2: in economics, finance, investment, and international relations. You can also 824 00:41:36,239 --> 00:41:40,279 Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast 825 00:41:40,400 --> 00:41:44,439 Speaker 2: channel on YouTube to see the show weekday mornings from 826 00:41:44,480 --> 00:41:47,719 Speaker 2: seven to ten am Eastern from our global headquarters in 827 00:41:47,800 --> 00:41:51,520 Speaker 2: New York City. 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