1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,000 Speaker 1: at Bloomberg dot com slash podcast. All right, we heard 7 00:00:22,120 --> 00:00:24,840 Speaker 1: from Michael McKee was speaking with the New York Fed 8 00:00:24,840 --> 00:00:28,280 Speaker 1: President today. Rates are going higher. I think the concern 9 00:00:28,360 --> 00:00:31,520 Speaker 1: are one of the several concerns in the marketplace is 10 00:00:31,800 --> 00:00:35,200 Speaker 1: what's the risk of this Fed reserve going too far, 11 00:00:35,560 --> 00:00:39,960 Speaker 1: too fast, maybe pushing this economy into recession. Danielle di Martino, 12 00:00:40,040 --> 00:00:45,160 Speaker 1: Booth CEO and chief strategists at Quill Intelligence, joins us. Danielle, 13 00:00:45,320 --> 00:00:47,960 Speaker 1: how is your federal reserve performing rate here? How and 14 00:00:48,200 --> 00:00:50,560 Speaker 1: how do you expect them to perform for the remainder 15 00:00:50,560 --> 00:00:54,280 Speaker 1: of the year. Well, you know, I think that that 16 00:00:54,360 --> 00:00:58,680 Speaker 1: we can expect Federal Reserve officials to attempt to stay 17 00:00:58,720 --> 00:01:03,080 Speaker 1: the course oh over the next few months. People forget 18 00:01:03,120 --> 00:01:06,200 Speaker 1: that this is a mid term election year, and if 19 00:01:06,200 --> 00:01:09,080 Speaker 1: there's one unwritten rule at the Fed, it's that you 20 00:01:09,160 --> 00:01:14,560 Speaker 1: don't appear overtly political during an election year. So I 21 00:01:14,600 --> 00:01:17,039 Speaker 1: think the reason that so many FED officials, including the 22 00:01:17,040 --> 00:01:18,640 Speaker 1: two most doublished the vice share of the F one, 23 00:01:19,160 --> 00:01:21,920 Speaker 1: John Williams, who was just on Bloomberg and Leo Brainerd. 24 00:01:22,160 --> 00:01:25,240 Speaker 1: I think the reason that they've been corralled by J. 25 00:01:25,440 --> 00:01:29,560 Speaker 1: Powell is that they want to be consistent in their broadcasting, 26 00:01:29,680 --> 00:01:34,560 Speaker 1: that they're going to to be methodical and that they're 27 00:01:34,560 --> 00:01:36,520 Speaker 1: going to raise rate, and that they're they've got a 28 00:01:36,520 --> 00:01:38,760 Speaker 1: goal of getting to neutral, and that they're going to 29 00:01:38,880 --> 00:01:42,440 Speaker 1: try and stay the course into the election, even though 30 00:01:42,480 --> 00:01:45,200 Speaker 1: those last few words they're not saying, but I think 31 00:01:45,200 --> 00:01:47,920 Speaker 1: that that's really the message right now. How do you 32 00:01:48,440 --> 00:01:50,920 Speaker 1: set yourself a goal of getting to neutral when you 33 00:01:51,000 --> 00:01:55,720 Speaker 1: have no idea where neutral is? I just you know, 34 00:01:55,840 --> 00:01:58,640 Speaker 1: nobody can I ask all people all the time, what's neutral? 35 00:01:58,800 --> 00:02:02,080 Speaker 1: What's your our star? And nobody he has an exact answer. 36 00:02:02,120 --> 00:02:06,520 Speaker 1: It's always kind of a wishy, washy spongy guess well, 37 00:02:06,680 --> 00:02:08,680 Speaker 1: and it's going to be right. Because J. Powell was 38 00:02:08,760 --> 00:02:11,400 Speaker 1: determined in two thousand eighteen that he was going to 39 00:02:11,520 --> 00:02:13,880 Speaker 1: get to three, it was as if he had this 40 00:02:14,000 --> 00:02:17,639 Speaker 1: neutral goal in mind. Now. You know, you listen to 41 00:02:17,680 --> 00:02:21,160 Speaker 1: Christopher Waller yesterday, governor who used to be the director 42 00:02:21,160 --> 00:02:24,359 Speaker 1: of research at the St. Louis Fete under Bullard. He said, 43 00:02:24,400 --> 00:02:27,960 Speaker 1: two point and that is the number that it seems 44 00:02:28,040 --> 00:02:32,200 Speaker 1: like things started to break last time in the markets. 45 00:02:32,240 --> 00:02:35,639 Speaker 1: So I think that they can. They can, they can 46 00:02:35,720 --> 00:02:38,200 Speaker 1: have as many models as they want. I think that 47 00:02:38,240 --> 00:02:41,399 Speaker 1: they're simply looking back in time and saying, well, look, 48 00:02:41,639 --> 00:02:43,639 Speaker 1: credit credit broke when we were approaching two and a 49 00:02:43,680 --> 00:02:46,040 Speaker 1: half percent, So let's let's just shoot a little bit 50 00:02:46,080 --> 00:02:48,440 Speaker 1: under that and call it two point four. By the way, 51 00:02:48,880 --> 00:02:51,600 Speaker 1: I have Danielle has a big fan who listens to 52 00:02:51,600 --> 00:02:53,640 Speaker 1: the show every day. We got a lot of fans. No, 53 00:02:53,720 --> 00:02:57,200 Speaker 1: I mean listen to our show every day. Okay, he 54 00:02:57,280 --> 00:02:59,560 Speaker 1: and I talk, but he also has heard Danielle speak 55 00:02:59,560 --> 00:03:01,640 Speaker 1: a few times. He's a big fan. He wants he's 56 00:03:02,000 --> 00:03:04,200 Speaker 1: writing in right now. He wants to do you agree 57 00:03:04,200 --> 00:03:06,400 Speaker 1: with the change in work. That's the you know, the 58 00:03:06,400 --> 00:03:10,800 Speaker 1: Bloomberg function about inflation peaking and the market pricing in 59 00:03:10,880 --> 00:03:15,440 Speaker 1: fewer hikes. You know, I think I don't think that 60 00:03:15,480 --> 00:03:18,679 Speaker 1: the market has priced anything definitively in look at where 61 00:03:18,680 --> 00:03:21,240 Speaker 1: the tenure you'ld is right now and this is just 62 00:03:21,320 --> 00:03:25,200 Speaker 1: off of a stormer than expect University of Michigan expectations 63 00:03:25,280 --> 00:03:27,320 Speaker 1: number that that just crossed the wires a two minutes ago. 64 00:03:28,160 --> 00:03:31,640 Speaker 1: Right now, markets are extremely volatile and I and and 65 00:03:31,800 --> 00:03:38,080 Speaker 1: pricing of future inflation is is really it's undetermined right well, 66 00:03:38,080 --> 00:03:40,880 Speaker 1: but everybody has been saying this is the peak, you know, 67 00:03:41,480 --> 00:03:44,000 Speaker 1: or this is likely the peak. I don't. I don't 68 00:03:44,000 --> 00:03:47,200 Speaker 1: know if I personally buy that. Also, the biggest asset 69 00:03:47,240 --> 00:03:49,960 Speaker 1: managers in the world are betting that the terminal rate 70 00:03:50,040 --> 00:03:52,160 Speaker 1: is going to be about three percent, which I know 71 00:03:52,200 --> 00:03:54,360 Speaker 1: because black Rock came out today and said, Nope, it's 72 00:03:54,360 --> 00:03:56,480 Speaker 1: going to be closer to two. What do you think, 73 00:03:58,680 --> 00:04:02,440 Speaker 1: you know? I think uh, I think that what we're 74 00:04:02,440 --> 00:04:05,240 Speaker 1: seeing and what few two two people are talking about 75 00:04:05,560 --> 00:04:09,040 Speaker 1: is we're seeing that that freight that trucking in America 76 00:04:09,160 --> 00:04:13,000 Speaker 1: hit a wall on in early March. That is a 77 00:04:13,080 --> 00:04:14,360 Speaker 1: sign to you and I think that this is what 78 00:04:14,400 --> 00:04:18,279 Speaker 1: everybody's kind of kind of globbing onto. That's a sign 79 00:04:18,520 --> 00:04:22,560 Speaker 1: that demand in the United States has really come under pressure, 80 00:04:23,560 --> 00:04:26,480 Speaker 1: and that's why we're not seeing all these crazy supply 81 00:04:26,600 --> 00:04:32,280 Speaker 1: Chaine disruption inflationary impulses, despite what's going on in Ukraine 82 00:04:32,320 --> 00:04:35,000 Speaker 1: and despite what's going on in China. I think the 83 00:04:35,080 --> 00:04:37,799 Speaker 1: demanding the United States is really what's hit a wall, 84 00:04:38,200 --> 00:04:41,320 Speaker 1: and that that is what is going to anchor core 85 00:04:41,440 --> 00:04:46,400 Speaker 1: inflation moving forward. But we don't know what food prices 86 00:04:46,440 --> 00:04:49,760 Speaker 1: are going to do, and we're hoping that gas prices 87 00:04:49,760 --> 00:04:52,000 Speaker 1: are coming down. And by the way, University of Michigan 88 00:04:52,040 --> 00:04:55,280 Speaker 1: is a pure play the upside surprise, a pure play 89 00:04:55,320 --> 00:04:57,160 Speaker 1: on the fact that we gave back all of the 90 00:04:57,200 --> 00:05:00,600 Speaker 1: games at the gas pump and came and and pump 91 00:05:01,120 --> 00:05:04,080 Speaker 1: gas prices came down, and that's all you're looking at, 92 00:05:04,120 --> 00:05:06,920 Speaker 1: because it's still at recessionary readings. And I think that 93 00:05:06,920 --> 00:05:10,400 Speaker 1: that is something that shouldn't be shouldn't be lost, and 94 00:05:10,440 --> 00:05:13,960 Speaker 1: we should know that there is no uh Ohio State 95 00:05:14,279 --> 00:05:18,320 Speaker 1: sentiment index because we are focused on the game of football. 96 00:05:18,600 --> 00:05:21,239 Speaker 1: I admit that the University of Michigan is a great school. 97 00:05:21,760 --> 00:05:26,520 Speaker 1: It's an incredible academy. It's an institution for higher learning, 98 00:05:26,560 --> 00:05:29,000 Speaker 1: and I love ann Arbor. It's a great place to go, 99 00:05:29,200 --> 00:05:32,240 Speaker 1: except for when they're playing Ohio State, because then they 100 00:05:32,279 --> 00:05:34,200 Speaker 1: lose and it's so depressed. I know, I know, I 101 00:05:34,240 --> 00:05:35,880 Speaker 1: just wanted to get get that in there. All right, 102 00:05:35,960 --> 00:05:38,920 Speaker 1: So Danielle, just real quickly, here is my federal Reserve 103 00:05:39,000 --> 00:05:40,919 Speaker 1: going to deliver a soft landing for me? Or are 104 00:05:40,960 --> 00:05:44,640 Speaker 1: we gonna risk recession? Maybe next year? Oh heck no. 105 00:05:44,839 --> 00:05:47,200 Speaker 1: And I don't think recession is the next year proposition. 106 00:05:47,600 --> 00:05:52,240 Speaker 1: Oh look, look, what have we had a tenure expansion, 107 00:05:52,240 --> 00:05:55,320 Speaker 1: a twelve year expansion right now we're talking about a 108 00:05:55,520 --> 00:05:58,560 Speaker 1: two and a half year expansion, give or take. Why 109 00:05:58,680 --> 00:06:02,960 Speaker 1: is the why? Why is the general operating assumption that 110 00:06:03,040 --> 00:06:05,919 Speaker 1: we're going to go into recession as slowly as we have. 111 00:06:06,520 --> 00:06:10,680 Speaker 1: We've really protracted elongated expansion. When this expansion in the 112 00:06:10,839 --> 00:06:14,719 Speaker 1: entire cycle has been compressed into a time machine. I 113 00:06:14,760 --> 00:06:16,880 Speaker 1: think that I think that I think it's species to 114 00:06:16,880 --> 00:06:18,960 Speaker 1: say you're gonna have your eighteen months runway. I think 115 00:06:19,240 --> 00:06:22,039 Speaker 1: people are worried that you know, this monitor, uh what 116 00:06:22,080 --> 00:06:24,240 Speaker 1: do you call it? Modern monetary theory has brought in 117 00:06:24,200 --> 00:06:27,919 Speaker 1: an incredible inflation. And now look, Ira Jersey says, not 118 00:06:27,960 --> 00:06:30,560 Speaker 1: a question of um, you know, if we're gonna have 119 00:06:30,600 --> 00:06:33,919 Speaker 1: a recession, but what kind it's gonna be? I couldn't 120 00:06:33,920 --> 00:06:38,000 Speaker 1: agree more. We've only tacked on two trillion dollars more 121 00:06:38,440 --> 00:06:42,360 Speaker 1: in corporate debt since Operate the nineteen so more things 122 00:06:42,360 --> 00:06:45,200 Speaker 1: can break. Yep. Absolutely. Daniel D. Martino, Booth CEO and 123 00:06:45,240 --> 00:06:53,120 Speaker 1: Chief Strategies a quick intelligence giving us her thoughts. We 124 00:06:53,240 --> 00:06:55,960 Speaker 1: have a great pleasure ed prices in the studio with 125 00:06:56,000 --> 00:07:00,000 Speaker 1: a senior fellow and former British trade official senior foul 126 00:07:00,279 --> 00:07:03,960 Speaker 1: at at n y u and former British trade official. 127 00:07:04,480 --> 00:07:08,520 Speaker 1: Uh he's a political economist. He represented Her Majesty's government 128 00:07:09,000 --> 00:07:14,400 Speaker 1: to Wall Street and uh US official sector from seventy 129 00:07:14,480 --> 00:07:18,200 Speaker 1: one and um he's Uh. I guess you specialize in 130 00:07:18,320 --> 00:07:22,280 Speaker 1: German economic history, but you look at obviously the entire world. 131 00:07:22,360 --> 00:07:24,520 Speaker 1: Is that fair? Yes? I think, like you know, German 132 00:07:24,560 --> 00:07:26,360 Speaker 1: history is always in my mind. I think it's a 133 00:07:26,400 --> 00:07:28,480 Speaker 1: good a good benchmark for a lot of things, particularly 134 00:07:28,480 --> 00:07:31,480 Speaker 1: if we're gonna talk about inflation. Of course, yeah, the 135 00:07:31,520 --> 00:07:35,240 Speaker 1: Weimar Republican the hyper inflation is um the big scare 136 00:07:35,240 --> 00:07:37,000 Speaker 1: and that's why Germans hate it so much. But I 137 00:07:37,000 --> 00:07:39,400 Speaker 1: think we all hate inflation. I mean, Ronald Reagan hated 138 00:07:39,440 --> 00:07:42,960 Speaker 1: inflation as much as any German. Um. Uh. Somebody asked 139 00:07:42,960 --> 00:07:45,480 Speaker 1: me today, who's your least favorite German politician. And I 140 00:07:45,520 --> 00:07:49,960 Speaker 1: was thinking, Um, first of all, I didn't any I like, 141 00:07:50,280 --> 00:07:51,800 Speaker 1: I like a lot of them on both sides of 142 00:07:51,840 --> 00:07:55,200 Speaker 1: the aisle. There's very there's not as much differentiation there 143 00:07:55,200 --> 00:07:58,000 Speaker 1: as there is here, at least of the two parties. 144 00:07:58,240 --> 00:08:00,120 Speaker 1: But I thought, you know what, when I was the 145 00:08:00,160 --> 00:08:04,600 Speaker 1: G twenty in Hamburg, um, angl a miracle got like 146 00:08:04,640 --> 00:08:07,040 Speaker 1: a standing ovation from all the other leaders. She was 147 00:08:07,160 --> 00:08:11,200 Speaker 1: clearly leading the free world right um and and it 148 00:08:11,240 --> 00:08:16,240 Speaker 1: was amazing, like she was the hero. And now in hindsight, 149 00:08:16,640 --> 00:08:20,760 Speaker 1: we realized she's been appeasing Vladimir Putin for years and 150 00:08:20,840 --> 00:08:25,360 Speaker 1: making Germany dependent on Russian oil and gas. They're basically 151 00:08:25,560 --> 00:08:31,280 Speaker 1: fun funding his war in Ukraine, these atrocities, um that 152 00:08:31,320 --> 00:08:34,400 Speaker 1: we're that we're watching. How does how does Anglo miracle 153 00:08:34,440 --> 00:08:37,800 Speaker 1: go down in history? I mean it's that's a profound question, 154 00:08:37,920 --> 00:08:41,760 Speaker 1: right And to use the word appeasement um of Germans 155 00:08:42,200 --> 00:08:44,440 Speaker 1: is sort of metso ironic and you have, you know, 156 00:08:44,480 --> 00:08:47,000 Speaker 1: you have to sit down and think about that. That's 157 00:08:47,000 --> 00:08:50,200 Speaker 1: why you chose it was. I appreciate it. Um, Yeah, 158 00:08:50,200 --> 00:08:52,240 Speaker 1: how does she go down in history? Right now? Not 159 00:08:52,360 --> 00:08:55,760 Speaker 1: that well? And I suppose if you want to think 160 00:08:55,800 --> 00:08:59,080 Speaker 1: about why the Germans were taking in all that gas 161 00:08:59,120 --> 00:09:02,360 Speaker 1: and why they were appeasing Russia, maybe there was some 162 00:09:02,400 --> 00:09:04,840 Speaker 1: sort of back in their mind war guilt. You know, 163 00:09:05,200 --> 00:09:07,920 Speaker 1: we invaded the Russians twice, we caused a lot of damage, 164 00:09:08,240 --> 00:09:11,480 Speaker 1: and maybe we have some sort of historical responsibility to 165 00:09:11,480 --> 00:09:15,880 Speaker 1: bring the Russians back into the European fold. And again, ironically, 166 00:09:16,160 --> 00:09:18,080 Speaker 1: they are not in the European fold, and they seem 167 00:09:18,120 --> 00:09:20,600 Speaker 1: to have used this relationship with Germany to to break 168 00:09:20,640 --> 00:09:22,840 Speaker 1: away from what you might call norms. It's crazy. I 169 00:09:22,920 --> 00:09:25,080 Speaker 1: was over there for the last six years in Berlin, 170 00:09:25,120 --> 00:09:27,600 Speaker 1: and I kept running into like Dan Yet, the U 171 00:09:27,679 --> 00:09:30,240 Speaker 1: S Energy Minister. At every time, I'll tell you, Dan, 172 00:09:30,240 --> 00:09:31,600 Speaker 1: what are you doing here? He's like, I'm trying to 173 00:09:31,640 --> 00:09:34,120 Speaker 1: get these guys to buy our l en g I'm 174 00:09:34,120 --> 00:09:35,960 Speaker 1: trying to get them to build more terminals so they 175 00:09:35,960 --> 00:09:38,480 Speaker 1: can accept our gas and not buy all the stuff 176 00:09:38,480 --> 00:09:41,160 Speaker 1: from Vladimir Putin and a shut down Nords dream too. 177 00:09:41,200 --> 00:09:44,560 Speaker 1: Obviously he was unsuccessful. I mean, I guess they wish 178 00:09:44,640 --> 00:09:48,320 Speaker 1: they would have now, But is it even possible for 179 00:09:48,679 --> 00:09:51,480 Speaker 1: Western Europe to cut off Russian oil and gas or 180 00:09:51,520 --> 00:09:54,280 Speaker 1: would they be kind of shooting themselves in the foot. Well, 181 00:09:54,280 --> 00:09:56,559 Speaker 1: it's certainly possible for Putin to shoot them in the 182 00:09:56,559 --> 00:09:59,319 Speaker 1: foot and cut off at least some of that gas. Right, 183 00:09:59,360 --> 00:10:01,920 Speaker 1: So I think it's definitely it's now become clear that 184 00:10:01,920 --> 00:10:05,280 Speaker 1: that's a major security risk. Uh. And so whether it's 185 00:10:05,320 --> 00:10:08,199 Speaker 1: possible to the upside, whether they can actually pivot back 186 00:10:08,240 --> 00:10:12,000 Speaker 1: to US oil production, one would hope. Um, Now, of course, 187 00:10:12,120 --> 00:10:13,720 Speaker 1: I mean, you guys, tell me what you think about this, 188 00:10:13,760 --> 00:10:15,680 Speaker 1: but you're immediately going to drive into the wall of 189 00:10:15,800 --> 00:10:19,640 Speaker 1: the climate lobby. Um. Possibly correctly, right, But it's on 190 00:10:19,679 --> 00:10:22,000 Speaker 1: the one hand, on the other hand, situation, Um, so 191 00:10:22,200 --> 00:10:25,120 Speaker 1: we need to pump. Do you want to finance war crimes? 192 00:10:25,520 --> 00:10:27,319 Speaker 1: Do you want to mind more dirty call? Do you 193 00:10:27,360 --> 00:10:30,840 Speaker 1: want to roast to death? Which way like atomic weapons? 194 00:10:31,000 --> 00:10:34,719 Speaker 1: Or slowly? So we we heard from Christine Leguard I 195 00:10:34,920 --> 00:10:37,920 Speaker 1: m F this morning. It gives us your sense of 196 00:10:37,960 --> 00:10:41,000 Speaker 1: how the world's banks to fair. The e c B, 197 00:10:41,240 --> 00:10:44,320 Speaker 1: the Bank of England. How coordinated are they in terms 198 00:10:44,320 --> 00:10:47,599 Speaker 1: of trying to bring down inflation? We've got a reopening economy. 199 00:10:48,120 --> 00:10:52,280 Speaker 1: How are they in Canada? Don't forget forget fends, they're 200 00:10:52,280 --> 00:10:54,560 Speaker 1: all fighting the same inflation. Right, Hopefully they're on the 201 00:10:54,559 --> 00:10:56,959 Speaker 1: phone with each other, one would hope. Yeah, I think 202 00:10:57,000 --> 00:10:58,640 Speaker 1: I think the central bank has talk to each other 203 00:10:58,679 --> 00:11:01,800 Speaker 1: all the time. How coordinates coordinated there are in actual 204 00:11:01,840 --> 00:11:04,120 Speaker 1: policy terms remains to be seen, and I think the 205 00:11:04,240 --> 00:11:06,960 Speaker 1: CBS behind But if you're asking me my sense of it, 206 00:11:07,040 --> 00:11:09,840 Speaker 1: I think all central banks around the world are realizing 207 00:11:10,080 --> 00:11:13,000 Speaker 1: two two things right. Number one, fat currency is a 208 00:11:13,000 --> 00:11:16,079 Speaker 1: massive experiment, and number two, we've been running an experiment 209 00:11:16,120 --> 00:11:21,560 Speaker 1: within an experiment with endless que So an M T right, MMC, 210 00:11:21,640 --> 00:11:24,559 Speaker 1: Please don't get me started on M T R. So, 211 00:11:24,679 --> 00:11:26,680 Speaker 1: I mean how much money did we spend, not just 212 00:11:26,760 --> 00:11:28,920 Speaker 1: monetary policy, right, how much money do we spend in 213 00:11:28,960 --> 00:11:33,120 Speaker 1: fiscal um since the pandemic started, and we at least 214 00:11:33,160 --> 00:11:35,880 Speaker 1: brought ourselves out of a recession quickly. But the questions 215 00:11:35,880 --> 00:11:38,920 Speaker 1: are we headed right back down there with massive inflation 216 00:11:39,440 --> 00:11:41,560 Speaker 1: um to join it. I think the answer is yes, 217 00:11:41,559 --> 00:11:44,679 Speaker 1: So a nine trillion dollar balance sheets and absurdity. And 218 00:11:44,800 --> 00:11:47,920 Speaker 1: if you remember, we were talking about inflation being transitory passing, 219 00:11:48,280 --> 00:11:51,280 Speaker 1: we kind of moved from passing to persistent, and now 220 00:11:51,320 --> 00:11:53,640 Speaker 1: I think we need to move from persistent to pernicius 221 00:11:53,679 --> 00:11:55,600 Speaker 1: and the Fed really does need to get a handle 222 00:11:55,640 --> 00:11:58,000 Speaker 1: on this. I understand that there's a war in Ukraine. 223 00:11:58,040 --> 00:12:00,560 Speaker 1: I understand that there are all sorts of other financial 224 00:12:00,600 --> 00:12:03,760 Speaker 1: markets reasons for like, you know, keeping the juice going, 225 00:12:04,120 --> 00:12:06,960 Speaker 1: But this is going to become a disaster. Eight could 226 00:12:06,960 --> 00:12:08,800 Speaker 1: be ten, and if it's ten, you could imagine twins. 227 00:12:08,840 --> 00:12:11,760 Speaker 1: So you think they should be quicker with much QT, 228 00:12:12,400 --> 00:12:14,439 Speaker 1: much quicker with QT, much quicker with hikes. So you're 229 00:12:14,480 --> 00:12:17,599 Speaker 1: not in the camp that the CPI inflation reading we 230 00:12:17,720 --> 00:12:20,480 Speaker 1: just got is the peak. I don't think it matches 231 00:12:20,520 --> 00:12:22,000 Speaker 1: if it's the peak. I mean, what if it goes back, 232 00:12:22,080 --> 00:12:23,800 Speaker 1: goes back down to seven? I mean, who cares? This 233 00:12:23,840 --> 00:12:25,560 Speaker 1: is a major problem. This is eating into people, and 234 00:12:25,600 --> 00:12:27,520 Speaker 1: this is something like I guess one of my questions 235 00:12:27,559 --> 00:12:29,760 Speaker 1: has always been, dude, those costs don't go back down, right, 236 00:12:29,840 --> 00:12:33,920 Speaker 1: I've been watching My from in January is fifty grand. 237 00:12:34,200 --> 00:12:36,720 Speaker 1: In February, mid February they raised it to fifty three. 238 00:12:37,000 --> 00:12:40,240 Speaker 1: You know, now the beginning of March it was did 239 00:12:39,840 --> 00:12:44,599 Speaker 1: get no, I'm talking we're talking about the forward f 240 00:12:44,720 --> 00:12:47,120 Speaker 1: one fifty for Matt Miller. It's a big issue that 241 00:12:47,280 --> 00:12:49,480 Speaker 1: just that's a general term I really am trying to 242 00:12:49,480 --> 00:12:55,840 Speaker 1: decide between a GMC Sierra four X and the Chevy Stilverado. 243 00:12:55,920 --> 00:12:59,120 Speaker 1: But in any case, the point is the prices stay elevated, right, 244 00:12:59,120 --> 00:13:01,320 Speaker 1: they still sift of gas and food. Hopefully they'll come 245 00:13:01,320 --> 00:13:03,680 Speaker 1: back down. Prices upwardly sticky. Let's be weird like that. 246 00:13:03,880 --> 00:13:06,400 Speaker 1: And I've been looking at the Toyoto Super myself like 247 00:13:06,520 --> 00:13:09,000 Speaker 1: that thing looks like a beast. So you know what 248 00:13:09,080 --> 00:13:12,720 Speaker 1: I mean. Share development with BMW is a kind word. Yes, yes, 249 00:13:15,160 --> 00:13:18,240 Speaker 1: I'm trying to be right now. Yeah, you cause I'm 250 00:13:18,440 --> 00:13:20,960 Speaker 1: a fan. Okay, cool, I'm driving a Subaru, so if 251 00:13:20,960 --> 00:13:22,560 Speaker 1: you want me to leave right nice? No, No, that's 252 00:13:22,600 --> 00:13:26,920 Speaker 1: a boxer motor. I love it and very reliable that 253 00:13:27,000 --> 00:13:30,520 Speaker 1: Consumer Reports ranks Subaru as one of the greatest brands 254 00:13:30,559 --> 00:13:32,520 Speaker 1: of all car brands in the world. So I'm feeling 255 00:13:32,520 --> 00:13:35,520 Speaker 1: good about my choice. Yeah, thank you. What's our fed dude? 256 00:13:35,520 --> 00:13:37,800 Speaker 1: Next there? And I mean fifty basis points? Do I 257 00:13:37,800 --> 00:13:40,400 Speaker 1: have multiple fifty basis point moves from my federal reserve? 258 00:13:40,679 --> 00:13:43,520 Speaker 1: I'd like to see that. Um No, probably. I mean 259 00:13:43,520 --> 00:13:46,080 Speaker 1: they're they're very hesitant, aren't they about even suggesting they'll 260 00:13:46,080 --> 00:13:48,800 Speaker 1: do one? I mean they've said they might, um, but 261 00:13:49,720 --> 00:13:52,839 Speaker 1: my guess on it says they're gonna be four coming off. 262 00:13:52,880 --> 00:13:54,959 Speaker 1: I'd like to see that too. Um. But I think 263 00:13:54,960 --> 00:13:57,040 Speaker 1: that if they do that, there's a moment in markets 264 00:13:57,080 --> 00:13:58,760 Speaker 1: right where the markets are like, oh what is this? 265 00:13:59,559 --> 00:14:01,200 Speaker 1: H If you do it once, you've kind of broken 266 00:14:01,200 --> 00:14:04,360 Speaker 1: the seal. And so they're facing two panics, right They're 267 00:14:04,360 --> 00:14:07,640 Speaker 1: facing either the real economy panicking because we can't buy 268 00:14:07,679 --> 00:14:09,160 Speaker 1: the things that we want to buy, and on the 269 00:14:09,160 --> 00:14:12,320 Speaker 1: other hand, they're facing the financial market panic potentially in 270 00:14:12,360 --> 00:14:14,880 Speaker 1: which markets stone around in side. You imagine four fifty 271 00:14:14,880 --> 00:14:18,400 Speaker 1: basis point hikes. That sounds crazy, but it brings us 272 00:14:18,440 --> 00:14:21,720 Speaker 1: only to two and a quarter percent. Still nothing. So 273 00:14:21,760 --> 00:14:24,880 Speaker 1: what does normalization mean? Yeah, okay, normalization doesn't mean anything 274 00:14:24,920 --> 00:14:26,680 Speaker 1: right now, We're still going to be in a very 275 00:14:26,720 --> 00:14:29,160 Speaker 1: loose environment even with that kind of even with that 276 00:14:29,240 --> 00:14:31,280 Speaker 1: kind of piking, Good time to buy a house, all right, 277 00:14:31,400 --> 00:14:33,880 Speaker 1: Ed Brice, thank you so much, and senior fellow n 278 00:14:34,040 --> 00:14:37,400 Speaker 1: y U, former British trade official. Remember the Economic Club 279 00:14:37,480 --> 00:14:39,200 Speaker 1: of New York? Do they actually have it like a clubhouse? 280 00:14:39,280 --> 00:14:41,800 Speaker 1: That's a big deal, that's that's a big old club. Actually, 281 00:14:42,080 --> 00:14:43,560 Speaker 1: did they have a clubhouse to I mean, where do 282 00:14:43,640 --> 00:14:45,680 Speaker 1: they think they meet? They probably meet it like the 283 00:14:45,720 --> 00:14:49,600 Speaker 1: Metropolitan Club or something. And I mean I took economic time. 284 00:14:49,720 --> 00:14:51,160 Speaker 1: Can I get in there? I don't know what you 285 00:14:51,160 --> 00:14:54,160 Speaker 1: have to do to join it? Alright, thank you so much. 286 00:14:54,200 --> 00:15:01,040 Speaker 1: We appreciate it. Looking at the wall, worry a new 287 00:15:01,080 --> 00:15:04,280 Speaker 1: brick has recently been added over the past couple of months, 288 00:15:04,320 --> 00:15:07,640 Speaker 1: and that is geopolitical risk, as you have a hot 289 00:15:07,680 --> 00:15:10,480 Speaker 1: war now in Ukraine, and that there is another issue 290 00:15:10,480 --> 00:15:13,880 Speaker 1: for investors to digest. Sedec Wabba joins us. He is founder, 291 00:15:13,960 --> 00:15:19,040 Speaker 1: chairman and managing partner of I Squared Capital. Sedec. You know, 292 00:15:19,320 --> 00:15:23,400 Speaker 1: we have this hot war in Ukraine. It feels so 293 00:15:23,520 --> 00:15:26,200 Speaker 1: twentieth century that people, I think, I have a hard 294 00:15:26,240 --> 00:15:29,000 Speaker 1: time kind of really appreciating the impacts. How do you 295 00:15:29,080 --> 00:15:34,840 Speaker 1: think about that in terms of your investment outlook great 296 00:15:34,880 --> 00:15:37,720 Speaker 1: to be with you, Matt, and I appreciate the invite. 297 00:15:38,600 --> 00:15:43,040 Speaker 1: My biggest concern is the impact the war who is 298 00:15:43,080 --> 00:15:47,680 Speaker 1: having on global inflation and US inflation in particular. So 299 00:15:47,720 --> 00:15:50,760 Speaker 1: the numbers came out two days ago, eight point five 300 00:15:50,800 --> 00:15:56,400 Speaker 1: percent increase in March compared to seven point nine you 301 00:15:56,440 --> 00:15:59,640 Speaker 1: had one point to percent increase in one month. That 302 00:15:59,680 --> 00:16:04,800 Speaker 1: increase will continue, and I suspect inflation will be around 303 00:16:04,880 --> 00:16:08,960 Speaker 1: ten plus by the summer. So that puts enormous pressure 304 00:16:09,280 --> 00:16:13,600 Speaker 1: on the Federal Reserve to increase interest rates, and that 305 00:16:13,720 --> 00:16:17,760 Speaker 1: of course is not going to help the economy. My senses, 306 00:16:18,000 --> 00:16:24,120 Speaker 1: we are sleepwalking towards global economic crisis unless this Ukraine 307 00:16:24,200 --> 00:16:27,800 Speaker 1: situation get resolved. I want to jump in and say, 308 00:16:28,000 --> 00:16:32,200 Speaker 1: first of all, that was Paul. Uh, that that was Paul. 309 00:16:32,320 --> 00:16:36,520 Speaker 1: This is Matt. I'm just saying, OK, we we we 310 00:16:36,600 --> 00:16:40,280 Speaker 1: look a lot like on the radio. UM. First of all, 311 00:16:40,320 --> 00:16:42,520 Speaker 1: hello and thanks so much for joining us. Great talking 312 00:16:42,520 --> 00:16:46,320 Speaker 1: to you. UM, I want to know what you think about, UM, 313 00:16:46,440 --> 00:16:48,840 Speaker 1: you know the U s economy in this context? Are 314 00:16:48,880 --> 00:16:52,920 Speaker 1: we are we headed towards a recession with ten percent inflation? 315 00:16:52,960 --> 00:16:59,080 Speaker 1: That sounds like a horrible situation. I think if the 316 00:16:59,120 --> 00:17:03,080 Speaker 1: war in Ukraine is not resolved relatively quickly, you will 317 00:17:03,120 --> 00:17:07,440 Speaker 1: have the trifecta of a pandemic of a global logistics 318 00:17:07,600 --> 00:17:12,080 Speaker 1: Chaine supply crisis and war that has pushed energy prices, 319 00:17:12,160 --> 00:17:17,120 Speaker 1: commodity prices, food prices way way up, and that yes, 320 00:17:17,400 --> 00:17:21,439 Speaker 1: will probably lead to a recession. UM. I give you. 321 00:17:21,440 --> 00:17:25,880 Speaker 1: One simple example, we passed one point two trillion infrastructure bill. 322 00:17:26,320 --> 00:17:28,920 Speaker 1: The cost of construction has gone up by more than 323 00:17:30,280 --> 00:17:34,040 Speaker 1: that means that that infrastructure bill, at one point to trillion, 324 00:17:34,400 --> 00:17:39,600 Speaker 1: has already lost so it's lost two billion dollars of 325 00:17:39,680 --> 00:17:43,760 Speaker 1: its purchasing power. So that's a problem. So are we 326 00:17:43,800 --> 00:17:46,919 Speaker 1: going to get any more fiscal help? You think, um, 327 00:17:47,160 --> 00:17:50,560 Speaker 1: because we've fallen off this fiscal cliff. It's kind of 328 00:17:50,600 --> 00:17:55,359 Speaker 1: a cliche now, but it's true. And you know, on 329 00:17:55,200 --> 00:17:58,720 Speaker 1: one hand, a lot of that fiscal spending is to 330 00:17:59,160 --> 00:18:04,160 Speaker 1: um is getting the blame for inflation. On the other hand, Um, 331 00:18:04,200 --> 00:18:09,600 Speaker 1: can we really go cold Turkey without any more? No, 332 00:18:09,760 --> 00:18:12,440 Speaker 1: you can't. So so you have to continue to invest, 333 00:18:12,760 --> 00:18:18,200 Speaker 1: but invest productively in areas where that has a positive 334 00:18:18,240 --> 00:18:21,919 Speaker 1: effect on American productivity. That has to continue to happen, 335 00:18:22,840 --> 00:18:25,400 Speaker 1: and that is in fact what the Biden administration is doing. 336 00:18:25,760 --> 00:18:30,720 Speaker 1: They're trying to ensure that the infrastructure bill, which is 337 00:18:30,720 --> 00:18:34,680 Speaker 1: the biggest bill we've ever had, is allocated properly across 338 00:18:34,760 --> 00:18:39,160 Speaker 1: productive projects across the US. So that is certainly going 339 00:18:39,200 --> 00:18:42,440 Speaker 1: to be a huge plus, and that has to continue. 340 00:18:42,720 --> 00:18:44,840 Speaker 1: I think the other element is to be able to 341 00:18:44,880 --> 00:18:48,960 Speaker 1: have a synchronized effort globally to try and stop the 342 00:18:49,000 --> 00:18:51,800 Speaker 1: war in Ukraine, because that is going to be the 343 00:18:51,840 --> 00:18:55,600 Speaker 1: biggest positive impact it can have on the global economy. 344 00:18:55,840 --> 00:18:59,280 Speaker 1: In terms of US infrastructure, select, where do you think 345 00:18:59,320 --> 00:19:02,320 Speaker 1: the priorities be. I'll take your minds minus the Gateway project, 346 00:19:02,359 --> 00:19:05,560 Speaker 1: getting some new tunnels connecting New Jersey and New York 347 00:19:05,600 --> 00:19:09,000 Speaker 1: and Amtrak. I've been lobbying that forever. Where do you 348 00:19:09,040 --> 00:19:13,440 Speaker 1: think the money should be spent? So the most efficient 349 00:19:13,520 --> 00:19:16,320 Speaker 1: way today is to spend the money on things that 350 00:19:16,359 --> 00:19:20,320 Speaker 1: needs immediate repair. Why because you don't have to wait 351 00:19:20,359 --> 00:19:22,600 Speaker 1: another three or four years of planning to be able 352 00:19:22,640 --> 00:19:26,159 Speaker 1: to do that. So things that have broken bridges that 353 00:19:26,200 --> 00:19:29,879 Speaker 1: are almost falling are the easiest target. Whether is the 354 00:19:29,920 --> 00:19:33,000 Speaker 1: most impact, the biggest bank for your buck, And that 355 00:19:33,200 --> 00:19:36,840 Speaker 1: is what is in fact the administration currently doing. The 356 00:19:37,000 --> 00:19:42,040 Speaker 1: next will be to really focus on energy supply and 357 00:19:42,720 --> 00:19:45,560 Speaker 1: adopt on all of the above strategy. Right, so, we 358 00:19:45,640 --> 00:19:50,240 Speaker 1: realize that we need to ensure independence but also the 359 00:19:50,280 --> 00:19:55,520 Speaker 1: independence of allies in Europe, and so that means accelerating 360 00:19:55,840 --> 00:20:00,480 Speaker 1: energy projects and ensuring that that will allow gas to 361 00:20:00,600 --> 00:20:05,200 Speaker 1: flow into Western Europe, which I think indirectly should help 362 00:20:05,640 --> 00:20:09,480 Speaker 1: accelerate the end of the war. As an investor, sodic, 363 00:20:09,640 --> 00:20:14,800 Speaker 1: are there infrastructure projects that you think have decent returns 364 00:20:14,920 --> 00:20:19,480 Speaker 1: right now? What's the what's the what's the environment look like? Look, 365 00:20:19,800 --> 00:20:23,359 Speaker 1: the environment is generally positive. Of course, everything is expensive, 366 00:20:23,440 --> 00:20:27,120 Speaker 1: even though there's been a market adjustment, but real assets 367 00:20:27,119 --> 00:20:31,720 Speaker 1: haven't yet adjusted the way that probably should. But you 368 00:20:31,800 --> 00:20:35,520 Speaker 1: have investments in digital infrastructure, which continues to be very important. 369 00:20:36,240 --> 00:20:40,080 Speaker 1: You have investments in renewables in solar and wind, which 370 00:20:40,119 --> 00:20:43,080 Speaker 1: is going to be critical. And I think investment in 371 00:20:43,800 --> 00:20:49,359 Speaker 1: basic infrastructure associated with the transport of gas across the 372 00:20:49,480 --> 00:20:53,000 Speaker 1: US to ensure that you can unblock the supply of 373 00:20:53,040 --> 00:20:56,720 Speaker 1: gas for export purposes, that's going to be an important element. 374 00:20:57,720 --> 00:20:59,760 Speaker 1: So so that at the beginning of this pandemic, you know, 375 00:20:59,760 --> 00:21:03,600 Speaker 1: when supply chain issues became so apparent to so many people, 376 00:21:04,119 --> 00:21:08,120 Speaker 1: there's certainly talk about on shoring more of our supply chain. 377 00:21:08,359 --> 00:21:10,760 Speaker 1: Is that something you think this U s economy has 378 00:21:10,760 --> 00:21:16,480 Speaker 1: an appetite force, that's something that should occur. It. Look, 379 00:21:16,640 --> 00:21:19,000 Speaker 1: the strategy is from a just in time to just 380 00:21:19,160 --> 00:21:22,560 Speaker 1: in case. Uh, that just in case, of course comes 381 00:21:22,560 --> 00:21:27,000 Speaker 1: at an expense. Right The fact is Europe was buying 382 00:21:27,040 --> 00:21:30,840 Speaker 1: gas from Russia and not from other Reasians. It's because 383 00:21:30,840 --> 00:21:34,720 Speaker 1: it's cheaper. So the moment we start on shoring as 384 00:21:34,720 --> 00:21:38,520 Speaker 1: opposed to offshoring, we will by definition increase the cost 385 00:21:38,680 --> 00:21:42,800 Speaker 1: to the consumers and that will also fuel inflation. And 386 00:21:42,840 --> 00:21:45,720 Speaker 1: so from that perspective, it's a choice that consumers have 387 00:21:45,800 --> 00:21:49,120 Speaker 1: to make. I think in times of crisis that's what happens. 388 00:21:49,160 --> 00:21:52,720 Speaker 1: But I think once that stabilizes, I would not be 389 00:21:52,800 --> 00:21:58,280 Speaker 1: surprised that we returned to a more balanced offshore on 390 00:21:58,480 --> 00:22:01,879 Speaker 1: shore type of strategy. Alright, sedek Wabba, thank you so 391 00:22:01,960 --> 00:22:05,560 Speaker 1: much for joining us. Todek Wabba, Founder, chairman and managing 392 00:22:05,600 --> 00:22:08,560 Speaker 1: partner of I Squared Capital. Matt, you ever think we're 393 00:22:08,560 --> 00:22:14,159 Speaker 1: gonna build a silicon chip factory here in the US, Yeah, 394 00:22:14,200 --> 00:22:17,000 Speaker 1: for sure, I'm They're they're building chip factories here in 395 00:22:17,040 --> 00:22:18,760 Speaker 1: the US right now. I believe one in the great 396 00:22:18,760 --> 00:22:22,440 Speaker 1: state of Ohio, at least one. UM And I think 397 00:22:22,440 --> 00:22:24,280 Speaker 1: Sodic makes a great point. You know it's going to 398 00:22:24,400 --> 00:22:28,440 Speaker 1: be more expensive obviously, UM, you can't treat workers here 399 00:22:28,520 --> 00:22:34,880 Speaker 1: the way you do in low costs labor nations. And UM. 400 00:22:35,320 --> 00:22:38,920 Speaker 1: On the other hand, though, maybe we're willing to spend 401 00:22:39,200 --> 00:22:42,000 Speaker 1: enough so that the workers who do build our chips 402 00:22:42,280 --> 00:22:44,359 Speaker 1: live a better life. Yep. Interesting to see how this 403 00:22:44,359 --> 00:22:47,480 Speaker 1: plays app That was certainly the on shoring of certain 404 00:22:47,520 --> 00:22:51,000 Speaker 1: manufacturing issues, supply chain issues, certainly the talk in the 405 00:22:51,080 --> 00:22:57,520 Speaker 1: beginning of this pandemic. See how this plays out. There's 406 00:22:57,520 --> 00:23:02,439 Speaker 1: a film called Trading Places. Highly recommend if you haven't 407 00:23:02,480 --> 00:23:05,359 Speaker 1: seen it. If you're working on Wall Street, watching Trading 408 00:23:05,359 --> 00:23:08,439 Speaker 1: Places is like reading Liars Poker. It's something that you 409 00:23:08,520 --> 00:23:13,440 Speaker 1: have to have done. So. Jennifer Lee, Senior Conmers Managing Director, 410 00:23:13,480 --> 00:23:16,679 Speaker 1: Femoil Capital Markets. Have you seen Trading Places, Jennifer. I 411 00:23:16,720 --> 00:23:19,840 Speaker 1: think my favorite line is when he his legs. We're 412 00:23:19,880 --> 00:23:21,920 Speaker 1: discovered that they worked, and he was like, it's a miracle. 413 00:23:21,960 --> 00:23:26,840 Speaker 1: It's a miracle. I can walk. Eddie Murphy, Jennifer's see. 414 00:23:26,960 --> 00:23:29,119 Speaker 1: Jennifer's seen, and she can stay and play with us. 415 00:23:29,119 --> 00:23:31,760 Speaker 1: All right, Jennifer talked to us about this economy. It's 416 00:23:31,800 --> 00:23:33,679 Speaker 1: bad enough I have to deal with inflation at the 417 00:23:33,720 --> 00:23:36,760 Speaker 1: gas pump in the supermarket. Now you've got some economists 418 00:23:36,800 --> 00:23:40,480 Speaker 1: talking about recession next year. How do you think about 419 00:23:40,560 --> 00:23:43,560 Speaker 1: this Federal Reserve and is a recession risk reel in 420 00:23:43,560 --> 00:23:48,680 Speaker 1: your mind. They are. Remember when we spoke about this 421 00:23:48,840 --> 00:23:51,160 Speaker 1: last month, I was saying, it's not our base case scenario, 422 00:23:51,240 --> 00:23:53,399 Speaker 1: and it's still that's still the point the case that 423 00:23:53,520 --> 00:23:56,399 Speaker 1: is not again our base case scenario. But you know, 424 00:23:56,480 --> 00:23:59,440 Speaker 1: the longer that you know, the the war last for 425 00:23:59,600 --> 00:24:02,280 Speaker 1: for Examp Bowl, you know, um, the FED communication has 426 00:24:02,280 --> 00:24:04,959 Speaker 1: been very clear that they are going to go faster 427 00:24:05,160 --> 00:24:08,240 Speaker 1: and higher um than everyone was anyone was expecting, you know, 428 00:24:08,280 --> 00:24:09,920 Speaker 1: like half a year ago or so. So I think 429 00:24:09,920 --> 00:24:12,080 Speaker 1: the risk of a hard landing is is rising. But 430 00:24:12,119 --> 00:24:14,359 Speaker 1: again it's not our base case scenario. But you know, 431 00:24:14,400 --> 00:24:16,040 Speaker 1: probably the next couple of years, you know, we're probably 432 00:24:16,040 --> 00:24:18,359 Speaker 1: gone some kind of pulled back. So what do you 433 00:24:18,400 --> 00:24:20,720 Speaker 1: expect in terms of you know, we were just talking 434 00:24:20,760 --> 00:24:26,200 Speaker 1: about some people forecasting four fifty basis point hikes. Um, 435 00:24:26,960 --> 00:24:30,040 Speaker 1: I don't think that's the consensus, but we are looking 436 00:24:30,080 --> 00:24:32,159 Speaker 1: for If you take a look at the w I 437 00:24:32,560 --> 00:24:35,840 Speaker 1: RP function on the Bloomberg terminal, you can see that 438 00:24:35,920 --> 00:24:41,120 Speaker 1: the market has priced in essentially nine twenty five basis 439 00:24:41,160 --> 00:24:44,520 Speaker 1: point hikes between now and the beginning of February. What 440 00:24:44,560 --> 00:24:46,959 Speaker 1: do you think, all right, so this is a very 441 00:24:47,080 --> 00:24:49,920 Speaker 1: humbling job, by the way, and I remember pooing people 442 00:24:49,920 --> 00:24:52,000 Speaker 1: who are saying, you know, four or five, and I'm like, oh, 443 00:24:52,040 --> 00:24:55,679 Speaker 1: come on, you know, let's be reasonable. We can account anymore. 444 00:24:55,680 --> 00:24:58,760 Speaker 1: We have rate hikes um going for every single meeting 445 00:24:59,000 --> 00:25:02,000 Speaker 1: this year and I think two next year. UM. And 446 00:25:02,040 --> 00:25:05,159 Speaker 1: we're looking for fifty basis points in May and in 447 00:25:05,240 --> 00:25:09,760 Speaker 1: June twenty five and whatever after that. UM. Again, the 448 00:25:09,840 --> 00:25:12,320 Speaker 1: risk is higher. And it's not just the FED, it's 449 00:25:12,520 --> 00:25:15,280 Speaker 1: you know, as everyone knows, it's like almost all center 450 00:25:15,320 --> 00:25:17,080 Speaker 1: banks around the world. You know, this week we had 451 00:25:17,080 --> 00:25:19,800 Speaker 1: to make a Canada going fifty. We had New Zealand 452 00:25:19,840 --> 00:25:23,320 Speaker 1: going fifty. We had a governor governor less big of 453 00:25:23,440 --> 00:25:26,800 Speaker 1: Korea going twenty five, you know. So it's, uh, this 454 00:25:26,880 --> 00:25:29,199 Speaker 1: is like the story for for everyone, and it's almost 455 00:25:29,200 --> 00:25:31,680 Speaker 1: like what's that movie about them? Anyways, It's like fifty 456 00:25:31,800 --> 00:25:34,159 Speaker 1: is like the new That's sort of how I've been 457 00:25:34,160 --> 00:25:37,280 Speaker 1: thinking about it. What we had Christine Legarde, president of 458 00:25:37,280 --> 00:25:39,960 Speaker 1: the e c B, this morning speaking what was your 459 00:25:39,960 --> 00:25:43,320 Speaker 1: takeaway there? It seems like it's less clear for the 460 00:25:43,320 --> 00:25:47,679 Speaker 1: ECB their path relative to the FED reserve. Right, so 461 00:25:47,960 --> 00:25:49,920 Speaker 1: Europe has you know, it's it's a very different story 462 00:25:50,040 --> 00:25:52,240 Speaker 1: over there, um, you know, especially with with the war 463 00:25:52,320 --> 00:25:55,720 Speaker 1: and energy prices especially. UM. It was interesting because I 464 00:25:55,720 --> 00:25:58,920 Speaker 1: think that the press release it self was pretty cut 465 00:25:58,920 --> 00:26:01,320 Speaker 1: and dry, you know, saying that if that we are 466 00:26:01,359 --> 00:26:05,200 Speaker 1: basically seen enough and the A p P will end 467 00:26:05,320 --> 00:26:08,560 Speaker 1: in Q three. But during the press conference, President regard Um, 468 00:26:08,640 --> 00:26:11,760 Speaker 1: who was working from home, sounded a lot more wishy washy, 469 00:26:11,760 --> 00:26:14,440 Speaker 1: a lot more vague and in sort of like typical 470 00:26:14,440 --> 00:26:17,680 Speaker 1: of the UCB, where you know, she was emphasizing UM 471 00:26:17,840 --> 00:26:20,720 Speaker 1: flexibility and optionality, and she didn't She was like, you know, 472 00:26:20,720 --> 00:26:22,920 Speaker 1: we see it's going to end in QC Q three, 473 00:26:22,920 --> 00:26:24,520 Speaker 1: but we didn't say when, you know, is it gonna 474 00:26:24,520 --> 00:26:28,080 Speaker 1: be early or later? Um, So I think July is 475 00:26:28,080 --> 00:26:30,119 Speaker 1: still a possibility. But I've sort of tossed that one 476 00:26:30,200 --> 00:26:31,679 Speaker 1: up the window now and I think we're going to 477 00:26:31,720 --> 00:26:35,520 Speaker 1: go for a September ray hike, just given how uncertain 478 00:26:35,680 --> 00:26:38,960 Speaker 1: the the e c B was sounding UM today, it's 479 00:26:38,960 --> 00:26:43,520 Speaker 1: amazing to me that we have seen such little movement 480 00:26:43,960 --> 00:26:46,280 Speaker 1: UM in the euro For a while, I thought I 481 00:26:46,320 --> 00:26:48,520 Speaker 1: was going to go to parody as it was going 482 00:26:48,600 --> 00:26:50,879 Speaker 1: up to you know, one twelve, one thirteen. Then I 483 00:26:50,880 --> 00:26:53,840 Speaker 1: thought up is the path and now it's come back 484 00:26:53,880 --> 00:26:55,840 Speaker 1: down to to one oh eight. Where do you see 485 00:26:55,840 --> 00:26:58,639 Speaker 1: euro dollar? Um, we're a little bit more on the 486 00:26:58,680 --> 00:27:01,119 Speaker 1: bare side of things, UM. And I guess I was 487 00:27:01,119 --> 00:27:03,480 Speaker 1: just sort of anticipating that, you know, the the CP 488 00:27:03,560 --> 00:27:06,480 Speaker 1: will probably get cold feet, um, and they will probably 489 00:27:06,760 --> 00:27:09,960 Speaker 1: keep communicating and they they're already pulling back on that accommodation. 490 00:27:10,040 --> 00:27:12,399 Speaker 1: But when they're actually going to be more aggressive on 491 00:27:12,400 --> 00:27:13,719 Speaker 1: the right hike front, I don't know when that's going 492 00:27:13,760 --> 00:27:15,920 Speaker 1: to happen. But we've got the euro ending at around 493 00:27:16,000 --> 00:27:19,440 Speaker 1: one oh six by the end of this year. Um. 494 00:27:19,520 --> 00:27:22,320 Speaker 1: You know, hopefully I'm wrong on this one, but you know, 495 00:27:22,480 --> 00:27:24,560 Speaker 1: maybe around lower than where we are now. Are they 496 00:27:24,600 --> 00:27:28,640 Speaker 1: all on the phone, Jennifer? Are are Christine Leguarde and 497 00:27:28,760 --> 00:27:33,520 Speaker 1: Jerome Powell? And you know, um the Bank of England 498 00:27:33,560 --> 00:27:35,440 Speaker 1: and the Bank of Canada? Are they all talked? Because 499 00:27:35,440 --> 00:27:39,240 Speaker 1: they're fighting the same inflation right with different rate hikes? Right? 500 00:27:39,280 --> 00:27:41,560 Speaker 1: I think they were, you know, um chatting and probably 501 00:27:41,560 --> 00:27:43,440 Speaker 1: they have a WhatsApp group going on, you know, back 502 00:27:43,440 --> 00:27:46,159 Speaker 1: in But UM, now I think you know, things are 503 00:27:46,600 --> 00:27:50,080 Speaker 1: heading in different directions, you know, especially uh inflation and 504 00:27:50,080 --> 00:27:53,080 Speaker 1: then with the economies in North America a little bit stronger. 505 00:27:53,160 --> 00:27:55,760 Speaker 1: You know, the US was certainly starting on the starting 506 00:27:55,800 --> 00:27:59,720 Speaker 1: off on our stronger footing, so they have more um, 507 00:27:59,720 --> 00:28:02,280 Speaker 1: more comfort I think, in raising rates very quickly and 508 00:28:02,520 --> 00:28:04,879 Speaker 1: very aggressively. And it's that your poll and said, you know, 509 00:28:04,960 --> 00:28:07,440 Speaker 1: the labor market is strong and the economy can raise rates, 510 00:28:07,480 --> 00:28:10,879 Speaker 1: but um in here in Canada as well, but in Europe, 511 00:28:10,920 --> 00:28:12,520 Speaker 1: like I said, it's a very different story and they're 512 00:28:12,520 --> 00:28:15,280 Speaker 1: more concerned about the impact of the war. All right, Jennifer, 513 00:28:15,280 --> 00:28:17,280 Speaker 1: thanks so much for joining us again. Jennifer LEAs and 514 00:28:17,280 --> 00:28:20,680 Speaker 1: your economist managing director Demo Capital Markets, thanks for listening 515 00:28:20,720 --> 00:28:24,200 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 516 00:28:24,240 --> 00:28:28,520 Speaker 1: to interviews of Apple Podcasts or whatever podcast platform you prefer. 517 00:28:28,880 --> 00:28:32,399 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller V 518 00:28:32,680 --> 00:28:35,760 Speaker 1: three on false Sweeney, I'm on Twitter at pt Sweeney. 519 00:28:35,800 --> 00:28:38,479 Speaker 1: Before the podcast, you can always catch us worldwide at 520 00:28:38,480 --> 00:28:39,280 Speaker 1: Bloomberg Radio.