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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEO, market pros, and Bloomberg experts,

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Speaker 1: along with essential market moving news. Find the Bloomberg Markets

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Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. Legendary on Wall Street, Ralph

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Speaker 1: Shlastin is the co chairman of the board and co

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Speaker 1: CEO of Evercre, but has a huge, huge reputation and

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Speaker 1: history on Wall Street. See was co founder of black

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Speaker 1: Rock black In. He was an investment banker at Lehman,

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Speaker 1: started the firm's investment or at least interest rate swap business,

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Speaker 1: and so much more so, we're thrilled to have Ralph

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Speaker 1: Schlastin joining us now. Ralph, thanks some Bollian for joining.

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Speaker 1: Talk to us about the deal landscape. But we've seen

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Speaker 1: so many SPACs raised since the beginning of the year,

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Speaker 1: and so many sort of deals that we haven't seen

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Speaker 1: in a long time, you know, not your regular mergers

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Speaker 1: and acquisitions. What's going an other? Well, there are two things.

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Speaker 1: Number one uh m and a activity is back. Uh

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Speaker 1: It went on pause from the beginning of March until

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Speaker 1: probably the beginning of July with only very sporadic activity,

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Speaker 1: and over the last three months. Uh, if you look

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Speaker 1: today at the level of activity and dialogue between CEOs,

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Speaker 1: it's quite a bit higher than and more intense than

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Speaker 1: it was a month ago. And a month ago it

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Speaker 1: was higher and more intense than a month before, and

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Speaker 1: the same would have been true two months ago. So

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Speaker 1: there's no question, uh that activity is starting to return.

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Speaker 1: And with respect to the SPACs, UH, you know, they

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Speaker 1: have become essentially another way. Who are companies become public?

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Speaker 1: H they're really three alternatives now that a company can

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Speaker 1: become public. One is a direct listing where they don't

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Speaker 1: raise additional capital, they just list their stock. The second

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Speaker 1: is a traditional I p O. And the third is

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Speaker 1: to merge into a spact and become a public company. UH.

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Speaker 1: That way and spacts have been uh you know, a

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Speaker 1: lot of money has been raised. Uh. They have to

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Speaker 1: do a transaction within a two year period of time.

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Speaker 1: There's some very qualified uh business leaders who have raised

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Speaker 1: this capital and many cases they will be helpful to

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Speaker 1: the companies that they buy to help them grow. Ralph

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Speaker 1: typically in an m N a scenario. UH. You know,

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Speaker 1: a CEO and his or her board need presumably have

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Speaker 1: a fair amount of confidence in their business model, in

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Speaker 1: their sector, and their economy. So as I saw the

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Speaker 1: sixty nine billion dollars worth of deals announced on Monday,

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Speaker 1: I kind of said to myself, where can that confidence

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Speaker 1: come from? Given what's going on in the world. What

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Speaker 1: are you hearing from some of your clients as they

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Speaker 1: think about h M and A activity. Yeah, Well, first

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Speaker 1: of all, the transactions that were done this week, we're

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Speaker 1: in sectors that were either largely or completely unaffected by

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Speaker 1: the pandemic. UH. The Navidia arm deal in technology, the

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Speaker 1: Guilelead deal in biopharma. UH. Those are two sectors that,

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Speaker 1: if anything, and certainly in technology has benefited moderately from

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Speaker 1: this stay at home or work at home environment, and

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Speaker 1: biotech is a long term growth sector. So there's been

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Speaker 1: you know, the pickup and activity has been to a

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Speaker 1: greater degree in sectors that have pretty clear visibility as

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Speaker 1: to the future uh, economic and revenues and profits of

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Speaker 1: their business. You haven't seen as much pick up yet

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Speaker 1: in things like industrials, where there's a lot more uncertainty.

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Speaker 1: We are speaking with Ralph Sholstein of Ever Court, Ralph,

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Speaker 1: are there enough private companies out there that would look

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Speaker 1: to go public in this kind of environment to take

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Speaker 1: advantage of all these books? Well, the thing that people

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Speaker 1: don't realize is, uh, you look back twenty years ago

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Speaker 1: there were roughly undred public companies h and about thirty

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Speaker 1: five hundred private companies of some scale, and I think

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Speaker 1: it's a billion dollars or more in revenues. Today the

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Speaker 1: reverse is true. There are seventy five hundred or so

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Speaker 1: maybe eight thousand private companies uh and four thousand public companies.

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Speaker 1: There aren't even enough companies to populate the Russell five

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Speaker 1: thousand uh. So Uh. The answer is the ratio of

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Speaker 1: opportunity in the private company world has literally reversed from

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Speaker 1: one to two to two to one, and SPACs are

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Speaker 1: taking advantage of that. So there's some concern in the

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Speaker 1: marketplace that SPACs uh, combined with maybe kind of the

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Speaker 1: robin Hood retail investor the day trader, suggesting speculation is

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Speaker 1: creeping into this market it may not be healthy. How

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Speaker 1: do you view that? Well, there's uh, no question in

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Speaker 1: my mind. At least two things are true. Number One,

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Speaker 1: the stock market is a bit ahead of the real economy.

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Speaker 1: It's anticipating a v shaped recovery, which we certainly don't

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Speaker 1: have yet. We're not back to where we were pre

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Speaker 1: covid by any stretch of the imagination. Uh So one

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Speaker 1: of the two one is wrong, the stock market is wrong,

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Speaker 1: or the economy will catch up to the stock market. Um.

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Speaker 1: I tend to think that the econom me is going

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Speaker 1: to continue to do well. I'm not sure it's quite

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Speaker 1: where the stock market will get to. Quite where the

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Speaker 1: stock market is, so I think there's some vulnerability there.

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Speaker 1: And then you have a uh tremendous concentration of the

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Speaker 1: gains in the stock market in a handful of stocks

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Speaker 1: which happened to be particularly appealing to retail investors. So

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Speaker 1: these are great companies there. It's not it's not like

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Speaker 1: the dot com bubble where anybody with forty three eyeballs

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Speaker 1: to go public. But these are phenomenal companies that are

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Speaker 1: going to be long term winners. But they're trading it,

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Speaker 1: you know, reasonably stemming multiples compared to history. There's some

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Speaker 1: talk of pivots at the moment, pivot to value and

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Speaker 1: so on, and then there's also a concern about everything

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Speaker 1: the Federal Reserve is doing in the longer term impacts.

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Speaker 1: What concerns you out there, elephant, And do you see

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Speaker 1: pivots in the stock market? Well, I think the right

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Speaker 1: now we have a stock market and an economy UH

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Speaker 1: that are definitely supported, you could say, propped up by

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Speaker 1: UH monetary and fiscal policy. I mean, people don't realize

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Speaker 1: both the magnitude and the speed of what was done

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Speaker 1: by both the Congress and the President and by the

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Speaker 1: Federal Reserve. You know, first fiscal policy, we had two

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Speaker 1: and a half trillion dollars of UH stimulus passed before

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Speaker 1: the first down quarter of g d P was reported officially. UH.

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Speaker 1: In the financial crisis in two thousand and eight, we

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Speaker 1: had eight hundred and fifty million billion dollars of stimulus

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Speaker 1: and it didn't get passed by the Congress must much

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Speaker 1: less implemented until the third quarter of decline. So this

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Speaker 1: came much more quickly and three times the scale monetary policy.

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Speaker 1: The first week, our first day, the Federal Reserve brought

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Speaker 1: a hundred billion dollars of treasuries and mortgage backed securities.

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Speaker 1: The most that they bought in the fiscal fiscal financial

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Speaker 1: crisis was a hundred billion in a month, So this

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Speaker 1: is huge. The Federal Reserve has been there, Roth Slaustein,

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Speaker 1: We've got to leave it there because the time. Thank

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Speaker 1: you so much for joining us. We really appreciate your time.

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Speaker 1: Roth Slaustein, co chairman co CEO of ever Corps, giving

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Speaker 1: us his thoughts on the markets UH equity markets, including

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Speaker 1: M and A. It is time for Bloomer Opinion today.

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Speaker 1: We're joined by Claude Gussam, director of macro economic Policy

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Speaker 1: for the Washington Center for Equitable Growth, also a Bloomberg

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Speaker 1: Opinion columnist. Claudia is a former Federal Reserve economists and

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Speaker 1: creator of the SOM Rule, a recession indicator. Claudia, thanks

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Speaker 1: so much for joining us here. You have a fascinating

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Speaker 1: column out widening education gap may tear the economy apart.

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Speaker 1: What did you find in your reporting? Well, first of all,

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Speaker 1: thank you for having me on today. I really appreciate

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Speaker 1: the chance to talk through the piece in a little

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Speaker 1: more detail. Yeah, so, I think the biggest thing I

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Speaker 1: want to draw people's attention to is back to school.

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Speaker 1: What's happening right now in our elementary schools, in our colleges.

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Speaker 1: This is a pivotal moment for the inequalities that we've

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Speaker 1: been living with and have increased over time in the

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Speaker 1: United States, and we know this from the Great Recession.

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Speaker 1: We are seeing this train wreck all over again, and

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Speaker 1: we have to pay attention to those who are less fortunate,

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Speaker 1: lower income, not in the fancy Harvards and Ivy League schools.

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Speaker 1: They need our support right now. Yeah, I mean some

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Speaker 1: of us, I'm sure have seen those really horrific and

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Speaker 1: really sad pictures on Twitter and elsewhere of kids gathered

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Speaker 1: outside places like Walmart and Target in order to try

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Speaker 1: to use free internet because they just don't have it

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Speaker 1: at home. This isn't just one problem, It's a money

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Speaker 1: headed problem, Caudia. Is there any kind of even partial

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Speaker 1: solution that could be implemented immediately the such a situation

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Speaker 1: that we are in is not inevitable, it is not

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Speaker 1: set in stone, and yet it will take money. The

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Speaker 1: federal government needs to get money out to state and

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Speaker 1: local governments. Those are the primary funding sources of education

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Speaker 1: United States, particularly our public schools, are public colleges and

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Speaker 1: our community colleges, which are so important, are always underfunded.

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Speaker 1: And right now the municipal just don't have the money

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Speaker 1: for Congress can send the money, and they haven't yet,

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Speaker 1: and they absolutely have to if we are going to

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Speaker 1: get to a better place because really here, uh, it's interesting,

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Speaker 1: a lot of these state and city colleges, they rely

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Speaker 1: very heavily upon that kind of state and city funding.

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Speaker 1: So what are they doing right for this academic year?

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Speaker 1: How stretched are they? Well, so if you think about

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Speaker 1: just broadly, what's happening at state and local governments, and

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Speaker 1: the vast majority of them have balanced budget requirements, right,

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Speaker 1: so they have to make what comes in meet what

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Speaker 1: goes out. Tax revenues plunged during the crisis. There are

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Speaker 1: estimates that they state and local governments are facing a

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Speaker 1: twenty percent shortfall in their budgets for this fiscal year

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Speaker 1: we're in now, Like that is incomprehensible, right, So a

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Speaker 1: lot of the adjustments are just getting started, and what

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Speaker 1: we've already seen is very painful, and the funding cuts

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Speaker 1: again for places like community colleges that already had pretty

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Speaker 1: tight funding, like, it's going to get worse, and that

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Speaker 1: that has repercussions of us for those students, and it

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Speaker 1: has repercussions for all of us. Education is a big

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Speaker 1: driver of shared prosperity. Right, So if you hit another

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Speaker 1: generation with um less educational opportunities, a massive amount of

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Speaker 1: student debt that doesn't you know, come along with a

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Speaker 1: great degree, then like you're we're going to destroy a

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Speaker 1: generation of students and we're really going to step back

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Speaker 1: the potential of the whole economy. So all students are affected,

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Speaker 1: as our old teachers, but presumably those in lower income

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Speaker 1: areas and also those in public schools as opposed to

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Speaker 1: private schools are worse affected. Clodia. So as you say,

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Speaker 1: the inequality of this is just so you know, unfair,

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Speaker 1: What will it take? Will it take protests on the streets?

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Speaker 1: I mean, what what can be done in order to

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Speaker 1: get some help, some funding, even just some support, whether

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Speaker 1: it's from their schools, you know, other communities, to these

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Speaker 1: kids that are just going to get lost in the system. So,

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Speaker 1: as I said before, money from Congress would go a

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Speaker 1: really long way. I don't expect that money to come.

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Speaker 1: It has been extremely frustrating to see that get mayred

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Speaker 1: down in partisan politics, but that is it is what

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Speaker 1: it is. So I think at this point it's going

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Speaker 1: to take a lot of creative solutions. People being like

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Speaker 1: thinking blue guy, like, how do we pull this off?

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Speaker 1: I'm actually speaking tomorrow at a conference of mayors, and

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Speaker 1: one of my tasks is to come exactly what's the

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Speaker 1: question you asked? Okay, so given where we are, what

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Speaker 1: do we do, like, how how do we get through

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Speaker 1: this situation in the best way possible? And and it's tough, right,

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Speaker 1: So it's blue sky thinking. It is trying to find

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Speaker 1: ways to be more effective, efficient, making sure that you

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Speaker 1: target the resources. Just said in the very beginning, there

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Speaker 1: are students who don't they lack the ability to go online,

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Speaker 1: to go hybrid, you know, their connectivity issues, there's access

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Speaker 1: to high speed WiFi. There's also a lot of issues

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Speaker 1: with parents who have to get back to work, right

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Speaker 1: and so they're just there's a lot of complexity, there's

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Speaker 1: a lot of need um, you know. But local governments

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Speaker 1: they know what their people need best like and how

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Speaker 1: to implement it. It It ought to becoming local instead of federal.

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Speaker 1: But the federal government should be getting them the money

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Speaker 1: they need to do these blue sky creative Well, let's

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Speaker 1: hope something happens very soon because we're already into the

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Speaker 1: school year. It's a great peace Scaldia, thank you for

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Speaker 1: writing it. It all needs to be said. Some of

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Speaker 1: course is former Federal Reserve economist, creator of the recession

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Speaker 1: indicator of the some rule, and we appreciate her coming

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Speaker 1: on well. When I was in business school many moons ago,

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Speaker 1: we were taught that the purpose of a corporation, particularly

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Speaker 1: public corporation, is that maximize profits for shareholders. Now, in

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Speaker 1: the age of E s G investing, where there's focused

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Speaker 1: on environmental, social, and governance, I think that's being expanded

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Speaker 1: upon to maybe include more stakeholders. To talk more about that,

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Speaker 1: we welcome Michael O. Leary, former economic policy advisor in

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Speaker 1: the United States Senate and a founding team member of

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Speaker 1: Bane Capital Social Impact Fund UH. Michael's also the co

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Speaker 1: author of a new book entitled Accountable, The Rise of

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Speaker 1: Citizen Capitalism. Michael, thanks so much for joining us here.

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Speaker 1: So again, maximize profits for shareholders or corporations need to

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Speaker 1: think about broadening that out to other stakeholders. I think

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Speaker 1: you're seeing right now or just changing focus from I

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Speaker 1: think we've had fifty years of this focus on the

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Speaker 1: corporation's purposes to maximize profits for shareholders. And with the

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Speaker 1: Business Roundtable statement, last summer, the Davos Manifesto coming out

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Speaker 1: of the World Economics Forum last winter. You're seeing business

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Speaker 1: leaders investors starting to recognize that the purpose of a

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Speaker 1: corporation can extend beyond just maximized share price. How about

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Speaker 1: furthering that? What what would be the best way to

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Speaker 1: go about things like that? Well, the problem right now

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Speaker 1: is that if this sort of stakeholder capitalism mindset is

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Speaker 1: winning the battle of ideas, it's losing the war stuffs

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Speaker 1: into action. And so at the same time that you'd

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Speaker 1: be hard pressed to find many business leaders today who

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Speaker 1: don't at least pay lip service to this idea of

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Speaker 1: serving their communities, their workers, the environment. You're not seeing

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Speaker 1: the sort of substant action they'll ast you push that forward.

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Speaker 1: And I think the the response to the pandemic was

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Speaker 1: a good example where at first you saw a lot

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Speaker 1: of companies pulling together, shifting from manufacturing perfume to manufacturing

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Speaker 1: hand sanitizer, from luxury gowns to hospital gowns. But you're

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Speaker 1: seeing all that start to pull back, and I think

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Speaker 1: that kind of the the decoupling of the financial markets

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Speaker 1: from the real economy. It's just forcing a lot of

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Speaker 1: people to question whether or not these pronouncements of stakeholder

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Speaker 1: capitalism are actually showing up in their lives. Well, Michael,

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Speaker 1: I remember thinking when I first saw that Business Roundtable

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Speaker 1: letter or statement from last year, my first thought was,

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Speaker 1: unless you align executive compensation to these goals, some of

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Speaker 1: these e s G goals stakeholder goals, you're not gonna

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Speaker 1: get any substant action. How do you go about that?

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Speaker 1: It's a great point, I mean, business leaders, CEOs are

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Speaker 1: the largest corporations, are compensated mainly on stock price, and

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Speaker 1: so to extend their compensation still requires them to maximize

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Speaker 1: their stock price. Their incentive structure is not going to

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Speaker 1: change just by changing their rhetoric. Now, what I think

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Speaker 1: business leaders are recognizing is that today employees, customers, government's

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Speaker 1: regulators are expecting more out of corporations, and so the

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Speaker 1: best way to maximize share price over the long term

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Speaker 1: is by focusing on things like a deeper purpose, on

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Speaker 1: serving your stakeholders. But but following the Roundtable statement, you

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Speaker 1: had this kind of horrible PostScript, which was the Council

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Speaker 1: of Institutional Investors, which represents a lot of the largest

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Speaker 1: asset owners in the country, released the statement of their

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Speaker 1: own reminding the business roundtable which represents CEOs, Reminding those

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Speaker 1: CEOs that CEOs work for shareholders, you know, and the

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Speaker 1: shareholders mocks do we have where shareholders elect boards and

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Speaker 1: boards appoint CEOs. CEOs ultimately have to to reflect the

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Speaker 1: interests of their underlying shareholders. And and uh, the statement

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Speaker 1: said accountability to everyoneted accountability to no one, and and

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Speaker 1: reminding CEOs that they work for shareholders. And so, I

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Speaker 1: mean that's part of what's gonna hold back real action

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Speaker 1: here is and tell shareholders investors get on board with

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Speaker 1: this sort of stakeholder approach to running companies, you're not

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Speaker 1: going to see a sort of change. So actually show

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Speaker 1: up in the lives the stakeholders. Yeah, the sentence are

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Speaker 1: not aligned. I mean, it's partially why Jeff Alben went

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Speaker 1: his own way and sort of after all these years,

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Speaker 1: started as you know, another of his own shops in

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Speaker 1: order to do E. S G. The way he wanted to,

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Speaker 1: the way he thought it should be done. We need

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Speaker 1: more of that, because if people are worried about having

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Speaker 1: enough of a return so they can retire someday, which

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Speaker 1: is probably already going to be later than they ever

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Speaker 1: thought before, then why should social justice come out of

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Speaker 1: their retirement if you like, that's the way they're going

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Speaker 1: to look at it, right. This is kind of the

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Speaker 1: traditional view that that any focus on society the environment

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Speaker 1: must come at the cost, come at the expense of

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Speaker 1: shareholder returns. That there is this trade off, and I

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Speaker 1: think what up and is doing with inclusive Capital Partners,

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Speaker 1: but a lot of major prova equity funds are now

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Speaker 1: doing and launching impact funds like a TVG or being

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Speaker 1: Capital Ride Work or KKR if they're saying we can

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Speaker 1: actually generate alpha by focusing on these areas because the

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Speaker 1: sorts of companies are gonna succeed in the long term

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Speaker 1: are sorts of companies that are focused on the material

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Speaker 1: financial risks and opportunities that come from looking at social

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Speaker 1: environmental issues. This is what you saw with the French

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Speaker 1: food giant dan On that put social purpose into its

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Speaker 1: corporate charter. It became the equivalent of a benefit corporation

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Speaker 1: in France. And they weren't doing that to say this

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Speaker 1: is going to come at the expensive profits. They're making

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Speaker 1: assessment that this is what was best for shareholders in

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Speaker 1: long term. Is we've seen this this crazy transition, where

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Speaker 1: at the same time that average holding period for a

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Speaker 1: stock has declined from eight years in the sixties to

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Speaker 1: eight months today. The needs, as you said, of future

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Speaker 1: retirees has elongated. You know, the media shareholder in America

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Speaker 1: is fifty years old. They can't even access their frore

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Speaker 1: owen K accounts for the next fifteen years. And so

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Speaker 1: when they need capital marks to be thinking longer term,

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Speaker 1: not shorter term, and I think inclusive Happita Partners, Jeff

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Speaker 1: up and spawned a lot of these impact funds are

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Speaker 1: recognizing that the best way to do that, the best

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Speaker 1: way to focus on the long term, is by focusing

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Speaker 1: on stakeholders. So, Michael, I guess I first heard about

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Speaker 1: E s G investing in was from Europe, maybe ten

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Speaker 1: or fifteen years ago, years before I really heard about

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Speaker 1: it from UH. US. Institutional investors. Are other parts of

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Speaker 1: the world incorporating the stakeholder approach better than perhaps the US.

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Speaker 1: I think you are c that you're seeing that Europe

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Speaker 1: for sure is leading. Japan has always taken a slightly

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Speaker 1: different approach. UH Germany, you'll have more companies that are

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Speaker 1: owned by majority shareholder, less of the sort of intermediated

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Speaker 1: capitalism we have in the U S where most companies

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Speaker 1: are not owned by a majority shareholder, Europe and many ways.

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Speaker 1: He's been leading the charge from the investing front. So

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Speaker 1: United Nations Principles for Responsible Investing, which is a set

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Speaker 1: of six principles saying that you're going to incorporate E

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Speaker 1: s G in some way into investing philosophy, is now

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Speaker 1: aggregated ninety trillion dollars of asset, many assets coming from

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Speaker 1: the US or Asia, but for the most part of

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Speaker 1: these are focused in Europe, in the Nordics and the

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Speaker 1: major pension funds, sovereign wealth funds. And the problem is

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Speaker 1: that at the same time that you're seeing that sort

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Speaker 1: of commitment to these principles of I'm going to integrate

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Speaker 1: E s G into my investing philosophy, there's been some

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Speaker 1: recent research coming from air In Unit Kellogg and others

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Speaker 1: that shows that there's not much difference between investors who

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Speaker 1: investors who have signed onto these principles and investors who

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Speaker 1: have not. There's not much difference between investors before and

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Speaker 1: after they saw to this principle. So what we're seeing

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Speaker 1: is we're seeing a lot of commitment, which is a

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Speaker 1: good first step we're not seeing that falls through into

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Speaker 1: a different wage of actually investing divested being one one

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Speaker 1: particular exception to that where the divestment movement where university

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Speaker 1: damads are divested from oil and gas. Michael, that's really

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Speaker 1: we have to talk about this again very soon. Michael

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Speaker 1: O'Leary joining us, their author of Accountable The Rise of

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Speaker 1: Citizen Capitalism. Well, as we know, it's only a few

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Speaker 1: hours to d time, and that is the f O

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Speaker 1: m C meeting and press conference. Jerry J. Powell be

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Speaker 1: getting up there along with all of a Zoom companions

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Speaker 1: and talking about the economy. Let's bringing somebody who can

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Speaker 1: give us a bit of a an insight into what

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Speaker 1: we might hear today, because there does seem to be

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Speaker 1: no consensus about what that might be. For were the

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Speaker 1: first time in a long time, Daniel D. Martineau Booth,

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Speaker 1: the CEO of Quill Intelligence and of course a columnist

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Speaker 1: for Bloomberg Opinion, former advisor to the Dallas Fed as well,

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Speaker 1: danielle for the first time in a long time, I'm

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Speaker 1: hearing different interpretations as to what might happen today. It

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Speaker 1: seems like it's it's been forever since fed water has

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Speaker 1: got into the details, and and you know, try to

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Speaker 1: forecast what the FED chair might say. Yeah, I'm not

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Speaker 1: sure we have daniel She might have dropped off the

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Speaker 1: line by should be back in just a moment. But well,

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Speaker 1: paul I, I'll ask you the same thing. Yeah, but

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Speaker 1: it'll be you know, it'll be interesting to see kind

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Speaker 1: of what tone we get from a chairman, pal, because

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Speaker 1: I think the market, you know, as we heard from

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Speaker 1: some uh Elena Letia from Bloomberg Economics this morning, maybe

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Speaker 1: a little bit more explanation on what they thinking was

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Speaker 1: behind that inflation policy, i e. The Fed might allow

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Speaker 1: the UH go above two percent, right, And of course

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Speaker 1: there's always a statement, and there's always a comparison of

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Speaker 1: this statement and the previous statement. Will this statement have

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Speaker 1: a whole new template to it? I mean it's very unlikely,

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Speaker 1: but there are likely to be different phrases, different you know,

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Speaker 1: wording about the mondays, you know, and what the Fed

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Speaker 1: will do. As you say, yeah, we now have Danielle.

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Speaker 1: Danielle de Martino Booth. She's back with us. Danielle, thanks

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Speaker 1: so much for joining us here again. The FED today

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Speaker 1: two o'clock with the statement to thirty press Conference, Virtual

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Speaker 1: Zoom Conference. I guess what are you expecting? So um

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Speaker 1: And in terms of the verbiage, we're gonna look for

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Speaker 1: Chair Powell to to to kind of solidify what he

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Speaker 1: said on August twenty seven and Jackson Hole, and that

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Speaker 1: is we're gonna be seeing the deletion of the words symmetric,

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Speaker 1: and we're going to see the replacement with the word average.

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Speaker 1: And that's going to nod to the fact that it's

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Speaker 1: comfortable going forward. At least it's the narrative that they

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Speaker 1: have with inflation running harder for for a period of time,

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Speaker 1: as opposed to bouncing about that two target just a

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Speaker 1: tenth up up or down around it. Again, they're gonna

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Speaker 1: look at us being an average over time such that

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Speaker 1: they can say, you know what if it's three for

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Speaker 1: a while, We're okay with that. So, Danielle, will the

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Speaker 1: statement change radically? Will Will there be a whole new

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Speaker 1: template for FED statements going forward? You know, I'm not

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Speaker 1: so sure about a whole new template. I wouldn't look

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Speaker 1: to any major language changes. We have to bear in

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Speaker 1: mind that this is the last F one C meeting

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Speaker 1: before the election. I think Chapel wants to try and

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Speaker 1: stay away from being too terribly political. That being said,

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Speaker 1: we do get the summary of economic projections today, we

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Speaker 1: do get the dot plot, So there's a lot more

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Speaker 1: richness in the information that we're going to be getting

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Speaker 1: from the Fed in terms of where it sees the

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Speaker 1: unemployment rate headed looking out all the way to three.

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Speaker 1: I think the bond market is anticipating that they see

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Speaker 1: these extra additive data sets coming from the Fed to

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Speaker 1: validate their their view that we're not going to see

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Speaker 1: interest rates rise for four years. Danielle, what kind of

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Speaker 1: language do you expect to here today, if any, about

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00:25:52,880 --> 00:25:56,320
Speaker 1: the Fed, you know, prompting for more fiscal stigmas out

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Speaker 1: of Washington. Well, you know, I think that if you

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Speaker 1: look at the other facilities that have been created, whether

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00:26:01,440 --> 00:26:04,399
Speaker 1: it's the commercial paper facility or the main street lending program,

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00:26:04,480 --> 00:26:06,600
Speaker 1: there's been some great Bloomberg reporting on that this week,

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00:26:07,000 --> 00:26:10,800
Speaker 1: the take up has been anemic at best, and the

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00:26:10,920 --> 00:26:13,240
Speaker 1: Fed is trying to communicate that what they really can do,

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00:26:13,359 --> 00:26:16,520
Speaker 1: the tool that the most effective is quantitative easing. So

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00:26:16,720 --> 00:26:18,720
Speaker 1: in order for them to deploy this tool, a sure

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00:26:18,720 --> 00:26:20,159
Speaker 1: would help if if we could get a couple of

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00:26:20,200 --> 00:26:22,840
Speaker 1: trillion dollars in stimulus pass, and I think that Cheer

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00:26:22,920 --> 00:26:26,440
Speaker 1: Powell is going to as discreetly as possible convey his

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00:26:26,600 --> 00:26:31,960
Speaker 1: continued plead to Congress to get back into negotiations and

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00:26:32,119 --> 00:26:34,879
Speaker 1: pass that next round of stimulus legislation so that the

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00:26:34,920 --> 00:26:40,919
Speaker 1: Fed can effectively monetize it. Danielle, when do we see inflation?

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00:26:41,040 --> 00:26:44,040
Speaker 1: And will we get any kind of a suggestion from

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Speaker 1: the third today that that they have an idea of

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Speaker 1: when that might be. You know, we've been tracking at

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Speaker 1: Quill Intelligence. We've been tracking rental inflation, which is of

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00:26:53,800 --> 00:26:57,760
Speaker 1: course housing inflation, the largest input to CPI. That's decreased

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Speaker 1: from a three point four percent year over your rate

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00:26:59,680 --> 00:27:02,120
Speaker 1: to a two point eight percent you over your rate

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00:27:02,160 --> 00:27:06,800
Speaker 1: as we're seeing rents decline and evictions can increase despite

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00:27:07,240 --> 00:27:11,520
Speaker 1: the CDC theoretically covering rents. So I think the bigger

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00:27:11,640 --> 00:27:14,280
Speaker 1: issue that's going to be talked about behind closed doors

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00:27:14,640 --> 00:27:17,639
Speaker 1: is the risk that we have disinflationary pressures building in

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00:27:17,720 --> 00:27:21,920
Speaker 1: the marketplace as we see this continued, persistent nearly thirty

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00:27:21,960 --> 00:27:25,399
Speaker 1: million Americans collecting unemployment. So again we have to bear

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00:27:25,440 --> 00:27:27,760
Speaker 1: in mind since January two thousand twelve on BERNANKEI first

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00:27:27,760 --> 00:27:30,080
Speaker 1: imposed the two percent targets that that has only hit

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00:27:30,160 --> 00:27:32,919
Speaker 1: that in eleven months. That's quite a quite a long

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00:27:32,960 --> 00:27:35,480
Speaker 1: time without everything that two percent. So I think that

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00:27:35,560 --> 00:27:38,240
Speaker 1: that is trying to talk up the inflation narrative, but

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Speaker 1: I think they're greater concerns is disinflation at this juncture. Danielle,

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00:27:42,200 --> 00:27:44,680
Speaker 1: about thirty seconds left, How concerned are you about this?

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Speaker 1: You mentioned unemployment becoming, you know, a permanent sense of

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00:27:48,760 --> 00:27:51,000
Speaker 1: unemployment for a larger number of people than maybe we

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00:27:51,040 --> 00:27:54,520
Speaker 1: initially thought. Well, I think that that is what the

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00:27:54,720 --> 00:27:57,280
Speaker 1: August payrolls report dictated to us. We had a twelve

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00:27:57,320 --> 00:28:00,119
Speaker 1: point four percent increase. We haven't seen anything like that

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00:28:00,320 --> 00:28:03,600
Speaker 1: since the since the Great Recession. So the permanence is

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00:28:03,600 --> 00:28:06,280
Speaker 1: definitely sitting in. The longevity of people staying on unemployment,

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00:28:06,320 --> 00:28:10,040
Speaker 1: even though they're technically classified as temporary, has also increased.

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Speaker 1: So these are things that chirpoell have to know and

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Speaker 1: they have to be discussing. All right, Danielle, thank you.

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Speaker 1: That is Danielle di Martino Booth, Bloomberg opinion columnist, and

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Speaker 1: of course Danielle is of Quill Intelligence as well. We'll

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Speaker 1: hear from Danielle post thefo OC meeting as well. Don't

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00:28:26,520 --> 00:28:29,560
Speaker 1: forget that you can listen live to the news conference

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00:28:30,000 --> 00:28:33,440
Speaker 1: at two thirty eastern pol And of course we will

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00:28:33,440 --> 00:28:35,880
Speaker 1: be doing that. Yeah, absolutely, we'll have that covered here.

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Speaker 1: And is daniel suggesting looking for just some subtle changes

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Speaker 1: in language. It'll be also interesting to see, uh, you know,

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00:28:42,720 --> 00:28:46,640
Speaker 1: to what extent uh the chairman will you know, kind

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00:28:46,680 --> 00:28:49,560
Speaker 1: of make some comments about fiscal stimulus, the need for

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00:28:49,800 --> 00:28:52,920
Speaker 1: another round of fiscal stimulus. It seems like our good

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00:28:52,960 --> 00:28:55,840
Speaker 1: friends in Washington have kind of stalled here in getting

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00:28:55,920 --> 00:28:57,800
Speaker 1: that next round of fiscal you know, it's funny with

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00:28:58,080 --> 00:29:00,160
Speaker 1: with Nancy Pelosi saying that they will leave in Hill

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Speaker 1: there is another round of stimulus and yet no talks inside.

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00:29:02,800 --> 00:29:05,160
Speaker 1: Yet no talks inside. Absolutely, So again that will be

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Speaker 1: closely to watch. Thanks for listening to Bloomberg Markets podcast.

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Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

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00:29:13,760 --> 00:29:17,320
Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm

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00:29:17,360 --> 00:29:19,959
Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm

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00:29:20,000 --> 00:29:22,600
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can

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00:29:22,680 --> 00:29:24,880
Speaker 1: always catch us worldwide at Bloomberg Radio