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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 3: Happy Friday, everybody.

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Speaker 4: We cover all the news that you need in business,

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Speaker 4: economics and finance. There are lens of our Bloomberg Intelligence folks.

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Speaker 4: They cover two thousand companies and one hundred and thirty

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Speaker 4: industries all around the world. And we also tap our

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Speaker 4: expertise outside of Bloomberg Intelligence as well. And for that

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Speaker 4: we go to Lindsay Piezga, she is chief economist over

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Speaker 4: at Stefold, to talk about the job support. Okay, so

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Speaker 4: we get the jobs number. Then a couple hours later

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Speaker 4: we get Chris Waller coming out and talking about the

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Speaker 4: current batch of data requires action and if appropriate, he

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Speaker 4: will advocate for front loading cuts.

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Speaker 3: What does if appropriate.

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Speaker 4: Mean to frontload cuts for fifty bases point cut in September.

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Speaker 5: Well, I think that means that if we see a

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Speaker 5: material weakening in the employment data, if we see a

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Speaker 5: material weakening in the inflation data, the Fed is poised

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Speaker 5: to take a more aggressive stance. That being said, the

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Speaker 5: lack of meaningful downward momentum that we've seen in price

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Speaker 5: pressures coupled with still a somewhat benign employment report. Remember,

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Speaker 5: we saw that downtick in the unemployment rate, stronger wage games,

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Speaker 5: So it doesn't seem that at this point, to Waller's

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Speaker 5: to use Waller's characterization, it is appropriate to result in

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Speaker 5: a more aggressive policy response. And as such, I think

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Speaker 5: the Fed is going to take a more tempered approach

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Speaker 5: until we see a more clear indication of weakness as

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Speaker 5: opposed to just normalization in the economy.

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Speaker 6: All right, somebody comes up to you to Starbucks this

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Speaker 6: weekend and says, lindsay, how's that labor market?

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Speaker 7: How would you respond?

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Speaker 5: Well, I think right now we're still seeing solid conditions

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Speaker 5: in the labor market. Now, certainly we have lost momentum

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Speaker 5: from earlier peak levels. Top line hiring has slowed, but

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Speaker 5: let's put the unemployment rate in perspective, it's still on

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Speaker 5: a relatively low basis. Wage games are still solid, jobless

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Speaker 5: flames continue to tick down, so there's still indications again

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Speaker 5: that the labor market, yes is cooling, losing momentum, but

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Speaker 5: more to the prospect of normalizing as opposed to indications

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Speaker 5: of outright weakness suggesting that the FED needs to take

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Speaker 5: expedited or more aggressive action to help supplement or stabilize

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Speaker 5: like market conditions.

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Speaker 4: Actually that happened to Michael McKee. It was on a

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Speaker 4: train and someone like random guy was like.

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Speaker 3: Hey, Mike, what are you from the FED?

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Speaker 4: So lindsay, is this is the FED going to go

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Speaker 4: twenty five or fifty? And I guess the better question

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Speaker 4: is how much do you care about that versus us

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Speaker 4: still pricing in two hundred and forty basis points of

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Speaker 4: cuts in the next you know, fourteen to fifteen months.

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Speaker 5: Well, I think the FED is going to take a

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Speaker 5: guess low and temperate pace. I think out of the

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Speaker 5: gate twenty five basis points is a appropriate and the

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Speaker 5: FED has been very clear they're not on a predetermined pathway.

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Speaker 5: And should we see the data come in better than

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Speaker 5: expected or weaker than expected, the next policy response will

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Speaker 5: reflect that data. And so that's going to really be

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Speaker 5: the driver of how the FED responds over the next

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Speaker 5: year or two years in terms of slowly returning US

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Speaker 5: more to a normal position and policy as opposed to

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Speaker 5: taking an aggressive approach and reversing us to neutral or

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Speaker 5: well below.

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Speaker 6: So, lindsay, put this labor data together. I guess for me,

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Speaker 6: one of the next questions is how does that frame

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Speaker 6: out how our US consumer is doing.

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Speaker 7: What's your view there?

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Speaker 5: Well, I think the US consumer is struggling at this point.

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Speaker 5: The US consumer feels the weight of these higher prices,

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Speaker 5: feels the weight of a slowing economy.

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Speaker 8: But the consumer is still.

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Speaker 5: Holding its own it's still spending out in the marketplace,

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Speaker 5: and it's still the backbone of the US economy.

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Speaker 3: We love that.

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Speaker 4: We love crying babies in the background. That's super cool.

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Speaker 4: You can definitely bring them on air. We love that

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Speaker 4: for you and for us. So I guess when we

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Speaker 4: talk about how the data will evolve, what are.

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Speaker 3: We going to really be looking at.

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Speaker 4: Is CPI really that important next week or is it

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Speaker 4: just like, let's get past this twenty five or fifty

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Speaker 4: or whatever and then we see how the labor market evolves.

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Speaker 5: I think the CPI the PPI are key data points

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Speaker 5: that are really going to determine the trajectory of the

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Speaker 5: fence pathway for race.

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Speaker 7: All right, lindsay, thank you so much. We appreciate it.

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Speaker 6: Lindsay the Eggs, a chief economist for Stiefel.

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Speaker 7: She joined us on his zoom from Chicago. She can

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Speaker 7: do it all.

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Speaker 6: She can talk economics and she can then go take

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Speaker 6: care of the little ones.

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Speaker 7: I mean, yeah, that's why you guts are the best.

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Speaker 7: I don't know how to do it.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple card Play and

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Speaker 2: Just say Alexa play Bloomberg eleven.

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Speaker 4: All right, let's get more in this market reaction here.

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Speaker 4: Matt Miskin Co, Chief Investment Stratus, John Hancock Investment Management

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Speaker 4: joins us. Now, hey, Matt, if I just take a

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Speaker 4: look at what's happening within the market and the reaction.

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Speaker 3: Oh god, I hate to say it. Is this a

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Speaker 3: Goldilocks move?

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Speaker 9: That looks a little bit like that, But the fact

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Speaker 9: that the tenure treasury yield isn't backing down much actually

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Speaker 9: to me suggests it's not as favorable.

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Speaker 4: But a huge it had a huge run, it did.

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Speaker 9: It did, and mortgage rates are coming down on that,

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Speaker 9: and then you're gonna get borrowing costs coming down on that.

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Speaker 9: And we had oil prices lower, and all these things

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Speaker 9: eventually are going to be good for the consumer.

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Speaker 10: But if economic growth is weakening, if you're not as

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Speaker 10: confident about your job, you're not going to be as

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Speaker 10: confident about spending.

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Speaker 9: And right now there is a you know, September weakness

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Speaker 9: that's always seasonal. So we're sitting here saying is this

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Speaker 9: seasonals or is this some more sinister? And for us,

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Speaker 9: the economic data is weakening. We like defensive parts of

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Speaker 9: the market. We like intermediate to longer term bonds, and

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Speaker 9: we're gonna sit here and wait for a better opportunity

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Speaker 9: to look at risk assets.

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Speaker 7: What's defensive in your mind? Met good one?

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Speaker 2: Yes?

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Speaker 10: So good old utilities. Utilities are a part of the market.

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Speaker 9: That were left for not you know, no one wanted

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Speaker 9: to touch them for much the last two years. They

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Speaker 9: were only two percent of the market, the lowest level

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Speaker 9: or sector weight in history. They've been on a tear here.

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Speaker 9: And we actually like long lived assets. I mean, you know,

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Speaker 9: alex as you said, I mean like this week, treasury

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Speaker 9: yields are meaningfully lower and longer duration equities should be

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Speaker 9: rallying on that. Utilities are, roots are even healthcare is

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Speaker 9: getting a bit of a bid. But then you've got

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Speaker 9: things like financials, which have done pretty well here that's

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Speaker 9: an odd mix, and tech, which used to be the

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Speaker 9: long duration asset.

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Speaker 10: Is getting can hit.

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Speaker 9: So it's not making a ton of It's not the

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Speaker 9: dots are not connecting all at once here.

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Speaker 10: It's it's one week. But the trend in terms of

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Speaker 10: the macro.

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Speaker 9: Data is what it is, and it looks like softening,

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Speaker 9: and we want to grab some good defensive parts of

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Speaker 9: the market while they're still here for us.

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Speaker 4: Yeah, And I don't want to make light of the

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Speaker 4: fact that texts down one percent and calling that goldilocks,

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Speaker 4: but just the idea that that sort of play versus say,

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Speaker 4: I mean, I'm looking at DOWT Transport. It's only down

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Speaker 4: quote unquote three tens of one percent. So I'm just

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Speaker 4: wondering if it's more of a rotation within the market

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Speaker 4: versus sort of a broad based selling. Do you think

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Speaker 4: that when we get a Christopher Waller talking at eleven,

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Speaker 4: is that going to be an event risk for you

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Speaker 4: right now?

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Speaker 10: It could be. I mean, you know, right now.

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Speaker 9: I think the Fed, if they push back too hard

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Speaker 9: and say, look, we're not we're not going fifty basis points.

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Speaker 10: We're not ready to cut.

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Speaker 9: I think if they do that at this juncture, you're

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Speaker 9: going to be upsetting the bond market. And there's few

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Speaker 9: times in doing this it's it's you know, nowadays we've

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Speaker 9: got the forward guidance, so we've got you know, pricing

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Speaker 9: in of how many cuts.

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Speaker 10: You know, you rewind ten fifteen years ago, people.

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Speaker 9: Didn't focus on that as much, but now that it's

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Speaker 9: one hundred percent probability of a cut in September, if

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Speaker 9: not more, because you're saying, hey, it could be fifty

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Speaker 9: basis points. If the FED says no, we're not cutting,

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Speaker 9: that is going to be bad news for everything. And

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Speaker 9: so I think you need to hear the FED speakers

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Speaker 9: come out and say yeah, we're gonna cut, and if

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Speaker 9: anything against that, I think is going to cause some volatility.

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Speaker 6: Hey, Matt, on the fixed income side, how much credit

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Speaker 6: risk are you guys comfortable taking these days?

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Speaker 10: Not much at all.

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Speaker 9: Frankly, we started the week at three hundred basis points

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Speaker 9: spread between junk bonds, high yield bonds, and treasury bonds,

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Speaker 9: And to.

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Speaker 10: Put that in perspective, last time that's.

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Speaker 9: Happened twenty twenty one before spread wide and twenty twenty two,

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Speaker 9: two thousand and seven before two eight, nineteen ninety nine,

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Speaker 9: before two thousand and three hundred b points is historically

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Speaker 9: really tight spreads.

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Speaker 10: And to us, that's just not a lot of value.

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Speaker 9: We prefer if you're going to go even in investment

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Speaker 9: grade corporate bonds, more of a single a kin type

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Speaker 9: of average portfolio.

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Speaker 10: Credit rating, and then we like agency nbs.

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Speaker 9: We like all those bonds or all those mortgages that

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Speaker 9: people locked in low mortgages.

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Speaker 10: I don't think there's any prepayment risk. People probably aren't

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Speaker 10: going to be moving.

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Speaker 9: Again to and it's good for their balance sheets. So

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Speaker 9: you know, they're yielding about five percent for four to

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Speaker 9: five percent right now. So we're just looking some high

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Speaker 9: quality bonds add that to the portfolio.

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Speaker 10: Lock in these.

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Speaker 9: Yields while you got them, because that cash balance that

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Speaker 9: everybody's loves so much, that money market interest rate, in

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Speaker 9: our view, that's gone into twenty twenty five, not completely gone,

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Speaker 9: but it's gonna be.

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Speaker 3: I mean, I'm waiting for it.

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Speaker 4: We still hit another record high at the end of

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Speaker 4: last week, according to the data that came out. So

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Speaker 4: do you think that it matters if it's twenty five

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Speaker 4: or fifty in September and or is it really how

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Speaker 4: many cuts we're going to be getting. I mean, we're

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Speaker 4: still pricing in something like almost ten cuts through the

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Speaker 4: end of next year, right.

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Speaker 9: And you know, I think about it as like you know,

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Speaker 9: getting lost in the forest.

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Speaker 10: Wait, is it the forest and the trees?

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Speaker 4: You can't see the forest from the trees, right, Yeah,

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Speaker 4: something like that.

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Speaker 9: The fast couple of cycles, on average, the FED is

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Speaker 9: cut from peak to trough seventeen times. Now that's twenty

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Speaker 9: five basis point cuts, but seventeen times is how much

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Speaker 9: the FED usually cuts in a cutting cycle. So whether

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Speaker 9: or not they cut one time or two times at

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Speaker 9: the first cut, don't get lost in that.

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Speaker 10: Don't overdo it. What you want to.

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Speaker 9: Do is set up for where this Where does the

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Speaker 9: end of the FED Fund's rate go? Where do we

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Speaker 9: go on the tenure yield? Our view, based on the

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Speaker 9: last three cycles, the tenure yield ends with a two

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Speaker 9: handle and the FED Fund's rate ends with a one handle.

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Speaker 9: If that is the world we're in, we're having a

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Speaker 9: different conversation.

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Speaker 10: Right now, we want to get while the these yields

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Speaker 10: are where they are right now.

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Speaker 9: I know it's been a quick move, but still don't

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Speaker 9: let it the volatility, you know, get you off course.

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Speaker 9: Bonds are going to be likely recovering all that in

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Speaker 9: our view majority, if not all they lost in twenty

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Speaker 9: twenty two, and we still got upside potential in the

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Speaker 9: Bontdom market.

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Speaker 7: All right, Matt, thanks so much for joining us. Really

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Speaker 7: appreciate it.

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Speaker 6: Matt misk And he's a co chief investment strategist at

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Speaker 6: John Hancock Investment Management.

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Speaker 7: And look it up there in Boston.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple card Play and

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Speaker 2: Enroud Auto with the Bloomberg Business app. Listen on demand

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 4: Happy Friday, Longest Forday week Out there. I'm Alex stan

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Speaker 4: alongside Paulsman Need. This is Bloomberg Intelligence Radio. We are

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Speaker 4: broadcasting to you live from Interactor Brooker Studio right here

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Speaker 4: in cloudy midtown Manhattan. So the equity market really rolling

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Speaker 4: over here, Big tech in particular getting hit the NASDAC

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Speaker 4: is off over two percent below it's fifty and one

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Speaker 4: hundred day moving average. Quick work of getting to that

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Speaker 4: two hundred day moving average as well. Not helping is

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Speaker 4: what's happening in Broadcom. That stock down by over ten

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Speaker 4: percent on earnings that came out yesterday after the closing bell. Now,

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Speaker 4: the money they made from AI and their forecast was

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Speaker 4: really quite good. It was just everything else that seemed

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Speaker 4: to disappoint investors sort of waiting for that trough, despite

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Speaker 4: the CEO saying yeah, okay, we might have found the

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Speaker 4: bottom and all of that, but nonetheless that stock is

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Speaker 4: off quite a bit. Dana Wolman is Bloomberg Senior Technology editor.

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Speaker 4: She joins us, Now, there's a lot to get through

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Speaker 4: in tech, but I just wanted to hit on Broadcom.

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Speaker 4: When you're looking at the stock reaction to the news

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Speaker 4: like they delivered on AI. They made a boatload of money,

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Speaker 4: They're going to keep making a boatload of money on AI.

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Speaker 4: Do you think it's an overreaction from what you're hearing.

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Speaker 11: A little bit and my background is not in equities,

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Speaker 11: but to your point, you would think that the worst

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Speaker 11: news imaginable would be that the company was not keeping

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Speaker 11: up with expectations and AI. In fact, it beat expectations

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Speaker 11: in all the parts of its business that are related

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Speaker 11: to AI. Somehow, it's really its legacy businesses that were

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Speaker 11: flagging in the forecast, but that, as you said, was

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Speaker 11: enough to just send the stock down.

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Speaker 6: It's interesting, it seems like Broadcom is well positioned for

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Speaker 6: this AI you know, kind of phenomena here because investors,

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Speaker 6: as you know, are trying to figure out a way

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Speaker 6: how do I play AI? And really do I just

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Speaker 6: buy Nvidia? Are there other ways to play it here? So,

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Speaker 6: but tell us about Broadcom and it's exposure to AI,

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Speaker 6: maybe how it's positioned.

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Speaker 11: So I think Broadcom gets less attention in part because

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Speaker 11: I think it's in a highly technical field, a field

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Speaker 11: that's already just very technical and sometimes difficult to explain

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Speaker 11: to play people. I think sometimes Broadcom's equipment is even

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Speaker 11: more so.

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Speaker 3: But it's everywhere. I mean, it's legacy businesses.

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Speaker 11: It's chips were already in everything from automotive to smartphones,

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Speaker 11: and its components are included in.

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Speaker 3: Just AI setups as well.

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Speaker 11: Yep, and the it's not necessarily a one form one

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Speaker 11: comm to what Nvidia is producing, but just complementary components

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Speaker 11: and piece of hardware that people might not know the

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Speaker 11: names ever think of, but are necessary in these larger

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Speaker 11: AI setups.

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Speaker 4: And also what I was reading is that if a

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Speaker 4: company winds at making their own AI tips in house,

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Speaker 4: they need Broadcom to do that.

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Speaker 3: So there's that part of the business as well. Let's

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Speaker 3: go to Intel because that stock is also off over

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Speaker 3: three percent.

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Speaker 4: It's considering some options for its steak in its struggling

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Speaker 4: automated driving system provider Mobile Global. Can you remind us

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Speaker 4: what Mobile Eye Global actually does.

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Speaker 11: Mobile Eye makes automated and automated driving system So is

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Speaker 11: it self driving stuff yes, autonomous vehicles yes. And Intel

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Speaker 11: has had a steak. It actually sold part of its

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Speaker 11: steak last year. I believe we reported profit of netted

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Speaker 11: around one point five billion from that. But it's looking

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Speaker 11: to sell more of its steak, and as we report

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Speaker 11: in the story, it's picking if it's going forward with this,

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Speaker 11: it's picking a not great time. Mobilized stock has been

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Speaker 11: down a lot, and so Intel would not exactly be

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Speaker 11: recouping on its investment if it chose this moment. But

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Speaker 11: as we reported more broadly, Intel is in a dire moment,

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Speaker 11: it does seem to be considering some really desperate severe

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Speaker 11: measures to keep itself afloat.

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Speaker 7: Yeah, I mean, I'm just I mean, it's Intel.

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Speaker 6: It's down sixty two percent year to date, fifty two

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Speaker 6: week low, down three point six percent today. You've covered

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Speaker 6: this tech industry for a long time, Dana.

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Speaker 7: What's going on with mo? With Intel?

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Speaker 6: Did they just miss I guess the technological evolution of

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Speaker 6: the chip business or is there?

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Speaker 7: Is it management? What do you think is going on there?

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Speaker 11: Certainly management doesn't help. I mean, it had that big

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Speaker 11: CEO shake up a few years ago. That was when

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Speaker 11: Brian Krisanich stepped down. It took a while to replace him,

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Speaker 11: and since Pat Gelsinger has been in the role, has

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Speaker 11: bet big on the company's foundry business, and that is

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Speaker 11: in fact dragging down the company performance and seems to be,

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Speaker 11: according to our reporting, something that the companies at least

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Speaker 11: considering splitting off.

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Speaker 4: Well okay, but that's confusing, right because their whole pitch

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Speaker 4: was that, yeah, yeah, we're Intel, yay, but now we're

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Speaker 4: gonna make chips too and be a foundry for us

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Speaker 4: and for also us. You can come to us, We'll

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Speaker 4: make our chips. So why has this gone so south?

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Speaker 11: At least for now, the foundry's biggest client seems to

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Speaker 11: be Intel itself, gotcha. Yes, So, for whatever reason, that

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Speaker 11: part of the business has not taken off as expected.

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Speaker 11: To the extent the company has brighter hopes, it does

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Speaker 11: seem to be on the chip design side, less the manufacturing.

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Speaker 6: So but weren't they a beneficiary or are they not

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Speaker 6: going to be a beneficiary of the US government's investment

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Speaker 6: in domestic chips.

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Speaker 4: I think they'd like to be if they had to

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Speaker 4: delay their plan, right.

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Speaker 11: Yes, So that that is something that our reporters are chasing,

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Speaker 11: is not just the fate of the company, but the

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Speaker 11: possible ramifications for the government's investment plans in strategic areas

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Speaker 11: that of course include.

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Speaker 4: The chip industry.

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Speaker 6: And they're based in Santa Clair, California, where everybody who

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Speaker 6: is anybody in the chip business is based in that.

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Speaker 6: Santa Clara, San Jo's a area there. University of Santa

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Speaker 6: Clara is right there as well. Dana Woman, thank you

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Speaker 6: so much for joining us. Dana Woman, senior Technology editor

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Speaker 6: for Bloomberg News, joining us live here in our Bloomberg

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Speaker 6: Interactive Broker studio which we appreciate.

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Speaker 7: On a Friday, I mean, people come in on it.

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Speaker 3: He likes some people come in, come in on a.

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Speaker 7: Friday special gold Star.

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Speaker 6: But you're right, the Intel stock is just getting crushed,

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Speaker 6: and you know, it's just a it's almost like a

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Speaker 6: shadow of its former self here with down sixteen percent. Dana,

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Speaker 6: thanks so much for joining us there.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecar Play and androyd

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Speaker 2: Outo with the Bloomberg Business App. You can also listen

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Speaker 2: live on Amazon Alexa from oursip New York station just

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Speaker 2: say Alexa playing Bloomberg eleven thirty.

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Speaker 6: So let's see, we're getting some moves here in the

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Speaker 6: currencies a little bit. I'm looking at the Bloomberg Dollar

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Speaker 6: Index a little just a smidge higher on the Bloomberg

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Speaker 6: Dollar Index, Pound Sterling a little bit weaker, the Euro

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Speaker 6: a little bit weaker on the backs of some of

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Speaker 6: this economic data we've got, including today's jobs number. Audrey

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Speaker 6: Child Freeman joint Is. She's a team leader and chief

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Speaker 6: f X strategist at Bloomberg Intelligence. Audrey, what are the

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Speaker 6: currency markets telling me about some of the economic data

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Speaker 6: we're seeing, including the jobs data today.

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Speaker 1: Well, the US dollar was already very much weaker getting

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Speaker 1: into the non fund pay rolls, and I think in

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Speaker 1: the end, from a currency perspective, for as long as

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Speaker 1: we didn't get any major supplies one way or the other,

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Speaker 1: it wasn't going to be a game changer for the

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Speaker 1: outbook for the dollar, which we know by now has

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Speaker 1: become a lot more negative with the start of the

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Speaker 1: is in cycle looming and most likely now likely on

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Speaker 1: September eighteen.

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Speaker 4: So to that point, how much more downside than is

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Speaker 4: there too? Dollar yeen?

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Speaker 1: In particular, I think dollar yen is being driven lower

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Speaker 1: by both both by the US side of the trade

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Speaker 1: and the US more Davich cyclical narrative, as well as

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Speaker 1: the Japanese side of the trade, and I think in

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Speaker 1: that respect there's probably room for more downside. You know,

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Speaker 1: it's still very difficult to assess the extent to which

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Speaker 1: you know the unwind of the carry trade is complete.

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Speaker 1: You know, some seeing some some people saying it's almost complete.

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Speaker 1: I think, you know, time will tell on that. It's

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Speaker 1: very complicated to assess, but I think that you know,

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Speaker 1: the the rate differential that's been drive driving dollar year

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Speaker 1: lower from one sixty to one forty two is going

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Speaker 1: to continue into Q four.

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Speaker 8: We're most likely.

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Speaker 1: Going to see a great height from the boju and

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Speaker 1: potentially even.

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Speaker 8: More next year.

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Speaker 1: So I feel that, you know, the dollar yen pick

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Speaker 1: is probably for me in the G ten currency space,

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Speaker 1: the most obvious one to expect to continue lower, with

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Speaker 1: the main question being how fast does it go lower?

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Speaker 1: For me, I've been in the camp that we're probably

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Speaker 1: going to see a slide as opposed to another slump.

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Speaker 6: So, Audrey, what currency out there offers the best value

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Speaker 6: from your perspective?

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Speaker 7: Do you think?

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Speaker 1: Well, if your dollar bear and I think for now

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Speaker 1: we still are dollar bearish, even though you know, I

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Speaker 1: kind of feel that this narrative that I've been describing about,

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Speaker 1: you know, weakening the US economy lower fat rates, it's

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Speaker 1: in the price, and I kind of feel at some

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Speaker 1: point the risk would be that there's too much dubbishness

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Speaker 1: price in the fact because the US economy has to

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Speaker 1: be clear, is not really falling apart, is just decelerating.

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Speaker 1: Inflation is coming down, and that means that we can

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Speaker 1: normalize interest rate in the US and that's fine. But

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Speaker 1: you know, in terms of which currency to play against

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Speaker 1: that I said, the Yeni is a good one. I

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Speaker 1: also kind of like the Swiss Frank just because I

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Speaker 1: feel that, you know, euro dollar upside at the moment

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Speaker 1: is a very tricky one because there's one element in

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Speaker 1: the Europe euro dollar bullish story that I'm still waiting

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Speaker 1: to unfold, and that's a pickup in economic activity. We're

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Speaker 1: not saying that happening in Europe. When that happens, I

443
00:21:36,080 --> 00:21:39,560
Speaker 1: think there'll be more momentum to the upside on the Europe.

444
00:21:39,680 --> 00:21:43,560
Speaker 1: And until that happens, I think dollar Swiss downside maybe

445
00:21:43,760 --> 00:21:46,760
Speaker 1: more appealing. And the other advantage of the Swiss Frank

446
00:21:46,840 --> 00:21:48,960
Speaker 1: I think at the moment is the fact that you know,

447
00:21:49,000 --> 00:21:54,080
Speaker 1: we've seen some episodes recently of more hesitant market risk advertise,

448
00:21:54,760 --> 00:21:56,880
Speaker 1: and this would do better if we were to see

449
00:21:56,920 --> 00:22:01,639
Speaker 1: another phase of risk of markets. So Dollar Swiss downside

450
00:22:02,000 --> 00:22:05,600
Speaker 1: is another very good and interesting pair. I think as

451
00:22:05,640 --> 00:22:08,080
Speaker 1: we conteah yeah into.

452
00:22:08,680 --> 00:22:10,719
Speaker 4: In just about thirty seconds, what do we get from

453
00:22:10,720 --> 00:22:11,720
Speaker 4: the ECB next week?

454
00:22:13,080 --> 00:22:16,280
Speaker 1: We get another cuts and I don't think that's going

455
00:22:16,320 --> 00:22:18,600
Speaker 1: to be too damaging for the Euro, but the euro

456
00:22:18,760 --> 00:22:21,359
Speaker 1: badly needs an improvement in the economy. That's what we

457
00:22:21,400 --> 00:22:24,720
Speaker 1: need for euro dollar upside to go through one twelve

458
00:22:24,800 --> 00:22:25,560
Speaker 1: and one fifteen.

459
00:22:26,400 --> 00:22:28,400
Speaker 4: All right, thank you so much. I really appreciate addit,

460
00:22:28,480 --> 00:22:31,040
Speaker 4: Child Freeman joining US team leader and chief FX strategist

461
00:22:31,600 --> 00:22:34,800
Speaker 4: at Bloomberg Intelligence. Need a better economy, Like how do

462
00:22:34,800 --> 00:22:35,199
Speaker 4: you get that?

463
00:22:35,240 --> 00:22:36,840
Speaker 3: You just take a look at Germany.

464
00:22:36,640 --> 00:22:39,159
Speaker 4: And then the news maybe that Volkswagen's gonna close on

465
00:22:39,240 --> 00:22:43,240
Speaker 4: some of its plans. Their industrial economy is just really suffering.

466
00:22:43,680 --> 00:22:46,000
Speaker 4: How do you get the whole Eurozone to really start

467
00:22:46,080 --> 00:22:48,960
Speaker 4: to outperform when Germany is really in adult drums here?

468
00:22:49,080 --> 00:22:51,359
Speaker 6: Yeah, and that kind of a lot of it stems

469
00:22:51,359 --> 00:22:55,119
Speaker 6: from there. Just a big exporter, particularly to China, and

470
00:22:55,119 --> 00:22:58,480
Speaker 6: if the Chinese economy is slowing, it has been slower

471
00:22:58,520 --> 00:23:02,360
Speaker 6: than expected in that impact big export nations like Germany.

472
00:23:02,359 --> 00:23:04,280
Speaker 6: And I saw that in that German reporting about the

473
00:23:04,280 --> 00:23:07,399
Speaker 6: auto factors Amy close auto factories since nineteen thirty seven,

474
00:23:07,880 --> 00:23:10,919
Speaker 6: So I mean that's not in their DNA to downsize.

475
00:23:11,000 --> 00:23:13,600
Speaker 4: Yeah. There was an interesting report out by no Moura

476
00:23:13,760 --> 00:23:16,439
Speaker 4: that talked about how it's really tourism that is keeping

477
00:23:17,280 --> 00:23:20,480
Speaker 4: services up and keeping the your economy afloat, so we'll

478
00:23:20,480 --> 00:23:21,840
Speaker 4: see what then happens when you get out of the

479
00:23:21,840 --> 00:23:22,760
Speaker 4: summer with John.

480
00:23:22,600 --> 00:23:24,119
Speaker 6: Tucker and I are the only people I know that

481
00:23:24,160 --> 00:23:26,480
Speaker 6: haven't been to Europe like the last year, so we're.

482
00:23:26,359 --> 00:23:29,040
Speaker 4: Just I haven't got anywhere in a year and more.

483
00:23:28,920 --> 00:23:31,119
Speaker 11: I haven't been out of New Jersey twenty five.

484
00:23:31,200 --> 00:23:31,720
Speaker 7: That's not for you.

485
00:23:31,840 --> 00:23:32,520
Speaker 3: Come to the city.

486
00:23:34,040 --> 00:23:37,920
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

487
00:23:38,000 --> 00:23:41,040
Speaker 2: weekdays at ten am Eastern on Apple car Play and

488
00:23:41,040 --> 00:23:43,960
Speaker 2: Android Auto with the Bloomberg Business app. You can also

489
00:23:44,040 --> 00:23:47,240
Speaker 2: listen live on Amazon Alexa from our flagship New York

490
00:23:47,280 --> 00:23:50,600
Speaker 2: station Just Say Alexa playing Bloomberg eleven.

491
00:23:50,400 --> 00:23:56,720
Speaker 6: Thirty Jony Biley, She's a chief workforce analyst at employ Bridge,

492
00:23:57,119 --> 00:24:00,960
Speaker 6: joining us from Omaha, Nebraska via zoom. Jony, you and

493
00:24:01,040 --> 00:24:05,080
Speaker 6: employee Bridge, you know exactly how employers are feeling here.

494
00:24:05,119 --> 00:24:09,080
Speaker 6: What did you make of this job's print here today?

495
00:24:09,760 --> 00:24:15,600
Speaker 8: Well, this report definitely proves we have a weakening job market.

496
00:24:16,480 --> 00:24:19,320
Speaker 8: We've been saying that certainly for some time. We feel

497
00:24:19,320 --> 00:24:24,680
Speaker 8: it in the temporary help industry, our industry, the staffing

498
00:24:24,720 --> 00:24:28,640
Speaker 8: and recruiting you know, of temporary workers has really been

499
00:24:28,680 --> 00:24:32,080
Speaker 8: on a decline for about two years, and those are

500
00:24:32,080 --> 00:24:34,400
Speaker 8: always the jobs that go first. I think we've talked

501
00:24:34,400 --> 00:24:38,720
Speaker 8: about that in the past, so it's pointing to, you know,

502
00:24:38,880 --> 00:24:43,680
Speaker 8: more weakness. Obviously, this report did not meet the expectations.

503
00:24:44,520 --> 00:24:47,880
Speaker 8: I kind of thought we might see this just because

504
00:24:48,240 --> 00:24:52,320
Speaker 8: you know, I'm constantly talking to employers of all sizes

505
00:24:52,400 --> 00:24:56,399
Speaker 8: across the US, and there's a lot of uncertainty. There's

506
00:24:56,720 --> 00:25:02,239
Speaker 8: economic uncertainty, and then there's also the uncertainty, and so

507
00:25:02,280 --> 00:25:05,639
Speaker 8: I think right now we're seeing a pause on hiring

508
00:25:06,680 --> 00:25:11,160
Speaker 8: and employers are just not adding to their payrolls due

509
00:25:11,160 --> 00:25:12,040
Speaker 8: to that uncertainty.

510
00:25:12,119 --> 00:25:13,440
Speaker 3: So, Johnny, that's such a great point.

511
00:25:13,520 --> 00:25:16,320
Speaker 4: So they're not adding to payrolls, what do you think

512
00:25:16,359 --> 00:25:18,800
Speaker 4: it's going to take for them to start laying off

513
00:25:18,840 --> 00:25:20,760
Speaker 4: their payrolls.

514
00:25:21,200 --> 00:25:26,280
Speaker 8: Well, we are seeing some layoffs here and there. So

515
00:25:26,359 --> 00:25:31,359
Speaker 8: that is, you know, concerning what I think will maybe

516
00:25:31,440 --> 00:25:33,359
Speaker 8: reverse the trend. I mean, it's going to be a

517
00:25:33,480 --> 00:25:36,959
Speaker 8: number of things. You know. I hate to say it,

518
00:25:37,000 --> 00:25:40,719
Speaker 8: but we might have to get past this election, regardless

519
00:25:40,760 --> 00:25:44,800
Speaker 8: of who wins, until employers can say all right, I

520
00:25:44,880 --> 00:25:47,040
Speaker 8: have to find my path forward and here's where I'm

521
00:25:47,040 --> 00:25:51,280
Speaker 8: going to invest and hire I think interest rate cuts

522
00:25:51,840 --> 00:25:55,760
Speaker 8: will help certainly, and you know, maybe we'll see a

523
00:25:55,760 --> 00:25:58,959
Speaker 8: little bit of relief if we do see, you know,

524
00:25:59,119 --> 00:26:01,080
Speaker 8: an interest rate cut, which I think we're all in

525
00:26:01,119 --> 00:26:03,120
Speaker 8: agreement that we're probably going to see one. The big

526
00:26:03,200 --> 00:26:05,359
Speaker 8: question is how large of a cut will they do,

527
00:26:05,760 --> 00:26:08,280
Speaker 8: And there's going to be a lot of scrutiny certainly

528
00:26:08,320 --> 00:26:11,080
Speaker 8: around that because that could signal, you know, are we

529
00:26:11,200 --> 00:26:17,040
Speaker 8: maybe in a worse economic picture than people had realized.

530
00:26:17,119 --> 00:26:20,119
Speaker 8: But I do think an interest rate cut will definitely

531
00:26:20,240 --> 00:26:26,160
Speaker 8: help because employers will then start to loosen up, you know,

532
00:26:26,600 --> 00:26:30,000
Speaker 8: those purse strings and start investing again in their businesses,

533
00:26:30,320 --> 00:26:32,520
Speaker 8: and that can certainly lead to more hiring.

534
00:26:33,280 --> 00:26:35,520
Speaker 6: Jenny, I like in your notes here something very interesting.

535
00:26:35,600 --> 00:26:39,720
Speaker 6: Employers are focused on employee retention, but they're very cautious

536
00:26:39,720 --> 00:26:43,440
Speaker 6: about hiring and adding to their current payrolls. How long, Yeah,

537
00:26:43,680 --> 00:26:45,920
Speaker 6: how long have employers kind of been in that mode?

538
00:26:46,880 --> 00:26:47,120
Speaker 7: Yeah?

539
00:26:47,160 --> 00:26:50,960
Speaker 8: No, that's a great question, because that pendulum definitely swings

540
00:26:51,760 --> 00:26:54,200
Speaker 8: from one side to the other. But I would say

541
00:26:54,600 --> 00:27:00,959
Speaker 8: that we've seen over the last year employers very focused

542
00:27:01,119 --> 00:27:05,320
Speaker 8: on retention strategies. Now there's a few dynamics of what's

543
00:27:05,320 --> 00:27:09,440
Speaker 8: happening certainly in the supply chain world. You know, most

544
00:27:09,480 --> 00:27:13,359
Speaker 8: of those workers are on site. In the professional and

545
00:27:13,400 --> 00:27:17,840
Speaker 8: business services, we've seen employers trying to bring people back

546
00:27:17,920 --> 00:27:21,720
Speaker 8: to the office, but they're balancing that with also trying

547
00:27:21,720 --> 00:27:26,480
Speaker 8: to give them flexibility. So they're very focused on what

548
00:27:26,560 --> 00:27:31,639
Speaker 8: types of benefit programs they can give to them. Of course, wages,

549
00:27:31,760 --> 00:27:37,000
Speaker 8: you know, need to stay competitive. Flexibility is certainly important.

550
00:27:37,760 --> 00:27:41,480
Speaker 8: But creating a great work environment where people want to stay,

551
00:27:42,000 --> 00:27:44,439
Speaker 8: you know, where they enjoy the work that they're doing,

552
00:27:44,840 --> 00:27:48,720
Speaker 8: that really has become a top priority. And we're also

553
00:27:48,840 --> 00:27:52,200
Speaker 8: seeing that that's what workers really want, you know, they

554
00:27:52,200 --> 00:27:55,400
Speaker 8: want to enjoy the work, they want to enjoy the environment,

555
00:27:55,440 --> 00:27:59,640
Speaker 8: and they do want to feel like their employers appreciate

556
00:27:59,720 --> 00:28:04,000
Speaker 8: them and respect them. And so we've we definitely have

557
00:28:04,119 --> 00:28:07,080
Speaker 8: seen a switch that employers are very focused on that

558
00:28:07,160 --> 00:28:09,040
Speaker 8: retention strategy right now.

559
00:28:09,520 --> 00:28:13,119
Speaker 4: That feels like a young kid thing, but whatever, Johnny,

560
00:28:13,200 --> 00:28:17,120
Speaker 4: When you take a look across sectors, what sectors are

561
00:28:17,160 --> 00:28:19,640
Speaker 4: are sort of stronger and what are weaker and sort

562
00:28:19,680 --> 00:28:21,879
Speaker 4: of how do you foresee that playing out over the

563
00:28:21,880 --> 00:28:24,080
Speaker 4: next six months as we get past the FED cut,

564
00:28:24,119 --> 00:28:25,640
Speaker 4: as we get past an election.

565
00:28:26,440 --> 00:28:30,600
Speaker 8: Yes, so certainly we've seen you know, healthcare continues to

566
00:28:30,640 --> 00:28:34,879
Speaker 8: be the strongest sector that is adding jobs, and I

567
00:28:34,920 --> 00:28:38,600
Speaker 8: think we will continue to see that certainly. You know,

568
00:28:39,000 --> 00:28:42,240
Speaker 8: as we look into twenty twenty five and twenty twenty six,

569
00:28:42,720 --> 00:28:46,720
Speaker 8: that sector will remain strong. There's a high demand, there's

570
00:28:46,840 --> 00:28:52,440
Speaker 8: lots of you know, opportunity in many different roles in

571
00:28:52,480 --> 00:28:57,080
Speaker 8: the healthcare sector, so that will be continue to be strong. Construction,

572
00:28:57,200 --> 00:28:59,320
Speaker 8: it was good to see that we added you know,

573
00:28:59,680 --> 00:29:03,920
Speaker 8: over thirty thousand jobs in the construction Construction is a

574
00:29:03,920 --> 00:29:07,000
Speaker 8: good sign that maybe we're starting to see some things

575
00:29:08,040 --> 00:29:11,360
Speaker 8: pick up a bit. But again on the other side,

576
00:29:11,360 --> 00:29:15,200
Speaker 8: we're losing jobs in manufacturing. The professional and business service

577
00:29:15,280 --> 00:29:19,560
Speaker 8: sector only had eight thousand jobs created. Again I mentioned

578
00:29:19,560 --> 00:29:24,520
Speaker 8: temporary help actually lost jobs for the month, Retail lost jobs,

579
00:29:25,040 --> 00:29:28,400
Speaker 8: you know, so overall this this really was a week report.

580
00:29:28,480 --> 00:29:32,120
Speaker 8: We're only seeing that job growth in healthcare and in government,

581
00:29:33,240 --> 00:29:35,280
Speaker 8: and then it's you know a little bit kind of

582
00:29:35,320 --> 00:29:39,479
Speaker 8: trickled out through the other sectors. But healthcare will remain strong.

583
00:29:39,720 --> 00:29:42,440
Speaker 8: I'm really looking for manufacturing to come back, but we

584
00:29:42,520 --> 00:29:44,440
Speaker 8: probably won't see that until next year.

585
00:29:45,160 --> 00:29:48,640
Speaker 6: And another data point for the labor market. Earlier this

586
00:29:48,680 --> 00:29:52,440
Speaker 6: week was the Jolts report continuing to come down. How

587
00:29:52,440 --> 00:29:54,640
Speaker 6: do you use the data that that JILT state is that.

588
00:29:54,600 --> 00:29:55,160
Speaker 7: Important to you?

589
00:29:56,560 --> 00:30:00,920
Speaker 8: It is important, you know, to watch the trends. We

590
00:30:01,000 --> 00:30:04,560
Speaker 8: really want to see that number start to reverse and climb.

591
00:30:05,400 --> 00:30:08,800
Speaker 8: Unfortunately it's it's lagging. It's a lagging report. But when

592
00:30:08,840 --> 00:30:13,240
Speaker 8: you look at seven point seven million open jobs, to me,

593
00:30:13,360 --> 00:30:18,040
Speaker 8: that's concerning because month after month we're seeing that number soften.

594
00:30:18,640 --> 00:30:21,680
Speaker 8: What we need to see is that number start to increase,

595
00:30:21,880 --> 00:30:24,720
Speaker 8: and that is going to be the first sign that

596
00:30:24,840 --> 00:30:27,920
Speaker 8: employers are going to be hiring and adding to their

597
00:30:27,960 --> 00:30:31,800
Speaker 8: payrolls because the first thing they do is advertise those jobs.

598
00:30:31,800 --> 00:30:34,960
Speaker 8: If they decide to hire, they're going to be posting

599
00:30:35,040 --> 00:30:39,440
Speaker 8: those positions online and that's what that report is truly measuring.

600
00:30:39,560 --> 00:30:42,640
Speaker 8: So we want to see that employers are having more

601
00:30:42,680 --> 00:30:45,960
Speaker 8: optimism about the job market, that they're going to invest

602
00:30:46,160 --> 00:30:51,200
Speaker 8: and expand their payrolls and add And I'll be looking

603
00:30:51,280 --> 00:30:54,600
Speaker 8: closely to see, you know what next month reports for

604
00:30:54,640 --> 00:30:56,959
Speaker 8: the Joltsy report. Hopefully it moves in the right direction,

605
00:30:57,440 --> 00:30:59,640
Speaker 8: but right now it does seem, you know, to be

606
00:30:59,680 --> 00:31:00,920
Speaker 8: kind of status.

607
00:31:00,560 --> 00:31:02,360
Speaker 4: Quo before all you go, what did you make of

608
00:31:02,360 --> 00:31:04,040
Speaker 4: the wage number and what are you hearing?

609
00:31:05,000 --> 00:31:07,640
Speaker 8: Yeah, So it's interesting on the wage number because the

610
00:31:07,680 --> 00:31:11,240
Speaker 8: wage number is still showing that wages, you know, are

611
00:31:11,280 --> 00:31:16,360
Speaker 8: strong and certainly competitive, but that really has to do

612
00:31:16,440 --> 00:31:20,040
Speaker 8: with the mix of jobs. When it comes to that

613
00:31:20,120 --> 00:31:22,840
Speaker 8: wage number, we are seeing a lot of the lower

614
00:31:23,000 --> 00:31:28,640
Speaker 8: leveled skilled jobs you know, have been either outsourced or

615
00:31:29,920 --> 00:31:32,880
Speaker 8: you know, whether they've gone overseas or maybe technology, automation,

616
00:31:33,120 --> 00:31:36,960
Speaker 8: artificial intelligence has eliminated some of those jobs. So it

617
00:31:37,040 --> 00:31:39,480
Speaker 8: has a lot to do with the mix of jobs.

618
00:31:39,760 --> 00:31:44,120
Speaker 8: I can tell you employers are not raising wages right now.

619
00:31:44,240 --> 00:31:49,000
Speaker 8: They are kind of steady. They're not decreasing wages, but

620
00:31:49,360 --> 00:31:52,280
Speaker 8: they are not in a situation where it's that competitive

621
00:31:52,560 --> 00:31:55,240
Speaker 8: of a job market that they need to increase wages

622
00:31:55,280 --> 00:31:58,280
Speaker 8: at this point. So it's a little misleading of an

623
00:31:58,280 --> 00:32:01,240
Speaker 8: indicator when you look at it in the bl US report.

624
00:32:02,320 --> 00:32:04,000
Speaker 6: All right, Jenny, thank you so much for joining us.

625
00:32:04,040 --> 00:32:07,400
Speaker 6: Jenny Biley, she's a chief workforce analyst at employee Bridge,

626
00:32:07,480 --> 00:32:10,800
Speaker 6: joining us from Omaha, Nebraska via zoom here. So I

627
00:32:10,880 --> 00:32:13,920
Speaker 6: think in his jobs report there's something.

628
00:32:12,960 --> 00:32:13,920
Speaker 4: Else for everyone.

629
00:32:14,160 --> 00:32:15,600
Speaker 3: I was gonna say it's like a rorshack test.

630
00:32:15,720 --> 00:32:16,880
Speaker 7: Yes, exactly, you can.

631
00:32:16,800 --> 00:32:17,960
Speaker 3: Make a bit of what you see.

632
00:32:18,280 --> 00:32:20,479
Speaker 6: We'll get one more I guess data point next week's CPI.

633
00:32:20,960 --> 00:32:23,160
Speaker 6: So for the FED, I mean Ira Jersey from Bloomberg

634
00:32:23,200 --> 00:32:25,040
Speaker 6: Intelligence just put out a note here and saying, you

635
00:32:25,080 --> 00:32:27,440
Speaker 6: know that'll have some meaning as well for the FED

636
00:32:27,440 --> 00:32:29,720
Speaker 6: in terms of inputs about whether they go twenty five

637
00:32:29,720 --> 00:32:30,600
Speaker 6: basis points or more.

638
00:32:30,680 --> 00:32:30,760
Speaker 10: So.

639
00:32:30,840 --> 00:32:32,280
Speaker 4: I think it's interesting is that if we get to

640
00:32:32,320 --> 00:32:35,640
Speaker 4: read from from where do we have the FED speak

641
00:32:35,640 --> 00:32:38,760
Speaker 4: coming with Waller who couldn't get that name, Maybe get

642
00:32:38,800 --> 00:32:40,600
Speaker 4: a little bit more of a temperance there, and maybe

643
00:32:40,600 --> 00:32:42,680
Speaker 4: the markets are as pricing in twenty five. I am wondering,

644
00:32:42,720 --> 00:32:44,400
Speaker 4: with a front end of the curve winds up, doing

645
00:32:44,400 --> 00:32:45,920
Speaker 4: do we need to kind of sell off a little

646
00:32:45,960 --> 00:32:48,600
Speaker 4: bit because we've had such a massive run into the

647
00:32:48,600 --> 00:32:52,240
Speaker 4: bond market, particularly in that front end, really flattening or

648
00:32:52,440 --> 00:32:54,640
Speaker 4: disinverting that curve of the two tenths. I'm kind of

649
00:32:54,640 --> 00:32:55,360
Speaker 4: paying attention to that.

650
00:32:56,920 --> 00:33:00,800
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

651
00:33:00,880 --> 00:33:03,960
Speaker 2: weekdays at ten am Eastern on applecard Play and and

652
00:33:04,160 --> 00:33:06,840
Speaker 2: royd Otto with the Bloomberg Business app. You can also

653
00:33:06,920 --> 00:33:10,440
Speaker 2: listen live on Amazon Alexa from our flagship New York station,

654
00:33:10,800 --> 00:33:13,560
Speaker 2: Just say Alexa playing Bloomberg eleven thirty.

655
00:33:15,240 --> 00:33:18,200
Speaker 6: Let's go back to this jobs reporting, Abigail suggested, that's

656
00:33:18,240 --> 00:33:20,560
Speaker 6: a big part of what's driving to sell off in

657
00:33:20,600 --> 00:33:23,720
Speaker 6: today's market. We welcome Christopher Smart. He's a managing partner

658
00:33:23,760 --> 00:33:27,160
Speaker 6: in our growth group. He's a former Special Assistant to

659
00:33:27,240 --> 00:33:29,320
Speaker 6: the President for international Economics.

660
00:33:29,400 --> 00:33:32,560
Speaker 7: He joins us from Boston, Massachusetts. And if you're listening

661
00:33:32,600 --> 00:33:33,160
Speaker 7: to us.

662
00:33:33,280 --> 00:33:35,720
Speaker 6: Up in Boston, our new home is now ninety two

663
00:33:35,880 --> 00:33:39,440
Speaker 6: nine FM in Boston. Christopher, how do you think the

664
00:33:39,480 --> 00:33:43,480
Speaker 6: folks down in DC that really think about this economy,

665
00:33:43,480 --> 00:33:45,920
Speaker 6: worry about this economy, try to manage this economy. How

666
00:33:45,920 --> 00:33:47,440
Speaker 6: do you think the folks down at DC are taking

667
00:33:47,480 --> 00:33:49,280
Speaker 6: this labor data we saw today.

668
00:33:50,320 --> 00:33:52,040
Speaker 12: Well, first of all, welcome to ninety two point nine

669
00:33:52,080 --> 00:33:53,680
Speaker 12: in Boston. We're all very excited to have you.

670
00:33:54,160 --> 00:33:55,920
Speaker 7: Thank you for the plan on a new channel.

671
00:33:57,040 --> 00:33:59,200
Speaker 12: In terms of what they're doing down in Washington, I'm

672
00:33:59,200 --> 00:34:01,800
Speaker 12: afraid they're probably spend a lot more time thinking about

673
00:34:02,560 --> 00:34:07,080
Speaker 12: the election implications of all of this. I'll just pause

674
00:34:07,160 --> 00:34:09,520
Speaker 12: and not answer your question right away. I think it

675
00:34:09,560 --> 00:34:12,160
Speaker 12: is quite remarkable that we are talking about a FED

676
00:34:12,640 --> 00:34:15,719
Speaker 12: cut of twenty five or fifty basis points two months

677
00:34:15,760 --> 00:34:19,160
Speaker 12: out of election, and most of the market and most

678
00:34:19,200 --> 00:34:22,200
Speaker 12: of the nonpartisan analysis would be that this is totally

679
00:34:22,239 --> 00:34:25,160
Speaker 12: unrelated to any political calculation on the part of the

680
00:34:25,160 --> 00:34:27,759
Speaker 12: FED or the Biden administration. So I think that's kind

681
00:34:27,800 --> 00:34:31,640
Speaker 12: of a nice plug for FED independence. In terms of

682
00:34:31,680 --> 00:34:33,799
Speaker 12: the jobs report, there was something for everybody, I think

683
00:34:33,800 --> 00:34:36,600
Speaker 12: in this report. For the hawks, there was, you know,

684
00:34:36,640 --> 00:34:40,360
Speaker 12: the unemployment rate notched down a little bit, hourly earnings

685
00:34:40,400 --> 00:34:42,920
Speaker 12: were up a little bit, and so that would give

686
00:34:42,960 --> 00:34:46,520
Speaker 12: them fuel to argue for twenty five basis points. For

687
00:34:46,680 --> 00:34:49,759
Speaker 12: the doves, you know, we still have a miss in

688
00:34:49,840 --> 00:34:54,640
Speaker 12: terms of the headline jobs growth number, and we have

689
00:34:54,880 --> 00:34:57,880
Speaker 12: downward revisions in the past couple of months. So I think,

690
00:34:58,239 --> 00:35:00,759
Speaker 12: you know, as I say, there's plenty to fuel both

691
00:35:00,760 --> 00:35:03,120
Speaker 12: sides of the debate. My bias would still be that

692
00:35:03,120 --> 00:35:07,160
Speaker 12: we're going to see fifty basis points because of the

693
00:35:07,200 --> 00:35:11,000
Speaker 12: other data that we've seen accumulating, and because you know,

694
00:35:11,160 --> 00:35:13,399
Speaker 12: as long as they are able to signal maybe as

695
00:35:13,440 --> 00:35:18,239
Speaker 12: a hawkish cut that this is not you know, we're

696
00:35:18,280 --> 00:35:20,720
Speaker 12: not going to get three to fifty basis point cuts

697
00:35:20,760 --> 00:35:23,160
Speaker 12: for the next three meetings. We're going to do fifty

698
00:35:23,200 --> 00:35:24,600
Speaker 12: now and then wait and see till the end of

699
00:35:24,640 --> 00:35:24,960
Speaker 12: the year.

700
00:35:25,239 --> 00:35:27,759
Speaker 4: You're right, So it's not like they're overdoing it. They're like, okay,

701
00:35:27,800 --> 00:35:31,200
Speaker 4: we'll go now, but then let's just see what in

702
00:35:31,239 --> 00:35:33,439
Speaker 4: the economic data tells you that we need fifty, Because

703
00:35:33,480 --> 00:35:34,880
Speaker 4: the other part of the argument is like, look, if

704
00:35:34,920 --> 00:35:37,360
Speaker 4: you go fifty, you're saying things are a lot worse

705
00:35:37,440 --> 00:35:38,319
Speaker 4: than you might have thought.

706
00:35:39,520 --> 00:35:42,239
Speaker 12: Well to me, you know, maybe to argue with your

707
00:35:42,280 --> 00:35:46,200
Speaker 12: previous guests that you know, inflation is really not the

708
00:35:46,239 --> 00:35:48,279
Speaker 12: problem anymore. It is a problem politically, it is a

709
00:35:48,320 --> 00:35:52,120
Speaker 12: problem for consumers, it's a problem for low, lower income households.

710
00:35:52,400 --> 00:35:56,120
Speaker 12: But the numbers are coming down the If you're in

711
00:35:56,120 --> 00:36:01,240
Speaker 12: the monetary policy business, you see that you're from fighting

712
00:36:01,280 --> 00:36:05,200
Speaker 12: inflation now to boosting growth. And I think they have

713
00:36:05,520 --> 00:36:08,840
Speaker 12: plenty of room to move from current levels down to

714
00:36:08,880 --> 00:36:11,600
Speaker 12: something a little bit a little bit easier. If not,

715
00:36:11,800 --> 00:36:14,040
Speaker 12: you know, it's certainly going to be still in the

716
00:36:14,160 --> 00:36:17,080
Speaker 12: in the tight range. The economy is slowing in the US,

717
00:36:17,520 --> 00:36:20,719
Speaker 12: there's much more slowing going on in Europe. China is

718
00:36:20,760 --> 00:36:25,640
Speaker 12: obviously stuck right now, So I don't see the risks

719
00:36:26,080 --> 00:36:28,880
Speaker 12: to inflation right now. And I really think as you

720
00:36:28,960 --> 00:36:31,479
Speaker 12: see you know that is those are big headlines coming

721
00:36:31,520 --> 00:36:35,240
Speaker 12: out of Governor Wallace's speech. If that's the broader message

722
00:36:35,239 --> 00:36:38,600
Speaker 12: he intends to deliver, you know, I think that's going

723
00:36:38,680 --> 00:36:42,320
Speaker 12: to increasingly turn markets towards expecting fifty next time.

724
00:36:43,200 --> 00:36:45,080
Speaker 7: Chris, you mentioned kind of the timing here.

725
00:36:45,120 --> 00:36:47,319
Speaker 6: We're in an election year and it looks like this

726
00:36:47,320 --> 00:36:49,439
Speaker 6: Federal Reserve is going to be pretty active in terms

727
00:36:49,480 --> 00:36:53,720
Speaker 6: of making some policy changes right around this election.

728
00:36:54,760 --> 00:36:56,520
Speaker 7: How uncomfortable do you think that makes the Fed?

729
00:36:57,600 --> 00:37:00,480
Speaker 12: I think it makes them very uncomfortable. I mean, Jay

730
00:37:00,480 --> 00:37:02,560
Speaker 12: Powell has been asked about this through a couple of

731
00:37:02,560 --> 00:37:05,600
Speaker 12: different meetings. He's been very forceful and I think very credible.

732
00:37:05,600 --> 00:37:08,359
Speaker 12: It's saying, look, you can read our minutes. We don't

733
00:37:08,360 --> 00:37:11,160
Speaker 12: talk about this, we don't talk about the election, we

734
00:37:11,239 --> 00:37:13,040
Speaker 12: don't talk about any of that. We look at the data.

735
00:37:13,080 --> 00:37:15,680
Speaker 12: It's hard enough getting the data right, and it's hard

736
00:37:15,760 --> 00:37:20,840
Speaker 12: enough setting monetary policy for this dual mandate, let alone

737
00:37:20,880 --> 00:37:26,719
Speaker 12: taking other election implications into view. So I think it

738
00:37:26,880 --> 00:37:30,600
Speaker 12: is notable that they are they feel free to do

739
00:37:30,680 --> 00:37:33,200
Speaker 12: it now. I think they don't love the fact that

740
00:37:33,200 --> 00:37:35,479
Speaker 12: they have to do it now, but they, I think,

741
00:37:35,640 --> 00:37:37,600
Speaker 12: feel that this is the right time. The data is

742
00:37:37,640 --> 00:37:40,880
Speaker 12: pointing in that direction, markets are expecting it, and that

743
00:37:40,920 --> 00:37:42,919
Speaker 12: they can move ahead. I don't think they'll get any

744
00:37:42,960 --> 00:37:46,680
Speaker 12: more cuts in October or anything like that, but they'll

745
00:37:46,680 --> 00:37:48,640
Speaker 12: pick up after the election and see where the data

746
00:37:49,200 --> 00:37:49,759
Speaker 12: guides them.

747
00:37:50,280 --> 00:37:52,880
Speaker 4: You're also a former Special Assistant to the President for

748
00:37:52,920 --> 00:37:57,520
Speaker 4: International Economics. Back in your previous life from twenty thirteen

749
00:37:57,560 --> 00:38:00,680
Speaker 4: to twenty fifteen, we've been getting alive and from about

750
00:38:00,719 --> 00:38:04,160
Speaker 4: economic plans, particularly when it comes around corporate taxes, and

751
00:38:04,200 --> 00:38:06,239
Speaker 4: I'm wondering if you've been able to think about our

752
00:38:06,280 --> 00:38:10,280
Speaker 4: model out the different outcomes on corporate tax policy.

753
00:38:10,400 --> 00:38:12,279
Speaker 3: Like, clearly, yes, lower.

754
00:38:12,000 --> 00:38:14,000
Speaker 4: Corporate taxes will be good for the SMP, but in

755
00:38:14,120 --> 00:38:19,080
Speaker 4: terms of say reinvestment and economic growth, well, the devil.

756
00:38:18,840 --> 00:38:21,960
Speaker 12: Is always in the details. President Trump's proposal is eye

757
00:38:21,960 --> 00:38:24,919
Speaker 12: catching in terms of a dramatic cut in the headline rate,

758
00:38:25,440 --> 00:38:29,440
Speaker 12: but that seems to be linked with manufacturing things in

759
00:38:29,480 --> 00:38:31,480
Speaker 12: the United States, and I think he talks about, you know,

760
00:38:31,520 --> 00:38:34,400
Speaker 12: one hundred percent manufacturing in the United States very little

761
00:38:34,440 --> 00:38:36,560
Speaker 12: as you know, is one hundred percent manufactured in the

762
00:38:36,680 --> 00:38:42,399
Speaker 12: United States, given the inputs to manufactured goods that come

763
00:38:42,480 --> 00:38:45,480
Speaker 12: from many, many other countries. Sometimes, you know, I think

764
00:38:45,520 --> 00:38:47,520
Speaker 12: they say that if you buy a car in the US,

765
00:38:47,760 --> 00:38:50,239
Speaker 12: there are parts that have crossed the Mexican border five

766
00:38:50,320 --> 00:38:54,319
Speaker 12: or six times before it reaches the dealer's lot. I

767
00:38:54,400 --> 00:38:57,440
Speaker 12: would guess what markets are expecting is that, you know,

768
00:38:57,520 --> 00:39:00,160
Speaker 12: corporate rates are probably not likely to move much much

769
00:39:00,239 --> 00:39:04,240
Speaker 12: more from where they are right now. Vice President Harris

770
00:39:04,320 --> 00:39:08,200
Speaker 12: is in line with the Biden proposal to raise them

771
00:39:08,239 --> 00:39:11,960
Speaker 12: to twenty eight percent. President Trump is talking about fifteen percent.

772
00:39:12,239 --> 00:39:14,520
Speaker 12: You know, we have this thing called Congress, which is

773
00:39:14,560 --> 00:39:17,719
Speaker 12: a big toss up and more likely than not, you know,

774
00:39:17,760 --> 00:39:19,640
Speaker 12: it may move one or two bases, one or two

775
00:39:19,680 --> 00:39:21,960
Speaker 12: percentage points up or down, but it's not going to

776
00:39:22,000 --> 00:39:23,920
Speaker 12: be a significant shift.

777
00:39:23,680 --> 00:39:27,520
Speaker 6: I don't think so, Chris, to what extent are you

778
00:39:27,520 --> 00:39:29,400
Speaker 6: your team folks.

779
00:39:29,120 --> 00:39:30,040
Speaker 7: In Washington, DC?

780
00:39:31,160 --> 00:39:34,240
Speaker 6: Are they talking about, you know, annual deficits, I mean

781
00:39:34,800 --> 00:39:38,759
Speaker 6: annual deficits the national debt. Is this something that any

782
00:39:38,800 --> 00:39:40,239
Speaker 6: gets any serious conversation?

783
00:39:41,120 --> 00:39:42,880
Speaker 12: Yeah, I mean, I'm sorry, debt deficit.

784
00:39:43,080 --> 00:39:44,040
Speaker 4: Yeah, yeah, totally.

785
00:39:45,920 --> 00:39:47,759
Speaker 12: I think people like us do talk about it. People

786
00:39:47,800 --> 00:39:50,120
Speaker 12: in the markets do worry about it. But if you

787
00:39:50,200 --> 00:39:52,960
Speaker 12: are a politician and you're looking at the next election,

788
00:39:54,120 --> 00:39:56,719
Speaker 12: why should I worry about this thing that's going out

789
00:39:56,760 --> 00:39:59,759
Speaker 12: ten twenty thirty years when I've got to win in

790
00:39:59,840 --> 00:40:02,839
Speaker 12: no member yep so and and and you know you're

791
00:40:02,880 --> 00:40:04,799
Speaker 12: telling me that credit markets are going to punish me

792
00:40:04,880 --> 00:40:08,319
Speaker 12: for bad behavior, Well when I haven't seen it yet.

793
00:40:08,960 --> 00:40:11,600
Speaker 2: And you know why, why.

794
00:40:11,560 --> 00:40:15,600
Speaker 12: Take on that, that that thorny issue now when I

795
00:40:15,640 --> 00:40:16,080
Speaker 12: don't have to.

796
00:40:16,400 --> 00:40:17,560
Speaker 3: Well, this is what gets confusing.

797
00:40:17,600 --> 00:40:20,120
Speaker 4: I think about the trade deficit too, like to that point, like,

798
00:40:20,160 --> 00:40:23,600
Speaker 4: don't we need the trade deficit because we need foreign

799
00:40:23,600 --> 00:40:25,960
Speaker 4: investors and countries to buy our debts. So if we

800
00:40:26,040 --> 00:40:28,480
Speaker 4: close the trade deficit, there's less money for them to

801
00:40:28,600 --> 00:40:30,200
Speaker 4: do that. And that's where I think I get a

802
00:40:30,200 --> 00:40:31,480
Speaker 4: little confused on all of it.

803
00:40:32,320 --> 00:40:33,720
Speaker 7: Well, you're not at all confused.

804
00:40:33,760 --> 00:40:36,080
Speaker 12: I mean, you're absolutely right that we you know, we

805
00:40:36,800 --> 00:40:40,359
Speaker 12: those things are intimately related, and nobody likes to talk

806
00:40:40,360 --> 00:40:45,160
Speaker 12: about that, you know. I think the focus on the

807
00:40:45,160 --> 00:40:48,640
Speaker 12: trade deficit raises a lot more issues around our savings rate,

808
00:40:48,920 --> 00:40:52,000
Speaker 12: our investment incentives and that sort of thing. Rather, you know,

809
00:40:52,680 --> 00:40:56,279
Speaker 12: the proposals that we tend to go to easily as

810
00:40:56,400 --> 00:41:02,120
Speaker 12: policymakers and politicians, which are tariffs generally don't tend to

811
00:41:02,200 --> 00:41:06,040
Speaker 12: do much to redress those differences in trade deficits that

812
00:41:06,080 --> 00:41:09,200
Speaker 12: people want to because we are so interlinked in so

813
00:41:09,280 --> 00:41:12,120
Speaker 12: many ways with our foreign markets and with other foreign markets.

814
00:41:12,120 --> 00:41:14,799
Speaker 12: A bilateral trade deficit gets a lot of attention between

815
00:41:14,800 --> 00:41:17,319
Speaker 12: the US and China, but really the over it's really

816
00:41:17,400 --> 00:41:20,359
Speaker 12: the overall balance of trade that we have with all

817
00:41:20,400 --> 00:41:21,920
Speaker 12: of our trading partners that will matter.

818
00:41:22,560 --> 00:41:24,520
Speaker 7: All right, Christopher, thank you so much. We appreciate that.

819
00:41:24,600 --> 00:41:25,680
Speaker 7: Doctor Christopher Smart.

820
00:41:25,719 --> 00:41:28,279
Speaker 6: He's a managing partner at our Growth Group and a

821
00:41:28,360 --> 00:41:31,320
Speaker 6: former Special Assistant to the President for International Economics.

822
00:41:31,320 --> 00:41:34,000
Speaker 7: I googled what our growth is. Apparently it's a berg

823
00:41:34,400 --> 00:41:35,120
Speaker 7: in Scotland.

824
00:41:35,719 --> 00:41:36,560
Speaker 4: Okay, there you go.

825
00:41:37,160 --> 00:41:41,680
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826
00:41:41,880 --> 00:41:45,080
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827
00:41:45,120 --> 00:41:48,480
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828
00:41:48,600 --> 00:41:52,000
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829
00:41:52,080 --> 00:41:55,239
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830
00:41:55,320 --> 00:41:57,160
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