WEBVTT - Bloomberg Surveillance TV: February 12th, 2026

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 2>live on Bloomberg Television weekday mornings from six to nine

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<v Speaker 2>am Eastern. Subscribe to the podcast on Apple, Spotify or

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business app. So here's the laces

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<v Speaker 2>this morning. The President threatening House Republicans taking a stand

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<v Speaker 2>against his tariff agenda. The President posting on truth Social

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<v Speaker 2>there will be consequences after six GOP lawmakers cross party

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<v Speaker 2>lines to reboot the President's levies on Canada. The Republican

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<v Speaker 2>Congressman French Hill voting against the measure to override President

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<v Speaker 2>Trump's tariffs, and he joined us now for more. Congressman Hill,

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<v Speaker 2>welcome to the program, sir. Your reaction to what happened

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<v Speaker 2>on the Hill yesterday and why votes to the way

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<v Speaker 2>you did.

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<v Speaker 3>Well. Good morning, Jonathan. Look, I think we should handle

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<v Speaker 3>the tariff discussion in a more comprehensive way and not

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<v Speaker 3>take votes every week on the floor that turns the

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<v Speaker 3>House floor over to the Democratic Party. That's why I

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<v Speaker 3>believe that standing with the Speaker Mike Johnson on this

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<v Speaker 3>maintains Republican control of the floor. So this is a

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<v Speaker 3>very important strategic issue in a parliamentary body like Congress

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<v Speaker 3>with a very narrow majority. What we should be doing

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<v Speaker 3>about trade is urging the President to renew USMCA with

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<v Speaker 3>Canada and Mexico, which is under review for its five

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<v Speaker 3>year review this summer. It's a very important trade arrangement

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<v Speaker 3>for the three countries. Progress is being made in working

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<v Speaker 3>with the Canadians and the Mexicans, So that's number one.

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<v Speaker 3>It's not to be connected, in my judgment to the

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<v Speaker 3>vote last night, which is did the President have the

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<v Speaker 3>right to put tariffs on Canada under IEPA because of

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<v Speaker 3>the fentanyl matter? You get my point. Let's stick with

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<v Speaker 3>the big picture here, which is growing America's exports and

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<v Speaker 3>growing America's influence using tariffs as a tool to change

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<v Speaker 3>trade behavior of other nations. Number one on that list,

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<v Speaker 3>of course, is China.

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<v Speaker 2>Congressman, you mentioned USMCA. I've seen down in Washington. I'm

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<v Speaker 2>sure you're familiar with the work at josh Wen Grows

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<v Speaker 2>wrote just yesterday that the President is privately musing about

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<v Speaker 2>exiting the North American Trade pack That accordings people familiar

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<v Speaker 2>with the matter. When you read a story like that,

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<v Speaker 2>do you just consider that part of the negotiation for

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<v Speaker 2>the upcoming negotiations or does that concern you?

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<v Speaker 3>Yeah, no, I do because of the way President Trump

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<v Speaker 3>is responsible for dramatically improving the North American Free Trade

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<v Speaker 3>Agreement from the nineteen ninety two to nineteen ninety three

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<v Speaker 3>timeframe in creating USMCA in his first term, and it

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<v Speaker 3>worked quite well. But there's more to be done on

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<v Speaker 3>Canadians on dairy or Canadians on softwood lumber, or how

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<v Speaker 3>the automotive business works back and forth between the two countries.

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<v Speaker 3>We're now the role of IA. We live in an

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<v Speaker 3>ever changing economy with ever changing priorities. But let's face

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<v Speaker 3>the reality that thirty percent of GDP in my home

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<v Speaker 3>state of Arkansas is connected to cross border trade with

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<v Speaker 3>Mexico and Canada. So the agreement is important. And it's

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<v Speaker 3>also important for you to note in that comment that

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<v Speaker 3>President Trumps does not impose additional tariffs on USMCA compliant goods,

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<v Speaker 3>so we are living by the agreement.

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<v Speaker 1>Congressman, there's a trade off here, and I think a

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<v Speaker 1>lot of people would be sympathetic with the idea of

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<v Speaker 1>trying to get certain trade partners to change behaviors and

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<v Speaker 1>thinking particularly of China. On the other hand, there's a

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<v Speaker 1>real affordability crisis, and this is a real issue for

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<v Speaker 1>a whole host of representatives who are coming up for

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<v Speaker 1>election later this later this year. I just wonder how

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<v Speaker 1>much influence you think that Republicans on the Hill have

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<v Speaker 1>over President Trump's negotiations around tariffs to potentially either abstain

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<v Speaker 1>from putting additional ones on or rolling some of the

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<v Speaker 1>existing ones back.

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<v Speaker 3>Well, what you've seen do is fine tune the efforts

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<v Speaker 3>with individual countries or regions like the EU, UK, Japan,

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<v Speaker 3>for example. I want to see the consolidate the wins

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<v Speaker 3>from those agreements that he has done over this first

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<v Speaker 3>year in the first place. Secondly, you've seen him roll

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<v Speaker 3>back some tariffs on commodities that we don't make here

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<v Speaker 3>in the United States, but we need to use. Whether

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<v Speaker 3>it's a fruit or vegetable or a coffee for example. Now,

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<v Speaker 3>I think that makes sense. You don't want to burden

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<v Speaker 3>the consumer as you're attempting to change trade policies in

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<v Speaker 3>other countries or compel them to follow Americans lead on

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<v Speaker 3>something like transnational drug cartel, countering those drug cartels. But

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<v Speaker 3>on the affordability side least. I think the most important

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<v Speaker 3>thing we can do is stay focused on the supply side.

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<v Speaker 3>The one big beautiful bill last year signed in a

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<v Speaker 3>law by President Trump will see real wage increases this

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<v Speaker 3>year for American families in Arkansas. Expect some ten thousand

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<v Speaker 3>dollars and benefit to a family of four from the

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<v Speaker 3>increased child tax credit, the lower taxes on tips, the

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<v Speaker 3>use of the standard deduction, lower taxes on seniors, Social Security,

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<v Speaker 3>so on. That's apply side, combined with what we're doing

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<v Speaker 3>on regulations and the proposal I made for housing in

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<v Speaker 3>the twenty first Century Housing Act. We got three hundred

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<v Speaker 3>and ninety votes on the House floor for that.

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<v Speaker 1>This week, I personally would like to boost consumption by

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<v Speaker 1>taking a flight to a number of places in the

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<v Speaker 1>next week. And I'm just wondering if TSA is going

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<v Speaker 1>to be an operation. Is the government going to shut

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<v Speaker 1>down tomorrow night?

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<v Speaker 3>Congressman, Oh, Lisa, I hope not. I just I just look,

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<v Speaker 3>it was so hard on my TSA agency in Little

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<v Speaker 3>Rock and up in the tower at Little Rock National Airport,

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<v Speaker 3>the air traffic controllers. That was a bad forty two days.

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<v Speaker 3>That's not how to run the government. President Trump has

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<v Speaker 3>used Tom Holman as a leader to consolidate both ICE

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<v Speaker 3>and CBB operations in Minneapolis. Brain transparency the operations, streamline it,

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<v Speaker 3>make sure the training is in place, make sure the

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<v Speaker 3>operation is consistent with federal law. They're using body cams.

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<v Speaker 3>Let's take that as the right direction and keep our

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<v Speaker 3>government funded in homeland security so important to so many people.

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<v Speaker 2>Congressman, it just fails Massy down in Washington. But you

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<v Speaker 2>pointed out the housing for the twenty first Century Act.

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<v Speaker 2>We can get things done. We can find support on

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<v Speaker 2>both sides. Congressman, what was actually a chief down in Washington?

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<v Speaker 2>And how important is that to you?

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<v Speaker 3>Well, it's very important, you know, Jonathan. On the properties,

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<v Speaker 3>I've had to have conservative, center right policy on redirecting

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<v Speaker 3>regulation and policy for people's investment opportunities, more crowdfunding, more

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<v Speaker 3>public offerings, community banking, making community banking great again by

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<v Speaker 3>lowering the regulatory burden on small banks that make sixty

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<v Speaker 3>percent of the home loans in this country, and now

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<v Speaker 3>twenty first century housing. We got three hundred votes for

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<v Speaker 3>those policies, as we did for our digital assets and

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<v Speaker 3>crypt to work last year. That shows that Republicans and

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<v Speaker 3>Democrats when it comes to economic policy, can get on

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<v Speaker 3>the same page and pass legislation that President Trump should

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<v Speaker 3>sign into law that will make people's lives better. Costs

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<v Speaker 3>will be brought down, supply chain, supply side capital, wild advance,

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<v Speaker 3>and community banking will thrive in this country. And those

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<v Speaker 3>are all good things.

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<v Speaker 2>Final question, Congressman, I've got about twenty seconds. Are you

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<v Speaker 2>happy you don't have to chair the House Judiciary Committee

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<v Speaker 2>because that was wild yesterday.

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<v Speaker 3>Well, I had a pretty wild hearing last week with

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<v Speaker 3>my ranking member and mister Bessett's testimony, so I know wild,

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<v Speaker 3>but it was. But that's what happens on kapin how

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<v Speaker 3>we bring the public and they're elected representatives together to

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<v Speaker 3>try to find solutions, and they can get spicy sometimes.

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<v Speaker 2>Stay with us. Mult Bloomberg Savannan's coming up after this,

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<v Speaker 2>Let's talk about European equities climates, fresh record highs the

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<v Speaker 2>stock six hundred, outperforming the S and P five hundred

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<v Speaker 2>so far. This shere. Sharon Bell of Goldman Sachs, writing,

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<v Speaker 2>the search for insulation from AI disruption risk has accelerated

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<v Speaker 2>the ongoing cyclical rally in the US. We continue to

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<v Speaker 2>see rising allocations through Europe as a diversifier with reasonable valuation.

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<v Speaker 2>Sharon joins US now for more. Sharon, welcome to the program.

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<v Speaker 2>Let's just build on what you've just written there the

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<v Speaker 2>idea that Europeans are starting to look at home again.

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<v Speaker 2>Are Americans looking abroad? Are they participating in this?

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<v Speaker 4>I think it's both. In fact, I would say it's

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<v Speaker 4>more American investors US dollar based investors that are worried

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<v Speaker 4>that the US market looks expensive. They're very concentrated in

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<v Speaker 4>their positions in the US dollar. You've got four or

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<v Speaker 4>five companies which are all big bets and one thing AI.

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<v Speaker 4>So that may pay off, but you don't know, and

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<v Speaker 4>it just leaves you with some risks. So people wanting

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<v Speaker 4>to do US for including US investors, but domestic investors too.

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<v Speaker 4>Both have been buying Europe this year, Sharon.

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<v Speaker 2>Apart from just being European, what is the diversification in Europe.

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<v Speaker 4>What does it OLFA, Yeah, offers very different sector exposure.

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<v Speaker 4>I would say there is a tech sector obviously in Europe.

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<v Speaker 4>It's much smaller than the sector in the US. You

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<v Speaker 4>don't have the large hyperscalers not spending as much in

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<v Speaker 4>the way that it is the hyperscalers are in the US,

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<v Speaker 4>So very different from a tech sector perspective. But also,

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<v Speaker 4>and I think this is more important, Europe offers things

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<v Speaker 4>like much more exposure to as a share of the

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<v Speaker 4>index to commutity related areas, materials, industrials, financials, which have

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<v Speaker 4>all in the last year performed very well.

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<v Speaker 1>Yeah, I'm thinking about Glencore for example, or Shell or

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<v Speaker 1>some of the big banks that have also done pretty

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<v Speaker 1>well in the region. I just am curious, though, if

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<v Speaker 1>someone is looking internationally and they're not from Europe, why

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<v Speaker 1>not go to Asia? What is the DRATA to Europe

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<v Speaker 1>that has better exposures? It's going to somehow outperform at

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<v Speaker 1>a time where there's a real kind of question around

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<v Speaker 1>how much they can break out from some of the

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<v Speaker 1>crosswinds coming from both the US and China.

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<v Speaker 4>Absolutely, and I agree with that. Philosophy has been you

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<v Speaker 4>want to broaden your exposure and diversify not just into

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<v Speaker 4>Europe but into Asia, into emerging markets. We've just upped

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<v Speaker 4>our emerging market targets for example, So and Nactually, Asian

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<v Speaker 4>emerging markets have seen better earnings performance this year and

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<v Speaker 4>have performed extremely well, better than Europe and the US

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<v Speaker 4>dot markets. So I think there's plenty of opportunity globally

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<v Speaker 4>to diversify, including Europe as part of that as well.

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<v Speaker 4>But I do agree there are headwinds for Europe. I mean,

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<v Speaker 4>economic growth is slower in Europe than elsewhere, although it's

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<v Speaker 4>still positive and it's been boosted obviously by the fiscal

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<v Speaker 4>spend in Germany. But yes, there are headwinds such as

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<v Speaker 4>China competition, although I do think European policymakers are starting

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<v Speaker 4>to acknowledge this.

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<v Speaker 2>Now.

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<v Speaker 1>You know, we're talking about the motivation and we talk

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<v Speaker 1>about the Cell America trade, which has become cliche. It

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<v Speaker 1>feels like a little bit different than that, and that's

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<v Speaker 1>the reason why we keep going back to this. George

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<v Speaker 1>Serahvellos of Deutsche Bank note or he's talking about the

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<v Speaker 1>loss of safe haven status for the dollar, not necessarily

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<v Speaker 1>in the sense that it's going to go to zero,

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<v Speaker 1>but you're not getting the same diversification feature in terms

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<v Speaker 1>of the dollar our performing when risk has to sell off.

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<v Speaker 1>How much do you see that as a driver, not

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<v Speaker 1>just people wanting to look home or some of the

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<v Speaker 1>emotions of the moment.

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<v Speaker 4>Yeah, I think it's definitely that. There's often when you

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<v Speaker 4>see a changing trend, there isn't one single driver of it.

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<v Speaker 4>There's several drivers. I think we talked about the diversification

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<v Speaker 4>sector exposure. I mentioned valuation differences, but I also think

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<v Speaker 4>concern about having all your exposure and dollars and wanting

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<v Speaker 4>to diversify that is also another element of this. And

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<v Speaker 4>the euro sterling Swiss Frank provides different currency exposure as well.

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<v Speaker 4>So I think there's many elements to this desire for

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<v Speaker 4>global investors to diversify and broaden out their exposures.

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<v Speaker 2>There's a lot of anticipation about how much money is

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<v Speaker 2>going to be spent on AI and the beneficiaries of

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<v Speaker 2>that shoan. As you know, it's a big thing for

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<v Speaker 2>the year ahead as well. With six hundred and fifty

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<v Speaker 2>billion dollars in campex coming from just four companies, which

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<v Speaker 2>is just absolutely absurd. People are thinking about the minus

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<v Speaker 2>Sharan in a much bigger way. And when I think

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<v Speaker 2>about minus, I think about the foot seat and some

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<v Speaker 2>of the listings for UK equities. Are you seeing that

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<v Speaker 2>generate some bigger returns for large camp UK?

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<v Speaker 4>Absolutely? FOE one hundred has done extremely well this year.

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<v Speaker 4>We you know, index targets have generally been raised. I

0:12:14.800 --> 0:12:17.600
<v Speaker 4>think in honesty, it's an index which will been ignored

0:12:17.640 --> 0:12:20.520
<v Speaker 4>for ten or fifteen years by global investors and domestic

0:12:20.600 --> 0:12:23.559
<v Speaker 4>UK investors. Doesn't really have very much tech exposure. It's

0:12:23.600 --> 0:12:25.839
<v Speaker 4>gone a very different type of exposure, but that's actually

0:12:25.880 --> 0:12:28.120
<v Speaker 4>doing quite well at the moment. It's also an index

0:12:28.280 --> 0:12:31.679
<v Speaker 4>which looks relatively inexpensive. So the UK markets still trades

0:12:31.720 --> 0:12:34.360
<v Speaker 4>at thirteen and a half times PE, which is not

0:12:34.440 --> 0:12:36.240
<v Speaker 4>quite half what the S and P trades on but

0:12:36.320 --> 0:12:37.000
<v Speaker 4>not far off.

0:12:37.480 --> 0:12:40.959
<v Speaker 2>Stay with us more Bloomberg Surveillance coming up after this.

0:12:50.400 --> 0:12:52.760
<v Speaker 2>The Fellow Reserve facing a busy week of data on

0:12:52.840 --> 0:12:55.440
<v Speaker 2>both sides of the Central banks mandate, the US economy

0:12:55.640 --> 0:12:58.360
<v Speaker 2>delivering a blowout payrolls report ahead of a fresh read

0:12:58.400 --> 0:13:02.080
<v Speaker 2>on inflation with cpides tomorrow. Steven a shootout of Miszoo,

0:13:02.240 --> 0:13:04.880
<v Speaker 2>writing the first half of the year is seeing benefiting

0:13:04.960 --> 0:13:08.080
<v Speaker 2>from strong individual tax refunds and the second half from

0:13:08.200 --> 0:13:11.560
<v Speaker 2>last year's seventy five basis point reduction in the funds. Right,

0:13:11.640 --> 0:13:13.360
<v Speaker 2>Steve Johns is snaw for more, Steve, and welcome to

0:13:13.400 --> 0:13:15.040
<v Speaker 2>the show. So always good to can't shut with you, sir.

0:13:15.280 --> 0:13:17.720
<v Speaker 2>How much weight should we put on that payrolls report?

0:13:18.040 --> 0:13:18.800
<v Speaker 2>Is it the real deal?

0:13:19.400 --> 0:13:19.520
<v Speaker 4>Well?

0:13:19.559 --> 0:13:21.520
<v Speaker 5>I think when you when back it up against the

0:13:21.600 --> 0:13:24.080
<v Speaker 5>claims data that we've been seeing on a regular basis,

0:13:24.120 --> 0:13:27.240
<v Speaker 5>I ignore last week's numbers. When you look at where

0:13:27.320 --> 0:13:29.280
<v Speaker 5>claims are, you look at where continuing claims are, and

0:13:29.320 --> 0:13:31.960
<v Speaker 5>you look at the decline in the exhaustion erate ie

0:13:32.080 --> 0:13:35.559
<v Speaker 5>people falling off the continuing claims role, you're seeing a

0:13:35.640 --> 0:13:38.640
<v Speaker 5>healthier labor market environment and you're seeing it actually picking

0:13:38.679 --> 0:13:41.160
<v Speaker 5>up speed. You see a healthy labor market environment in

0:13:41.280 --> 0:13:44.480
<v Speaker 5>the nfi B numbers. You saw some healthy data in

0:13:44.559 --> 0:13:47.679
<v Speaker 5>the ISM numbers. I think, you know you have to

0:13:47.760 --> 0:13:49.559
<v Speaker 5>look at all this data and say, well, why is

0:13:49.640 --> 0:13:51.160
<v Speaker 5>it taking place the way it is? And I think

0:13:51.200 --> 0:13:54.319
<v Speaker 5>the answer is because the economy is fundamentally healthy, and

0:13:54.400 --> 0:13:56.360
<v Speaker 5>I think it is going to accelerate as we go

0:13:56.440 --> 0:13:58.760
<v Speaker 5>forward into twenty twenty six. And I don't worry about

0:13:58.760 --> 0:14:00.640
<v Speaker 5>the second half of the year, as I wrote in

0:14:00.720 --> 0:14:03.240
<v Speaker 5>that little piece, because primarily we think the interest rate

0:14:03.360 --> 0:14:07.079
<v Speaker 5>story comes up to really replace the tax cuts as

0:14:07.160 --> 0:14:08.839
<v Speaker 5>the driver of the economy as we go into the

0:14:08.880 --> 0:14:11.560
<v Speaker 5>second half of the year. Remember in twenty twenty five,

0:14:11.720 --> 0:14:13.839
<v Speaker 5>we had a real acceleration and growth in the second

0:14:13.880 --> 0:14:15.920
<v Speaker 5>half of the year after a disappointing first half of

0:14:15.960 --> 0:14:18.079
<v Speaker 5>the year, and the FED was all worried about the

0:14:18.160 --> 0:14:21.280
<v Speaker 5>first half growth decline, and that's you know what they

0:14:21.400 --> 0:14:23.480
<v Speaker 5>used to justify the rate cuts. But at the end

0:14:23.480 --> 0:14:25.800
<v Speaker 5>of the day, the economy accelerated in the second half

0:14:27.000 --> 0:14:28.920
<v Speaker 5>as a result of the tax the rate cuts in

0:14:28.960 --> 0:14:30.920
<v Speaker 5>twenty twenty four, and I think that continues to dominate

0:14:30.960 --> 0:14:31.560
<v Speaker 5>again this year.

0:14:31.640 --> 0:14:33.040
<v Speaker 2>Well, Steve, I want to pick up on that point,

0:14:33.200 --> 0:14:35.760
<v Speaker 2>the twelve month, like, what is the twelfth month like about?

0:14:35.840 --> 0:14:38.680
<v Speaker 2>Because for someone just following financial markets, they might sit

0:14:38.760 --> 0:14:40.920
<v Speaker 2>here and say I might sit here and say, highly

0:14:41.000 --> 0:14:44.800
<v Speaker 2>financialized economy. It goes through financial markets almost immediately and

0:14:44.920 --> 0:14:47.520
<v Speaker 2>you can fairly effect straight away. What takes twelve months?

0:14:48.640 --> 0:14:52.160
<v Speaker 5>It takes twelve months for people to reassess their situation.

0:14:52.320 --> 0:14:55.400
<v Speaker 5>And we're really talking about a six month flagg, which

0:14:55.440 --> 0:14:58.320
<v Speaker 5>I think is the important piece of the equation because

0:14:58.680 --> 0:15:01.800
<v Speaker 5>you know there's usually this that monetary policy takes anywhere

0:15:01.800 --> 0:15:04.040
<v Speaker 5>from six months to eighteen months to be reflected in

0:15:04.120 --> 0:15:07.200
<v Speaker 5>the economy. The long invariable legs the aults you've had

0:15:07.280 --> 0:15:09.440
<v Speaker 5>Chairman like to talk about. But the reality of the

0:15:09.480 --> 0:15:12.800
<v Speaker 5>situation is those long invariable legs really depend on the

0:15:12.920 --> 0:15:15.040
<v Speaker 5>underlying health of balance sheets. And I know you were

0:15:15.080 --> 0:15:18.239
<v Speaker 5>talking before about the K shaped economy and the adjustments

0:15:18.280 --> 0:15:20.240
<v Speaker 5>taking place in the economy, But when you look at

0:15:20.280 --> 0:15:22.440
<v Speaker 5>where the economy is, you go back, you're looking at

0:15:22.480 --> 0:15:25.160
<v Speaker 5>five years ago, which was the COVID environment, and we're

0:15:25.240 --> 0:15:28.160
<v Speaker 5>renormalizing to a pre COVID environment. And that's what you're

0:15:28.160 --> 0:15:29.960
<v Speaker 5>seeing in a lot of the data when you look

0:15:29.960 --> 0:15:33.040
<v Speaker 5>at things like delinquency rates relative to balances, balances are

0:15:33.120 --> 0:15:35.520
<v Speaker 5>very low, so delinquency rates look high. But when you

0:15:35.600 --> 0:15:37.800
<v Speaker 5>scale them by income or you scale them by GDP,

0:15:38.200 --> 0:15:40.960
<v Speaker 5>suddenly delinquency rates don't look to be a problem. This

0:15:41.200 --> 0:15:43.720
<v Speaker 5>is all the type of normalizing as analysis that I

0:15:43.760 --> 0:15:46.200
<v Speaker 5>think we've been doing relative to other people that I

0:15:46.240 --> 0:15:48.520
<v Speaker 5>think is really really driving the point that this economy

0:15:48.600 --> 0:15:51.800
<v Speaker 5>is on a solid fundamental trajectory, and I disagree completely

0:15:51.920 --> 0:15:54.520
<v Speaker 5>about the argument that we're going to get inflation coming down.

0:15:54.800 --> 0:15:57.600
<v Speaker 5>We've been talking about inflation coming down from three percent

0:15:57.720 --> 0:16:00.240
<v Speaker 5>for several years now and it isn't happening. How long

0:16:00.280 --> 0:16:02.400
<v Speaker 5>are we going to continue to wait for goodob that's

0:16:02.440 --> 0:16:04.640
<v Speaker 5>the real problem, because the Federal Reserve has to wake

0:16:04.760 --> 0:16:07.200
<v Speaker 5>up and smell the roses, and inflation is stuck at

0:16:07.240 --> 0:16:07.720
<v Speaker 5>these levels.

0:16:07.800 --> 0:16:09.880
<v Speaker 1>We'll get to inflation in just a second. I'm just curious.

0:16:09.880 --> 0:16:12.280
<v Speaker 1>I'm dealing with whiplash right now. After David Tinsley was

0:16:12.360 --> 0:16:14.720
<v Speaker 1>just telling us that the middle class is falling into

0:16:15.080 --> 0:16:18.160
<v Speaker 1>the same type of affordability crisis as the lower income

0:16:18.240 --> 0:16:20.320
<v Speaker 1>individuals in this country. How do you square that story

0:16:20.680 --> 0:16:23.360
<v Speaker 1>with this idea that there is stimulus that is working

0:16:23.440 --> 0:16:24.360
<v Speaker 1>its way through the system.

0:16:25.200 --> 0:16:26.920
<v Speaker 5>Well, I think you come out with the fact that

0:16:27.000 --> 0:16:30.560
<v Speaker 5>the corporate stimulus came last year, the consumer kit stimulus

0:16:30.640 --> 0:16:32.880
<v Speaker 5>comes this year. A lot of people are just now

0:16:33.200 --> 0:16:36.720
<v Speaker 5>filing their tax returns, they're just now getting their refund distributions.

0:16:37.000 --> 0:16:40.880
<v Speaker 5>We're on the real exponential rise in refund check distribution,

0:16:41.320 --> 0:16:43.440
<v Speaker 5>so we expect to start seeing it showing up in

0:16:43.520 --> 0:16:46.560
<v Speaker 5>the data in the next couple of weeks. With regard

0:16:46.640 --> 0:16:49.600
<v Speaker 5>to the concept of the middle income households. You remember,

0:16:49.640 --> 0:16:51.920
<v Speaker 5>you just went through the longest government shutdown in history.

0:16:52.560 --> 0:16:56.200
<v Speaker 5>You went through a very very cold winter early winter environment.

0:16:56.840 --> 0:17:00.640
<v Speaker 5>You went through the reciprocal tariff adjustments last year. So

0:17:00.760 --> 0:17:04.000
<v Speaker 5>seeing some disruptions you get developed as a result of

0:17:04.080 --> 0:17:07.080
<v Speaker 5>that is not surprising. It's where do we go forward

0:17:07.160 --> 0:17:10.800
<v Speaker 5>that becomes the critical issue. The indicators that he's been

0:17:10.840 --> 0:17:13.560
<v Speaker 5>looking at basically indication that tells you where we were

0:17:14.040 --> 0:17:16.280
<v Speaker 5>and not looking at. Well, if the economy does get

0:17:16.359 --> 0:17:19.280
<v Speaker 5>the cyclical boost we're expecting, if labor markets do get

0:17:19.359 --> 0:17:22.480
<v Speaker 5>the cyclical improvement we're expecting, then guess what, you wind

0:17:22.600 --> 0:17:25.159
<v Speaker 5>up reversing all those trends after being worried about them

0:17:25.200 --> 0:17:25.720
<v Speaker 5>for so long.

0:17:26.080 --> 0:17:28.280
<v Speaker 2>So even going back, you thing to show that's.

0:17:28.119 --> 0:17:30.880
<v Speaker 1>Happening, going back to the inflation point that you're making,

0:17:31.040 --> 0:17:33.520
<v Speaker 1>the pushback that you're hearing across Wall Street, and Tiffany

0:17:33.560 --> 0:17:35.920
<v Speaker 1>Wilding of PIMCO put this out there that after a

0:17:36.000 --> 0:17:40.440
<v Speaker 1>period of stubbornly high rental housing inflation, you're actually seeing

0:17:40.560 --> 0:17:44.800
<v Speaker 1>the opposite, surprisingly low housing related inflation, and this is

0:17:44.880 --> 0:17:47.280
<v Speaker 1>being born out a whole host of different data. I'm

0:17:47.320 --> 0:17:50.200
<v Speaker 1>just wondering, where is the inflation going to come from.

0:17:51.040 --> 0:17:52.359
<v Speaker 5>Well, you're going to see it in the good side.

0:17:52.400 --> 0:17:55.399
<v Speaker 5>I mean, we honestly believe that the acceleration and growth

0:17:55.440 --> 0:17:58.280
<v Speaker 5>in the economy is going to lead to a greater

0:17:58.440 --> 0:18:01.440
<v Speaker 5>demand pull equation. Think we're going to see it in

0:18:01.560 --> 0:18:05.480
<v Speaker 5>a lot of those factors that really lead to higher prices.

0:18:05.520 --> 0:18:08.520
<v Speaker 5>A tighter labor market environment will lead to higher wages.

0:18:08.640 --> 0:18:12.280
<v Speaker 5>Higher wages will help contribute to stronger demand. Stronger demand

0:18:12.520 --> 0:18:14.800
<v Speaker 5>will contribute to higher prices in some of the areas

0:18:14.840 --> 0:18:17.400
<v Speaker 5>where good price have been declining. This is why CPI

0:18:17.560 --> 0:18:20.440
<v Speaker 5>is an index. It's not one component. And this is

0:18:20.480 --> 0:18:23.840
<v Speaker 5>the thing everyone keeps on forgetting about CPI. Remember two

0:18:23.960 --> 0:18:25.520
<v Speaker 5>years ago, it was all about, oh my god, you

0:18:25.600 --> 0:18:29.280
<v Speaker 5>got to ignore the rising insurance rates that were driving

0:18:29.440 --> 0:18:32.920
<v Speaker 5>CPI higher. The reality is you can't ignore it rising

0:18:33.000 --> 0:18:35.960
<v Speaker 5>insurance rates. You can't ignore all the other components. You

0:18:36.040 --> 0:18:38.480
<v Speaker 5>have to look at the aggregate of the index. That's

0:18:38.520 --> 0:18:41.760
<v Speaker 5>what really matters, is the aggregate, not all these individual components.

0:18:42.000 --> 0:18:43.800
<v Speaker 5>You look at the number of components that can always

0:18:43.840 --> 0:18:46.320
<v Speaker 5>find something to hang my hat on. To be boised

0:18:46.359 --> 0:18:48.679
<v Speaker 5>like people looked at the payroll employment number and they

0:18:48.760 --> 0:18:51.879
<v Speaker 5>started doing some really apples to oranges comparisons in the

0:18:51.960 --> 0:18:55.320
<v Speaker 5>birth death model. The reality is it's the best data

0:18:55.440 --> 0:18:58.639
<v Speaker 5>we have. Stop arguing with the data. The data is

0:18:58.760 --> 0:19:01.520
<v Speaker 5>the data, except the for what it is. Make your

0:19:01.560 --> 0:19:05.240
<v Speaker 5>analysis of the data. Stop looking for arguments within the

0:19:05.359 --> 0:19:06.880
<v Speaker 5>data to discredit the data.

0:19:07.240 --> 0:19:09.680
<v Speaker 2>Steve, don't stop. This was great. Steve's good to see you.

0:19:09.720 --> 0:19:12.600
<v Speaker 2>I've got twenty seconds. Quick question, Next move, hiker. A

0:19:12.680 --> 0:19:13.919
<v Speaker 2>cut at the feder Reserve.

0:19:14.880 --> 0:19:17.399
<v Speaker 5>Nothing. They do nothing for at least twelve months.

0:19:18.400 --> 0:19:21.920
<v Speaker 2>This is the Bloomberg Surveillance Podcast, bringing you the best

0:19:22.000 --> 0:19:25.280
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0:19:25.359 --> 0:19:28.240
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0:19:28.440 --> 0:19:32.160
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0:19:32.320 --> 0:19:34.560
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0:19:34.560 --> 0:19:36.960
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