WEBVTT - Shutdown, Fed, Amazon, and Real Estate 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.680 --> 0:00:22.840 And let's get figure out what's happening now in Washington, DC, 0:00:22.960 --> 0:00:25.240 because they have no idea what's going on down there. 0:00:25.239 --> 0:00:27.160 They're not even back like in session. I mean they're 0:00:27.160 --> 0:00:29.560 coming back tomorrow. I mean, the government's about the shutdown 0:00:29.600 --> 0:00:31.360 and they're still on some holiday. 0:00:31.400 --> 0:00:36.640 I think it's very popular in Washington, d C. To 0:00:36.920 --> 0:00:39.519 not do your job, right. I think that's what the 0:00:39.560 --> 0:00:40.760 constituency wants. 0:00:41.200 --> 0:00:43.720 You think, So it seems like it all right. Nathan Dean, 0:00:43.760 --> 0:00:45.920 I'm gonna blame him for all this. Nathan Dean is 0:00:45.920 --> 0:00:49.360 our senior US policy analyst for Bloomberg Intelligence. His job 0:00:49.400 --> 0:00:51.600 is to make sure this government works. He's not getting 0:00:51.640 --> 0:00:54.400 it done here. Nathan, talk to us about where we 0:00:54.560 --> 0:00:57.800 are with this possible shutdown. What's the feeling in Washington, 0:00:57.880 --> 0:00:58.680 DC these days? 0:00:59.480 --> 0:00:59.680 Yeah? 0:01:00.080 --> 0:01:01.600 You know, over the weekend, you know, Speaker of the 0:01:01.600 --> 0:01:05.280 House Kevin McCarthy talked about trying to pass for appropriation bills. 0:01:05.440 --> 0:01:08.920 You know, there's been talk about some Republicans bypassing the 0:01:08.959 --> 0:01:11.880 Speaker and working with Democrats to do something called a 0:01:11.959 --> 0:01:14.479 discharge petition. But if you're sitting in New York City, 0:01:14.520 --> 0:01:16.600 all you need to know is is that nothing really 0:01:16.640 --> 0:01:20.160 has changed. I mean, we're heading towards the shutdown Saturday night. 0:01:20.600 --> 0:01:22.679 You know, there's a lot of political fireworks that have 0:01:22.720 --> 0:01:25.360 to happen this week, but we just aren't seeing any 0:01:25.440 --> 0:01:29.040 movement at this point that the Speaker wants to actually 0:01:29.080 --> 0:01:31.720 do a deal with the Democrats and try and avoid 0:01:31.760 --> 0:01:35.759 this type of situation. So I think we're probably around 0:01:35.800 --> 0:01:37.360 seventy eighty percent chance and we're gonna. 0:01:37.160 --> 0:01:38.160 Have a shutdown next week. 0:01:38.200 --> 0:01:40.960 So Nathan is the choice for the speaker. I'm assuming, 0:01:41.000 --> 0:01:43.959 you know, Speaker McCarthy's is kind of driving the bus. 0:01:44.000 --> 0:01:46.920 Here is this choice, I do a deal with these 0:01:47.040 --> 0:01:51.320 radical Republicans, these small group Republicans, or I reach across 0:01:51.360 --> 0:01:54.760 the aisle to Democrats and deal with the political backlash. 0:01:54.880 --> 0:01:55.760 There is that his choice. 0:01:55.760 --> 0:01:57.200 At this point, there's no deal to be done with 0:01:57.200 --> 0:02:00.520 the radical Republicans. They want to shut down the government, right, 0:02:00.680 --> 0:02:02.160 Isn't that yes what they want? 0:02:02.240 --> 0:02:04.920 It's so much more of like, do I actually ask 0:02:05.000 --> 0:02:09.320 to the radical Republicans and then shut down the government 0:02:09.360 --> 0:02:11.880 and then get to a point where the Democrats just say, look, 0:02:11.880 --> 0:02:13.680 we're not going to deal. I mean, the odds of 0:02:13.760 --> 0:02:16.800 what the Republicans, some of those conservative Republicans are wanting, 0:02:17.200 --> 0:02:19.160 are less than a two percent chance of ever going 0:02:19.200 --> 0:02:19.840 to become law. 0:02:19.880 --> 0:02:21.240 And that's being grateful. 0:02:21.600 --> 0:02:24.960 So Speaker McCarthy's choice here is essentially saying, look, do 0:02:25.080 --> 0:02:27.920 I go through the motions of a government shutdown and 0:02:28.080 --> 0:02:30.600 then do I deal with the Democrats? Or do I 0:02:30.600 --> 0:02:33.640 deal with the Democrats now and get it over with? Ultimately, 0:02:33.720 --> 0:02:36.040 this is ending with a deal with the Democrats. And 0:02:36.080 --> 0:02:38.560 so I think from the Speaker's perspective, really what he 0:02:38.639 --> 0:02:41.119 has to do here is he has to do this deal, 0:02:41.160 --> 0:02:42.360 but he has to do it in a way that 0:02:42.440 --> 0:02:44.720 saves him face. Look, he's got to be showing that 0:02:44.800 --> 0:02:47.079 he's fighting for his ideals and so forth like that, 0:02:47.320 --> 0:02:49.200 And that's why I think he's going to accept the 0:02:49.240 --> 0:02:52.680 government shutdown if he makes a deal before then I 0:02:52.680 --> 0:02:54.800 think there are those people that are seeking to oust 0:02:54.880 --> 0:02:57.280 him get a little bit more ammunition, saying, look, he 0:02:57.320 --> 0:02:59.560 didn't even fight, so let's just kick him out. So 0:03:00.040 --> 0:03:02.240 I think speaker, I think the speaker's just playing a 0:03:02.240 --> 0:03:05.040 little bit of what if scenario NELS is here, But 0:03:05.440 --> 0:03:07.160 I think he's just going to say, look, we got 0:03:07.160 --> 0:03:10.079 to do this after sometime next week, after the shutdown. 0:03:10.600 --> 0:03:13.200 By the way, is it do we call them conservatives 0:03:13.240 --> 0:03:14.679 because they don't really act like that? 0:03:14.760 --> 0:03:17.360 Do we that the Freedom Club people? Nathan? 0:03:17.600 --> 0:03:21.920 I mean, they're not exactly acting like Ronald Reagan or 0:03:21.960 --> 0:03:22.840 George H. W. 0:03:22.960 --> 0:03:28.440 Bush. It's more like, I don't know what word you use. 0:03:28.520 --> 0:03:32.919 How do you describe that other than you know, radical populists. 0:03:33.360 --> 0:03:36.640 Well, you know, I could say somebody is a conservative Washington, 0:03:36.680 --> 0:03:39.000 and I'll get one hundred different answers what that means. 0:03:39.560 --> 0:03:41.640 But you know, ultimately what's going to happen here is 0:03:41.680 --> 0:03:44.880 it's the House Freedom Caucus. There's about fifteen or so members, 0:03:45.320 --> 0:03:47.960 maybe as much as twenty. But I would also point 0:03:47.960 --> 0:03:50.800 out that there's also another caucus called the House Problem 0:03:50.880 --> 0:03:53.560 Solvers Caucus. And one of the things that they're trying 0:03:53.560 --> 0:03:56.080 to do, and we've heard whispers on this is that 0:03:56.120 --> 0:03:57.960 there's about six of them. It would take six of 0:03:57.960 --> 0:04:01.280 them to say, look, I'm going to bypass Speaker. I'm 0:04:01.280 --> 0:04:04.120 going to work with the Democrats on something called the 0:04:04.160 --> 0:04:09.280 discharge petition, where I can actually overrule the Speaker. We'll 0:04:09.320 --> 0:04:12.280 have the Democrats have control of the floor. They'll make 0:04:12.320 --> 0:04:14.680 the deal. Now, I don't think Speaker McCarthy would be 0:04:14.680 --> 0:04:16.400 all that upset with it. Look, I mean, look, you 0:04:16.440 --> 0:04:18.400 could say, look, this is horrible that they're taking me 0:04:18.600 --> 0:04:20.680 my power, you know, so forth like that, but also 0:04:20.760 --> 0:04:22.960 as a get out of jail card free for you know, 0:04:23.040 --> 0:04:26.039 free get out of jail free card for him. So 0:04:26.480 --> 0:04:28.520 you know, I think what the Speaker is doing at 0:04:28.520 --> 0:04:30.440 this moment is just saying, look, I've got these people 0:04:30.440 --> 0:04:33.320 over here that want this. This is never going to happen. 0:04:33.680 --> 0:04:36.560 I got over here this idea of working with the Democrats, 0:04:36.560 --> 0:04:39.839 which I know eventually will happen, But I just can't 0:04:39.839 --> 0:04:40.799 go out there and say. 0:04:40.600 --> 0:04:42.160 I'm ready to do it just yet. 0:04:42.320 --> 0:04:45.120 So unfortunately, you know, it's the people that are going 0:04:45.200 --> 0:04:46.920 to be stuck at you know, the American people are 0:04:46.920 --> 0:04:48.280 going to suffer a little bit because of this. 0:04:48.560 --> 0:04:50.640 I mean, this seems from like, I don't know anything 0:04:50.640 --> 0:04:53.280 about politics and political calculus, but this seems like a 0:04:53.360 --> 0:04:57.839 disaster for the Republican Party. How does the leadership allow A? 0:04:58.080 --> 0:05:00.599 Is it a disaster? And B? How would the leadership 0:05:00.600 --> 0:05:02.200 at the Republican Party allow this to happen? 0:05:02.760 --> 0:05:05.440 Well, you know, it's not like they can come out 0:05:05.440 --> 0:05:07.280 and just wave their wand and say do as I say. 0:05:07.400 --> 0:05:09.840 I mean that, you know, the speaker McCarthy's. 0:05:10.520 --> 0:05:12.960 But we have whips and majority leaders and things like that. 0:05:13.080 --> 0:05:16.720 You know, if the party has fallen apart, you know, 0:05:16.839 --> 0:05:21.359 if they've lost their minds, then all right, But I'll. 0:05:21.200 --> 0:05:23.520 Say, but then you can't control them, right, I mean. 0:05:24.120 --> 0:05:25.960 But if they also make a deal within the next 0:05:26.000 --> 0:05:28.080 two weeks or so, we won't be talking about this 0:05:28.080 --> 0:05:31.560 come January. We'll be talking about you know, the presidential 0:05:31.600 --> 0:05:32.560 election cycle. 0:05:32.279 --> 0:05:32.880 And so forth. 0:05:32.960 --> 0:05:35.839 So there are people out there that say, look, shutdowns 0:05:35.880 --> 0:05:37.720 will be negative for the party that cause it, in 0:05:37.720 --> 0:05:41.000 this case would be the Republicans. But the independent voter's 0:05:41.080 --> 0:05:44.120 mindset is sort of short term, and per your inflation 0:05:44.240 --> 0:05:47.200 talk prior to this segment, you know, inflation may be 0:05:47.240 --> 0:05:49.240 around in January, and that may be the big ticket 0:05:49.360 --> 0:05:52.159 so there are some saying, look, shutdowns are bad, but 0:05:52.360 --> 0:05:54.240 you know how much of a political price we're gonna 0:05:54.240 --> 0:05:56.120 have to pay? Maybe not so much. 0:05:56.920 --> 0:05:57.719 It's a good point. 0:05:57.920 --> 0:05:59.520 It's a good point by but Nathan, let me get 0:05:59.560 --> 0:06:03.880 your takes of inflation on the UAW and President Biden, 0:06:04.080 --> 0:06:07.800 Oh yeah, going there, which I think is I mean, 0:06:07.880 --> 0:06:11.400 such an exciting story because I love the car makers 0:06:11.640 --> 0:06:14.480 and now you've got these one hundred and fifty thousand 0:06:14.480 --> 0:06:16.640 workers that are potentially going to make a lot more money. 0:06:16.960 --> 0:06:18.080 It's inflationary. 0:06:18.800 --> 0:06:21.560 President Biden says he's pro union, but he's also super 0:06:21.600 --> 0:06:25.240 pro green transition and EVS, which the union feels is 0:06:25.600 --> 0:06:27.080 in some ways is like their enemy. 0:06:27.400 --> 0:06:28.960 How do you look at that whole situation? 0:06:29.120 --> 0:06:32.280 Can he does he have the vitality to go and 0:06:32.320 --> 0:06:33.520 stand on a picket line. 0:06:34.240 --> 0:06:35.200 I'm just for me. 0:06:35.279 --> 0:06:38.080 This is all about Michigan. I mean, he needs Michigan 0:06:38.120 --> 0:06:41.240 to win reelection, and going to that picket line is 0:06:41.400 --> 0:06:43.760 just way to say that. Look, Michigan is one of 0:06:43.760 --> 0:06:48.560 those five or six states that I need. Going there 0:06:48.640 --> 0:06:50.760 is just to make sure that President Trump doesn't steal 0:06:50.800 --> 0:06:53.599 the press cycle by him going there. So you know 0:06:53.640 --> 0:06:55.840 the actions of President Biden actually walking the picket line 0:06:55.839 --> 0:06:57.960 and so forth like that. This was a political call. 0:06:58.440 --> 0:07:01.400 I'm not sure how much impact. You know, I haven't 0:07:01.400 --> 0:07:02.960 looked at the impact of how it would impact the 0:07:03.000 --> 0:07:04.240 UAW negotiations. 0:07:04.560 --> 0:07:06.000 But this was an easy call for him. 0:07:05.920 --> 0:07:08.240 To make because if he doesn't go there, President Trump 0:07:08.279 --> 0:07:10.600 was going to go there. Other Republican candidates would go 0:07:10.600 --> 0:07:12.880 there in one of your key states would be you know, 0:07:12.920 --> 0:07:15.040 you wouldn't actually be in one of those key states 0:07:15.040 --> 0:07:15.560 that you need. 0:07:16.400 --> 0:07:18.840 It'll be tough, though, if some of the workers on 0:07:18.880 --> 0:07:22.280 the picket line say, hey, Joe, what's with the billions 0:07:22.280 --> 0:07:25.120 of dollars in subsidies for electric vehicle transitions. 0:07:26.400 --> 0:07:28.960 Absolutely, I mean, you know, he's going to have a 0:07:28.960 --> 0:07:31.640 tough time talking to this. But you know, President Biden 0:07:31.680 --> 0:07:35.280 also claims to be the most pro union president ever Scranton, Pennsylvania, 0:07:35.320 --> 0:07:38.360 and this is something so I wouldn't put it past 0:07:38.400 --> 0:07:39.920 him to be able to rely on some of the 0:07:40.000 --> 0:07:43.320 institutional knowledge he's had over those seven years, seventy years 0:07:43.320 --> 0:07:45.480 to try and go forth and you know, at least 0:07:45.520 --> 0:07:47.840 get some talking points out of there. So I don't 0:07:47.840 --> 0:07:50.000 think it's going to be that much impactful in the 0:07:50.040 --> 0:07:54.600 way of the negotiations. But again it's a symbolic gesture 0:07:54.640 --> 0:07:57.760 that he needs to ensure that he wins the rust 0:07:57.840 --> 0:08:02.120 belts come twenty twenty four, because that in Arizona and 0:08:02.120 --> 0:08:04.480 Nevada are going to be pretty much all the states 0:08:04.520 --> 0:08:06.520 that matter going into this election. 0:08:07.600 --> 0:08:10.560 So is it expectation in DC? We're getting off topic 0:08:10.560 --> 0:08:12.360 a little bit. It's going to be Biden for the 0:08:12.360 --> 0:08:15.680 Democratic Party. Is or any credible discussion otherwise? 0:08:16.320 --> 0:08:16.400 No. 0:08:16.560 --> 0:08:19.400 I mean, look, we're three months away from a primary process, 0:08:19.400 --> 0:08:21.440 and if President Biden were to stand up and say, look, 0:08:21.760 --> 0:08:23.480 I'm not going to run for president, you know who 0:08:23.480 --> 0:08:26.400 would take his place? Obviously have Vice President Kamala Harris. 0:08:26.440 --> 0:08:29.120 But you know Vice President Harris was the first one 0:08:29.160 --> 0:08:31.280 to bow out in the twenty you know, in the 0:08:31.320 --> 0:08:35.280 prior election. That person doesn't automatically get the party's mantle. 0:08:35.559 --> 0:08:38.120 So if President Biden were to say today I'm not running, 0:08:38.440 --> 0:08:41.079 you would kick off a chaotic process in which the 0:08:41.120 --> 0:08:44.520 Democrats would be completely on you know, disjointed, and there'd 0:08:44.559 --> 0:08:47.320 be a really fast paced fight to try and see 0:08:47.320 --> 0:08:50.800 who can win. Governor Newsom, probably Governor Pritzker from Illinois, 0:08:51.160 --> 0:08:53.679 for example. It would just be very chaotic. So I 0:08:53.720 --> 0:08:56.040 really don't see President Biden saying that he's done. 0:08:56.480 --> 0:08:58.200 I think he's in this for the long bow. 0:08:58.400 --> 0:09:00.079 All right, Nathan, thanks so much for joining us. We 0:09:00.120 --> 0:09:01.960 can go a million ways with you. You've always got 0:09:02.280 --> 0:09:05.559 everything on topic. Nathan Deane, Senior Polo Saneles for the 0:09:05.640 --> 0:09:09.240 US government for Bloomberg Intelligence. He's based down in Washington, 0:09:09.280 --> 0:09:10.800 d C. And he is our go to guy. So 0:09:10.840 --> 0:09:13.720 there's a lot of balls in the air down in DC. 0:09:14.280 --> 0:09:17.920 Most notably, is this government gonna shut down? And it 0:09:17.960 --> 0:09:21.480 looks like appears at this stage at least that the 0:09:21.520 --> 0:09:22.720 answer is probably yes. 0:09:23.800 --> 0:09:27.160 You're listening to the Team Ken's are Live program Bloomberg 0:09:27.280 --> 0:09:30.680 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:09:30.720 --> 0:09:33.880 the iHeartRadio app, and the Bloomberg Business app, or listen 0:09:33.920 --> 0:09:36.199 on demand wherever you get your podcasts. 0:09:38.520 --> 0:09:40.400 You know, Matt, you might remember two or three months ago, 0:09:40.440 --> 0:09:43.200 I took that whole recession talk off the table for me. 0:09:43.600 --> 0:09:47.200 But you know what, this federal reserve higher for longer, 0:09:47.360 --> 0:09:49.120 I don't know. I think they might run the risk 0:09:49.160 --> 0:09:51.920 of pushing us into something that we don't really need. 0:09:52.000 --> 0:09:55.000 So I'm going to talk to and ask a professional 0:09:55.040 --> 0:09:59.400 about this. Lydia Bussor senior economists at e Y Parthenon. So, 0:09:59.480 --> 0:10:01.840 Lydia was I a little bit early in taking the 0:10:01.840 --> 0:10:04.439 recession talk off the table. Is this Federal Reserve with 0:10:04.559 --> 0:10:08.079 its news or not new but continued effort to keep 0:10:08.120 --> 0:10:11.080 rates higher for longer? Are they bringing that recession talk 0:10:11.120 --> 0:10:12.679 back to the forefront? 0:10:14.080 --> 0:10:17.400 Hi, thanks for having me. I mean the higher for 0:10:17.480 --> 0:10:21.239 longer interest rate paradigm that the Federal Reserve strongly signaled 0:10:21.760 --> 0:10:24.760 after the meeting, and with this new dot plot showing 0:10:24.800 --> 0:10:29.200 interest rates remaining above five percent throughout next year, means 0:10:29.200 --> 0:10:31.280 that you know, we're going to see we're going to 0:10:31.320 --> 0:10:34.920 be in that higher interest rate environment for longer, higher 0:10:34.920 --> 0:10:37.600 cost of capital, and that's going to be waiting on 0:10:37.640 --> 0:10:42.000 spending decisions for consumers and businesses. I think this is 0:10:42.040 --> 0:10:44.800 going to be an additional headwind for the economy. This 0:10:44.960 --> 0:10:48.560 has already been impacting the economy, but we do believe 0:10:48.559 --> 0:10:51.240 that there remains a pathway for a soft lending. I 0:10:51.280 --> 0:10:54.800 think it's important to keep in mind that these higher 0:10:54.840 --> 0:10:58.199 for longer interest rates are also reflection of a more 0:10:58.280 --> 0:11:02.800 resilient and stronger economy and also expectations for that trend 0:11:02.920 --> 0:11:04.080 to continue moving forward. 0:11:05.480 --> 0:11:08.640 Well, first of all, Lydia, we just got a red 0:11:08.920 --> 0:11:14.440 hot sticky headline crossing the terminal and on China and 0:11:14.480 --> 0:11:19.360 the property issue there. So Evergrand Unit missed payment on 0:11:19.679 --> 0:11:23.840 four billion you on Onshore bond. We've all been watching 0:11:24.400 --> 0:11:28.559 the Chinese property sector again lately. Right, it looks worse 0:11:28.640 --> 0:11:34.120 than feared previously, and the short lived boost it got 0:11:34.120 --> 0:11:38.480 from the Chinese sort of stimulus activities is gone. 0:11:38.520 --> 0:11:39.520 Now. 0:11:40.600 --> 0:11:42.000 Is it possible that this. 0:11:42.000 --> 0:11:44.680 Spreads around the world or is it contained to the 0:11:44.760 --> 0:11:45.640 Chinese economy? 0:11:45.640 --> 0:11:45.960 You think? 0:11:47.559 --> 0:11:50.040 I mean, we believe that the China, the China, the 0:11:50.120 --> 0:11:53.320 China's economic explow down has emerged as a top risk 0:11:53.400 --> 0:11:56.360 for the global economy. When we look at the US 0:11:56.400 --> 0:12:00.840 in particular, when you purely looked at the trailing and 0:12:00.960 --> 0:12:05.120 financial linkages, they're fairly limited in terms of the US 0:12:05.160 --> 0:12:09.640 exposure and looking at US exports to China. But when 0:12:09.679 --> 0:12:12.960 you think about the impact on financial conditions and how 0:12:13.040 --> 0:12:16.720 that could potentially lead to China growth care the way 0:12:16.760 --> 0:12:20.440 we saw back in twenty fifteen twenty sixteen, that could 0:12:20.520 --> 0:12:23.080 have an impact on confidence, and that could have an 0:12:23.120 --> 0:12:26.800 impact on a more significant impact on the US economy. Now, 0:12:26.840 --> 0:12:29.720 looking at the broader global economy, this is going to 0:12:29.760 --> 0:12:33.559 have some ramification for economies that are more exposed, and 0:12:33.640 --> 0:12:37.000 this is potentially leading also to a sharper economy slow 0:12:37.040 --> 0:12:37.880 down globally, So. 0:12:37.920 --> 0:12:39.040 Not the US, right Lydia. 0:12:39.200 --> 0:12:41.520 When you say economies that are more exposed, I guess 0:12:41.520 --> 0:12:43.640 you're talking more about Europe than America. 0:12:43.920 --> 0:12:47.520 Europe is more exposed, but as I mentioned, the US, 0:12:48.040 --> 0:12:52.079 the exposure is really through more through financial conditions and 0:12:52.320 --> 0:12:55.960 a potential deeper global slowdown as some of the other 0:12:56.080 --> 0:12:58.400 trade partners for the US get impacted as well. 0:12:59.200 --> 0:13:02.200 Leading you back here in the US. One of the 0:13:02.240 --> 0:13:05.400 real points of resilience in this iconomy has been the 0:13:05.480 --> 0:13:07.040 labor market. And a lot of folks are kind of 0:13:07.040 --> 0:13:10.600 confused about why this labor market is so strong, given 0:13:11.120 --> 0:13:13.640 you know, the inflation editors are given the higher rates. 0:13:14.440 --> 0:13:16.360 How do you view and how do you explain the 0:13:16.440 --> 0:13:17.600 labor market to every one? 0:13:19.200 --> 0:13:22.640 Yeah, I mean, we've seen some persistent tightness in the 0:13:22.679 --> 0:13:26.320 label market and those lingering labor shortages in some sectors. 0:13:26.760 --> 0:13:29.320 So a lot of that tightness that we have seen 0:13:29.400 --> 0:13:31.640 is really tied to some of these post pandemic label 0:13:31.679 --> 0:13:34.640 market dynamics. We've seen a lot of these locations during 0:13:34.640 --> 0:13:38.640 the pandemic, and so what we're seeing today's companies essentially 0:13:38.920 --> 0:13:42.559 holding on to the workforce, their talent that they really 0:13:42.600 --> 0:13:46.720 had a hard time attracting and retaining over the past 0:13:46.720 --> 0:13:50.199 two years. So we are seeing some labor hoarding. And 0:13:50.600 --> 0:13:52.640 that is, you know, one of the reasons why even 0:13:52.679 --> 0:13:55.839 though you're saying that rebalancing, even though you're saying labor 0:13:55.880 --> 0:13:59.400 dement coming down, we haven't seen that a significant rising 0:13:59.480 --> 0:14:02.880 layoff that you would expect in this environment of higher 0:14:02.960 --> 0:14:04.520 interest rates. 0:14:04.800 --> 0:14:07.120 In terms of the you know, the path to a 0:14:07.200 --> 0:14:09.640 soft landing, you know, with all the risks that you 0:14:09.720 --> 0:14:15.200 mentioned Lydia, and we've been you know, we've been listing 0:14:15.240 --> 0:14:19.280 them here on Bloomberg Radio as well, from increased credit 0:14:19.320 --> 0:14:23.920 card debt to delinquencies on those cards and on auto loans, 0:14:24.080 --> 0:14:28.760 the return of student loan payments, higher oil and higher 0:14:28.800 --> 0:14:30.840 gas prices at the pump. 0:14:31.960 --> 0:14:34.000 What am I missing, Paul, No, those are all good. 0:14:34.400 --> 0:14:38.240 I mean, it seems like the strike, the UAW strike 0:14:38.320 --> 0:14:41.160 lasting a long time and expanding is a risk. I 0:14:41.160 --> 0:14:44.760 don't know if the government shutdown is a financial risk, 0:14:44.880 --> 0:14:47.920 or if it's just an amazing annoyance. But all of 0:14:47.960 --> 0:14:52.280 these things are bad, right, So where do you see 0:14:52.280 --> 0:14:53.680 a soft landing coming out of that? 0:14:54.920 --> 0:14:57.760 Yeah, I mean we all these headwinds, the headwinds you 0:14:57.840 --> 0:15:01.840 mentioned are really combining and will combine to slow down 0:15:01.880 --> 0:15:04.880 the economy. So we do expect to see a downshift 0:15:04.880 --> 0:15:08.000 in economic activity as we head into twenty twenty four. 0:15:08.480 --> 0:15:11.440 We think that growth will fall below potential, and then 0:15:11.880 --> 0:15:15.800 we're expecting a number of quarters where growth is going 0:15:15.840 --> 0:15:19.320 to be fairly modest as a result of some of 0:15:19.360 --> 0:15:23.760 the old headwinds higher interest rates, tighter credit conditions, and 0:15:23.800 --> 0:15:26.960 still high inflation and some of these new headwinds that 0:15:27.000 --> 0:15:29.040 you mentioned that are going to be waiting on growth 0:15:29.280 --> 0:15:32.120 in the fourth quarter. What's important to keep in mind 0:15:32.240 --> 0:15:36.760 with the strike, with the potential government shutdown is some 0:15:36.800 --> 0:15:39.320 of the impact is going to be reversed in the 0:15:39.320 --> 0:15:42.720 first quarter of next year. So this is also something 0:15:42.760 --> 0:15:44.600 that I think is important to keep in mind when 0:15:44.600 --> 0:15:48.400 you think about the outlook. But certainly a nuanced outlook 0:15:48.680 --> 0:15:52.400 with resilient economy, but some headwinds that are going to 0:15:52.440 --> 0:15:54.400 be waiting on private sector activity. 0:15:55.520 --> 0:15:59.040 So Lydia, we've seen inflation come down from the peak 0:15:59.120 --> 0:16:03.400 of eighteen month to go roughly, But now maybe the 0:16:03.440 --> 0:16:06.000 hard work starts. As a lot of economers are suggesting, 0:16:06.000 --> 0:16:08.840 how do you see inflation moving over the next six 0:16:08.920 --> 0:16:10.000 or twelve months. 0:16:11.040 --> 0:16:13.720 Yeah, we are in the camp that maybe the last 0:16:13.720 --> 0:16:17.320 inflation mile won't be as strainerous as some people think. 0:16:17.840 --> 0:16:19.840 There is a lot of ground to cover in terms 0:16:19.880 --> 0:16:22.880 of bringing inflation back to target, but we still think 0:16:22.920 --> 0:16:27.080 that there is there is this inflationary environment that remains 0:16:27.120 --> 0:16:27.560 in place. 0:16:27.880 --> 0:16:29.040 When you look further. 0:16:28.800 --> 0:16:32.240 Ahead at the next few months and going into twenty 0:16:32.320 --> 0:16:35.760 twenty four, when you look at core inflation, we are 0:16:35.800 --> 0:16:39.040 expecting to see modes inflation on the core side, with 0:16:39.680 --> 0:16:43.800 housing inflation having turned the corner, with the label market 0:16:43.920 --> 0:16:47.760 loosening as well, and also with the fact that you 0:16:47.760 --> 0:16:49.880 know we're going to see a slow down in demand 0:16:50.320 --> 0:16:53.080 and in economic activity and that will put further downwald 0:16:53.080 --> 0:16:56.320 pressure on inflation. So we think that we're going to 0:16:56.320 --> 0:17:00.120 see continue this inflation and looking at poor and headline inflation, 0:17:00.680 --> 0:17:02.680 it will still take some time, but by the end 0:17:02.720 --> 0:17:05.399 of next year we may have gotten closer to the 0:17:05.800 --> 0:17:07.760 two person target on both headline and poor. 0:17:08.600 --> 0:17:12.760 Lady health concerned. Are you about the European economies over there? 0:17:12.800 --> 0:17:15.360 I mean again, we talked about it earlier, but boy, 0:17:15.400 --> 0:17:18.960 their exposure to China and just compounds some some problems 0:17:18.960 --> 0:17:21.800 over there. What's about your forecast for just Europe in 0:17:21.800 --> 0:17:22.680 the UK going forward. 0:17:24.040 --> 0:17:27.200 Yeah, we are seeing more weakness for the deer and 0:17:27.359 --> 0:17:30.840 the European economy, and we are seeing more headwinds as 0:17:30.840 --> 0:17:34.560 well from the China slowdown. When we look at economic activity, 0:17:35.000 --> 0:17:38.000 we are seeing some economic indicators pointing to a further 0:17:38.080 --> 0:17:41.919 down shift. And now the outlook is, you know, not 0:17:42.080 --> 0:17:45.199 the same for each individual country within the Eurozone. We 0:17:45.240 --> 0:17:49.760 are seeing localized weakness in Germany with this this recession 0:17:49.960 --> 0:17:53.840 recessionary conditions in Germany. The UK is also showing most 0:17:53.840 --> 0:17:56.760 signs of weakness. But overall, this is a region where 0:17:56.800 --> 0:17:59.879 we are expecting to see more weakness this year and 0:18:00.280 --> 0:18:02.639 this is going to be a soft spot for the 0:18:02.680 --> 0:18:05.359 global economy along with the Chinese economy. 0:18:05.800 --> 0:18:07.719 Lydia, thank you so much for joining us. Always appreciate 0:18:07.760 --> 0:18:11.680 getting your comments. Lydia bussor senior economists at e Y 0:18:11.720 --> 0:18:12.960 Partha that you're. 0:18:12.760 --> 0:18:16.160 Listening to the tape Cat's Are Live program Bloomberg Markets 0:18:16.240 --> 0:18:19.600 weekdays at ten am Eastern on Bloomberg Radio, the tune 0:18:19.680 --> 0:18:21.480 in app, Bloomberg dot Com. 0:18:21.200 --> 0:18:22.640 And the Bloomberg Business App. 0:18:22.680 --> 0:18:25.480 You can also listen live on Amazon Alexa from our 0:18:25.480 --> 0:18:30.600 flagship New York station, Just say Alexa Play Bloomberg eleven thirty. 0:18:31.240 --> 0:18:33.560 Jess Larsen joins and sees the CEO and founder of 0:18:33.600 --> 0:18:36.520 Briarcliff Credit Partners. He joins us live here in our 0:18:36.520 --> 0:18:40.560 Bloomberg Interactive Broker studio. Just you guys, just focus on 0:18:40.560 --> 0:18:43.520 this exclusively. Matt and I. We know private credit as 0:18:43.600 --> 0:18:47.520 like direct lending. Well you're telling us it's more than that, right. 0:18:48.000 --> 0:18:51.240 That is, that's a good question, right, and private credit 0:18:51.280 --> 0:18:52.800 means a lot of things to a lot of people. 0:18:53.240 --> 0:18:56.240 And there's a little bit of a misunderstanding that directlenning 0:18:56.400 --> 0:18:58.600 is all rage of private credit. Dorek Lanny is a 0:18:58.600 --> 0:19:01.760 great sub strategy with in private credit, but private credit 0:19:01.880 --> 0:19:04.720 is really a lot more so. What we have identified 0:19:05.119 --> 0:19:07.680 is fall pillars of private credit. You got corporate credit, 0:19:07.720 --> 0:19:11.520 structure credit, real asset, and sparcusally finance underneath that twenty 0:19:11.640 --> 0:19:13.000 six different strategy way. 0:19:13.280 --> 0:19:14.520 It doesn't matter where in. 0:19:14.480 --> 0:19:17.720 The economic economic cycle we are there's always strategies for 0:19:17.760 --> 0:19:20.520 you to make money, and that's exciting about private credit. 0:19:20.359 --> 0:19:23.080 Right, and private credit seems to me to come out 0:19:23.080 --> 0:19:24.960 of nowhere over the last four or five. 0:19:24.840 --> 0:19:26.760 Well yeah, I mean I've been going to the super 0:19:26.920 --> 0:19:29.840 Turn conference for the past I don't know, seven or 0:19:29.880 --> 0:19:33.840