1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,200 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Brownowitz. Daily we bring you 3 00:00:13,280 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,799 Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com, 5 00:00:23,920 --> 00:00:29,600 Speaker 1: and of course on the Bloomberg terminal. There is a 6 00:00:29,640 --> 00:00:33,479 Speaker 1: single sentence from a Holland Horst and from Nathan Sheets, 7 00:00:33,479 --> 00:00:37,400 Speaker 1: global chief economist at City Group. Also is public service 8 00:00:37,440 --> 00:00:40,400 Speaker 1: to the United States Treasury, and Nathan Sheets joins us 9 00:00:40,479 --> 00:00:43,720 Speaker 1: right now, Nathan, there's that single line of global g 10 00:00:43,840 --> 00:00:47,240 Speaker 1: d P in two thousand twenty three. It is well 11 00:00:47,280 --> 00:00:51,960 Speaker 1: below the typical three percent level. How bad is the 12 00:00:52,000 --> 00:00:57,800 Speaker 1: global recession of next year? The global economy, as you say, 13 00:00:57,920 --> 00:01:02,600 Speaker 1: Thoma's looking very slot at the moment and aggregat our 14 00:01:02,720 --> 00:01:08,200 Speaker 1: projection is two percent global growth if you take out 15 00:01:08,200 --> 00:01:15,000 Speaker 1: our relatively bullish expectation for China, we see global growth 16 00:01:15,200 --> 00:01:18,679 Speaker 1: at less than one percent next year, which is right 17 00:01:18,760 --> 00:01:21,960 Speaker 1: on the border of what's been traditionally associated with the 18 00:01:22,319 --> 00:01:25,959 Speaker 1: with the global recession. Now, looking at a little bit 19 00:01:25,959 --> 00:01:29,720 Speaker 1: more at the details, we see early next year fairly 20 00:01:29,760 --> 00:01:33,240 Speaker 1: severe downturn in Europe clean both the year AWARE in 21 00:01:33,280 --> 00:01:37,160 Speaker 1: the UK, and then as the year progresses, the monetoring 22 00:01:37,280 --> 00:01:41,520 Speaker 1: tightening UH in the United States leads to a recession 23 00:01:41,680 --> 00:01:44,040 Speaker 1: during the second half of the year here as well. 24 00:01:44,360 --> 00:01:49,720 Speaker 1: So pretty pretty tough outlook, challenging in a lot of 25 00:01:49,760 --> 00:01:53,920 Speaker 1: different respects, and UH and that's coupled with an inflation 26 00:01:53,960 --> 00:01:59,320 Speaker 1: outlook remains very concerning Nathan. Financial conditions of East with 27 00:01:59,360 --> 00:02:02,360 Speaker 1: the bactrop they're talking about, financial conditions have started two weights, 28 00:02:02,680 --> 00:02:04,240 Speaker 1: and that's because a lot of people are thinking about 29 00:02:04,240 --> 00:02:06,800 Speaker 1: the Federal Reserve back in a way from the pace 30 00:02:06,840 --> 00:02:09,840 Speaker 1: of hikes from seventy five maybe down to fift day 31 00:02:09,880 --> 00:02:12,840 Speaker 1: the size down to Nathan, what do you make of 32 00:02:12,880 --> 00:02:19,960 Speaker 1: that conversation. I think the Fed has struggled in its communication. 33 00:02:20,639 --> 00:02:25,080 Speaker 1: It has set up, at least implicitly, a syllogism that 34 00:02:25,320 --> 00:02:29,560 Speaker 1: if we're serious about inflation, then we go seventy five 35 00:02:29,639 --> 00:02:33,760 Speaker 1: basis points, and when rates are low, it makes sense 36 00:02:33,760 --> 00:02:38,000 Speaker 1: to have that syllogism. But once you move to three percent, 37 00:02:38,320 --> 00:02:40,560 Speaker 1: and in November there will be at three seventy five. 38 00:02:41,040 --> 00:02:44,799 Speaker 1: As you move higher, you've got to start casting your 39 00:02:44,880 --> 00:02:50,919 Speaker 1: determination and framing your determination to fight inflation in in 40 00:02:50,919 --> 00:02:54,520 Speaker 1: in in different ways. Specifically, the FED can say we've 41 00:02:54,560 --> 00:02:58,920 Speaker 1: moved substantially and that reflects ourn't commitment. And if you 42 00:02:59,000 --> 00:03:03,120 Speaker 1: don't uh believe that we're committed, just watch what we're 43 00:03:03,120 --> 00:03:05,799 Speaker 1: gonna do. So I do think they're in a tough 44 00:03:05,919 --> 00:03:09,919 Speaker 1: situation where they've got to pivot. They can't take rates 45 00:03:09,960 --> 00:03:15,400 Speaker 1: off at seventy five basic points rate indefinitely, and the 46 00:03:15,440 --> 00:03:18,520 Speaker 1: markets are interpreting that as the fat kind of pivoting 47 00:03:18,600 --> 00:03:22,680 Speaker 1: off inflation determination, which I think is a misinterpretation of 48 00:03:22,720 --> 00:03:25,080 Speaker 1: where they are. I'm looking right now at some of 49 00:03:25,080 --> 00:03:28,440 Speaker 1: the GDP components. Michael McKee is breaking them down, and 50 00:03:28,520 --> 00:03:31,480 Speaker 1: we saw housing. He mentioned housing, and he just clarified 51 00:03:31,480 --> 00:03:35,680 Speaker 1: that residential investments attracted one point three seven percent from GDP. 52 00:03:35,840 --> 00:03:39,160 Speaker 1: This is a quickly moving story under the hood, how 53 00:03:39,240 --> 00:03:42,800 Speaker 1: much or other inflationary components off setting some of these 54 00:03:42,840 --> 00:03:45,840 Speaker 1: disinflationary moves that we're seeing in the housing market, that 55 00:03:45,880 --> 00:03:47,800 Speaker 1: we're seeing in retail that we're seeing and used at 56 00:03:47,840 --> 00:03:50,800 Speaker 1: car prices that you could see on the margins around 57 00:03:50,800 --> 00:03:56,120 Speaker 1: the economy. Very clearly, we are now in a dynamic 58 00:03:56,400 --> 00:04:02,840 Speaker 1: of disinflation in terms of goods prices that is clearly happening. 59 00:04:02,920 --> 00:04:05,320 Speaker 1: We expect that it's going to come off quite sharply 60 00:04:05,360 --> 00:04:10,920 Speaker 1: in coming months. Similarly, the shelter prices are persistent the 61 00:04:10,960 --> 00:04:14,120 Speaker 1: way they're calculated in the indexes. But when we're getting 62 00:04:14,120 --> 00:04:18,000 Speaker 1: these monster declines and residential investment, that's point of a 63 00:04:18,240 --> 00:04:23,320 Speaker 1: very soft housing market. But where the heart of inflationary 64 00:04:23,400 --> 00:04:28,640 Speaker 1: pressures remains is in the non shelter services and that 65 00:04:28,839 --> 00:04:33,159 Speaker 1: is tied to the hot labor market, rising wages and 66 00:04:33,440 --> 00:04:38,159 Speaker 1: rising services inflation. That is what the fans worried about. 67 00:04:38,240 --> 00:04:42,800 Speaker 1: And uh, that's what the FED is targeting here effectively, 68 00:04:43,320 --> 00:04:47,000 Speaker 1: is they've got to see a more contained numbers in 69 00:04:47,120 --> 00:04:51,479 Speaker 1: terms of non shelter services price inflation. And then mean yet, 70 00:04:51,520 --> 00:04:57,080 Speaker 1: take a while, I look, Nathan, at how we're going 71 00:04:57,200 --> 00:05:00,920 Speaker 1: to recalibrate. We're gonna recalibrate off this press conference, John 72 00:05:00,960 --> 00:05:04,680 Speaker 1: one in four minutes something. We're gonna recalibrate November two, 73 00:05:05,360 --> 00:05:08,520 Speaker 1: frame the City Group look for next year. I'm going 74 00:05:08,600 --> 00:05:12,359 Speaker 1: back to your stunning global GDP call of two percent 75 00:05:12,480 --> 00:05:17,719 Speaker 1: next year? What is your year opening report gonna look like? 76 00:05:17,839 --> 00:05:22,240 Speaker 1: Give us a heads up, so what we're what we're 77 00:05:22,279 --> 00:05:25,800 Speaker 1: seeing at the moment. Uh, and it's looking pretty durable 78 00:05:25,920 --> 00:05:31,440 Speaker 1: in my mind. We're calling next year rolling recessions in 79 00:05:31,480 --> 00:05:38,760 Speaker 1: the global economy. Uh. We're gonna see various countries turned down. Uh, 80 00:05:38,839 --> 00:05:42,880 Speaker 1: the vast majority of GDP will see a downturn. That 81 00:05:42,920 --> 00:05:49,599 Speaker 1: would particularly be accentuating, exacerbated if the Chinese economy ends 82 00:05:49,680 --> 00:05:53,120 Speaker 1: up being uh somewhat softer and instead of the five 83 00:05:53,160 --> 00:05:56,320 Speaker 1: and a half percent we're forecasting, if it's more like 84 00:05:56,560 --> 00:06:00,160 Speaker 1: this year at at three and a half. As you've 85 00:06:00,200 --> 00:06:03,039 Speaker 1: got this on the growth side, and then you also 86 00:06:03,120 --> 00:06:06,640 Speaker 1: have central banks they're gonna have to early in the 87 00:06:06,680 --> 00:06:10,320 Speaker 1: year continue to hide and as the year rolls on, 88 00:06:10,839 --> 00:06:14,600 Speaker 1: our expectation is hold those those rates and high levels. 89 00:06:15,000 --> 00:06:19,000 Speaker 1: So uh, next year is gonna be a challenging year. 90 00:06:19,360 --> 00:06:26,000 Speaker 1: I'm kind of already turning the page to that's so 91 00:06:26,080 --> 00:06:28,440 Speaker 1: much like that's that's what we need from a former 92 00:06:28,480 --> 00:06:32,800 Speaker 1: government official, Dr Sheath. That was brilliant night in Jessus City, Knithan, 93 00:06:32,880 --> 00:06:45,159 Speaker 1: thank you. This is a joint. Now we're gonna wrap 94 00:06:45,200 --> 00:06:48,880 Speaker 1: this into international economics. We do this with Christine Lagarde 95 00:06:48,920 --> 00:06:52,200 Speaker 1: an extended press conference mat managing the Master of the 96 00:06:52,240 --> 00:06:56,200 Speaker 1: e c B. Carl Weinberg joins US now high frequency economics. Carl, 97 00:06:56,640 --> 00:06:58,960 Speaker 1: I've got to go to e M. I looked at 98 00:06:58,960 --> 00:07:03,840 Speaker 1: a Columbia the Nation bond the other day and has 99 00:07:03,960 --> 00:07:07,400 Speaker 1: enjoyed going from night to sixty three. How big is 100 00:07:07,440 --> 00:07:10,559 Speaker 1: the tention right now in e M due to FED 101 00:07:10,640 --> 00:07:14,760 Speaker 1: policy and a strong dollar? In good morning, Tom Well, 102 00:07:15,400 --> 00:07:19,000 Speaker 1: Historically this would be a classic squeeze, with the FED 103 00:07:19,080 --> 00:07:23,000 Speaker 1: hiking rates and raising borrowing costs with commodity prices for 104 00:07:23,120 --> 00:07:28,040 Speaker 1: comfort countries that import commodities first going up and pairing 105 00:07:28,080 --> 00:07:30,480 Speaker 1: their balance of payments and their flow of dollars coming in, 106 00:07:30,560 --> 00:07:33,040 Speaker 1: and then now with prices going down for countries that 107 00:07:33,160 --> 00:07:36,080 Speaker 1: export them, facing the same kind of squeeze. The bottom 108 00:07:36,080 --> 00:07:38,320 Speaker 1: line is that most of the debt that's out there 109 00:07:38,800 --> 00:07:41,800 Speaker 1: is other at the World Bank with very fixed rates, 110 00:07:42,280 --> 00:07:45,360 Speaker 1: or with China, where the rates are in yuan and 111 00:07:45,440 --> 00:07:48,200 Speaker 1: not in U S dollars. China is now the largest 112 00:07:48,360 --> 00:07:51,520 Speaker 1: lender to emerging markets after the World Bank, more than 113 00:07:51,560 --> 00:07:54,600 Speaker 1: the United States, more than Europe, so to the extent 114 00:07:54,720 --> 00:07:58,200 Speaker 1: that most of the debt is locked into loans to China, 115 00:07:58,560 --> 00:08:02,560 Speaker 1: and the lenders in China our national banks, China Development Bank, 116 00:08:02,640 --> 00:08:06,920 Speaker 1: and China Export of Developed Export Development Bank. UM. I 117 00:08:06,960 --> 00:08:09,200 Speaker 1: don't really think that we're looking at the crisis as 118 00:08:09,200 --> 00:08:11,360 Speaker 1: we saw back in the nineteen seventies coming out of 119 00:08:11,400 --> 00:08:15,560 Speaker 1: all this some stress, yes, but crisis, no, Carl. We 120 00:08:15,600 --> 00:08:18,760 Speaker 1: had a raft of economic data out this morning. I'm 121 00:08:18,760 --> 00:08:21,720 Speaker 1: looking at e C o ECO go on the Bloomberg terminal. 122 00:08:21,760 --> 00:08:23,400 Speaker 1: Let's just start with the top line, the g P 123 00:08:24,120 --> 00:08:26,760 Speaker 1: two point six. You know, it's better than expected. It's 124 00:08:26,760 --> 00:08:29,000 Speaker 1: obviously better to the first two quarters of the year. 125 00:08:29,600 --> 00:08:32,080 Speaker 1: How do I think about that number in context of 126 00:08:32,600 --> 00:08:36,920 Speaker 1: the drumbeat of recession calls out there. How should we 127 00:08:36,920 --> 00:08:41,040 Speaker 1: think about that? Well, you know, the overshoot from expectations 128 00:08:41,080 --> 00:08:44,120 Speaker 1: was only two tenses cent, which, if not exactly a 129 00:08:44,120 --> 00:08:46,960 Speaker 1: big surprise, it was a team we need a little surprise. 130 00:08:47,360 --> 00:08:50,959 Speaker 1: And looking at the components, there are signs of weakness 131 00:08:51,120 --> 00:08:53,760 Speaker 1: within the components. But you know, just because we're not 132 00:08:53,840 --> 00:08:56,839 Speaker 1: in recession now doesn't mean we're not going into a recession. 133 00:08:57,080 --> 00:08:59,480 Speaker 1: That would be the first observation to make. And all 134 00:08:59,559 --> 00:09:02,360 Speaker 1: the INDO haters are on the table, all the factors 135 00:09:02,360 --> 00:09:04,120 Speaker 1: are on the table. That suggests that the U. S 136 00:09:04,160 --> 00:09:07,520 Speaker 1: economy will at least slow if not contract in the 137 00:09:07,600 --> 00:09:11,120 Speaker 1: quarters ahead from where we are right now. For the markets, 138 00:09:11,400 --> 00:09:14,560 Speaker 1: what matters is how this influence is central bank policy, 139 00:09:14,880 --> 00:09:17,680 Speaker 1: and our view at high frequency economics would be not 140 00:09:17,880 --> 00:09:19,800 Speaker 1: at all. The FED is going to be looking at 141 00:09:19,840 --> 00:09:22,080 Speaker 1: the inflation numbers and it's going to be a turn 142 00:09:22,200 --> 00:09:24,720 Speaker 1: in inflation that's going to bring about a turn in 143 00:09:24,760 --> 00:09:27,400 Speaker 1: FED policy. And we're not quite there yet. Okay, we're 144 00:09:27,400 --> 00:09:30,120 Speaker 1: not quite there, but you know, I can play off 145 00:09:30,120 --> 00:09:32,599 Speaker 1: the Chris Low note of put published moments ago. We 146 00:09:33,040 --> 00:09:37,040 Speaker 1: are seeing a little bit of a turn. Do we 147 00:09:37,120 --> 00:09:41,600 Speaker 1: see quite there yet with the November CPI report or 148 00:09:41,600 --> 00:09:45,200 Speaker 1: does it even wait distant out from there? Well, it's 149 00:09:45,240 --> 00:09:48,120 Speaker 1: a it's a tough call for economists, as you know, 150 00:09:48,200 --> 00:09:50,440 Speaker 1: aren't very good at all of this. But we do 151 00:09:50,520 --> 00:09:53,680 Speaker 1: see is that prices of some things are actually going down, 152 00:09:54,000 --> 00:09:59,079 Speaker 1: in particular industrial commodities. Oil now ninety dollars a barrel 153 00:09:59,120 --> 00:10:01,520 Speaker 1: as compared to a high thirty dollars about all six 154 00:10:01,520 --> 00:10:06,560 Speaker 1: months ago, like aluminum, copper, nickel, All these industrial commodities 155 00:10:06,559 --> 00:10:10,200 Speaker 1: are headed down in price. Used car prices headed down 156 00:10:10,200 --> 00:10:12,960 Speaker 1: in price. You know, the things that were starting to 157 00:10:12,960 --> 00:10:15,400 Speaker 1: adjust the other way. Housing going down, thank you, for 158 00:10:15,440 --> 00:10:18,360 Speaker 1: reminding me. Down in price as goes down in volume. 159 00:10:18,600 --> 00:10:21,600 Speaker 1: You know, these are the signs of weakening demand. So 160 00:10:21,640 --> 00:10:24,840 Speaker 1: we're gonna be looking to see. You know, what we 161 00:10:25,000 --> 00:10:27,560 Speaker 1: learned in in two thousand and seven two thousand and 162 00:10:27,600 --> 00:10:30,720 Speaker 1: eight is that prices can turned very quickly. In six months, 163 00:10:30,880 --> 00:10:34,040 Speaker 1: inflation went from four percent to negative in the US 164 00:10:34,080 --> 00:10:37,320 Speaker 1: based on So how does the Fed carl that's brilliant? 165 00:10:37,520 --> 00:10:40,760 Speaker 1: How does the Fed filter that in? You know, they 166 00:10:40,800 --> 00:10:43,440 Speaker 1: put their their paul, they put their left pants on 167 00:10:43,640 --> 00:10:47,360 Speaker 1: one leg time, thank you. But but how do they 168 00:10:47,440 --> 00:10:51,200 Speaker 1: filter what you just said about our collective study of 169 00:10:51,240 --> 00:10:55,560 Speaker 1: the fifties and two thousand seven into this parlor game 170 00:10:55,600 --> 00:10:58,959 Speaker 1: of what the Fed's gonna do with rates? Well, Tom, 171 00:10:59,000 --> 00:11:01,200 Speaker 1: you once gave a exture to my class at n 172 00:11:01,320 --> 00:11:03,959 Speaker 1: y U where you discussed the difference between type one 173 00:11:04,000 --> 00:11:06,199 Speaker 1: and type two errors in the market and at the 174 00:11:06,280 --> 00:11:09,719 Speaker 1: central bank. And what you pointed out, very very precidently, 175 00:11:09,840 --> 00:11:12,520 Speaker 1: is that the central banks job is to avoid the 176 00:11:12,600 --> 00:11:15,959 Speaker 1: worst possible outcome at all costs, and the worst possible 177 00:11:16,000 --> 00:11:18,440 Speaker 1: outcome will be run away inflation. So they're going to 178 00:11:18,559 --> 00:11:22,599 Speaker 1: act keeping things tight and maybe even tightening in some 179 00:11:22,720 --> 00:11:25,160 Speaker 1: wady see that the worst possible outcome has been avoided. 180 00:11:25,320 --> 00:11:29,400 Speaker 1: The market's job is to avoid missing the best possible outcome, 181 00:11:29,600 --> 00:11:32,000 Speaker 1: and that gives them a different sense set of parameters 182 00:11:32,000 --> 00:11:34,600 Speaker 1: to work on. And that's maybe why receive a divergence 183 00:11:34,640 --> 00:11:37,520 Speaker 1: between market expectations and what the said is actually telling us. 184 00:11:37,760 --> 00:11:41,200 Speaker 1: Dr Weinberg speaks of their folks is massive jargon but 185 00:11:41,480 --> 00:11:46,160 Speaker 1: foundational to not losing money, which is an understanding of 186 00:11:46,240 --> 00:11:50,000 Speaker 1: statistical type one. It's Roman numeral one type two, Roman 187 00:11:50,040 --> 00:11:56,599 Speaker 1: numeral two lies do and it's used differently, Paul, across economics, finance, investment, 188 00:11:57,080 --> 00:12:00,840 Speaker 1: and also across social policy, and so you've gotta be 189 00:12:00,920 --> 00:12:04,160 Speaker 1: very careful about the interpretation of it. But basically, as 190 00:12:04,240 --> 00:12:08,599 Speaker 1: Dr Weinberg says, there, it's a FED riveted on avoiding 191 00:12:08,640 --> 00:12:12,640 Speaker 1: the worst outcome, which in their case is name the 192 00:12:12,679 --> 00:12:15,440 Speaker 1: history of FED screwing up, central banks screwing up. That's 193 00:12:15,679 --> 00:12:18,880 Speaker 1: that's their number one focal point. Yeah, absolutely, speaking of 194 00:12:18,880 --> 00:12:27,160 Speaker 1: losing money, Meta stock is exactly fifty two week low. So, Carl, 195 00:12:27,160 --> 00:12:28,240 Speaker 1: I mean you take you take a look at some 196 00:12:28,280 --> 00:12:31,040 Speaker 1: of these companies that are talking about slowing advertising demand, 197 00:12:31,120 --> 00:12:34,000 Speaker 1: like Meta, like Google, um, there are so many as 198 00:12:34,040 --> 00:12:36,080 Speaker 1: you point out there are so many signs out there 199 00:12:36,160 --> 00:12:40,120 Speaker 1: that this economy is in fact cooling. Does that not 200 00:12:40,200 --> 00:12:43,400 Speaker 1: give the Fed an opportunity to say, we're done, are 201 00:12:43,440 --> 00:12:46,520 Speaker 1: pretty close to being done here? Well, are they sure 202 00:12:46,559 --> 00:12:48,600 Speaker 1: that they're done? That's the question. And by the way, Paul, 203 00:12:48,640 --> 00:12:50,640 Speaker 1: don't forget to mention all the companies that have said 204 00:12:50,640 --> 00:12:54,680 Speaker 1: they've stopped hiring or that they're actively reducing headcount. The 205 00:12:54,760 --> 00:12:57,440 Speaker 1: writings on the wall. Now. Households may still have some 206 00:12:57,520 --> 00:13:01,440 Speaker 1: cash left over from pandemic, little subsidies and so forth, 207 00:13:01,600 --> 00:13:05,400 Speaker 1: but their savings are going down. They're turning more and 208 00:13:05,440 --> 00:13:07,720 Speaker 1: more to credit card debt that can't go on forever, 209 00:13:08,280 --> 00:13:11,480 Speaker 1: and their real incomes are falling, and that means eventually 210 00:13:11,520 --> 00:13:13,840 Speaker 1: their spending is going to have to come down. I 211 00:13:13,880 --> 00:13:15,880 Speaker 1: can't tell you whether that's going to be this quarter 212 00:13:15,960 --> 00:13:18,480 Speaker 1: or next quarter or the quarter after, but the writing 213 00:13:18,559 --> 00:13:21,120 Speaker 1: is on the wall. Or a year from now, the U. 214 00:13:21,200 --> 00:13:23,960 Speaker 1: S economy almost certainly will have contracted by one or 215 00:13:24,000 --> 00:13:27,079 Speaker 1: maybe even two quarters, and price increases will be lower 216 00:13:27,120 --> 00:13:30,600 Speaker 1: than they are today. That's our forecast at high frequency Economics. 217 00:13:30,720 --> 00:13:33,559 Speaker 1: But which quart that's going to be, we don't really 218 00:13:33,559 --> 00:13:36,040 Speaker 1: have a confident forecast on where that's going to happen. 219 00:13:36,360 --> 00:13:39,559 Speaker 1: Carl Weinberg, thank you so much, greatly appreciate it. There 220 00:13:39,559 --> 00:13:48,040 Speaker 1: with high frequency economic right now. Also behind us is 221 00:13:48,040 --> 00:13:50,880 Speaker 1: Greg Valier with the mustarid note from a g F 222 00:13:51,040 --> 00:13:54,240 Speaker 1: Investments and he joins us this morning. Greg, I said 223 00:13:54,280 --> 00:13:57,520 Speaker 1: to them, I said, get somebody who remembers driving by 224 00:13:57,640 --> 00:14:00,720 Speaker 1: the ge factory and schennected they knew you ARC on 225 00:14:00,840 --> 00:14:03,160 Speaker 1: your way past Utica. There's only one guy we know 226 00:14:03,240 --> 00:14:06,280 Speaker 1: that remembers Jack walch is s connected in New York. 227 00:14:06,360 --> 00:14:10,560 Speaker 1: It's gone, Greg, Maybe it's the UTICAUS of America. They're 228 00:14:10,559 --> 00:14:14,040 Speaker 1: gonna go to Syracuse today. Dr Biden went to Providences 229 00:14:14,280 --> 00:14:17,600 Speaker 1: as well. Can the Democrats garner votes in the many 230 00:14:17,800 --> 00:14:23,240 Speaker 1: Utica New York's of America? Well, ironically it looks like 231 00:14:23,320 --> 00:14:26,880 Speaker 1: Democrats who have been entrenched in New England are in trouble. 232 00:14:27,320 --> 00:14:30,080 Speaker 1: So no, I think we're seeing a total reversal. We're 233 00:14:30,120 --> 00:14:33,880 Speaker 1: seeing Hispanic voters leave the Democratic Party going to Republicans. 234 00:14:34,080 --> 00:14:37,120 Speaker 1: We're seeing a lot of changes from the old the 235 00:14:37,160 --> 00:14:40,040 Speaker 1: old rules. At least. What I think is so important 236 00:14:40,080 --> 00:14:43,840 Speaker 1: here is is this just simple idea of the Panic 237 00:14:44,000 --> 00:14:46,400 Speaker 1: two weeks into the election and what was the day 238 00:14:46,400 --> 00:14:48,280 Speaker 1: to day year is going to be extraordinary. Well, and 239 00:14:48,320 --> 00:14:50,840 Speaker 1: if you look at some of the betting odds, you 240 00:14:50,840 --> 00:14:53,600 Speaker 1: can see that the Democrats are just dramatically losing seats, 241 00:14:53,600 --> 00:14:55,280 Speaker 1: and there's a question of how bad of a whopping 242 00:14:55,280 --> 00:14:57,280 Speaker 1: they're going to take in both the House and the 243 00:14:57,320 --> 00:15:00,840 Speaker 1: Senate greg from with respect to which ray As you're watching, 244 00:15:00,920 --> 00:15:03,000 Speaker 1: what's going to be most telling to you in terms 245 00:15:03,000 --> 00:15:05,760 Speaker 1: of not just whether the Democrats lease power, but by 246 00:15:05,800 --> 00:15:09,200 Speaker 1: how much. Yeah, I'm at seventeen in the House and 247 00:15:09,200 --> 00:15:11,840 Speaker 1: I'm probably on the low side. I might have to 248 00:15:11,880 --> 00:15:15,440 Speaker 1: revise my final forecast and put it up into the twenties. 249 00:15:15,960 --> 00:15:20,040 Speaker 1: So many, so many interesting dynamics in this election. Polls 250 00:15:20,120 --> 00:15:23,360 Speaker 1: show that crime has surged as a big issue. Polls 251 00:15:23,400 --> 00:15:25,680 Speaker 1: show that abortion is not as big an issue as 252 00:15:25,720 --> 00:15:29,600 Speaker 1: we thought it might be. Poll's also show hispanic voters 253 00:15:29,600 --> 00:15:34,120 Speaker 1: are moving to the Republicans. Really interesting stuff, And I 254 00:15:34,160 --> 00:15:36,880 Speaker 1: do think there's going to be a wicked, wicked post 255 00:15:36,920 --> 00:15:40,240 Speaker 1: mortem among the Democrats trying to figure out just what happened. 256 00:15:40,480 --> 00:15:42,800 Speaker 1: And not to be conspiracy theorist, but I have to 257 00:15:42,840 --> 00:15:45,080 Speaker 1: go to this because there have been some rumblings around 258 00:15:45,120 --> 00:15:48,200 Speaker 1: the edges. How concerned are you about election security at 259 00:15:48,200 --> 00:15:50,240 Speaker 1: a time when it's clear that there are a number 260 00:15:50,320 --> 00:15:53,800 Speaker 1: of international actors as well as domestic ones that want 261 00:15:53,840 --> 00:15:56,600 Speaker 1: to raise doubts about the institution of the United States. 262 00:15:57,200 --> 00:15:59,920 Speaker 1: It's a legitimate fear there was a break in. Yet 263 00:16:00,040 --> 00:16:03,040 Speaker 1: today we don't know the details, so we can't really speculate. 264 00:16:03,080 --> 00:16:05,840 Speaker 1: But I have a hunch that's probably not the only 265 00:16:06,120 --> 00:16:08,480 Speaker 1: incident will have in the next two weeks, Like that 266 00:16:08,840 --> 00:16:11,280 Speaker 1: charges of that ballot box stuffing, you know, all of 267 00:16:11,320 --> 00:16:14,240 Speaker 1: that stuff, Gregor, real focus on the Democrats here, Let's 268 00:16:14,240 --> 00:16:17,280 Speaker 1: focus on the GOP right now. How Grand Old Party 269 00:16:17,400 --> 00:16:21,320 Speaker 1: is the GOP two weeks out. Well, they've got an 270 00:16:21,360 --> 00:16:24,080 Speaker 1: internal debate to resolve, and that is how much money 271 00:16:24,080 --> 00:16:27,320 Speaker 1: do we give Ukraine. Kevin McCarthy has had to walk 272 00:16:27,400 --> 00:16:30,280 Speaker 1: back what he said. I think most Republicans want to 273 00:16:30,280 --> 00:16:34,600 Speaker 1: continue the funding. I wouldn't think please go ahead, I'm sorry, please, 274 00:16:34,720 --> 00:16:37,400 Speaker 1: I'd make this point time. I think this one of 275 00:16:37,400 --> 00:16:40,640 Speaker 1: the sleeper issues, and it involves China, it involves Ukraine, 276 00:16:40,720 --> 00:16:44,560 Speaker 1: involves Iran. Is a dramatic increase in defense spending. I 277 00:16:44,560 --> 00:16:47,600 Speaker 1: think we go to eight hundred billion in this new 278 00:16:47,640 --> 00:16:51,840 Speaker 1: fiscal year. Our Democrats and Republicans on board with that jointly, 279 00:16:51,960 --> 00:16:54,880 Speaker 1: as we see them both jointly with a view on China, 280 00:16:55,680 --> 00:16:58,479 Speaker 1: one of the rare issues where you could see a compromise. 281 00:16:58,600 --> 00:17:02,880 Speaker 1: I think there's unified antipathy in Washington towards China for 282 00:17:02,960 --> 00:17:05,119 Speaker 1: all all of the things that they've done with whether 283 00:17:05,160 --> 00:17:08,320 Speaker 1: it's COVID or treatment of dissidents. Greg Let's say that 284 00:17:08,359 --> 00:17:11,679 Speaker 1: the Republicans do win both the House and the Senate, 285 00:17:11,720 --> 00:17:13,320 Speaker 1: what are they gonna do with the FED when they 286 00:17:13,320 --> 00:17:15,280 Speaker 1: are hiking rates? How much are they going to start 287 00:17:15,320 --> 00:17:19,800 Speaker 1: pushing back against a pretty aggressive tightening in some of 288 00:17:19,840 --> 00:17:23,000 Speaker 1: the monetary policy is simply because it's going to create 289 00:17:23,000 --> 00:17:26,560 Speaker 1: some real problems for this economy. Fearless Forecast, Lisa. I 290 00:17:26,600 --> 00:17:28,680 Speaker 1: think we're going to start to see the FED really 291 00:17:28,720 --> 00:17:32,960 Speaker 1: come under intense criticism. We saw yesterday Shared Brown, the 292 00:17:33,320 --> 00:17:36,320 Speaker 1: Democrat from Ohio, with a pretty harsh letter, and we 293 00:17:36,400 --> 00:17:39,160 Speaker 1: see people in the markets, whether it's Jeremy Siegel or 294 00:17:39,280 --> 00:17:42,040 Speaker 1: Jim Paulson, there are a lot of highly regarded people 295 00:17:42,080 --> 00:17:44,520 Speaker 1: who feel the FED is overdone it. I think that 296 00:17:44,600 --> 00:17:47,600 Speaker 1: criticism is going to increase right to catch up Greg 297 00:17:47,600 --> 00:17:49,800 Speaker 1: just awesome. No doubt we'll speak to you touch bikes 298 00:17:49,840 --> 00:17:53,800 Speaker 1: again before the midsum of I g F Investments. This 299 00:17:53,880 --> 00:17:57,639 Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us 300 00:17:57,720 --> 00:18:00,560 Speaker 1: live week days from seven to ten a m. Eastern 301 00:18:00,800 --> 00:18:04,880 Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from 302 00:18:04,920 --> 00:18:10,160 Speaker 1: six to nine am for insight from the best in economics, finance, investment, 303 00:18:10,320 --> 00:18:15,320 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 304 00:18:15,440 --> 00:18:19,240 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 305 00:18:19,359 --> 00:18:23,560 Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg