WEBVTT - Jay Powell, Pride, And Public Companies (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple podcast or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.279 at Bloomberg dot com slash podcast. Let's check in with 0:00:22.360 --> 0:00:25.320 Jennifer Lee, senior economist and Managing director of BEMO Capital Markets. 0:00:25.360 --> 0:00:28.560 Good friend of the show. Uh, Jennifer, what did you 0:00:28.680 --> 0:00:32.680 hear or did you hear anything different from FED Chairman 0:00:32.920 --> 0:00:35.560 j Pale as he uh testified yesterday in front the 0:00:35.600 --> 0:00:38.080 Senate and today in front of the House. Yesterday people 0:00:38.120 --> 0:00:40.559 were saying maybe he wasn't as hawkish as we expected. 0:00:40.600 --> 0:00:43.199 And this morning the big headline was is going to 0:00:43.280 --> 0:00:45.640 be very challenging to hit a soft landing. Yeah, that 0:00:45.680 --> 0:00:47.440 was the headline. So, Jennifer, what did you take away? 0:00:48.960 --> 0:00:51.760 Good morning everyone. So I thought he was again I 0:00:51.800 --> 0:00:54.000 think said his last few game He's been very clear 0:00:54.080 --> 0:00:57.400 and I'm giving him an a for his communications recently. 0:00:57.640 --> 0:00:59.720 But I thought the big takeaway was the fact that 0:00:59.800 --> 0:01:02.400 he did not dismiss the possibility of a hundred basis 0:01:02.480 --> 0:01:04.720 point right, like, um, you know, he said, and this 0:01:04.760 --> 0:01:06.440 is a smart thing to do, like I will never 0:01:06.600 --> 0:01:09.319 take anything off the table for any and all purposes. 0:01:09.360 --> 0:01:11.520 And that's a wise thing to say, because you can't 0:01:11.520 --> 0:01:14.720 dismiss anything. So I don't lessons learned by the way 0:01:14.800 --> 0:01:17.520 Jennifer right, because remember a couple of meetings ago he said, oh, 0:01:17.520 --> 0:01:21.520 seventy now we're not going to do that. Yes, exactly exactly. 0:01:21.560 --> 0:01:22.640 That was like, yeah, it was one of the first 0:01:22.640 --> 0:01:25.080 thing cause I thought about when the market rallied, um, 0:01:25.120 --> 0:01:26.959 you know last week when he said that, they said, oh, 0:01:27.000 --> 0:01:29.320 you don't he's uh, he's dismissing or he's saying that 0:01:29.360 --> 0:01:31.160 the semi five basis points is not comm and I 0:01:31.200 --> 0:01:33.560 can't remember exact words, but I was thinking a hold it. 0:01:33.720 --> 0:01:36.240 Back in May he also sort of dismissed the semi 0:01:36.280 --> 0:01:38.360 five peoper in markets rally. Then look what happened. So 0:01:38.600 --> 0:01:40.800 I don't think anything can be taken off the table, 0:01:40.800 --> 0:01:42.960 as he said, And you know, I'm I don't think 0:01:42.959 --> 0:01:45.800 the hunter basis points it's going to be a thing. 0:01:45.880 --> 0:01:47.600 It's going to become a thing. But the fact that 0:01:47.640 --> 0:01:50.680 he's just or that the entire committee is not putting 0:01:50.680 --> 0:01:54.480 anything off the table, is seeks volumes to their commitment, um, 0:01:54.560 --> 0:01:57.000 you know, to bring insulation back. It's great that they 0:01:57.000 --> 0:02:01.000 had that commitment. Obviously, inflation is the bay of our existence, 0:02:01.040 --> 0:02:04.640 as um UH President Biden said on one of the 0:02:04.680 --> 0:02:08.519 evening talk shows. But can he really do that much 0:02:08.560 --> 0:02:13.359 about it, Jennifer, I mean, um, you know, in all 0:02:13.400 --> 0:02:18.280 of your economics training, Um, what does monetary policy do 0:02:18.639 --> 0:02:25.960 to supply chain problems, supply side problems? Absolutely nothing? Um, Um. 0:02:26.040 --> 0:02:29.320 You know, it's a it's a blunt monetary it's a 0:02:29.320 --> 0:02:31.960 blunt instrument, and it's you know, I'm sarting to hammer 0:02:32.000 --> 0:02:34.200 down on demand and we're already seeing the effects of that. 0:02:34.280 --> 0:02:36.560 But you know, as he has said, you know, um 0:02:36.639 --> 0:02:39.600 very very often that they cannot do anything to make 0:02:39.639 --> 0:02:42.760 those you know, widgets come off of the um, off 0:02:42.760 --> 0:02:45.360 of the conveyor belt even faster. Um. You know, there 0:02:45.360 --> 0:02:48.440 are all these other supply issues that are contributing to 0:02:48.880 --> 0:02:52.880 UM to the inflation, and that part they cannot um control. 0:02:53.160 --> 0:02:55.000 But if they control the amount of demand that it's 0:02:55.000 --> 0:02:57.720 out there, that's you know, that's pushing on the supply chains. 0:02:58.160 --> 0:03:00.760 You know, then they will have I have done their job, 0:03:01.560 --> 0:03:04.240 which is again cooling demanded, and it's starting. We're starting 0:03:04.240 --> 0:03:06.799 to see that already. All right, Jennifer, I get asked you, Hannah, 0:03:06.840 --> 0:03:11.519 what's your recession outlook? Do you have a consent or 0:03:11.880 --> 0:03:15.280 a feel for whether this economy will roll into a recession? 0:03:15.280 --> 0:03:17.280 And if so, how deep, how shallow all that kind 0:03:17.280 --> 0:03:18.960 of stuff. I don't know if you heard me, Jennifer, 0:03:19.000 --> 0:03:21.560 but this morning we heard from George Buckley over Numura. 0:03:21.760 --> 0:03:23.960 He thinks we're going to have five quarters of back 0:03:24.000 --> 0:03:28.720 to back in traction starting in Q four. I heard you. Holy, 0:03:29.280 --> 0:03:32.560 that's that's quite That's an outlier, right, he's an out Yeah, 0:03:32.560 --> 0:03:35.880 it's it's quite headline catching. You know, we've thought we've 0:03:35.920 --> 0:03:38.080 actually been trimming our our growth O. Look, we've got 0:03:38.400 --> 0:03:40.640 we chopped next year down to one percent. We originally 0:03:40.640 --> 0:03:42.200 had one and a half percent of the last move 0:03:42.600 --> 0:03:45.280 But we do not have your traditional you know, back 0:03:45.320 --> 0:03:48.280 to back GDP negative GDP readings. But we do have 0:03:48.600 --> 0:03:50.800 growth grinding slower in the second half of the year. 0:03:50.800 --> 0:03:53.440 The first half is you know, pretty decent, notwithstanding that 0:03:53.440 --> 0:03:55.680 one and a half percent dropping. That's because of again, 0:03:55.840 --> 0:03:57.280 um sort of in the Q one that was because 0:03:57.280 --> 0:04:00.520 of importance and in inventories. But this and half we 0:04:00.600 --> 0:04:04.280 have slowly grinding um slower into into the turn of 0:04:04.360 --> 0:04:07.320 next year, so you know, almost like barely zero percent 0:04:07.560 --> 0:04:10.000 growth in Q four and Q one for example, So 0:04:10.080 --> 0:04:12.720 not an official you know, again negative back to back 0:04:12.760 --> 0:04:16.320 reading for GDP, but enough to have growth grind down 0:04:16.360 --> 0:04:18.800 to about one percent next year. Jennifer, what's your view 0:04:18.839 --> 0:04:20.680 of the consumer? And Matt and I were just talking 0:04:20.680 --> 0:04:22.840 about a story on the Bloomberg terminal. Dard And Restaurants 0:04:22.839 --> 0:04:25.760 reported some better than expected results, their same store sales 0:04:25.800 --> 0:04:29.920 at their restaurants up almost in the quarter ending in May. 0:04:29.960 --> 0:04:32.279 That kind of surprised me given some of the inflationary pressures. 0:04:32.279 --> 0:04:33.400 How do you what do you how do you think 0:04:33.400 --> 0:04:37.720 about the consumer here? I think you know I I 0:04:37.760 --> 0:04:39.039 we say this all the time. You know, you can 0:04:39.120 --> 0:04:43.120 never ever underestimate the US consumer. Obviously, they're under pressure 0:04:43.560 --> 0:04:46.279 from these higher prices, from record gas prices at the 0:04:46.279 --> 0:04:48.520 pump um At the same time, the fact that the 0:04:48.560 --> 0:04:51.520 jawn market remains very tight, the fact that people are 0:04:51.560 --> 0:04:54.839 still getting a regular paycheck, which I think speaks volumes 0:04:54.880 --> 0:04:56.520 for all of this, and then they still have, you know, 0:04:56.720 --> 0:04:58.960 a little nice tidy pile of savings that they can 0:04:59.000 --> 0:05:01.680 fall back on. Um, hopefully they're just going to keep 0:05:01.680 --> 0:05:03.159 it there, I think, just to you know, just to 0:05:03.160 --> 0:05:05.480 make sure everything is okay. But you know, consumers are 0:05:05.480 --> 0:05:07.560 still dining out. You know, you're talking earlier about Old 0:05:07.600 --> 0:05:09.640 Garden for example. You know the fact that they are 0:05:09.680 --> 0:05:13.320 still dining out. You're still um buying sporting goods for examples. UM. 0:05:13.360 --> 0:05:15.800 I think in the last retail sales report, I think 0:05:15.839 --> 0:05:17.920 speaks volumes that you know, the consumer, you can you 0:05:17.960 --> 0:05:20.320 cannot write them off just yet. What about obviously there's 0:05:20.320 --> 0:05:23.159 gonna be What about the job situation. I mean people 0:05:23.200 --> 0:05:25.800 who were looking for jobs and they were being picky, 0:05:26.000 --> 0:05:29.920 is it time for them to uh, you know settle, settle? 0:05:30.640 --> 0:05:33.000 Or people who wanted to sell a house but they 0:05:33.000 --> 0:05:36.839 were kind of on the fence do it now? I 0:05:36.839 --> 0:05:38.560 would say, in terms of the job for the for 0:05:38.600 --> 0:05:41.080 the job market, I mean some you're already seeing you know, 0:05:41.279 --> 0:05:43.839 initial claims picking up already on a four week moving 0:05:43.839 --> 0:05:47.400 average basis, So the job market will not be as 0:05:47.440 --> 0:05:49.839 tight as a that's is already starting to ease up 0:05:49.839 --> 0:05:52.159 a bit. And you know I've been using this example. 0:05:52.160 --> 0:05:54.200 If you are a company that has been looking for 0:05:54.360 --> 0:05:56.600 let's just say you know ten told people and you've 0:05:56.600 --> 0:05:58.200 been looking for a long long time and you still 0:05:58.240 --> 0:06:00.680 can't find anyone. At some point you're gonna think, maybe 0:06:00.720 --> 0:06:02.680 we don't need all those people. Maybe we can just 0:06:02.720 --> 0:06:05.640 do with what we have, Especially with demanding starting to 0:06:05.800 --> 0:06:07.320 ease up a bit, we don't we don't need to 0:06:07.360 --> 0:06:09.920 hire as many. So if you do have several offers 0:06:09.920 --> 0:06:12.800 out there, I would say, take all right, Jennifer. Maybe 0:06:12.800 --> 0:06:15.320 some of our listeners don't know that BEMO stands for 0:06:15.320 --> 0:06:18.560 a Bank of Montreal. Give us a sense of how 0:06:18.600 --> 0:06:22.120 are things up? Is it Ontario? Bank of Montreal Ontario? No, 0:06:23.920 --> 0:06:29.559 that's back of Montreal. Yeah, the MO is just for Montreal. Yes, 0:06:29.800 --> 0:06:33.480 because Montreal is not in Ontario. That's correct. Quebec very 0:06:33.520 --> 0:06:35.440 good talk to us about. Just give us a sense 0:06:35.440 --> 0:06:37.720 how are things in Canada the days? How's the economy, 0:06:37.720 --> 0:06:40.080 how's the COVID, how are how's the consumer? How are 0:06:40.120 --> 0:06:43.400 things to our good friends up north? So we are 0:06:44.520 --> 0:06:46.599 we're similar to what's happening in the US, but our 0:06:47.520 --> 0:06:51.040 our our lockdowns lasted longer, and we're definitely more prevasive, 0:06:51.040 --> 0:06:53.680 pervasive than they were in the US. So because we 0:06:53.720 --> 0:06:56.560 opened up a lot later, well, we had a stronger 0:06:56.600 --> 0:06:59.719 start to the year UM and we're still seeing some 0:06:59.720 --> 0:07:02.240 some pretty decent numbers up until like up until the 0:07:02.279 --> 0:07:06.200 second quarter, but we also see things UM cooling down 0:07:06.320 --> 0:07:08.839 in the second half of the year UM into early 0:07:08.920 --> 0:07:12.160 next year as the banker Canda starts to raise rates UM. 0:07:12.320 --> 0:07:14.760 You know, we almost a lockstep with with with the US. 0:07:14.800 --> 0:07:16.640 I mean, after the semi five basis point right high 0:07:17.000 --> 0:07:18.680 for the Fed last week and then at the strong 0:07:18.760 --> 0:07:20.920 signal that they're going to do it again in July, 0:07:21.120 --> 0:07:23.560 we also raised our our call for the bank to 0:07:23.560 --> 0:07:25.840 go seventy five basis points in July. So, you know, 0:07:25.880 --> 0:07:28.520 the same thing high prices. You know, we just got 0:07:28.600 --> 0:07:31.640 a very strong inflation report UM yesterday at seven points 0:07:31.640 --> 0:07:35.480 seven percent UM. Again there is it's a similar story 0:07:35.480 --> 0:07:38.520 around the world where inflation is that decade highs UM 0:07:38.640 --> 0:07:40.840 or multi decade highs I guess I should say, and 0:07:40.960 --> 0:07:44.560 central banks that are continuing to um to titan and 0:07:44.680 --> 0:07:47.240 tighten sharply. And Jennifer, one of the things I think 0:07:47.280 --> 0:07:50.200 I understand about the Canadian economy, the Canadian consumers, the 0:07:50.360 --> 0:07:54.040 housing home is a bigger part of the personal asset. 0:07:54.400 --> 0:07:56.440 Give us a sense of kind of how the housing 0:07:56.480 --> 0:08:00.040 market is there and how people think about that. So 0:08:00.120 --> 0:08:02.240 the housing market was one of the biggest drivers of 0:08:02.280 --> 0:08:06.160 our of our strong growth, just given years and years 0:08:06.200 --> 0:08:10.320 of super low interest rates and sometimes this this concept 0:08:10.360 --> 0:08:13.080 that you know that housing has nowhere to go up, 0:08:13.160 --> 0:08:16.120 and that's you know, clearly not true. Um. So you 0:08:16.160 --> 0:08:18.280 know now that we've got central banks of the Bank 0:08:18.280 --> 0:08:21.520 Accunta tightening rates, warning that there's that they're going to 0:08:21.680 --> 0:08:23.520 be a lot higher, and you know, there is fear 0:08:23.640 --> 0:08:26.440 that the in that the housing market is going to 0:08:27.080 --> 0:08:29.320 to be in pain because of that, and it's already 0:08:29.320 --> 0:08:33.280 starting to drop considerably. And of course the pandemic didn't 0:08:33.280 --> 0:08:35.160 help with everyone sort of moving moving out of the 0:08:35.200 --> 0:08:37.800 downtown core. I'm just speaking about Toronto right now, moving 0:08:37.800 --> 0:08:40.000 out to the bourbs and you know, getting more house 0:08:40.120 --> 0:08:42.640 for your money, and uh, you know, so that also 0:08:42.760 --> 0:08:45.840 added to the strong demand for housing. But that's starting 0:08:45.840 --> 0:08:49.960 to cool significantly already. All right, Jennifer Lee, thank you 0:08:50.000 --> 0:08:52.800 so much for joining is always appreciate getting your thoughts 0:08:53.160 --> 0:08:56.080 about the global economy and the Canadian economy. As well. 0:08:56.160 --> 0:09:00.360 Jennifer Leasing, economist managing director for PIMO Capital, Mark gets 0:09:04.000 --> 0:09:07.440 the Supreme Court has struck down, as we just reported, 0:09:07.600 --> 0:09:11.239 the New York gun carrying restrictions. New York is famously 0:09:11.440 --> 0:09:14.160 or infamously depending on how you look at it, strict 0:09:14.200 --> 0:09:17.120 about concealed carry licenses and handing them out. You can, 0:09:17.200 --> 0:09:21.240 of course get a license for a handgun, but you 0:09:21.280 --> 0:09:23.720 would normally have to keep it in your home, certainly 0:09:23.760 --> 0:09:26.920 in New York City, certainly in Westchester County, and it's 0:09:27.000 --> 0:09:29.680 very difficult to carry it outside your home. But the 0:09:29.679 --> 0:09:34.040 Supreme Court has avoided that and established your right to 0:09:34.080 --> 0:09:38.400 bear arms any place other than just in your house. 0:09:38.559 --> 0:09:43.000 Just Justice Thomas wrote the majority opinion and the ruling 0:09:43.160 --> 0:09:47.680 was six to three. So um Briar so to Mayor 0:09:48.240 --> 0:09:52.240 and Kagan dissented in the case. There the three and 0:09:52.600 --> 0:09:54.360 this is one of the big cases that we've been 0:09:54.360 --> 0:09:58.400 waiting for. Um. June Grasso is here in the studio 0:09:58.480 --> 0:10:01.640 with us to to give the background on this case 0:10:01.679 --> 0:10:04.200 and tell us what it means. So June, well, you've 0:10:04.200 --> 0:10:07.880 done pretty well so far. Matt uh Well, the background 0:10:07.920 --> 0:10:10.440 on this cases we were we've been expecting this case 0:10:10.960 --> 0:10:14.559 to be decided in this way since the oral arguments, 0:10:14.559 --> 0:10:17.199 because it was pretty clear that the conservative justices and 0:10:17.280 --> 0:10:20.120 you mentioned it's six to three down audiological lines, the 0:10:20.160 --> 0:10:24.160 conservative justices saying that there is this right to carry 0:10:24.200 --> 0:10:28.000 and that New York is it's it's law, which is 0:10:28.120 --> 0:10:33.359 very restrictive, as you mentioned, is unconstitutional. The three justices 0:10:33.400 --> 0:10:37.040 in dissent where the liberal justices. So the question is, 0:10:37.080 --> 0:10:39.840 and I haven't had a chance to read through this yet, 0:10:40.200 --> 0:10:42.920 but the question is just how far the court went 0:10:43.000 --> 0:10:46.240 in this, whether they say that all laws like New 0:10:46.320 --> 0:10:50.080 York's law are or whether or whether or whether there's 0:10:50.240 --> 0:10:53.640 there are certain restrictions for examples, you know, special areas 0:10:53.640 --> 0:10:58.440 where you can't carry guns. Um, it's Justice Thomas has 0:10:58.480 --> 0:11:02.280 been a Second amend an advocate and not that's putting 0:11:02.280 --> 0:11:06.760 it mildly for years and the favor of the Constitution right, well, 0:11:06.960 --> 0:11:10.040 they all say that the that the Second Amendment allows 0:11:10.040 --> 0:11:13.680 you to turn differently, right exactly. I mean up until 0:11:13.720 --> 0:11:17.480 this point. This is the first gun law gun decision 0:11:17.600 --> 0:11:20.200 in a decade. So up until this point in a 0:11:20.240 --> 0:11:26.240 decision written by Justice Scalia, very conservative. Um, you could carry, 0:11:26.280 --> 0:11:28.000 you could have a gun in the home, but this 0:11:28.120 --> 0:11:31.240 takes it another step, a big step, by the way. 0:11:31.360 --> 0:11:34.520 Not to be silly, June, but are there justices on 0:11:34.559 --> 0:11:38.400 the Supreme Court who believe the Second Amendment should be repealed? 0:11:38.679 --> 0:11:41.920 Are there any of those dissenters you think who don't 0:11:41.920 --> 0:11:44.760 believe Americans should have the right to bear arms? Well, 0:11:44.800 --> 0:11:46.720 you know, I think they all. First of all, you 0:11:46.760 --> 0:11:50.840 can't repeal this. To take a constitutional amendment away would 0:11:50.880 --> 0:11:54.640 be it's never been done, my dad, it could be done, um, 0:11:54.720 --> 0:11:57.040 because you need to do so many things. But so 0:11:57.559 --> 0:12:01.240 but I think they all accept the fact in their 0:12:01.280 --> 0:12:03.600 heart of hearts, whether they believe that. I mean, there 0:12:03.600 --> 0:12:06.960 are many many scholars who don't believe that the Second 0:12:06.960 --> 0:12:10.640 Amendment goes in the direction that Heller has put it, 0:12:10.679 --> 0:12:13.160 that it means that everyone can has a right to 0:12:13.240 --> 0:12:15.559 carry a gun or to have a gun in their home. 0:12:15.640 --> 0:12:17.920 I mean, there are many many scholars who look at 0:12:17.920 --> 0:12:21.480 the Second Amendment and say that's not what this amendment meant, 0:12:21.520 --> 0:12:24.840 and that the justices have read into it over the years. 0:12:24.880 --> 0:12:27.520 But I think that everyone at this point accepts the 0:12:27.559 --> 0:12:30.560 fact that the Second Amendment allows you to have a 0:12:30.600 --> 0:12:32.520 gun in the house. Well, and certainly at the time 0:12:32.520 --> 0:12:36.000 it was written everyone had a gun in the house. Well, 0:12:36.000 --> 0:12:37.840 but it was. We don't want to get into a 0:12:38.040 --> 0:12:41.199 historical argument about it. But no, there are I mean, 0:12:41.200 --> 0:12:43.840 there are many many scholars of the Second Amendment who 0:12:43.960 --> 0:12:46.840 don't believe that it was meant to be as it 0:12:46.960 --> 0:12:49.120 is today. And there's a lot of difference between you know, 0:12:49.200 --> 0:12:51.840 the militia and having a gun for of course, protect 0:12:51.880 --> 0:12:56.199 your And of course there are many, uh, scholars and 0:12:56.640 --> 0:13:00.400 justices who see the Constitution as a living document field 0:13:00.400 --> 0:13:02.199 that it should change with the times. And then there 0:13:02.200 --> 0:13:04.840 are the originalists who or what do you call them? 0:13:04.840 --> 0:13:08.920 The fundamentalists? Who? Who? Originalists? Sexualists exactly? Who? Who? Who 0:13:09.000 --> 0:13:12.240 want to really stick to the words on the paper? Um, 0:13:12.320 --> 0:13:14.599 in terms of what New York can do about this, 0:13:14.640 --> 0:13:16.600 because I know that at least at the state level, 0:13:16.640 --> 0:13:18.880 and I think I've heard Mayor Adams say on the 0:13:18.880 --> 0:13:23.240 city level as well, UM, legislators were preparing for this 0:13:23.520 --> 0:13:28.520 eventuality and trying to figure out ways that they could 0:13:28.800 --> 0:13:33.280 still limit, um, the amount of uh, you know, guns 0:13:33.280 --> 0:13:36.760 in circulation here while adhering to the decision. Right, this 0:13:36.800 --> 0:13:38.480 is why you talk about I think what they call 0:13:38.600 --> 0:13:43.400 sensitive areas, right exactly, So It all depends on what 0:13:43.559 --> 0:13:50.960 this opinion says exactly, whether it's says completely no laws 0:13:51.000 --> 0:13:55.439 allowed that restrict the use of carrying guns in public. 0:13:55.640 --> 0:13:57.720 I mean, it's hard to believe that that that this 0:13:57.800 --> 0:14:00.480 says that, but as I said, I have to really 0:14:00.520 --> 0:14:04.079 carefully to see what it says. We know that New 0:14:04.160 --> 0:14:07.480 York's law was very, very restrictive. As you mentioned, it 0:14:07.960 --> 0:14:11.440 required very many restrictions. So we'll have to see how 0:14:11.440 --> 0:14:15.600 did we can copy a celebrity or super rich basically 0:14:16.120 --> 0:14:19.240 one of those. Alright, thank you so much. During Grasso, 0:14:19.360 --> 0:14:25.680 legal reporter for Bloomberg News. All right, let's check in. 0:14:25.720 --> 0:14:28.640 We've got Fed Chirman j. Pal He's still in Washington, 0:14:28.800 --> 0:14:31.400 d C. Still in front of Congress today it's the 0:14:31.800 --> 0:14:35.960 Senate Um and along chief was economist for Bloomberg Economics 0:14:35.960 --> 0:14:38.560 and joins us. And uh, you know, I'm not sure 0:14:38.560 --> 0:14:40.400 what to take away from this. It seems like it's 0:14:40.400 --> 0:14:43.160 more political theater than than anything. But as you as 0:14:43.160 --> 0:14:45.760 you think about the communication we've we've heard from Fed 0:14:45.800 --> 0:14:48.000 Sherman Powell over the last couple of days and you know, 0:14:48.040 --> 0:14:50.280 over the last week and so on, how do you 0:14:50.320 --> 0:14:56.280 think he's approaching this inflation slash recession Balancing Act. Yeah, 0:14:56.320 --> 0:15:00.840 I think he is trying to um not sound too 0:15:00.880 --> 0:15:04.960 alarming about recessions, but he also wants to acknowledge that 0:15:05.520 --> 0:15:10.200 it is uh that that the FED officials are realizing 0:15:10.320 --> 0:15:13.920 that that there is a trade off in bringing inflation 0:15:13.960 --> 0:15:17.800 down and unemployment. Right, well, well right, you know, as 0:15:17.800 --> 0:15:22.120 a policy maker, they could control the narratives recessions. So 0:15:22.200 --> 0:15:25.520 even if they internally think that a recession is a 0:15:25.600 --> 0:15:28.520 short thing, they will not come out and say it's 0:15:28.520 --> 0:15:31.360 a short thing. So so whatever he says about would 0:15:31.360 --> 0:15:33.360 be the day right when the FED chair says we're 0:15:33.400 --> 0:15:36.760 definitely headed into a recession next quarter, or a president 0:15:36.800 --> 0:15:39.880 the president can't really say it either. Yeah, exactly. It 0:15:39.920 --> 0:15:41.880 would be like being in a you know that the 0:15:41.960 --> 0:15:45.080 analogy of it being in a movie theater and somebody 0:15:45.120 --> 0:15:49.120 screaming fire, everybody's running out. He did say, though, it 0:15:49.160 --> 0:15:52.480 would be very challenging to stick a soft landing. So 0:15:52.520 --> 0:15:56.200 he's getting closer and closer to making that admission, especially 0:15:56.240 --> 0:16:00.760 as um politicians question him about the efficacy of monetary 0:16:00.800 --> 0:16:04.040 policy when it comes to dealing with supply side inflation. 0:16:04.320 --> 0:16:07.280 It's just not that useful, and the only way you 0:16:07.320 --> 0:16:11.920 can do it is to buy damping down demand. Right. Well, 0:16:11.960 --> 0:16:14.680 you know he says that, right, but when you look 0:16:14.720 --> 0:16:17.920 at what's happening now, it doesn't seem that way. After 0:16:18.080 --> 0:16:22.120 the FED raises rates by sony fight it, you see 0:16:22.160 --> 0:16:24.920 that everybody is darting to talk about recession spears and 0:16:25.000 --> 0:16:29.200 suddenly oil price plunged by what like almost like sixteen 0:16:29.240 --> 0:16:33.800 dollars for barrow already within a week. So through this, 0:16:34.320 --> 0:16:40.040 through influencing people's expectations and sentiment, suddenly he has an 0:16:40.040 --> 0:16:44.000 effect on supply. Yeah. Absolutely, we we We saw oil 0:16:44.040 --> 0:16:49.960 trading for basically a hundred four dollars a barrel last Tuesday, 0:16:50.080 --> 0:16:53.640 and this morning we came down to one oh two 0:16:53.760 --> 0:16:58.120 thirty two. So yeah, we were actually down twenty bucks 0:16:58.440 --> 0:17:01.280 in a week and a half, not even a week 0:17:01.320 --> 0:17:04.199 and a half. Is that going to be enough? And uh, 0:17:04.280 --> 0:17:08.960 I mean, um is the jaw owning and a few 0:17:09.000 --> 0:17:13.320 seventy basis point how it is going to do it? Well? 0:17:13.560 --> 0:17:16.840 I think that even before last week there there were 0:17:16.920 --> 0:17:21.560 some disinflationary signs happening in the economy, but just not 0:17:21.720 --> 0:17:25.359 food and energy prices. Um I I spoke to you 0:17:25.359 --> 0:17:30.320 guys previously telling you that I think headline inflation would 0:17:30.600 --> 0:17:33.280 get to nine percent before the end of the summer. 0:17:33.640 --> 0:17:36.040 I still think that that is likely going to happen, 0:17:36.160 --> 0:17:41.199 precisely because you know, food prices going to ride, gasoline prices, 0:17:41.320 --> 0:17:45.320 um um. There's some seasonality with it and and it 0:17:45.400 --> 0:17:50.600 has to fall sharply in order to see the situation 0:17:50.720 --> 0:17:55.040 and improved um. So I still see like nine percent 0:17:55.160 --> 0:17:58.480 being attainable in a couple of months and in terms 0:17:58.520 --> 0:18:00.960 of inflation year over year in lation. But at the 0:18:01.000 --> 0:18:03.920 same time, if you look at core measures, those are 0:18:04.000 --> 0:18:07.720 coming down in a more sure footed way. And I 0:18:07.800 --> 0:18:11.800 think that after I if the FED does one more 0:18:11.840 --> 0:18:15.840 seventy five and a couple more fifty bits, I think 0:18:15.840 --> 0:18:19.639 they could uh downshift bits by the end of the 0:18:19.720 --> 0:18:23.120 year and and get to four percent next year and 0:18:23.160 --> 0:18:26.359 we will be well. I think that will be an 0:18:26.359 --> 0:18:29.200 optimistic cap for our bringing inflation back to two percent. 0:18:29.359 --> 0:18:31.520 And one of our good friends of Bloomberg Economics, are 0:18:31.560 --> 0:18:35.560 you calling for a recession at any time? Officially yes, 0:18:35.680 --> 0:18:41.040 we have a officially adopted a recession um as our baseline, 0:18:41.119 --> 0:18:44.240 and we think it will be happening in the second half. 0:18:46.240 --> 0:18:50.840 We estimated that a recession before the end of next year. 0:18:51.240 --> 0:18:56.400 It could happen with seventy two percent probability. Pretty distinct number. 0:18:56.400 --> 0:18:58.200 There is it gonna be a shallow one, a deep one. 0:18:58.280 --> 0:19:03.040 I mean Matt was quoting says five quarters in a 0:19:03.119 --> 0:19:07.840 row of traction. Oh wow, Okay, we are seeing it 0:19:08.000 --> 0:19:12.199 more of a short and shallow one because typically you 0:19:12.280 --> 0:19:19.280 need uh financial distress and some banging sector um instability 0:19:19.520 --> 0:19:23.920 and uh you know uh to to get the deep 0:19:23.960 --> 0:19:27.160 recession the type that you see in two thousand and eight. 0:19:27.600 --> 0:19:32.320 And right now I'm just seeing very healthy household balance sheet. Um, 0:19:32.359 --> 0:19:36.960 you know, mortgage services as a share of income is 0:19:37.000 --> 0:19:42.320 that historical lows. So even though the housing market the debt, 0:19:42.480 --> 0:19:45.560 you know, with the urge and mortgage trade, people will 0:19:46.119 --> 0:19:49.480 pay more, it's still historically kind of low as a 0:19:49.560 --> 0:19:52.440 share of their income. And and so I just don't 0:19:52.480 --> 0:19:55.840 see those kind of financial frictions that generate that could 0:19:55.880 --> 0:19:58.600 generate is huge and deep recession. I want to talk 0:19:58.640 --> 0:20:02.280 about school for a second, and because I note, um, 0:20:02.400 --> 0:20:07.760 you got your bachelors in economics at Berkeley UM, which 0:20:07.800 --> 0:20:11.159 I think of as you know, a school where you 0:20:11.200 --> 0:20:14.439 come at things from a Marxist perspective. And then you 0:20:14.440 --> 0:20:17.640 when got your PhD at the University of Chicago, which 0:20:17.680 --> 0:20:21.560 is much more of an Austrian school. Right, how do you, um, 0:20:22.880 --> 0:20:27.160 how do you compare and contrast those two experiences. Yeah, 0:20:27.240 --> 0:20:30.520 I think you Chicago might like to accept Berkeley a 0:20:30.600 --> 0:20:35.119 lump just try to convert them for fun. But uh, 0:20:35.400 --> 0:20:39.359 but yeah, I think Berkeley definitely. It's one gets an 0:20:39.480 --> 0:20:44.719 education Berkeley. You attend to think that government stimulus, um 0:20:44.760 --> 0:20:51.320 you knows Ukansian economics works and bringing an economy out 0:20:51.320 --> 0:20:55.120 of recession because you think that prices are sticky. Then 0:20:55.280 --> 0:20:59.800 the uh you think about externality there. That's why there's 0:20:59.800 --> 0:21:03.840 a paste for why government stimulus can I can you know, 0:21:03.960 --> 0:21:07.760 get an economy out of you know, liquidity Trafford, you 0:21:07.760 --> 0:21:11.640 know some story situations, whereas the Chicago school is more 0:21:11.720 --> 0:21:17.159 of more places, more focused on um rationality, like you know, 0:21:17.480 --> 0:21:20.000 they look at a situation like today, they would be 0:21:20.040 --> 0:21:24.439 like poor sentiment in response to inflation, like the a 0:21:24.440 --> 0:21:30.560 little irrational because nominal money illusions people. People's nominal wages 0:21:30.560 --> 0:21:35.960 are rising in para all right, and a good good stuff. 0:21:35.960 --> 0:21:39.000 They appreciate it as always are very well educated. Anna 0:21:39.080 --> 0:21:43.800 Wong chief US economist for Bloomberg Economics, bringing us some 0:21:43.840 --> 0:21:46.399 thoughts here as fat Cherman j pal Uh. You know 0:21:46.720 --> 0:21:50.480 day two of his testimony in Front of Commerce explaining inflation, 0:21:50.560 --> 0:22:00.240 explaining monetary policy and the Balancing Act. June is Ride 0:22:00.240 --> 0:22:03.280 month and a month when we're focusing on equality issues 0:22:03.359 --> 0:22:06.879 here at Bloomberg. Today we bring in Edward Moreno, labor 0:22:06.960 --> 0:22:09.639 and Employment reporter for Bloomberg Law. He joins us to 0:22:09.680 --> 0:22:14.640 discuss the pressure companies face and advocating for inclusion during 0:22:14.720 --> 0:22:16.880 Pride Month. Edward, thanks for what you're joining is here. 0:22:17.400 --> 0:22:20.040 What did you find? What are companies doing? Are they 0:22:20.080 --> 0:22:23.399 paying lip service to this whole inclusion diversity equality thing? 0:22:23.480 --> 0:22:29.080