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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amerie Hordernt. Join us each day
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Speaker 2: with stocks at record highs and the dollar at multi
Speaker 2: year lows. Heading into the Fed's meeting, Prayer Misra of
Speaker 2: JP Morgan writing, expect POW to focus on the FEDS
Speaker 2: manday rather than the politics. Despite all the Fed shair drama,
Speaker 2: we have a divided FED with different views on risk
Speaker 2: the manday, and the chair has only one vote. Prayer
Speaker 2: joins us now for more pre good Monarch morning. Is
Speaker 2: this a different FED because that one vote used to
Speaker 2: count for quite a lot.
Speaker 3: I think you know the FED chairs job is to
Speaker 3: sort of build consensus, but look at I mean, what
Speaker 3: you've been talking about there are so many cross currents here.
Speaker 3: You know, with this highly concentrated GDP, the case shape recovery,
Speaker 3: the low higher low fire economy, they risk to the
Speaker 3: mandate are sort of two sided, and that's why we
Speaker 3: have a divided committee. So can any feed chair sort
Speaker 3: of build consensus. I think Chepau did a lot, but
Speaker 3: they've already reached the sort of realm of neutral. So
Speaker 3: I think any feed check coming in is going to
Speaker 3: have to contend with the fact that you're close to neutral.
Speaker 3: It's between three and four. They're right there, so they're
Speaker 3: going to have to wait for the data.
Speaker 4: So, you know, I think, you know.
Speaker 3: The pushback around from the FED, the pushback from the
Speaker 3: market around FED independence. I actually think the fact that
Speaker 3: everybody wants an independent FED, the bond market, the president,
Speaker 3: I think that's actually the FED is pushing back. I
Speaker 3: think this is all good news. The feed chair is
Speaker 3: extremely important. We'll have to listen to the you know,
Speaker 3: we'll have to sort of listen to the entire committee,
Speaker 3: but it is just one vote, and we'll have to
Speaker 3: listen to everybody at the field, all twelve voting members
Speaker 3: and the non voting members.
Speaker 5: Was Champa's last rite cut the last.
Speaker 3: Mate given the data right now, yes, I mean he's
Speaker 3: around till May. There's a lot of data between now
Speaker 3: and May, so can he cut you know, in March.
Speaker 3: So we're going to be watching both inflation and the
Speaker 3: labor market. The labor market does seem to have stabilized.
Speaker 3: We were getting those really high layoff announcements, and then
Speaker 3: you know, initial claims is not showing a pickup.
Speaker 4: So I would say base case this.
Speaker 3: You know, we might have seen the last rate cut,
Speaker 3: but I don't think you're going to get any confirmation
Speaker 3: of that. The inflation data has been weak, but it's.
Speaker 4: So shut down impacted.
Speaker 3: So we're going to have to see between the tax
Speaker 3: refunds on one side, and do we get this shutdown
Speaker 3: impacted data showing inflation some heat in inflation. I think
Speaker 3: for now they might not do anything. The market's not
Speaker 3: pricing in any rate cuts in the first half of THEAY,
Speaker 3: I think rightfully, so, but we're going to watch all
Speaker 3: all of the data. I hope there's no shutdown because
Speaker 3: that's going to you know, we're just getting.
Speaker 4: Somewhat clean data.
Speaker 3: I would really hope that we continue to get that
Speaker 3: clean data. The FED is otherwise likely to stay on hold,
Speaker 3: But I think rate cuts second half of the year
Speaker 3: is our base case. I think, you know, if inflation
Speaker 3: continues in its current downward trajectory, I think there's a
Speaker 3: few more rate cuts this year.
Speaker 1: Isn't there a chance that Jay Powell might be there
Speaker 1: for those rate cuts given the fact that Senator Tillis
Speaker 1: is basically saying, I'm not moving ahead with the peck
Speaker 1: until the DOJA investigation is wrapped up.
Speaker 4: How are you thinking about the politics?
Speaker 1: Do you think it will seep into the monetary policy decisions?
Speaker 3: No, I don't think politics will drive and I think
Speaker 3: the Fed does what they've always done. They look at
Speaker 3: the data, they assess risk to the outlook, and then
Speaker 3: they take an action. I think it's actually excellent that
Speaker 3: Jair Powell pushed back as strongly as he did, and
Speaker 3: that I think provided cover to Senator Tillis and others
Speaker 3: to push back as well. Where the politics can come
Speaker 3: in is the doj will need to wrap up pretty quickly,
Speaker 3: otherwise we're not getting another FED chair. I think the
Speaker 3: likelihood to your point, maybe Chefowell is more likely to
Speaker 3: stay on as a governor, so you know it remains
Speaker 3: just one additional vote that or you know, one person
Speaker 3: that potentially could be political. So I think that's where
Speaker 3: it can come in the makeup of the FED. But
Speaker 3: I think the FED is still going to say, let's
Speaker 3: look at the data.
Speaker 4: There are very.
Speaker 3: Vocal hawks out there who are concerned about the inflation risks.
Speaker 4: When it comes to the body.
Speaker 1: What you're talking about, if he stays on as a governorship,
Speaker 1: it's a deliberative body. So isn't this working against what
Speaker 1: the president wants?
Speaker 4: If FED Chair J.
Speaker 1: Powell is only going to stay on now because he
Speaker 1: feels like the institution's under threat.
Speaker 3: But you know, but I would say Chepoul is extremely credible.
Speaker 3: I think the administration wants rate cuts, but in a
Speaker 3: credible fashion because we've seen if the market gets nervous
Speaker 3: that the FED is losing its grip on inflation, you know,
Speaker 3: long term inflation expectations, the long end is going to
Speaker 3: get unanchored.
Speaker 4: The President's focus on the tenure.
Speaker 3: The bond every time the bond market speaks becomes yippie.
Speaker 4: We see some reaction from the administration.
Speaker 3: So I don't think the President or the administration would
Speaker 3: want to put somebody who's not credible. Jep Owl is
Speaker 3: extremely credible, and he's gone out on a limb, I think,
Speaker 3: very deliberately to say that he cares about FED independence.
Speaker 3: I think that's actually good for the institution. It's good
Speaker 3: for the bond market, and I think that's why the
Speaker 3: bond market. I mean, doesn't this feel like the longest
Speaker 3: month of the gate has just begun? But we've had
Speaker 3: a decade, right, We've had so much thrown at the market.
Speaker 3: The ten years At four and a quarter, I think
Speaker 3: that tells you the market is saying, let's put everything together.
Speaker 4: We have a credible fad.
Speaker 3: We have a lot of cross currents, but we're instill
Speaker 3: in a soft landing and inflation's heading lower, so those
Speaker 3: rate cuts can happen just maybe.
Speaker 4: A little bit.
Speaker 2: I think I saw a headline yesterday, or rather a
Speaker 2: picture on social Maydia that said something like it's January
Speaker 2: twenty seven hundred and seventy second. Yeah, I saw that,
Speaker 2: which is which is what it feels like, right. I
Speaker 2: think there's a disconnected divide between the way the financial
Speaker 2: media is talking about what's happnigan markets and what's actually
Speaker 2: happening in markets. There's a headline that I keep seeing
Speaker 2: every time we have a Dante for the US doma
Speaker 2: just sell America. And then I look at the bond
Speaker 2: market and it's at twenty four for twenty three, for
Speaker 2: twenty something. And then I hear headlines and people talking
Speaker 2: about stories that consider a debasement trade and this is
Speaker 2: why everyone's parting into gold. And then market based expectations
Speaker 2: for inflation are still really, really subdued. I was looking
Speaker 2: at the data for foreign holdings of treasuries at the
Speaker 2: back end of last year, record highs never been higher.
Speaker 2: Is there a divide between the stories you're seeing, the
Speaker 2: headlines you read, and what's actually happening in markets at
Speaker 2: the moment.
Speaker 3: So you know that famous and saying never let the
Speaker 3: facts get in the way for good story.
Speaker 4: I think there's a little bit of that. There is
Speaker 4: a good story. Sell America. You know, there's so.
Speaker 3: Much chaos, political chaos. You should sell America. Let's look
Speaker 3: at the facts. You know, we have auctions every other week.
Speaker 3: Auctions have been going fine. Foreign demand is strong, and
Speaker 3: I would look at, you know, not just holdings of treasures,
Speaker 3: look at holdings of corporate bonds. We've had a record
Speaker 3: corporate issuance month this year, you know or you know
Speaker 3: this month, we've had signals freaking influence from foreigners. So
Speaker 3: why are credit spreads where they are. We're seeing the demand,
Speaker 3: so the technicals for fixed income, technicals for equities remain strong.
Speaker 3: So it's hard for me to say sell America when
Speaker 3: they are still when the rest of the world is
Speaker 3: still buying American assets. The US is still growing significantly,
Speaker 3: out performing.
Speaker 4: The rest of the world.
Speaker 3: We still have the most diversified liquid deep markets.
Speaker 4: So I think the.
Speaker 3: Dollar is a separate issue. Maybe it's a little overvalued.
Speaker 3: Our models still suggests the dollars a little overvalued.
Speaker 4: You have this whole yen intervention.
Speaker 3: I don't know if the intervene or its with verbal intervention,
Speaker 3: the President saying he's okay with a lower dollar. I
Speaker 3: think there's a little bit of a valuation with maybe
Speaker 3: you know, the dollar can weaken. I think it might
Speaker 3: be a hedge dollar risk rather than sell America. We're
Speaker 3: not seeing any evidence of a sell America across asset class,
Speaker 3: so I would say it's not really sell America.
Speaker 2: It was interesting last week just listening and reading the
Speaker 2: way that people were talking of writing about what was
Speaker 2: developing in financial markets last week. The bigger move was
Speaker 2: in Japan. Yet we woke up to stories about sell
Speaker 2: America and I was actually so impressed by how wow
Speaker 2: the treasury market actually stood up to the convulsion in
Speaker 2: the JGB market. The fact that we saw moves of
Speaker 2: twenty to thirty basis points at the long end of
Speaker 2: the Japanese curve and we were up by one mid
Speaker 2: single digits here in the treasury market. I'll take that
Speaker 2: any day of the week, wouldn't you, given the move
Speaker 2: we saw in Japan, And.
Speaker 3: Which is why most of us are not sleeping a
Speaker 3: whole lot, because we're watching, you know, the forty year
Speaker 3: auction last night in Japan was actually okay. You know,
Speaker 3: I think the Japanese and we're watching the election next
Speaker 3: week or the week after, so I think, yes, the
Speaker 3: Japanese long end is what I'm watching. Because you know
Speaker 3: that global term premiums are highly correlated. So you can
Speaker 3: have no sell America, but you can have a global
Speaker 3: term premiums have to be high and therefore all long
Speaker 3: end sell off. So let's watch what do the Japanese
Speaker 3: do around their.
Speaker 4: Fiscal side, their fiscal situation.
Speaker 3: Is not that bad actually so, but do they cut some.
Speaker 4: Of that long end supply? What do we do in
Speaker 4: the US.
Speaker 3: You know, Secretary Besine can cut some long end supply,
Speaker 3: I would say, market participant, there isn't that much demand
Speaker 3: for the very long end, so maybe cut the twenty
Speaker 3: got the thirty year. We have the treasury refunding next week,
Speaker 3: which we'll be watching for any hints of that. So
Speaker 3: is there a supply demand mismatch globally in the long
Speaker 3: in perhaps? And that's where I think you know, there
Speaker 3: could be some issuance shifts. But you're right, And so
Speaker 3: this was a japange. It was a cell GGBIS rather
Speaker 3: than a celiment.
Speaker 5: I should clarify. I don't think you should be ignorant
Speaker 5: of the risk.
Speaker 2: I'm just sort of highlighting it's an observation, not a
Speaker 2: judgment about where we go, just an observation of last week,
Speaker 2: just how well the treasury market withstood some of this.
Speaker 2: I do think there's a warning coming out of Japan
Speaker 2: that ultimately, at some point, regardless of how big your
Speaker 2: central bank, how big that role is in your market,
Speaker 2: at some point the market will push back against the
Speaker 2: government going too far, and I think that's something you've
Speaker 2: got to keep on your radar for this year at
Speaker 2: a time when we go into the midterms. So we've
Speaker 2: heard all kinds of suggestions about how we boost this
Speaker 2: economy in the US. My question, prayer would be, in fact,
Speaker 2: my number one question would be why is the treasury
Speaker 2: market so resilient in the face of all these risks?
Speaker 2: Why is it standing up so wow? Why did it
Speaker 2: perform so well relative to Japan last week?
Speaker 4: I think it's the inflation story.
Speaker 3: I mean, I maybe look at fundamentals in the inflation
Speaker 3: trends broadly speaking are all heading lower, and that's going
Speaker 3: to allow the Fed to cut. It's going to allow
Speaker 3: the market to price in these rate cuts. And then
Speaker 3: we look at further out the curve, you look at
Speaker 3: term premium. It's actually risen significantly. We're getting paid up
Speaker 3: much more today than over the last fifteen years to
Speaker 3: extend out in duration. So investors like us will say, Okay,
Speaker 3: we've broken out of the range. Maybe duration risk is attractive,
Speaker 3: and maybe we should be buying some longer end treasuries,
Speaker 3: you know, apart from you know, just buying credit. So
Speaker 3: it's been a credit story at some point it's going
Speaker 3: to be a duration story. So we saw it as
Speaker 3: an opportunity to extend out the curve. I think that's
Speaker 3: why that long end has been contained.
Speaker 4: That's one.
Speaker 3: The other one I would say that the president cares
Speaker 3: about the long end. I mean, if housing affordability is
Speaker 3: all about the tenure.
Speaker 4: We've heard him last year talk.
Speaker 3: But the yippie bond market Secretary Vestine was out there,
Speaker 3: you know, talking to the Japanese officials the yen intervention,
Speaker 3: you know. I think that tells you that there is
Speaker 3: focus from the administration. When the bond market speaks, every
Speaker 3: other market and the administration listen.
Speaker 2: This is why I think so many people are so
Speaker 2: much more comfortable with the dollar trade and pushing it
Speaker 2: to be weaker. Because if you had total control of
Speaker 2: the feder Reserve, there's one thing you can control, and
Speaker 2: that's yields. You can just buy it. You can anchor yields.
Speaker 2: Japan did that. They've shown us the playbook, and if
Speaker 2: you're really worried about mortgage rates, you could pin the
Speaker 2: long end of the curve down. What you can't control
Speaker 2: is how the effects market would respond to that, and
Speaker 2: we know how it would you'd be pushing a much
Speaker 2: much weaker dollar, and that would be the release valve.
Speaker 2: And I wonder if that's where the markets come around things.
Speaker 2: Just thinking about the range of risks and a balance
Speaker 2: of risk over the next twelve months, that that's the
Speaker 2: easier trade to make here, just push through foreign exchange
Speaker 2: compared to other asset classes.
Speaker 3: I think relative to what the administration wants. I will
Speaker 3: push back that the Fed is not going to buy
Speaker 3: the longen just I'm selling off.
Speaker 4: But really there's a supply issue. Maybe the treasure you
Speaker 4: can issue.
Speaker 3: Less, or people like us would say at some point,
Speaker 3: I'm getting paid up. The curve is steep enough that
Speaker 3: I'm going to move out the curve. It's a positive
Speaker 3: carry trade now to be long duration as a hedge.
Speaker 4: And that's the other thing.
Speaker 3: Right with valuations where they are, I might want a
Speaker 3: hedge here and the front end was extremely attractive and
Speaker 3: you were getting five five and a half percent. Now,
Speaker 3: well that front end is much lower. The Fed's cut
Speaker 3: traits the tenure is a much better hedge to risk assets.
Speaker 3: And I think that's why investors like us who are
Speaker 3: buying credit, who think we're in a soft Landing will
Speaker 3: say let's just hedge and buy a.
Speaker 4: Little bit further out the curve. And even though it's
Speaker 4: not the.
Speaker 3: FED that's pinning, I think that demand starts to pin
Speaker 3: that way.
Speaker 5: Yeah.
Speaker 2: No, my base case, we'll get yield curve control. I'll
Speaker 2: throw that out there. I'm just saying from a market
Speaker 2: participants perspective, I think right now they feel like there's
Speaker 2: less resistance in foreign exchange than the resins, say the
Speaker 2: bomb market trying to push you olds higher.
Speaker 5: Just one way of thinking about things.
Speaker 2: Stay with us. More Bloomberg Surveillance coming up after this.
Speaker 2: Coming up tonight, programming note on Bloomberg TV nine pm
Speaker 2: Eastern Time, the latest episode of The David Rubinstein Show
Speaker 2: Peer to Peer Conversations. David joined us now for more.
Speaker 2: Looking forward to this one with any David. Good to
Speaker 2: see you, sir. The infamous dinner last week we bumped
Speaker 2: into you at the World Economic Forum in Davos, Switzerland.
Speaker 5: You're in the room.
Speaker 2: I believe when COMMAS Secretary Howard Latnik delivered that speech,
Speaker 2: how controversial was it?
Speaker 6: Well, it was controversial, ixpect, but he didn't think it
Speaker 6: was controversial.
Speaker 7: It was a dinner. It was the welcoming dinner from.
Speaker 6: The host of the or the chair of the word
Speaker 6: Economic Forum, which is now co shared for at least
Speaker 6: an interim period of time by two people, Larry Fink
Speaker 6: and Andre's Hoffman from halfmandlll Roach family. And they had
Speaker 6: about five speakers who spoke, and Howard Lutnik was the
Speaker 6: last speaker who spoke, and it was something that got
Speaker 6: people's attention, I'll put it that way.
Speaker 1: Is it curious that he was the launch deliver this message?
Speaker 4: The first time I ever met Howard Lutnik was at
Speaker 4: Davos years.
Speaker 1: Ago before he's a Treasury secretary's talking about the global elite. Well,
Speaker 1: no offense, mister commerce secretary. But isn't he Wasn't he
Speaker 1: part of one that now he now is saying he.
Speaker 4: Just owns.
Speaker 6: He is a unique figure, and I think he's gotten
Speaker 6: a lot of leeway by the President that negotiate a
Speaker 6: lot of these deals, and I think he's very much
Speaker 6: enjoying the job. Being my impression, I co hosted a
Speaker 6: lunch with Dina Pale later in the weekend. He came
Speaker 6: to that lunch and spoke as well, and his message
Speaker 6: is pretty consistent. So I think he's not got to change,
Speaker 6: and you know, he's pretty happy in the job, and
Speaker 6: I think the President seems.
Speaker 1: To be happy with him, So that is a very
Speaker 1: diplomatic answer overall.
Speaker 4: What did you make of this year's Davos, Well, it was.
Speaker 6: A transition because Klaus Schwab, who built it more than
Speaker 6: fifty years ago, it was no longer the chair. He
Speaker 6: wasn't there, and so they had new leadership. I think
Speaker 6: there were more CEOs than they've ever had before, they
Speaker 6: had more foreign leaders. Virtually every European leader showed up.
Speaker 6: And clearly when the president United State shows up, it
Speaker 6: tends to dominate the news. And a lot of people
Speaker 6: stood just watching President Trump's speech for an hour or
Speaker 6: so and everybody was waiting for the punchline. And the
Speaker 6: punchline that people were expecting didn't show up, which was
Speaker 6: that he was going to use military force. That didn't
Speaker 6: show up. So that was the big news, and I
Speaker 6: think people were relieved about that.
Speaker 7: Generally.
Speaker 2: I welcomed some of the developments in the last week.
Speaker 2: It just felt like corporate America's shifted away from virtue,
Speaker 2: say they think, and we're just focused on business now.
Speaker 2: Is that your sense of a shift as well. Did
Speaker 2: you witness that last week?
Speaker 6: Well after the Greenland thing kind of went away a bit,
Speaker 6: people are focused on the FED, and though as you
Speaker 6: pointed out already, the Fed's decision is pretty much as
Speaker 6: well known for today. And then people are looking at
Speaker 6: earnings and people are wondering where the deficit is going
Speaker 6: debt the US and also whether there's going to be
Speaker 6: a government shutdown. And I think I think both sides
Speaker 6: and the Republicans Democrats do not want to shut down.
Speaker 6: They are really trying hard to avoid a shutdown. I
Speaker 6: suspect they will avoid it.
Speaker 5: Some we don't want to shut down.
Speaker 2: We've seen all the headlines about South America in financial markets,
Speaker 2: but then I listen to the CEOs in America and
Speaker 2: the global CEOs as well, who are investing in America.
Speaker 2: Do you sense a disconnect between the headlines and where
Speaker 2: the money's going at the moment.
Speaker 6: Well, there's no doubt that people are a little more
Speaker 6: nervous about investing in America than maybe people would like
Speaker 6: who are trying to get them to invest in America
Speaker 6: because there is some concern about the dollar going down.
Speaker 6: You know, if you invest in the United States and
Speaker 6: the dollar goes down, the value of your investment.
Speaker 7: Obviously is not as good as you thought.
Speaker 6: But it's not been the major cause of concern for
Speaker 6: foreign investors. They're just worried about where the US government
Speaker 6: is going. It's very hard to predict where the US
Speaker 6: government is going. For a lot of foreign investors. People
Speaker 6: want usit. People predictability. Tell me what the rules are,
Speaker 6: and I will follow the rules, and sometimes the rules
Speaker 6: are unpredictable or they change a lot. So to the
Speaker 6: extent that there's consistency, I think more and more people
Speaker 6: will invest in the US, But the extent that there's inconsistency,
Speaker 6: people will pull back back a bit. And particularly the
Speaker 6: dollar is an issue as well.
Speaker 1: But that's that's Trump and a nutshell, uncertainty is a
Speaker 1: feature of him. That is what he does. And now
Speaker 1: it's an election year. So what kind of unpredictability can
Speaker 1: we see this year alone?
Speaker 6: Well, I can't predict the unpredictability of the leadership of
Speaker 6: the government, but I would say there are a lot
Speaker 6: of issues that people are worried about. And right now,
Speaker 6: I would say the US economy seems to be doing
Speaker 6: pretty well. I think growth is pretty good. Inflation's pretty
Speaker 6: much under control relatively speak. It's not going to be
Speaker 6: a two percent, and unemployment is at a tolerable level.
Speaker 7: It's not as low as we might.
Speaker 6: Want, but generally the economy is in pretty good shape.
Speaker 6: And whatever people might say about Jay Pow, and I'm
Speaker 6: a big supporter of his, we haven't had a recession
Speaker 6: under j Poal's leadership. Normally, fed shares get often get
Speaker 6: blamed for recessions. Other people get blamed too, But he's
Speaker 6: had to increase interest rates a deal with high inflation,
Speaker 6: and he's had to lower them when when inflation came back.
Speaker 6: And normally when you increase and you decrease, you get
Speaker 6: some kind of recession along the way. We haven't had
Speaker 6: a recession. So he's done a pretty good job neving.
Speaker 4: Known the man.
Speaker 1: Do you think he's going to entertain any questions stay
Speaker 1: regarding will he stay on after his chairmanship or the
Speaker 1: more sort of stance he's taken against the White House.
Speaker 6: I don't want to pretend to speak for him, but
Speaker 6: I would be surprised if he said anything other than
Speaker 6: here's what we did today.
Speaker 4: Boring.
Speaker 6: But it's actually interesting because when you had previous fed shares.
Speaker 6: They didn't tell you what they were going to do
Speaker 6: in advance, and they didn't explain it thirty minutes later.
Speaker 7: He doesn't. In English, you can.
Speaker 6: Understand, So I think to his credit, he actually explains
Speaker 6: what he's doing and people can understand it. Many times,
Speaker 6: the Fed never actually had press conferences before, so I
Speaker 6: think he's done a pretty good job, and I suspect
Speaker 6: in the end he will announce at the appropriate time
Speaker 6: what he's going to do.
Speaker 2: He has no green span, that's for sure. It's a
Speaker 2: very different communications now, without a doubt.
Speaker 6: It's different than Alan green Spanner or Paul Bolker. They
Speaker 6: were more, I would say, difficult to understand.
Speaker 2: David tons of vult acidity around this institution. I've been
Speaker 2: surprised by how it hasn't really been consequential at two
Speaker 2: in financial markets. I struggled to find a read through
Speaker 2: from the volatility around the institution and how it's rippling
Speaker 2: through financial markets. In fact, the treasury market has been
Speaker 2: very resilient in the face of a lot of risk.
Speaker 2: As a market participant like yourself, what's your conclusion as
Speaker 2: you see that play out?
Speaker 6: Well, I think people are unclear where the government policy
Speaker 6: is in some areas, and therefore they are hesitant about
Speaker 6: making some long term commitments. But on the whole, the
Speaker 6: business community is more or less supportive of what the
Speaker 6: federal government is doing. I mean, most of the CEOs
Speaker 6: are more or less in line. I mean they don't
Speaker 6: agree with everything the administration is doing, but they recognize
Speaker 6: that there's less regulation than there was before. It's easier
Speaker 6: to get a decision about mergers or acquisitions than it
Speaker 6: might have been before. So I think some business people
Speaker 6: are pleased with it. But some business people are basically
Speaker 6: doing what they need to do to help their company,
Speaker 6: but they may not personally believe in everything that the
Speaker 6: president is doing.
Speaker 2: Stay with us more Bloomberg surveillance coming up after this.
Speaker 2: So if you're sitting here thinking the president could announce
Speaker 2: this morning, and let's say he did, when you start
Speaker 2: thinking about the confirmation process, the senator from North Carolina
Speaker 2: is telling you he's not going to get up and
Speaker 2: open the door and let people through anytime soon.
Speaker 1: No, which is why if you're the president of the
Speaker 1: United States and you heard our interview with Senator Tom Tillis,
Speaker 1: you're thinking, why would I make an announcement?
Speaker 4: So soon.
Speaker 1: You want to potentially wait till you know the DOJ
Speaker 1: investigation to Powell is going to be wrapped up, because
Speaker 1: Tillis is not moving until that moment.
Speaker 2: Tober Marcus of Wolf Research has this to say, Rick
Speaker 2: Reader is now viewed as the odds on fed chair favorite.
Speaker 2: We're unconvinced. We think both Kevins are still strong possibilities.
Speaker 2: Topin joins us Now for more, Tobin, I want your
Speaker 2: view on what is just holding things up here? Why
Speaker 2: is the President dragging his feet when he's told us
Speaker 2: for quite a while he knows who it is.
Speaker 8: Well, you know, I think he's still trying to find
Speaker 8: the best option among a set of options, none of
Speaker 8: whom off exactly what he wants. Reader, the current perceived favorite,
Speaker 8: has a lot to recommend him, but he certainly is
Speaker 8: not a Trump loyalized by any stretch. As Tyler was
Speaker 8: just discussing, there's this issue about his political donations. With
Speaker 8: him now sort of in the spotlight for the first time,
Speaker 8: I think you're going to see knives come out for
Speaker 8: him a little bit. Larry Cobo yesterday published an op
Speaker 8: ed essentially saying don't pick him. Pick one of the Kevins,
Speaker 8: And you know, I think in a similar way to
Speaker 8: how when Hassett was the perceived front runner, that's when
Speaker 8: the White House started to get pushed back about the
Speaker 8: potential bond market concerns. You could see there, So you know,
Speaker 8: I think he's cycling through his options and doesn't see
Speaker 8: anything that he's completely compelled by.
Speaker 1: I loved your note readering the tea leaves when it
Speaker 1: comes to the tea leaves. So the discussion Jonathan and
Speaker 1: I just had about Senator Tom tillis, do you think
Speaker 1: that is why this administration doesn't feel.
Speaker 4: Any urgency right now to have their pick.
Speaker 8: I think Trump is mostly I think the biggest hold
Speaker 8: up is the decision making process itself. And I do
Speaker 8: think that Trump is still trying to and you know,
Speaker 8: the best person, with none of them being perfect. You
Speaker 8: know that being said, I till us completely at face
Speaker 8: value that the pro by DCUs Attorney Puro is going
Speaker 8: to need to be wrapped up and resolved definitively before
Speaker 8: he's going to be willing to let any of these
Speaker 8: people through.
Speaker 7: I think the view that.
Speaker 8: Reader has some confirmation edge is basically wrong. I think
Speaker 8: once you get tillissatisfied about that probe, and to Powell,
Speaker 8: none of these individuals are going to have any trouble
Speaker 8: getting through the Senate Republican caucus. Hasset's the person that
Speaker 8: markets have is concerned about. But he's been working in
Speaker 8: Republican politics for decades. He has very strong positive relationships
Speaker 8: across the Senate Republican Caucus. So, you know, the notion
Speaker 8: that you could get reader through but not some alternative
Speaker 8: I think is fairly wrongheaded.
Speaker 1: You're pointing to something I read this morning the Wall
Speaker 1: Street Journal about the fact the president is looking for
Speaker 1: something maybe he won't ever find. You're talking about this
Speaker 1: perfect candidate, this unicorn. What does that entail? Can you
Speaker 1: define for us who that would be in front of
Speaker 1: this president's eyes?
Speaker 5: Yeah?
Speaker 8: I mean he just last week at Davos was very
Speaker 8: very forward and very explicit about wanting loyalty. He specifically
Speaker 8: complained about disloyalty in those words. He talked about, all
Speaker 8: these people seem great until you nominate them, and then
Speaker 8: they start making decisions that you don't like. They start cut,
Speaker 8: you know, hiking rinks when he thinks it's inappropriate. That's
Speaker 8: the exact criticism He's leveled at Powell, who also came
Speaker 8: in with sort of recommendations from Trump's economic staff, but
Speaker 8: without that personal personal relationship, and he of course has
Speaker 8: regretted that decision. So I think you want someone who
Speaker 8: you can rely on in that way and who's going
Speaker 8: to listen to his views as he continues to articulate them,
Speaker 8: but also someone who brings, you know, bond marketr credibility
Speaker 8: and doesn't raise acute concerns about FED independence and those
Speaker 8: the there's a deep tension.
Speaker 2: Between this toom Saba, and we've got to keep around
Speaker 2: the geopolitics as well. This from the President just moments
Speaker 2: ago on social media or statement from him, A massive
Speaker 2: armado is heading to Iran. It is moving quickly with
Speaker 2: great power, enthusiasm, and purpose. It is a larger fleet
Speaker 2: headed by the great aircraft carrier Abraham Lincoln. Then that
Speaker 2: sense of Venezuela. Like with Venezuela, it is ready willing
Speaker 2: and able to rapidly fulfill its mission and with speed
Speaker 2: and violence if necessary. Hopefully Iron will quickly come to
Speaker 2: the table and negotiate a fair and equitable deal, no
Speaker 2: nickel weapons, one that is good for all parties.
Speaker 5: Time it's running down. It is truly of the essence.
Speaker 1: So the President is saying he wants Iron to make
Speaker 1: a deal. He then also continues to talk about the
Speaker 1: fact that they didn't make a deal and there was
Speaker 1: quote Operation Midnight Hammer, which we saw last year. The
Speaker 1: President right now is setting almost a red line, come
Speaker 1: to the table or I am prepared and I have
Speaker 1: my toys out there in the sea ready to go,
Speaker 1: and I am prepared to strike if Tehran does not
Speaker 1: feel willing to engage.
Speaker 5: It's open.
Speaker 2: How likely is it that we take on another kind
Speaker 2: of military front in Iran?
Speaker 5: I think fairly likely.
Speaker 8: The President sure seemed like he was leaning towards intervening
Speaker 8: when the protests were at their apex a couple of
Speaker 8: weeks ago.
Speaker 5: At the time, I think the.
Speaker 8: Lack of military assets in the region was one of
Speaker 8: the obstacles to doing that, along with some concerns from
Speaker 8: regional allies, along with I think some real questions about
Speaker 8: what efficacious targets look like. Unlike in Midnight Hammer, where
Speaker 8: it was very obviously we were targeting the nuclear facilities,
Speaker 8: if you're trying to degrade their abilities to oppress the
Speaker 8: domestic political opposition, what are you strike police barracks, Like,
Speaker 8: I don't think anyone really believes that it's a capitation
Speaker 8: strike against Comanity if they can even find him, would
Speaker 8: result in regime change. I think ultimately is what the
Speaker 8: president wants here. So you know, he sure seems to
Speaker 8: be wanting to strike. I think at a minimum, he's
Speaker 8: very focused on creating that optionality and leverage to be
Speaker 8: able to pursue a range of options. That it does
Speaker 8: seem like some kind of strikes eventually.
Speaker 4: Or likely tobn to that point.
Speaker 1: Even if the United States were to get rid of Hamoni,
Speaker 1: doesn't the regime still continue?
Speaker 4: Yeah.
Speaker 8: I think the only way that you see actual regime
Speaker 8: change it's kind of cascading defections among the security elite,
Speaker 8: and we've seen no sign of that whatsoever. Generally, that
Speaker 8: happens when they're asked to fire on protesters, like if
Speaker 8: they refuse to do so, that's when you can start
Speaker 8: to see elite defections. And of course they just massacred
Speaker 8: thousands of civilians who were protesting in the street. So
Speaker 8: I think if we were going to see it, we
Speaker 8: would have seen it. Replacing one person at the head
Speaker 8: of the regime. I just don't think there's any plausible
Speaker 8: scenario by which that would result in the entire regime
Speaker 8: turning over.
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