WEBVTT - Bloomberg Surveillance TV: January 28th, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amerie Hordernt. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.840 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:36.959 Terminal and the Bloomberg Business app. We begin this out 0:00:37.000 --> 0:00:39.680 with stocks at record highs and the dollar at multi 0:00:39.760 --> 0:00:42.199 year lows. Heading into the Fed's meeting, Prayer Misra of 0:00:42.240 --> 0:00:44.840 JP Morgan writing, expect POW to focus on the FEDS 0:00:44.920 --> 0:00:48.519 manday rather than the politics. Despite all the Fed shair drama, 0:00:48.760 --> 0:00:51.240 we have a divided FED with different views on risk 0:00:51.320 --> 0:00:54.480 the manday, and the chair has only one vote. Prayer 0:00:54.520 --> 0:00:56.720 joins us now for more pre good Monarch morning. Is 0:00:56.760 --> 0:00:58.760 this a different FED because that one vote used to 0:00:58.800 --> 0:00:59.760 count for quite a lot. 0:01:00.440 --> 0:01:02.400 I think you know the FED chairs job is to 0:01:02.440 --> 0:01:04.760 sort of build consensus, but look at I mean, what 0:01:04.800 --> 0:01:07.640 you've been talking about there are so many cross currents here. 0:01:07.680 --> 0:01:11.679 You know, with this highly concentrated GDP, the case shape recovery, 0:01:11.720 --> 0:01:15.959 the low higher low fire economy, they risk to the 0:01:16.040 --> 0:01:18.240 mandate are sort of two sided, and that's why we 0:01:18.319 --> 0:01:21.600 have a divided committee. So can any feed chair sort 0:01:21.640 --> 0:01:24.280 of build consensus. I think Chepau did a lot, but 0:01:24.400 --> 0:01:27.200 they've already reached the sort of realm of neutral. So 0:01:27.280 --> 0:01:29.080 I think any feed check coming in is going to 0:01:29.120 --> 0:01:31.520 have to contend with the fact that you're close to neutral. 0:01:31.640 --> 0:01:35.559 It's between three and four. They're right there, so they're 0:01:35.560 --> 0:01:36.840 going to have to wait for the data. 0:01:36.920 --> 0:01:38.920 So, you know, I think, you know. 0:01:39.080 --> 0:01:41.959 The pushback around from the FED, the pushback from the 0:01:42.000 --> 0:01:45.320 market around FED independence. I actually think the fact that 0:01:45.360 --> 0:01:48.560 everybody wants an independent FED, the bond market, the president, 0:01:49.040 --> 0:01:51.360 I think that's actually the FED is pushing back. I 0:01:51.360 --> 0:01:53.560 think this is all good news. The feed chair is 0:01:53.600 --> 0:01:55.840 extremely important. We'll have to listen to the you know, 0:01:56.960 --> 0:01:59.200 we'll have to sort of listen to the entire committee, 0:01:59.440 --> 0:02:01.440 but it is just one vote, and we'll have to 0:02:01.480 --> 0:02:04.800 listen to everybody at the field, all twelve voting members 0:02:04.800 --> 0:02:06.080 and the non voting members. 0:02:06.240 --> 0:02:08.000 Was Champa's last rite cut the last. 0:02:07.840 --> 0:02:13.280 Mate given the data right now, yes, I mean he's 0:02:13.440 --> 0:02:15.720 around till May. There's a lot of data between now 0:02:15.720 --> 0:02:18.160 and May, so can he cut you know, in March. 0:02:18.240 --> 0:02:20.720 So we're going to be watching both inflation and the 0:02:20.800 --> 0:02:23.360 labor market. The labor market does seem to have stabilized. 0:02:23.360 --> 0:02:26.239 We were getting those really high layoff announcements, and then 0:02:26.360 --> 0:02:28.320 you know, initial claims is not showing a pickup. 0:02:28.400 --> 0:02:30.400 So I would say base case this. 0:02:30.760 --> 0:02:32.600 You know, we might have seen the last rate cut, 0:02:32.680 --> 0:02:34.960 but I don't think you're going to get any confirmation 0:02:35.040 --> 0:02:37.600 of that. The inflation data has been weak, but it's. 0:02:37.440 --> 0:02:38.840 So shut down impacted. 0:02:39.040 --> 0:02:41.359 So we're going to have to see between the tax 0:02:41.440 --> 0:02:44.480 refunds on one side, and do we get this shutdown 0:02:44.480 --> 0:02:49.320 impacted data showing inflation some heat in inflation. I think 0:02:49.360 --> 0:02:51.560 for now they might not do anything. The market's not 0:02:51.560 --> 0:02:53.680 pricing in any rate cuts in the first half of THEAY, 0:02:53.680 --> 0:02:56.480 I think rightfully, so, but we're going to watch all 0:02:56.639 --> 0:02:59.040 all of the data. I hope there's no shutdown because 0:02:59.080 --> 0:03:01.240 that's going to you know, we're just getting. 0:03:01.000 --> 0:03:02.240 Somewhat clean data. 0:03:02.320 --> 0:03:04.320 I would really hope that we continue to get that 0:03:04.360 --> 0:03:07.679 clean data. The FED is otherwise likely to stay on hold, 0:03:07.720 --> 0:03:09.880 But I think rate cuts second half of the year 0:03:10.120 --> 0:03:12.480 is our base case. I think, you know, if inflation 0:03:12.639 --> 0:03:15.920 continues in its current downward trajectory, I think there's a 0:03:15.919 --> 0:03:17.040 few more rate cuts this year. 0:03:17.200 --> 0:03:19.120 Isn't there a chance that Jay Powell might be there 0:03:19.160 --> 0:03:21.680 for those rate cuts given the fact that Senator Tillis 0:03:21.720 --> 0:03:24.400 is basically saying, I'm not moving ahead with the peck 0:03:24.919 --> 0:03:27.480 until the DOJA investigation is wrapped up. 0:03:27.760 --> 0:03:29.720 How are you thinking about the politics? 0:03:29.720 --> 0:03:32.960 Do you think it will seep into the monetary policy decisions? 0:03:33.280 --> 0:03:35.840 No, I don't think politics will drive and I think 0:03:35.840 --> 0:03:38.680 the Fed does what they've always done. They look at 0:03:38.680 --> 0:03:41.880 the data, they assess risk to the outlook, and then 0:03:41.920 --> 0:03:45.120 they take an action. I think it's actually excellent that 0:03:45.240 --> 0:03:48.040 Jair Powell pushed back as strongly as he did, and 0:03:48.120 --> 0:03:51.120 that I think provided cover to Senator Tillis and others 0:03:51.360 --> 0:03:53.880 to push back as well. Where the politics can come 0:03:53.920 --> 0:03:56.320 in is the doj will need to wrap up pretty quickly, 0:03:56.440 --> 0:03:59.040 otherwise we're not getting another FED chair. I think the 0:03:59.240 --> 0:04:01.920 likelihood to your point, maybe Chefowell is more likely to 0:04:01.960 --> 0:04:04.680 stay on as a governor, so you know it remains 0:04:04.840 --> 0:04:08.000 just one additional vote that or you know, one person 0:04:08.080 --> 0:04:11.040 that potentially could be political. So I think that's where 0:04:11.080 --> 0:04:13.440 it can come in the makeup of the FED. But 0:04:14.040 --> 0:04:16.040 I think the FED is still going to say, let's 0:04:16.040 --> 0:04:16.920 look at the data. 0:04:17.120 --> 0:04:17.880 There are very. 0:04:17.760 --> 0:04:20.720 Vocal hawks out there who are concerned about the inflation risks. 0:04:21.240 --> 0:04:23.359 When it comes to the body. 0:04:23.440 --> 0:04:25.760 What you're talking about, if he stays on as a governorship, 0:04:26.440 --> 0:04:29.279 it's a deliberative body. So isn't this working against what 0:04:29.320 --> 0:04:30.279 the president wants? 0:04:30.800 --> 0:04:31.880 If FED Chair J. 0:04:32.040 --> 0:04:34.120 Powell is only going to stay on now because he 0:04:34.200 --> 0:04:36.159 feels like the institution's under threat. 0:04:37.000 --> 0:04:39.440 But you know, but I would say Chepoul is extremely credible. 0:04:39.720 --> 0:04:43.159 I think the administration wants rate cuts, but in a 0:04:43.200 --> 0:04:46.599 credible fashion because we've seen if the market gets nervous 0:04:46.600 --> 0:04:50.400 that the FED is losing its grip on inflation, you know, 0:04:50.440 --> 0:04:53.080 long term inflation expectations, the long end is going to 0:04:53.120 --> 0:04:53.920 get unanchored. 0:04:54.240 --> 0:04:56.479 The President's focus on the tenure. 0:04:56.279 --> 0:04:59.479 The bond every time the bond market speaks becomes yippie. 0:05:00.080 --> 0:05:02.479 We see some reaction from the administration. 0:05:02.760 --> 0:05:04.880 So I don't think the President or the administration would 0:05:04.920 --> 0:05:08.080 want to put somebody who's not credible. Jep Owl is 0:05:08.120 --> 0:05:11.920 extremely credible, and he's gone out on a limb, I think, 0:05:12.040 --> 0:05:15.039 very deliberately to say that he cares about FED independence. 0:05:15.160 --> 0:05:17.200 I think that's actually good for the institution. It's good 0:05:17.200 --> 0:05:19.240 for the bond market, and I think that's why the 0:05:19.279 --> 0:05:21.599 bond market. I mean, doesn't this feel like the longest 0:05:21.600 --> 0:05:23.640 month of the gate has just begun? But we've had 0:05:23.680 --> 0:05:27.200 a decade, right, We've had so much thrown at the market. 0:05:27.440 --> 0:05:29.360 The ten years At four and a quarter, I think 0:05:29.360 --> 0:05:32.160 that tells you the market is saying, let's put everything together. 0:05:32.400 --> 0:05:33.520 We have a credible fad. 0:05:33.600 --> 0:05:36.120 We have a lot of cross currents, but we're instill 0:05:36.120 --> 0:05:38.880 in a soft landing and inflation's heading lower, so those 0:05:38.920 --> 0:05:40.640 rate cuts can happen just maybe. 0:05:40.520 --> 0:05:40.960 A little bit. 0:05:40.960 --> 0:05:42.599 I think I saw a headline yesterday, or rather a 0:05:42.640 --> 0:05:45.240 picture on social Maydia that said something like it's January 0:05:45.240 --> 0:05:47.800 twenty seven hundred and seventy second. Yeah, I saw that, 0:05:48.000 --> 0:05:50.320 which is which is what it feels like, right. I 0:05:50.320 --> 0:05:52.800 think there's a disconnected divide between the way the financial 0:05:52.800 --> 0:05:55.279 media is talking about what's happnigan markets and what's actually 0:05:55.320 --> 0:05:57.800 happening in markets. There's a headline that I keep seeing 0:05:57.800 --> 0:05:59.719 every time we have a Dante for the US doma 0:06:00.120 --> 0:06:02.039 just sell America. And then I look at the bond 0:06:02.080 --> 0:06:05.640 market and it's at twenty four for twenty three, for 0:06:05.839 --> 0:06:08.680 twenty something. And then I hear headlines and people talking 0:06:08.720 --> 0:06:11.680 about stories that consider a debasement trade and this is 0:06:11.680 --> 0:06:14.680 why everyone's parting into gold. And then market based expectations 0:06:14.720 --> 0:06:18.400 for inflation are still really, really subdued. I was looking 0:06:18.400 --> 0:06:20.240 at the data for foreign holdings of treasuries at the 0:06:20.279 --> 0:06:23.640 back end of last year, record highs never been higher. 0:06:24.120 --> 0:06:26.240 Is there a divide between the stories you're seeing, the 0:06:26.279 --> 0:06:28.920 headlines you read, and what's actually happening in markets at 0:06:28.920 --> 0:06:29.279 the moment. 0:06:29.800 --> 0:06:33.479 So you know that famous and saying never let the 0:06:33.640 --> 0:06:35.240 facts get in the way for good story. 0:06:35.279 --> 0:06:36.840 I think there's a little bit of that. There is 0:06:36.880 --> 0:06:39.200 a good story. Sell America. You know, there's so. 0:06:39.240 --> 0:06:42.560 Much chaos, political chaos. You should sell America. Let's look 0:06:42.560 --> 0:06:45.480 at the facts. You know, we have auctions every other week. 0:06:45.640 --> 0:06:48.520 Auctions have been going fine. Foreign demand is strong, and 0:06:48.560 --> 0:06:51.520 I would look at, you know, not just holdings of treasures, 0:06:51.560 --> 0:06:54.159 look at holdings of corporate bonds. We've had a record 0:06:54.200 --> 0:06:58.520 corporate issuance month this year, you know or you know 0:06:58.600 --> 0:07:02.280 this month, we've had signals freaking influence from foreigners. So 0:07:02.680 --> 0:07:05.239 why are credit spreads where they are. We're seeing the demand, 0:07:05.400 --> 0:07:09.000 so the technicals for fixed income, technicals for equities remain strong. 0:07:09.080 --> 0:07:11.400 So it's hard for me to say sell America when 0:07:11.400 --> 0:07:12.960 they are still when the rest of the world is 0:07:13.000 --> 0:07:16.600 still buying American assets. The US is still growing significantly, 0:07:16.680 --> 0:07:17.760 out performing. 0:07:17.360 --> 0:07:18.160 The rest of the world. 0:07:18.280 --> 0:07:22.040 We still have the most diversified liquid deep markets. 0:07:22.280 --> 0:07:22.880 So I think the. 0:07:22.960 --> 0:07:25.480 Dollar is a separate issue. Maybe it's a little overvalued. 0:07:25.560 --> 0:07:27.920 Our models still suggests the dollars a little overvalued. 0:07:28.200 --> 0:07:29.680 You have this whole yen intervention. 0:07:29.800 --> 0:07:32.040 I don't know if the intervene or its with verbal intervention, 0:07:32.440 --> 0:07:35.120 the President saying he's okay with a lower dollar. I 0:07:35.120 --> 0:07:38.680 think there's a little bit of a valuation with maybe 0:07:38.840 --> 0:07:41.200 you know, the dollar can weaken. I think it might 0:07:41.320 --> 0:07:44.600 be a hedge dollar risk rather than sell America. We're 0:07:44.600 --> 0:07:47.679 not seeing any evidence of a sell America across asset class, 0:07:47.680 --> 0:07:49.560 so I would say it's not really sell America. 0:07:49.760 --> 0:07:52.280 It was interesting last week just listening and reading the 0:07:52.280 --> 0:07:54.400 way that people were talking of writing about what was 0:07:54.440 --> 0:07:57.160 developing in financial markets last week. The bigger move was 0:07:57.200 --> 0:07:59.480 in Japan. Yet we woke up to stories about sell 0:07:59.520 --> 0:08:02.240 America and I was actually so impressed by how wow 0:08:02.320 --> 0:08:04.840 the treasury market actually stood up to the convulsion in 0:08:04.880 --> 0:08:07.680 the JGB market. The fact that we saw moves of 0:08:07.720 --> 0:08:09.480 twenty to thirty basis points at the long end of 0:08:09.520 --> 0:08:11.800 the Japanese curve and we were up by one mid 0:08:11.840 --> 0:08:14.840 single digits here in the treasury market. I'll take that 0:08:14.880 --> 0:08:16.760 any day of the week, wouldn't you, given the move 0:08:16.800 --> 0:08:17.840 we saw in Japan, And. 0:08:17.800 --> 0:08:19.600 Which is why most of us are not sleeping a 0:08:19.640 --> 0:08:21.840 whole lot, because we're watching, you know, the forty year 0:08:21.880 --> 0:08:25.160 auction last night in Japan was actually okay. You know, 0:08:25.200 --> 0:08:29.520 I think the Japanese and we're watching the election next 0:08:29.560 --> 0:08:32.360 week or the week after, so I think, yes, the 0:08:32.679 --> 0:08:35.840 Japanese long end is what I'm watching. Because you know 0:08:35.880 --> 0:08:38.839 that global term premiums are highly correlated. So you can 0:08:38.880 --> 0:08:41.280 have no sell America, but you can have a global 0:08:41.360 --> 0:08:44.480 term premiums have to be high and therefore all long 0:08:44.600 --> 0:08:48.000 end sell off. So let's watch what do the Japanese 0:08:48.040 --> 0:08:48.720 do around their. 0:08:48.600 --> 0:08:51.280 Fiscal side, their fiscal situation. 0:08:51.000 --> 0:08:53.400 Is not that bad actually so, but do they cut some. 0:08:53.400 --> 0:08:55.600 Of that long end supply? What do we do in 0:08:55.600 --> 0:08:56.160 the US. 0:08:56.240 --> 0:08:59.320 You know, Secretary Besine can cut some long end supply, 0:08:59.440 --> 0:09:02.920 I would say, market participant, there isn't that much demand 0:09:02.960 --> 0:09:05.600 for the very long end, so maybe cut the twenty 0:09:05.760 --> 0:09:08.079 got the thirty year. We have the treasury refunding next week, 0:09:08.280 --> 0:09:10.720 which we'll be watching for any hints of that. So 0:09:11.080 --> 0:09:14.520 is there a supply demand mismatch globally in the long 0:09:14.600 --> 0:09:17.640 in perhaps? And that's where I think you know, there 0:09:17.640 --> 0:09:20.160 could be some issuance shifts. But you're right, And so 0:09:20.200 --> 0:09:22.960 this was a japange. It was a cell GGBIS rather 0:09:23.040 --> 0:09:23.880 than a celiment. 0:09:24.000 --> 0:09:25.880 I should clarify. I don't think you should be ignorant 0:09:25.880 --> 0:09:26.320 of the risk. 0:09:26.400 --> 0:09:28.760 I'm just sort of highlighting it's an observation, not a 0:09:28.840 --> 0:09:31.080 judgment about where we go, just an observation of last week, 0:09:31.120 --> 0:09:33.880 just how well the treasury market withstood some of this. 0:09:34.280 --> 0:09:36.040 I do think there's a warning coming out of Japan 0:09:36.360 --> 0:09:39.200 that ultimately, at some point, regardless of how big your 0:09:39.240 --> 0:09:41.480 central bank, how big that role is in your market, 0:09:41.520 --> 0:09:44.640 at some point the market will push back against the 0:09:44.640 --> 0:09:47.000 government going too far, and I think that's something you've 0:09:47.000 --> 0:09:48.440 got to keep on your radar for this year at 0:09:48.440 --> 0:09:49.880 a time when we go into the midterms. So we've 0:09:49.880 --> 0:09:51.960 heard all kinds of suggestions about how we boost this 0:09:51.960 --> 0:09:54.560 economy in the US. My question, prayer would be, in fact, 0:09:54.559 --> 0:09:57.040 my number one question would be why is the treasury 0:09:57.040 --> 0:09:59.560 market so resilient in the face of all these risks? 0:09:59.559 --> 0:10:01.800 Why is it standing up so wow? Why did it 0:10:01.840 --> 0:10:04.440 perform so well relative to Japan last week? 0:10:04.800 --> 0:10:06.199 I think it's the inflation story. 0:10:06.240 --> 0:10:09.720 I mean, I maybe look at fundamentals in the inflation 0:10:09.960 --> 0:10:13.760 trends broadly speaking are all heading lower, and that's going 0:10:13.800 --> 0:10:15.920 to allow the Fed to cut. It's going to allow 0:10:16.040 --> 0:10:18.559 the market to price in these rate cuts. And then 0:10:18.600 --> 0:10:20.480 we look at further out the curve, you look at 0:10:20.559 --> 0:10:25.079 term premium. It's actually risen significantly. We're getting paid up 0:10:25.640 --> 0:10:28.520 much more today than over the last fifteen years to 0:10:28.640 --> 0:10:31.760 extend out in duration. So investors like us will say, Okay, 0:10:31.760 --> 0:10:35.239 we've broken out of the range. Maybe duration risk is attractive, 0:10:35.240 --> 0:10:37.960 and maybe we should be buying some longer end treasuries, 0:10:38.640 --> 0:10:41.880 you know, apart from you know, just buying credit. So 0:10:41.920 --> 0:10:44.240 it's been a credit story at some point it's going 0:10:44.280 --> 0:10:46.200 to be a duration story. So we saw it as 0:10:46.200 --> 0:10:49.040 an opportunity to extend out the curve. I think that's 0:10:49.040 --> 0:10:51.000 why that long end has been contained. 0:10:51.040 --> 0:10:51.640 That's one. 0:10:52.040 --> 0:10:54.200 The other one I would say that the president cares 0:10:54.240 --> 0:10:57.040 about the long end. I mean, if housing affordability is 0:10:57.160 --> 0:10:58.240 all about the tenure. 0:10:58.559 --> 0:11:00.040 We've heard him last year talk. 0:11:00.040 --> 0:11:03.319 But the yippie bond market Secretary Vestine was out there, 0:11:03.640 --> 0:11:06.559 you know, talking to the Japanese officials the yen intervention, 0:11:07.080 --> 0:11:08.760 you know. I think that tells you that there is 0:11:08.880 --> 0:11:12.400 focus from the administration. When the bond market speaks, every 0:11:12.440 --> 0:11:14.720 other market and the administration listen. 0:11:14.840 --> 0:11:16.200 This is why I think so many people are so 0:11:16.240 --> 0:11:18.560 much more comfortable with the dollar trade and pushing it 0:11:18.600 --> 0:11:21.160 to be weaker. Because if you had total control of 0:11:21.200 --> 0:11:23.600 the feder Reserve, there's one thing you can control, and 0:11:23.640 --> 0:11:26.680 that's yields. You can just buy it. You can anchor yields. 0:11:26.720 --> 0:11:28.760 Japan did that. They've shown us the playbook, and if 0:11:28.760 --> 0:11:31.040 you're really worried about mortgage rates, you could pin the 0:11:31.040 --> 0:11:33.319 long end of the curve down. What you can't control 0:11:33.400 --> 0:11:35.160 is how the effects market would respond to that, and 0:11:35.160 --> 0:11:37.040 we know how it would you'd be pushing a much 0:11:37.080 --> 0:11:39.000 much weaker dollar, and that would be the release valve. 0:11:39.120 --> 0:11:41.040 And I wonder if that's where the markets come around things. 0:11:41.080 --> 0:11:43.120 Just thinking about the range of risks and a balance 0:11:43.120 --> 0:11:44.960 of risk over the next twelve months, that that's the 0:11:45.040 --> 0:11:47.680 easier trade to make here, just push through foreign exchange 0:11:47.960 --> 0:11:49.400 compared to other asset classes. 0:11:49.840 --> 0:11:52.200 I think relative to what the administration wants. I will 0:11:52.240 --> 0:11:54.080 push back that the Fed is not going to buy 0:11:54.120 --> 0:11:56.320 the longen just I'm selling off. 0:11:56.360 --> 0:11:59.000 But really there's a supply issue. Maybe the treasure you 0:11:59.000 --> 0:11:59.760 can issue. 0:11:59.559 --> 0:12:02.240 Less, or people like us would say at some point, 0:12:02.320 --> 0:12:04.400 I'm getting paid up. The curve is steep enough that 0:12:04.480 --> 0:12:06.319 I'm going to move out the curve. It's a positive 0:12:06.360 --> 0:12:09.559 carry trade now to be long duration as a hedge. 0:12:09.600 --> 0:12:10.439 And that's the other thing. 0:12:10.480 --> 0:12:13.840 Right with valuations where they are, I might want a 0:12:13.880 --> 0:12:16.640 hedge here and the front end was extremely attractive and 0:12:16.679 --> 0:12:19.000 you were getting five five and a half percent. Now, 0:12:19.120 --> 0:12:21.200 well that front end is much lower. The Fed's cut 0:12:21.200 --> 0:12:25.400 traits the tenure is a much better hedge to risk assets. 0:12:25.400 --> 0:12:27.760 And I think that's why investors like us who are 0:12:27.760 --> 0:12:30.439 buying credit, who think we're in a soft Landing will 0:12:30.480 --> 0:12:32.240 say let's just hedge and buy a. 0:12:32.280 --> 0:12:34.800 Little bit further out the curve. And even though it's 0:12:34.840 --> 0:12:35.120 not the. 0:12:35.080 --> 0:12:37.920 FED that's pinning, I think that demand starts to pin 0:12:37.960 --> 0:12:38.199 that way. 0:12:38.280 --> 0:12:38.480 Yeah. 0:12:38.480 --> 0:12:40.480 No, my base case, we'll get yield curve control. I'll 0:12:40.480 --> 0:12:42.360 throw that out there. I'm just saying from a market 0:12:42.400 --> 0:12:45.560 participants perspective, I think right now they feel like there's 0:12:45.600 --> 0:12:48.080 less resistance in foreign exchange than the resins, say the 0:12:48.080 --> 0:12:49.720 bomb market trying to push you olds higher. 0:12:49.880 --> 0:12:51.080 Just one way of thinking about things. 0:12:51.480 --> 0:12:54.960 Stay with us. More Bloomberg Surveillance coming up after this. 0:13:04.160 --> 0:13:07.439 Coming up tonight, programming note on Bloomberg TV nine pm 0:13:07.480 --> 0:13:10.960 Eastern Time, the latest episode of The David Rubinstein Show 0:13:11.000 --> 0:13:14.120 Peer to Peer Conversations. David joined us now for more. 0:13:14.160 --> 0:13:16.040 Looking forward to this one with any David. Good to 0:13:16.040 --> 0:13:19.360 see you, sir. The infamous dinner last week we bumped 0:13:19.400 --> 0:13:21.880 into you at the World Economic Forum in Davos, Switzerland. 0:13:22.000 --> 0:13:22.600 You're in the room. 0:13:23.000 --> 0:13:25.640 I believe when COMMAS Secretary Howard Latnik delivered that speech, 0:13:25.640 --> 0:13:26.719 how controversial was it? 0:13:27.640 --> 0:13:31.520 Well, it was controversial, ixpect, but he didn't think it 0:13:31.520 --> 0:13:32.280 was controversial. 0:13:32.400 --> 0:13:34.800 It was a dinner. It was the welcoming dinner from. 0:13:34.640 --> 0:13:38.000 The host of the or the chair of the word 0:13:38.000 --> 0:13:41.160 Economic Forum, which is now co shared for at least 0:13:41.160 --> 0:13:44.040 an interim period of time by two people, Larry Fink 0:13:44.080 --> 0:13:48.920 and Andre's Hoffman from halfmandlll Roach family. And they had 0:13:48.920 --> 0:13:52.720 about five speakers who spoke, and Howard Lutnik was the 0:13:52.800 --> 0:13:56.480 last speaker who spoke, and it was something that got 0:13:56.520 --> 0:13:57.960 people's attention, I'll put it that way. 0:13:58.200 --> 0:14:00.679 Is it curious that he was the launch deliver this message? 0:14:00.720 --> 0:14:03.800 The first time I ever met Howard Lutnik was at 0:14:03.880 --> 0:14:05.040 Davos years. 0:14:04.800 --> 0:14:07.680 Ago before he's a Treasury secretary's talking about the global elite. Well, 0:14:07.920 --> 0:14:10.880 no offense, mister commerce secretary. But isn't he Wasn't he 0:14:10.960 --> 0:14:12.640 part of one that now he now is saying he. 0:14:12.640 --> 0:14:13.439 Just owns. 0:14:14.920 --> 0:14:18.480 He is a unique figure, and I think he's gotten 0:14:18.520 --> 0:14:21.240 a lot of leeway by the President that negotiate a 0:14:21.240 --> 0:14:23.480 lot of these deals, and I think he's very much 0:14:23.600 --> 0:14:27.360 enjoying the job. Being my impression, I co hosted a 0:14:27.440 --> 0:14:30.440 lunch with Dina Pale later in the weekend. He came 0:14:30.480 --> 0:14:33.680 to that lunch and spoke as well, and his message 0:14:33.720 --> 0:14:36.280 is pretty consistent. So I think he's not got to change, 0:14:36.280 --> 0:14:38.240 and you know, he's pretty happy in the job, and 0:14:38.240 --> 0:14:39.400 I think the President seems. 0:14:39.120 --> 0:14:40.680 To be happy with him, So that is a very 0:14:40.680 --> 0:14:42.480 diplomatic answer overall. 0:14:42.520 --> 0:14:45.720 What did you make of this year's Davos, Well, it was. 0:14:45.720 --> 0:14:49.160 A transition because Klaus Schwab, who built it more than 0:14:49.160 --> 0:14:51.240 fifty years ago, it was no longer the chair. He 0:14:51.320 --> 0:14:55.280 wasn't there, and so they had new leadership. I think 0:14:55.520 --> 0:14:57.800 there were more CEOs than they've ever had before, they 0:14:57.840 --> 0:15:00.400 had more foreign leaders. Virtually every European leader showed up. 0:15:00.440 --> 0:15:02.760 And clearly when the president United State shows up, it 0:15:02.840 --> 0:15:05.480 tends to dominate the news. And a lot of people 0:15:05.680 --> 0:15:08.600 stood just watching President Trump's speech for an hour or 0:15:08.640 --> 0:15:11.200 so and everybody was waiting for the punchline. And the 0:15:11.200 --> 0:15:14.400 punchline that people were expecting didn't show up, which was 0:15:14.400 --> 0:15:16.680 that he was going to use military force. That didn't 0:15:16.680 --> 0:15:18.720 show up. So that was the big news, and I 0:15:18.720 --> 0:15:20.480 think people were relieved about that. 0:15:20.520 --> 0:15:20.920 Generally. 0:15:21.080 --> 0:15:23.080 I welcomed some of the developments in the last week. 0:15:23.080 --> 0:15:25.560 It just felt like corporate America's shifted away from virtue, 0:15:25.560 --> 0:15:28.080 say they think, and we're just focused on business now. 0:15:28.280 --> 0:15:30.080 Is that your sense of a shift as well. Did 0:15:30.120 --> 0:15:31.280 you witness that last week? 0:15:31.920 --> 0:15:36.120 Well after the Greenland thing kind of went away a bit, 0:15:36.480 --> 0:15:39.600 people are focused on the FED, and though as you 0:15:39.680 --> 0:15:41.720 pointed out already, the Fed's decision is pretty much as 0:15:41.720 --> 0:15:44.640 well known for today. And then people are looking at 0:15:44.680 --> 0:15:47.600 earnings and people are wondering where the deficit is going 0:15:47.800 --> 0:15:49.880 debt the US and also whether there's going to be 0:15:49.920 --> 0:15:53.000 a government shutdown. And I think I think both sides 0:15:53.040 --> 0:15:55.400 and the Republicans Democrats do not want to shut down. 0:15:55.760 --> 0:15:58.560 They are really trying hard to avoid a shutdown. I 0:15:58.600 --> 0:15:59.680 suspect they will avoid it. 0:15:59.720 --> 0:16:01.600 Some we don't want to shut down. 0:16:01.680 --> 0:16:05.640 We've seen all the headlines about South America in financial markets, 0:16:05.880 --> 0:16:08.880 but then I listen to the CEOs in America and 0:16:08.960 --> 0:16:12.200 the global CEOs as well, who are investing in America. 0:16:12.320 --> 0:16:14.600 Do you sense a disconnect between the headlines and where 0:16:14.640 --> 0:16:15.720 the money's going at the moment. 0:16:16.960 --> 0:16:18.920 Well, there's no doubt that people are a little more 0:16:18.960 --> 0:16:22.920 nervous about investing in America than maybe people would like 0:16:23.000 --> 0:16:24.760 who are trying to get them to invest in America 0:16:24.800 --> 0:16:27.080 because there is some concern about the dollar going down. 0:16:28.160 --> 0:16:29.600 You know, if you invest in the United States and 0:16:29.640 --> 0:16:31.640 the dollar goes down, the value of your investment. 0:16:31.360 --> 0:16:32.800 Obviously is not as good as you thought. 0:16:33.120 --> 0:16:35.920 But it's not been the major cause of concern for 0:16:35.920 --> 0:16:38.400 foreign investors. They're just worried about where the US government 0:16:38.480 --> 0:16:42.120 is going. It's very hard to predict where the US 0:16:42.200 --> 0:16:44.480 government is going. For a lot of foreign investors. People 0:16:44.560 --> 0:16:47.800 want usit. People predictability. Tell me what the rules are, 0:16:47.960 --> 0:16:50.480 and I will follow the rules, and sometimes the rules 0:16:50.520 --> 0:16:53.200 are unpredictable or they change a lot. So to the 0:16:53.200 --> 0:16:56.160 extent that there's consistency, I think more and more people 0:16:56.160 --> 0:16:59.120 will invest in the US, But the extent that there's inconsistency, 0:16:59.280 --> 0:17:01.000 people will pull back back a bit. And particularly the 0:17:01.000 --> 0:17:02.160 dollar is an issue as well. 0:17:02.240 --> 0:17:05.760 But that's that's Trump and a nutshell, uncertainty is a 0:17:05.800 --> 0:17:08.800 feature of him. That is what he does. And now 0:17:08.800 --> 0:17:12.160 it's an election year. So what kind of unpredictability can 0:17:12.200 --> 0:17:13.760 we see this year alone? 0:17:14.240 --> 0:17:18.359 Well, I can't predict the unpredictability of the leadership of 0:17:18.400 --> 0:17:20.199 the government, but I would say there are a lot 0:17:20.240 --> 0:17:23.080 of issues that people are worried about. And right now, 0:17:23.119 --> 0:17:25.200