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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Right now, joining us, Jordan Rochester with a wonderful set

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Speaker 2: of overnight notes.

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Speaker 3: He's with FIC macro strategy, you know, with Miszuo. Jordan.

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Speaker 2: Let's go a little walk as year right now as

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Speaker 2: Cam Dawston was talking about this trust series, so for

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Speaker 2: ten year, I'm looking at it out three standard deviations.

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Speaker 3: It's been worse over the last four days.

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Speaker 2: Where's the trip point for these liquidity trust series for you?

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Speaker 3: Where we get to market chaos?

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Speaker 4: I think that's the biggest question to it.

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Speaker 5: Was one of my big key concerns earlier this week

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Speaker 5: was about dollar funding because the whole world was facing

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Speaker 5: such higher.

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Speaker 4: Tariff rates for the US.

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Speaker 5: What you're going to see is that exporters to the

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Speaker 5: US were no longer going to receive their dollar receipts,

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Speaker 5: and then dollar funding would become an issue. The only

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Speaker 5: good news that I can give you is that you

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Speaker 5: just had a record Q one imports in America and

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Speaker 5: so a lot of these exporters around the world will

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Speaker 5: be sitting on a dollar cash pile. That's a little

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Speaker 5: bit more healthier than usual. Now we've had this ninety

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Speaker 5: day reprieve at ten percent tariff rates. I do see

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Speaker 5: the flows of commerce still taking place between Europe and

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Speaker 5: the rest. But the problem is with China with these

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Speaker 5: extreme tariffs that we have. We've got one hundred and

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Speaker 5: forty five percent tariff rate on China. It's the largest,

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Speaker 5: one of the largest trading partners in the world with

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Speaker 5: the US, and so you're going to see a dollar

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Speaker 5: a quizy issue at some point unless we have are

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Speaker 5: climbed out.

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Speaker 3: Jordan Rochester with this Missouri.

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Speaker 2: We welcome all of you on your commute this morning

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Speaker 2: across the nation this Friday of Bloomberg's Veillance. Very much

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Speaker 2: market focus. We'll do a little bit of Washington and

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Speaker 2: certainly those announcements out of the White House will be

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Speaker 2: Key John Tucker with us for Lisa Matteo in this hour.

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Speaker 2: Damien sasaur In for Paul Sweeney with this wonderful emerging

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Speaker 2: market focus at Bloomberg Intelligence.

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Speaker 3: Damien a question to mister Rochester.

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Speaker 6: Yes, mister Rochester formerly fic Macro at Nomor and out

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Speaker 6: in the zoo. So really in a great place to

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Speaker 6: talk about China here. And look, everybody's blaming the thirty

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Speaker 6: year move on the basis on leverage, selling or buying

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Speaker 6: or whatever it is. But you know, I just got

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Speaker 6: to ask you. I'm getting a lot of questions about

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Speaker 6: China and what role it pad in these treasury swings.

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Speaker 6: I know you're well, not your colleagues, but your peers

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Speaker 6: over at SNBC are basically saying that China was involved

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Speaker 6: in that, and now City Group's getting, you know, getting

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Speaker 6: on board.

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Speaker 3: What are your thoughts there?

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Speaker 5: I could never say whether China is involved not. We

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Speaker 5: just don't have the data yet until at next the

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Speaker 5: end of the month for next month. That's the irritating

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Speaker 5: thing about data.

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Speaker 4: It's slow.

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Speaker 5: But what we can say is that if you're a

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Speaker 5: central bank and you're facing extreme currency pressures, it makes

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Speaker 5: sense to selling US treasuries to defend your currency. It's

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Speaker 5: been very smooth in dollar ramimbi and so that's kind

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Speaker 5: of possibly been behind it, I would add.

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Speaker 6: So let me ask you this now that you know

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Speaker 6: the dollars declining in the face of all this very unusual.

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Speaker 6: Do you think Asian central banks have more scope to

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Speaker 6: cut rates here?

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Speaker 4: I think the whole world does.

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Speaker 5: This is going to be a huge growth shock to

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Speaker 5: the US, but a big growth shop to the rest

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Speaker 5: of the world. And what's going to happen is the

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Speaker 5: Chinese exports are no longer going to go to the

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Speaker 5: US at the same rate. We'll be looking for the

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Speaker 5: next consumer. Europe stands out to me, but parts of

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Speaker 5: Asia too. We'll see excess supply of Chinese goods hit

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Speaker 5: their markets and that's going to load the selling price.

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Speaker 2: Jordan, Rochester within all the research capabilities of your shop,

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Speaker 2: do you people just look at the various supply chains

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Speaker 2: and almost frankly the demand chains.

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Speaker 3: Where China belieguered by the White House, runs their products

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Speaker 3: through Vietnam, runs their product through Indonesia, runs their next

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Speaker 3: to Kazakhstan.

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Speaker 4: Long term, that's probably what's going to happen. Short term.

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Speaker 5: How quickly they can do it is difficult. For example,

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Speaker 5: Chinese exporters were discussing in an FT article just over

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Speaker 5: over the past few days they had set up in Jordan,

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Speaker 5: which has an FTA Jordan, the country not me an

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Speaker 5: FTA with the US, but Jordan as a result has

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Speaker 5: a twenty percent tariff rate. Now under these the sort

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Speaker 5: of expected levels of reciprocal and so even countries with

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Speaker 5: FDAs where China exporters had sort of hedged themselves by

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Speaker 5: moving into countries to do the final production part there

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Speaker 5: and sell on to the US that the plans scuffered.

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Speaker 5: If everybody has a ten percent taraf rate, it's really

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Speaker 5: hard to do the rerouting. But for Chinese exports at

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Speaker 5: one hundred and forty five percent, sure they will take

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Speaker 5: ten percent by rerouting, but it it takes time and

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Speaker 5: it's not going to happen in the next few weeks.

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Speaker 2: I mean, Danian, we got to focus this down here

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Speaker 2: because we have Danian Sasar with us.

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Speaker 3: The bottom line is Fuscheng is making.

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Speaker 2: A lot of the golf heads for callaway, ping and tidiness.

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Speaker 2: Going to have to run that through Vietnam, Damien SASA

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Speaker 2: or hey to help improve your lousy game.

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Speaker 6: I pay an awful lot for my probi one excess.

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Speaker 6: But here's what I have to ask Jordan. I mean, look,

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Speaker 6: we know that the China dumping is on the rest

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Speaker 6: of the world is going to happen where we know

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Speaker 6: transhipments are going to happen. We know Europe's the clear winner.

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Speaker 6: But here's my question. How will bilateral trade negotiations with

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Speaker 6: the US evolve? And here's what I'm thinking here. You

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Speaker 6: have active discussions going on right now with India, Japan,

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Speaker 6: South Korea. Are non tara variables going to play a

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Speaker 6: role here? I mean, are they going to start talking

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Speaker 6: about currency manipulation and start holding some of these Asian

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Speaker 6: economies you know to bear for that? I mean, how

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Speaker 6: do you how do you even begin to talk about

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Speaker 6: that and regulate that.

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Speaker 5: I don't know about your experience with government officials, but

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Speaker 5: it never goes quickly, does it. Whenever your life involves

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Speaker 5: dealing with the government, it's quite difficult to get things

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Speaker 5: via email chains over the line. So I am skeptical

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Speaker 5: about how quickly you can get complete free trade agreements

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Speaker 5: in the next ninety days.

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Speaker 4: What I can think that.

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Speaker 5: A lot of these countries can do is buy themselves

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Speaker 5: more time extensions. Way, there's more time to deliberate. The

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Speaker 5: EUS offering zero for zero tariff rates, for example, but

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Speaker 5: the US is claiming that non tariff barriers are their issue.

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Speaker 5: Non tariff barriers requires regulation, changes, requires votes in parts,

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Speaker 5: it's a bit more difficult to do than just simple

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Speaker 5: tariff manipulation stories. And on the FX side, I do

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Speaker 5: agree Lessons made it clear several times informally and formally

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Speaker 5: about Japan, for example, having two weeks of an exchange

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Speaker 5: rate and the Bank Japan perhaps needing to hike rates

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Speaker 5: more so these will be a factor in the talks.

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Speaker 2: I got John Tucker's thinking, long yen here to be

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Speaker 2: stronger again? Can you model out as you did the

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Speaker 2: other day, Jordan Rochester one for five yen down to

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Speaker 2: one thirty five? Dare I say, short term, given dollar malignancy,

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Speaker 2: that we get yen to a strong one thirty per dollar.

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Speaker 4: Yeah.

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Speaker 5: What's quite clear is we're having a d dollarization theme

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Speaker 5: play out in the market. The theme's gone from slow

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Speaker 5: to rapid in the past forty eight hours.

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Speaker 4: A lot of that has.

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Speaker 5: Been corporate demands as well that the market's been seeing,

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Speaker 5: pushing up the likes of euro dollar and dollien and

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Speaker 5: the yen stronger for the Japanese yen. I think that

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Speaker 5: we could have another five percent devaluation in the.

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Speaker 4: Dollar from here.

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Speaker 5: If we are truly pricing in the US, exceeptionism come

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Speaker 5: to an end. Once you have a ten percent trade

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Speaker 5: weighted fall in the dollar, typically that's when it bottoms

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Speaker 5: out and rebounds. So we're using the twenty eighteen the

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Speaker 5: COVID nineteen playbooks, and we've won another five percent at

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Speaker 5: least to go here. That gets dolly En quite close

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Speaker 5: to one thirty five and lower. That's the sort of

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Speaker 5: view I have for where we get to over.

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Speaker 4: The next few months.

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Speaker 5: And it was something I thought would happen next year.

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Speaker 5: So it's all happening very quickly.

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Speaker 3: Jordan, Thank you so much. Jordan Rochester with us with Missoul.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

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Speaker 2: What does Kathy say at Schwab joining us now Kathy

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Speaker 2: Jones to straighten out our fixed income portfolio?

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Speaker 3: Do people buy the dip in bonds?

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Speaker 7: Yeah, I think you have to be careful, but I

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Speaker 7: think that is probably a very good idea. The question is,

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Speaker 7: are we at the yield level that's really attractive in

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Speaker 7: some parts of the market. I think we are. I

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Speaker 7: think in municipal bonds you're looking at, you know, tax

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Speaker 7: equivalent yields or a high earner in the eight nine

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Speaker 7: percent area, the high st equality. I think that that's

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Speaker 7: the place you start to nimble.

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Speaker 2: Okay, But on the commercial break, John Tucker's over here

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Speaker 2: with robinhood Day trading in Nvidia. He's buying the dip.

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Speaker 2: When you buy the Kathy Jones dip? Are you buying duration?

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Speaker 2: Are you, like saying, extending out your maturity? Are you

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Speaker 2: what's the what's the math of buying the fixed income dip?

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Speaker 7: Yeah, so right now we're still at benchmark, which is

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Speaker 7: consistent with the Bloomberg egg, and that's around six years

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Speaker 7: and we've been kind of hugging the benchmark for a

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Speaker 7: long time because of all the uncertainty. We feel like

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Speaker 7: you're still clipping a pretty good coupon of four and

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Speaker 7: a half upwards to five percent in high quality bonds.

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Speaker 7: That's a good base. We're not extending duration yet. We

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Speaker 7: have to wait and see how things play out, but

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Speaker 7: I think that will be a move that we make

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Speaker 7: probably some time later this year, but you know, high

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Speaker 7: credit quality. For We're we're really just focused on high

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Speaker 7: credit quality and making sure we have enough liquidity, not

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Speaker 7: going into instruments that they're ill liquid at this stage

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Speaker 7: of the game, trying to play it safe. But I

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Speaker 7: think the opportunities are starting to emerge.

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Speaker 3: Jamien, is a dollar an a liquid instrument?

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Speaker 6: Well, you know, Kathy, I have to agree with you.

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Speaker 6: Muni's mortgages as well. You know, I think you know

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Speaker 6: high quality mortgages. But you know what really stands out

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Speaker 6: in this move. Guess what acid class woke up within

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Speaker 6: fixed income credit and we saw spreads blow And now

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Speaker 6: I'm looking at IG and high yield, you know, down

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Speaker 6: two and a half three percent, you know, just since

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Speaker 6: the second of April. What are your thoughts on credit

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Speaker 6: markets going forward?

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Speaker 7: Yeah, we're so a little bit cautious, although again we're

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Speaker 7: getting tempted. We have been and kind of on the

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Speaker 7: sidelines and credit for a while, just staying up in

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Speaker 7: credit quality because the spreads were so tight. It didn't

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Speaker 7: get paid for taking risk. But now you know, we're

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Speaker 7: starting to get paid for taking risk. The problem is,

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Speaker 7: I think the mix of policies we have right now

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Speaker 7: is so difficult to interpret or even come up with

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Speaker 7: an investment thesis that you can carry through the end

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Speaker 7: of the year, because it could change in the heartbeat.

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Speaker 7: That's where we're that's where we're having trouble. But I

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Speaker 7: do think as we get if those spreads blow out

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Speaker 7: some more, you know, we will start looking at more credit.

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Speaker 6: We've also seen a massive steepening dare I say, in

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Speaker 6: US yield curve, not just the US, really global yield curves,

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Speaker 6: you know, And so you know when it talks, when

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Speaker 6: Tom asks about positioning along the yield curve, I'm just curious,

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Speaker 6: you know, I'm hearing a lot of people saying they

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Speaker 6: still want to be, you know, along the short end

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Speaker 6: of the curve, you know, as opposed to the long end.

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Speaker 6: I'm just curious to hear thoughts there.

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Speaker 2: Yeah.

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Speaker 7: No, I think that thesis makes sense because we are

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Speaker 7: anticipating rate cuts down the road, and if this continues,

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Speaker 7: I don't see how the FED holds off because you

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Speaker 7: see higher unemployment on the horizon. But I don't want

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Speaker 7: to just hug the short end and miss out on

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Speaker 7: grasping some of these yields for the long run, because

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Speaker 7: I do think we're going to get a slower economy.

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Speaker 7: I do think the FED will at some point have

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Speaker 7: to lower rate, and I want to capture some of that, right.

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Speaker 2: I want to report, Damien Damiens stay there right now

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Speaker 2: the market moving futures are up like forty and they're

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Speaker 2: now at eleven.

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Speaker 3: We actually had read in the screen for a bit

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Speaker 3: the Secretary.

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Speaker 2: Of treasurer with Maria right now, maybe he can have

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Speaker 2: the same effect as James Diamond a few days ago.

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Speaker 6: Damien Kathy US Treasury demanded this, you know, kind of

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Speaker 6: downtick really took a bit of a knock, and you know,

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Speaker 6: I'm just curious. You know, we know we've been transitioning

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Speaker 6: away from the FED, from US banks and foreigners, and

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Speaker 6: you know, what does this mean in your opinion to

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Speaker 6: term premium over time? I mean, are you thinking that

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Speaker 6: this steepening of the curve is structural, that it's going

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Speaker 6: to last for a long period.

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Speaker 3: That's a really good pa.

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Speaker 7: I do think it's going to last. Okay, term premium.

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Speaker 7: We actually came into this year calling at the year

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Speaker 7: of the term premium because we have to. We have

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Speaker 7: to incorporate now these risks that are out there, and

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Speaker 7: I do think we'll continue to see the term premium

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Speaker 7: move up, not just here but globally, but especially here

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Speaker 7: because this is the source of uncertainty.

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Speaker 2: I got twenty more questions. We don't have time, Kathy Jones,

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Speaker 2: your trooper to come in today. I can't imagine what

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Speaker 2: the Kathy Jones calendar looks like at Charles Schwab today

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Speaker 2: Chief Fixed Income Strategists, and ye'll curve watcher at Charles Schwab.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business App. You can also listen live

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Speaker 1: on Amazon Alexa from our flagship New York station, Just

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Speaker 1: say Alexa play Bloomberg eleven thirty.

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Speaker 2: Within the span of this week, this historic week, it

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Speaker 2: is a good time to speak to Sevita Supermanian. She

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Speaker 2: is with the Bank of America, but far more than that,

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Speaker 2: delivers Berkeley mathematics, philosophy and massive dead head knowledge and.

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Speaker 3: Joins us this morning here. She was definitive in making

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Speaker 3: esg adult for.

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Speaker 2: All all of you that were screaming, stop the peace,

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Speaker 2: love and dope, just give me the math. Savina Supermanian

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Speaker 2: led the charge to a constructive ESG debate more than

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Speaker 2: a few years ago, where through she could joined us

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Speaker 2: at studio.

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Speaker 3: Wonderful to have you here.

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Speaker 2: I love what you do in your Bank of America report, which,

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Speaker 2: unlike most ego driven strategists, you actually listen to your

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Speaker 2: securities research. You actually pay attention to what's going on

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Speaker 2: in the trenches. Lorraine Hutchinson has a worst job at

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Speaker 2: Bank of America.

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Speaker 3: She's got to figure out what Walmart's going to do

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Speaker 3: with China.

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Speaker 2: I know, what does China do to the consumer and

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Speaker 2: that how does that fold into your world?

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Speaker 8: Well, I mean, you know, Lorraine has been spot on

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Speaker 8: in calling out that a lot of these companies with

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Speaker 8: exposure to China actually started shifting sourcing out of China

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Speaker 8: into other regions of Asia as well as Mexico, you know,

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Speaker 8: other parts of globe as early as you know, twenty fifteen,

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Speaker 8: even before any of the tariff talk began.

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Speaker 9: So, you know, I think that the idea that these.

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Speaker 8: Companies are vulnerable to China alone is nice, is not

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Speaker 8: necessarily the case anymore. But closet China via you know, Vietnam, Mexico,

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Speaker 8: That's what worried us about the initial April second announcement.

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Speaker 2: A few years ago, you were in high school. I

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Speaker 2: got a phone call in Singapore. Go over to Bank

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Speaker 2: of America.

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Speaker 3: So I walk in.

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Speaker 2: It's me and Ken Lewis having a conversation about Bank

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Speaker 2: of America and Asia. You guys have a heritage there,

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Speaker 2: you have a history there really like no one else.

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Speaker 2: So what's China do here? Damien's going to say they dedollarize.

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Speaker 2: Do you just assume China solves the problem without unilateral

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Speaker 2: negotiations with the White House bilateral?

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Speaker 9: I should say, you know, that's TBD.

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Speaker 8: I think that where we are now is where corporates

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Speaker 8: have to really think about how they're going to plan.

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Speaker 8: And that's the problem is that it's hard to plan

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Speaker 8: when you just don't know what the playing field looks like.

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Speaker 4: You know.

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Speaker 8: What I think is interesting, though, is that there's been

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Speaker 8: this knee jerk reaction to buy treasury bonds instead of

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Speaker 8: stocks as a safe haven. And I think that's exactly

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Speaker 8: wrong because if you look back on what happened in

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Speaker 8: prior periods of protectionism, prior periods of stagflation, whatever we're

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Speaker 8: heading into value stocks outperformed treasury bonds by a massive margin.

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Speaker 8: The last thing you want to be stuck in during

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Speaker 8: a stagflationary environment is long duration bonds. They have no options,

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Speaker 8: whereas stocks, to me, are the best place to be.

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Speaker 8: In an environment where you need those options, companies can

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Speaker 8: extend or shorten their duration. We saw this with Meta

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Speaker 8: and Google in twenty twenty three. They both initiated dividends

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Speaker 8: and transition from being just pure.

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Speaker 9: Growth to value.

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Speaker 8: I think this is a really interesting time to think

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Speaker 8: about value equities. Companies that are returning capital, like utilities,

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Speaker 8: even metals and mining, even you know, energy companies that

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Speaker 8: where the dividends are sacro SYNCD. I think those are

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Speaker 8: areas that you really want to think about.

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Speaker 6: Sabina, I'd love to ask you whether you prefer Tarpent

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Speaker 6: station or American beauty, but we're not going to ask that.

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Speaker 6: An earning season, it's a great time to be alive.

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Speaker 6: And you know, I don't think it's going to be

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Speaker 6: you know, the earnings at all that moves markets. It's

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Speaker 6: going to be the words, the forward guidance around it.

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Speaker 6: What are you expecting here?

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Speaker 9: Absolutely?

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Speaker 8: And I think what's a little bit worrisome is that

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Speaker 8: we have a lot of companies shutting down guidance and

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Speaker 8: going dark, and that's never really good because the worst

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Speaker 8: you know, I think one of the reasons that we

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Speaker 8: were a bullish on US stocks is that they're the

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Speaker 8: most transparent, you know, equity market in the world. All

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Speaker 8: of these companies issue guidance, and now if they stop,

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Speaker 8: that's that's one you know, one more nick in the

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Speaker 8: America you know exceptionalism story. I think, you know, what

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Speaker 8: do we do with that that information vacuum? I mean,

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Speaker 8: what I think is interesting is that companies are already

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Speaker 8: thinking about how to navigate this period. And it could

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Speaker 8: be something like recasting your costs as IP or you know,

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Speaker 8: thinking about how to shift sourcing more creatively, how to price,

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Speaker 8: how to pass that price along to consumers, and a

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Speaker 8: lot of companies have the option to increase prices as

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Speaker 8: long as wages remain relatively healthy.

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Speaker 2: With the Bank of America, Savita Supermanian with us, we

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Speaker 2: welcome all over your commute across Bank of America's nation

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Speaker 2: and of course on YouTube and particularly good evening in

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Speaker 2: the Pacific RIM YouTube subscribe to Bloomberg Podcast as CPI. Yesterday,

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Speaker 2: I got negative statistics for that business inflation PPI. I'm

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Speaker 2: not going to go into it other than to say

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Speaker 2: it does show a disinflationary tendency. Pretty much everything said,

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Speaker 2: futures go from up twenty to up twenty six. The

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Speaker 2: VIX comes in actually forty one point four or five.

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Speaker 3: Let me say that.

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Speaker 2: Blomberg surveillance and all of our economics. It's brought to

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Speaker 2: you by Commonwealth. Join over two thousand independent financial advisors.

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Speaker 2: They are taking control of their growth with advisor centric

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00:18:11,280 --> 00:18:14,000
Speaker 2: support and future ready technologies.

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00:18:14,160 --> 00:18:15,120
Speaker 3: Grow on your.

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00:18:15,000 --> 00:18:18,800
Speaker 2: Own terms with a partner dedicated to your success. Go

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00:18:18,920 --> 00:18:21,520
Speaker 2: to Commonwealth dot com to learn how.

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Speaker 6: Damian Savida put on your options hat for me. With

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Speaker 6: all the uncertainty that's out there, implied boles have been

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Speaker 6: all over the map, surfaces or inverting skis or stapening.

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Speaker 6: What are your thoughts on buying and or underwriting equity

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Speaker 6: protection here?

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Speaker 8: Yeah, I mean I think that protections already probably pretty

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Speaker 8: well uh sought after. Yeah, you know, I think there

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Speaker 8: is actually potentially more upside than downside risk to the

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Speaker 8: S and P five hundred And I know I sound

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Speaker 8: a little bit, you.

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Speaker 9: Know, out of sync with everybody else.

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Speaker 8: Here, but you know, again, I see this as a

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Speaker 8: market environment where you want to follow the money. The

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Speaker 8: money is not going into US Treasury bonds. There's a

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Speaker 8: buyers strike on US treasure rebonds. Where is the money

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Speaker 8: going to go? I think it's going to go into

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Speaker 8: inflation protected income. Think about retirees. Retirees right now own

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Speaker 8: this barbell I have to.

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Speaker 9: Well, let's think about what we all own. We own

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Speaker 9: a barbelle of cash and tim stocks, right.

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Speaker 8: I mean, if you look at Merrill lynch Our, you

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Speaker 8: know advisor data, four out of five of the top

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Speaker 8: ten holdings of retirees are tech companies. Their yield is

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Speaker 8: lower than the yield of the S and P five hundred.

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Speaker 8: This is the first time in history that we've seen

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Speaker 8: retirees not owning dividends.

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Speaker 2: Quickly on this then, is apple of value stock as

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Speaker 2: you mentioned value before, Well, I mean.

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Speaker 8: It's certainly a lot more value now than it was

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Speaker 8: a few months ago.

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Speaker 3: Peas Templeton would say, shares are on sale.

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Speaker 8: Yeah, I think that there is an idea there is

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Speaker 8: this notion that the dividends are relatively protected, payout ratios

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Speaker 8: are low for a lot of these companies. That's what

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Speaker 8: I would look at is, what's the payout ratio, what's

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Speaker 8: their dividend growth profile?

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Speaker 9: What's management's focus on dividends?

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Speaker 2: Handlers didn't want you to do this interview because they

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Speaker 2: know I'm going to get you in trouble.

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Speaker 3: Okay, folks, here's the drill.

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Speaker 2: Savida is so good at the spread market in math

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Speaker 2: that she's one of the few equity people out there.

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Speaker 2: And what do we do with our four oh one

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Speaker 2: k that could go into the office this afternoon with

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Speaker 2: Brian moynihan, And you're going to explain to Brian for

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Speaker 2: the larger Bank of America World the collapse two point

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Speaker 2: eight standard deviations off the log trend back to twenty

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Speaker 2: twenty three autumn of so for ten year yield. And

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Speaker 2: the answer is the underlining machinery of mister moynihan, a

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Speaker 2: guy building a building on Park Evan and a few

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Speaker 2: other people. The liquidity issue out there is really sport.

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Speaker 2: How do you explain to bank management the tension going

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Speaker 2: into this weekend?

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Speaker 4: Oh?

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Speaker 8: I think bank management is well aware and on top

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Speaker 8: of this, But I mean I would say that you know,

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Speaker 8: in environments like this, the trick is getting to the

441
00:21:07,359 --> 00:21:08,119
Speaker 8: other side.

442
00:21:08,320 --> 00:21:09,359
Speaker 9: And who knows this.

443
00:21:09,320 --> 00:21:13,119
Speaker 2: Is that how many heads a short term trust market?

444
00:21:13,560 --> 00:21:15,879
Speaker 8: Well, I mean I think that you look for areas

445
00:21:15,960 --> 00:21:18,800
Speaker 8: that are short duration. Short duration is key in a

446
00:21:18,840 --> 00:21:22,720
Speaker 8: liquidity crisis, and that means you go for cash, short

447
00:21:22,800 --> 00:21:26,560
Speaker 8: duration bonds, stocks with high dividends. You know, some credit,

448
00:21:26,600 --> 00:21:29,879
Speaker 8: but not all credit. Credit markets might be healthier than

449
00:21:29,920 --> 00:21:32,760
Speaker 8: they have been in prior crises. I mean, you tell me, Tom,

450
00:21:32,800 --> 00:21:35,240
Speaker 8: but I think this crisis is so different from two

451
00:21:35,280 --> 00:21:39,160
Speaker 8: thousand and eight or nineteen ninety eight or ninety eight

452
00:21:39,320 --> 00:21:43,480
Speaker 8: or even the seventies, in that US companies have completely

453
00:21:43,960 --> 00:21:47,119
Speaker 8: de levered in terms of the larger ones. Right if

454
00:21:47,160 --> 00:21:50,879
Speaker 8: you think about banks, energy companies, all the old economy

455
00:21:50,920 --> 00:21:53,359
Speaker 8: companies that were hit in two thousand and eight have

456
00:21:53,480 --> 00:21:57,960
Speaker 8: become healthier, have really been preparing for this type of crisis.

457
00:21:58,440 --> 00:22:00,920
Speaker 8: So I think that's the good news is that within

458
00:22:00,960 --> 00:22:03,199
Speaker 8: the equity market, you've got a lot of companies with

459
00:22:03,359 --> 00:22:07,480
Speaker 8: solid balance sheets and you know, the ability to maintain dividends.

460
00:22:07,560 --> 00:22:10,120
Speaker 6: Seviea. We're talking about retirees and we're talking about retirement

461
00:22:10,200 --> 00:22:13,720
Speaker 6: benefits here, and we're talking about equitable institute losses. Between

462
00:22:13,800 --> 00:22:16,040
Speaker 6: the four trading days between April third, and April eighth,

463
00:22:16,160 --> 00:22:19,200
Speaker 6: the twenty five top state local US pensions lost almost

464
00:22:19,240 --> 00:22:22,800
Speaker 6: two hundred billion dollars. Well, yeah, I mean they're calling you,

465
00:22:22,840 --> 00:22:23,400
Speaker 6: what do you say?

466
00:22:23,600 --> 00:22:26,240
Speaker 9: You know why that that's happening.

467
00:22:26,280 --> 00:22:28,480
Speaker 8: I think part of the reason is that everybody loaded

468
00:22:28,600 --> 00:22:33,000
Speaker 8: up on private equity, private credit and long bonds, interesting,

469
00:22:33,040 --> 00:22:35,720
Speaker 8: which are hardest hit during any sort of cost of

470
00:22:35,800 --> 00:22:38,600
Speaker 8: capital crisis. Think about all of these areas, They're going

471
00:22:38,640 --> 00:22:41,560
Speaker 8: to be whacked by higher interest rates. And I think

472
00:22:41,600 --> 00:22:44,640
Speaker 8: that's the problem, is that pension funds have supplanted all

473
00:22:44,680 --> 00:22:49,960
Speaker 8: of their active public equity exposure, yeah, with passive or

474
00:22:50,000 --> 00:22:52,960
Speaker 8: private equity. Interesting, and that's why the S and P

475
00:22:53,160 --> 00:22:56,120
Speaker 8: index itself is at risk. This is the most crowded

476
00:22:56,119 --> 00:22:58,919
Speaker 8: ticker in the world. Nobody owns stocks anymore, they own

477
00:22:58,920 --> 00:22:59,320
Speaker 8: the index.

478
00:22:59,320 --> 00:23:01,159
Speaker 6: But let me ask you that. I mean, aren't private

479
00:23:01,280 --> 00:23:04,120
Speaker 6: credit funds allowed to mark their books like four times

480
00:23:04,160 --> 00:23:05,399
Speaker 6: a year, call it once a year when they get

481
00:23:05,400 --> 00:23:07,560
Speaker 6: the audit, right, So I mean, it's not really showing

482
00:23:07,640 --> 00:23:10,359
Speaker 6: up in it, you know what I mean? So that

483
00:23:10,480 --> 00:23:12,639
Speaker 6: four dat decline of two hundred billion, that might not

484
00:23:12,720 --> 00:23:15,160
Speaker 6: even be including the marks you're getting from private credit yet,

485
00:23:15,160 --> 00:23:16,920
Speaker 6: So it could be much more, is what you're saying exactly.

486
00:23:16,920 --> 00:23:18,359
Speaker 9: That's why I like equities Again.

487
00:23:18,400 --> 00:23:22,240
Speaker 8: They're marked to reality every millisecond of the day, and

488
00:23:22,280 --> 00:23:26,359
Speaker 8: I think that's a very valuable characteristic as well, beautifully.

489
00:23:25,920 --> 00:23:28,240
Speaker 3: Explained by you and Damien better than I could do.

490
00:23:28,640 --> 00:23:33,080
Speaker 2: Then where is the opportunity if passive is taken over?

491
00:23:33,160 --> 00:23:35,120
Speaker 2: I mean, as we get this from Eric Bell Chunas,

492
00:23:35,200 --> 00:23:40,160
Speaker 2: But Savita Supermanian, give me an opportunity looking out past

493
00:23:40,280 --> 00:23:40,880
Speaker 2: labor day?

494
00:23:41,080 --> 00:23:43,960
Speaker 8: Yeah, by the average stock in the S and P,

495
00:23:44,160 --> 00:23:47,520
Speaker 8: by the equal weighted SMP put by large cat value,

496
00:23:47,560 --> 00:23:50,520
Speaker 8: by anything but the cap weighted index. Because that's the

497
00:23:50,640 --> 00:23:54,160
Speaker 8: area that I think has become bloated and potentially risky.

498
00:23:54,280 --> 00:23:55,280
Speaker 3: Can you buy Europe?

499
00:23:55,640 --> 00:23:57,920
Speaker 2: I mean if if i'm I mean, I mean, let's

500
00:23:57,960 --> 00:24:00,320
Speaker 2: be honest here, Damien, I mean, you know if I

501
00:24:00,320 --> 00:24:04,360
Speaker 2: got you one thirteen, Savina Romamian over Lewis Viewton, They're

502
00:24:04,359 --> 00:24:07,760
Speaker 2: on fifty seventh Street and fifth. They han't a loading up.

503
00:24:07,800 --> 00:24:09,320
Speaker 2: I mean, is europe an opportunity?

504
00:24:09,480 --> 00:24:11,800
Speaker 9: I think Europe's an opportunity. I mean, i'm i'm.

505
00:24:11,920 --> 00:24:15,560
Speaker 8: I was more optimistic on Europe when before the tariff

506
00:24:15,760 --> 00:24:18,760
Speaker 8: wars began because I think there's an opportunity for a

507
00:24:18,760 --> 00:24:21,080
Speaker 8: lot of really interesting cross border m and a where

508
00:24:21,200 --> 00:24:24,119
Speaker 8: US companies can buy cheaper growth in Europe than they

509
00:24:24,160 --> 00:24:26,320
Speaker 8: can in the US. So, you know, I think those

510
00:24:26,320 --> 00:24:29,040
Speaker 8: are areas that could catalyze Europe. I think Europe also

511
00:24:29,320 --> 00:24:33,760
Speaker 8: right now certainly looks a lot more attractive on a.

512
00:24:33,680 --> 00:24:35,159
Speaker 9: Policy risk perspective.

513
00:24:35,200 --> 00:24:37,040
Speaker 8: At least we know a little bit more about what's

514
00:24:37,080 --> 00:24:40,920
Speaker 8: going to happen there. But I still think Europe's dependence

515
00:24:40,960 --> 00:24:43,880
Speaker 8: on the US and the interdependence between all of these

516
00:24:43,920 --> 00:24:47,199
Speaker 8: regions is a risk that that may not be factored in.

517
00:24:47,480 --> 00:24:49,360
Speaker 2: Call me if you talk to Brian moyne, Anne, we'd

518
00:24:49,359 --> 00:24:51,359
Speaker 2: love to know what you know, what you're talking about.

519
00:24:51,760 --> 00:24:54,560
Speaker 2: Savina Supermanian, thank you so much for.

520
00:25:00,320 --> 00:25:04,240
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

521
00:25:04,280 --> 00:25:07,560
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

522
00:25:07,680 --> 00:25:10,520
Speaker 1: with the Bloomberg Business app. You can also watch us

523
00:25:10,560 --> 00:25:14,440
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

524
00:25:15,040 --> 00:25:18,280
Speaker 2: Jennifer Lee joins US Now Senior economist Jennifer to what

525
00:25:18,560 --> 00:25:22,320
Speaker 2: we heard from Damien sas our overwhelming law.

526
00:25:22,320 --> 00:25:25,800
Speaker 3: Is a presumption of a growth slowdown. Where will real

527
00:25:25,880 --> 00:25:26,880
Speaker 3: GDP head?

528
00:25:28,720 --> 00:25:31,760
Speaker 10: Good morning, and thank you very much for having me on. Yes, well,

529
00:25:31,840 --> 00:25:34,520
Speaker 10: right now, it looks like GDP is headed lower in

530
00:25:34,600 --> 00:25:38,119
Speaker 10: terms of growth. You know, we're not looking for a

531
00:25:38,200 --> 00:25:41,280
Speaker 10: recession in the US, but the risk of this continues

532
00:25:41,320 --> 00:25:44,480
Speaker 10: to run. It's just given obviously this escalating higher and

533
00:25:44,480 --> 00:25:46,600
Speaker 10: a higher terra form losing the track of all the

534
00:25:46,720 --> 00:25:49,199
Speaker 10: percentages right now, but it looks like, you know, we

535
00:25:49,280 --> 00:25:51,479
Speaker 10: are maxed out at one hundred and forty five percent

536
00:25:51,840 --> 00:25:53,679
Speaker 10: on one side, one hundred and twenty five percent on

537
00:25:53,720 --> 00:25:55,960
Speaker 10: the other side. So we'll see how this plays out.

538
00:25:55,960 --> 00:25:57,480
Speaker 10: But this is you know, obviously not going to use

539
00:25:57,520 --> 00:25:59,600
Speaker 10: for US consumers. You're going to be paying higher prices,

540
00:25:59,640 --> 00:26:03,320
Speaker 10: even though you know, we brought all the other countries

541
00:26:03,359 --> 00:26:06,240
Speaker 10: down to a baseline of ten percent tariff, but you know,

542
00:26:06,400 --> 00:26:07,840
Speaker 10: prices are heading higher and.

543
00:26:07,800 --> 00:26:09,320
Speaker 11: This is what's going to hit the US consumer and

544
00:26:09,359 --> 00:26:11,280
Speaker 11: this is what's going to.

545
00:26:11,680 --> 00:26:14,200
Speaker 2: Are you going to a negative statistic on real GDP

546
00:26:14,400 --> 00:26:15,520
Speaker 2: for this present quarter?

547
00:26:16,600 --> 00:26:17,639
Speaker 11: No, we are not, no, not.

548
00:26:17,720 --> 00:26:21,040
Speaker 10: We're still looking for growth, but slower, much slower growth.

549
00:26:21,920 --> 00:26:23,520
Speaker 10: And it's not just the consumer, by the way, it's

550
00:26:23,520 --> 00:26:26,640
Speaker 10: also business investment. And you know, even though a lot

551
00:26:26,680 --> 00:26:30,560
Speaker 10: of these uh you know, this this invitation we can

552
00:26:30,600 --> 00:26:33,879
Speaker 10: we say, to bring more investment into the US is helping,

553
00:26:33,920 --> 00:26:36,360
Speaker 10: we're stealing, you know, lots of money coming in now

554
00:26:36,680 --> 00:26:40,240
Speaker 10: in terms from different companies promising to build and to hire.

555
00:26:40,920 --> 00:26:42,840
Speaker 10: At the same time. You know, it's just very hard

556
00:26:42,880 --> 00:26:47,399
Speaker 10: to make any real strong with conviction investment decisions in

557
00:26:47,400 --> 00:26:50,280
Speaker 10: this sort of uncertain environment. So I think that's also

558
00:26:50,320 --> 00:26:53,040
Speaker 10: going to offset a lot of this incoming.

559
00:26:52,640 --> 00:26:53,679
Speaker 11: Investment, Jennifer.

560
00:26:53,760 --> 00:26:56,840
Speaker 6: As you know, overnight, Beijing raised their tariff on the

561
00:26:56,920 --> 00:26:59,080
Speaker 6: US to one twenty five percent, But the company statements

562
00:26:59,080 --> 00:27:00,399
Speaker 6: stood out for me. They said, we're not going to

563
00:27:00,440 --> 00:27:02,200
Speaker 6: raise anymore. You know why, because it doesn't matter. We're

564
00:27:02,200 --> 00:27:04,399
Speaker 6: not trading with them anymore. I mean, so in your models,

565
00:27:04,400 --> 00:27:07,399
Speaker 6: are you modeling zero trade between China and the US

566
00:27:07,760 --> 00:27:08,960
Speaker 6: on a four basis?

567
00:27:09,560 --> 00:27:11,280
Speaker 10: Well, you know it, certainly it looks like we are

568
00:27:11,359 --> 00:27:14,800
Speaker 10: heading in that direction, but I can't see, you know,

569
00:27:15,080 --> 00:27:16,879
Speaker 10: I just can't see how that is going to happen,

570
00:27:17,000 --> 00:27:19,840
Speaker 10: just given how much reliance they are, there is on

571
00:27:19,920 --> 00:27:22,760
Speaker 10: both both countries on each other for all this trade.

572
00:27:22,760 --> 00:27:24,560
Speaker 10: So there's just going to have to be you know,

573
00:27:24,680 --> 00:27:26,600
Speaker 10: sometimes they're going to have to start talking at some point,

574
00:27:26,680 --> 00:27:28,520
Speaker 10: but right now, I'm just I'm very curious to see,

575
00:27:28,680 --> 00:27:30,399
Speaker 10: number one, what the reaction from White House is going

576
00:27:30,440 --> 00:27:32,679
Speaker 10: to be, and number two, what other tools are going

577
00:27:32,720 --> 00:27:35,240
Speaker 10: to be coming out of the toolbox to borrow with

578
00:27:35,240 --> 00:27:37,800
Speaker 10: the language from monetary policy makers about what else can

579
00:27:37,840 --> 00:27:40,159
Speaker 10: be used? If we are hitting that max of one

580
00:27:40,240 --> 00:27:41,840
Speaker 10: hundred and forty five one hundred and fine five percent,

581
00:27:42,240 --> 00:27:45,080
Speaker 10: what's next? So we're going to start talking about expert

582
00:27:45,080 --> 00:27:48,560
Speaker 10: restrictions on rare minerals for example, on you know, perhaps

583
00:27:48,640 --> 00:27:52,040
Speaker 10: treasury on the treasury holdings. I don't know what's next,

584
00:27:52,119 --> 00:27:54,400
Speaker 10: but you know, but if we're done with terrorists, there's well,

585
00:27:54,400 --> 00:27:55,760
Speaker 10: there's probably a lot of other things that they.

586
00:27:55,680 --> 00:27:58,040
Speaker 6: Can use, Jennifer. Many are referring to the ninety day

587
00:27:58,040 --> 00:28:01,080
Speaker 6: window by Trump as him having blinked, right, I mean,

588
00:28:01,119 --> 00:28:03,400
Speaker 6: he saw the devil and he basically blinked. And I'm

589
00:28:03,440 --> 00:28:05,919
Speaker 6: just curious. You know, if you're sitting there, you're in Beijing,

590
00:28:05,960 --> 00:28:08,000
Speaker 6: you have to enter into negotiations, or for that matter,

591
00:28:08,040 --> 00:28:08,800
Speaker 6: any sense, any.

592
00:28:08,680 --> 00:28:12,640
Speaker 12: Country entering after why do they have to negotiate as well?

593
00:28:12,680 --> 00:28:14,000
Speaker 6: I mean, only if they want to keep creating with

594
00:28:14,040 --> 00:28:15,840
Speaker 6: the US, or you're right, maybe they just sit tight,

595
00:28:15,880 --> 00:28:17,480
Speaker 6: sit on their hands, and then them blink back again.

596
00:28:17,520 --> 00:28:19,879
Speaker 6: I mean, that's my question, Jennifer. You know, how do

597
00:28:20,000 --> 00:28:22,520
Speaker 6: you negotiate with the US now that Trump has just

598
00:28:22,520 --> 00:28:24,639
Speaker 6: put this ninety day window and it does seem like

599
00:28:24,720 --> 00:28:25,720
Speaker 6: he did blink.

600
00:28:28,400 --> 00:28:29,280
Speaker 11: It is it.

601
00:28:29,200 --> 00:28:31,119
Speaker 10: Looks like he saw the cliff. He goes, oh, there

602
00:28:31,200 --> 00:28:33,119
Speaker 10: is the after of the cliff. I'm going the other way.

603
00:28:33,320 --> 00:28:35,320
Speaker 10: You know, there are a lot of different interpretations of

604
00:28:35,359 --> 00:28:37,479
Speaker 10: what happened, but you know, from one, I think all

605
00:28:37,480 --> 00:28:39,920
Speaker 10: of us are very relieved that he did that he

606
00:28:40,040 --> 00:28:42,520
Speaker 10: that he did put in that ninety day pause, and

607
00:28:42,560 --> 00:28:45,080
Speaker 10: I think that should be very much welcomed. And that

608
00:28:45,160 --> 00:28:47,160
Speaker 10: was definitely a big step back from the brink, and

609
00:28:47,200 --> 00:28:49,040
Speaker 10: I think that's what everyone should sort of focus on,

610
00:28:49,080 --> 00:28:49,920
Speaker 10: and the fact that that.

611
00:28:49,960 --> 00:28:50,920
Speaker 11: Is good news.

612
00:28:51,160 --> 00:28:54,080
Speaker 10: Now, what's going to happen next Again, that's anyone's guest.

613
00:28:54,120 --> 00:28:56,200
Speaker 10: But I would really really hope that both sides are

614
00:28:56,200 --> 00:28:58,640
Speaker 10: going to start saying, okay, let's talk this out. Let's

615
00:28:58,680 --> 00:29:01,320
Speaker 10: let's plan a summit of some port of some sort

616
00:29:01,360 --> 00:29:03,200
Speaker 10: of in Beijing or in Washington, DC, or a somewhere

617
00:29:03,200 --> 00:29:06,000
Speaker 10: in neutral wherever that's going to be now and start

618
00:29:06,040 --> 00:29:06,720
Speaker 10: hammering out.

619
00:29:06,560 --> 00:29:08,000
Speaker 11: What are we going to do to make all of this,

620
00:29:08,200 --> 00:29:09,400
Speaker 11: to make it both sides.

621
00:29:09,120 --> 00:29:11,720
Speaker 10: Happy, because the global economy is really at stake here,

622
00:29:11,800 --> 00:29:12,000
Speaker 10: you know.

623
00:29:12,080 --> 00:29:15,000
Speaker 2: Jennifer, what's so important here is is this oddity on

624
00:29:15,080 --> 00:29:19,719
Speaker 2: a Friday of While the American economy is great, Morgan

625
00:29:19,880 --> 00:29:24,640
Speaker 2: Stanley out now has a return on average common equity

626
00:29:24,760 --> 00:29:29,280
Speaker 2: of seventeen point four percent jp Morgan even better than that,

627
00:29:30,640 --> 00:29:35,160
Speaker 2: we're moving from a three percent real GDP economy into

628
00:29:35,240 --> 00:29:39,760
Speaker 2: some great mystery. Can the banks call Secretary Besson and

629
00:29:39,920 --> 00:29:44,800
Speaker 2: just say stop this because of the liquidity issues, the

630
00:29:44,840 --> 00:29:48,480
Speaker 2: bond issues, the dollar issue. Are you confident into the

631
00:29:48,520 --> 00:29:52,400
Speaker 2: weekend that the big banks have the power to sway

632
00:29:52,600 --> 00:29:53,480
Speaker 2: the secretary?

633
00:29:56,240 --> 00:29:58,960
Speaker 11: I would like to think that would be the case. However,

634
00:29:59,200 --> 00:30:01,560
Speaker 11: I think there are the administration has.

635
00:30:01,800 --> 00:30:05,560
Speaker 10: Bigger, bigger issues or bigger picture that they're that they're

636
00:30:05,560 --> 00:30:08,400
Speaker 10: focusing on. I mean, I believe President Trump did say

637
00:30:08,400 --> 00:30:09,880
Speaker 10: that there's good that we're going to be entering this,

638
00:30:09,960 --> 00:30:12,640
Speaker 10: you know, this volatile period right now, Camemis exact words,

639
00:30:12,640 --> 00:30:14,720
Speaker 10: but you know it's going to be some choppiness in

640
00:30:14,800 --> 00:30:17,360
Speaker 10: terms of economy, in terms of prices, so we have

641
00:30:17,440 --> 00:30:18,840
Speaker 10: to what they're trying to do is look through this

642
00:30:19,200 --> 00:30:21,640
Speaker 10: and ultimately make this you know, right, this wrong?

643
00:30:21,760 --> 00:30:23,440
Speaker 11: You know what they are they are seeing in terms

644
00:30:23,480 --> 00:30:24,880
Speaker 11: of global trade.

645
00:30:24,480 --> 00:30:27,760
Speaker 2: Jennifer, I got gold up fifty six dollars three two

646
00:30:27,920 --> 00:30:32,040
Speaker 2: three four. I've got so for ten year, folks, which

647
00:30:32,080 --> 00:30:35,120
Speaker 2: is sort of the heartbeat of the trust market out

648
00:30:35,120 --> 00:30:39,440
Speaker 2: two point nine standard deviations off the trend ACKed to

649
00:30:39,560 --> 00:30:42,840
Speaker 2: the fall of last year. Aren't we at a point

650
00:30:42,880 --> 00:30:46,440
Speaker 2: where the big banks, Diamond, Mooyne and the others can

651
00:30:46,480 --> 00:30:50,479
Speaker 2: call them up and just say stop it.

652
00:30:51,480 --> 00:30:51,760
Speaker 11: Again?

653
00:30:51,960 --> 00:30:52,320
Speaker 4: They can?

654
00:30:52,600 --> 00:30:55,440
Speaker 11: But does he want to show that he is bending

655
00:30:55,560 --> 00:30:57,280
Speaker 11: to you know, to corporate America.

656
00:30:57,360 --> 00:30:59,440
Speaker 10: That's you know, they're sort of like beet chair Powell

657
00:30:59,480 --> 00:31:02,200
Speaker 10: right when when he want, you know, people are going

658
00:31:02,240 --> 00:31:03,920
Speaker 10: to be questioning is he doing it because of local

659
00:31:03,960 --> 00:31:06,480
Speaker 10: pressure or is he doing it because he's trying to

660
00:31:06,800 --> 00:31:08,800
Speaker 10: support the US economy. There's there's gonna be a lot

661
00:31:08,800 --> 00:31:11,280
Speaker 10: of questions about this, and tough questions, of course, and

662
00:31:11,560 --> 00:31:12,760
Speaker 10: you know they will be posed.

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Speaker 3: Jen We've got to run here, Damien. I got to run,

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00:31:15,400 --> 00:31:16,520
Speaker 3: but this is too important.

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00:31:16,760 --> 00:31:19,680
Speaker 2: I got Looney one forty one to a strong Canadian

666
00:31:19,760 --> 00:31:23,880
Speaker 2: dollar one thirty nine. Can the next Prime Minister of Canada,

667
00:31:24,240 --> 00:31:27,920
Speaker 2: whomever it is, can they stand a strong Canadian dollar.

668
00:31:28,800 --> 00:31:31,080
Speaker 11: I don't know. I would call it right now very strong.

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00:31:31,160 --> 00:31:33,040
Speaker 10: I mean, it's certainly better than, you know, than what

670
00:31:33,080 --> 00:31:35,800
Speaker 10: we had before. But I'm going to be curious to me.

671
00:31:35,840 --> 00:31:38,480
Speaker 10: Our election is at April twenty eighth. Whoever the new

672
00:31:38,480 --> 00:31:39,880
Speaker 10: Prime minister is going to be, whether or not there's

673
00:31:39,920 --> 00:31:42,920
Speaker 10: going to be a majority government or not, what measures are.

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00:31:42,800 --> 00:31:45,200
Speaker 11: They going to do to strengthen the Canadian economy? And

675
00:31:45,200 --> 00:31:46,800
Speaker 11: that will be you know, that's the next focus.

676
00:31:47,000 --> 00:31:49,480
Speaker 2: Thank you so much for being this today, Jenniferly huge

677
00:31:49,560 --> 00:31:51,680
Speaker 2: value at BEMO Capital Market.

678
00:31:51,840 --> 00:31:55,720
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

679
00:31:55,760 --> 00:31:58,760
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

680
00:31:58,760 --> 00:32:01,800
Speaker 1: Otto with the Bloomberg Business Up. You can also listen

681
00:32:01,920 --> 00:32:05,160
Speaker 1: live on Amazon Alexa from our flagship New York station,

682
00:32:05,720 --> 00:32:08,400
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

683
00:32:08,960 --> 00:32:13,080
Speaker 2: Erica Groschen came out of Harvard and out of University

684
00:32:13,080 --> 00:32:17,680
Speaker 2: of Wisconsin, Madison and did the thing that's wonderful in research.

685
00:32:17,840 --> 00:32:19,840
Speaker 2: She wrote up research. I believe it was the new

686
00:32:19,960 --> 00:32:23,440
Speaker 2: York fed years ago and Damiena jumped out of the page,

687
00:32:23,520 --> 00:32:24,200
Speaker 2: jumped out.

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00:32:24,000 --> 00:32:26,080
Speaker 3: Of the screen. It was like, who is this person?

689
00:32:26,440 --> 00:32:28,880
Speaker 2: And I interviewed Eric Groschen. I don't think she was

690
00:32:28,880 --> 00:32:31,640
Speaker 2: so young. I don't think she could drive. She's joining

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00:32:31,720 --> 00:32:36,760
Speaker 2: us now after a stellar career of public service as

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00:32:36,840 --> 00:32:41,840
Speaker 2: commissioner of the United States Bureau of Labor Statistics. When

693
00:32:41,880 --> 00:32:44,920
Speaker 2: you see dose, say we're going to move him out

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00:32:45,000 --> 00:32:49,000
Speaker 2: the door. No one has been in the crosshairs like

695
00:32:49,080 --> 00:32:51,880
Speaker 2: doctor Groschen. Erica, thank you so much for joining us.

696
00:32:51,880 --> 00:32:54,360
Speaker 2: It could be a four hour conversation, but we're going

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00:32:54,440 --> 00:32:56,440
Speaker 2: to be quick, quick, quick today.

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00:32:57,000 --> 00:32:57,360
Speaker 3: Erica.

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00:32:57,360 --> 00:33:00,360
Speaker 2: What is the damage to the people that you our

700
00:33:00,480 --> 00:33:05,640
Speaker 2: economic data build in nineteen forty seven, best in the world.

701
00:33:06,160 --> 00:33:09,560
Speaker 2: How does the labor statistics, How does CEA and the others?

702
00:33:09,680 --> 00:33:11,240
Speaker 3: How do they move forward?

703
00:33:12,960 --> 00:33:17,760
Speaker 13: Wow, that's a that is a big question. Let me

704
00:33:17,840 --> 00:33:20,240
Speaker 13: start off by saying, I think up to this point,

705
00:33:20,320 --> 00:33:23,200
Speaker 13: most of the damage has been collateral. Damage hasn't been

706
00:33:23,280 --> 00:33:28,440
Speaker 13: aimed at BLS or most of the other statistical agencies,

707
00:33:29,000 --> 00:33:35,680
Speaker 13: with some exceptions in particular, but it's profound. It's lack.

708
00:33:38,040 --> 00:33:41,840
Speaker 13: Right now, we're worried about very worried about the loss

709
00:33:41,840 --> 00:33:45,959
Speaker 13: of expertise and at BLS in particular, that's going to

710
00:33:46,080 --> 00:33:50,080
Speaker 13: be exasperated in the next couple of weeks when the

711
00:33:50,120 --> 00:33:54,400
Speaker 13: Department of Labor announces the reductions force that it's intending

712
00:33:54,440 --> 00:33:55,560
Speaker 13: to do. Will and then.

713
00:33:55,480 --> 00:33:58,520
Speaker 12: There's will we be a little Will we be able

714
00:33:58,640 --> 00:34:02,440
Speaker 12: doctor Groschen to execut cute the two jobs reports in

715
00:34:02,480 --> 00:34:04,720
Speaker 12: the first week of the month, or is that going

716
00:34:04,800 --> 00:34:09,080
Speaker 12: to become a challenge to actually understand the American labor economy.

717
00:34:11,200 --> 00:34:15,799
Speaker 13: In the short run, probably not too much disruption, but

718
00:34:15,880 --> 00:34:20,200
Speaker 13: the damage will grow over time. And we have also

719
00:34:20,640 --> 00:34:24,439
Speaker 13: what we're doing is getting rid of the necessary sort

720
00:34:24,440 --> 00:34:28,120
Speaker 13: of option value that BLS has always built into its

721
00:34:28,160 --> 00:34:31,279
Speaker 13: operations so that when there's a weather event or some

722
00:34:31,480 --> 00:34:36,720
Speaker 13: other problem, the agency can still put out the jobs

723
00:34:36,760 --> 00:34:40,719
Speaker 13: report on time. That's going to be harder. And then finally,

724
00:34:41,160 --> 00:34:47,000
Speaker 13: we are absolutely the devastating the agency's ability to modernize

725
00:34:47,200 --> 00:34:47,880
Speaker 13: in the way.

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00:34:47,640 --> 00:34:48,200
Speaker 11: That it should.

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00:34:48,640 --> 00:34:52,040
Speaker 6: Doctor Groshen Larry think of Blackrock on the tape right

728
00:34:52,080 --> 00:34:55,680
Speaker 6: now saying that sweeping US TWERF announcements went way beyond

729
00:34:55,680 --> 00:34:58,040
Speaker 6: anything I could have ever imagined in my forty nine

730
00:34:58,080 --> 00:35:01,000
Speaker 6: years in Finance. You had Jamie I'm in on earlier

731
00:35:01,080 --> 00:35:04,239
Speaker 6: saying pretty much the same thing. What does this mean

732
00:35:04,360 --> 00:35:06,719
Speaker 6: for the labor markets here in the US? Can we

733
00:35:06,760 --> 00:35:07,680
Speaker 6: expect layoffs ahead?

734
00:35:09,880 --> 00:35:10,160
Speaker 11: Wow?

735
00:35:11,800 --> 00:35:17,160
Speaker 13: So one of the things that's characteristic of most recessions

736
00:35:17,840 --> 00:35:22,759
Speaker 13: is that actually companies stop hiring before they start laying off,

737
00:35:24,640 --> 00:35:28,880
Speaker 13: and so the place to look for the most immediate

738
00:35:28,960 --> 00:35:34,520
Speaker 13: damage is just freezing and hiring. And we're already starting.

739
00:35:34,600 --> 00:35:38,239
Speaker 13: We've already begun to see that in the fact that

740
00:35:38,560 --> 00:35:44,439
Speaker 13: temporary help services employment has been falling. Erica, Well, that's

741
00:35:44,520 --> 00:35:50,160
Speaker 13: often companies will stop hiring temp or fire their tempts

742
00:35:50,680 --> 00:35:54,120
Speaker 13: before they Yeah, Erica.

743
00:35:54,200 --> 00:35:56,399
Speaker 3: Get one more question in here. We've got breaking news.

744
00:35:56,440 --> 00:35:57,880
Speaker 3: You're going to have to run. But let me let

745
00:35:57,920 --> 00:35:58,719
Speaker 3: me get this in folks.

746
00:35:58,800 --> 00:36:00,960
Speaker 2: The headline, which will get to in a moment, the

747
00:36:01,080 --> 00:36:05,680
Speaker 2: United States has told China to request a g Trump

748
00:36:05,880 --> 00:36:08,920
Speaker 2: call that according to CNN, and that moved the markets.

749
00:36:08,960 --> 00:36:10,160
Speaker 3: We are read on the screen and.

750
00:36:10,120 --> 00:36:13,000
Speaker 2: Now we're up twenty three on the Dow fractionally up,

751
00:36:13,040 --> 00:36:15,640
Speaker 2: I would say, but again, this is the headline by

752
00:36:15,680 --> 00:36:19,320
Speaker 2: headline sequence, we're seeing a reason to stay with Bloomberg

753
00:36:19,880 --> 00:36:22,600
Speaker 2: all through this fractures Friday. I can't imagine where we're

754
00:36:22,640 --> 00:36:25,480
Speaker 2: going to be at three pm this afternoon, Erica. They

755
00:36:25,520 --> 00:36:27,680
Speaker 2: said you were coming on today, and I said, great.

756
00:36:27,960 --> 00:36:32,360
Speaker 2: Finally I can ask someone qualified, Erica Groschen, if we

757
00:36:32,400 --> 00:36:36,800
Speaker 2: get to a five percent unemployment rate somewhere out there

758
00:36:37,560 --> 00:36:41,719
Speaker 2: is a five percent unemployment rate in America now, the

759
00:36:41,800 --> 00:36:45,760
Speaker 2: same as a five percent unemployment rate in nineteen eighty

760
00:36:45,840 --> 00:36:47,760
Speaker 2: five or nineteen sixty five.

761
00:36:52,560 --> 00:36:53,080
Speaker 3: Wow.

762
00:36:56,000 --> 00:36:58,560
Speaker 13: The simple answer is yes, that's part of what we

763
00:36:58,600 --> 00:37:01,319
Speaker 13: expect from our federals to tiss except it's collected in

764
00:37:01,360 --> 00:37:05,000
Speaker 13: the same way, it's asking the same questions, and so

765
00:37:05,200 --> 00:37:10,160
Speaker 13: it is comparable. That said, the economy has changed, right,

766
00:37:10,920 --> 00:37:19,200
Speaker 13: So when we look overall at at who's who's who's unemployed,

767
00:37:19,239 --> 00:37:23,560
Speaker 13: and who's not unemployed, and who's counted as working and

768
00:37:23,600 --> 00:37:27,960
Speaker 13: things like that, there are changes over time. So right now,

769
00:37:28,120 --> 00:37:30,160
Speaker 13: one of the things I would say is that we've

770
00:37:30,239 --> 00:37:34,000
Speaker 13: just come off a period of historically low unemployment rates.

771
00:37:34,200 --> 00:37:38,000
Speaker 13: So five percent wouldn't have seemed that bad, you know,

772
00:37:38,640 --> 00:37:40,680
Speaker 13: you know, two or three decades ago, but now it's

773
00:37:40,719 --> 00:37:44,080
Speaker 13: a significant increase in the amount of unemployment.

774
00:37:43,880 --> 00:37:46,840
Speaker 2: Erica, for all of us at Bloomberg with great respect

775
00:37:47,000 --> 00:37:49,799
Speaker 2: led by our Michael McKee. Thank you to you and

776
00:37:49,840 --> 00:37:53,839
Speaker 2: our public servants in our economic data collection. Can't say

777
00:37:53,840 --> 00:37:56,080
Speaker 2: that how we rely on you.

778
00:37:55,760 --> 00:37:56,920
Speaker 3: Each and every day.

779
00:37:57,120 --> 00:38:00,440
Speaker 2: She is at Carnell University, the arecclaimed Industrial and Labor

780
00:38:00,760 --> 00:38:05,960
Speaker 2: Program Erica Grossen always the Bureau of Labor Statistics.

781
00:38:06,280 --> 00:38:11,120
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

782
00:38:11,239 --> 00:38:15,520
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

783
00:38:15,640 --> 00:38:19,120
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

784
00:38:19,200 --> 00:38:23,239
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

785
00:38:23,280 --> 00:38:26,640
Speaker 1: can also watch us live every weekday on YouTube and

786
00:38:26,840 --> 00:38:28,560
Speaker 1: always on the Bloomberg terminal