WEBVTT - Surveillance: Growth Overall Is Coming Down, Weinberg Says 0:00:09.840 --> 0:00:13.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Leie. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.200 Bloomberg dot Com, and of course, on the Bloomberg With 0:00:28.280 --> 0:00:30.720 our top story, shall we and a key question is 0:00:30.760 --> 0:00:34.519 a global manufacturing slump? Putting a reality check on this 0:00:34.600 --> 0:00:38.199 weekend's trade thrus across Asia and Europe manufacturing p m 0:00:38.280 --> 0:00:42.320 ice sticking in contraction territory for an original take, uous 0:00:42.360 --> 0:00:44.320 sound pleased to say that joining us in the studio 0:00:44.680 --> 0:00:48.120 is Carl Winburg, High Frequency Economics chief economist and found 0:00:48.120 --> 0:00:50.519 a good morning to Carl, Good morning. I know you've 0:00:50.520 --> 0:00:52.040 got a different take on this. Do you think the 0:00:52.080 --> 0:00:55.320 p m I s through the year have been somewhat misleading? 0:00:55.360 --> 0:00:57.640 Just walk us through the thinking over the high frequency 0:00:57.680 --> 0:00:59.480 at the moment, Car, let's just take a deep breath, 0:00:59.480 --> 0:01:01.280 all right, Mark, It's p m s are new and 0:01:01.280 --> 0:01:04.000 they're not statistically tested. They can't be there only twelve 0:01:04.080 --> 0:01:06.960 years old. So to put full credit, to put put 0:01:07.000 --> 0:01:10.160 full belief confidence in what they're saying is a mistake. 0:01:10.200 --> 0:01:12.440 You really want to look at the trusted indicators, the 0:01:12.440 --> 0:01:14.120 ones that have been around for a long time, like 0:01:14.160 --> 0:01:19.959 Germany's IFO Index, like the ECS European Commissions Economic Confidence INDSEASE, 0:01:20.200 --> 0:01:23.760 and they've been signaling an economic downturn and an industrial 0:01:23.800 --> 0:01:26.479 downturn for over a year now. It's been right there 0:01:26.520 --> 0:01:29.199 for everyone to see. And market meanwhile has been above 0:01:29.240 --> 0:01:31.639 fifty and they've been saying, well, the economy has been growing, 0:01:31.800 --> 0:01:34.320 when the hard data are showing us that it's not 0:01:34.600 --> 0:01:36.600 so industrial. To me, at least to our readers at 0:01:36.640 --> 0:01:40.320 High Frequency Economics, industrial recession in Europe is not news, 0:01:40.440 --> 0:01:42.880 all right. It's an ongoing story. It's not a problem, 0:01:42.920 --> 0:01:45.360 it's a fact. And the question we're talking about is 0:01:45.360 --> 0:01:47.400 when is it going to end? And there's no sign 0:01:47.440 --> 0:01:50.400 of it from indices that we trust, like the IFO Index, 0:01:50.560 --> 0:01:54.200 the European Economic Confidence Index, Japan's ton Kan out this 0:01:54.240 --> 0:01:57.760 morning down or it's been down for over a year now. Alright. 0:01:58.000 --> 0:02:00.120 Just have to look at the hard data and the 0:02:00.160 --> 0:02:02.720 surveys that are tested to see that that's been the case. 0:02:02.800 --> 0:02:05.720 There has been somewhat of a divergence through various economies 0:02:05.720 --> 0:02:08.239 between what is happening with manufacturing and what is happening 0:02:08.280 --> 0:02:11.680 with services. Europe is a fantastic example of that. We 0:02:11.720 --> 0:02:14.560 haven't seen much side of a bleed through from a 0:02:14.600 --> 0:02:18.400 really soft manufacturing sector into a somewhat resilient services sector. 0:02:18.440 --> 0:02:20.639 What do you see at the moment, CALP Well, the risk, 0:02:20.680 --> 0:02:23.280 of course is that services are to some extent dependent 0:02:23.440 --> 0:02:27.120 upon industry, all right, Industry subcontracts out services, right, the 0:02:27.160 --> 0:02:30.200 big factory has a services company run its cafeteria and 0:02:30.240 --> 0:02:33.160 clean the factory floors, so that a downturn and industry 0:02:33.240 --> 0:02:36.639 is important, even though industry is only a relatively small 0:02:36.720 --> 0:02:40.280 part of the picture. So the question we're seeing right 0:02:40.280 --> 0:02:43.160 now is that growth overall is coming down, employment growth 0:02:43.280 --> 0:02:45.400 is slowing. We'll be looking for that and releases this 0:02:45.480 --> 0:02:47.200 week from Europe. We saw a little bit of it 0:02:47.240 --> 0:02:50.639 in Japan last week, and we're looking for services to 0:02:50.919 --> 0:02:54.840 to slow down in parallel with industry, bringing GDP down 0:02:54.880 --> 0:02:58.760 to a halt or possibly even a contraction. Monetary policy 0:02:59.200 --> 0:03:04.200 in its a loneness fix this in Europe absolutely not, 0:03:04.840 --> 0:03:07.480 for a number of reasons. Reason number one is that 0:03:07.560 --> 0:03:11.440 the monetary stimulus that has been given to Europe by 0:03:11.480 --> 0:03:13.840 the ECB over the last five years has not been 0:03:13.840 --> 0:03:17.520 transmitted into the economy because banks aren't lending. Number two, 0:03:17.760 --> 0:03:21.640 monetary policy has stopped out the ECB despite Mr Drags, 0:03:21.880 --> 0:03:24.440 I'll call it bluster, all right, has very few of 0:03:24.520 --> 0:03:27.280 any tools left available to you. But critically, and Carl, 0:03:27.320 --> 0:03:30.959 this is where your expert. Is monetary policy stopped out 0:03:31.639 --> 0:03:34.760 across all of the Pacific rim? I mean, forget about 0:03:34.840 --> 0:03:38.520 major players like Japan. Is it stopped out in Singapore? 0:03:38.840 --> 0:03:41.480 Look at the Australian shock over the weekend of the 0:03:41.480 --> 0:03:44.880 new low rates John in Australia the I mean Italian 0:03:44.920 --> 0:03:48.320 two year under two percent this morning. But is monetary 0:03:48.640 --> 0:03:54.560 policy stopped out in Australia or Singapore? Now there are exceptions. 0:03:54.600 --> 0:03:56.839 Australia is certainly one of them. But even they're down 0:03:56.840 --> 0:03:58.800 to one in a quarter percent on the cash raid 0:03:59.080 --> 0:04:01.680 and their bond yields are at historic lows. You know, 0:04:01.680 --> 0:04:04.040 when you get bond yields down lower than they've ever 0:04:04.080 --> 0:04:06.600 been before, all right, you get them lower than inflation, 0:04:06.640 --> 0:04:09.640 you get borrowing rates below inflation. Money is now free. 0:04:09.880 --> 0:04:12.400 And when money is free and the economy doesn't grow, 0:04:12.680 --> 0:04:15.080 you sort of reached the limit as to what monetary 0:04:15.120 --> 0:04:19.000 policy can do. I think that the RBA governor Philip 0:04:19.080 --> 0:04:23.039 Low has joined voices with Mario Draggi has bin choices 0:04:23.080 --> 0:04:25.080 with all the central bank over you're saying it's time 0:04:25.120 --> 0:04:28.479 for fiscal policy to add something to this. Fiscal policy 0:04:28.560 --> 0:04:31.720 is the missing way. Karl Weinberg, high frequency economics. Where 0:04:31.720 --> 0:04:34.760 this this is with futures up thirty two down, futures 0:04:34.839 --> 0:04:38.320 up two hundred fifty three. How does an economist like 0:04:38.360 --> 0:04:41.919 you interpret a bowl market in equities the vixed thirteen 0:04:42.480 --> 0:04:47.280 point nine three? How what's the prism of equity valuations 0:04:47.320 --> 0:04:50.040 that you see? Well? What are the alternatives? Tom? Right? 0:04:50.080 --> 0:04:51.680 You look at bond yo olds all right, and they're 0:04:51.720 --> 0:04:54.200 not very attractive. You go to Europe and you have 0:04:54.320 --> 0:04:57.160 to pay the government to hold your money safely for 0:04:57.200 --> 0:04:59.200 a year or two or three or five, all right, 0:04:59.320 --> 0:05:03.119 you have negative of interest rates, so that the alternatives 0:05:03.200 --> 0:05:06.880 are not particularly attractive to equities right now. So a 0:05:06.960 --> 0:05:08.800 lot of money is it's a wall of money being 0:05:08.839 --> 0:05:11.040 funneled into it all. So I think the key question 0:05:11.080 --> 0:05:13.080 for us Tom through the week is are you willing 0:05:13.080 --> 0:05:15.120 do you have the tolerance the stomach to sit through 0:05:15.120 --> 0:05:16.800 and look through the weaker data that might come in 0:05:16.839 --> 0:05:18.840 the coming months. Do you have the stomach to sit 0:05:18.880 --> 0:05:21.120 through and look through the weaker revisions to earn It's 0:05:21.120 --> 0:05:23.240 going you make it in the coming months as one, 0:05:23.360 --> 0:05:29.279 starting with Jobs Day on Friday, the celebration of the 0:05:29.320 --> 0:05:32.080 colonies in the War of the Rebellion that happened in 0:05:32.120 --> 0:05:36.360 seventeen seventies six is on Thursday. I'll be working Friday. 0:05:36.400 --> 0:05:41.080 Are you in working Friday? We're both stays. Job stay, 0:05:41.160 --> 0:05:44.600 John Tucker, will you be Here's biscuit demand. Absolutely, we're 0:05:44.640 --> 0:05:48.040 all going to be Friday. So Carl, let's talk about that. 0:05:48.360 --> 0:05:49.760 A lot of people are worried that in the coming 0:05:49.760 --> 0:05:52.599 months we will get worst data, we will get negative 0:05:52.640 --> 0:05:54.520 earnings revisions for some of these companies, some of the 0:05:54.600 --> 0:05:57.080 large mega caps here in the United States. Is that 0:05:57.200 --> 0:06:00.440 something you anticipate, something you sent to see happen in 0:06:00.440 --> 0:06:04.320 the nice coming months. Well, the the the profit picture 0:06:04.640 --> 0:06:07.800 is complex, but certainly the macroeconomics don't seem to be 0:06:07.800 --> 0:06:09.880 supporting growth of profits. That's about as far as we 0:06:09.880 --> 0:06:12.880 can go at high frequency economics on the employment side. 0:06:12.920 --> 0:06:15.160 All right, Well, we have a very mixed picture in 0:06:15.160 --> 0:06:17.520 the United States right now, and this Friday's report has 0:06:17.560 --> 0:06:21.120 particularly big significance because we've got those bad numbers behind us, 0:06:21.360 --> 0:06:23.520 and the question is what kind of numbers lie ahead 0:06:23.560 --> 0:06:27.160 of us. The weakness in the labor market are are 0:06:27.160 --> 0:06:30.640 has not been confirmed by the weekly claims data, So 0:06:30.720 --> 0:06:34.200 our chief US economists at High Frequency Economics GUMO Sullivan 0:06:34.480 --> 0:06:37.159 is saying the jury is still out on what's really 0:06:37.200 --> 0:06:39.920 happening in the labor market, whether we've had some aberrational 0:06:39.960 --> 0:06:43.440 reports or whether we have a new trend. So we're watching. 0:06:43.720 --> 0:06:45.960 We will be watching not only the employment report, but 0:06:46.000 --> 0:06:49.919 also the weekly claims data on sixty thousand. John Farrell's 0:06:49.960 --> 0:06:53.680 our Monday number on non farm payrolls. That's what's interesting 0:06:53.920 --> 0:06:56.080 that will get tweaked over the next couple of days. 0:06:56.080 --> 0:06:58.919 A synthesis of thirty or fifty whatever the number of 0:06:58.960 --> 0:07:01.880 economists is, what do you think it comes down like 0:07:02.960 --> 0:07:05.479 from We've been told again and again and again that 0:07:05.520 --> 0:07:08.400 we can't keep up the two k month after month 0:07:08.440 --> 0:07:11.640 after month, but we've actually sustained a really decent pace 0:07:12.040 --> 0:07:14.640 of jobs growth in America. Is not something you can 0:07:14.640 --> 0:07:17.360 can see continuing at the moment, well, you know it 0:07:17.400 --> 0:07:19.920 can only continue so far. Quest the unemployment rate has 0:07:19.920 --> 0:07:23.120 a three handle on it and it can't go down forever. 0:07:23.200 --> 0:07:24.920 And this, of course, if we just take a deep 0:07:24.920 --> 0:07:28.000 breath and look backward. Why did the Fed high rates 0:07:28.040 --> 0:07:31.000 and tightened monetary conditions to begin with, It was because 0:07:31.040 --> 0:07:34.200 it was concerned that at the current rate of employment 0:07:34.240 --> 0:07:37.120 growth that we would run out of workers in a 0:07:37.200 --> 0:07:39.800 due course and lead to an inflation episode. So to 0:07:39.840 --> 0:07:42.680 some extent, a slow down in growth and the slowdown 0:07:42.760 --> 0:07:45.720 in jobs is what the FED really wanted to see. 0:07:45.920 --> 0:07:48.440 What's unexplicable right now, what we don't have a good 0:07:48.440 --> 0:07:50.720 story for is why it's taking so long for wages 0:07:50.760 --> 0:07:52.840 to respond. And we're expecting a little bit of up 0:07:52.840 --> 0:07:55.240 taking the wages component, but not enough to keep the 0:07:55.280 --> 0:07:57.960 Fed happy. Quick funal question called anything about the weekend 0:07:58.000 --> 0:08:01.480 has changed anything for you? And the time at high frequency? No, 0:08:01.720 --> 0:08:04.280 I mean the President Trump got what he wanted, you know, 0:08:04.320 --> 0:08:07.920 he got the talk started again. But the Chinese really 0:08:07.960 --> 0:08:10.280 gave up nothing, al right, it was total concession on 0:08:10.320 --> 0:08:13.200 the part of the US. They just agreed to come back. 0:08:13.800 --> 0:08:16.240 Was at two am Saturday morning, I looked at my 0:08:16.240 --> 0:08:18.960 phone and said, I don't believe what I'm looking at. Well, 0:08:19.280 --> 0:08:21.239 what were you looking at? All? Right? The Chinese agreed 0:08:21.280 --> 0:08:23.080 to come back to the table all right. They were 0:08:23.160 --> 0:08:25.760 away from the table, all right, and Trump went there 0:08:25.800 --> 0:08:28.160 to ask them to come back to the table. All right. 0:08:28.200 --> 0:08:30.560 So when you have that dynamic, alright, the question is 0:08:30.600 --> 0:08:32.280 what do you have to give up? So he gave 0:08:32.360 --> 0:08:34.840 up some degrees of freedom on tariffs, he gave up 0:08:34.840 --> 0:08:37.480 some of the restrictions on Huawei, and the Chinese said, okay, 0:08:37.480 --> 0:08:40.680 we'll come back to that. But though he didn't he 0:08:40.760 --> 0:08:44.200 there's nothing specific and the Chinese press has yet to 0:08:44.240 --> 0:08:46.360 report anything coming out of that meeting in terms of 0:08:46.400 --> 0:09:03.000 thank you. This is an important interview for anybody on 0:09:03.040 --> 0:09:05.960 Global Wall Street. And we can dovetail it right into 0:09:06.559 --> 0:09:10.240 the Brookfield, Genesee, Wyoming. That's real estate behind a train company. 0:09:10.679 --> 0:09:14.120 Robert Perfusak does a quarterly visit with us. He is 0:09:14.160 --> 0:09:18.440 with Jones Day, but that barely describes his history of 0:09:18.640 --> 0:09:24.160 actual normal size transactions. I would go back, of course, 0:09:24.160 --> 0:09:28.120 to the important transaction of Continental and United. The airline 0:09:28.120 --> 0:09:31.440 business in America's all bought. Profusis fault and he joins 0:09:31.520 --> 0:09:36.400 us uh this morning, explain the difference in your world 0:09:36.600 --> 0:09:41.400 of Jones Day two mega deals versus the actual deals 0:09:41.440 --> 0:09:44.880 that never make the headlines. Well that there are a 0:09:44.920 --> 0:09:47.560 lot of deals in this last quarter in particular that 0:09:47.640 --> 0:09:51.080 didn't that are not stillborn. I don't think they're just 0:09:51.160 --> 0:09:53.800 not happening yet. And one of the things that the 0:09:53.880 --> 0:09:55.959 thing that you've been talking about so much all morning, 0:09:56.000 --> 0:09:59.600 about the uncertainty of everything, that's been the main factor. Um, 0:10:00.280 --> 0:10:03.480 there there is an end. There is I think, not 0:10:03.640 --> 0:10:08.160 a crisis, but there there's a fair amount of confidence. 0:10:08.240 --> 0:10:11.000 There's not a crisis of confidence there's a fair amount 0:10:11.000 --> 0:10:14.600 of concern among CEOs right now. You know, it's chart 0:10:14.600 --> 0:10:16.200 of the week last week, and this is why you 0:10:16.240 --> 0:10:20.199 were going on your sabbatical, Morgan Stanley with a chart 0:10:20.280 --> 0:10:24.520 of business confidence stunning. I saw that. I saw that. 0:10:24.600 --> 0:10:26.120 I saw the chart. I don't know what the inputs 0:10:26.120 --> 0:10:28.600 into the chart, but we've seen the c suite confidence 0:10:28.600 --> 0:10:32.320 on various survey indicators roll over. Bob. I know many 0:10:32.320 --> 0:10:34.880 investors that are struggling to make an investment decision with 0:10:34.880 --> 0:10:36.960 a time arising longer than five seconds because of this 0:10:37.040 --> 0:10:39.640 trade story. How difficult is it right now for the 0:10:39.640 --> 0:10:44.000 c suites have the confidence to execute on a big transaction. Well, 0:10:44.120 --> 0:10:46.920 it is. It is difficult because on a big deal. 0:10:47.480 --> 0:10:50.280 Companies and their directors certainly know that there's a potential 0:10:50.320 --> 0:10:53.199 for criticism. Look at and a dark oh right now 0:10:53.320 --> 0:10:58.600 with um? What what's going going went on with occidental um? 0:10:58.640 --> 0:11:02.120 And you're making long term decisions in a in a 0:11:02.160 --> 0:11:06.800 difficult environment. Now, can people see through the fog of 0:11:07.080 --> 0:11:10.200 all this stuff? Sure? Sometimes, And there are plenty of 0:11:10.240 --> 0:11:13.760 deals that were announced that that that have been well 0:11:13.840 --> 0:11:17.840 received in the marketplace. Um, But we're in a difficult 0:11:17.920 --> 0:11:20.720 environment right now, and so you know, lots of directors 0:11:20.760 --> 0:11:23.160 are urging caution when CEO comes in and so I 0:11:23.240 --> 0:11:26.760 got this great idea. But one thing is we we 0:11:26.800 --> 0:11:30.560 shouldn't overlook that lots and lots of deals are still 0:11:30.600 --> 0:11:34.000 getting done. Um, lots of them. It's down on a 0:11:34.080 --> 0:11:37.360 year on your basis, but still the market is very 0:11:37.400 --> 0:11:40.680 active right now. There's always two extremes to every conversation. 0:11:40.720 --> 0:11:42.840 At one extreme, it's a C suite that doesn't have 0:11:42.840 --> 0:11:46.360 the confidence to do anything. At the other extreme, Patrick Draught, 0:11:46.400 --> 0:11:50.920 he slapping at premium on southa base and a billionaire 0:11:50.960 --> 0:11:54.719 takes the public company private. This is already a company 0:11:54.760 --> 0:11:58.680 that is by definition quite toppy, and therefore this guy 0:11:58.760 --> 0:12:00.560 comes in and takes it of it, and then some 0:12:00.600 --> 0:12:03.280 people the lazy analysis here and from me from the 0:12:03.320 --> 0:12:06.839 outside looking in the easy arguments constructors. This feels toppy, 0:12:07.160 --> 0:12:09.120 but it was the truth just somewhere in between, that 0:12:09.200 --> 0:12:11.880 things are still okay and transactions are getting done. Oh sure, 0:12:11.960 --> 0:12:14.319 there's lots and lots of deals getting done if I 0:12:14.600 --> 0:12:17.400 don't haven't seen the numbers yet, but my guess was 0:12:17.600 --> 0:12:20.520 going in this weekend a number of deals basis be 0:12:20.559 --> 0:12:23.920 down for the first six months something like that, but 0:12:24.040 --> 0:12:26.520 that's still on a on a basis, on a basis, 0:12:26.520 --> 0:12:29.559 it's huge. There are eleven twelve thousand deals a year 0:12:29.640 --> 0:12:32.760 they get done. So it's not like this isn't like 0:12:32.800 --> 0:12:36.160 two thousand nine or something like that, where there's no capital, 0:12:36.200 --> 0:12:39.400 there's no anything. It's just that people are more cautious. 0:12:39.559 --> 0:12:42.199 It's like it's like the equity markets. It's it's no really, 0:12:43.120 --> 0:12:45.160 this Bob it is. It is a question if the 0:12:45.160 --> 0:12:47.520 Federal Serve cuts interest rates, if boring costco love it, 0:12:47.520 --> 0:12:49.440 does that change an I think in the decision making 0:12:49.440 --> 0:12:51.920 process of any of these guys. Not really, it changes 0:12:51.960 --> 0:12:54.760 the math and it makes modeling easier. I mean, like 0:12:54.880 --> 0:12:58.240 you know, at these were ten years around, covering around 0:12:58.240 --> 0:13:01.839 two hundred as you mentioned, you know, that's that's almost free. 0:13:02.360 --> 0:13:06.080 And then when you think about it, and uh, the 0:13:06.160 --> 0:13:09.320 debt capital markets beyond the bank markets, you know they 0:13:09.920 --> 0:13:12.200 were difficult at the year end when the equity markets 0:13:12.200 --> 0:13:15.040 were difficult, but they're great right now. The desperation and 0:13:15.160 --> 0:13:18.640 healthcare seems unique. And I know it's you know, Washington 0:13:18.640 --> 0:13:23.560 and legislation. Now there's Abby Abbott Labs, Abby Pharmaceuticals and 0:13:23.679 --> 0:13:25.679 Botox whatever they took out. I can't remember the name 0:13:25.760 --> 0:13:29.800 right now, Elegant, excuse me. And there's Etna and you 0:13:29.840 --> 0:13:32.720 know that whole blow up as well. Is it a 0:13:32.880 --> 0:13:37.480 rational industry right now? Is healthcare irrational business? Well, it's 0:13:37.480 --> 0:13:40.200 a business. It's got a lot of it's under a 0:13:40.200 --> 0:13:43.480 lot of pressure, it's it's it's in the vortex of politics, 0:13:43.480 --> 0:13:46.000 it's got all these things to deal with. Yet you know, 0:13:46.080 --> 0:13:48.480 when you look at the contribution to the to the 0:13:48.480 --> 0:13:51.559 economy of this country, it's huge. It's a huge part 0:13:51.600 --> 0:13:53.080 of the Did you see how I didn't know the 0:13:53.160 --> 0:13:59.880 name of Elegant because when when you were gone, and 0:14:00.000 --> 0:14:02.240 it is sabbatical, this was a source of Can we 0:14:02.280 --> 0:14:03.240 just get us out of the way. Do you know 0:14:03.240 --> 0:14:05.319 how many people wrote to me last week and said, 0:14:05.360 --> 0:14:08.440 Tom keeps banging on about you being on vacation has 0:14:08.480 --> 0:14:10.960 given you a really hard time. You've had more vacation 0:14:10.960 --> 0:14:13.079 than me this year. That was my first week off 0:14:13.080 --> 0:14:15.120 of the year. Really, that was my first week off 0:14:15.120 --> 0:14:17.600 of the I would I would have never guessed though 0:14:17.960 --> 0:14:20.880 there's a Tom Keene vacation index. Do you remember the 0:14:20.920 --> 0:14:23.840 last summer when Tom missed every single payrolls Friday. I 0:14:25.000 --> 0:14:28.360 skipped every payroll through the whole of summer. Yeah, I 0:14:28.560 --> 0:14:31.880 just actually arranging so that doesn't happen. And now we've 0:14:31.880 --> 0:14:34.600 cleared things up, you can get conversation. Tell us about 0:14:34.600 --> 0:14:37.560 the law business right now. Are you having trouble retaining 0:14:38.440 --> 0:14:43.880 young Turks at Jones Day? No, it's a it's it 0:14:43.920 --> 0:14:48.720 really hasn't changed. Um, the business is good. There's lots 0:14:48.760 --> 0:14:52.360 and lots of I mean, the quality of the people 0:14:52.400 --> 0:14:56.480 coming out of stol Heard's stunning when I think about 0:14:56.560 --> 0:14:58.440 what I have been able to compete in that environment 0:14:58.440 --> 0:15:03.760 and exactly on speak four languages and their resumes are fabulous. Um, 0:15:04.320 --> 0:15:06.800 But you know, the law business, it's not you know, 0:15:06.840 --> 0:15:09.400 it's not like going to a startup tech company or 0:15:09.440 --> 0:15:12.080 something like that. But that's actually the benefit. It's stable 0:15:12.160 --> 0:15:15.120 and when you come out of a big time university 0:15:15.160 --> 0:15:18.160 with tons of debt, you know you can pay that down. 0:15:20.560 --> 0:15:23.560 Ye tell us about the dynamic of Jones Day in 0:15:23.560 --> 0:15:27.600 Washington and all of legal in Washington. Is it gearing 0:15:27.720 --> 0:15:33.720 up for? Is it's stable? What's the dynamic among legal 0:15:33.800 --> 0:15:37.160 lobby in Washington. Well, we don't We don't participate in 0:15:37.240 --> 0:15:39.520 the political side of things. We don't have a lobbying 0:15:39.600 --> 0:15:42.480 practice per se. But yeah, I mean, you know, just 0:15:43.280 --> 0:15:46.600 the part of the the the hysteria of everything that 0:15:46.640 --> 0:15:48.720 goes on today. I guess it's born by the media 0:15:48.800 --> 0:15:51.760 nowhere in events, but it just gets in your face. 0:15:52.000 --> 0:15:55.240 There's tremendous abount of activities, you know, John, outside the 0:15:55.280 --> 0:15:59.800 Saint Region spar in Washington, Long Vertical Room, it looks 0:15:59.800 --> 0:16:03.240 like an officer Jones, you are responsible for stereo in 0:16:03.280 --> 0:16:05.680 every single bar that you walk into. That as well. 0:16:05.720 --> 0:16:08.680 Have you ever been for a drink with Tom Bob? Actually, 0:16:08.720 --> 0:16:12.360 actually I've been once. Yes. Did it get messy quite quickly? Yes? 0:16:13.200 --> 0:16:15.480 I never, I never. I don't even try keeping up. 0:16:15.840 --> 0:16:18.480 The drinks start coming and I stop. I just stopped, 0:16:18.480 --> 0:16:24.520 and then I walk away very quickly. It's um an experience, 0:16:24.880 --> 0:16:28.960 it's an experience, Thank you, thank you so much. Bout 0:16:28.960 --> 0:16:32.000 PROFU sick with us is a CU three. Look. So 0:16:32.200 --> 0:16:35.160 the summary I get your bot Prefu sick is you've 0:16:35.200 --> 0:16:39.160 got some optimism into the second and a half, but boy, 0:16:39.160 --> 0:16:43.080 you've got some distractions in Washington. Yeah, that's that's right. UM. 0:16:43.280 --> 0:16:46.400 When we live in an environment where we're constantly bombarded 0:16:46.480 --> 0:16:51.960 by what's happening in these national capitals, it's just we were, 0:16:51.960 --> 0:16:54.000 of course here, so we think about Washington. It's not 0:16:54.080 --> 0:16:59.280 just Washington and everything we're doing right now about PUS. 0:16:59.520 --> 0:17:15.360 Thank you, I'm so much durable goods. I would suggest 0:17:15.359 --> 0:17:19.720 as more important than usual on Wednesday to Lindsay Panks 0:17:19.800 --> 0:17:23.879 about it Dark chief Economists, Staple's chief economists. It's a 0:17:23.920 --> 0:17:26.800 blur of data, Lindsay, and we all agree this time 0:17:26.920 --> 0:17:29.800 is different. What is different about your day to day 0:17:29.840 --> 0:17:34.560 analysis this week of America's economy? Well, I think it's 0:17:34.600 --> 0:17:37.960 increasingly important because we know the FED is watching the 0:17:38.040 --> 0:17:40.520 data and as they told us that's the latest l 0:17:40.640 --> 0:17:43.679 MC meeting, they're poised and ready to make a change 0:17:43.680 --> 0:17:47.000 in policy, But they're not yet contents, meaning that they 0:17:47.040 --> 0:17:50.160 do acknowledge some of the weakness bubbling underneath the surface, 0:17:50.560 --> 0:17:53.919 but they'd really like to see more evidence of that slowdown. 0:17:54.280 --> 0:17:56.359 And so the feed is going to be watching each 0:17:56.359 --> 0:17:58.399 and every data point that we get between now and 0:17:58.440 --> 0:18:02.400 the July meeting within increased scrutinate. If we get uh, 0:18:02.680 --> 0:18:05.560 my father would call it a Mouldi number, if we 0:18:05.640 --> 0:18:10.280 get a really bad number, aren't they hugely advantaged to 0:18:10.359 --> 0:18:14.480 get out front with a rate cut immediately so they're 0:18:14.480 --> 0:18:18.280 not pressured with a fifty basis point foolishness the end 0:18:18.320 --> 0:18:21.800 of the month. They are. But at the same time, 0:18:21.880 --> 0:18:24.480 the set is not going to adjust policy based on 0:18:24.800 --> 0:18:27.359 one data point, agreed, So they're going to be looking 0:18:27.400 --> 0:18:30.080 at the underlying trend. It has the trend in the 0:18:30.160 --> 0:18:33.400 data been deteriorating for quite some time? I would argue yes, 0:18:33.840 --> 0:18:37.080 but FET officials don't quite seem as convinced as I am, 0:18:37.160 --> 0:18:39.639 or not as convinced as the market is. John and 0:18:39.680 --> 0:18:42.879 your sabbatical. We did have some constructive data points on 0:18:43.280 --> 0:18:46.159 income and spending. I mean, they weren't bang up, but 0:18:46.640 --> 0:18:49.480 to God's point, there's been a few constructive data points. 0:18:49.560 --> 0:18:52.199 I've spoked some people at Morgan Standing recently, Lindsay, and 0:18:52.200 --> 0:18:54.240 one thing they worry about its corporate margins and how 0:18:54.240 --> 0:18:57.720 companies will respond to the threat of smaller corporate margins 0:18:57.720 --> 0:19:01.760 and whether they'll pull the lever that says cut the 0:19:01.840 --> 0:19:04.399 labor force, lind Do you seek any sign of that 0:19:04.480 --> 0:19:07.720 happening at the small and medium sized company level, any 0:19:07.760 --> 0:19:11.200 signs of job cuts starting to emerge in this economy? Oh, 0:19:11.240 --> 0:19:13.440 I think all we need to look at is last 0:19:13.480 --> 0:19:17.040 month's employment report, and there's very clear indication that businesses 0:19:17.080 --> 0:19:22.560 are having an increased difficult time passing on increases and 0:19:22.600 --> 0:19:26.320 costs directly onto the consumer, and so they're having to 0:19:26.400 --> 0:19:29.439 circumvent a lot of that pressure by finding ways to 0:19:29.720 --> 0:19:34.840 reduce costs at home, meaning find those cost efficiencies in 0:19:34.880 --> 0:19:39.960 many cases meaning layoffs or lower wages or both. And 0:19:40.000 --> 0:19:41.520 I do think that this is going to be an 0:19:41.520 --> 0:19:44.919 ongoing trend that we continue to see, particularly if we 0:19:45.000 --> 0:19:48.680 don't see the latest in trade negotiations actually pan out 0:19:49.119 --> 0:19:52.440 into an extended truth or some sort of long term 0:19:52.480 --> 0:19:55.199 of agreement. At ten businesses were able to eat that 0:19:55.280 --> 0:20:00.000 cost and this is going to be increasingly difficult. Lindsey 0:20:00.000 --> 0:20:02.560 look us through durable goods. I say this because I 0:20:02.560 --> 0:20:06.080 think durable goods and inventories are what I would call 0:20:06.119 --> 0:20:11.199 secondary or indeed tertiary market economic data points that no 0:20:11.240 --> 0:20:13.720 one cares about until they do care about it. Right 0:20:13.720 --> 0:20:16.760 now is one of those times walk us through how 0:20:16.840 --> 0:20:22.360 you interpret these longer than three year goods in America. Well, 0:20:22.400 --> 0:20:26.240 I I think durable goods investment is always an important education. 0:20:26.600 --> 0:20:30.159 It's certainly from a corporate standpoint, but I would I 0:20:30.200 --> 0:20:31.840 would say that we really need to get into the 0:20:31.840 --> 0:20:35.120 weeds when we're looking at the durable goods, well, yes, 0:20:35.280 --> 0:20:38.280 is important, but we really need to look at durable 0:20:38.320 --> 0:20:44.439 goods um X transportation so excluding aircraft UH production, and 0:20:44.560 --> 0:20:48.320 that is a proxy, that's a proxy for corporate investment 0:20:48.320 --> 0:20:51.960 when we look at that isolated component, and what we 0:20:52.040 --> 0:20:55.680 see is that corporations, yes, they're still investing. But again, 0:20:55.720 --> 0:20:59.080 when we look at capital goods excluding aircraft and defense, 0:20:59.119 --> 0:21:03.040 I should say, this really gives us an underlying sense 0:21:03.080 --> 0:21:05.520 of whether or not businesses are willing to invest. And 0:21:05.600 --> 0:21:11.280 we continue to see this very minimally positive trend. So again, 0:21:11.320 --> 0:21:14.120 corporate dollars still being put to work. But This really 0:21:14.240 --> 0:21:17.960 highlights a hesitancy and a really a heightened level of 0:21:18.040 --> 0:21:21.919 uncertainty when we look at the longer term trajectory for 0:21:22.000 --> 0:21:25.639 the economy. When businesses are feeling confident, when they're happy 0:21:25.640 --> 0:21:28.919 about the growth prospects of the economy or their particular sector, 0:21:29.320 --> 0:21:32.280 they're very willing to loosen those corporate purse strings and 0:21:32.320 --> 0:21:34.840 put capital to work. On the flip side, when they're 0:21:34.880 --> 0:21:37.600 not confident and they're concerned about the prospects for the 0:21:37.680 --> 0:21:40.320 U S economy, they pull back and what we have 0:21:40.440 --> 0:21:43.919 been seeing is very minimally positive months of investment or 0:21:44.000 --> 0:21:47.639 outright negative business investment. So this is something also that 0:21:47.680 --> 0:21:51.480 the FETE is watching at corporations are investing, they're not hiring. 0:21:51.600 --> 0:21:55.200 Thank you for the reefing dr pgs with stifle uh 0:21:55.400 --> 0:22:12.640 this morning text box are rallying before the market opens here. 0:22:12.680 --> 0:22:14.280 We had some you know on the on the news 0:22:14.320 --> 0:22:16.480 coming out of Osaka that perhaps the U. S and 0:22:16.560 --> 0:22:18.680 China will be going back to the negotiating table that 0:22:18.720 --> 0:22:21.920 helps our good friends out in Silicon Valley, particularly the 0:22:22.480 --> 0:22:25.320 guys at Apple Computer, the folks at Apple. Uh Dan 0:22:25.440 --> 0:22:27.920