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Speaker 2: With a blistering note, I want to make clear here
Speaker 2: he was my market Economist of the Year two three
Speaker 2: years ago for congenital optimism when everybody was gloomy. Neil
Speaker 2: Dudda with a blistering note this morning, and Kevin Wash,
Speaker 2: mister Dudda is economist Renaissance Macro. Neil come on the
Speaker 2: first sentence, President Trump has picked everyone's least favorite candidate.
Speaker 2: Discuss Was it something I said?
Speaker 3: I don't think I stuttered that. You know, look, well
Speaker 3: he is everyone's least favorite candidate. I mean, I mean
Speaker 3: to me, look, the main criticism I have of Kevin
Speaker 3: Walsh is lack of judgment. Okay, because the performance his
Speaker 3: performance during the financial crisis was not a pretty particularly
Speaker 3: good one, and I think you could say arguably that
Speaker 3: it is disqualifying. I mean to be that concerned about
Speaker 3: inflation at a time when the unemployment rate was rising
Speaker 3: very rapidly, you know it kind of strange fradulity. So
Speaker 3: and in the years since, everyone makes bad calls, Okay,
Speaker 3: I mean I've been market treat economist for a while.
Speaker 4: I've made bad calls.
Speaker 3: Everyone makes bad calls. The issue is when you make
Speaker 3: bad calls and you're always wrong in the same direction
Speaker 3: that to me was open minded.
Speaker 2: This I can't just say enough how I agree with that.
Speaker 2: Not for mister Walsh, folks, but part of the game
Speaker 2: is to be wrong and learn from it. You call
Speaker 2: him a cookie cutter Republican coming off of Bush the younger,
Speaker 2: the idea that he's a sweetheart of Wall Street, and
Speaker 2: you say it's time you equate it here to say
Speaker 2: worsh would make sense if Mitt Romney was president Donald
Speaker 2: Trump is not. Mitt Romney discuss the card carrying Republican
Speaker 2: dealing with President Trump on a meeting to meeting basis, Well, think.
Speaker 3: About some of the I mean, President Trump, I think,
Speaker 3: relative to the median Republican official, at least in my lifetime,
Speaker 3: has much better monetary policy instincts. I mean, remember there
Speaker 3: was a time when people like Paul Ryan and Mitt
Speaker 3: Romney were talking about changing the Fed's mandate to just
Speaker 3: purely a price stability one. It's people like Kevin Warsh
Speaker 3: that love that, right. So you know, President Trump, by contrast,
Speaker 3: in many cases, got the nomination by bucking a lot
Speaker 3: of the traditional Republican orthodoxies right on trade, on immigration,
Speaker 3: on social insurance.
Speaker 2: On the FED.
Speaker 3: And so I think that's what makes this so perplexing
Speaker 3: for you know, the so called greatest jobs president that
Speaker 3: God ever invented. He's picked someone that's, you know, frankly,
Speaker 3: based on his record, a threat to working people.
Speaker 2: Okay, So.
Speaker 3: A member of the sort of MAGA movement, Kevin Warsh
Speaker 3: is not okay. And that's why I say, I mean,
Speaker 3: remember there's also he has a track record too, right,
Speaker 3: I mean he's been he's critiqued previous administrations for not
Speaker 3: pursuing free trade deals. Now he's being nominated by someone
Speaker 3: that's trying to you know, rip up the sort of
Speaker 3: global trading system and trying to kind of move it
Speaker 3: towards the US's favor, America's favor. So that's why I say, like,
Speaker 3: if you think that this is sort of a populist pick,
Speaker 3: if you think this is uh, you know, someone that's
Speaker 3: a member of the sort of president's base. I'm not
Speaker 3: so sure about that.
Speaker 5: Right, Hey, Neil, given this nomination, what do you think
Speaker 5: FED Chairman J.
Speaker 2: Powell will do.
Speaker 4: Well?
Speaker 3: As I say, I mean Kevin Worsh's newfound dubbishness. I mean,
Speaker 3: all of a sudden, now that he's in the sort
Speaker 3: of public interview process for this job, all of a
Speaker 3: sudden he likes right cuts.
Speaker 6: Okay, So that.
Speaker 3: Suspicion, I think is going to peak the interest or
Speaker 3: that that about face from Worsh is going to peak
Speaker 3: the interest of not just your own Powell, but a
Speaker 3: lot of the people around the table at the form C.
Speaker 3: So if your Powell, I don't know, maybe you want
Speaker 3: to stick around a little bit longer.
Speaker 2: See what's interesting interesting? Good morning everyone, Neil dought it
Speaker 2: with Jay Hebfield on deck. Claudia Sun coming up later.
Speaker 2: This is a special edition of Bloomberg Surveillance Across a Erica.
Speaker 2: Kevin Walsh point nominated, I should say, by the President
Speaker 2: of the United States to replace your own Powell. Of course,
Speaker 2: confirmation by banking is necessary, you know, I want to
Speaker 2: polarize here the vector of Stephen Myron and Michael McKee
Speaker 2: speaking with the governor Myron this afternoon, who's looking for
Speaker 2: a hugely accommodative fed with the natural restrictiveness of Kevin
Speaker 2: at Walsh. I mean, basically, Myron and worsh are polar
Speaker 2: opposites that I can see in terms of tone discuss that.
Speaker 2: Does a president understand this is not a Myron replacement? Yeah,
Speaker 2: I'm not so sure.
Speaker 3: I mean I think look, I mean, the president is
Speaker 3: trying to find someone that kind of that sort of
Speaker 3: believes in this notion of a golden age, you know,
Speaker 3: of strong productivity.
Speaker 2: Growth.
Speaker 3: Lower nehru, I guess, and maybe he's found his person in,
Speaker 3: you know, maybe he's found his person in in Kevin Warsh.
Speaker 3: You know, Steve Myron has been making similar arguments. But again,
Speaker 3: I mean look at the you know, look Tom, I
Speaker 3: mean Myron. Has Byron been successful and swaying the committee
Speaker 3: to his point of view?
Speaker 2: Yeah? This kid comes out of Albany, he ends up
Speaker 2: at Stanford under the guys of Michael Boskin and John Taylor.
Speaker 2: He's got a shingle out Neil Dudd at the Hoover Institution.
Speaker 2: This screams to me restrictive GOP economics. Am I wrong
Speaker 2: on that? Jay, Yeah, Fields over your nodding, you know,
Speaker 2: am I wrong on that?
Speaker 5: Nice?
Speaker 3: I mean, look, look, I mean this is someone that
Speaker 3: he clearly overweights the inflation side of the Fed's mandate
Speaker 3: relative to employment. Okay, I mean I don't. I don't
Speaker 3: think that that's a pretty particularly controversial thing to say.
Speaker 3: One thing I would say, though, is that you've heard
Speaker 3: a lot of folks in the administration talk about how
Speaker 3: they want the new FED chairman to kind of pull
Speaker 3: and Alan Greenspan right, And so the idea here is
Speaker 3: that in the nineties time, as you know, Alan Greenspan
Speaker 3: resisted the temptation to raise interest rates in the mid
Speaker 3: nineties because you know, productivity was strong and you know,
Speaker 3: inflation was was slowing right now, if you actually go
Speaker 3: back at the time, I mean that was coming off
Speaker 3: of a period where inflation had already been slong. So
Speaker 3: that was sort of the opportunistic disinflationary years, right.
Speaker 2: And if you look at that.
Speaker 3: Time during the nineties, what was green Span really doing.
Speaker 3: He was really just following a tailor rule. So the
Speaker 3: reason why they didn't hike in the mid nineties is
Speaker 3: because the data were more or less telling them not
Speaker 3: to hike in the mid nineties. I mean, yes, it
Speaker 3: is true the unemployment or it was declining, but inflation
Speaker 3: was also rapidly fallen. And the combination of those two
Speaker 3: things is why interest rates didn't go up the policy
Speaker 3: rate that is. But you know, rarely is it meant.
Speaker 3: And you know, when you talk about pull at green Span,
Speaker 3: look think about what happened in the late nineties. There
Speaker 3: was an aggressive hiking cycle about a year after the
Speaker 3: LTM LTCM blow up. And why was that happening. That
Speaker 3: was happening because the labor markets were red hot, right,
Speaker 3: So again I mean we were having it maybe a
Speaker 3: golden age then too, right, I mean strong activity growth.
Speaker 3: But because the labor markets were on fire, Alan Greenspan
Speaker 3: rapidly increased interest rates. So this notion of like pulling
Speaker 3: Alan Greenspan, I think it's a bit of a it's
Speaker 3: a bit of a choose your own adventure.
Speaker 4: Yeah, Neil, how.
Speaker 5: Controversial, if at all? Do you think this confirmation process
Speaker 5: will be for mister Warsh.
Speaker 6: I mean, you know, it's hard to know.
Speaker 3: I mean, I think there's obviously a lot of things
Speaker 3: going on in the background, right, I mean, Senator Tillis
Speaker 3: has basically said that he'd slow down the nomination process
Speaker 3: so long as this this investigation into the head and
Speaker 3: you know, Jerome Powell remains open. We'll see if he
Speaker 3: means that, but that could presumably slow the process down
Speaker 3: a little bit. But as you know, guys, I mean
Speaker 3: these these this role has become less sort of bipartisan,
Speaker 3: right Like in my career it was sort of every
Speaker 3: you know, every every person that's been up the Jet
Speaker 3: Yankee has had a thinner and thinner margin in the
Speaker 3: Senate when they've gotten confirmed.
Speaker 2: You know, I got to get the Jay Hatfield. But
Speaker 2: let me frame this out. We're gonna go to Hatfield.
Speaker 2: I'm gonna ask them the same questions, folks, Neil dot
Speaker 2: right now. And you've been phenomenal about the labor fragility
Speaker 2: of America. What is your real GDP forward the chairman
Speaker 2: worship is going to deal with and the inflation overlay
Speaker 2: that's gonna upset him to get the nominal GDP. How
Speaker 2: do you frame that out through the rest of the year.
Speaker 3: Well, I mean, for me, Tom, you know, I have
Speaker 3: a very much a state of labor market driven view,
Speaker 3: and you know, aggregate hours are barely rising and wage
Speaker 3: growth is slowing, so you know, I think we're basically
Speaker 3: in on track for you know, essentially a four percent
Speaker 3: nomenal growth environment, maybe even a little bit lower than that.
Speaker 3: I mean, if you look at wages and salaries over
Speaker 3: the last couple of quarters. Quite so, really you have
Speaker 3: to you have to tell a tale for why the
Speaker 3: labor markets are going to strengthen. And it's hard to
Speaker 3: do that right now because you look at what consumers
Speaker 3: are saying about the jobs market.
Speaker 2: Okay, We've got to leave it there, folks, and I'm
Speaker 2: going to not mince words. We protect the copyright of
Speaker 2: all of our guests. This morning. Neil Dotta with a
Speaker 2: fiery note out at Renaissance Macro. But bonus Neil Dutta
Speaker 2: out on LinkedIn and Twitter. Look for mister Dotta particularly
Speaker 2: on LinkedIn today with fiery thoughts his note, as you mentioned,
Speaker 2: Paul is just really on fire. Neil Dotta, Thank you
Speaker 2: so much. Stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2: Chris Waller goes to the heart of the matter, which
Speaker 2: Claudia some has lived, which is the jargon of their
Speaker 2: world outreach meetings. I can't emphasize enough how hard our
Speaker 2: public officials work. They go to every rotary breakfast yep.
Speaker 2: I can't say enough, folks, how they're on the road
Speaker 2: and not in the office with their Bloomberg terminal. Claudia
Speaker 2: Some Governor. Waller says, there are multiple outreach meetings of
Speaker 2: planned layoffs, and I'm going to editorialize firings. Do you
Speaker 2: see that trend? Doctor, some of layoffs like Amazon like ups.
Speaker 7: So we have certainly seen layoff announcements pick up that
Speaker 7: this is not new right. We saw several of them
Speaker 7: last year, and say theer announcements at this point, we
Speaker 7: haven't seen them translate into jobless claims, broader measures, aggregate
Speaker 7: measures of layoff. So I think there's every reason to
Speaker 7: be concerned about the labor market. There's some signs of stabilization.
Speaker 7: But I think Waller is appropriate to point out when
Speaker 7: are not out of the woods yet.
Speaker 2: Stanford Economics, everybody's got a different flavor associated with the
Speaker 2: Hoover institution. What kind of inflation a hawk? What kind
Speaker 2: of economist or lawyer comfortable with a restrictive policy? Is
Speaker 2: Kevin Worsh? What, Claudius sam flavor is he? So?
Speaker 7: I mean I was at the FED when Kevin Worsh
Speaker 7: was a governor. I've watched him in action as a policymaker.
Speaker 7: I've certainly followed his comments since then. I mean there's
Speaker 7: a lot about his track record and his recent comments
Speaker 7: about what we see in the economy and what's appropriate
Speaker 7: for interest rates. All that said, I think the conversation
Speaker 7: about Kevin Warsh and again today he got the nomination.
Speaker 7: He's not the FED chair yet, he needs to go
Speaker 7: before the Senate and I think the hearing, his confirmation hearing,
Speaker 7: should be a pretty difficult one because right now, the
Speaker 7: big conversation is about the independence of the FED. Will
Speaker 7: it be free from political influence and setting interest rates?
Speaker 7: And there are some comments from Kevin Worsh. I think
Speaker 7: he needs to be asked about and that goes before
Speaker 7: all his views on the economy.
Speaker 5: So, Claudia, what do you think the FED should be
Speaker 5: thinking about right now? Again, it's got that dual mandate here,
Speaker 5: and we're getting more and more data.
Speaker 4: As we speak here.
Speaker 5: What do you think the focus should be or is
Speaker 5: for the FED right now?
Speaker 7: Well, the Fed, the Fed's focus should be its dual mandate.
Speaker 7: It should be about maintaining maximum employment and getting inflation
Speaker 7: back to the two percent target using the tools that
Speaker 7: it has. I mean, this is where you know, the
Speaker 7: unemployment rate is below four and a half percent, the
Speaker 7: inflation rate is around three percent, much lower than it was,
Speaker 7: you know, just a few years ago. But you know
Speaker 7: it's not it's not all the way back to target.
Speaker 7: So I think there, you know, their job is not done.
Speaker 7: But I don't see this as a moment where we
Speaker 7: need to have, as Kevin worsh has talked about, a
Speaker 7: regime change, come in and knock heads right there. There's
Speaker 7: work to be done the like. There needs to be
Speaker 7: a continuity, a continued focus on the two sides of
Speaker 7: the mandate and and if we have a disruption of that,
Speaker 7: that could be you know, really problematic in general.
Speaker 2: Paul, was that, Claudia, sam shade?
Speaker 8: Is that maybe a little bit shade there, Claudia, how
Speaker 8: do you think mister Walsh will work with, interact with,
Speaker 8: deal with the other members of the FED here.
Speaker 7: What if he is confirmed, he's the public comments that
Speaker 7: he's made in recent months suggest that he's going to
Speaker 7: come in on a pretty combative footing. I mean he's
Speaker 7: used words like knock some heads. He's been very critical
Speaker 7: of the FED. I mean, he went so far as
Speaker 7: to accuse the FED of its rate cuts in twenty
Speaker 7: twenty four as the unemployment rate was rising, that that
Speaker 7: was political, right, That's a really serious accusation to make.
Speaker 7: The FED was reacting to a labor market that looked
Speaker 7: like it might be unraveling. So I think he's going
Speaker 7: to come in. You know, the FED works by consensus.
Speaker 7: He's by his own remarks. I think he's going to
Speaker 7: have a tough time building consensus, but he is capable
Speaker 7: of doing that. It's just it's a it's going to
Speaker 7: be a could be a rocky transition.
Speaker 2: Claudia sam with us. We're thrilled to have her here
Speaker 2: in the nine o'clock or do we have Paul yet
Speaker 2: when we're going to get a press conference? I have
Speaker 2: not seen for the President of the United States, we
Speaker 2: don't have it yet. But again, for those joining a
Speaker 2: nominee as chairman of the Federal Reserve System, Kevin Walsh.
Speaker 2: This morning, we've heard from Christopher Waller and his descent.
Speaker 2: I'm sure we'll hear from others through the day. I
Speaker 2: want to emphasize here and again, folks, this comes down
Speaker 2: to the pedigree. Claudia Sam Michigan, PhD. Absolutely definitive and
Speaker 2: trying to understand the court to the corter gyrations of recession,
Speaker 2: or Richard Clareda, the vice chairman, and all of his
Speaker 2: work at Columbia where he literally herded cats at Columbia
Speaker 2: for years, and his work with a strange thing called
Speaker 2: dynamic stochastic general equilibrium theory. Doctor some lawyer Powell. I
Speaker 2: guess we really didn't know what he was going to
Speaker 2: do other than he was a finance guy. What was
Speaker 2: the song last summer looking for a finance guy? Six five?
Speaker 2: He was blue eyed in six' Five, Claudiusam do you
Speaker 2: have any real understanding Of Attorney worsh's.
Speaker 7: Economics worsh has said in interviews in recent. Months last,
Speaker 7: year he's very critical of the models that THE fed,
Speaker 7: uses has called them. Outdated has you, know really push
Speaker 7: the idea that we need a new? THINKING i, mean
Speaker 7: one of the. Things you, Know powell came in he
Speaker 7: was not a diet in the world monetary policy. Theorist,
Speaker 7: yeah but he came in as a governor and then
Speaker 7: continue on his chair as really listening to the experts around,
Speaker 7: him building his, understanding relying on their, expertise being very data.
Speaker 4: Driven you, know this.
Speaker 2: Is the heart of the. Matter, doctor some you worked
Speaker 2: With warsh at THE. Fed do you suggest he will
Speaker 2: mimic the pattern Of Governor powell or is there going
Speaker 2: to be a different approach here where he does not
Speaker 2: listen TO fed.
Speaker 7: PhDs i'm reacting to comments that he made just within
Speaker 7: the last. Year now you, know it's over a decade
Speaker 7: ago when he was a. GOVERNOR i, think you, know
Speaker 7: we really need to listen to what he's been saying.
Speaker 7: Recently and he's been extremely critical of THE fed, models
Speaker 7: extremely critical of the staff and the CURRENT fed. Officials
Speaker 7: so you, KNOW i think he'll be different Than, powell
Speaker 7: and it could be different in a way that's disruptive
Speaker 7: and not.
Speaker 5: Productive, Claudia i'm looking at a note From Ben emmons
Speaker 5: At Highline Asset management in which he, says Quote worsh
Speaker 5: has made it explicitly clear in Is Hoover Institutional interview
Speaker 5: In may of twenty twenty, five that THE fed is
Speaker 5: responsible for interest, rates administration is responsible for the, budget
Speaker 5: and that this should be the basis for a NEW
Speaker 5: Fed treasury. Accord how radical are out of consensus is.
Speaker 7: That it's extremely radical and out of. Consensus my biggest
Speaker 7: concern with Worsh AND i think this is something that
Speaker 7: he should be asked about by The. Senate, right let
Speaker 7: him explain more his thinking on. IT i don't want to,
Speaker 7: prejudge BUT i mean he's talked about that there needs
Speaker 7: to be a coordination use those, words a coordination between
Speaker 7: The White house And treasury on the balance. Sheet we
Speaker 7: need to remember The fed's balance sheet is an instrument
Speaker 7: of monetary. Policy THE fed has used it to influence
Speaker 7: long term interest. Rates short term political interests Of White
Speaker 7: house have no business in that. Conversation revisit a decade.
Speaker 2: AGO i MEAN i was at a you, KNOW i
Speaker 2: read only important papers at, bars of, course so you,
Speaker 2: know like fifteen years, AGO i met this Great greek
Speaker 2: restaurant In midtown reading forty eight pages Of. Geidner you
Speaker 2: know the world was blowing. Up or That claudia take
Speaker 2: us back To Governor walsh and the basic idea that
Speaker 2: he said we shouldn't Ease And i'm saying this in
Speaker 2: a very general. STATEMENT i want you to tell, us
Speaker 2: was he against accommodation in the heat of the battle
Speaker 2: of the.
Speaker 7: Crisis governor warsh participated in helping stabilize financial markets right
Speaker 7: in the global financial. Crisis he, was you, know worked
Speaker 7: very closely With chairman Bernank, on you, know trying to
Speaker 7: figure out how to stabilize financial. Markets he worked on
Speaker 7: the first you, know the first asset, purchases quantitative. Easing
Speaker 7: as it moved moved into the unemployment rate is near
Speaker 7: ten percent and the economy is really, Weakening warshwood got
Speaker 7: very concerned about inflation and was very critical of The
Speaker 7: fed using asset purchases to support the. Economy it doesn't
Speaker 7: make any. Sense inflation was not a, problem then unemployment
Speaker 7: was the. Problem and in the many years after that
Speaker 7: he hasn't revisited that and said it was a. Mistake
Speaker 7: so that's WHERE i think his credibility on the labor
Speaker 7: market is really, then.
Speaker 2: And, Paul i'm going to interject here the wonderful and
Speaker 2: late and dearly Missed Charles plosser also was worried about,
Speaker 2: inflation and he came out and SAID i was. WRONG i,
Speaker 2: mean this was a raging. Debate McKee lived this but
Speaker 2: at the. Time but this is a really important, distinction
Speaker 2: folks that maybe will be in the, Question, paul get
Speaker 2: one more in here with Doctor.
Speaker 5: Sam doctor some how contentious are? You are you anticipating
Speaker 5: a contentious confirmation process for this? Nominee, YES i.
Speaker 4: Am AND i think that's.
Speaker 7: APPROPRIATE i, mean given moment THE fed is, in these
Speaker 7: are not normal times and it's the sentence, job right
Speaker 7: like they are supposed to vet the, candidate make sure
Speaker 7: they have the. Expertise and this time, around it is
Speaker 7: so important that there are very clear lines drawn between
Speaker 7: The White house and THE, fed and that THE fed
Speaker 7: chair can really back up that they're going to continue
Speaker 7: that independence because it matters for All. Americans it matters
Speaker 7: for financial markets and. Stability SO i think it should
Speaker 7: be a tough, hearing but that's that's the.
Speaker 4: Way it should.
Speaker 2: Be, claudia thank you so, much really really appreciate your
Speaker 2: commitment to what we. Do we look forward to seeing
Speaker 2: you jobs day if that's on the date. Calendar. Doctor
Speaker 2: some driving The American Economic conversation in our public service
Speaker 2: to The fed as. Well stay with us more From
Speaker 2: Bloomberg surveillance coming up after.
Speaker 1: This you're listening to the Bloom Work surveillance. Podcast catch
Speaker 1: Us live weekday afternoons from seven to ten Am Eastern
Speaker 1: listen On Apple karplay And Android otto with The Bloomberg business,
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Speaker 2: YouTube heavy dose of economics, today but far more a
Speaker 2: heavy dose of what these momentous announcements mean to your
Speaker 2: portfolios of currencies. Commodities did you sell all the gold?
Speaker 4: YESTERDAY i don't, know, BOY i tried to ouload the.
Speaker 2: Boat, yeah.
Speaker 4: Exactly the kids are on the.
Speaker 2: PHONE i couldn't get to the. Phone how about the
Speaker 2: stock market with futures negative? Nineteen and of Course John
Speaker 2: stolfus is just young enough to remember the panic Of
Speaker 2: Alan greenspan taking over in nineteen eighty. Seven it was
Speaker 2: a swall matter at the end of nineteen eighty. Seven
Speaker 2: should you adapt an adjust to this or just steady
Speaker 2: forward for the bullmarket Of John, Stulphus.
Speaker 4: Well, TOM i think it's it's steady.
Speaker 9: Forward it's a rock steady. Moment when we think about
Speaker 9: the bullmarkt and what's supporting. That the big, CHANGE i
Speaker 9: think is for short term, investors for the, traders for
Speaker 9: the highly leveraged. Crowd some of these declines that we're
Speaker 9: seeing in commodities and stocks this morning likely directly related
Speaker 9: to unwinding of positions that were looking for a much
Speaker 9: more aggressive stance in terms OF fed policy and lightening
Speaker 9: up on what remains of the hike. Cycle AND i
Speaker 9: think that's what it. Is you, KNOW i don't think
Speaker 9: IT'S i don't think it's a dramatic.
Speaker 4: Change if. Anything the one thing that.
Speaker 9: Occurs to me right away as, well you, Know trump
Speaker 9: Nominated powell for the fan that he didn't like, him
Speaker 9: or he may have trouble With warsh very soon after,
Speaker 9: thereafter AND i think part of it may have been
Speaker 9: a concern about weakness in the dollar that had been
Speaker 9: expressed By bess and sometime in the last twenty four
Speaker 9: or forty eight hours he was saying it was supportive
Speaker 9: of a strong dollar after The president had infer that
Speaker 9: he liked a week. Dollar and the, market the market
Speaker 9: plays that stuff on a day to day. Basis that's
Speaker 9: why we you, know we're not surprised when we go
Speaker 9: from risk on to risk, off risk one to risk,
Speaker 9: off and one day's, value one day's, growth one day's.
Speaker 5: Mids and so we do have a little bit of
Speaker 5: a lift here to the D X y index here this,
Speaker 5: morning but still with a ninety six spot three, eight
Speaker 5: much lower than what we've seen over the last several. Months,
Speaker 5: john we're racing back in the middle of earning. Season
Speaker 5: this is a, busy busy week four. Earnings what have
Speaker 5: you seen From Corporate america so far and what do
Speaker 5: you think the market needs to, see.
Speaker 9: You, know related To Corporate, america what we've seen in
Speaker 9: THE s AND p five hundred earnings results is double
Speaker 9: digit growth, again and double digit growth not only within
Speaker 9: technology but also AS i, recall.
Speaker 4: My screen just went out over here real. QUICK i
Speaker 4: went to another.
Speaker 9: Screen SO i can't look at THE ea, page BUT
Speaker 9: i recall That energy it was double digit earnings on
Speaker 9: THE ea, page AND i.
Speaker 4: Think materials was as.
Speaker 9: Well so what you're looking app is really the process
Speaker 9: evidence of an economy that shows sustainable, growth likely with
Speaker 9: the monetary policy that we've, had even if it is
Speaker 9: at a slower pace than some would.
Speaker 2: Like this special edition Of Bloomberg surveillance across the arc
Speaker 2: of the, morning Including Paul sweeny And Scarlett. Foo later
Speaker 2: on this, morning the seismic announcement a NEW fed chairman
Speaker 2: Sometime paul In, may is it it's like, there like
Speaker 2: when it's, warmer, Exactly.
Speaker 4: Hope we got to get a freezing In New York.
Speaker 2: City before we can have a NEW fed. Chairman John
Speaker 2: stulphus leads us off with his wonderful conviction in a
Speaker 2: bull market that we've seen over the last number of
Speaker 2: years At, Claudia sam and otherworthies will join us for
Speaker 2: perspective on mister WORSCH i look at this And i'm.
Speaker 2: Sorry as an equity, GUY i got to look at
Speaker 2: the bond. Market that's WHAT i was doing last. Night
Speaker 2: it's seven thirty and eight. Pm don't tell Missus. KEANE
Speaker 2: i was the thirty year bond right? Now eighty eight
Speaker 2: percent to, Me John stolfus for, everyone housing, equities everything
Speaker 2: that long rate is the Worsh litmus, paper, now AM i? Right?
Speaker 4: Well you KNOW i quite, Honestly i'll have to, SAY
Speaker 4: i don't.
Speaker 9: Recall what was His litanus paper in the in the
Speaker 9: LAST u if we get.
Speaker 2: A, five if we get a five thirty One John
Speaker 2: Paul sweeney's housing market falls.
Speaker 9: Apart you, know AND i think the reality is is
Speaker 9: that we've had good housing markets when we were a
Speaker 9: double digit interest.
Speaker 4: Rate so you, KNOW i can recall my first mortgage
Speaker 4: was ten.
Speaker 9: Percent one of my colleagues first mortgage was, sixteen and
Speaker 9: his boss's first mortgage was twenty.
Speaker 2: TWO i can't believe.
Speaker 9: It and the only reason why mine was ten is
Speaker 9: the bank wanted to charge me thirteen and my seller
Speaker 9: fortunately wanted to move AND i was able to negotiate
Speaker 9: this therapy took. It when you look at, it IT'S
Speaker 9: i think there's less need for drama at this moment
Speaker 9: in THE fed chair name that has come, up AND
Speaker 9: i think that the market is in good stead right.
Speaker 9: Now it's, notwithstanding you, know on a day to day, basis,
Speaker 9: bears skeptics and nervous investors will take opportunity to trim
Speaker 9: positions WITHOUT fomo.
Speaker 4: If they can find a, catalyst and this is a
Speaker 4: near term.
Speaker 9: Catalyst BUT i really think most of this is probably
Speaker 9: traders reducing positions that we're looking for a much more
Speaker 9: aggressive policy for cutting at THE.
Speaker 5: Fed, Hey Johnny, SAW i guess starting totish last, year
Speaker 5: kind of a little bit of a rotation starting people
Speaker 5: kind of maybe moving a little bit out of some
Speaker 5: of the big tech names and trying to find some
Speaker 5: value in other parts of the. Market is that something
Speaker 5: that is going to continue to be a theme in twenty,
Speaker 5: sixty you, Think, Paul.
Speaker 4: We really think.
Speaker 9: So we think this is the process after tech led
Speaker 9: with great power out of That april eighth bottom last.
Speaker 9: YEAR i think the play is here a broader participation
Speaker 9: by other sectors because investors are looking for a way to.
Speaker 9: Diversify one thing That i've, noticed it's going to be
Speaker 9: forty three years sometime Between may Or july THAT i
Speaker 9: reported to my first job On Wall, street and WHEN
Speaker 9: i look, BACK i remember the private investor at that
Speaker 9: time was usually a lot of it was cocktail party,
Speaker 9: chatter you, know how well had they done in a particular.
Speaker 9: Stock today people are investing because they know that Social,
Speaker 9: security while it will still remain.
Speaker 4: In, place will just not be anything as much of the.
Speaker 9: Income they'll need during, retirement and they want to keep
Speaker 9: a standard of. Living so past performance no guarantee of future.
Speaker 9: Results we unerize the equities tend to be a good
Speaker 9: place to, be to weather, inflation to garner trends that
Speaker 9: are important for.
Speaker 2: Growth Johns dolphus with us with The vics up sticks
Speaker 2: seventeen point nine zero The. Vicks if you're just joining,
Speaker 2: us good morning Across. America you have a NEW fed.
Speaker 2: Chairman The president of The United states Selects Kevin warrish
Speaker 2: to be the NEXT fed. Chairman per The. Senate As paul,
Speaker 2: mentioned that's a bit iffy right. Now we'll have to
Speaker 2: see what The Senate banking will.
Speaker 10: See how they do.
Speaker 5: It, john what's some sectors here that that screen well
Speaker 5: for you these? Days maybe, sectors maybe, factors what screens
Speaker 5: well for you guys these?
Speaker 9: Days we would have to say within the. Sectors we
Speaker 9: continue to like information. Technology we don't think we're going
Speaker 9: back to the abaccus or the avocas or the other slide.
Speaker 9: Rule we think chips are an important part of. LIFE
Speaker 9: ai is here to just stay and will morph in
Speaker 9: different ways going. Forward we also like communications services at
Speaker 9: the traditional telephone, companies as well as about eighty percent social,
Speaker 9: media the search engines and the. Streamers but we, like
Speaker 9: we do like industrials and have liked them for a long.
Speaker 2: Time financials when you're At, oppenheimer, folks and this is ancient,
Speaker 2: history like back To volker Green, span When stulfus AND
Speaker 2: i had. Hair there was a guy that we learned
Speaker 2: the sell, side and we learned the discipline of byhold
Speaker 2: cell from giants Like Myron. Picot we walk in the.
Speaker 2: Shadow he was legendary at your. OpCo here's WHAT i observed.
Speaker 2: Yesterday microsoft totally tanked for fourteen REASONS. Omg and the
Speaker 2: entire cell side seventy one buys two, holes zero. Cells
Speaker 2: John stolfiz ignored it lifted or, ADJUSTED i should, say
Speaker 2: their target. Price and they're still looking for a blended
Speaker 2: thirty percent. Pop And, microsoft can you explain to mere
Speaker 2: mortals how aircraft carrier goes down ten percent and the
Speaker 2: cell side goes long long.
Speaker 9: ONE i would say that the adage of it's better
Speaker 9: to have to be time in the market is more
Speaker 9: important than timing the market for most. Investors the other
Speaker 9: side of it, is you, know investors over the course
Speaker 9: Of i'd tell, you over the.
Speaker 4: Last ten, years have grown accustomed to buy the dips
Speaker 4: when they when they see it.
Speaker 10: Happen.
Speaker 4: Myths what appears to be a secular bull.
Speaker 9: Market we often, say not so much by the, dips
Speaker 9: but look for the babies that get thrown out with the,
Speaker 9: Bathwater those perfectly good stocks the traders will hurl down
Speaker 9: on the floor like a hot potata because there's a
Speaker 9: piece of a quarterly report that doesn't quite meet up to.
Speaker 5: Snuff SO i, MEAN i, mean that's a great story
Speaker 5: of me BECAUSE i mean a lot of people talking
Speaker 5: about valuation in the.
Speaker 2: Market, boy it's.
Speaker 5: Expensive but then the other side, is but earnings are,
Speaker 5: Growing so how do you have that valuation discussion with your?
Speaker 9: Ques, WELL i think the good thing is that earnings
Speaker 9: are growing substantially so that those fat multiples may be
Speaker 9: taken down a little.
Speaker 2: Bit as we go.
Speaker 9: Forward and we've seen over the last few, years you,
Speaker 9: know WE'RE i think right now we're about it at
Speaker 9: twenty two or twenty three, times but we've been even
Speaker 9: higher than.
Speaker 4: That but the earnings are helping us.
Speaker 9: Out the other side of it is, is you, Know
Speaker 9: yardini talks about the fact that there aren't enough companies
Speaker 9: to go into The wilshire five thousand anymore because there's
Speaker 9: only what thirty four hundred publicly traded due to private
Speaker 9: equity consolidation AT m AND, a and, so what we'd
Speaker 9: like to say is we think because of the seriousness
Speaker 9: of people designing their portfolios with advisors or however they
Speaker 9: may be working their portfolios in terms of retirement preserving
Speaker 9: a standard of, living we do, think but they're really
Speaker 9: looking at they're willing to pay more for each dollar
Speaker 9: of earnings if the company shows that it's got good,
Speaker 9: management good, product.
Speaker 4: And then it has cash flow and profit or.
Speaker 2: Kill one more question For John stolf's, folks is we
Speaker 2: really all line up A Jay hatfield we've just learned
Speaker 2: coming in who's absolutely exquisite to go From John stolf
Speaker 2: as that's pretty. SURE i feel this what this is.
Speaker 2: About we come to your commercial free this morning Across,
Speaker 2: america The president announces a new. Chairman subject of banking,
Speaker 2: Confirmation John, Sofis i'm going to ask this question fourteen times.
Speaker 2: TODAY i start with. You the heart of the matter
Speaker 2: Is Martin's wige would, say if a fed's, restrictive things.
Speaker 2: Change can you envision a set of circumstances Where chairman
Speaker 2: worsh would deliver a RESTRICTIVE fed to the stock.
Speaker 9: Market, WELL i think the stickiness in inflation would mean
Speaker 9: that we remain somewhat restrictive in the near term with
Speaker 9: maybe only that generates ah NOMENAL.
Speaker 2: Gdp that's pretty, snappy, right.
Speaker 4: Yep, still that's the thing.
Speaker 9: Is it depends on how tight is the. Tightening you,
Speaker 9: KNOW i could remember very well when people were mourning
Speaker 9: the loss of twelve percent yield on bonds AND i
Speaker 9: was talking. Stocks stocks were going. Up, well interest rates
Speaker 9: will remark high relative to. Today the nominal coupons were.
Speaker 2: Phenomenal one of our listeners sent me a photo from
Speaker 2: his studio with six gretches lined, up you, know the,
Speaker 2: jet the white, falcon the. Whole do you have six
Speaker 2: gretches at?
Speaker 4: Home you, KNOW i don't even own one? Gretch Is
Speaker 4: nexus fixed? THIS I, gibson The defender, guy and the McCurdy.
Speaker 9: Guy mccurty Is rick, mccurty the great contemporary jazz and
Speaker 9: rock and roll.
Speaker 2: Guitar, sorry sweetwater out In Fort. WAYNE i, mean come,
Speaker 2: on get on the. PHONE i should you get a?
Speaker 9: Gretch you, KNOW i think IF i got a, Gretch
Speaker 9: i'd have mccurty. Rebuilt shake the neck a little bit.
Speaker 2: More I'm American John stolphus honored to have you in
Speaker 2: with these important announcers? Today he is legendary at. OPCOD
Speaker 2: i really want to make note mister stulpus through thick and,
Speaker 2: thin Including april of last, year said participate in the,
Speaker 2: market stay with. Us more From Bloomberg's surveillance coming up after.
Speaker 1: This you're listening to The Bloomberg Surveillance. Podcast catch us
Speaker 1: live weekday afternoons from seven to ten Am Eastern listen
Speaker 1: On applecarplay And Android auto with The Bloomberg business, app
Speaker 1: or watch us live on.
Speaker 2: YouTube just off the four top headlines of The Bloomberg
Speaker 2: on the, terminal The president picks a reinvented wash to
Speaker 2: lead The Federal. Reserve gold and silver plunge is wild,
Speaker 2: swings rock metals, markets dollar fears are flaring As trump
Speaker 2: rekindles the basement trade at a big. Take you're On.
Speaker 2: Unitlove i've never been in The unit. Clove, no it's
Speaker 2: not popular, demo but, yeah somebody, said you, KNOW i
Speaker 2: was looking at what are the tights the? Lemon?
Speaker 6: Yeah, yes, NO i don't own any see, leggings you
Speaker 6: don't own?
Speaker 2: Any why sized up two sizes and it still didn't
Speaker 2: work as. Well we begin our coverage With Katie, kaminski
Speaker 2: chief for research Strategist Alpha. Simplex, katie what are the
Speaker 2: trends in the market right? Now the chairman worsh will.
Speaker 10: Enjoy, well this is interesting because today's news has actually
Speaker 10: reverted the Big i've been calling it the pedal to
Speaker 10: the metal, trade where everyone's thinking interest rates are going.
Speaker 10: Lower so you've seen you, know big moves in the dollar.
Speaker 10: Weakening you've seen massive moves and, metals and you've seen
Speaker 10: equities up as. Well so today's announcement kind of has
Speaker 10: caused a reversion across those different.
Speaker 6: Themes we'll see how long that. LASTS i. GUESS i
Speaker 6: mean it's so far as just one day hens all.
Speaker 5: Exactly, Yeah katie mentioned that the dollar, here, boy it
Speaker 5: has been really weak this. Year we're got the D
Speaker 5: X y index ninety six spot five, here a little
Speaker 5: bit of strength, today but really weak this. Year what's
Speaker 5: your thought there on currency?
Speaker 10: Markets so we saw a pivot in a week dollar
Speaker 10: trade starting to strengthen later last, year and we've really
Speaker 10: seen it, accelerate especially around the commentary last week regarding you,
Speaker 10: Know trump's view on THE us. DOLLAR i think the
Speaker 10: general view has been that the dollar is going to
Speaker 10: be weaker if we're going to have lower. Rates but
Speaker 10: there's just generally been pressure on the dollar for quite
Speaker 10: some time, now and it has been close to its
Speaker 10: bottom in terms of breaking out to a new, trend
Speaker 10: but it hasn't hit a new trend.
Speaker 6: Yet but it's. POSSIBLE i, mean it's definitely.
Speaker 5: Possible, commodities, boy they have just been ripping to the.
Speaker 5: UPSIDE i think about the precious metals has just been, extraordinary, gold,
Speaker 5: silver what's your view. There we're getting a little bit
Speaker 5: of a pullback, today but, boy they've been on a, tear.
Speaker 10: Yes AND i mean what's interesting to us is also
Speaker 10: the inter day price action you, saw for, example, yesterday for,
Speaker 10: examples you're, seeing you, know the market has been going
Speaker 10: up so, much but you're starting to see a little
Speaker 10: bit of, hesitation a little bit of. PULLBACK i think
Speaker 10: copper and base metals to also be a big story as, Well.
Speaker 6: And you're seeing inter.
Speaker 10: Day moves that go from really good to really bad
Speaker 10: to really. Good that suggests we might be at a.
Speaker 10: Top but we'll.
Speaker 2: See Kathery kominsky with us on a trend based analysis
Speaker 2: with alpha s. Inplex, again the headline in the last
Speaker 2: hour the red sticky across The. Bloomer The president of
Speaker 2: The United states Nominates Kevin walsh to be the next
Speaker 2: chairman of The Federal Reserve, system and with a special
Speaker 2: edition here of good conversation Across Kati kaminski's. Equities we're
Speaker 2: doing to commodities Of Suki cooper here in a Bit
Speaker 2: Ira jersey on. Bonds claudia sam scheduled to be with
Speaker 2: us in the nine o'clock, Our. Katie i'm looking within
Speaker 2: trend analysis at tip points or. Signals my easy signal
Speaker 2: on The bloomberg terminals a yield on the thirty year.
Speaker 2: Bond IF i see a five percent and may be
Speaker 2: able to get my radar And President trump's radar. Up
Speaker 2: what is your? Signal you're monitoring to see the dynamics
Speaker 2: of the worsh.
Speaker 10: Chairmanship so what's interesting is we have been following fixed
Speaker 10: income pretty strongly in terms of we're seeing more short,
Speaker 10: views which is suggesting somewhat of a.
Speaker 6: STEEPENER i think most people.
Speaker 10: Expected a much more dubvish pick for The, fed SO
Speaker 10: i think that's baked in. Some in, general fixed income
Speaker 10: has been the hardest asset class to trade for the
Speaker 10: last year and a, half so we're still looking for
Speaker 10: something to really break, out but it has been a
Speaker 10: lot of back and forth in that asset.
Speaker 2: Class, well important headlines From washington right.
Speaker 5: Now, yeah mister tillis suggesting saying that Mister walsh is
Speaker 5: a QUALIFIED fed, nominee but Mister tillos also saying On
Speaker 5: Kevin walsh will oppose confirmation of ANY fed, pick so
Speaker 5: kind of just confirming what we kind of already.
Speaker 2: Know The senator speaking Of davos With Jonathan ferrell made
Speaker 2: it real clear that he's just really not happy with
Speaker 2: the judicial, process as we saw From Chairman pole as.
Speaker 2: Well we continue With Katie kominsky At alpha Sim. PLEX i,
Speaker 2: Look katie at the equity, markets and there's a point
Speaker 2: where even AT mit they GO omg technology sand disk this,
Speaker 2: morning alexis talking that. UP i, MEAN i, Mean Katie
Speaker 2: kominsky is an Old Sun microsystems hard drive nailed to
Speaker 2: the wall in her. Office, katie are you surprised by
Speaker 2: the technical the technology juggernaut that we see right?
Speaker 10: Now, WELL i, MEAN i think the market has been
Speaker 10: kind of trying to process some of, these you, know
Speaker 10: can we go higher, recently and that's what you. SEE i,
Speaker 10: mean you've seen a little concern this week in the tech,
Speaker 10: sector which is and we've actually seen more of a.
Speaker 10: Rotation some places like em have been the big winner
Speaker 10: because of the metal moves and other things and the week.
Speaker 10: Dollar but you, know you have still seen technology showing incredible.
Speaker 10: Results SO i think even though there's a, rotation these
Speaker 10: signals still continue to be strong for t and there's Little,
Speaker 10: well we'll have to see, better we'll have to see continued,
Speaker 10: earnings but we really still see that trend.
Speaker 5: Continuing bond, market it looks like fixed income yields ARE
Speaker 5: i don't, know they've they've moved a little, higher but
Speaker 5: they still kind of seen within ranges. BOUND i guess
Speaker 5: at this, point how do you think about?
Speaker 10: That, WELL i think what we have seen with fixed
Speaker 10: income is there hasn't been a lot of movement in
Speaker 10: fixed income over the last year and a, half and
Speaker 10: it's been very difficult to trade because a lot of
Speaker 10: people are anticipating a steeper yield. Curve they've been worried
Speaker 10: about inflation that hasn't Been and, now of course there's
Speaker 10: been a lot of focus on the construction and set
Speaker 10: up how THE fed is going to look in the
Speaker 10: next few. Months but we have to remember that THE
Speaker 10: us is still not done with its cutting, cycle whereas
Speaker 10: other economies are pretty much at the, end especially if.
Speaker 6: You look At.
Speaker 10: Australia so we're kind of in that inflection point trying
Speaker 10: to figure out what's the next move in fixed income
Speaker 10: and it's been really hard to tell.
Speaker 2: Where's your opportunity right?
Speaker 10: Now so the biggest themes we're, SEEING i, mean there's
Speaker 10: huge moves in the, commodities short positions in. Cocoa you're
Speaker 10: seeing long positions in, silver, platinum, ladium anything that's shiny
Speaker 10: is really on the top. There but also THE us
Speaker 10: dollar weakness trade has worked very well And australia is
Speaker 10: benefiting from some of these big moves in.
Speaker 2: MEDALS i Got, JAMES i Got james mccannon. Deck But,
Speaker 2: katie help me here with. Dollar let's go off the
Speaker 2: VANILLA dxy right, now what's your scope?
Speaker 5: Is?
Speaker 2: Go paul mentioned ninety? Six are you going to give?
Speaker 2: ME i got to make some, News. Katie can you
Speaker 2: give me an eighty nine week dollar ON?
Speaker 10: Dx, wife that's a big, One i'd, say you, KNOW
Speaker 10: i think we've gone pretty far, already SO i, think you,
Speaker 10: know if WE i would say it would take a
Speaker 10: lot to get to eighty. Nine but if we had
Speaker 10: a very strong rate cut, move why not Right so
Speaker 10: right Now i'd say low, probability but.
Speaker 2: Possible, Okay, katie thank, you, thanks thank, you thank you so.
Speaker 2: Much Ket kominski with Alf simplex this. Morning there and
Speaker 2: some of the trends that we.
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Speaker 4: Terminal