WEBVTT - Bloomberg Wall Street Week - August 2nd, 2024 0:00:00.280 --> 0:00:02.560 This is Bloomberg Wall Street Week. 0:00:02.680 --> 0:00:07.280 The global push into infrastructure, breaking the IPO logjam in text. 0:00:07.160 --> 0:00:09.200 The financial stories that shape. 0:00:08.880 --> 0:00:12.040 Are were cutting inflation without losing jobs? Do we need 0:00:12.119 --> 0:00:14.560 rate cuts and if so, how many? Investing in the 0:00:14.560 --> 0:00:16.120 time of geopolitical turmoil? 0:00:16.200 --> 0:00:18.919 Through the eyes of the most influential voices. 0:00:18.720 --> 0:00:22.520 Keen Roguoff economists at Harvard, former FDIC had Shila bet 0:00:22.680 --> 0:00:27.360 Ge CEO, Larry Kulp, San Francisco FED President Mary Daily, Bloomberg. 0:00:26.840 --> 0:00:30.480 Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.280 --> 0:00:32.400 A cooling labor market, a FED that is waiting in 0:00:32.440 --> 0:00:36.279 the wings, and David Wesson's special edition from Aspen. This 0:00:36.360 --> 0:00:40.520 is Bloomberg Wall Street Week. I'm scarlet food this week. 0:00:40.680 --> 0:00:43.640 MIT Professor Christen Forbes on what the FED has been 0:00:43.680 --> 0:00:44.320 waiting for. 0:00:44.880 --> 0:00:47.680 There had been a leaning before the pandemic and the 0:00:47.680 --> 0:00:50.440 post pandemic inflation, to wait till you saw inflation, until 0:00:50.440 --> 0:00:52.199 you saw the weights of the eyes of inflation. 0:00:52.880 --> 0:00:56.120 And US Ambassador to Japan Ram and Manual on China's 0:00:56.120 --> 0:00:57.720 global strategy with. 0:00:57.880 --> 0:01:09.400 China is stealing and they bring caught. 0:01:16.400 --> 0:01:19.480 We start with the unexpected cooling in the US labor market. 0:01:19.520 --> 0:01:22.280 The US economy added one hundred and fourteen thousand jobs 0:01:22.319 --> 0:01:25.000 in July, lower than the estimated one hundred and seventy 0:01:25.040 --> 0:01:28.320 five thousand jobs, and the unemployment rate also ticked up 0:01:28.360 --> 0:01:32.040 to four point three percent. This softness is raising questions 0:01:32.080 --> 0:01:35.319 about the Fed's decision to wait to cut rates. Bloomberg's 0:01:35.360 --> 0:01:38.040 Michael McKee joins US now. So not only did we 0:01:38.120 --> 0:01:40.399 get a miss for the July number, we also had 0:01:40.440 --> 0:01:43.680 a downward revision to the Jude number as well. What 0:01:43.720 --> 0:01:47.760 does a breakdown look like in terms of sectors, Well, this. 0:01:47.720 --> 0:01:50.320 Was a generally weak report across the board. The worst 0:01:50.480 --> 0:01:53.880 was information services, which is the tech world, and so 0:01:54.440 --> 0:02:01.160 that is not completely surprising. Government also hiring sloads significantly there, 0:02:01.440 --> 0:02:04.800 but there wasn't a particular area that stood out other 0:02:04.880 --> 0:02:08.560 than we like to look at temporary health services and 0:02:08.960 --> 0:02:12.280 they lost almost nine thousand jobs in that area, which 0:02:12.320 --> 0:02:15.600 is sometimes a harbinger of worse things to come as 0:02:15.639 --> 0:02:18.480 companies cut back on temporary workers before they let go 0:02:18.520 --> 0:02:19.000 of their own. 0:02:19.360 --> 0:02:21.320 Now, speaking of worse things to come, the other thing 0:02:21.360 --> 0:02:23.919 about the rise and the unemployment rate to four point 0:02:23.960 --> 0:02:26.600 three percent is that it triggered a recession call. And 0:02:26.639 --> 0:02:28.480 this has to do with something called a Sam rule. 0:02:28.960 --> 0:02:32.800 Claudia Sam, former FED official, designed the rule, and basically 0:02:32.840 --> 0:02:36.160 it posits that if you get a certain level of unemployment, 0:02:36.200 --> 0:02:38.639 certain change in the amount of unemployment. 0:02:38.639 --> 0:02:40.959 When you get to that level, which is half. 0:02:40.880 --> 0:02:43.919 A percent above the low, then it goes up much 0:02:43.960 --> 0:02:47.560 faster and you're already in recession at that point. And 0:02:47.639 --> 0:02:50.280 it's been a slow grind up as unemployment has risen. 0:02:50.639 --> 0:02:54.760 And while we didn't exactly get to the half percent move, 0:02:55.000 --> 0:02:58.080 it's close enough. And so that's why you're seeing the 0:02:58.120 --> 0:03:01.079 reaction that we have seen on Wall Street is because 0:03:01.120 --> 0:03:04.120 everybody's afraid now that this portends really bad news for 0:03:04.200 --> 0:03:05.519 the overall economy. 0:03:05.840 --> 0:03:08.120 So that's Wall Streets reaction. But I know you speak 0:03:08.160 --> 0:03:11.680 with FED officials, you look at economists notes. What do 0:03:11.760 --> 0:03:14.440 FED officials think of this latest jobs report? 0:03:14.720 --> 0:03:16.400 Well, the first thing they're going to tell you is 0:03:16.440 --> 0:03:18.720 that we never look at one piece of data and 0:03:18.800 --> 0:03:21.079 make a decision based on that, And this is one 0:03:21.160 --> 0:03:21.840 data report. 0:03:22.040 --> 0:03:23.320 There'll be another Job's. 0:03:23.080 --> 0:03:26.639 Report to CPI reports before we get to the next 0:03:26.720 --> 0:03:29.440 FED meeting on September eighteenth, and so they're going to 0:03:29.440 --> 0:03:31.800 want to look at a lot of other different things, 0:03:32.240 --> 0:03:35.080 but it does appear clear that the economy is slowing. 0:03:35.200 --> 0:03:37.240 You have to remember that that's what they wanted. They 0:03:37.280 --> 0:03:40.160 wanted the economy to slow down. The labor market was overheating. 0:03:40.240 --> 0:03:42.840 One hundred and fourteen thousand jobs isn't a bad number. 0:03:42.880 --> 0:03:46.000 It's about the replacement level that the FED would be expecting. 0:03:46.040 --> 0:03:47.360 It's just that we got there in. 0:03:47.240 --> 0:03:50.520 One month rather than over a slow period of time. 0:03:50.880 --> 0:03:54.080 So they're going to push back on the panic aspect 0:03:54.200 --> 0:03:57.480 of it in the markets and say we still have 0:03:57.520 --> 0:04:01.200 a strong economy. GDP has been strong, and we'll wait 0:04:01.240 --> 0:04:03.000 and see what the rest of the data tell us. 0:04:03.240 --> 0:04:06.600 I guess they could also pushback using another data point 0:04:06.680 --> 0:04:09.680 in today's report, which is the participation rate for prime 0:04:09.680 --> 0:04:12.800 major Americans actually rose to the highest in two thousand 0:04:12.800 --> 0:04:14.760 and one, to eighty four percent. So that is a 0:04:14.800 --> 0:04:16.000 silver lining, isn't it. 0:04:16.000 --> 0:04:17.720 It is a silver lining. It's something the FED has 0:04:17.760 --> 0:04:18.599 been wanting to see. 0:04:18.640 --> 0:04:21.000 And really, the unemployment rate went up because a lot 0:04:21.000 --> 0:04:23.520 more people entered the labor force. People think they can 0:04:23.560 --> 0:04:27.120 get jobs and so they start looking, and because that 0:04:27.240 --> 0:04:29.880 number gets larger, the denominator gets larger. 0:04:30.080 --> 0:04:32.359 It makes the unemployment rate a little bit bigger. 0:04:32.680 --> 0:04:35.440 One reason that even Claudia Sam says the sum rule 0:04:35.480 --> 0:04:38.760 may not hold this time because normally it's based on 0:04:38.800 --> 0:04:40.880 the idea of your going into recessions of companies or 0:04:40.880 --> 0:04:41.640 cutting workers. 0:04:41.839 --> 0:04:43.160 But we're not really seeing that. 0:04:43.360 --> 0:04:45.400 So that's an interesting point, the fact that the market 0:04:45.440 --> 0:04:48.000 will bring rates lower on its own, and you could 0:04:48.000 --> 0:04:52.000 see that with bond's rallying hard after the latest jobs report. 0:04:52.680 --> 0:04:54.600 Who does it not help out to have just market 0:04:54.680 --> 0:04:57.440 rates come down, but the Fed's key rates stay where 0:04:57.440 --> 0:04:57.720 it is. 0:04:58.440 --> 0:05:02.120 It's not going to help the con consumer borrowing as much. 0:05:02.160 --> 0:05:04.800 We know that credit card rates are very sticky, and 0:05:04.800 --> 0:05:09.160 that's what people notice the most about tight credit is 0:05:09.160 --> 0:05:12.039 that they're paying more on a monthly basis for interest. 0:05:12.279 --> 0:05:17.279 It'll probably be slow to hit the housing market. Housing 0:05:17.560 --> 0:05:20.640 rates may come down some, but we're around seven percent 0:05:20.720 --> 0:05:23.000 and have been for a couple of years, and we 0:05:23.080 --> 0:05:26.000 don't know how low mortgage rates have to go before 0:05:26.040 --> 0:05:29.240 people feel comfortable borrowing again, but some say four to 0:05:29.320 --> 0:05:32.080 five percent, so it'll take a while to get there. 0:05:32.240 --> 0:05:34.520 And then car sales are the other big interest rate 0:05:34.600 --> 0:05:38.720 sensitive sector, and again we don't know whether companies will 0:05:38.720 --> 0:05:42.839 go back to offering incentives, something to drive the purchases. 0:05:43.040 --> 0:05:45.360 All right, Bloomer's Michael McKee, thank you so much, our 0:05:45.400 --> 0:05:47.600 international economics and policy correspondent. 0:05:48.680 --> 0:05:51.480 We spent the week in Colorado at the Aspen Economic 0:05:51.560 --> 0:05:54.960 Strategy Group, where each summer, prominent economists gather with leaders 0:05:54.960 --> 0:05:57.839 from government and industry to talk about issues that affect 0:05:57.960 --> 0:06:01.680 markets and investors and ultimate all of us. One of 0:06:01.680 --> 0:06:04.839 the subjects of discussion this year was that sudden switch 0:06:04.880 --> 0:06:07.919 to Vice President Kamala Harris as the Democratic nominee for 0:06:07.960 --> 0:06:11.039 president and what that could mean for the policy alternatives 0:06:11.080 --> 0:06:14.160 this November. One of those attending was US Ambassador to 0:06:14.240 --> 0:06:17.720 Japan Ram Emmanuel, who gave us the view from Asia. 0:06:19.920 --> 0:06:24.800 From your friend's side, they very much interested in America selection, 0:06:25.160 --> 0:06:28.520 as is your foe. But from a different perspective. Take 0:06:29.200 --> 0:06:33.680 President Biden's leadership that created the Japan Korea Trilateral which 0:06:33.720 --> 0:06:36.880 is historic. One of China's basic principles is the three 0:06:36.920 --> 0:06:39.359 of us can never get on the same page big time, 0:06:39.760 --> 0:06:42.240 then the United States, Japan, and Korea never happened before 0:06:42.320 --> 0:06:46.200 that twilight and this kind of hub and spoke strategy 0:06:46.400 --> 0:06:50.279 that's now becoming more like a lattice work. All of 0:06:50.320 --> 0:06:55.680 it depends on the indispensable presidence power of the United 0:06:55.720 --> 0:07:00.000 States and the permanence of that. Your foes have a strategy, 0:07:00.040 --> 0:07:02.320 which is America's a receding power and don't bet long 0:07:02.360 --> 0:07:04.240 on them. You got to bet on us. And so 0:07:04.360 --> 0:07:06.080 people want to know whether there's going to be a 0:07:06.080 --> 0:07:08.320 foreign policy that counts out. You know, you can't have 0:07:08.320 --> 0:07:11.160 alliances without allies. Are they going to be counted? And 0:07:11.200 --> 0:07:14.200 we're making historic strides, at least in Japan, but I 0:07:14.200 --> 0:07:16.640 can say in other countries also of among friends, and 0:07:16.720 --> 0:07:19.400 so their big concern in the election is are we 0:07:19.440 --> 0:07:21.160 going to stay on this path or is it going 0:07:21.160 --> 0:07:24.400 to be a radical change to friend and foe where 0:07:24.440 --> 0:07:25.880 you not being able to tell the difference. 0:07:26.000 --> 0:07:27.760 So tell us more about that. I think it's called 0:07:27.800 --> 0:07:30.520 trilateral minister's meeting you had for ten days. I think 0:07:30.800 --> 0:07:32.640 with South Korea, no, no. 0:07:32.480 --> 0:07:35.560 No, no. I have patients, but not that much patience. 0:07:36.320 --> 0:07:37.800 In fact, I have zero patience. 0:07:38.960 --> 0:07:43.120 So this weekend was there were four first time ever events. 0:07:43.720 --> 0:07:47.440 One is the United States in what's the Secretary of 0:07:47.520 --> 0:07:49.960 State and Defense met with their counterparts and for the 0:07:49.960 --> 0:07:52.440 first time in seventy years, America is going to update 0:07:52.520 --> 0:07:56.920 their military presence and for structure in Japan, We're going 0:07:56.960 --> 0:08:00.880 to go from management to operational command and control, biggest 0:08:00.960 --> 0:08:04.560 change in seventy years, and bring parts of Indo Pacific 0:08:04.760 --> 0:08:09.120 in Honolulu forward to theater. Second, we've been making since 0:08:09.160 --> 0:08:13.080 Camp Davids President Biden's meeting there, making a lot of 0:08:13.080 --> 0:08:16.240 progress on the political diplomatic side. For the first time ever, 0:08:16.520 --> 0:08:19.160 the defense ministers of the three countries met and planned 0:08:19.440 --> 0:08:22.080 military exercises and strategy and integration. 0:08:21.960 --> 0:08:23.160 For the for the next four years. 0:08:23.760 --> 0:08:27.560 Third, extended to terms, which is America's nuclear commitment to 0:08:27.560 --> 0:08:30.400 the security and safety of Japan at a ministerial level 0:08:30.440 --> 0:08:32.960 had never been so it's raised the level, especially given 0:08:33.000 --> 0:08:36.280 to China's increase in nuclear capability with what North Korea 0:08:36.360 --> 0:08:39.080 is doing. And then fourth, the first time ever in 0:08:39.120 --> 0:08:43.080 agreement with an ally about military industrial co production and 0:08:43.120 --> 0:08:46.120 code development. And when you take for those principles, the 0:08:46.200 --> 0:08:51.480 quantitative aggregate is a qualitative significant change and it is 0:08:51.520 --> 0:08:54.319 the biggest kind of the last thirty six hours. A 0:08:54.320 --> 0:08:56.920 lot of news in America, but for the Indo Pacific 0:08:57.000 --> 0:08:58.920 strategy for what we're trying to do in the sense 0:08:58.960 --> 0:09:03.040 of building dimatic, political and military alliances. The most significant 0:09:03.040 --> 0:09:05.360 weekend in American into Pacific presence. 0:09:05.480 --> 0:09:07.880 And how durable do you think that is? Because there 0:09:07.920 --> 0:09:09.880 are a lot of disagreements in this election between the 0:09:09.920 --> 0:09:12.599 Democracs of Roehunts. The one bipartisan points seems to be 0:09:12.640 --> 0:09:15.479 a real concern about China. I think that position ourselves. 0:09:15.640 --> 0:09:17.680 If I can. I think there's two countries that have 0:09:17.760 --> 0:09:21.640 bipartisan agreement, one about China and about Japan, but from 0:09:21.679 --> 0:09:24.360 different perspectives, and I do think. 0:09:25.720 --> 0:09:26.319 It's durable. 0:09:26.800 --> 0:09:32.280 Japan today, in the last three years, has made changes 0:09:32.320 --> 0:09:35.920 to five separate seventy year old policies. They've gone from 0:09:35.920 --> 0:09:38.880 one percent to two percent on GDP. For defense, they'll 0:09:38.880 --> 0:09:42.960 become the third largest military in the world. They're adopting 0:09:43.280 --> 0:09:48.600 counter strike capability. They've changed their export capability. They've opened 0:09:48.640 --> 0:09:51.679 up and stabilized their relationship with Korea. So when you 0:09:51.760 --> 0:09:56.040 aggregate all those capacities, they're coming up as a full partner. 0:09:56.080 --> 0:09:58.320 And then the most important thing, which we sometimes don't 0:09:58.640 --> 0:10:02.760 fully in my view, appreciate in the Indo Pacific Asian countries, 0:10:03.360 --> 0:10:08.400 Japan's the most popular country. Seventy years of development, diplomatic 0:10:08.480 --> 0:10:12.280 work huge political benefit to the alliance. There we are 0:10:12.320 --> 0:10:16.480 going as two countries from kind of alliance management to 0:10:16.640 --> 0:10:21.440 alliance or alliance kind of protection to alliance per UH projection, 0:10:22.080 --> 0:10:24.960 and Japan can be a significant partner in the region 0:10:25.000 --> 0:10:28.560 and is a significant partner, and that accrues to America's 0:10:29.120 --> 0:10:34.480 kind of hur our diplomacy while very good. We come 0:10:34.520 --> 0:10:37.400 in with a lot of resources and assets. Japan comes 0:10:37.440 --> 0:10:40.840 in what's dubbed soft power, but it accrues to huge 0:10:40.880 --> 0:10:42.800 political benefit to the UH alliance. 0:10:43.559 --> 0:10:45.720 Do you see a path forward to a world in 0:10:45.760 --> 0:10:49.320 which we engage with China economically? We don't just isolate them, 0:10:49.360 --> 0:10:52.600 that's unrealistic given their size, but do not enable them 0:10:52.720 --> 0:10:54.920 because it feels like the United States is going back 0:10:54.920 --> 0:10:55.400 and forth. 0:10:55.559 --> 0:10:57.800 You know, I nobody would ever look at this and 0:10:57.800 --> 0:11:03.000 say this is a diplomat. So where deterrence ends and 0:11:03.160 --> 0:11:06.280 provocation begins, I don't know, and nobody knows. It's more 0:11:06.480 --> 0:11:12.160 art than it is science. You can have engagement. So 0:11:12.400 --> 0:11:16.440 here's just a short I thought it was the right 0:11:16.480 --> 0:11:19.880 strategy when you look at equities where China was better 0:11:19.920 --> 0:11:22.400 to have them in the tenth than out. What the 0:11:22.440 --> 0:11:26.080 mistake was in twenty twelve. Basically, when President She comes 0:11:26.080 --> 0:11:29.320 to power, we went from they went from thinking of 0:11:29.360 --> 0:11:33.679 America in the West as strategic competitors to strategic adversaries. 0:11:33.880 --> 0:11:38.319 We held onto strategic competitors a decade too long. Now 0:11:38.320 --> 0:11:42.320 we're accelerating realizing that this is different. You can't have 0:11:42.840 --> 0:11:46.400 a system where somebody's part of it, where intellectual property 0:11:46.440 --> 0:11:50.880 theft is a norm. It's just too volatile to a 0:11:50.960 --> 0:11:55.240 system based on trust and law. They're stealing stuff from Google. 0:11:55.440 --> 0:11:57.840 That's not a case. They're stealing stuff from ASML. And 0:11:57.840 --> 0:12:00.680 I'll take one case. ASML makes a SUITAE my conductor 0:12:01.160 --> 0:12:04.880 laser technology. Tokyo Electron is a big competitor. Nikon's a 0:12:04.880 --> 0:12:07.880 big competitor. They compete, they out innovate, They don't steal 0:12:07.880 --> 0:12:10.760 from each other. But China is stealing and they've been 0:12:10.880 --> 0:12:14.520 caught stealing. You can't have an international system, so can 0:12:14.559 --> 0:12:16.800 we have. Sure, you can trade, but you can't steal. 0:12:17.679 --> 0:12:21.120 You can't cheat, okay, and you can't subsidize your private 0:12:21.160 --> 0:12:23.480 sector to the point that their whole strategy is to 0:12:23.520 --> 0:12:26.960 crush the opposition. That's a different economic model, to the 0:12:26.960 --> 0:12:28.160 point that it is destructive. 0:12:29.160 --> 0:12:34.280 That was Ram Emmanuel, US Ambassador to Japan. Coming up, 0:12:34.400 --> 0:12:36.160 we get a view from the other side of the 0:12:36.160 --> 0:12:39.079 aisle with Kevin McCarthy, former Speaker of the House. 0:12:39.800 --> 0:12:41.880 So if you ask me to run the race, it's 0:12:41.920 --> 0:12:43.199 all about Pennsylvania. 0:12:44.880 --> 0:12:47.199 That's next on Wall Street Week on Bloomberg. 0:12:48.800 --> 0:12:53.000 This is Bloomberg Wall Street Week with David Weston from 0:12:53.160 --> 0:12:54.040 Bloomberg Radio. 0:12:59.679 --> 0:13:01.920 This is special edition of Wall Street Week coming from 0:13:01.960 --> 0:13:05.800 the Aspen Economic Strategy Group meetings in Colorado. Former Speaker 0:13:05.800 --> 0:13:08.079 of the House Kevin McCarthy was one of those at 0:13:08.080 --> 0:13:10.640 the meetings and we asked him about what the next 0:13:10.679 --> 0:13:14.480 president will face, whether it is Donald Trump or Kamala Harris. 0:13:14.920 --> 0:13:17.800 We're already facing it. We are paying more an interest 0:13:17.840 --> 0:13:21.240 than we paid in defense, the proportion of GDP. What 0:13:21.559 --> 0:13:23.840 dead is We haven't seen this since World War Two, 0:13:23.880 --> 0:13:26.480 but we were fighting to save the world. Right, What 0:13:26.520 --> 0:13:30.119 are we doing now? And it's just on a spiral 0:13:30.160 --> 0:13:32.840 effect that if we don't do something now, the options 0:13:32.880 --> 0:13:35.880 will be taken away for us to save those programs 0:13:35.880 --> 0:13:39.000 that we know are so critical for this country. 0:13:39.160 --> 0:13:41.120 In your own party, you have somebody like a Glenn 0:13:41.200 --> 0:13:44.640 Youngkin who has some experience with business he really understands 0:13:44.920 --> 0:13:47.640 the way a budget works. Do you have hopes that 0:13:47.679 --> 0:13:49.559 a Glenn Youngkind who's not going to be the vice 0:13:49.559 --> 0:13:51.520 president of nominee now a contrary to what I think 0:13:51.520 --> 0:13:54.120 you would have preferred. Is there a voice for a 0:13:54.160 --> 0:13:55.679 Glenn Youngkin right now in your party? 0:13:55.760 --> 0:13:55.920 Yeah? 0:13:55.920 --> 0:13:57.760 And you have to remember a vice president is just 0:13:57.760 --> 0:14:01.400 one position. You pick a team and a cabinet. I 0:14:01.480 --> 0:14:04.080 think Glenn Youngkin would be perfect a cabinet because now 0:14:04.240 --> 0:14:07.040 not only does he have business experience, he has government 0:14:07.080 --> 0:14:10.760 experience as a governor, that's a manager. I think governors 0:14:10.800 --> 0:14:11.920 make better presidents. 0:14:12.000 --> 0:14:12.160 Right. 0:14:12.679 --> 0:14:14.400 They can't print more money, but they have to balance 0:14:14.400 --> 0:14:16.480 a budget, they have to run agencies they didn't create, 0:14:16.640 --> 0:14:18.400 and they have to work with both sides of the aisle. 0:14:18.640 --> 0:14:21.200 And what Glenn also did was understand the importance of 0:14:21.320 --> 0:14:25.120 education and the power of what that changes individual lives. 0:14:25.480 --> 0:14:28.080 I think Glenn inside would be fabulous, And there's a 0:14:28.080 --> 0:14:30.560 lot of people out there that I think can add 0:14:30.600 --> 0:14:33.040 to the ticket to actually make it more powerful on 0:14:33.080 --> 0:14:33.600 both sides. 0:14:33.880 --> 0:14:36.080 You've said that you think Donald Trump is a changed 0:14:36.080 --> 0:14:38.720 man after that attempt on his life. You've seen him, 0:14:38.720 --> 0:14:40.680 you've dealt with him, you believe that. Is he a 0:14:40.800 --> 0:14:43.360 changed man when it comes to economic policy. 0:14:43.560 --> 0:14:45.840 You know, there's certain things that he believed long before 0:14:45.880 --> 0:14:50.080 he ever ran, and some of them are really we're 0:14:50.160 --> 0:14:52.920 Republican ideas in the turn of the century. You know, 0:14:53.000 --> 0:14:55.600 he believes in a strong nation. He's always said that, 0:14:55.960 --> 0:14:58.680 he believes that tariffs not let other countries have their. 0:14:58.640 --> 0:14:59.200 Way about him. 0:15:00.120 --> 0:15:01.920 Get mad at the way he delivered, but he was 0:15:01.960 --> 0:15:04.520 one hundred percent right when he went to NATO and said, 0:15:05.040 --> 0:15:07.520 you got to pay more. You promised all this time, 0:15:07.720 --> 0:15:11.080 and these other people would invade. He gives America greater strength. 0:15:11.120 --> 0:15:14.760 The only time Putin never invaded as he was in 0:15:14.840 --> 0:15:20.320 charge was under Trump's administration. So, I mean, there's certain 0:15:20.360 --> 0:15:23.400 things he fundamentally believes, but he does get by being 0:15:23.400 --> 0:15:26.880 a business person. Now that may set people off differently 0:15:26.960 --> 0:15:31.760 because he'll say things that seem out of the ballpark 0:15:32.000 --> 0:15:35.680 for a politician, but it's not for a business person 0:15:35.720 --> 0:15:36.680 who's negotiating. 0:15:36.880 --> 0:15:39.280 Well, what about the other side. I understand you're a Republican, 0:15:39.360 --> 0:15:42.560 but now have Kamala Harris. Does she have an opportunity 0:15:42.840 --> 0:15:45.800 to make some sort of a pivot on bidnamics that 0:15:45.880 --> 0:15:47.640 might make sense towards the center. Do you have any 0:15:47.640 --> 0:15:49.520 hope of that she does. 0:15:49.680 --> 0:15:51.840 But you want to look at history what's interesting, and 0:15:51.880 --> 0:15:54.960 this race is totally different. The last six weeks of 0:15:55.040 --> 0:15:58.120 politics in America is something we probably will never see again. 0:15:59.000 --> 0:16:03.600 A top candidate being convicted, a debate that a sitting 0:16:03.680 --> 0:16:07.560 president collapses on an assassination attempt you probably haven't seen 0:16:07.600 --> 0:16:11.160 since the sixties, and the president pulling out. Now the 0:16:11.240 --> 0:16:13.680 vice president is a part of that ticket, so all 0:16:13.760 --> 0:16:17.000 those policy things she's still rapped to. She comes from 0:16:17.040 --> 0:16:20.560 San Francisco, so she comes from being in the Senate. 0:16:20.600 --> 0:16:22.800 She was rated as the furthest to the other side. 0:16:23.040 --> 0:16:25.200 But it's a new day for Democrats when they were 0:16:25.200 --> 0:16:28.600 about to completely can collapse. But it looks a lot 0:16:28.640 --> 0:16:32.600 a lot like nineteen eighty eight. Do Caucus becomes the nominee. 0:16:32.720 --> 0:16:36.600 He's a liberal governor from Massachusetts and picks a moderate 0:16:36.680 --> 0:16:41.160 Democrat senator from Texas. He's ahead by seventeen points mid 0:16:41.240 --> 0:16:45.160 July coming out of their convention. You got George Bush 0:16:45.240 --> 0:16:49.040 behind being the VP. He picks this young senator from 0:16:49.080 --> 0:16:53.680 the Midwest that doesn't take off very well. Right, sounds similar, 0:16:54.200 --> 0:16:58.480 But what happened you saw those policies come out across 0:16:58.520 --> 0:17:01.440 the Willie horton the week on crime when crime's a 0:17:01.480 --> 0:17:04.520 big concern to people. Then you saw the moment of 0:17:05.280 --> 0:17:08.480 Ducaucus in a tank, So the question became are they 0:17:08.480 --> 0:17:11.360 prepared for the three am call? Then you got that 0:17:11.480 --> 0:17:15.200 moment in time in a debate or you still opposed 0:17:15.240 --> 0:17:17.879 to the death penal even if your wife was raped? 0:17:17.920 --> 0:17:20.399 And he said yes. So it was out of step 0:17:20.440 --> 0:17:23.119 where America was. So it really did come down to 0:17:23.160 --> 0:17:25.720 policies and lo and behold, George Bush had a really 0:17:25.720 --> 0:17:28.359 big election. I don't know if that happens there now. 0:17:28.600 --> 0:17:33.080 But you've got a history of Kamala starting very strong 0:17:33.119 --> 0:17:36.919 in campaigns, but as the campaign goes, she doesn't do 0:17:36.960 --> 0:17:39.320 as well. Now this is a short campaign, so maybe 0:17:39.320 --> 0:17:41.800 advantage to her, but she has a long history of 0:17:41.840 --> 0:17:44.240 the policies that are kind of out of step when 0:17:44.240 --> 0:17:47.520 it comes to crime, inflation, and the border, and she 0:17:47.560 --> 0:17:49.639 had a responsibility for it. So she's going to have 0:17:49.680 --> 0:17:53.800 to overcome that. Now Trump has a ceiling to where 0:17:53.800 --> 0:17:58.159 he was before and the last presidential race, Biden won 0:17:58.240 --> 0:18:01.360 it by forty nine hundred eight team votes. So if 0:18:01.359 --> 0:18:04.520 you ask me to run the race. It's all about Pennsylvania. 0:18:05.000 --> 0:18:09.160 If Trump only kept the states that he won last 0:18:09.200 --> 0:18:11.840 time when he lost, and he only picked up Pennsylvania 0:18:11.920 --> 0:18:15.240 and Georgia and won the majority of votes in Maine, 0:18:15.320 --> 0:18:18.480 that's two seventy he wins. So it's going to be 0:18:18.560 --> 0:18:21.879 interesting that Kamla It's got the ability to pick her 0:18:22.000 --> 0:18:25.840 VP candidate after knowing all the cards are held out. 0:18:25.920 --> 0:18:27.000 It's an advantage to her. 0:18:27.200 --> 0:18:27.840 Where does she go? 0:18:28.000 --> 0:18:30.480 Well, that sounds like instead of picking a senator from Texas, 0:18:30.520 --> 0:18:33.199 she said, pick a governor from Pennsylvania named Shapiro. Is 0:18:33.560 --> 0:18:34.400 your advice to her? 0:18:34.840 --> 0:18:36.240 No, I don't want to give her good advice. 0:18:36.320 --> 0:18:37.480 I pick somebody else. 0:18:38.080 --> 0:18:40.240 Look, I think Shapiro would be smart, just as I 0:18:40.359 --> 0:18:43.520 thought if you picked Youngkin. It's like a game of chess. 0:18:43.560 --> 0:18:45.560 You want to put more states in play. It would 0:18:45.560 --> 0:18:47.959 have put Virginia in play and it would have been 0:18:47.960 --> 0:18:50.760 a better play down. But she may look to Arizona 0:18:51.200 --> 0:18:54.880 thinking she could play out West right, Deny Trump, Arizona, 0:18:54.960 --> 0:18:57.959 Nevada reshape the debate when it comes to the border. 0:18:58.040 --> 0:19:01.200 Mark Kelly being an astronaut, he's a very interesting Hitit 0:19:01.359 --> 0:19:05.680 go to Tim Walls, a manager I think if she's 0:19:05.720 --> 0:19:09.040 being a senator, I'd pick a governor, a manager, right 0:19:09.400 --> 0:19:13.200 and try to get away from what she's already tried 0:19:13.200 --> 0:19:16.280 to those policies. But look, you're ninety nine days out. 0:19:16.359 --> 0:19:19.520 The advice i'd give anybody, I would listen to Al Davis, 0:19:19.880 --> 0:19:22.680 just win, baby, whatever it takes, just win. 0:19:23.200 --> 0:19:26.760 That was former House Speaker Kevin McCarthy. Wall Street Week 0:19:26.760 --> 0:19:29.880 traveled to Colorado this week for the Aspen Economic Strategy 0:19:29.920 --> 0:19:32.440 Group meetings, and the focus on the FED and where 0:19:32.480 --> 0:19:35.800 it is in an extraordinary period. This included a pandemic 0:19:35.840 --> 0:19:38.919 and a series of dramatic rate increases was very much 0:19:38.960 --> 0:19:42.920 a topic of conversation. MIT Professor of economics Kristin Forbes 0:19:43.000 --> 0:19:46.320 has studied rate cycles through history and took the opportunity 0:19:46.359 --> 0:19:50.320 in Aspen to put what we're seeing into a broader context. 0:19:50.720 --> 0:19:53.520 There had been a leaning before the pandemic and the 0:19:53.520 --> 0:19:56.280 post pandemic inflation to wait till you saw inflation, until 0:19:56.320 --> 0:19:58.600 you saw the weights of the eyes of inflation. And 0:19:58.760 --> 0:20:02.040 mcalesson has learned need to allow center banks to be preemptive. 0:20:02.359 --> 0:20:04.520 They need to be able to start raising interest rates 0:20:04.520 --> 0:20:06.639 ahead of time when they think prices are going to 0:20:06.680 --> 0:20:09.800 pick up quickly. Related to that, I think an important 0:20:09.840 --> 0:20:12.520 lesson we've learned is that as economists central bankers, we 0:20:12.560 --> 0:20:15.120 focus on inflation. So there's a lot of discussion now 0:20:15.160 --> 0:20:17.280 on how inflation is coming back. It's heading back to 0:20:17.280 --> 0:20:20.879 two percent. This has been a remarkably pain free recovery, 0:20:21.080 --> 0:20:24.240 but it hasn't been paid free. The price level has increased. 0:20:25.000 --> 0:20:27.440 It's more expensive for consumers to buy what they need 0:20:27.440 --> 0:20:30.760 to buy to keep their households afloat. And is the 0:20:30.760 --> 0:20:34.080 economists we forget that this price of a basket of 0:20:34.119 --> 0:20:37.000 goods matters to people. Things are more expensive. Is the 0:20:37.040 --> 0:20:39.400 price level that matters to people, not just the rate 0:20:39.440 --> 0:20:41.919 of change of prices. So I think we've learned an 0:20:41.920 --> 0:20:45.400 important lesson that the level of prices does matter. Even 0:20:45.440 --> 0:20:47.879