Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We
Speaker 1: start the day where we started every single morning on
Speaker 1: Phase one Deal watch. There is no Phase one deal
Speaker 1: agreement yet I strongly support that, and I put this
Speaker 1: in the script on TV. To me, it's the idea
Speaker 1: of a one and done tariff adjustment or is it
Speaker 1: some form of sequence forward? And we still don't know.
Speaker 1: This came from Royt's in the last twenty four hours,
Speaker 1: and agreement between the United States and China to roll
Speaker 1: back existing tariffs as part of a Phase one trade
Speaker 1: deal faces fierce internal opposition in the White House. That
Speaker 1: is where we are right now here in New York
Speaker 1: on police to say is Stephen Stanley, chief economist at
Speaker 1: Amherst Peer Punk, Good morning to Stephen, Good morning your
Speaker 1: take on the back and forth all of this. The
Speaker 1: market is quite clearly made a decisive move yields higher
Speaker 1: equities advance, Yet we still don't have a phase one agreement.
Speaker 1: What is going on? Well, you you need to let
Speaker 1: the fund play out a little more. I think every
Speaker 1: day this week you come in in the morning and
Speaker 1: the markets either up or down based on what the
Speaker 1: latest trade headline is. And unfortunately it feels like we're
Speaker 1: going to be dealing with that for at least another month.
Speaker 1: You would seem to be higher though on positive news
Speaker 1: than they are lower on negative news. There's a real
Speaker 1: difference in terms of the market bias investor attitude than
Speaker 1: compared to maybe three months ago. Yeah, I think people
Speaker 1: are getting a little more optimistic. There's a sense in
Speaker 1: the markets that maybe the global economy, while it's not
Speaker 1: greats has maybe seen its worst days and if we
Speaker 1: are going to get a trade deal, that that signals,
Speaker 1: you know, maybe better days ahead. Going into your take
Speaker 1: is interesting. The details of a deal are probably less
Speaker 1: important than the degree of the clarity that it provides.
Speaker 1: Why South because if you look at the U. S economy,
Speaker 1: the bulk of the damage that's been done because of
Speaker 1: the trade situation is not so much the direct impact
Speaker 1: of the tariffs. It's the uncertainty that has kept businesses
Speaker 1: sideline from investing. So if they see something that allows
Speaker 1: them to move forward with clarity. Then it doesn't really
Speaker 1: matter what the details are. It's just getting them back
Speaker 1: to the table in investing again. And Friday's the game
Speaker 1: will start, I don't know, three o'clock this afternoon. It'll
Speaker 1: clicking on all the blogs, all the analysis. What I
Speaker 1: call the gloom Friday tone. It's been there every week
Speaker 1: and the you know, walls of worry up up up
Speaker 1: in the markets. Steve Sandley, you're gonna drive over that
Speaker 1: with a bulldozer. With an above two and a half
Speaker 1: percent GDP call for the next X number of quarters,
Speaker 1: how alone do you feel and calling for a better
Speaker 1: American economy over the next number of quarters. Well, it's
Speaker 1: certainly an above consensus call. I would say that it's
Speaker 1: interesting the FED has been much more optimistic in their
Speaker 1: tone about the economy in UM the consensus market view
Speaker 1: for quite a while, but the markets have focused more
Speaker 1: on the fact that the FED has been talking about
Speaker 1: downside risks UM. Now that the FED has paused, it
Speaker 1: feels like the shift has gone away from the risks
Speaker 1: a little bit and more to the UM to the
Speaker 1: point estimate forecast, I think a little bit. Where's the
Speaker 1: source of growth in the U. S economy from here, well,
Speaker 1: the consumer continues to be the the sector that's kind
Speaker 1: of driving the train. But I think to get to
Speaker 1: a faster pace of growth from here, you need to
Speaker 1: see a little bit of a revival and business investment,
Speaker 1: which has been negative for the last couple of quarters.
Speaker 1: And when we talk about consumers, there are discussions about
Speaker 1: cracks in the consumer. Uh. Do you buy that the
Speaker 1: labor market is very strong? Uh? Consumer balance sheets as
Speaker 1: a whole are pretty clean. I I think the consumers
Speaker 1: can't get shape. You get the failing though that this
Speaker 1: might be too little, too light. And as far as
Speaker 1: the tride War is concerned that manufacturing abroad is taken
Speaker 1: such a massive hit that it might be inevitable that
Speaker 1: it bleeds to us to what the pots of the economy.
Speaker 1: What do you make of the document? Um, I don't
Speaker 1: think that that's inevitable. I guess the bleed point, it
Speaker 1: seems like would be the labor market, right because business
Speaker 1: has gotten pretty cautious un investment, but they're still hiring. Um.
Speaker 1: Is there a point which they stopped hiring? And that
Speaker 1: was a real concern. I think over the last few
Speaker 1: months and the payroll report last Friday I think alleviated
Speaker 1: that concern to a great degree, because not only did
Speaker 1: you get it better than expected number in October, but
Speaker 1: you've got significant upward divisions to the prior two months.
Speaker 1: So all of a sudden, that slowing trajectory that we
Speaker 1: thought we were seeing isn't there anymore? Enlightened us on
Speaker 1: the makeup of the marginal decline in exports. There's a
Speaker 1: wonderful article I am that was based off i AM
Speaker 1: F research. I think it was in the f T.
Speaker 1: It talked about global auto demand, unit demand down, etcetera.
Speaker 1: But when we say exports are down, is that six
Speaker 1: you know, tankers out of Portland with soybeans on him?
Speaker 1: Is that automobiles? Is that IBM computers? What is that iPhone?
Speaker 1: iPhones are coming this way? When we say we have
Speaker 1: declining exports, what is that? Yeah? Well it's interesting because
Speaker 1: US exports, you know, if you look at kind of
Speaker 1: what are the big categories, A lot of it is
Speaker 1: stuff that you would call kind of low on the
Speaker 1: supply chain, raw materials and um we used to export
Speaker 1: a lot of waste paper to China, for example, and
Speaker 1: scrap metal and stuff like that, and then stuff at
Speaker 1: the very high end, and certainly one thing there would
Speaker 1: be Boeing. I mean, we know that Boeing exports obviously
Speaker 1: are kind of dead in the water right now because
Speaker 1: of the max um. But yeah, I mean, I think
Speaker 1: you've seen a lot of altility from one month to
Speaker 1: the next, and a lot of that is trying to
Speaker 1: time these changes in tariffs. Um, it'll be interesting if
Speaker 1: we do get a deal and we get some stability
Speaker 1: to see what happens. Two reasons for optimism now, One
Speaker 1: that we may get a face one truce between the
Speaker 1: United States and China, and too, there are signs that
Speaker 1: the global economy it's bottoming out in the trade day
Speaker 1: to today, expectations that Chinese exports may completely roll over
Speaker 1: once again better than expect It's still weaker, but better
Speaker 1: than expect it. Do you see those signs as while Stephen,
Speaker 1: and it's that more important than a potential for trite
Speaker 1: truths that the global economy is shoving scientift bottoming out. Yeah,
Speaker 1: I mean, you know, it's it's not getting worse anymore. Um,
Speaker 1: you know, I don't I don't want to jump the
Speaker 1: gun and say that things are getting hugely are hugely
Speaker 1: improved from here, But it does feel like it's kind
Speaker 1: of settling at the bottom, and hopefully we'll rebound from there.
Speaker 1: I do think the trade thing is is critical here
Speaker 1: because even the economies that aren't necessarily directly tied, and
Speaker 1: and I would give the example of Germany. Um, there's
Speaker 1: no reason that their economy should be affected by US
Speaker 1: China trade negotiations, but but it is because they are
Speaker 1: so highly leveraged trade. Steven Stanley, we are, we are
Speaker 1: just immune on the American consumer. I won't shop below
Speaker 1: fifty Night Street. Farrell won't go below Sex. Lisa was
Speaker 1: seen in Soho like three months ago. I think shopping
Speaker 1: What is the state of the American consumer away from
Speaker 1: our little you know, two zip code view here? Yeah? Well,
Speaker 1: I mean you've got a three point five percent unemployment
Speaker 1: eight you've got high consumer confidence, and you've got a
Speaker 1: savings rate above eight percent? So are we saving? Are we?
Speaker 1: Are we gonna spend it? You know? This weekend below
Speaker 1: fourteen Street. I would just say that, you know, most
Speaker 1: retailers that I've heard from are expecting a very good
Speaker 1: holiday season. Do you buy that? I was thinking about
Speaker 1: that walking around you know above fifty ninth Street last night.
Speaker 1: Do you really buy that we're gonna have a bang
Speaker 1: up holiday season? I don't see why not. I mean,
Speaker 1: almost everybody has a job and people are feeling pretty
Speaker 1: good about things. So yeah, I think we will have
Speaker 1: straight once once for an interview with the old g
Speaker 1: E Office building, which is I think on fifty three.
Speaker 1: It was like the studios are right in Jack. I
Speaker 1: have a serious quick question, Steve, when you talk about
Speaker 1: Gucci the high end shopper versus the low end shopper,
Speaker 1: where will the strength come from? Well, I think the
Speaker 1: good news. You know, there have been concerns about you know,
Speaker 1: obviously in the political run there a lot of talk,
Speaker 1: there's a lot of talk about income inequality, but even
Speaker 1: within the economic circles, I think there's been some concern
Speaker 1: about the narrow uh benefits. You know that the upper
Speaker 1: um income households were benefiting all we're getting all the benefit.
Speaker 1: And what we've seen lately, which is pretty classic for
Speaker 1: an economic cycle, is as you get longer into the cycle,
Speaker 1: the benefits start to move down the curve. And I
Speaker 1: think what we're seeing is now you've got labor shortages
Speaker 1: even for unskilled workers. You've got wages going up faster
Speaker 1: for unskilled than for skilled wonders. So I think there
Speaker 1: is some, uh if you want to call it democratization
Speaker 1: of the expansion. Stephen Stanley, thank you so much for
Speaker 1: the point. Greatly greatly appreciate that. Global Wall Street gearing
Speaker 1: up for Friday and from the weekend. Steven Stanley joining
Speaker 1: us in the last hour of Amir's pure punt and
Speaker 1: he is a stunning above two and a half percent
Speaker 1: GDP call for the next six months. Very few people
Speaker 1: out there and that optimism Stanley adamant. It is all
Speaker 1: linked into trade, which is a good way to bring
Speaker 1: in our next guest on China. Miranda high Song, International
Speaker 1: senior macro strategist joins us. Now, Miranda, great Tammy with
Speaker 1: us on the program. Let's start with the data out
Speaker 1: of China. Shall we expectations for exports to roll over.
Speaker 1: They weaken, but not as much as expected. Please help
Speaker 1: us understand whether we have seen the worst of the
Speaker 1: data in China. Well, yeah, on the trade side, it
Speaker 1: was actually the exports were only down point nine, which
Speaker 1: is a lot better than expectations. Um and interestingly, a
Speaker 1: lot of it seems to be being diverted. So it's
Speaker 1: not coming from China, but it's going to the US maybe,
Speaker 1: but it's going to other Asian um nations UM and
Speaker 1: offer to to place US tide to Taiwan. So we're
Speaker 1: actually seeing quite a lot of trade being diverted rather
Speaker 1: than necessarily going to the going to the US market.
Speaker 1: And the interesting thing is now this is basically you're
Speaker 1: coming on for a year of the trade war really
Speaker 1: sort of having an impact, and we're now getting into
Speaker 1: much weaker year on year comparisons. So actually, if this
Speaker 1: is as bad as it gets, then for the next
Speaker 1: few months, we might actually see improving figures from China
Speaker 1: rather than a continued, continued slow down. Miranda. Today was
Speaker 1: the exports that were better than expected. It wasn't the
Speaker 1: imports that really picked up. The imports still look weak.
Speaker 1: That's a story of weak domestic demand for a lot
Speaker 1: of people. Any signs that things are actually picking up
Speaker 1: in the domestic economy, well on the import side is
Speaker 1: actually so you've actually got if you look at the volume,
Speaker 1: volumes were actually pretty good. Interesting crude crude oil was
Speaker 1: up about twelve um, copper was done, but then you
Speaker 1: had things like the plastics and and and so interestingly,
Speaker 1: the the chips chip deliveries were actually really strong about twelve,
Speaker 1: but it was the value that basically dragged the thing down.
Speaker 1: So if you think the all prices and a lot
Speaker 1: of the commodity prices have come down over the last year,
Speaker 1: so that's making it look worse than it actually that
Speaker 1: actually is. And you know, if you if you stip
Speaker 1: that out, then you're basically talking maybe sort of want
Speaker 1: two percentage points down rather than the minus six. But
Speaker 1: I mean coming forward, I think that's going to then
Speaker 1: also you do have some infrastructure side coming in and
Speaker 1: then they're really big debate I think is what happens,
Speaker 1: you know, in the in the auto market, and that
Speaker 1: could really bring in some sort of a sort of flatlining,
Speaker 1: a sort of activity in Q four after what's been
Speaker 1: a really big drag this year. So how much is
Speaker 1: this a story of PBOC liquidity making its way into
Speaker 1: the economy and we're seeing the path there, and how
Speaker 1: much is it's just that people got ahead of themselves
Speaker 1: with the China slowing down into crisis story, Well, I
Speaker 1: think the expectations where the China would be hit a
Speaker 1: lot worse than it has actually been. Um. I mean,
Speaker 1: you have had sort of reasonable um domestic demand. But
Speaker 1: the interesting thing is the p D O C in
Speaker 1: the government haven't done I mean as that they keep saying,
Speaker 1: they haven't done the flood liquidity and they haven't just
Speaker 1: pushed out the bank loans, and they've kept things quite restrained,
Speaker 1: you know, things like the shadow banking um and also
Speaker 1: the p P financing where this is where a lot
Speaker 1: of consumer debt has built up. It's not actually loosened
Speaker 1: us up. Just to be honest, what's keeping the whole
Speaker 1: the whole economy on the road is actually the property
Speaker 1: market where they've allowed you know, some loosening and that's
Speaker 1: sort of keeping everything you know, going reasonably well. But
Speaker 1: they've not, um, they've not done a sort of a
Speaker 1: huge stimulus. So that's basically keeping things relatively stable at
Speaker 1: the same time as you have obviously the trade war impact.
Speaker 1: Can they afford to delay all this talk of the
Speaker 1: week and you know, we're exhausted by the talk of
Speaker 1: the week, but morinda, can they just toss this into
Speaker 1: two thousand twenty they they I mean, obviously the so
Speaker 1: the trade war UM side, they could you know, get
Speaker 1: this in December. It's phase one. This is something that
Speaker 1: China would have, um, you know, decided on last year.
Speaker 1: They would have agreed to something similar you know, this
Speaker 1: time last year, and you wouldn't have had to have
Speaker 1: all this, all the all the rest of it. But
Speaker 1: the but yea, but yes, in terms of the longer
Speaker 1: term issues, in terms of you know, getting to the
Speaker 1: phase two. Um, then the debate is whether China is
Speaker 1: ever going to concede do anything as as significant as
Speaker 1: as the US wants in terms of you know them
Speaker 1: removing state ownership and removing state influence and removing all
Speaker 1: the a lot of redlines for China. So yeah, I
Speaker 1: mean it's phase one could get stein. But then phase two,
Speaker 1: that's that's going to that's a longer term issue and
Speaker 1: that may have to wait a lot longer. Well, Miranda,
Speaker 1: Typically what we would think is that if we go
Speaker 1: into phase two without tackling the big issues, that it
Speaker 1: could blow up Phase one. The reason why some people
Speaker 1: don't think that movie plays out this time around going
Speaker 1: into next year is because next year is an election year.
Speaker 1: Does that change things for you, Miranda, Well, the thing
Speaker 1: is the China that being hard on China can play
Speaker 1: well if you get the if you get the Phase
Speaker 1: one deal signed, and so therefore the agricultural exports and
Speaker 1: al and G benefits that part of the elector, then
Speaker 1: that's fine for China and for the US. But in
Speaker 1: terms of then the bigger scale, so that's a sort
Speaker 1: of you know, the technology, the five G warth and
Speaker 1: AI and a lot of the bigger sort of like
Speaker 1: state influence. Then to be honest in going into an
Speaker 1: election taking a strong stance on that may not actually
Speaker 1: that be that bad if you've already sort of saved
Speaker 1: a little bit of the economy by doing the by
Speaker 1: doing the Phase one deal. And Miranda Kurr, thank you
Speaker 1: so much, greatly appreciated. With High Time International, John. This weekend,
Speaker 1: it's a keen household movie weekend. I'm signing up for
Speaker 1: Excite streaming services. November twelve, that's when Disney Plus comes out.
Speaker 1: You're gonna sign I got a free gave me a
Speaker 1: free up on that early, like two weeks early. I've
Speaker 1: got Disney Plus, Peacock, Hulu, Netflix, the abrama Witz Network.
Speaker 1: What's the abrama Witz networks? You know, like sort of
Speaker 1: super is that money Undercover on Tuesdays at one pm,
Speaker 1: repeat over and over. Lots of people are rushing into that.
Speaker 1: Keithan Rock Nathan joining us now bloom Bug Intelligence media
Speaker 1: analysts with Disney. That's what we're here to talk about. Disney.
Speaker 1: The stock up by six point five percent with an
Speaker 1: earnings beat, and November twelfth, they're joining the streaming wars.
Speaker 1: Gaither your view on the number so far? Yeah, thank you,
Speaker 1: Thank you so much. John So, there was a lot
Speaker 1: to like in Disney's report last night. They're firing on
Speaker 1: all cylinders. But I think, just as we heard Bob
Speaker 1: Iger speak, there's really a streaming first mentality with the management.
Speaker 1: There's a lot of enthusiasm around the Disney Plus launch.
Speaker 1: This is one This is going to be one of
Speaker 1: the most affordable streaming services out there in the marketplace,
Speaker 1: anchored by world class brands like Marvel, Pixar, Lucas Nacio,
Speaker 1: and it's really perfect for the thirty five million US
Speaker 1: households with children who want to immerse themselves in the
Speaker 1: vast world of Disney. I did a long term of
Speaker 1: all study of Disney, and I think I can editorialize
Speaker 1: that they haven't popped like they've popped recently back pushing
Speaker 1: twenty two years. I mean this surge, streaming surge, this
Speaker 1: tiger surge that we've seen, what does that do to
Speaker 1: buy hold cell? Not your by hold cell, but what
Speaker 1: does that do to the street? Is it out front
Speaker 1: because of the pop to ahead of itself? I don't
Speaker 1: think it's ahead of itself. So you're absolutely right, tom
Speaker 1: So for for for the past four years, I mean,
Speaker 1: the stock has been languishing ever since two thousand and
Speaker 1: fifteen when they first spoke about the ESPN subscriber losses.
Speaker 1: And this year's April Investor Day was the real catalyst. Um,
Speaker 1: you know, them announcing the service of the distribution partnerships,
Speaker 1: the content. Everything seems to be kind of working in
Speaker 1: their favor right now. I think in terms of near
Speaker 1: term catalysts, of course the studio is outperforming um, but
Speaker 1: more than anything, I mean, streaming is definitely going to
Speaker 1: be the number one catalysts. I think in general, the
Speaker 1: street is expecting about a ten million subscriber number by
Speaker 1: the end of this year. Disney itself refused to give
Speaker 1: any early reads on subscribers. They've only pointed to their
Speaker 1: longer term sixty to ninety million Disney plus subscriber goal.
Speaker 1: But that's over five years. But I think the first
Speaker 1: reads would be in in the first quarter of their
Speaker 1: fiscal first ter um when as management decides to give
Speaker 1: any early number, do we give you a little bit
Speaker 1: of research here right now, Lisa, November one, Frozen two.
Speaker 1: Do you go to the six pm show or the
Speaker 1: nine PM show? How about the never show? Oh no,
Speaker 1: come on, You're gonna go see the Frozen two in
Speaker 1: the theater the first time I got to gotta pay
Speaker 1: forty eight dollars a ticket or whatever. How big? How
Speaker 1: big is Frozen two to all this? Oh? It is?
Speaker 1: It is massive. I mean if you just heard management yesterday.
Speaker 1: So they actually reported a seventeen percent increase in the
Speaker 1: operating operating income for their park segment. But really the
Speaker 1: driver there was not so much the parks, but it
Speaker 1: was more the merchandise at thirty six percent increase in
Speaker 1: Frozen and Toy Story merchant. So this is huge. Brando
Speaker 1: with boys. You were in Elson and my older son
Speaker 1: said to me when Frozen one was hot, all the
Speaker 1: girls love Frozen. My favorite favorite movie is my favorite
Speaker 1: movie is hot? What what is that? It's not It's
Speaker 1: just not appropriate for radio. Like Frozen. How it's up
Speaker 1: continuing at is very cool, but what's serious is Frozen
Speaker 1: two moves the needle. I think that there's also an
Speaker 1: interesting question about fixed expenses for Disney and how much
Speaker 1: UH they're going to bring in versus pay out. There
Speaker 1: was a story about how the fact they have come
Speaker 1: to an agreement Amazon, Samsung and LG Devices and in
Speaker 1: order to stream their service they already have agreements with
Speaker 1: Apple and Roku. How much of a drag will that be?
Speaker 1: Um So. I think the Amazon deal absolutely adds to
Speaker 1: their distribution muscle. They've already pointed investors to the fact
Speaker 1: that there is going to be some upfront costs with
Speaker 1: the streaming service. I mean, this always happens when you
Speaker 1: need to build up the scale. Um So. They've pointed
Speaker 1: to the streaming services not actually bringing in any profits
Speaker 1: for at least another three to four years. So is
Speaker 1: when Disney Plus breaks even, it could break even earlier
Speaker 1: if if they totally hit the ground running with the
Speaker 1: subscriber number. So we'll have to wait and watch. Katha
Speaker 1: always great to get your thoughts. Keithan Rock and Bloomberg
Speaker 1: Intelligence media analyst went again on the economic data, I'm
Speaker 1: pleased to say, joining us right now Atlanta FED President
Speaker 1: Raphael Bostick sitting down with Bloomberg's Michael McKay and Alex
Speaker 1: Steele Now are Bloomberg television and radio listeners and joining
Speaker 1: us here for a special conversation is Raphael Bostic, president
Speaker 1: of the Atlanta Fed. You're the perfect one to help
Speaker 1: us answer all these questions. You said yesterday that you
Speaker 1: would probably dissented and voted against an interest rate cut
Speaker 1: at the last f O MC meeting. Why. Well, one
Speaker 1: of the things that we try to do in the
Speaker 1: sixth district is really get a sense of what's such
Speaker 1: rejective of the economy and how much are the risks
Speaker 1: out there being taken on by businesses and consumers, And
Speaker 1: in my canvassing of our district and hearing from our directors,
Speaker 1: we just weren't hearing that in a material way. And
Speaker 1: so we had already done a fair amount of accommodation.
Speaker 1: We've moved twice already, and it was my view that
Speaker 1: we really should just let that go and let's wait
Speaker 1: and see how it how it plays out, and if
Speaker 1: then then if we see that there's more need for accommodation.
Speaker 1: We could act at that point, We've already done a lot,
Speaker 1: and I was willing to just let's see how that
Speaker 1: plays through the economy. Well, you concerned that rates are
Speaker 1: too low now that there's an issue with where rates
Speaker 1: are with inflation quiesced, what would be the problem? Well,
Speaker 1: I think, first of all, I think we are slightly
Speaker 1: accommodative UM, and that's fine. I don't think that our
Speaker 1: position now is likely to spark the economy to get
Speaker 1: into an overheated mode where we might expect there to
Speaker 1: be some weakening in response to that. I worry a
Speaker 1: lot about the policy space that we have. H We
Speaker 1: are at a half to three one and three quarters.
Speaker 1: That's not a lot of space when you think historically
Speaker 1: what responses have been in the recessionary to a recession.
Speaker 1: We don't have that much space, and so I want
Speaker 1: to make sure that when we do deploy our tools,
Speaker 1: they're they're deployed in maximum effect. Uh. In a way
Speaker 1: that leaves us with with policy apps moving forward. You
Speaker 1: mentioned the R word recession, and Alex was just saying
Speaker 1: you're the perfect one to answer the question. Uh, there
Speaker 1: seems to be a change in mood certainly on Wall
Speaker 1: Street and the idea of UH downturn being priced out
Speaker 1: now people are getting optimistic. Have you seen that kind
Speaker 1: of change on the ground in your district or did
Speaker 1: Wall Street see something that the businessmen men you talked
Speaker 1: to didn't see. So, my business contexts have been consistent
Speaker 1: through this entire year. That consumer has been solid, their
Speaker 1: revenues have been solid, their profits have been pretty stable.
Speaker 1: Actually for many it's more than what they expected in
Speaker 1: and at the beginning of this year, And what they've
Speaker 1: told me is that they're expecting that to continue on
Speaker 1: into So I've not really heard much of a change
Speaker 1: in perspective. They've always been in that positive space and
Speaker 1: that's pretty much what we're expecting moving forward. And to
Speaker 1: add on to that, to the speech you gave yesterday,
Speaker 1: we'll have a quote from it that sort of encapsulates
Speaker 1: that to trade policies impacting the business sector as a
Speaker 1: whole remains modest, flowing capital expenditures by a few percentage
Speaker 1: points in leading to a small change in overall employment. So,
Speaker 1: like you were saying, it's not really doing that much.
Speaker 1: So walking through what higher yields do then, because we
Speaker 1: freak out like when we go from you know, one
Speaker 1: point three to one point eight and there's lots of
Speaker 1: volatility Wall Street at the market, we freak out, what
Speaker 1: what does it mean for you? Well, for for me
Speaker 1: and and for many businesses, I think they take a
Speaker 1: longer view. So this, this day to day volatility is
Speaker 1: not stuff that really affects them because it's not what's
Speaker 1: driving their consumers when they walk into their stores to
Speaker 1: buy goods. So so I think that you take a
Speaker 1: longer arc. And when you see the longer arc, the
Speaker 1: risks they're out there. There's uncertainty that's out there, much
Speaker 1: of it hasn't actually been resolved in ways so that
Speaker 1: we know what the impacts are. And what I'm hearing
Speaker 1: from businesses is that they're gonna they understand their uncertainties.
Speaker 1: That's a wide set of them. So they're making contingency plans.
Speaker 1: They're starting to think about diversifying supply chains and ways
Speaker 1: to get goods to market. But it is not with
Speaker 1: a level of panic or consternation that that uh, you
Speaker 1: know I've heard articulated in kind of dis context. Well,
Speaker 1: when you look at when you look at the uncertainty
Speaker 1: out there, and everybody blames it on the trade wars
Speaker 1: and things like that. Are companies saying that they need
Speaker 1: to expand but they're afraid to or are they pretty
Speaker 1: much comfortable with the resources the supply they have to
Speaker 1: meet demand. I think it's more the ladder you. So,
Speaker 1: for many businesses was a record year in terms of performance,
Speaker 1: and so staying at a record level is not a
Speaker 1: bad thing. And so I think that staying at this
Speaker 1: level is something that businesses would be comfortable with. Of course,
Speaker 1: if there were opportunities to grow and do things that
Speaker 1: were pre they would want to do that. But in
Speaker 1: that context, the biggest constraint that I'm hearing them say
Speaker 1: is finding quality labor, finding workers. The labor market is tight,
Speaker 1: I mean, and they're looking for ways to get the
Speaker 1: right people into positions so they can take advantage of opportunities.
Speaker 1: If you're watching Boomberg Television or listening to Boomberg Radio,
Speaker 1: we want to welcome you. We're speaking with the Land
Speaker 1: of Fed President Raphael Bostick. Where is the labor market
Speaker 1: most type? What sectors? So um I would say, not
Speaker 1: in sectors, I would say at segments of the labor market.
Speaker 1: So one of the things that we're hearing a lot
Speaker 1: of is trying to get entry level workers, like get
Speaker 1: in restaurants are like has become extremely competitive, and so
Speaker 1: businesses are changing their their screening requirements. Drug tests in
Speaker 1: some sense are being dropped, looking at prison records as
Speaker 1: being dropped. We've even heard of a restaurantur who is
Speaker 1: hiring you and you started on the same day. So
Speaker 1: they're getting very restive in terms of trying to get
Speaker 1: that entry level worker, and the wage pressures for that
Speaker 1: segment are significant. Certainly, we know that engineers, tech people, nurses,
Speaker 1: places where either the economy is super super uh strong
Speaker 1: for that and looking for those sorts of workers, or
Speaker 1: where we know we have shortages of workers in the
Speaker 1: case of nurses for example, or truck drivers, we're seeing
Speaker 1: definite competition and that's showing up on wages as well. Well.
Speaker 1: The question, though, is why aren't wages overall rising given
Speaker 1: where we are with unemployment. Is there a lot of
Speaker 1: extra slack out there or have we just gotten used
Speaker 1: to a low wage environment. So I think it's actually
Speaker 1: a combination of a number of factors. When I first
Speaker 1: started this job two and a half years ago, yeah,
Speaker 1: I asked this question. I was a new guy, I
Speaker 1: haven't hadn't talked to businesses. I was like, we've got
Speaker 1: to find out why this is happening. Because if you're
Speaker 1: if you're complaining about shortage of workers, obviously just pay
Speaker 1: them more. You'll get you you'll compete better. And some
Speaker 1: of them said, look, I remember seven years ago when
Speaker 1: I had to lay off, you know, a third of
Speaker 1: my staff. That was so painful. I'm going to be
Speaker 1: very reticent to quickly take people on that way. Others
Speaker 1: said that, um, look, today's workers, many of them aren't
Speaker 1: looking for wages. They're looking for flexibility in the work schedule.
Speaker 1: They're looking to bring their pet to work. They're looking
Speaker 1: for a lot of different things to allow pet to work.
Speaker 1: Oh yeah, bring bring you got a cat, a cat,
Speaker 1: the cat person too, so we can we have that
Speaker 1: in but but yeah, so so finding ways to make
Speaker 1: people work in their comfortable environment, and that's something that
Speaker 1: that's happened a lot a lot as well. A third
Speaker 1: is on the consumer side. So consumers also remember from
Speaker 1: the Great Recession that you know, the three desks next
Speaker 1: to them used to have people in it, and now
Speaker 1: they don't anymore. So they're so their willingness to push
Speaker 1: wages has actually changed a lot as well. Now that
Speaker 1: was that was ten years ago, almost actually more and
Speaker 1: ten years ago at the beginning. And what's happening is
Speaker 1: that that psychology, the further way you get, the more
Speaker 1: you get into a more regular type of mindset and
Speaker 1: more historically normal mindset. And so what we're seeing now
Speaker 1: is we're seeing pretty significant If you look at our
Speaker 1: our wage tracker that we have on our website, you're
Speaker 1: seeing significant jumps in um wages for people who are
Speaker 1: changing jobs. Right, So this this notion that you're starting
Speaker 1: to get some energy in the churn of the labor force,
Speaker 1: that's an important sign that that things are actually not
Speaker 1: so irregular and that we may be getting back into
Speaker 1: a more normal phase. In this political season, there's a
Speaker 1: lot of talk about two Americas and how some are
Speaker 1: doing really well, particularly urban areas. You've got some big
Speaker 1: urban areas in your district Atlanta, Miami, Tampa, Birmingham, and
Speaker 1: you've got some very poor areas. Are there two America's?
Speaker 1: Do people see things differently as you travel around your district?
Speaker 1: There are definitely multiple America's, right, So you know, as
Speaker 1: I've gone around, and our district is incredibly diverse. We
Speaker 1: have the big places, we got a lot of smaller places.
Speaker 1: We look at the map, most of my area is
Speaker 1: not the big cities. It's smaller towns. It's rural, it's agricultural,
Speaker 1: and and there are places many of them used to
Speaker 1: have like a mill that used to employ a lot
Speaker 1: of workers. But as the economy has evolved, as we can,
Speaker 1: we've become more global um, those things have disappeared. And
Speaker 1: so you go to places where South Georgia or northern Alabama,
Speaker 1: north western Alabama, or the eastern half of Tennessee. Once
Speaker 1: you get past um Chattanooga and the like, you see
Speaker 1: places where they're not experiencing three percent growth and they're
Speaker 1: got population stagnation and their demographics are aging very rapidly,
Speaker 1: and they're facing a different kind of challenge than you
Speaker 1: faced in Nashville or in midtown Atlanta, where where my
Speaker 1: bank is. And so we try to talk about We
Speaker 1: talked to them differently about the economy and about what
Speaker 1: things they need. What are the skills that might be
Speaker 1: required for being competitive in the workforce of tomorrow. How
Speaker 1: do you think about the region to UM to really
Speaker 1: project that reason and be in the mind of employers
Speaker 1: that are looking for that next place to open. And
Speaker 1: so it's a very different conversation that we have in
Speaker 1: some of the hot places, where it's how do you
Speaker 1: preserve affordability and access to neighborhoods and getting amenities more
Speaker 1: evenly spread across the area. We're talking with Atlanta FED
Speaker 1: President Raphael Bostika and Blueberg Television and Radio worldwide. Uh,
Speaker 1: what do you do about that? Then? How do you
Speaker 1: can you help these other areas, not necessarily the FED,
Speaker 1: but can they be helped with economic policies? Or have
Speaker 1: we moved on to a time period where you have
Speaker 1: to live in the bigger cities if you want to
Speaker 1: see economic growth. So I actually think you can do
Speaker 1: something about this. So one is let's make sure that
Speaker 1: the people who are living in these places that have
Speaker 1: stagnated actually know where the opportunities are. One of the
Speaker 1: senses that I've had is there's so much discussion about
Speaker 1: you know, these global economy things are changing, things are changing,
Speaker 1: and in many instances it just stops there and it
Speaker 1: doesn't say, well, change actually imposes costs, but it also
Speaker 1: brings opportunities and you can position yourself to take advantage
Speaker 1: of those opportunities. I go to a lot of places
Speaker 1: and they don't know what the opportunities are. They've not
Speaker 1: had people have that conversation with them. So that's the
Speaker 1: first thing. Because there are things that these like automation,
Speaker 1: all these new developments, jobs come with them. Those jobs
Speaker 1: have a different set of skills, and we need to
Speaker 1: make sure that they understand what those skills are, and
Speaker 1: then that we also have pipelines of pathways so they
Speaker 1: can get those skills. Because you know, historically in the
Speaker 1: US we've always had technology technological disruption. So everybody used
Speaker 1: to be a farmer. Technology can and we don't need farmers.
Speaker 1: But in those days, we don't need as many farmers.
Speaker 1: In those days, UM, the skills that you need to
Speaker 1: do farming weren't so different than skills you needed to
Speaker 1: work in a factory. Today, the skills you need to
Speaker 1: do many of the jobs that are being disrupted out
Speaker 1: are different, and so we need to have robust and
Speaker 1: mature training programs and facilities to allow people to get
Speaker 1: those skills. Is there anything that you can do well,
Speaker 1: We don't do that at the favernment. UM, it needs
Speaker 1: to be institutional it needs to be institutionalized. Sometimes that
Speaker 1: will be the public sector of the government, other times
Speaker 1: it will be the private sector. So I've had a
Speaker 1: director in uh from my Nuance branch. She ran a hospital.
Speaker 1: She said, we don't have enough nurses. She set up
Speaker 1: a school and and so so what we're seeing is
Speaker 1: many different blends private sector, public sector, public private partnerships,
Speaker 1: nonprofits can get involved. And so one of the things
Speaker 1: that we try to do when we go around is
Speaker 1: really try to understand what's in that community that can
Speaker 1: come together to be the building blocks for those strategies
Speaker 1: to make that change. Well, let's bring it back to
Speaker 1: monetary policy. Chairman Powell has talked about leaving rates low
Speaker 1: to help those people out as much as possible, to
Speaker 1: get the expansion into the corners of the economy. Where
Speaker 1: would you like to see how comfortable are you? But
Speaker 1: we put this way, with interest rates where they are,
Speaker 1: and how long would you be able to leave them
Speaker 1: there in order for that to happen. But first of all,
Speaker 1: I think it's really great that the chair is willing
Speaker 1: to talk about the distributional impacts of monetary policy and
Speaker 1: the fact that there might be distributional impacts. We know
Speaker 1: that in economic cycles there are certain segments of our
Speaker 1: population that are the last ones to benefit, and so
Speaker 1: the longer that you can have a growth cycle, the
Speaker 1: more possibilities and opportunities there are for that group to
Speaker 1: become part of the labor force and labor market. My
Speaker 1: biggest concern is that if you run low and the
Speaker 1: market gets too hot. Almost every time we get to
Speaker 1: a place where the markets too hot, the labor market
Speaker 1: gets too tight. UM. That's usually a signal that businessister
Speaker 1: taking risks, and we often will find that there will
Speaker 1: be a recession that comes after that. And when that happens,
Speaker 1: it is often the case that UM, the last ones
Speaker 1: in are the first ones out, so so the benefits
Speaker 1: UM wind up not being as great. So one of
Speaker 1: the things I'm hoping for is, let's get sustainable growth.
Speaker 1: Let's have this go along. Does have go in the
Speaker 1: steady way that we don't get to an overheating position,
Speaker 1: so that when we get those new jobs, their jobs
Speaker 1: that will sustain. Now, for me, that's that's sort of
Speaker 1: part and personal what we're trying to do writ large,
Speaker 1: and my hope is that we're not going to see
Speaker 1: those signs of overheating. We're not going to see pockets
Speaker 1: of the of the economy where it looks like there's
Speaker 1: significant risk taking that's building up that might spill over
Speaker 1: into a broader economic experience or event. So that's that's
Speaker 1: kind of where where we are right now, where my
Speaker 1: head is at Atlanta Fed President Ralphael Bostic, Thank you
Speaker 1: so much. It was really great to spend this time
Speaker 1: with you and for all of our Bloomberg to television
Speaker 1: and radio listeners. Thanks for joining us as Atlanta FED
Speaker 1: President Raphael Bostic. Alex still there alongside Michael McKee and
Speaker 1: the Atlanta Fed President Raphael Bostick, and really interesting conversation
Speaker 1: another Fed official, Tom really talking up the US economy
Speaker 1: and most specifically the US labor market. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keane. Before the podcast, you
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio