WEBVTT - Bloomberg Surveillance TV: April 5, 2024 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:38.000 Terminal and the Bloomberg Business app. The payrolls report comes 0:00:38.000 --> 0:00:39.639 in at three hundred and three thousand. It's a big 0:00:39.680 --> 0:00:43.040 upside surprise again, two fourteen was the estimate. If you 0:00:43.080 --> 0:00:45.560 work your way through the report, the unemployment rate comes 0:00:45.560 --> 0:00:48.160 down to three point eight percent, down from three point nine. 0:00:48.440 --> 0:00:51.839 Average AULIY earnings month over month zero point three, in 0:00:51.880 --> 0:00:54.720 line with the estimate of zero point three. The equity 0:00:54.760 --> 0:00:56.680 price action looks like this. We're positive a third of 0:00:56.680 --> 0:00:59.040 one percent on the SMP. We'ret by zero point four 0:00:59.040 --> 0:01:01.840 percent on the NASA. The bomb market price sanction, if 0:01:01.880 --> 0:01:04.120 you switch on the board, looks a little something like this. 0:01:04.200 --> 0:01:06.240 Yields up by seven basis points on a ten year 0:01:06.400 --> 0:01:08.479 getting close to the four forty again after breaking through 0:01:08.520 --> 0:01:10.880 that level earlier. On this week, the two year yield 0:01:10.920 --> 0:01:12.960 high by four or five basis points, getting very close 0:01:12.959 --> 0:01:14.840 to four seventy. And I'll give you a snapshot of 0:01:14.840 --> 0:01:17.039 foreign exchange off the back of this. I'll make it simple. 0:01:17.280 --> 0:01:20.640 Dollars stronger against absolutely everything in G ten. You're a 0:01:20.680 --> 0:01:23.440 dollar at the moment, one away fifteen to break down 0:01:23.480 --> 0:01:24.920 and react to some of this, some place to say 0:01:24.920 --> 0:01:27.080 that joining us from black Rock is Jeff Rosenberg, and 0:01:27.160 --> 0:01:29.960 joining us alongside him is Muhammad ol Area Mohamma. You've 0:01:29.959 --> 0:01:31.320 had a bit of time to chew over this one. 0:01:31.480 --> 0:01:32.480 What's your big takeaway? 0:01:32.800 --> 0:01:33.039 John? 0:01:33.160 --> 0:01:37.679 It is a job report that confirm US economic exceptionalism. 0:01:38.319 --> 0:01:42.360 You're having a strong supply side, strong demand side. So 0:01:42.480 --> 0:01:44.679 if you look at the economy, the economy continues to 0:01:44.720 --> 0:01:45.800 benefit from. 0:01:45.640 --> 0:01:47.000 The favorable supply shock. 0:01:47.680 --> 0:01:49.280 If you look at the FED, that's not going to 0:01:49.360 --> 0:01:52.400 change much what the Fed is thinking. And believe me 0:01:52.640 --> 0:01:56.600 that the administration will be celebrating this report. So overall, 0:01:56.720 --> 0:01:59.200 a very strong report that just confirms that the US 0:01:59.680 --> 0:02:02.800 is an economic exception among the advanced economies. 0:02:02.920 --> 0:02:05.280 Jeff Rosenberg, do you believe this labor market report is 0:02:05.280 --> 0:02:07.560 a report this Federal Reserve can fully embrace. 0:02:07.840 --> 0:02:10.160 Well, it can fully embrace it, but you know, it 0:02:10.240 --> 0:02:12.600 is a little bit challenging around the timing issue. 0:02:12.600 --> 0:02:15.080 I think the key thing in this report we. 0:02:15.000 --> 0:02:18.720 Haven't talked about is labor force participation and its impact 0:02:19.080 --> 0:02:22.280 offsetting some of the wage concerns. And I think that's 0:02:22.440 --> 0:02:24.480 kind of the good news. Lisa, you asked why a 0:02:24.480 --> 0:02:26.760 little bit of a more modest reaction out of the 0:02:27.240 --> 0:02:30.200 bond market for such a headline beat, And I think 0:02:30.240 --> 0:02:32.919 that's it is that you're seeing kind of the well, 0:02:32.960 --> 0:02:36.120 it's a strong labor market, but the wage picture isn't, 0:02:36.160 --> 0:02:38.400 at least in terms of what you see in the 0:02:38.919 --> 0:02:42.680 print today, ticking up beyond expectation, so that relieves a 0:02:42.720 --> 0:02:44.239 bit of fears. And then you look at that labor 0:02:44.280 --> 0:02:48.200 force participation rate chicking up. That's good news for the 0:02:48.240 --> 0:02:48.800 wage front. 0:02:49.080 --> 0:02:51.520 Given all of that, though, Mohammad why cutt, I'm going 0:02:51.560 --> 0:02:53.359 to go back to what Neil Kushkari was saying. Given 0:02:53.400 --> 0:02:55.079 the fact that the US labor market seems to be 0:02:55.160 --> 0:02:58.160 doing just great, what is the onus on the federal 0:02:58.200 --> 0:03:01.200 reserve to ease policy that does seem like it's hampering 0:03:01.440 --> 0:03:02.160 this economy. 0:03:02.639 --> 0:03:06.200 It's because policy acts with a lag. These favorable supply 0:03:07.160 --> 0:03:10.160 sharks are not going to last forever, and there are 0:03:10.200 --> 0:03:13.320 signs of weakness elsewhere. So you've got to navigate this. 0:03:14.200 --> 0:03:16.360 You know, you've heard me say this over and over again. 0:03:17.200 --> 0:03:19.600 The mistake the FED will make, if it makes a mistake, 0:03:19.800 --> 0:03:24.400 is being overly data dependent, becoming a play by play commentator, 0:03:24.800 --> 0:03:26.920 and not looking through various things. 0:03:27.000 --> 0:03:28.120 So you've got to look forward. 0:03:28.200 --> 0:03:32.040 Yes, we're having a wonderful supply shock has a lot 0:03:32.080 --> 0:03:35.360 to do with immigration, and that's why, as Jeff Wrighty says, 0:03:35.760 --> 0:03:39.520 the wage numbers are restrained. They're still not low enough, 0:03:39.520 --> 0:03:44.000 but they're restrained. But if you go forward six twelve months, 0:03:44.480 --> 0:03:47.920 you've got to be conscious that a lot of what 0:03:48.000 --> 0:03:51.360 has powered the US so far, including excess savings, is 0:03:51.400 --> 0:03:51.960 going away. 0:03:52.360 --> 0:03:54.720 Jeff, what's your take on that. The argument that Neil 0:03:54.760 --> 0:03:57.640 Kashkari made yesterday, if the Minneapolis said, why cut rates 0:03:57.840 --> 0:03:59.960 if you have robust economic data and a label more 0:04:00.000 --> 0:04:02.640 mar that seems to be chugging along, especially if you 0:04:02.720 --> 0:04:06.720 do have commodities inflation that people can afford to keep 0:04:06.760 --> 0:04:08.640 paying because they are still employed. 0:04:08.800 --> 0:04:09.000 Yeah. 0:04:09.240 --> 0:04:12.120 I think it's about really the debate between what I 0:04:12.200 --> 0:04:14.840 call and the market calls maintenance cuts to maintain the 0:04:14.880 --> 0:04:18.320 degree of restrictedness. What Muhammad was talking about that you 0:04:18.360 --> 0:04:21.680 don't want the lag in policy to eventually become too 0:04:21.760 --> 0:04:26.280 restrictive by holding real interest rates at these high at 0:04:26.360 --> 0:04:29.400 least relative to historical levels, and the threat that that 0:04:29.480 --> 0:04:32.600 made down the road lead to more tightening than what 0:04:32.680 --> 0:04:36.039 you would otherwise want. But that's different than saying we 0:04:36.120 --> 0:04:39.680 need to calibrate the cuts to a slowdown. And I 0:04:39.720 --> 0:04:43.039 think what Neil Kashgari is talking about is really pricing 0:04:43.080 --> 0:04:45.719 out really what already happened in the bond market. We 0:04:45.760 --> 0:04:49.200 came into the year pricing in seven cuts, we're now three, 0:04:49.640 --> 0:04:52.440 maybe pushing down somewhere between two and three. 0:04:52.640 --> 0:04:54.280 I still think that's. 0:04:53.960 --> 0:04:56.920 Right in the sense of you want to have that insurance, 0:04:56.920 --> 0:05:00.400 and this is a FED that is very much wedded 0:05:00.440 --> 0:05:03.360 to trying to secure the gains of the soft landing. 0:05:03.520 --> 0:05:06.040 Jeff, how dependable do you think this economic data is. 0:05:06.320 --> 0:05:08.720 That's a subject we've revisited a few times over the 0:05:08.800 --> 0:05:10.520 last few months. How dependable do you think it is? 0:05:10.760 --> 0:05:12.479 Well, you know, it's really interesting. 0:05:12.640 --> 0:05:17.359 The back dropped what's going on in the movement to 0:05:17.560 --> 0:05:21.360 reprice away from seven cuts to three cuts is that 0:05:21.440 --> 0:05:25.799 you had this debate between two big sources of data, 0:05:25.839 --> 0:05:28.560 both for growth and for the labor market. On the 0:05:28.560 --> 0:05:31.520 growth side, it was the debate between GDP and GDI. 0:05:32.120 --> 0:05:35.320 GDI had been lagging the strength that was shown up 0:05:35.360 --> 0:05:37.360 in GDP that gave a lot of people in the 0:05:37.360 --> 0:05:40.080 market a lot of evidence that, hey, this economy is 0:05:40.120 --> 0:05:41.360 a lot weaker than we thought. 0:05:41.400 --> 0:05:42.520 What did we learn. 0:05:42.600 --> 0:05:48.240 Most recently, GDI rose to GDP and validated the stronger story. Similarly, 0:05:48.400 --> 0:05:51.240 on the labor market, you had the gap between the 0:05:51.240 --> 0:05:55.080 household and the establishment survey and a lot of people saying, oh, 0:05:55.160 --> 0:05:59.320 the establishment survey, the headlines is overstated, look at the 0:05:59.320 --> 0:06:00.479 household weakness. 0:06:00.640 --> 0:06:01.799 Well, now what we're. 0:06:01.640 --> 0:06:04.520 Seeing, and that's the latest theme is no, it's the 0:06:04.520 --> 0:06:06.800 immigration that's not being captured. 0:06:07.000 --> 0:06:08.839 The labor market is much stronger. 0:06:08.960 --> 0:06:12.800 So in both cases, with respect to alternative data, you 0:06:12.920 --> 0:06:15.880 had a debate. That debate is pushing more on the 0:06:15.920 --> 0:06:18.680 settle of the side of no, this is actually a 0:06:18.720 --> 0:06:21.320 stronger economy than we thought, and that's what's validating this 0:06:21.440 --> 0:06:23.960 kind of move to push back from seven cuts to 0:06:24.080 --> 0:06:25.159 three or less cuts. 0:06:25.200 --> 0:06:27.040 It's the supply side story. I think we all struggle 0:06:27.040 --> 0:06:28.800 with Mohammed when you restart to think about it. What 0:06:29.240 --> 0:06:31.880 the Federal Reserve is telling you is that basically, don't 0:06:31.880 --> 0:06:35.000 worry about strong data like payrolls growth of three hundred 0:06:35.040 --> 0:06:37.560 and three thousand, because it's not coming along with stronger 0:06:37.560 --> 0:06:40.160 weight growth off the back of that. Because we're embracing 0:06:40.160 --> 0:06:43.040 this big supply side phenomenon. At the same time, ihmbit, 0:06:43.040 --> 0:06:45.160 they're also pointing to the labor market as evidence they 0:06:45.160 --> 0:06:49.360 are sufficiently restrictive, and I struggle to reconcile the two things. 0:06:49.400 --> 0:06:51.520 Can you reconcile the two things? How can you use 0:06:51.520 --> 0:06:55.040 something as evidence of being sufficiently restrictive but also acknowledge 0:06:55.080 --> 0:06:57.279 the majority of it is supply driven. 0:06:57.440 --> 0:07:00.920 Because they're trying to have maximum optionality John, and that's 0:07:00.960 --> 0:07:03.400 what they want. It's the same thing that led Chair 0:07:03.440 --> 0:07:07.120 Pale at Stanford to say, on the one hand, the 0:07:07.160 --> 0:07:10.120 inflation story has not changed after the harder than expected 0:07:10.160 --> 0:07:12.960 prints in January February, But on the other hand, we 0:07:13.000 --> 0:07:15.280 need better, we need more evidence that actually the inflation 0:07:15.320 --> 0:07:17.320 story is what the inflation story, what we think the 0:07:17.360 --> 0:07:20.200 inflation story is. Look, I would be doing the same thing. 0:07:20.280 --> 0:07:24.680 They are trying to maintain optionality, and they are having 0:07:24.760 --> 0:07:28.920 competing claims. Also, don't forget that the positive domestic supply 0:07:29.120 --> 0:07:34.520 side story is countered by a very negative international supply 0:07:34.680 --> 0:07:37.280 side story, so they've also got a balance these to 0:07:37.440 --> 0:07:37.960 things out. 0:07:38.280 --> 0:07:40.760 Mohammed, I obstruck by what you said a while back, 0:07:40.800 --> 0:07:42.400 where you were saying that this is going to be 0:07:42.440 --> 0:07:44.840 a federal reserve that ultimately will probably accept a two 0:07:44.880 --> 0:07:48.160 points something inflation rate. If you take a look at 0:07:48.640 --> 0:07:51.679 the preliminary bond market action after this report, and understanding 0:07:51.720 --> 0:07:53.800 that the first reaction is always the right one, this 0:07:53.840 --> 0:07:56.160 bigger cell office in the long end, this is basically 0:07:56.240 --> 0:07:58.480 a kind of confirmation that this market believes that the 0:07:58.520 --> 0:08:00.600 Fed will make good on its promises, actually that it 0:08:00.640 --> 0:08:03.840 will cut rates at some point this year, will allowing 0:08:03.880 --> 0:08:07.440 inflation and growth to continue to run at a somewhat 0:08:07.520 --> 0:08:10.920 hard speed. At what point does that become concerning to you, Muhammad? 0:08:11.040 --> 0:08:15.160 It only becomes concerning Lisa if it the anchors inflation expectations. 0:08:15.480 --> 0:08:19.160 I think there is a slow but show migration in markets, 0:08:19.240 --> 0:08:23.200 even among policy observers and certainly among quite a few 0:08:23.240 --> 0:08:25.960 economists to the view that yes, we're not going to 0:08:25.960 --> 0:08:28.200 get to two percent, We're going to get to above two, 0:08:28.280 --> 0:08:31.160 closer to three, and that's going to be stable. And 0:08:31.200 --> 0:08:35.520 the policy mistake would be to go after two percent 0:08:35.679 --> 0:08:40.400 inflation too quickly. You heard Bill Dudley yesterday and I 0:08:40.440 --> 0:08:42.719 agree with him saying, you know, think more about a 0:08:42.720 --> 0:08:46.120 two and a half percent inflation weight on average. You've 0:08:46.120 --> 0:08:50.120 heard about how asymmetrical defeat is to when it misses 0:08:50.160 --> 0:08:52.240 on one side or the other side on inflation. Look, 0:08:52.280 --> 0:08:56.680 we're going to settle into an inflation world that's higher 0:08:56.720 --> 0:08:59.920 than two percent, and I suspect that that is stable. 0:09:00.800 --> 0:09:04.760 The risk is to try to force it down when 0:09:04.800 --> 0:09:07.520 the economy can sustain a slightly higher one, because you're 0:09:07.520 --> 0:09:08.880 then undermine economic well. 0:09:08.760 --> 0:09:11.560 Being, Which raises this question, Jeff, about at what point 0:09:11.720 --> 0:09:15.880 the bond market will adequately price in a higher inflation future. 0:09:16.000 --> 0:09:18.559 John was talking about the BEMO survey and how there 0:09:18.640 --> 0:09:22.960 essentially is an inherent bias among bond investors to buy duration, 0:09:23.160 --> 0:09:25.920 to buy longer term bonds on selloffs, just simply because 0:09:25.960 --> 0:09:28.720 they believe the FED will achieve their goal and will 0:09:28.720 --> 0:09:31.719 continue to set rates at a lower rate. How much 0:09:31.720 --> 0:09:33.200 can you get behind that and how much do you 0:09:33.240 --> 0:09:35.520 push back and say, no, there is something else afoot 0:09:35.800 --> 0:09:37.959 in the long end of the treasury curve that makes 0:09:38.000 --> 0:09:38.720 you not like them. 0:09:38.960 --> 0:09:41.920 Yeah, I really think that with rates at this level, 0:09:42.120 --> 0:09:45.720 that we're going to shift away from that view that 0:09:45.800 --> 0:09:48.880 the long end is the best place for the hedge. 0:09:49.040 --> 0:09:50.680 You know, it used to be a long time ago 0:09:50.720 --> 0:09:53.640 that flight to quality meant that the curve would steepen, 0:09:53.760 --> 0:09:56.480 that the best performance in terms of yield change would 0:09:56.480 --> 0:09:57.439 be in the short end. 0:09:57.559 --> 0:09:59.200 And I think that's the environment that we're in. 0:09:59.240 --> 0:10:01.560 If you go back a year ago during SVB, it 0:10:01.640 --> 0:10:03.840 was exactly what you saw happen in the curve. The 0:10:03.840 --> 0:10:07.200 best performance in terms of yield change for your hedges, 0:10:07.360 --> 0:10:08.840 you know, granted that you need to have the right 0:10:08.920 --> 0:10:12.120 notional amount to make this a fair comparison, happened in 0:10:12.160 --> 0:10:15.600 the front end. The strongest negative stockbond correlation by bond 0:10:15.640 --> 0:10:18.160 maturity was in the two year, the weakest was in 0:10:18.200 --> 0:10:20.720 the thirty year. And I think that's the environment that 0:10:20.760 --> 0:10:23.760 we're in, and as we start to see more evidence. 0:10:23.320 --> 0:10:24.920 Of that, that's going to help. 0:10:25.080 --> 0:10:28.320 If you will to bring back in some term premium 0:10:28.320 --> 0:10:31.280 because part of the flattening of the term premium was 0:10:31.720 --> 0:10:34.520 the pinning of zero interest rates in the front end, 0:10:34.520 --> 0:10:36.920 which meant that a flight to quality had to be 0:10:36.960 --> 0:10:38.720 in the back end because you didn't have the room 0:10:38.760 --> 0:10:40.880 to run in the front end. With a level of 0:10:40.920 --> 0:10:43.560 front end inversion that we have today, you go back 0:10:43.600 --> 0:10:46.880 to that earlier kind of textbook that flight to quality 0:10:46.960 --> 0:10:50.280 is in the front end and a steepener, and that 0:10:50.720 --> 0:10:52.400 I think is going to help to bring back a 0:10:52.480 --> 0:10:55.760 higher level of term premium, more consistent with the inflation 0:10:55.880 --> 0:10:58.160 narrative we just heard from Muhammad. 0:10:57.679 --> 0:10:59.040 Interest In Jeff, before you go, I want to talk 0:10:59.040 --> 0:11:01.000 about Stokes with you sell. Just to put a bow 0:11:01.040 --> 0:11:02.719 on it, is this a stock market front of the 0:11:02.800 --> 0:11:03.800 Job's report this morning? 0:11:03.960 --> 0:11:04.160 You know? 0:11:04.240 --> 0:11:05.960 I think it's it's okay. 0:11:06.160 --> 0:11:08.360 I think when you look at the stock market, what 0:11:08.400 --> 0:11:11.120 we've seen this year is a lot less. 0:11:10.840 --> 0:11:13.240 Dependence on the denominator. Right. 0:11:13.280 --> 0:11:17.040 It's last year was all about inflation, inflation expectations, the 0:11:17.080 --> 0:11:20.440 five year, five year driving headline equities. You've seen a 0:11:20.440 --> 0:11:23.160 lot less of that. So I think it's less of 0:11:23.200 --> 0:11:25.080 an issue because so much more of what we've seen 0:11:25.120 --> 0:11:28.600 in stock market domination is really coming out of the numerators, 0:11:28.600 --> 0:11:31.480 coming out of the earnings. The power of secular growers 0:11:31.679 --> 0:11:35.680 really overwhelming the much smaller concerns in terms of the 0:11:35.720 --> 0:11:38.320 degree of change that we're seeing in terms of the denominator. 0:11:38.400 --> 0:11:39.880 Jeff, this was great. I know you've got to run 0:11:40.000 --> 0:11:43.520 because you're at work today. We're not all in Lake Como. 0:11:43.800 --> 0:11:46.640 Jeff Rosenberg of Blackrock has got to run. Mohamma's going 0:11:46.679 --> 0:11:48.000 to stick with us in place to say if you 0:11:48.000 --> 0:11:49.640 aren't just joining, I guess We've got the brilliant Mohamad 0:11:49.640 --> 0:11:51.640 eleven of Queen's College, Cambridge alongside it is to break 0:11:51.679 --> 0:11:54.000 down this job's report, Mohamed, let's get into a piece 0:11:54.000 --> 0:11:57.880 you wrote earlier this week on American exceptionalism for Bloomberg Opinion. 0:11:57.920 --> 0:11:59.959 You've mentioned that a few times, Well, it didn't mention 0:12:00.160 --> 0:12:02.240 was something you pointed to in the pace and really 0:12:02.280 --> 0:12:04.480 really highlighted, and it was a difference between what's happening 0:12:04.520 --> 0:12:07.360 in Germany versus what's happening in the US bond market. 0:12:07.720 --> 0:12:10.079 How important is that spread between the two of the moment. 0:12:10.240 --> 0:12:12.280 It's important, and it's the reason why you seeing the 0:12:12.320 --> 0:12:14.440 dollar strength, then look, John, it's gone up to about 0:12:14.440 --> 0:12:17.360 two hundred basis points. If you look at the last 0:12:17.360 --> 0:12:19.720 three years, the low was ninety seven basis points. 0:12:20.000 --> 0:12:21.320 And it reflects two things. 0:12:21.600 --> 0:12:26.040 One is that US economic growth has and will continue 0:12:26.080 --> 0:12:29.800 to outpace Germany's and the rest of Europe. And the 0:12:29.840 --> 0:12:34.800 second thing is that inflation will come down in Europe 0:12:34.920 --> 0:12:37.120 faster than will in the US. And you may well 0:12:37.200 --> 0:12:41.800 end up with more ECB cuts than the FED, even 0:12:41.800 --> 0:12:43.760 though the ECB didn't hike as much as the FED. 0:12:44.160 --> 0:12:46.880 And I think these the markets are starting to incorporate 0:12:46.920 --> 0:12:50.760 these two things, and that single differential captures really well 0:12:50.960 --> 0:12:51.840 these different factors. 0:12:51.960 --> 0:12:54.120 Yeah, I'm struck by the idea that the US immigration 0:12:54.240 --> 0:12:56.880 story is so different from other areas around the world 0:12:56.920 --> 0:13:00.640 that are facing real demographic problems, like the euroregion. From 0:13:00.640 --> 0:13:03.480 that point of view, when does the euro become a 0:13:03.559 --> 0:13:06.320 problem in terms of a weakness and an important inflation 0:13:06.400 --> 0:13:08.920 issue or is that almost a welcome development so that 0:13:08.960 --> 0:13:12.600 the European region can compete against American exceptionalism. 0:13:12.720 --> 0:13:15.160 It would be at the margin welcome. That I think 0:13:14.880 --> 0:13:18.280 more concerning is what's been happening to oil prices, and 0:13:18.320 --> 0:13:21.160 that's something we don't talk enough about. But when you 0:13:21.240 --> 0:13:24.200 see Brent in the nineties that is going to have 0:13:24.280 --> 0:13:28.640 a stackflationary impact on Europe. You know it's good to 0:13:28.679 --> 0:13:32.320 come and visit and participate in these European conferences. And 0:13:32.360 --> 0:13:37.360 the one here at Umbrosoti is excellent because you hear 0:13:37.760 --> 0:13:42.559 a completely different narrative about the economy, about what's happening 0:13:42.600 --> 0:13:45.480 to the supply side, and you realize how exceptional the 0:13:45.559 --> 0:13:50.040 US is right now, and this divergence is not just 0:13:50.320 --> 0:13:53.120 going to stay, It's going to increase over time. And 0:13:53.160 --> 0:13:56.079 that's something important when people want to rush to fade 0:13:56.080 --> 0:14:01.280 the US in terms of equity allocations elsewhere, just look 0:14:01.320 --> 0:14:02.679 at the underlying stories. 0:14:02.720 --> 0:14:04.040 They are very, very different. 0:14:04.080 --> 0:14:05.840 Lisa, Well, just to put together some of the things 0:14:05.840 --> 0:14:07.800 that you said, Given the fact that we are seeing 0:14:07.800 --> 0:14:09.960 oil prices rally, are you saying that that could be 0:14:09.960 --> 0:14:13.200 a staideflationary shock for the European region and that frankly 0:14:13.240 --> 0:14:16.280 could only widen the divide between Europe and the US. 0:14:16.320 --> 0:14:18.320 It also stands to benefit on the other side from 0:14:18.400 --> 0:14:19.400 higher oil prices. 0:14:19.840 --> 0:14:22.320 Yes, I mean I wouldn't say shock as much as 0:14:22.360 --> 0:14:27.040 I would say is techfilationary headwind? And it makes a 0:14:27.080 --> 0:14:29.840 transition that Europe needs to make, which is the US 0:14:29.920 --> 0:14:34.000 is making from an old, exhausted growth model that depended 0:14:34.040 --> 0:14:36.280 on exports to China, that depended on all sorts of 0:14:36.360 --> 0:14:39.120 things that are no longer happening, to a new growth 0:14:39.160 --> 0:14:44.160 model that stresses things like genitive AI, life sciences, sustainable energy. 0:14:44.480 --> 0:14:48.160 It makes that transition for Europe even harder. So yes, 0:14:48.440 --> 0:14:51.360 it is an important factor to keep in mind because 0:14:51.720 --> 0:14:53.840 Europe doesn't need additional headwinds right now. 0:14:54.000 --> 0:14:56.160 Mohammed, we'd love a final thought on what we got 0:14:56.160 --> 0:14:58.400 this morning and what it makes the FED policy. This 0:14:58.520 --> 0:15:01.520 from Torson Slock of Apollow. He said, the source of 0:15:01.560 --> 0:15:05.000 this strength is easy financial conditions. We are sticking to 0:15:05.040 --> 0:15:07.840 our view that the FED will not cut interest rates 0:15:08.280 --> 0:15:11.120 this year. Mohammed, what's your reaction to that? And do 0:15:11.160 --> 0:15:11.720 you agree? 0:15:11.840 --> 0:15:13.880 So I understand where he's coming from. Me even had 0:15:14.040 --> 0:15:17.280 a non voting member of the FOMC as today role 0:15:17.400 --> 0:15:21.680 market by a statement. I think that if this FED 0:15:22.440 --> 0:15:27.280 is continuously overly data dependent, then maybe we don't get cuts. 0:15:27.520 --> 0:15:31.960 But I'm hoping that they will see through the backward 0:15:32.000 --> 0:15:33.960 looking data and look forward, and I think we will 0:15:34.080 --> 0:15:39.040 end up with two cuts this year. It may not 0:15:39.080 --> 0:15:42.000 start as early as a lot of people thought initially, 0:15:42.040 --> 0:15:43.440 but I do think we will get two cuts. 0:15:44.000 --> 0:15:46.040 Muhammad, this was great. Thanks for making time for us today. 0:15:46.120 --> 0:15:49.160 We appreciate it, as you often do. On pay Ross Friday, Mouhammad, 0:15:49.320 --> 0:15:53.160 Aaron of Queen's College, Camper's working through another upside surprise 0:15:53.280 --> 0:16:06.840 Lisa on the job's report Stolenberg, NATO Secretary General joins us. Now, 0:16:07.000 --> 0:16:08.760 mister Secretary General, want for to catch up with you 0:16:08.800 --> 0:16:10.680 against I just wanted to stand with some comments from 0:16:10.720 --> 0:16:13.400 the French President Emanuel Macron, a series of comments over 0:16:13.400 --> 0:16:15.680 the last month. I'd love your response to He hasn't 0:16:15.760 --> 0:16:18.280 ruled out eventual boots on the ground in Ukraine. He 0:16:18.400 --> 0:16:22.360 recently suggested sending personnel there, including the possibility of training 0:16:22.400 --> 0:16:25.120 troops in the country. I just wondered have you spoken 0:16:25.160 --> 0:16:27.520 to him directly about some of these proposals. 0:16:27.880 --> 0:16:30.360 I'm a regular contact with the French President and all. 0:16:30.280 --> 0:16:35.000 The leaders in the NATO alliance, and what is clear 0:16:35.160 --> 0:16:40.440 is that NATO has all plans of deploying combat troops 0:16:40.480 --> 0:16:45.040 into Ukraine, but we will step up our military support 0:16:45.160 --> 0:16:51.720 to Ukraine with ammunition, equipment, weapons, so Ukraine can liberate 0:16:51.760 --> 0:16:56.480 more territory and Kraveilia and as a sovereign independent nation 0:16:56.600 --> 0:16:58.680 in Europe, because that match for Ukraine, but it also 0:16:58.720 --> 0:16:59.960 matters for all NATO allies. 0:17:00.080 --> 0:17:02.640 So could I be more specific sending person out there 0:17:03.000 --> 0:17:06.479 to train troops? How risky is the training option in 0:17:06.520 --> 0:17:07.000 your view? 0:17:07.280 --> 0:17:09.879 Well, again, as we are providing. 0:17:10.920 --> 0:17:13.960 Training, NATO alas are providing taining for tens of thousands 0:17:14.040 --> 0:17:18.280 of Ukrainian troops, have done that for many years, but 0:17:18.480 --> 0:17:25.600 that space now outside Ukraine. So our support is to 0:17:25.680 --> 0:17:29.800 provide training, it's to provide amnition weapons, but not to 0:17:29.840 --> 0:17:33.200 have combat operations inside Ukraine. 0:17:33.520 --> 0:17:35.720 I want to also ask you about the fact of 0:17:35.760 --> 0:17:38.119 the former president coming back that's looming large on some 0:17:38.160 --> 0:17:40.879 of these partners within NATO, especially when it comes to 0:17:41.200 --> 0:17:44.520 the Ukrainian Defense Contact Group, which is run by the 0:17:44.600 --> 0:17:46.719 United States. Is there a chance you bring that in 0:17:46.840 --> 0:17:50.800 house so that NATO controls that and pretty much safeguards 0:17:50.800 --> 0:17:53.200 it no matter who runs the US. 0:17:53.480 --> 0:17:55.760 Well, we are we agree that the NATO Forum and 0:17:55.840 --> 0:17:59.119 is still admitting this week to start planning for a 0:17:59.200 --> 0:18:05.560 stronger native role in providing and coordinating support to Ukraine. 0:18:05.880 --> 0:18:10.080 The US said contact for Ukraine has played and contains 0:18:10.119 --> 0:18:12.639 to pay a very important role. But I think that 0:18:12.720 --> 0:18:15.840 NATO can ensure that we have even more robust and 0:18:15.880 --> 0:18:20.959 more predictable framework for our support to Ukraine. That's needed 0:18:21.000 --> 0:18:23.639 because Ukrainians need to know that we are there for 0:18:23.680 --> 0:18:27.359 the long haul. So that's what we're starting to do 0:18:27.400 --> 0:18:30.600 at NATO, and I expect the decision before the NATO 0:18:30.640 --> 0:18:31.920 seventeen Washington in July. 0:18:32.520 --> 0:18:35.640 Other other areas you're trying to shore up NATO control 0:18:35.680 --> 0:18:38.320 because you are concerned about political instability. 0:18:38.600 --> 0:18:41.879 Well, my proposals on a stronger NATO role is based 0:18:41.880 --> 0:18:45.080 on the situation on the battlefield in Ukraine, the urgent 0:18:45.200 --> 0:18:50.480 need they have to have more reliable, more predictable support, 0:18:51.000 --> 0:18:54.520 the need we have within NATO to ensure more fair 0:18:54.640 --> 0:18:58.600 burden sharing among allies. Nineteen nine percent of the military 0:18:58.640 --> 0:19:01.960 support comes from NATO, and we how to be sure 0:19:02.000 --> 0:19:06.040 that bern is shared equally among allies. And then of 0:19:06.119 --> 0:19:08.280 course we also need to send a message to Moscow 0:19:08.359 --> 0:19:11.520 that we are there for long hauld because now Preston 0:19:11.560 --> 0:19:14.160 Puttin believes that he can wait us out, he has 0:19:14.200 --> 0:19:16.399 to understand that he will not win on the battlefield. 0:19:16.520 --> 0:19:19.919 He cannot wait out Ukraine and NATO allies and therefore 0:19:20.000 --> 0:19:24.600 stronger institutionalized NATO framework will send that message and then 0:19:24.720 --> 0:19:28.000 force him to sit down and negotiate an agreement where 0:19:28.080 --> 0:19:31.520 Ukraine pervades as a severn independent nation in Europe. 0:19:31.640 --> 0:19:34.880 Secretary General, we talk almost every morning about the potential 0:19:34.960 --> 0:19:37.919 for Ukraine funding in the US to be passed, and 0:19:37.960 --> 0:19:40.960 how it's gotten hung up by politics again and again 0:19:41.080 --> 0:19:41.480 and again. 0:19:41.600 --> 0:19:42.560 How difficult does. 0:19:42.480 --> 0:19:45.040 It make it for you to wrangle support to get 0:19:45.040 --> 0:19:47.919 to one hundred billion dollar fund that you plan for 0:19:48.000 --> 0:19:49.359 the next five years for Ukraine. 0:19:49.560 --> 0:19:53.080