Single Best Idea with Tom Keene: Torsten Slok & Jeffrey Rosenberg

Tom Keene breaks down the Single Best Idea from the latest edition of Bloomberg Surveillance Radio.

In this episode, we feature conversations with Torsten Slok & Jeffrey Rosenberg.

Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:14):
The single best idea on a really really strange Tuesday
before FED meeting. Of course, we'll do the FED meeting tomorrow,
the FED decize we do that at one thirty Wall
Street time, looking forward to that. And my phrase for
this coming off the reading I've done is x post
is after the fact, So the FED takes in the

(00:35):
data and then only x after the fact x post.
But I'm calling it x post squared because not only
are the ex post worried about inflation and what's going
to happen there, the ex post worried about jobs, jobs,
jobs as well, and a squared function means more than
just adding them together. And I think that shows the
bizarreness the uncertainty of this FED meeting. As someone who's

(01:00):
really focused on this is Tursten's Slock of Apollo Global Management.
Let's listen.

Speaker 1 (01:05):
We are absolutely in staflation. If you look at the
quantifications from the Yald budget lab from the pin Waton
budget model from the Tax Foundation, from the Pierson Institute,
they find that inflation over the next twelve months will
go up by one percent is point. So if we
have inflation going up, they fetch would be hiking. But
if at the same time we have less economic activity,
the fetch would be cutting. So executary point which one
is what's really most interesting also about this discussion is

(01:27):
that the dot plot is actually revealing that they're leaning
towards looking at growth, because the dot plot is saying
that the next move is a cut. So if that's
the case, we have our answer right there that they're
fed things that in a stacklation scenario the focus should
be on growth. And that's of course where the Arthur
Burns and the pul Volca discussions will come in, because
is that a mistake If inflation is about to go
remember COPC today's two point eight, and if we add

(01:49):
one percent to then we get to three point eight.
Can you be cutting? If inflationans move up to t
pot two to three point eight. That gets a really
really complex decision.

Speaker 2 (01:56):
Three point eight and that's a much smaller number than
four point zero. I can't imagine a bundled in three
month moving average or four point zero. I don't hear
many people modeling that yet, So it's not get in
front of ourselves. One of the secrets of Bloomberg's surveillance
and we learned this ages ago. We are so humbled

(02:17):
that our guests tune into the show before they're on
the linkage here of the guest guest to guest to
guests can really be valuable. From Blackrock listening to Torsten
Slock at Apollo Global Management, here's Jeffrey Rosenberg.

Speaker 3 (02:31):
I'm not sure Torsten wrote about this or certainly people
are talking about the kind of typical pattern when you
get a shock to the system like the one that
we had, is the soft survey based data starts to
erode reflective of that shock on more of a forward
looking basis, because you're asking people in real time, what

(02:52):
are your expectations going forward? That erodes before the hard
data does. Now, what we're coming off of here, of course,
is that following the soft data in the most last
in the most recent decline in soft data was a
really bad strategy because the soft data ended up not
being validated in the hard data. So we have this
period in time. It's typical where you have the break

(03:14):
between soft data and hard data. And now what we're
going to look for and what the FED we'll talk
about is does it show up in the hard data?
What's critical for FED policy is they're not going to
be forecast depending here. They're not going to forecast and
move policy based on the soft data. They're going to wait,
and by waiting, they will be late, and they're going
to be happy to be late. Well, whether financial markets

(03:37):
are happy that they're late, that'll be a different question.

Speaker 2 (03:39):
Jeffrey Rosenberg fired up there Black Rock as well. I
hope we have them on the FED meeting off to
see what the agenda is. He does their thematic investing
with a particular focus on fixed income. We're focused on
your interest in US on your commute. Thank you so much,
major shout out to ninety two ninety We had a
lot of fun today with a met gala and to

(04:01):
see Clario there, a singer songwriter out of Conquered Carlisle
High School out in the burbs by Blue Jay Recording
out in Conquered in Carlisle, Massachusetts. Very cool, Lincoln there.
Good morning to ninety two nine FM and you're met
Gala on your commune across the nation and of course

(04:21):
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