October 8, 2025 • 27 mins
- Julian Emanuel, Chief Equity & Quantitative Strategist at Evercore ISI
- Ian Lyngen, Head: US Rates Strategy at BMO Capital Markets
- David Deckelbaum, Senior Analyst: Oil & Gas Exploration at TD Cowen
- Gregory Daco, Chief Economist at EY Parthenon
Julian Emanuel, Chief Equity & Quantitative Strategist at Evercore ISI, discusses the US equity rally and whether markets will continue to melt upward. Ian Lyngen, Head: US Rates Strategy at BMO Capital Markets, discusses the Fed's approach to inflation and a weakening labor market and the outlook for rate cuts. David Deckelbaum, Senior Analyst: Oil & Gas Exploration at TD Cowen, discusses the latest developments in the energy market. Gregory Daco, Chief Economist at EY Parthenon, offers his outlook for the US economy.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:11):
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
with Lisa Bromwitz and Amerie hortert join us each day
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(00:34):
Terminal and the Bloomberg Business app. Julian and Manuel, i've
ever call writing the increased probability of a bubble scenario
gives the S and P five hundred and thirty percent
chance to rise to nine K by year end twenty
twenty six. Judian joins us now for more. Julian, good morning,
Good morning. It's going to see you, sir. Let's put
some meat on those bones. Thirty percent chance of nine
K next year on the SMP.
Speaker 3 (00:54):
So if you think about it, actually going back to
y two K right where all this sort of talk
of bubbles originated. Over the course of this last twenty
five years, you have had numerous bubbles, housing, global bond markets,
Chinese equities in twenty fifteen, meme stocks, this, that, and
(01:17):
the other, and frankly, when.
Speaker 4 (01:18):
You add all that up.
Speaker 3 (01:20):
First of all, academia would tell you that those many
bubbles in twenty five years is absolutely impossible. But when
you think about it, it really does speak to the
fact that number one, each bubble was larger than the last.
And from our point of view, when you think about
Y twok a twenty eight times earnings peak, it's very
(01:40):
reasonable to think about thirty times a three hundred dollars
number getting you to nine thousand the s and P
five hundred, But it's bigger, more grander every time.
Speaker 2 (01:52):
Well, let's speak to this moment. They're our whists of
vendor financing. We see a video investing in some of
that companies and in some of that customers, and we
know that money is going to come back.
Speaker 4 (02:01):
To that company.
Speaker 2 (02:02):
What's different about this moment It seems to be the
strength of the balance sheets compared to where we were
in the late nineties and the absence of leverage on
those balance sheets are some of the major tech players.
Does that give this more legs?
Speaker 4 (02:12):
Is that?
Speaker 2 (02:12):
How do you think about things.
Speaker 3 (02:13):
Well, again, when you think about the late nineties, you
were having companies that didn't have earnings, that had barely
had revenues. That we're doing all the spending on capex.
You don't have it this time. Most of the companies,
to your point, have incredibly strong balance sheets. But when
you think about what we've heard in the last couple
(02:35):
of weeks, the memory for us is this Japanese phrase
koretsu cross shareholdings. You saw it in the nineteen eighties
and the early nineteen nineties, which inflated valuations into the
Japanese equity market bubble. And look, if you're not concerned
about the potential knock on effects of all this kind
(02:57):
of cross shareholder relationships, you're probably not paying sufficient attention.
Speaker 1 (03:02):
So it is this bullish or bearish you're talking nine thousand,
which sounds great, let's get in. And then you're talking
about a bubble that's bigger than anything we've ever seen before.
Speaker 3 (03:09):
So and you have to think about it in terms
of cycles. Okay, what we have been very plain about
in getting ourselves around the idea that you invest in
a higher valuation environment is this notion that what end
structural bull markets. And to be very clear of what
(03:31):
we had in February to April was a cyclical bear
market in a structural bull market. What end structural bull
markets is a FED that's going to be hostile. If anything,
the FED is going to be perhaps too friendly to
the point about stalking inflation. Higher yields on the long end.
Amazing how quiescent the tenure yield has been. And then
(03:55):
you know recession that doesn't seem to be in the cars.
But the last thing, the fact that every one of
these capital market cycles has ended with an incredibly robust
corporate action pipeline and we're just starting to see that
form tells you that there's further to run. And as
(04:15):
difficult as it is, and it is difficult to invest
in these valuations, and we think that you need to stay.
Speaker 1 (04:24):
Invested, You need to stay investor in the big tech players.
Does it say anything about the rest of the market
or is that just a completely different story in terms
of the economic drivers the areas outside of AI.
Speaker 3 (04:35):
Well, look and again when you think about the demographics
and know that over the course of the coming decades,
demographics are going to be ahead when and they already
are in places like China. That's part of why AI
has had the impact that it's had. And this year
we're seeing other companies, the adopters and the adapters really
(05:00):
start to talk about how they're essentially driving revenue. We
always knew the cost saving story, but that is very,
very vital and for us. When you look at the
internals of the market, what's different between now in the
late nineteen nineties is that day to day the advancers
are beating the decliners. The troops, the people in the field,
(05:24):
the stocks that nobody talks about are going up day
in and day out, Whereas in the late nineties it
was all tech all.
Speaker 5 (05:31):
The time, seeing billions of dollars being put towards AI,
but we're not seeing billions of dollars being put towards
electricity demand. What happens if the grid can't handle.
Speaker 3 (05:39):
All of this, well, that's absolutely a concern, no question.
Speaker 5 (05:44):
Nine thousand next year, if you can't even develop data.
Speaker 3 (05:47):
Centers, that's a good question. And from our point of view, again,
it's less about the synchronization of the build out then
the fact that there is sufficient liquidity to you know,
really expect the build out to occur over over a time,
(06:10):
and again I go back to this idea, and frankly,
we're seeing it. This week was different. Not only did
you have the largest LBO in history, but I took
taxi cab rise and they started talking about the stock
market and they started talking about AI And that's different.
But that's part of every cycle, and that is how
you get to valuations that go from rational exuberance where
(06:34):
we are now to something more extreme.
Speaker 2 (06:37):
I'm not thrown shade at all, but I think the
camp driver over the past five years has been more
dependable than the strategist on wolf straight in some ways.
Is that fair?
Speaker 3 (06:46):
We got cautious, like everyone. We got bullish in April,
to be clear, but.
Speaker 2 (06:52):
I don't know if that's been the country into kunda
in quite the same way that they were in the
nineteen twenties nineteen thirties.
Speaker 3 (06:57):
Well, what's fascinating again is you go back to February
through April, and the public got this right. Literally for
the first time in the cycle. The public was the
buyer the whole way down. And the reason that the
market has been so unrelenting on the upside is because
professionals have found themselves under invested.
Speaker 2 (07:17):
It was a shoeshine boy in the twenties, remember all
that stuff. The story is really different. The performance chase
gun into year end is coming from Wolf Street. Wouldn't
you agree I'm taking to clients that missed out in
the move in April in the last.
Speaker 3 (07:28):
Six months, I would, But I would also say this
is that the dynamics of trading. They used to call
it day trading in the nineteen nineties. Now you're looking
at high frequency trading. But these zero dazed expiration options,
the gamma effect that causes hedgers to have to hedge
(07:48):
upside intra day is really unlike anything I've seen.
Speaker 2 (07:54):
Stay with us more Bloomberg surveillance coming up after this.
Let's turn to the Federal Reserve traders looking ahead to
the FMC minutes due out at two pm Eastern time
in Lincoln of BIMO writing twenty five basis point cuts
in October and December are already a foregun conclusion as
(08:17):
long as there isn't a more dramatic down to in
risk assets in joints now for more income mornits.
Speaker 4 (08:22):
So it's good to see you.
Speaker 2 (08:23):
Happy to be here when a Federal reserve is in
risk management mode. If they don't have the data, are
they cutting or are they holding?
Speaker 6 (08:30):
I think that they're going to continue to cut, simply
because the data shift that we saw over the course
of the summer, including the bitchmark revisions on the jobs front,
suggests that we are cooling as an economy and getting
back to normal policy rates. Seems to make sense in
that With that background.
Speaker 1 (08:45):
I just wonder what you think of this dissonance between
a labor market that seems to be cooling, in GDP
that seems to be going strong well.
Speaker 6 (08:53):
As you've been discussing the AI investment capex, everything associated
with that has not only been driving business spending so
keeping up the momentum of the real economy, but we
all faces we are also seeing upside inequities and that
is fueling consumption because we know the top ten percent
account for fifty percent consumption in the US, and I
(09:14):
think that that has been a key driver. And when
I make the observation about a potential downturn in risk assets,
if we are going to slip into a recession at
some point, it's probably going to come from a repricing
of risk assets. But that certainly is not onknow one's
radar At this point.
Speaker 1 (09:29):
I guess I'm trying to understand whether it makes sense
for the FED to cut rights to protect jobs given
the fact that there is clearly a sluggishness to the
labor market. You're seeing peripheral spending data showing a slow
down in September as while I was looking at Citigroup
data this morning, I just wonder if it makes sense
to do that if you potentially pose the risk of turbocharging.
What some people are saying is bubblishest types of behavior
(09:51):
in other sectors, AI be one of them.
Speaker 6 (09:54):
Well, I think that that's what the FED needs to
decide over the course of the rest of the year,
whether they're going to get back to three percent or
three point five, depending on what estimates you look at,
or is there a risk that there's still more to
be seen on the tariff side, Even setting aside the
bubble issue, I still think that there's tariff passed through
to inflation that has yet to be realized, and so
(10:16):
we could see some sticky CPI prints when we finally
get them. And that's the big unknown is when does
a government start publishing data again?
Speaker 2 (10:23):
So what are you tracking right now?
Speaker 1 (10:24):
Given the fact that we're not really getting anything official
from a lot of the sources.
Speaker 6 (10:29):
So I think that we do have ADP, and we
have ISM, and we have some of the private data.
But at the end of the day, we're really just
looking at the day count of the shutdown because the
longer it goes, the more uncertainty there'll be. And when
the FED meets later this month, the one piece of
information that they will really have is whether or not
the government has been reopened or if we're going to
(10:49):
push that record long thirty four day shutdown window.
Speaker 5 (10:53):
Do you guys have a base case of how long
you think the governershupdown will last.
Speaker 6 (10:57):
I think that it will get through the end of
next week and at the earliest before we start to
see any movement, because at that point people will stop
getting paychecks. I assume that there'll be more rhetoric and
more headlines out of Washington. But it's also a question
of how the Democrats are going to be polling as
a result of this, going into what will be the
run up to the midterm and the politics around that,
(11:19):
and that's always difficult testamy.
Speaker 5 (11:20):
So the FED will be walking in potentially with that
base case, with a job report, but not inflation data.
How concerning is that when the likes of Neil Koshkari
are sounding alarms on two fastive interest rate cuts might
be a problem, and there's stiflationary fears.
Speaker 6 (11:35):
I do think that if they happen to have the
jobs data in hand, that that will be part of
the story that they can justify cutting because a weaker
job market is disinflationary on a forward basis.
Speaker 4 (11:48):
And that is again information.
Speaker 6 (11:50):
I do think it would be ideal if they had
a full set of information, but at the end of
the day, they're going to adjust to the reality as
it comes out.
Speaker 2 (12:00):
And since the Fed last night mid September, two year
bon yields are slightly higher, ten year bon yields a higher,
The whole curve is shifted higher. What it think that
speaks to.
Speaker 6 (12:09):
I think we're just in an arrange consolidation mode for
the market. I think that we now know the direction
of travel of rates. We have some uncertainty associated with
the shutdown and what that means more than likely for
the beginning next year as opposed to the balance of
this year, and we don't have enough convincing evidence to
get back to three ninety five ten year yields, but
(12:31):
also not to get back to four fifty. We're just
in a range as we see how things play out.
Speaker 2 (12:36):
Don't you think also that the rate story has stabilized,
because subsequently after the FED meeting, we found out this
FED is far more divided than was actually revealed in
that news conference with Chairman Powell. That maybe for a
lot of people they thought this was the start of
a bigger rate cutting cycle, something down towards three and quickly.
And what I've heard subsequently since there's a bunch of
(12:56):
FED speakers with very different views about the future mentioned
Neil Kashgawi, there are some individuals that aren't ready to
go again, never mind go another one hundred. Isn't that
part of this story as well? How big a feature
is that?
Speaker 4 (13:09):
Well?
Speaker 6 (13:09):
I think that what the future's market is telling us
is we're comfortable with a glide path back to three
percent sometime in the middle of next year. But as
you point out, there are competing voices on the committee,
and there do tend to be competing voices when we're
at an inflection point, and we were at an inflection point.
I think that Powell's comments in particular, were an effort
(13:31):
to ensure that there was as much flexibility as possible,
and he didn't want to pre commit to an October
or a December move. So I think it's more of
a business as usual than it is something particularly frightening.
Speaker 1 (13:42):
This is sort of a perverse question, but it looks
like right now in polymarket it's only a twenty five
percent chance that the shutdown ends before October fifteenth. You
said that this is the one piece of data that the.
Speaker 4 (13:51):
FED is going to have.
Speaker 1 (13:52):
It's new which just how long the shutdown's going on.
Speaker 4 (13:54):
Is that bond positive at the end of the day.
Speaker 6 (13:58):
I think it is because it's more uncertain and we've
spent a lot of the the last four or five
months with a TREBUTI will related on uncertainty as well
as now shut down related uncertainty, and that has led
to a stalling out on the labor front, and until
we have more clarity, I think people are going to
be a lot more reluctant to hire, more reluctant to spend,
(14:19):
and I think it's going to eventually be gone positive.
Speaker 2 (14:25):
Stay with us. More Bloomberg surveillance coming up after this.
The analyst David Deck Obama, TD Cow and covers some
of the companies that Trump administration has invested in, and
has this to say, Investors have to ask who's next.
(14:46):
Stocks are moving fantastically on this news, no matter what
the actual details are. David joins US Now for more.
David Gomardick, morning, Thanks for having me. Your job has changed,
It has changed. Indeed, sure the White House is now
picking the winners. How does that change your approach?
Speaker 7 (15:01):
You know, similar to my comments before, it was interesting
in their prior conversation here talking about, you know, what's
the process behind all of this and what's the intention?
And I think real really it's true for the administration
one to some extent to make an investment on behalf
of taxpayers, but also I think to raise the profile
for the general investing public that these companies are a
priority and that these industries are a priority. And now
(15:24):
everyone obviously has their hands out and you've seen companies
openly talking about and disclosing. We're having conversations with the
USDO Department of War, We're having conversations with the Pentagon,
and I think it just sets the stage for what
should be triggering a multi year investment process in the
broader material sector.
Speaker 1 (15:42):
Theoretically, a lot of people could get behind this, and
it seems like it does make sense at least according
to both sides of the aisle. And what they've put
out there is the administration picking the right names.
Speaker 7 (15:53):
So I would say, with their first investment, and I'm
not going to speak on Intel, so let's look at
them P Materials. They're the largest rare earth miner in
the Western Hemisphere. I think that was a very logical
chosen champion for this administration to get behind because it
unlocks multiple parts of the supply chain for rare earth
and ultimately magnets. You also saw a follow up deal
(16:16):
with Apple right on the heels of that, So I
think all of these things were connected. In the context
with lithium Americas, the government was already involved with a
substantial loan that the DOE had approved under the Biden
administration under the ATVM loan program, which sought to really
propel the lithium supply chain in North America, largely around
(16:36):
the proliferation of electric vehicles.
Speaker 4 (16:38):
We've walked back.
Speaker 7 (16:39):
A lot of the EV tax credits and incentives there,
but I think there was still partly a recognition on
the part of the government that were already in bed
with this company from a loan process. Let's sort of
rework some of the terms. Did it actually improve the
outlook for Lithium America's I would argue perhaps, no, it
really just diluted there, really deluted the equity holder at
that point. But it does obviously raise the profile and
(17:01):
the stock moved up well over one hundred percent, you know,
without really caring what the details were.
Speaker 1 (17:06):
So can you just basically look at whoever the US
is given a loan to and say that probably will
be equitized.
Speaker 7 (17:12):
Sure, you could certainly build. I mean, you've seen a
lot of names already moving in anticipation that they're going
to receive funding in some form, and logically you would
anticipate that every single company in the material space that
has a project at least on the whiteboard at this
moment is having active conversations. So I think you can
probably still make money that way, because at some point
(17:32):
you have to ask how does this all end? You know,
is the government going to be trading out of these
equity positions. It's not as though there's always a contribution
that's coming with this, and at this point, I think
it's safe to say that there.
Speaker 4 (17:44):
Is no end in sight for this.
Speaker 5 (17:45):
Well, some people think that this is just the beginning
of potentially US sovereign wealth fund.
Speaker 4 (17:50):
How you do it?
Speaker 7 (17:51):
I mean, I think in some cases that's already very
much the case, except you know, in theory, I suppose
this is being done with tax payer money. And you've
seen some funds reallocated from areas like the Chips Act
and some other funding, and I think it's really just
going to try to accelerate a lot of these investment opportunities.
Speaker 5 (18:09):
One official was talking about, there's hundreds of deals that
right now are being proposed. Could you see by the
end of Trump's first term, hundreds of companies the US
government has a stake.
Speaker 7 (18:18):
In, And theory short, look look at all these stakes.
And what's interesting about a five to ten percent stake
because some of these are coming with board membership, right,
so the government is becoming an active member of management oversight.
They're not necessarily helping with execution, but they can help
on the contracting side. And if you think about, you know,
(18:38):
hundreds of companies out there, taking a five percent equity
interest in some of these companies that's coming costless to
the government. Sure in theory, right and if you're an
executive right now and you see the potential to re
rate your equity by hundreds of percent and then on
the back of that perhaps raise additional capital in the
markets just by giving the company, you know, the government
five percent of your company. That's a very difficult deal
(19:00):
not to side long term. What does this do for
competition in this space, Well, I think that it does welcome,
at least in the United States, that everyone can get
involved in the supply chain. Look at rare Earth's for
instance right now. Yes, they've championed MP they've given them
a floor price, and you've seen actually the the NDPR
market for rare earths, you've seen pricing move substantially higher
(19:23):
up to ninety dollars a kilo. In August they gave
them one hundred and ten dollars a heilo price floor.
I think that it provides opportunity for everyone within the
within the United States and really allied nations to come
forward with projects to try to re short of the supply.
Speaker 4 (19:37):
Chain as quickly as possible.
Speaker 2 (19:40):
Stay with US multiple IMPEX savidance coming up off to
this right to that kind of ay Right and his
right camp bat now expecting the Feds and low interests
right back to back Masinx right rights in the following this,
it's increasingly fragile backdrop, compounded by data vacuum and policy uncertainty.
(20:04):
It's likely to tell the balance of FED policy makers
correct joint just now for more. Greg and Mornik, Good morning,
No data, no problem.
Speaker 8 (20:11):
No data means more caution when it comes to how
business leaders, how economists, how FED policy makers are going
to react. I've been talking with a lot of business
executives that are concerned about the fact that we're not
getting a pulse on the economy, and as we were
getting before this government shut down, a lot of mixed signals.
(20:31):
There's growing uncertainty as to the underlying pace of the economy.
I think one thing that's key to remember is that
there are three fragile pillars to the economy that all
start with an A. You have essentially affluent workers that
are supporting consumer spending. You have the AI investment boom
and potentially a bubble there, and then you have the
asset price increases. They're all correlated and they're all fragile.
(20:53):
If you get any type of disruption to one of
those three that could portend to a slower economic outlook and.
Speaker 4 (21:00):
Then the need for morpheed easing. As we navigate into
twenty twenty.
Speaker 1 (21:04):
Six, when you talk about caution, it seems to be
a deceleration in growth or euphoria in market. It's not
necessarily the acceleration in inflation.
Speaker 4 (21:11):
Why well, I think.
Speaker 8 (21:12):
When you're thinking about the economy right now, what you're
seeing is essentially the acceleration in inflation that is induced
by terriffs. And the key question is whether this is
an embedded acceleration in inflation or something that's likely to
be transitory.
Speaker 4 (21:25):
And you and I have talked about this in the past.
Speaker 8 (21:27):
We are in an environment where labor market demand is softening.
It's not because we're seeing slower payroll growth only. It's
because we're seeing a hiring rate that's at a twelve
year low. It's because we are seeing continuing claims for
unemployment that have been gradually rising. It's because job cut
announcements are up fifty five percent relative to last year.
So all these indicators indicate softening labor market demand, notwithstanding
(21:51):
the massive negative shock that we've seen in terms of
net migration, there is underlying weakness and softness in the
labor market, which means there's unlikely to be this desire
to raise wages, and so what we're seeing is essentially
this increase in prices, which is eroding consumer spending power,
and in turn, businesses that have to contend with these
higher cost pressures are not going to be hiring more freely.
(22:14):
They're not going to be allowing for higher wages, and
therefore that's going to continue to weigh on income and
on consumer spending activey.
Speaker 4 (22:21):
There's a lot to unpack there.
Speaker 1 (22:22):
I just would ask, can I sound like a broken
record should ask this a lot? Would really cutting rates
help that picture in any way? Would it get people jobs?
Given the fact that ultimately a lot of companies are
turning to AI and they have every capital market opening
that they possibly could imagine.
Speaker 8 (22:38):
I think that's the broader question as to how the
FED reacts to supply shocks. We are in this environment
where what we're seeing is massive supply shocks to the economy,
whether it's on the side of AI or on the
side of net migration in the labor market. The FED
has a limited number of tools to address any type
of imbalance in the economy, and in this instance, it's
(22:58):
a supply shockading to inflationary pressures and.
Speaker 4 (23:01):
Reduce growth volumes.
Speaker 8 (23:03):
Now, your question is very interesting because what we're seeing
is essentially a growing spread between short term rates and
long term rates. Short term rates are pricing more fed
easing over the course.
Speaker 4 (23:13):
Of the next twelve months.
Speaker 8 (23:14):
Long term rates have to contend with higher inflation expectations,
a fiscal situation that is concerning, even more so in
the midst of a government shutdown, and then fed pressures
from the administration. The three f's there are very important
to contend with when it comes to the trajectory of
where the economy is going to head.
Speaker 5 (23:32):
When you look at tariff induced inflation, though we haven't
really seen it yet.
Speaker 4 (23:36):
Not broad base, not broad based.
Speaker 8 (23:38):
But if you lift the hood and you look at
the underlying drivers of inflation, if you look at grocery prices,
if you look at apparel prices, if you look at
car prices, if you look at furniture prices, all of
these elements have been rising and lifting inflation by about
a third, essentially a third of the inflation increase over
the course of the past four months has been driven
(23:59):
by these categories. What I would also note is that
you're also seeing that pass through to services. A lot
of services that we consume are actually using goods and equipment.
You think of medical care, you think of car or
repair shops. There are services that use a lot of
equipment that have an imported component into them, and that
(24:22):
essentially see these upward pressures in terms of prices. We're
not going to see the same type of increase that
we saw back in twenty one and twenty two. We're
not going back to nine percent inflation, but we are
going away from two percent inflation towards three three and
a half percent inflation, which is hurting families across the country.
Speaker 5 (24:39):
Will this haunt the FED next year because they seemed
to be ignoring it completely in the bias is to
labor market.
Speaker 8 (24:44):
I think you may see the hints of this hurting
the FED next year because the rotation of voters is
going to be more hawkish. So if there is more
easing this year, you're going to see more hawkish members
next year that may be on the dockets saying, actually,
we ease too much and we now need to either
hold for longer or.
Speaker 4 (25:04):
Tighten monetary policy.
Speaker 8 (25:05):
That's going to be the twenty twenty six debate because
the rotation of Fed palsy makers is going to become
more hockey.
Speaker 2 (25:11):
It's super hard to protect what the Fed's going to
do a year out. The Federal Reserve has difficulty protecting
what the Federal Reserve's going to do a year out.
Given what you just said, you're going to have this mix,
this collision between a hawkish rotation and that maybe a
very douvish rotation at the very top of the Central Bank.
How difficult will this committee be to lead beyond my
next year?
Speaker 8 (25:32):
Extreme polarization is going to be the situation when it.
Speaker 4 (25:35):
Comes to the Fed. We're already seeing hints of that.
Speaker 8 (25:37):
There's one hundred and fifty basis points spread between the
most hawkish dot in the and famous dot plot of
the Fed and the most douvish policy maker. So that
polarization is going to remain firmly in place, and we're
going to get a cacophany of speeches that go in
different directions when it comes to interpreting the direction of
(25:58):
the US economy next year, and that's going to be
very hard to read from a policymakers standpoint, but also
also from a business leader standpoint.
Speaker 4 (26:07):
Let's not forget what we really are.
Speaker 8 (26:10):
Concerned about is the direction of investment, the direction of employment,
and the direction of consumer spending. If you have a
lack of clarity as to what the Fed is going
to be doing because it interprets conditions as EI either
being extremely loose on the financial front, or because it
sees that there's more of a drag from the labor
demand side or labor supply side, whether there are different views,
(26:33):
diverging views, very divergent views. Potentially, that's going to confuse
policy makers, it's going to confuse investors, and it's going
to confuse business executives as to what decisions they should make.
Speaker 2 (26:45):
This is the Bloombergs Events podcast, bringing you the best
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Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:11):
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
with Lisa Bromwitz and Amerie hortert join us each day
for insight from the best in markets, economics, and geopolitics
from our global headquarters in New York City. We are
live on Bloomberg Television weekday mornings from six to nine
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anywhere else you listen, and as always on the Bloomberg
(00:34):
Terminal and the Bloomberg Business app. Julian and Manuel, i've
ever call writing the increased probability of a bubble scenario
gives the S and P five hundred and thirty percent
chance to rise to nine K by year end twenty
twenty six. Judian joins us now for more. Julian, good morning,
Good morning. It's going to see you, sir. Let's put
some meat on those bones. Thirty percent chance of nine
K next year on the SMP.
Speaker 3 (00:54):
So if you think about it, actually going back to
y two K right where all this sort of talk
of bubbles originated. Over the course of this last twenty
five years, you have had numerous bubbles, housing, global bond markets,
Chinese equities in twenty fifteen, meme stocks, this, that, and
(01:17):
the other, and frankly, when.
Speaker 4 (01:18):
You add all that up.
Speaker 3 (01:20):
First of all, academia would tell you that those many
bubbles in twenty five years is absolutely impossible. But when
you think about it, it really does speak to the
fact that number one, each bubble was larger than the last.
And from our point of view, when you think about
Y twok a twenty eight times earnings peak, it's very
(01:40):
reasonable to think about thirty times a three hundred dollars
number getting you to nine thousand the s and P
five hundred, But it's bigger, more grander every time.
Speaker 2 (01:52):
Well, let's speak to this moment. They're our whists of
vendor financing. We see a video investing in some of
that companies and in some of that customers, and we
know that money is going to come back.
Speaker 4 (02:01):
To that company.
Speaker 2 (02:02):
What's different about this moment It seems to be the
strength of the balance sheets compared to where we were
in the late nineties and the absence of leverage on
those balance sheets are some of the major tech players.
Does that give this more legs?
Speaker 4 (02:12):
Is that?
Speaker 2 (02:12):
How do you think about things.
Speaker 3 (02:13):
Well, again, when you think about the late nineties, you
were having companies that didn't have earnings, that had barely
had revenues. That we're doing all the spending on capex.
You don't have it this time. Most of the companies,
to your point, have incredibly strong balance sheets. But when
you think about what we've heard in the last couple
(02:35):
of weeks, the memory for us is this Japanese phrase
koretsu cross shareholdings. You saw it in the nineteen eighties
and the early nineteen nineties, which inflated valuations into the
Japanese equity market bubble. And look, if you're not concerned
about the potential knock on effects of all this kind
(02:57):
of cross shareholder relationships, you're probably not paying sufficient attention.
Speaker 1 (03:02):
So it is this bullish or bearish you're talking nine thousand,
which sounds great, let's get in. And then you're talking
about a bubble that's bigger than anything we've ever seen before.
Speaker 3 (03:09):
So and you have to think about it in terms
of cycles. Okay, what we have been very plain about
in getting ourselves around the idea that you invest in
a higher valuation environment is this notion that what end
structural bull markets. And to be very clear of what
(03:31):
we had in February to April was a cyclical bear
market in a structural bull market. What end structural bull
markets is a FED that's going to be hostile. If anything,
the FED is going to be perhaps too friendly to
the point about stalking inflation. Higher yields on the long end.
Amazing how quiescent the tenure yield has been. And then
(03:55):
you know recession that doesn't seem to be in the cars.
But the last thing, the fact that every one of
these capital market cycles has ended with an incredibly robust
corporate action pipeline and we're just starting to see that
form tells you that there's further to run. And as
(04:15):
difficult as it is, and it is difficult to invest
in these valuations, and we think that you need to stay.
Speaker 1 (04:24):
Invested, You need to stay investor in the big tech players.
Does it say anything about the rest of the market
or is that just a completely different story in terms
of the economic drivers the areas outside of AI.
Speaker 3 (04:35):
Well, look and again when you think about the demographics
and know that over the course of the coming decades,
demographics are going to be ahead when and they already
are in places like China. That's part of why AI
has had the impact that it's had. And this year
we're seeing other companies, the adopters and the adapters really
(05:00):
start to talk about how they're essentially driving revenue. We
always knew the cost saving story, but that is very,
very vital and for us. When you look at the
internals of the market, what's different between now in the
late nineteen nineties is that day to day the advancers
are beating the decliners. The troops, the people in the field,
(05:24):
the stocks that nobody talks about are going up day
in and day out, Whereas in the late nineties it
was all tech all.
Speaker 5 (05:31):
The time, seeing billions of dollars being put towards AI,
but we're not seeing billions of dollars being put towards
electricity demand. What happens if the grid can't handle.
Speaker 3 (05:39):
All of this, well, that's absolutely a concern, no question.
Speaker 5 (05:44):
Nine thousand next year, if you can't even develop data.
Speaker 3 (05:47):
Centers, that's a good question. And from our point of view, again,
it's less about the synchronization of the build out then
the fact that there is sufficient liquidity to you know,
really expect the build out to occur over over a time,
(06:10):
and again I go back to this idea, and frankly,
we're seeing it. This week was different. Not only did
you have the largest LBO in history, but I took
taxi cab rise and they started talking about the stock
market and they started talking about AI And that's different.
But that's part of every cycle, and that is how
you get to valuations that go from rational exuberance where
(06:34):
we are now to something more extreme.
Speaker 2 (06:37):
I'm not thrown shade at all, but I think the
camp driver over the past five years has been more
dependable than the strategist on wolf straight in some ways.
Is that fair?
Speaker 3 (06:46):
We got cautious, like everyone. We got bullish in April,
to be clear, but.
Speaker 2 (06:52):
I don't know if that's been the country into kunda
in quite the same way that they were in the
nineteen twenties nineteen thirties.
Speaker 3 (06:57):
Well, what's fascinating again is you go back to February
through April, and the public got this right. Literally for
the first time in the cycle. The public was the
buyer the whole way down. And the reason that the
market has been so unrelenting on the upside is because
professionals have found themselves under invested.
Speaker 2 (07:17):
It was a shoeshine boy in the twenties, remember all
that stuff. The story is really different. The performance chase
gun into year end is coming from Wolf Street. Wouldn't
you agree I'm taking to clients that missed out in
the move in April in the last.
Speaker 3 (07:28):
Six months, I would, But I would also say this
is that the dynamics of trading. They used to call
it day trading in the nineteen nineties. Now you're looking
at high frequency trading. But these zero dazed expiration options,
the gamma effect that causes hedgers to have to hedge
(07:48):
upside intra day is really unlike anything I've seen.
Speaker 2 (07:54):
Stay with us more Bloomberg surveillance coming up after this.
Let's turn to the Federal Reserve traders looking ahead to
the FMC minutes due out at two pm Eastern time
in Lincoln of BIMO writing twenty five basis point cuts
in October and December are already a foregun conclusion as
(08:17):
long as there isn't a more dramatic down to in
risk assets in joints now for more income mornits.
Speaker 4 (08:22):
So it's good to see you.
Speaker 2 (08:23):
Happy to be here when a Federal reserve is in
risk management mode. If they don't have the data, are
they cutting or are they holding?
Speaker 6 (08:30):
I think that they're going to continue to cut, simply
because the data shift that we saw over the course
of the summer, including the bitchmark revisions on the jobs front,
suggests that we are cooling as an economy and getting
back to normal policy rates. Seems to make sense in
that With that background.
Speaker 1 (08:45):
I just wonder what you think of this dissonance between
a labor market that seems to be cooling, in GDP
that seems to be going strong well.
Speaker 6 (08:53):
As you've been discussing the AI investment capex, everything associated
with that has not only been driving business spending so
keeping up the momentum of the real economy, but we
all faces we are also seeing upside inequities and that
is fueling consumption because we know the top ten percent
account for fifty percent consumption in the US, and I
(09:14):
think that that has been a key driver. And when
I make the observation about a potential downturn in risk assets,
if we are going to slip into a recession at
some point, it's probably going to come from a repricing
of risk assets. But that certainly is not onknow one's
radar At this point.
Speaker 1 (09:29):
I guess I'm trying to understand whether it makes sense
for the FED to cut rights to protect jobs given
the fact that there is clearly a sluggishness to the
labor market. You're seeing peripheral spending data showing a slow
down in September as while I was looking at Citigroup
data this morning, I just wonder if it makes sense
to do that if you potentially pose the risk of turbocharging.
What some people are saying is bubblishest types of behavior
(09:51):
in other sectors, AI be one of them.
Speaker 6 (09:54):
Well, I think that that's what the FED needs to
decide over the course of the rest of the year,
whether they're going to get back to three percent or
three point five, depending on what estimates you look at,
or is there a risk that there's still more to
be seen on the tariff side, Even setting aside the
bubble issue, I still think that there's tariff passed through
to inflation that has yet to be realized, and so
(10:16):
we could see some sticky CPI prints when we finally
get them. And that's the big unknown is when does
a government start publishing data again?
Speaker 2 (10:23):
So what are you tracking right now?
Speaker 1 (10:24):
Given the fact that we're not really getting anything official
from a lot of the sources.
Speaker 6 (10:29):
So I think that we do have ADP, and we
have ISM, and we have some of the private data.
But at the end of the day, we're really just
looking at the day count of the shutdown because the
longer it goes, the more uncertainty there'll be. And when
the FED meets later this month, the one piece of
information that they will really have is whether or not
the government has been reopened or if we're going to
(10:49):
push that record long thirty four day shutdown window.
Speaker 5 (10:53):
Do you guys have a base case of how long
you think the governershupdown will last.
Speaker 6 (10:57):
I think that it will get through the end of
next week and at the earliest before we start to
see any movement, because at that point people will stop
getting paychecks. I assume that there'll be more rhetoric and
more headlines out of Washington. But it's also a question
of how the Democrats are going to be polling as
a result of this, going into what will be the
run up to the midterm and the politics around that,
(11:19):
and that's always difficult testamy.
Speaker 5 (11:20):
So the FED will be walking in potentially with that
base case, with a job report, but not inflation data.
How concerning is that when the likes of Neil Koshkari
are sounding alarms on two fastive interest rate cuts might
be a problem, and there's stiflationary fears.
Speaker 6 (11:35):
I do think that if they happen to have the
jobs data in hand, that that will be part of
the story that they can justify cutting because a weaker
job market is disinflationary on a forward basis.
Speaker 4 (11:48):
And that is again information.
Speaker 6 (11:50):
I do think it would be ideal if they had
a full set of information, but at the end of
the day, they're going to adjust to the reality as
it comes out.
Speaker 2 (12:00):
And since the Fed last night mid September, two year
bon yields are slightly higher, ten year bon yields a higher,
The whole curve is shifted higher. What it think that
speaks to.
Speaker 6 (12:09):
I think we're just in an arrange consolidation mode for
the market. I think that we now know the direction
of travel of rates. We have some uncertainty associated with
the shutdown and what that means more than likely for
the beginning next year as opposed to the balance of
this year, and we don't have enough convincing evidence to
get back to three ninety five ten year yields, but
(12:31):
also not to get back to four fifty. We're just
in a range as we see how things play out.
Speaker 2 (12:36):
Don't you think also that the rate story has stabilized,
because subsequently after the FED meeting, we found out this
FED is far more divided than was actually revealed in
that news conference with Chairman Powell. That maybe for a
lot of people they thought this was the start of
a bigger rate cutting cycle, something down towards three and quickly.
And what I've heard subsequently since there's a bunch of
(12:56):
FED speakers with very different views about the future mentioned
Neil Kashgawi, there are some individuals that aren't ready to
go again, never mind go another one hundred. Isn't that
part of this story as well? How big a feature
is that?
Speaker 4 (13:09):
Well?
Speaker 6 (13:09):
I think that what the future's market is telling us
is we're comfortable with a glide path back to three
percent sometime in the middle of next year. But as
you point out, there are competing voices on the committee,
and there do tend to be competing voices when we're
at an inflection point, and we were at an inflection point.
I think that Powell's comments in particular, were an effort
(13:31):
to ensure that there was as much flexibility as possible,
and he didn't want to pre commit to an October
or a December move. So I think it's more of
a business as usual than it is something particularly frightening.
Speaker 1 (13:42):
This is sort of a perverse question, but it looks
like right now in polymarket it's only a twenty five
percent chance that the shutdown ends before October fifteenth. You
said that this is the one piece of data that the.
Speaker 4 (13:51):
FED is going to have.
Speaker 1 (13:52):
It's new which just how long the shutdown's going on.
Speaker 4 (13:54):
Is that bond positive at the end of the day.
Speaker 6 (13:58):
I think it is because it's more uncertain and we've
spent a lot of the the last four or five
months with a TREBUTI will related on uncertainty as well
as now shut down related uncertainty, and that has led
to a stalling out on the labor front, and until
we have more clarity, I think people are going to
be a lot more reluctant to hire, more reluctant to spend,
(14:19):
and I think it's going to eventually be gone positive.
Speaker 2 (14:25):
Stay with us. More Bloomberg surveillance coming up after this.
The analyst David Deck Obama, TD Cow and covers some
of the companies that Trump administration has invested in, and
has this to say, Investors have to ask who's next.
(14:46):
Stocks are moving fantastically on this news, no matter what
the actual details are. David joins US Now for more.
David Gomardick, morning, Thanks for having me. Your job has changed,
It has changed. Indeed, sure the White House is now
picking the winners. How does that change your approach?
Speaker 7 (15:01):
You know, similar to my comments before, it was interesting
in their prior conversation here talking about, you know, what's
the process behind all of this and what's the intention?
And I think real really it's true for the administration
one to some extent to make an investment on behalf
of taxpayers, but also I think to raise the profile
for the general investing public that these companies are a
priority and that these industries are a priority. And now
(15:24):
everyone obviously has their hands out and you've seen companies
openly talking about and disclosing. We're having conversations with the
USDO Department of War, We're having conversations with the Pentagon,
and I think it just sets the stage for what
should be triggering a multi year investment process in the
broader material sector.
Speaker 1 (15:42):
Theoretically, a lot of people could get behind this, and
it seems like it does make sense at least according
to both sides of the aisle. And what they've put
out there is the administration picking the right names.
Speaker 7 (15:53):
So I would say, with their first investment, and I'm
not going to speak on Intel, so let's look at
them P Materials. They're the largest rare earth miner in
the Western Hemisphere. I think that was a very logical
chosen champion for this administration to get behind because it
unlocks multiple parts of the supply chain for rare earth
and ultimately magnets. You also saw a follow up deal
(16:16):
with Apple right on the heels of that, So I
think all of these things were connected. In the context
with lithium Americas, the government was already involved with a
substantial loan that the DOE had approved under the Biden
administration under the ATVM loan program, which sought to really
propel the lithium supply chain in North America, largely around
(16:36):
the proliferation of electric vehicles.
Speaker 4 (16:38):
We've walked back.
Speaker 7 (16:39):
A lot of the EV tax credits and incentives there,
but I think there was still partly a recognition on
the part of the government that were already in bed
with this company from a loan process. Let's sort of
rework some of the terms. Did it actually improve the
outlook for Lithium America's I would argue perhaps, no, it
really just diluted there, really deluted the equity holder at
that point. But it does obviously raise the profile and
(17:01):
the stock moved up well over one hundred percent, you know,
without really caring what the details were.
Speaker 1 (17:06):
So can you just basically look at whoever the US
is given a loan to and say that probably will
be equitized.
Speaker 7 (17:12):
Sure, you could certainly build. I mean, you've seen a
lot of names already moving in anticipation that they're going
to receive funding in some form, and logically you would
anticipate that every single company in the material space that
has a project at least on the whiteboard at this
moment is having active conversations. So I think you can
probably still make money that way, because at some point
(17:32):
you have to ask how does this all end? You know,
is the government going to be trading out of these
equity positions. It's not as though there's always a contribution
that's coming with this, and at this point, I think
it's safe to say that there.
Speaker 4 (17:44):
Is no end in sight for this.
Speaker 5 (17:45):
Well, some people think that this is just the beginning
of potentially US sovereign wealth fund.
Speaker 4 (17:50):
How you do it?
Speaker 7 (17:51):
I mean, I think in some cases that's already very
much the case, except you know, in theory, I suppose
this is being done with tax payer money. And you've
seen some funds reallocated from areas like the Chips Act
and some other funding, and I think it's really just
going to try to accelerate a lot of these investment opportunities.
Speaker 5 (18:09):
One official was talking about, there's hundreds of deals that
right now are being proposed. Could you see by the
end of Trump's first term, hundreds of companies the US
government has a stake.
Speaker 7 (18:18):
In, And theory short, look look at all these stakes.
And what's interesting about a five to ten percent stake
because some of these are coming with board membership, right,
so the government is becoming an active member of management oversight.
They're not necessarily helping with execution, but they can help
on the contracting side. And if you think about, you know,
(18:38):
hundreds of companies out there, taking a five percent equity
interest in some of these companies that's coming costless to
the government. Sure in theory, right and if you're an
executive right now and you see the potential to re
rate your equity by hundreds of percent and then on
the back of that perhaps raise additional capital in the
markets just by giving the company, you know, the government
five percent of your company. That's a very difficult deal
(19:00):
not to side long term. What does this do for
competition in this space, Well, I think that it does welcome,
at least in the United States, that everyone can get
involved in the supply chain. Look at rare Earth's for
instance right now. Yes, they've championed MP they've given them
a floor price, and you've seen actually the the NDPR
market for rare earths, you've seen pricing move substantially higher
(19:23):
up to ninety dollars a kilo. In August they gave
them one hundred and ten dollars a heilo price floor.
I think that it provides opportunity for everyone within the
within the United States and really allied nations to come
forward with projects to try to re short of the supply.
Speaker 4 (19:37):
Chain as quickly as possible.
Speaker 2 (19:40):
Stay with US multiple IMPEX savidance coming up off to
this right to that kind of ay Right and his
right camp bat now expecting the Feds and low interests
right back to back Masinx right rights in the following this,
it's increasingly fragile backdrop, compounded by data vacuum and policy uncertainty.
(20:04):
It's likely to tell the balance of FED policy makers
correct joint just now for more. Greg and Mornik, Good morning,
No data, no problem.
Speaker 8 (20:11):
No data means more caution when it comes to how
business leaders, how economists, how FED policy makers are going
to react. I've been talking with a lot of business
executives that are concerned about the fact that we're not
getting a pulse on the economy, and as we were
getting before this government shut down, a lot of mixed signals.
(20:31):
There's growing uncertainty as to the underlying pace of the economy.
I think one thing that's key to remember is that
there are three fragile pillars to the economy that all
start with an A. You have essentially affluent workers that
are supporting consumer spending. You have the AI investment boom
and potentially a bubble there, and then you have the
asset price increases. They're all correlated and they're all fragile.
(20:53):
If you get any type of disruption to one of
those three that could portend to a slower economic outlook and.
Speaker 4 (21:00):
Then the need for morpheed easing. As we navigate into
twenty twenty.
Speaker 1 (21:04):
Six, when you talk about caution, it seems to be
a deceleration in growth or euphoria in market. It's not
necessarily the acceleration in inflation.
Speaker 4 (21:11):
Why well, I think.
Speaker 8 (21:12):
When you're thinking about the economy right now, what you're
seeing is essentially the acceleration in inflation that is induced
by terriffs. And the key question is whether this is
an embedded acceleration in inflation or something that's likely to
be transitory.
Speaker 4 (21:25):
And you and I have talked about this in the past.
Speaker 8 (21:27):
We are in an environment where labor market demand is softening.
It's not because we're seeing slower payroll growth only. It's
because we're seeing a hiring rate that's at a twelve
year low. It's because we are seeing continuing claims for
unemployment that have been gradually rising. It's because job cut
announcements are up fifty five percent relative to last year.
So all these indicators indicate softening labor market demand, notwithstanding
(21:51):
the massive negative shock that we've seen in terms of
net migration, there is underlying weakness and softness in the
labor market, which means there's unlikely to be this desire
to raise wages, and so what we're seeing is essentially
this increase in prices, which is eroding consumer spending power,
and in turn, businesses that have to contend with these
higher cost pressures are not going to be hiring more freely.
(22:14):
They're not going to be allowing for higher wages, and
therefore that's going to continue to weigh on income and
on consumer spending activey.
Speaker 4 (22:21):
There's a lot to unpack there.
Speaker 1 (22:22):
I just would ask, can I sound like a broken
record should ask this a lot? Would really cutting rates
help that picture in any way? Would it get people jobs?
Given the fact that ultimately a lot of companies are
turning to AI and they have every capital market opening
that they possibly could imagine.
Speaker 8 (22:38):
I think that's the broader question as to how the
FED reacts to supply shocks. We are in this environment
where what we're seeing is massive supply shocks to the economy,
whether it's on the side of AI or on the
side of net migration in the labor market. The FED
has a limited number of tools to address any type
of imbalance in the economy, and in this instance, it's
(22:58):
a supply shockading to inflationary pressures and.
Speaker 4 (23:01):
Reduce growth volumes.
Speaker 8 (23:03):
Now, your question is very interesting because what we're seeing
is essentially a growing spread between short term rates and
long term rates. Short term rates are pricing more fed
easing over the course.
Speaker 4 (23:13):
Of the next twelve months.
Speaker 8 (23:14):
Long term rates have to contend with higher inflation expectations,
a fiscal situation that is concerning, even more so in
the midst of a government shutdown, and then fed pressures
from the administration. The three f's there are very important
to contend with when it comes to the trajectory of
where the economy is going to head.
Speaker 5 (23:32):
When you look at tariff induced inflation, though we haven't
really seen it yet.
Speaker 4 (23:36):
Not broad base, not broad based.
Speaker 8 (23:38):
But if you lift the hood and you look at
the underlying drivers of inflation, if you look at grocery prices,
if you look at apparel prices, if you look at
car prices, if you look at furniture prices, all of
these elements have been rising and lifting inflation by about
a third, essentially a third of the inflation increase over
the course of the past four months has been driven
(23:59):
by these categories. What I would also note is that
you're also seeing that pass through to services. A lot
of services that we consume are actually using goods and equipment.
You think of medical care, you think of car or
repair shops. There are services that use a lot of
equipment that have an imported component into them, and that
(24:22):
essentially see these upward pressures in terms of prices. We're
not going to see the same type of increase that
we saw back in twenty one and twenty two. We're
not going back to nine percent inflation, but we are
going away from two percent inflation towards three three and
a half percent inflation, which is hurting families across the country.
Speaker 5 (24:39):
Will this haunt the FED next year because they seemed
to be ignoring it completely in the bias is to
labor market.
Speaker 8 (24:44):
I think you may see the hints of this hurting
the FED next year because the rotation of voters is
going to be more hawkish. So if there is more
easing this year, you're going to see more hawkish members
next year that may be on the dockets saying, actually,
we ease too much and we now need to either
hold for longer or.
Speaker 4 (25:04):
Tighten monetary policy.
Speaker 8 (25:05):
That's going to be the twenty twenty six debate because
the rotation of Fed palsy makers is going to become
more hockey.
Speaker 2 (25:11):
It's super hard to protect what the Fed's going to
do a year out. The Federal Reserve has difficulty protecting
what the Federal Reserve's going to do a year out.
Given what you just said, you're going to have this mix,
this collision between a hawkish rotation and that maybe a
very douvish rotation at the very top of the Central Bank.
How difficult will this committee be to lead beyond my
next year?
Speaker 8 (25:32):
Extreme polarization is going to be the situation when it.
Speaker 4 (25:35):
Comes to the Fed. We're already seeing hints of that.
Speaker 8 (25:37):
There's one hundred and fifty basis points spread between the
most hawkish dot in the and famous dot plot of
the Fed and the most douvish policy maker. So that
polarization is going to remain firmly in place, and we're
going to get a cacophany of speeches that go in
different directions when it comes to interpreting the direction of
(25:58):
the US economy next year, and that's going to be
very hard to read from a policymakers standpoint, but also
also from a business leader standpoint.
Speaker 4 (26:07):
Let's not forget what we really are.
Speaker 8 (26:10):
Concerned about is the direction of investment, the direction of employment,
and the direction of consumer spending. If you have a
lack of clarity as to what the Fed is going
to be doing because it interprets conditions as EI either
being extremely loose on the financial front, or because it
sees that there's more of a drag from the labor
demand side or labor supply side, whether there are different views,
(26:33):
diverging views, very divergent views. Potentially, that's going to confuse
policy makers, it's going to confuse investors, and it's going
to confuse business executives as to what decisions they should make.
Speaker 2 (26:45):
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