October 9, 2025 • 35 mins
- Hakeem Jeffries, House Minority Leader (D)
- Danny Danon, Israel Ambassador to the UN
- Richard Bernstein, CIO at Richard Bernstein Advisors
- Vincent Reinhart, Chief Economist at BNY Investments
Hakeem Jeffries, House Minority Leader (D), joins to discuss the US government shutdown and negotiations with Republicans. Danny Danon, Israel Ambassador to the UN, talks about the latest on the Israel-Gaza war. Richard Bernstein, CIO at Richard Bernstein Advisors, talks about what he expects from equities in Q4. Vincent Reinhart, Chief Economist at BNY Investments, offers his US economic outlook.
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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 Hordern. Join us each day
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(00:34):
Terminal and the Bloomberg Business app.
Speaker 3 (00:36):
Sticking with the shutdown, as tensions are rising on Capitol Hill,
House Minority Leader Hakim Jeffries of New York is confident
a spending bill can pass, but says Republicans must first
address what he calls healthcare crisis. House Leader Jeffries joins
us now, Congressman, thank.
Speaker 1 (00:53):
You so much for being with us.
Speaker 3 (00:54):
House Leader, I want to just start with whether you
feel confident that you can complete sort of agreement in
the next few days. Do you have a timeframe as
these discussions do continue.
Speaker 4 (01:06):
Welcome morning, and great to be with you. You know,
as Democrats, we've repeatedly made clear we will sit down anytime,
any place with anyone, either here at Capitol Hill or
back at the White House, in order to reopen the government,
to enact the spending bill that actually meets the needs
of the American people as opposed to hurting everyday Americans.
And of course that spending bill must decisively address the
(01:29):
Republican healthcare crisis that is hurting working class Americans and
middle class Americans all throughout the country, including as it
relates to the urgent need to reauthorize and extend the
Affordable Care attax credits.
Speaker 5 (01:45):
Well, the Speaker told us yesterday that Congress is having
these talks when it comes to subsidies reform.
Speaker 1 (01:50):
Are you part of these talks?
Speaker 5 (01:52):
And just a quick condolences because I know you like me,
we're up late watching the Yankees lose and I know
you're a huge fan.
Speaker 1 (01:57):
Minority Leader Jeffries, Well, thank you.
Speaker 4 (02:01):
They had a great season. Unfortunately it didn't in the
way that we expected. But on to next year. With
respect to know what the Speaker has indicated, there's been
no conversation between House Republicans and House Democrats. Are between
the Republican Party, Donald Trump, the administration, and any of
us on Capitol Hill, including our conversations that should be
(02:21):
taking place with Leader Schumer and Senate Democrats since that
White House meeting that occurred last Monday. That's unfortunate, and
the behavior of Republicans since that point in time has
been unseerrious and erratic, and we continue to urge them
to find a path forward, to sit down, let's talk
exercise common sense on behalf of the American people. But
(02:44):
anything that's done has to address this urgent need. You know,
the open enrollment period starts on November first. Over the
next few weeks, tens of millions of Americans are going
to receive notices indicating that their premiums, copaids, and deductibles
are about to skyrocket, in many instances by thousands of
dollars per year. People are going to go without health insurance,
(03:06):
face medical bankruptcy, and be jammed up in a situation
where they need care for themselves, their children, and their families,
but will be unable to access it because they'll be
without health insurance.
Speaker 5 (03:19):
It was a democratic policy, though your party voted for
this temporary subsidy increase. Do you regret having an expiration
date on.
Speaker 4 (03:27):
This No, We were able to extend it through the
end of this year, in full anticipation that any reasonable
member of Congress will understand that you cannot kick tens
of millions of Americans off of health care that's become
affordable for them.
Speaker 6 (03:49):
As a result of the tax credits.
Speaker 4 (03:51):
Unfortunately, Republicans chose earlier this year to pass their one big,
ugly bill, largest cut to Medicaid in American history, ripped
food away from the mouths of hungry children and seniors
and veterans, and they did all of this to pay
for massive tax breaks that they made permanent for their
billionaire donors well at the same time refusing to extend
(04:11):
the Affordable CARECT tax credits, which is why we find
ourselves in this situation.
Speaker 1 (04:17):
Right now, Leader Jeffries.
Speaker 3 (04:18):
Some people would argue that what the Republicans are offering
is to have a clean, continuing resolution and to continue
negotiating this given the fact that at the same time,
they are going to be service members who are not
going to be paid. There's going to be a question
around foodstab stamps and whether they're going to be funded.
Air traffic controllers are calling out sick because they're not
receiving paychecks. At what point do you just say, look,
(04:40):
we need to keep people getting paid and we can
keep talking.
Speaker 4 (04:43):
We want to reopen the government, and we want to
reopen it immediately, but we also need to enact a
spending agreement that actually improves the quality of life of
the American people as opposed to hurting everyday Americans, which
Republicans have been doing all throughout this year, and they've refused,
They've refused to negotiate at every step of the way
(05:04):
throughout this year. They've taken a my way or the
highway approach. They've gone it alone. And now we find
ourselves dealing with this mess of this Republican healthcare crisis,
and time has run out.
Speaker 3 (05:15):
Leader Jeffries, do you think that you've gotten more leverage
as this process has gone on, or do you think
that it's actually waiting?
Speaker 4 (05:21):
Well, it's actually not about leverage for us. It's about
the American people. That's the fight that we're waging. Particularly
in an environment where the cost of living is way
too high.
Speaker 6 (05:31):
People are already.
Speaker 4 (05:32):
Paying too much for groceries, for housing, for their electricity bills,
and now, of course they're confronting the very real possibility
of being bankrupted by the rising costs of their health insurance.
So we're just asking Republicans to sit down and negotiate.
That's what should take place, not simply a my way
(05:54):
or the highway approach, particularly when they're asking Democrats to
support a part of san in Republicans spending bill that
continues to gut the healthcare of the American people.
Speaker 5 (06:04):
Right now, Republicans are asking is to support a clean
continuous resolution, a scoff gap funding measure, which we've seen
time and time again that Democrats also wanted Republicans to
support in the fast passed Why are Democrats choosing to
keep the government shut?
Speaker 4 (06:20):
That's a Republican talking point, unfortunately, that they are putting
into the public domain. It's not a clean continuing resolution.
Speaker 1 (06:27):
Why isn't it In March?
Speaker 6 (06:29):
I'd be happy to explain that.
Speaker 4 (06:31):
In March, the Republicans passed a partisan bill in the
House that Democrats strongly opposed. We opposed that spending bill
because it hurt veterans, hurt children and families, it hurt
housing affordability, and it hurt healthcare because of the cuts
that were included in it. There was actually a bipartisan
(06:51):
spending agreement that we reached last December that passed overwhelmingly
in the House and in the Senate. It was signed
into law by President Joe Biden, and it had the
support of then President elect Donald Trump. That would have
been a clean spending agreement that could have been put
before the Congress. Instead, they passed this partisan, Republican spending
(07:14):
bill in March that we strongly opposed, and now they
want us to continue to sign off on that particular
bill that also includes five hundred million dollars and cuts
to law enforcement grants to support police officers all across
the country. That's just not something for a variety of reasons,
we can support at this particular point in time.
Speaker 5 (07:37):
Do you think the Democratic Party could commit to broader
reforms when it comes to the Affordable Care Act and
keeping less of the subsidies. Could this be potential offrame
for a deal.
Speaker 4 (07:49):
I think that our view, certainly in the House is
that we will evaluate in good faith any bipartisan proposal
that is sent over to us from the Senate if
it decisively addresses the Republican healthcare crisis with respect to
the Affordable Care Act, tax credits, extensions, or any other
(08:09):
issues that may be put on the table because of
the enormity of the attack on the healthcare of the
American people that Republicans have waged this year.
Speaker 6 (08:17):
It's got to be meaningful.
Speaker 4 (08:18):
It's got to actually improve the lives of the American people.
Speaker 6 (08:22):
But unlike Republicans who.
Speaker 4 (08:24):
Have adopted this my way or the highway approach, we
are actually willing to sit down and evaluate in good
faith anything that could advance the ball here for working
class Americans, middle class Americans, and everyday Americans.
Speaker 5 (08:39):
Is there an opportunity for standalone legislation to make sure
that the more than one million active duty service members
get paid next week.
Speaker 4 (08:47):
Certainly, our view in the House is that we should
stand by our men and women in uniform and make
sure that they do not miss a paycheck. Unfortunately, Speaker
Johnson has ruled that out, saying it's not really an
issue that he's prepared to deal with, in part because
Republicans cancel votes last week, cancel votes this week, Apparently
(09:09):
they may not be coming back next week. And what
is that all for. Why are they on vacation in
the middle of a government shutdown, Particularly as it relates
to the real possibility that our military families might miss
a paycheck that they cannot afford to miss. We're urging
Republicans to get back into town, allow us to deal
with the military pay issue, allow us to deal with
(09:32):
the Republican health care crisis, and allow us to reopen
the government so we can enact the spending agreement that
meets the needs of the American people.
Speaker 5 (09:40):
Peter Jeffries, we also saw a pretty explosive argument between
you and the fellow New York Congressman Mike Lawler, and
then you proceeded to call Lawler an embarrassment on television.
Was this fight representative of the state tensions that are
going on within the Republican Party in New York State
right now?
Speaker 4 (10:00):
Well, Magi, Mike Lawler is an irrelevant individual. He's a
clout chaser, and he was stalking the Democratic leadership press
conference in ways that are unhinged. And at the end
of the day, our view is the people who need
to sit down and have the conversation with US Republican
leadership in the House and in the Senate. The Trump administration,
(10:23):
including the President or the Vice president or anyone that
they designate, are the ones who are ultimately going to
determine how we can find a bipartisan path out of it,
and we look forward to having those conversations, but unfortunately
Republicans to date have declined to do that.
Speaker 5 (10:39):
Well, what was he doing that you deem unhinged? And
have you spoken to him since? Have tensions cooled? It
doesn't sound like they have.
Speaker 4 (10:47):
He's an irrelevant individual and as I indicated, his behavior
clearly speaks for itself, complete and total embarrassment. As a
description was a polite use of words.
Speaker 7 (10:58):
Leader.
Speaker 3 (10:58):
There's a question here about today is to get to
unify the Democratic Party because this is somebody who is
a Republican. He's not relevant in his district, and there
is a question here, especially in New York, how to
get some sort of cohesive message as a Democrat.
Speaker 1 (11:14):
I'm just wondering, from your perspective, especially.
Speaker 3 (11:17):
As it relates to the Democratic mayoral race in New
York City.
Speaker 1 (11:21):
You have an endorsed or on mcdonnie, how.
Speaker 3 (11:23):
Difficult is it to get sort of a leadership view
of where the Democratic Party is going to go?
Speaker 4 (11:31):
Well, listen, as Democrats, what unites us is that we
believe in a strong flow and no ceiling at the
end of the day, in America, you work hard, you
play by the rules, there should be no ceiling to
your success in terms of what you can achieve for yourself,
for your family, and for your children. At the same
point in time, we also believe that in this great country,
the wealthiest country in the history of the world, that
(11:52):
we need.
Speaker 6 (11:52):
A strong flow.
Speaker 4 (11:53):
That strong flow includes social Security and Medicare, Medicaid supplemental
nutritional assistance, veterans benefits, and of course the Affordable Care Act.
And what unites Democrats at this particular point in time
is the fact that Republicans are assaulting the flaw that
we should have for everyday Americans, while at the same
time rewarding their billionaire donors, and by the way, in
(12:15):
doing so, skyrocketing the debt by more than three trillion
dollars in such a fiscally irresponsible fashion.
Speaker 5 (12:25):
Leader Jeffries, you did tell reporters last month you planned
to address the mayor race in New York soon. Do
you have a plan to endorse zoramm Donnie.
Speaker 4 (12:35):
We're in the middle of a government shut down. People
are being hurt all across the country because Trump and
Republicans decided to shut down the government rather than provide
healthcare to working class Americans. And so what I've indicated,
particularly most recently when Mayor Adams decided that he wouldn't
seek reelection, is that I will have more to say
(12:55):
about the mayor's race in advance of early voting in.
Speaker 6 (13:00):
New York City, which begins at the end of this month.
Speaker 2 (13:04):
Stay with US Mulplan tax savandance coming up after this.
Speaker 3 (13:17):
Reaching a deal to release all of the hostages in Kaza,
President Trump saying he expects the hostages to be released
probably on Monday. Joining US now is Danny Denon, Israel's
ambassador Cheesy United Nations.
Speaker 1 (13:30):
Danny, Ambassador Donna.
Speaker 3 (13:32):
I'd love to get your sense of what the mood
is like in Israel and why it has taken up
to this point that really got this deal together and
really changed the tone.
Speaker 7 (13:43):
Good morning, Lisa, Thank you for having me.
Speaker 8 (13:46):
Indeed today in Israel all around the world, we are
very hopeful.
Speaker 7 (13:50):
You know, we have been waiting for the day for
two years.
Speaker 8 (13:52):
We prayed for the release of the hostages, and we
were very determined and we stayed it very clear.
Speaker 7 (13:58):
This worle will not end.
Speaker 8 (14:00):
We will get all the hostages out and I think
that determination brought us to the position where we are today,
and we want to thank President Trump and Prime Minister
and Tanyau for the leadership. It's only the beginning, it's
only the first aage. The government will decide in two
hours about releasing terrorists, which is painful for us, and
then we will start to see hopefully the hostages coming
(14:22):
back home. That's the most important faith, but it's not
the last one. You know, we have to speak about
the future, the dimlitarization of Gaza, ensuring that Hamas will.
Speaker 7 (14:33):
Not be part of the process over there.
Speaker 8 (14:35):
So it did a long way ahead, but we are
very hopeful and happy today to think about the hostages
finally reuniting with the families.
Speaker 5 (14:45):
Ambassador, is it your understanding that President Trump is going
to travel to Israel and address the Kannesse.
Speaker 8 (14:52):
Yes, you know, we expect Prethident Traump to arrive to
it well late Saturday night or on Sunday. You know,
it will be first visit during this term, and I
think for him it's very important. You know, he was
very involved with the issue of the hostages. You know,
he met with the families, he asked about their medical conditions,
and we have to give him credit for that, and
(15:14):
it speaks volume that he comes to the region and
we have to be thankful not only to his leadership,
but the fact that now we can speak about expanding
the Abraham accodes.
Speaker 7 (15:24):
You know, after we will finish this war, is really
a peaceful nation.
Speaker 8 (15:28):
We want to build bridges, we want to sign more
peace accordes, and I think today when President's ramping in
the White House and in Jerusalem, we can start exploring
the opportunities.
Speaker 5 (15:39):
When it comes to the first phase of this peace agreement,
where exactly do you see the line where the idea
will withdraw to.
Speaker 7 (15:47):
Well, that was negotiated.
Speaker 8 (15:49):
You know, we made some compromises over there over that issue.
On the last days. Basically we're going to pull out
from the cities. And you know, we have no intention
to stay in Gaza. We don't want to be there,
and we will intend to pull out completely. But it
will happen gradually when we will see that actually Hamas
(16:09):
is giving away, it's a grip of the of the
Gatherans and allowing international.
Speaker 7 (16:15):
Forces to take over.
Speaker 8 (16:16):
We care about our security, that's the reason we moved
into Gaza.
Speaker 3 (16:22):
You're the ambassador to the United Nations, where a number
of world leaders walked out when Natanya, who was speaking just.
Speaker 1 (16:30):
A couple of weeks ago.
Speaker 3 (16:31):
I'm just wondering how difficult you think it's going to
be the repair Israel's relationship with the rest of the world,
given some of the animosity that we've seen of late.
Speaker 8 (16:40):
I think we will do it very fast. You know,
we have strong relationship with so many countries. Many of them,
you know, made mistakes. You know, we saw the difference
between politics and diplomacy. Some leaders like Macron and others
came to the UN for the show for the declarations
President Trump and primarily to NATANIAO dealt with out call
diplomacy and both resorts. So I'm sure that very fast
(17:04):
we will be able to work with those countries, continue
to contribute to developing countries. You know, we have a
lot to do, a lot to share. We paid the
heavy price, and I have to mention the price we paid.
More than one thousandthologists died since October seventh.
Speaker 7 (17:18):
It's painful for us, but we are strong and we prevailed.
Speaker 3 (17:22):
And I'm also wondering about whether there have been any
discussions to restart talks to normalize relations between Israel and
some of your other Middle East neighbors, and thinking of
Saudi Arabia, where that was clearly a discussion before this.
Speaker 1 (17:37):
But others as well.
Speaker 3 (17:39):
Is that already on the table or is that a
long ways off?
Speaker 7 (17:42):
We definitely expected to happen.
Speaker 8 (17:44):
You know, first we have to stabilize the situation, to
make sure that actually Hamas is out of the game.
Speaker 7 (17:50):
You know, it's not a given. You know, we have
to make sure that out of the game.
Speaker 8 (17:54):
And I think it will be the interest of Israel,
the US, and many moderatest countries.
Speaker 7 (17:59):
To move forward.
Speaker 8 (18:00):
And it's important to mention that, you know, the Abraham
Coos countries sticks to the peace agreement we signed with them,
even though it was challenging and difficult for them during
the war, and we appreciate that.
Speaker 5 (18:12):
Are you concerned with a fragile relationship with Egypt? Earlier
in September, we had President LCCI talk about the fact
that Israel was a quote enemy, and we've seen a
lot of acrimonious statements and individuals saying it's almost the
closest these two countries have been to war since nineteen
seventy nine.
Speaker 8 (18:31):
Now we have a stronger bond with the Egyptian government.
You know, we know that during the war it wasn't
the domestic politics some of those leaders and they had
to play the game. But we collaborate with Egyptians and
I think now we should aim to expending peace.
Speaker 7 (18:47):
That's our goal in the future.
Speaker 5 (18:49):
Well, when it comes to Egypt and Cutter and United
Arab Emirates, which you already have a peace agreement with,
how do you see these countries working with Israel when
it comes to face two and three of rebuilding Gaza, Well.
Speaker 7 (19:04):
I think it will be more than that.
Speaker 8 (19:05):
It will require the involvement of more countries and I
cannot name name it, but we are talking with the
major players that are willing to contribute to the efforts
for the reconstruction of Gada. And it's not only physical reconstruction.
We have to build the environment, a society that will
not glorify terrorism. You know, for twenty years Hamas took
(19:27):
the people of Gada hostage, and I think now Dava
the option to build a better future and have to
be responsible about it and not allow radicals to take
over Gada again.
Speaker 9 (19:40):
Stay with us.
Speaker 2 (19:41):
More plan Taxavidance coming up after this.
Speaker 3 (19:52):
Turning back to the broader markets, the stocks trade near
all time highs. Richard Bernstein of RB Advisors, writing, markets
are ins some sort of speculative fervor. It is very
obvious that investors are not risk averse.
Speaker 1 (20:05):
Richard joins us now is probably an understatement.
Speaker 3 (20:08):
Richard, I am curious whether you think it's gone too
far or do you get on the train and follow momentum.
Speaker 10 (20:13):
So, Lisa, good morning, It's great to be with you.
I think the problem with being a momentum investor is
never trying to figure out should we get on the train.
I mean, that's easy. You can see what's going on
the moment. The key to momentum investing is knowing when
to sell and when to get off right, Like who
sold technology stocks at the peak of the bubble in
March of two thousand. That would be the perfect momentum investor.
(20:35):
And we know from history that people are very bad sellers.
And so I think what the speculative environment really shows
is that the most important part of a portfolio right
now is diversification. You may want to play momentum, but
don't overplay momentum.
Speaker 3 (20:50):
To just underscore what you're saying are you selling tech
stocks right now?
Speaker 10 (20:55):
So we have been famous or infamous for not overweighting them,
So I don't think we have to sell anything because
we're not overweight. I think what we've done, though, what
we've done very effectively in our portfolios is find other
areas that people are ignoring that are performing quite well,
you know, whether that be non US quality, whether that
(21:15):
be dividends, whether that be small and MidCap industrials. I
think there's lots of different things that have been performing
well that are way off of people's radars.
Speaker 5 (21:23):
But when it comes to historically how it's difficult for
individuals to sell during all of this momentum, what are
you looking at that would give you the signs that
potentially this could be the meltdown?
Speaker 10 (21:34):
So I think, you know, like, if you want to
look for a risk, I think the risk to look
for right now is can the FED cut rates as
much as the market is presently anticipating and as much
as investors are presently anticipating. And the reason I say
that is that people forget that the FED is the
central bank, and that is the keyword bank, and that
(21:58):
the way they impart monetary policy is through the banking system.
So if the banking system is hesitant to lend, then
the FED cuts rates to try and make the cost
of funding cheaper for banks to encourage lending. If the
banking sector is lending too much, then the economy is overheating.
The FED will raise interest rates to try to increase
(22:19):
the cost of funding to slow down lending, which in
turn will slow the economy. So the question we should
all be asking right now, and the question the FED
should be asking, is where is the hiccup in the
financial sector that is constraining lending, which is constraining growth.
I think that's very hard to find right now.
Speaker 5 (22:36):
Well, if there isn't one, then do you think the
FED should be cutting out all the rest of the year.
Speaker 10 (22:42):
I I don't. Look, I can't tell you whether they
should or they shouldn't. It sound like JPL's calling me
up and asking me, rich should I cut rates? So
what I think they should do maybe irrelevant. I think
what's important is for investors to think about that risk
and to think about what the comes could be. And
what I was saying before, you know that you may
(23:03):
want to be better diversified than you were a month
ago or two months ago, or certainly six months ago.
And I think that's the way to think about what's
going on here. I think it's going to be more
difficult for the FED to cut rates than they think
right now, and certainly more difficult than the markets think
right now.
Speaker 1 (23:20):
You've been in the market a long time, Richard.
Speaker 3 (23:22):
One thing that's been very interesting to me is how
much the idea of diversification has shifted over the past
five years. And I just wonder when you say diversify,
how much that has a different meaning today than say,
the sixty forty portfolio of your Oh.
Speaker 10 (23:38):
Absolutely, And I think part of that, Lisa, is the
sixty percent portfolio. You know, your stock portfolio has turned
out to be like seven or ten or twenty stocks,
And so how much diversification do you even get just
by going sixty forty. I think that's right. I think
one has to look at should be looking at things
like commodities, should be looking at various alternative investments, with
(24:00):
the reasoning that alts is not a real category, like
it really likes to say alternatives. That's kind of silly,
that's like kind of saying I want to be invested.
There are different kinds of waults that have different goals
and different things like that, and I think it's worth
looking at some of that. But I don't think, you know,
one should be saying there's only seven growth stories in
(24:21):
the world. That seems silly to me.
Speaker 1 (24:23):
Do you think that there is a story to play?
Speaker 3 (24:25):
And I keep thinking about what Almos Hokstein had to say,
former White House senior advisor as well as a player
now in the space of infrastructure with energy and AI.
I just wonder how much the market is fully appreciated
how much investment has to go into infrastructure and the
real economy. Certainly that is a very hot area in
private markets. Do you see ways to get into that
(24:47):
kind of idea in public markets or beyond that haven't
fully been tapped.
Speaker 10 (24:52):
So, Lisa, I think the best long term investment story
is all about small and MidCap industrial company these and
the reindustrialization of the United States and the infrastructure that
has to go along with that. You know, one of
the things that people have talked a lot about is
the price of electricity. And I don't know if you're aware,
but in the last five years we have had the
(25:14):
biggest run up in electricity prices in modern American history.
They're up nationwide by like eighty percent in the last
five years. This has become for those of you who
live in New York, New Jersey, you know, this has
become a big issue in the New Jersey gogmunuatorial election.
They're talking about electricity prices. Well, you know, the thing
that people always forget is that bubbles misallocate capital and
(25:35):
in doing so, they are inflationary. And I think electricity
prices are a classic one. Where we're building out data
centers before the infrastructure is built. That's like building factories
before the roads are built to move the stuff in
and out from the factory. It's silly to think that way.
And here's a good way to think about this misallocation
of capital that's going on the economy that is so inflationary.
(25:55):
Imagine if all the capital that was going into cryptocurrencies
in dead was invested in the US electric grid. Would
we be having electricity prices up by the most in
modern American history? I don't think so.
Speaker 3 (26:09):
So are you buying electric grid related stocks? Is that
sort of what you're saying, That's that's where it needs
to go.
Speaker 10 (26:16):
Well, it has been that has been a sub theme
of ours for like a decade. There's nothing new for
those of us at RBA. I mean it is, you know,
the notion of small and MidCap industrial companies includes you know,
things like the grid, includes all this kind of you know,
industrial infrastructure type stuff. So you know, you always say
to people, imagine if you go to a cocktail party
(26:37):
and you didn't talk about in Nvidia, but you tried
to get people interested in carbon wire, I think you'd
be the skunk at the cocktail party.
Speaker 3 (26:45):
It would go back to the graduate plastics really enjoyed that, right,
this copper wire. I am just curious going forward how
much signal you take from the likes of Delta and
PEPSI earnings coming out better than expected. Delta in particular
talking about how travel is accelerated, not just the front
of the cabin but more broadly even in the economy sections.
How much do you take that as the economic data
(27:07):
to hint your heat on and sort of bet on,
even if you're diversified, the ongoing momentum in this economy.
Speaker 10 (27:13):
Oh well, there's there's no question Lisa about is the
economy healthy?
Speaker 5 (27:17):
Right?
Speaker 10 (27:17):
I mean the Atlanta FEDS GDP now is tracking if
I'm not mistaken, and roughly about three and a half
to four percent. I mean that's pretty good growth by
US standards. I would say, so there should be no
doubt that the economy is healthy. I mean, we could
argue about whether that's evenly divided among the economy and
how that's you know, what parts of the economy are healthy,
but the general economy is actually quite healthy. And you know,
(27:41):
if you think about nominal growth, you think about the
three and a half to four percent real growth, plus
you think about we could argue, let's say three to
four percent inflation, depending on how you're measuring it. You know,
we're talking, you know, six to seven percent nominal growth.
I mean that's that's a pretty strong environment. And that's
one of the reasons why I don't think people I
think people are overestimating the ability to FED to come
(28:03):
rates going forward. Seven percent nominal growth, I mean, that's
pretty strong growth.
Speaker 2 (28:08):
Stay with us mulblindex. Savannah's coming up off to this.
Speaker 3 (28:21):
US Treasury Secretary Scott Beston has finished interviewing eleven candidates
to replace FED chair J Powell. According to The Financial Times,
candidates were grilled for up to two hours on their
views on interest rates and FED reforms, and perhaps we
will actually get a couple of the final candidates who
can make their debut in discussions and in the race.
(28:41):
Sticking with the Federal Reserve FED minutes showing caution to
ease driven by inflation concerns, Vincent Reinhardt B and Y
Investments writing this. With the federal government shut down, less
data are available, which we think makes a data dependent
FED more likely to ease.
Speaker 1 (28:57):
Vincent joins us, Now, wonderful to see you. It's been
too long.
Speaker 3 (29:00):
I want to start there this idea that actually the
meeting minutes showed what the dots showed, which is a
huge dispersion of opinions and a lot of people who
were reluctant to ease again heading into the year end.
Why does the government shut down change your calculus?
Speaker 11 (29:15):
So what they did in September lays the tracks down
for what they do in October.
Speaker 9 (29:20):
And what did they do in September?
Speaker 11 (29:22):
They eased, but they didn't strongly signal policy action, and
they emphasized data dependence, and then they let everyone express
their own view in the summary of economic projections. Makes
it really hard to send a coherent message when you
let everyone address their own view of the appropriate policy rate.
(29:43):
But what was important about that is they were leaning
toward policy ease and said they were data dependent. What
that means is the data has to stop them, i e.
Do you get evidence that disproves the case that it's
appropriate to ease. That's what reconciled the whole group to
(30:05):
the policy choice. Guess what, they don't have data that
can disprove the case.
Speaker 3 (30:11):
We just got data about six minutes ago from Delta.
Speaker 1 (30:14):
They came out with their earnings and.
Speaker 3 (30:15):
The expectation that actually there's going to be a reacceleration
into the end of this year with consumer demand not
just at the front of the cabin but throughout the
entire cabin coming back. I just wonder, is that data
that actually should be relied on more given the fact
that we aren't getting official data and the data that have.
Speaker 1 (30:30):
Been released by the United States have been.
Speaker 11 (30:33):
Mixed, so they'll have to rely more on private data.
They're already scraping lots of big data sources. There's lots
of individual vendors, and don't forget it's the federal Reserve system,
which means that you have all that staff at Reserve
Bank talking to business people all over the country in
(30:54):
their summarizing that in their page book. So they have
a lot of sources of information. They don't have an
officialture on it. But that has a couple consequences. One
is they're not flying blind. However, we are more in
the dark about how they're flying because they're using private
(31:18):
information that won't be conveyed to us.
Speaker 5 (31:21):
Okay, but you were at the FED for what almost
a decade?
Speaker 9 (31:24):
It's actually a quarter century.
Speaker 5 (31:25):
But okay, well tell us what do you think they're
looking at? That's not the gold standard economic data that
comes out of BLS.
Speaker 11 (31:34):
So what I can tell here is you're filling the
entire media block with the news that is out, and
that's earnings reports, and so they are looking at whatever
they got, and what do they have. They have a
lot more than they had previously, Lots of information from
(31:56):
credit card processors, lots of information from the big block
stores that have up to the minute data on pricing
and sales. They'll get credit reports, they'll get the anecdotal reports.
Speaker 9 (32:16):
And what do we notice in COVID there was a.
Speaker 11 (32:19):
Whole blossoming of new indicators of high frequency demand. What
was that You apply a lot of resources with a
lot of information.
Speaker 9 (32:31):
They're going to do their best and that's what they're doing.
Speaker 6 (32:33):
Now.
Speaker 5 (32:33):
There's not a ton of debate about what the FED
will do the rest of the year. How are you
thinking about next year? Especially as Lisa was just mentioning,
the treasure Secretary just wrapped up his interviews for who's
going to lead the FED?
Speaker 9 (32:43):
Completely different. This year is easy.
Speaker 11 (32:46):
This year is let's agree on a macro forecast. Let's
think how has the FED previously acted, what is an
appropriate policy rule? And then just plug your numbers in
and that will get you probably another half point of
easing in twenty twenty five. It's a closer call toward
the end of the year exactly, because maybe inflation will
(33:10):
come up, maybe the economy won't soften as much as
they're worried because they're easing. As for risk management, they're
buying insurance by the end of the year, they may
not need it next year. Completely different. Why because the
Federal Reserve system is set up so that the leadership
(33:31):
of the FED turns over with the political process, So
the administration will get new slots and the Federal Reserve system.
The whole is set up to give the board pre
eminent role in monetary policy, so the White House is
(33:51):
going to use that.
Speaker 3 (33:52):
As an economist watching this, does it worry you that
you've seen such a devaluation of the dollar and that
you've seen gold increasingly take hold as a haven type
of instrument.
Speaker 11 (34:03):
So I have a Bloomberg worksheet right on my desk,
which is independence Watch. What do you look for if
there were concerns about the future of central bank monitor
policy making in the United States? You would look at
non dollar assets, so you would look at gold, You
look at the price of some crypto.
Speaker 9 (34:26):
You would also look.
Speaker 11 (34:27):
As hard as you can at the whole term structure
of US interest rates.
Speaker 9 (34:33):
A little worrying that, yes.
Speaker 11 (34:37):
The very little volatility in the bond market ten years
has been flatlining, but the ten year ten year forward
is drifted up, and some measures of inflation compensation have
come up. Thus far, not a lot of warning flores
flares and markets about worries about central bank independence, but
(34:57):
we think that's going to come.
Speaker 2 (35:00):
This is the Bloomberg Surveillance Podcast, bringing you the best
in markets, economics, and geopolitics. You can Watch the show
live on Bloomberg TV weekday mornings from six am to
nine am Eastern. Subscribe to the podcast on Apple, Spotify,
or anywhere else you listen, and as always, on the
Bloomberg Terminal and the Bloomberg Business app.
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 Hordern. 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
am Eastern. Subscribe to the podcast on Apple, Spotify or
anywhere else you listen, and as always on the Bloomberg
(00:34):
Terminal and the Bloomberg Business app.
Speaker 3 (00:36):
Sticking with the shutdown, as tensions are rising on Capitol Hill,
House Minority Leader Hakim Jeffries of New York is confident
a spending bill can pass, but says Republicans must first
address what he calls healthcare crisis. House Leader Jeffries joins
us now, Congressman, thank.
Speaker 1 (00:53):
You so much for being with us.
Speaker 3 (00:54):
House Leader, I want to just start with whether you
feel confident that you can complete sort of agreement in
the next few days. Do you have a timeframe as
these discussions do continue.
Speaker 4 (01:06):
Welcome morning, and great to be with you. You know,
as Democrats, we've repeatedly made clear we will sit down anytime,
any place with anyone, either here at Capitol Hill or
back at the White House, in order to reopen the government,
to enact the spending bill that actually meets the needs
of the American people as opposed to hurting everyday Americans.
And of course that spending bill must decisively address the
(01:29):
Republican healthcare crisis that is hurting working class Americans and
middle class Americans all throughout the country, including as it
relates to the urgent need to reauthorize and extend the
Affordable Care attax credits.
Speaker 5 (01:45):
Well, the Speaker told us yesterday that Congress is having
these talks when it comes to subsidies reform.
Speaker 1 (01:50):
Are you part of these talks?
Speaker 5 (01:52):
And just a quick condolences because I know you like me,
we're up late watching the Yankees lose and I know
you're a huge fan.
Speaker 1 (01:57):
Minority Leader Jeffries, Well, thank you.
Speaker 4 (02:01):
They had a great season. Unfortunately it didn't in the
way that we expected. But on to next year. With
respect to know what the Speaker has indicated, there's been
no conversation between House Republicans and House Democrats. Are between
the Republican Party, Donald Trump, the administration, and any of
us on Capitol Hill, including our conversations that should be
(02:21):
taking place with Leader Schumer and Senate Democrats since that
White House meeting that occurred last Monday. That's unfortunate, and
the behavior of Republicans since that point in time has
been unseerrious and erratic, and we continue to urge them
to find a path forward, to sit down, let's talk
exercise common sense on behalf of the American people. But
(02:44):
anything that's done has to address this urgent need. You know,
the open enrollment period starts on November first. Over the
next few weeks, tens of millions of Americans are going
to receive notices indicating that their premiums, copaids, and deductibles
are about to skyrocket, in many instances by thousands of
dollars per year. People are going to go without health insurance,
(03:06):
face medical bankruptcy, and be jammed up in a situation
where they need care for themselves, their children, and their families,
but will be unable to access it because they'll be
without health insurance.
Speaker 5 (03:19):
It was a democratic policy, though your party voted for
this temporary subsidy increase. Do you regret having an expiration
date on.
Speaker 4 (03:27):
This No, We were able to extend it through the
end of this year, in full anticipation that any reasonable
member of Congress will understand that you cannot kick tens
of millions of Americans off of health care that's become
affordable for them.
Speaker 6 (03:49):
As a result of the tax credits.
Speaker 4 (03:51):
Unfortunately, Republicans chose earlier this year to pass their one big,
ugly bill, largest cut to Medicaid in American history, ripped
food away from the mouths of hungry children and seniors
and veterans, and they did all of this to pay
for massive tax breaks that they made permanent for their
billionaire donors well at the same time refusing to extend
(04:11):
the Affordable CARECT tax credits, which is why we find
ourselves in this situation.
Speaker 1 (04:17):
Right now, Leader Jeffries.
Speaker 3 (04:18):
Some people would argue that what the Republicans are offering
is to have a clean, continuing resolution and to continue
negotiating this given the fact that at the same time,
they are going to be service members who are not
going to be paid. There's going to be a question
around foodstab stamps and whether they're going to be funded.
Air traffic controllers are calling out sick because they're not
receiving paychecks. At what point do you just say, look,
(04:40):
we need to keep people getting paid and we can
keep talking.
Speaker 4 (04:43):
We want to reopen the government, and we want to
reopen it immediately, but we also need to enact a
spending agreement that actually improves the quality of life of
the American people as opposed to hurting everyday Americans, which
Republicans have been doing all throughout this year, and they've refused,
They've refused to negotiate at every step of the way
(05:04):
throughout this year. They've taken a my way or the
highway approach. They've gone it alone. And now we find
ourselves dealing with this mess of this Republican healthcare crisis,
and time has run out.
Speaker 3 (05:15):
Leader Jeffries, do you think that you've gotten more leverage
as this process has gone on, or do you think
that it's actually waiting?
Speaker 4 (05:21):
Well, it's actually not about leverage for us. It's about
the American people. That's the fight that we're waging. Particularly
in an environment where the cost of living is way
too high.
Speaker 6 (05:31):
People are already.
Speaker 4 (05:32):
Paying too much for groceries, for housing, for their electricity bills,
and now, of course they're confronting the very real possibility
of being bankrupted by the rising costs of their health insurance.
So we're just asking Republicans to sit down and negotiate.
That's what should take place, not simply a my way
(05:54):
or the highway approach, particularly when they're asking Democrats to
support a part of san in Republicans spending bill that
continues to gut the healthcare of the American people.
Speaker 5 (06:04):
Right now, Republicans are asking is to support a clean
continuous resolution, a scoff gap funding measure, which we've seen
time and time again that Democrats also wanted Republicans to
support in the fast passed Why are Democrats choosing to
keep the government shut?
Speaker 4 (06:20):
That's a Republican talking point, unfortunately, that they are putting
into the public domain. It's not a clean continuing resolution.
Speaker 1 (06:27):
Why isn't it In March?
Speaker 6 (06:29):
I'd be happy to explain that.
Speaker 4 (06:31):
In March, the Republicans passed a partisan bill in the
House that Democrats strongly opposed. We opposed that spending bill
because it hurt veterans, hurt children and families, it hurt
housing affordability, and it hurt healthcare because of the cuts
that were included in it. There was actually a bipartisan
(06:51):
spending agreement that we reached last December that passed overwhelmingly
in the House and in the Senate. It was signed
into law by President Joe Biden, and it had the
support of then President elect Donald Trump. That would have
been a clean spending agreement that could have been put
before the Congress. Instead, they passed this partisan, Republican spending
(07:14):
bill in March that we strongly opposed, and now they
want us to continue to sign off on that particular
bill that also includes five hundred million dollars and cuts
to law enforcement grants to support police officers all across
the country. That's just not something for a variety of reasons,
we can support at this particular point in time.
Speaker 5 (07:37):
Do you think the Democratic Party could commit to broader
reforms when it comes to the Affordable Care Act and
keeping less of the subsidies. Could this be potential offrame
for a deal.
Speaker 4 (07:49):
I think that our view, certainly in the House is
that we will evaluate in good faith any bipartisan proposal
that is sent over to us from the Senate if
it decisively addresses the Republican healthcare crisis with respect to
the Affordable Care Act, tax credits, extensions, or any other
(08:09):
issues that may be put on the table because of
the enormity of the attack on the healthcare of the
American people that Republicans have waged this year.
Speaker 6 (08:17):
It's got to be meaningful.
Speaker 4 (08:18):
It's got to actually improve the lives of the American people.
Speaker 6 (08:22):
But unlike Republicans who.
Speaker 4 (08:24):
Have adopted this my way or the highway approach, we
are actually willing to sit down and evaluate in good
faith anything that could advance the ball here for working
class Americans, middle class Americans, and everyday Americans.
Speaker 5 (08:39):
Is there an opportunity for standalone legislation to make sure
that the more than one million active duty service members
get paid next week.
Speaker 4 (08:47):
Certainly, our view in the House is that we should
stand by our men and women in uniform and make
sure that they do not miss a paycheck. Unfortunately, Speaker
Johnson has ruled that out, saying it's not really an
issue that he's prepared to deal with, in part because
Republicans cancel votes last week, cancel votes this week, Apparently
(09:09):
they may not be coming back next week. And what
is that all for. Why are they on vacation in
the middle of a government shutdown, Particularly as it relates
to the real possibility that our military families might miss
a paycheck that they cannot afford to miss. We're urging
Republicans to get back into town, allow us to deal
with the military pay issue, allow us to deal with
(09:32):
the Republican health care crisis, and allow us to reopen
the government so we can enact the spending agreement that
meets the needs of the American people.
Speaker 5 (09:40):
Peter Jeffries, we also saw a pretty explosive argument between
you and the fellow New York Congressman Mike Lawler, and
then you proceeded to call Lawler an embarrassment on television.
Was this fight representative of the state tensions that are
going on within the Republican Party in New York State
right now?
Speaker 4 (10:00):
Well, Magi, Mike Lawler is an irrelevant individual. He's a
clout chaser, and he was stalking the Democratic leadership press
conference in ways that are unhinged. And at the end
of the day, our view is the people who need
to sit down and have the conversation with US Republican
leadership in the House and in the Senate. The Trump administration,
(10:23):
including the President or the Vice president or anyone that
they designate, are the ones who are ultimately going to
determine how we can find a bipartisan path out of it,
and we look forward to having those conversations, but unfortunately
Republicans to date have declined to do that.
Speaker 5 (10:39):
Well, what was he doing that you deem unhinged? And
have you spoken to him since? Have tensions cooled? It
doesn't sound like they have.
Speaker 4 (10:47):
He's an irrelevant individual and as I indicated, his behavior
clearly speaks for itself, complete and total embarrassment. As a
description was a polite use of words.
Speaker 7 (10:58):
Leader.
Speaker 3 (10:58):
There's a question here about today is to get to
unify the Democratic Party because this is somebody who is
a Republican. He's not relevant in his district, and there
is a question here, especially in New York, how to
get some sort of cohesive message as a Democrat.
Speaker 1 (11:14):
I'm just wondering, from your perspective, especially.
Speaker 3 (11:17):
As it relates to the Democratic mayoral race in New
York City.
Speaker 1 (11:21):
You have an endorsed or on mcdonnie, how.
Speaker 3 (11:23):
Difficult is it to get sort of a leadership view
of where the Democratic Party is going to go?
Speaker 4 (11:31):
Well, listen, as Democrats, what unites us is that we
believe in a strong flow and no ceiling at the
end of the day, in America, you work hard, you
play by the rules, there should be no ceiling to
your success in terms of what you can achieve for yourself,
for your family, and for your children. At the same
point in time, we also believe that in this great country,
the wealthiest country in the history of the world, that
(11:52):
we need.
Speaker 6 (11:52):
A strong flow.
Speaker 4 (11:53):
That strong flow includes social Security and Medicare, Medicaid supplemental
nutritional assistance, veterans benefits, and of course the Affordable Care Act.
And what unites Democrats at this particular point in time
is the fact that Republicans are assaulting the flaw that
we should have for everyday Americans, while at the same
time rewarding their billionaire donors, and by the way, in
(12:15):
doing so, skyrocketing the debt by more than three trillion
dollars in such a fiscally irresponsible fashion.
Speaker 5 (12:25):
Leader Jeffries, you did tell reporters last month you planned
to address the mayor race in New York soon. Do
you have a plan to endorse zoramm Donnie.
Speaker 4 (12:35):
We're in the middle of a government shut down. People
are being hurt all across the country because Trump and
Republicans decided to shut down the government rather than provide
healthcare to working class Americans. And so what I've indicated,
particularly most recently when Mayor Adams decided that he wouldn't
seek reelection, is that I will have more to say
(12:55):
about the mayor's race in advance of early voting in.
Speaker 6 (13:00):
New York City, which begins at the end of this month.
Speaker 2 (13:04):
Stay with US Mulplan tax savandance coming up after this.
Speaker 3 (13:17):
Reaching a deal to release all of the hostages in Kaza,
President Trump saying he expects the hostages to be released
probably on Monday. Joining US now is Danny Denon, Israel's
ambassador Cheesy United Nations.
Speaker 1 (13:30):
Danny, Ambassador Donna.
Speaker 3 (13:32):
I'd love to get your sense of what the mood
is like in Israel and why it has taken up
to this point that really got this deal together and
really changed the tone.
Speaker 7 (13:43):
Good morning, Lisa, Thank you for having me.
Speaker 8 (13:46):
Indeed today in Israel all around the world, we are
very hopeful.
Speaker 7 (13:50):
You know, we have been waiting for the day for
two years.
Speaker 8 (13:52):
We prayed for the release of the hostages, and we
were very determined and we stayed it very clear.
Speaker 7 (13:58):
This worle will not end.
Speaker 8 (14:00):
We will get all the hostages out and I think
that determination brought us to the position where we are today,
and we want to thank President Trump and Prime Minister
and Tanyau for the leadership. It's only the beginning, it's
only the first aage. The government will decide in two
hours about releasing terrorists, which is painful for us, and
then we will start to see hopefully the hostages coming
(14:22):
back home. That's the most important faith, but it's not
the last one. You know, we have to speak about
the future, the dimlitarization of Gaza, ensuring that Hamas will.
Speaker 7 (14:33):
Not be part of the process over there.
Speaker 8 (14:35):
So it did a long way ahead, but we are
very hopeful and happy today to think about the hostages
finally reuniting with the families.
Speaker 5 (14:45):
Ambassador, is it your understanding that President Trump is going
to travel to Israel and address the Kannesse.
Speaker 8 (14:52):
Yes, you know, we expect Prethident Traump to arrive to
it well late Saturday night or on Sunday. You know,
it will be first visit during this term, and I
think for him it's very important. You know, he was
very involved with the issue of the hostages. You know,
he met with the families, he asked about their medical conditions,
and we have to give him credit for that, and
(15:14):
it speaks volume that he comes to the region and
we have to be thankful not only to his leadership,
but the fact that now we can speak about expanding
the Abraham accodes.
Speaker 7 (15:24):
You know, after we will finish this war, is really
a peaceful nation.
Speaker 8 (15:28):
We want to build bridges, we want to sign more
peace accordes, and I think today when President's ramping in
the White House and in Jerusalem, we can start exploring
the opportunities.
Speaker 5 (15:39):
When it comes to the first phase of this peace agreement,
where exactly do you see the line where the idea
will withdraw to.
Speaker 7 (15:47):
Well, that was negotiated.
Speaker 8 (15:49):
You know, we made some compromises over there over that issue.
On the last days. Basically we're going to pull out
from the cities. And you know, we have no intention
to stay in Gaza. We don't want to be there,
and we will intend to pull out completely. But it
will happen gradually when we will see that actually Hamas
(16:09):
is giving away, it's a grip of the of the
Gatherans and allowing international.
Speaker 7 (16:15):
Forces to take over.
Speaker 8 (16:16):
We care about our security, that's the reason we moved
into Gaza.
Speaker 3 (16:22):
You're the ambassador to the United Nations, where a number
of world leaders walked out when Natanya, who was speaking just.
Speaker 1 (16:30):
A couple of weeks ago.
Speaker 3 (16:31):
I'm just wondering how difficult you think it's going to
be the repair Israel's relationship with the rest of the world,
given some of the animosity that we've seen of late.
Speaker 8 (16:40):
I think we will do it very fast. You know,
we have strong relationship with so many countries. Many of them,
you know, made mistakes. You know, we saw the difference
between politics and diplomacy. Some leaders like Macron and others
came to the UN for the show for the declarations
President Trump and primarily to NATANIAO dealt with out call
diplomacy and both resorts. So I'm sure that very fast
(17:04):
we will be able to work with those countries, continue
to contribute to developing countries. You know, we have a
lot to do, a lot to share. We paid the
heavy price, and I have to mention the price we paid.
More than one thousandthologists died since October seventh.
Speaker 7 (17:18):
It's painful for us, but we are strong and we prevailed.
Speaker 3 (17:22):
And I'm also wondering about whether there have been any
discussions to restart talks to normalize relations between Israel and
some of your other Middle East neighbors, and thinking of
Saudi Arabia, where that was clearly a discussion before this.
Speaker 1 (17:37):
But others as well.
Speaker 3 (17:39):
Is that already on the table or is that a
long ways off?
Speaker 7 (17:42):
We definitely expected to happen.
Speaker 8 (17:44):
You know, first we have to stabilize the situation, to
make sure that actually Hamas is out of the game.
Speaker 7 (17:50):
You know, it's not a given. You know, we have
to make sure that out of the game.
Speaker 8 (17:54):
And I think it will be the interest of Israel,
the US, and many moderatest countries.
Speaker 7 (17:59):
To move forward.
Speaker 8 (18:00):
And it's important to mention that, you know, the Abraham
Coos countries sticks to the peace agreement we signed with them,
even though it was challenging and difficult for them during
the war, and we appreciate that.
Speaker 5 (18:12):
Are you concerned with a fragile relationship with Egypt? Earlier
in September, we had President LCCI talk about the fact
that Israel was a quote enemy, and we've seen a
lot of acrimonious statements and individuals saying it's almost the
closest these two countries have been to war since nineteen
seventy nine.
Speaker 8 (18:31):
Now we have a stronger bond with the Egyptian government.
You know, we know that during the war it wasn't
the domestic politics some of those leaders and they had
to play the game. But we collaborate with Egyptians and
I think now we should aim to expending peace.
Speaker 7 (18:47):
That's our goal in the future.
Speaker 5 (18:49):
Well, when it comes to Egypt and Cutter and United
Arab Emirates, which you already have a peace agreement with,
how do you see these countries working with Israel when
it comes to face two and three of rebuilding Gaza, Well.
Speaker 7 (19:04):
I think it will be more than that.
Speaker 8 (19:05):
It will require the involvement of more countries and I
cannot name name it, but we are talking with the
major players that are willing to contribute to the efforts
for the reconstruction of Gada. And it's not only physical reconstruction.
We have to build the environment, a society that will
not glorify terrorism. You know, for twenty years Hamas took
(19:27):
the people of Gada hostage, and I think now Dava
the option to build a better future and have to
be responsible about it and not allow radicals to take
over Gada again.
Speaker 9 (19:40):
Stay with us.
Speaker 2 (19:41):
More plan Taxavidance coming up after this.
Speaker 3 (19:52):
Turning back to the broader markets, the stocks trade near
all time highs. Richard Bernstein of RB Advisors, writing, markets
are ins some sort of speculative fervor. It is very
obvious that investors are not risk averse.
Speaker 1 (20:05):
Richard joins us now is probably an understatement.
Speaker 3 (20:08):
Richard, I am curious whether you think it's gone too
far or do you get on the train and follow momentum.
Speaker 10 (20:13):
So, Lisa, good morning, It's great to be with you.
I think the problem with being a momentum investor is
never trying to figure out should we get on the train.
I mean, that's easy. You can see what's going on
the moment. The key to momentum investing is knowing when
to sell and when to get off right, Like who
sold technology stocks at the peak of the bubble in
March of two thousand. That would be the perfect momentum investor.
(20:35):
And we know from history that people are very bad sellers.
And so I think what the speculative environment really shows
is that the most important part of a portfolio right
now is diversification. You may want to play momentum, but
don't overplay momentum.
Speaker 3 (20:50):
To just underscore what you're saying are you selling tech
stocks right now?
Speaker 10 (20:55):
So we have been famous or infamous for not overweighting them,
So I don't think we have to sell anything because
we're not overweight. I think what we've done, though, what
we've done very effectively in our portfolios is find other
areas that people are ignoring that are performing quite well,
you know, whether that be non US quality, whether that
(21:15):
be dividends, whether that be small and MidCap industrials. I
think there's lots of different things that have been performing
well that are way off of people's radars.
Speaker 5 (21:23):
But when it comes to historically how it's difficult for
individuals to sell during all of this momentum, what are
you looking at that would give you the signs that
potentially this could be the meltdown?
Speaker 10 (21:34):
So I think, you know, like, if you want to
look for a risk, I think the risk to look
for right now is can the FED cut rates as
much as the market is presently anticipating and as much
as investors are presently anticipating. And the reason I say
that is that people forget that the FED is the
central bank, and that is the keyword bank, and that
(21:58):
the way they impart monetary policy is through the banking system.
So if the banking system is hesitant to lend, then
the FED cuts rates to try and make the cost
of funding cheaper for banks to encourage lending. If the
banking sector is lending too much, then the economy is overheating.
The FED will raise interest rates to try to increase
(22:19):
the cost of funding to slow down lending, which in
turn will slow the economy. So the question we should
all be asking right now, and the question the FED
should be asking, is where is the hiccup in the
financial sector that is constraining lending, which is constraining growth.
I think that's very hard to find right now.
Speaker 5 (22:36):
Well, if there isn't one, then do you think the
FED should be cutting out all the rest of the year.
Speaker 10 (22:42):
I I don't. Look, I can't tell you whether they
should or they shouldn't. It sound like JPL's calling me
up and asking me, rich should I cut rates? So
what I think they should do maybe irrelevant. I think
what's important is for investors to think about that risk
and to think about what the comes could be. And
what I was saying before, you know that you may
(23:03):
want to be better diversified than you were a month
ago or two months ago, or certainly six months ago.
And I think that's the way to think about what's
going on here. I think it's going to be more
difficult for the FED to cut rates than they think
right now, and certainly more difficult than the markets think
right now.
Speaker 1 (23:20):
You've been in the market a long time, Richard.
Speaker 3 (23:22):
One thing that's been very interesting to me is how
much the idea of diversification has shifted over the past
five years. And I just wonder when you say diversify,
how much that has a different meaning today than say,
the sixty forty portfolio of your Oh.
Speaker 10 (23:38):
Absolutely, And I think part of that, Lisa, is the
sixty percent portfolio. You know, your stock portfolio has turned
out to be like seven or ten or twenty stocks,
And so how much diversification do you even get just
by going sixty forty. I think that's right. I think
one has to look at should be looking at things
like commodities, should be looking at various alternative investments, with
(24:00):
the reasoning that alts is not a real category, like
it really likes to say alternatives. That's kind of silly,
that's like kind of saying I want to be invested.
There are different kinds of waults that have different goals
and different things like that, and I think it's worth
looking at some of that. But I don't think, you know,
one should be saying there's only seven growth stories in
(24:21):
the world. That seems silly to me.
Speaker 1 (24:23):
Do you think that there is a story to play?
Speaker 3 (24:25):
And I keep thinking about what Almos Hokstein had to say,
former White House senior advisor as well as a player
now in the space of infrastructure with energy and AI.
I just wonder how much the market is fully appreciated
how much investment has to go into infrastructure and the
real economy. Certainly that is a very hot area in
private markets. Do you see ways to get into that
(24:47):
kind of idea in public markets or beyond that haven't
fully been tapped.
Speaker 10 (24:52):
So, Lisa, I think the best long term investment story
is all about small and MidCap industrial company these and
the reindustrialization of the United States and the infrastructure that
has to go along with that. You know, one of
the things that people have talked a lot about is
the price of electricity. And I don't know if you're aware,
but in the last five years we have had the
(25:14):
biggest run up in electricity prices in modern American history.
They're up nationwide by like eighty percent in the last
five years. This has become for those of you who
live in New York, New Jersey, you know, this has
become a big issue in the New Jersey gogmunuatorial election.
They're talking about electricity prices. Well, you know, the thing
that people always forget is that bubbles misallocate capital and
(25:35):
in doing so, they are inflationary. And I think electricity
prices are a classic one. Where we're building out data
centers before the infrastructure is built. That's like building factories
before the roads are built to move the stuff in
and out from the factory. It's silly to think that way.
And here's a good way to think about this misallocation
of capital that's going on the economy that is so inflationary.
(25:55):
Imagine if all the capital that was going into cryptocurrencies
in dead was invested in the US electric grid. Would
we be having electricity prices up by the most in
modern American history? I don't think so.
Speaker 3 (26:09):
So are you buying electric grid related stocks? Is that
sort of what you're saying, That's that's where it needs
to go.
Speaker 10 (26:16):
Well, it has been that has been a sub theme
of ours for like a decade. There's nothing new for
those of us at RBA. I mean it is, you know,
the notion of small and MidCap industrial companies includes you know,
things like the grid, includes all this kind of you know,
industrial infrastructure type stuff. So you know, you always say
to people, imagine if you go to a cocktail party
(26:37):
and you didn't talk about in Nvidia, but you tried
to get people interested in carbon wire, I think you'd
be the skunk at the cocktail party.
Speaker 3 (26:45):
It would go back to the graduate plastics really enjoyed that, right,
this copper wire. I am just curious going forward how
much signal you take from the likes of Delta and
PEPSI earnings coming out better than expected. Delta in particular
talking about how travel is accelerated, not just the front
of the cabin but more broadly even in the economy sections.
How much do you take that as the economic data
(27:07):
to hint your heat on and sort of bet on,
even if you're diversified, the ongoing momentum in this economy.
Speaker 10 (27:13):
Oh well, there's there's no question Lisa about is the
economy healthy?
Speaker 5 (27:17):
Right?
Speaker 10 (27:17):
I mean the Atlanta FEDS GDP now is tracking if
I'm not mistaken, and roughly about three and a half
to four percent. I mean that's pretty good growth by
US standards. I would say, so there should be no
doubt that the economy is healthy. I mean, we could
argue about whether that's evenly divided among the economy and
how that's you know, what parts of the economy are healthy,
but the general economy is actually quite healthy. And you know,
(27:41):
if you think about nominal growth, you think about the
three and a half to four percent real growth, plus
you think about we could argue, let's say three to
four percent inflation, depending on how you're measuring it. You know,
we're talking, you know, six to seven percent nominal growth.
I mean that's that's a pretty strong environment. And that's
one of the reasons why I don't think people I
think people are overestimating the ability to FED to come
(28:03):
rates going forward. Seven percent nominal growth, I mean, that's
pretty strong growth.
Speaker 2 (28:08):
Stay with us mulblindex. Savannah's coming up off to this.
Speaker 3 (28:21):
US Treasury Secretary Scott Beston has finished interviewing eleven candidates
to replace FED chair J Powell. According to The Financial Times,
candidates were grilled for up to two hours on their
views on interest rates and FED reforms, and perhaps we
will actually get a couple of the final candidates who
can make their debut in discussions and in the race.
(28:41):
Sticking with the Federal Reserve FED minutes showing caution to
ease driven by inflation concerns, Vincent Reinhardt B and Y
Investments writing this. With the federal government shut down, less
data are available, which we think makes a data dependent
FED more likely to ease.
Speaker 1 (28:57):
Vincent joins us, Now, wonderful to see you. It's been
too long.
Speaker 3 (29:00):
I want to start there this idea that actually the
meeting minutes showed what the dots showed, which is a
huge dispersion of opinions and a lot of people who
were reluctant to ease again heading into the year end.
Why does the government shut down change your calculus?
Speaker 11 (29:15):
So what they did in September lays the tracks down
for what they do in October.
Speaker 9 (29:20):
And what did they do in September?
Speaker 11 (29:22):
They eased, but they didn't strongly signal policy action, and
they emphasized data dependence, and then they let everyone express
their own view in the summary of economic projections. Makes
it really hard to send a coherent message when you
let everyone address their own view of the appropriate policy rate.
(29:43):
But what was important about that is they were leaning
toward policy ease and said they were data dependent. What
that means is the data has to stop them, i e.
Do you get evidence that disproves the case that it's
appropriate to ease. That's what reconciled the whole group to
(30:05):
the policy choice. Guess what, they don't have data that
can disprove the case.
Speaker 3 (30:11):
We just got data about six minutes ago from Delta.
Speaker 1 (30:14):
They came out with their earnings and.
Speaker 3 (30:15):
The expectation that actually there's going to be a reacceleration
into the end of this year with consumer demand not
just at the front of the cabin but throughout the
entire cabin coming back. I just wonder, is that data
that actually should be relied on more given the fact
that we aren't getting official data and the data that have.
Speaker 1 (30:30):
Been released by the United States have been.
Speaker 11 (30:33):
Mixed, so they'll have to rely more on private data.
They're already scraping lots of big data sources. There's lots
of individual vendors, and don't forget it's the federal Reserve system,
which means that you have all that staff at Reserve
Bank talking to business people all over the country in
(30:54):
their summarizing that in their page book. So they have
a lot of sources of information. They don't have an
officialture on it. But that has a couple consequences. One
is they're not flying blind. However, we are more in
the dark about how they're flying because they're using private
(31:18):
information that won't be conveyed to us.
Speaker 5 (31:21):
Okay, but you were at the FED for what almost
a decade?
Speaker 9 (31:24):
It's actually a quarter century.
Speaker 5 (31:25):
But okay, well tell us what do you think they're
looking at? That's not the gold standard economic data that
comes out of BLS.
Speaker 11 (31:34):
So what I can tell here is you're filling the
entire media block with the news that is out, and
that's earnings reports, and so they are looking at whatever
they got, and what do they have. They have a
lot more than they had previously, Lots of information from
(31:56):
credit card processors, lots of information from the big block
stores that have up to the minute data on pricing
and sales. They'll get credit reports, they'll get the anecdotal reports.
Speaker 9 (32:16):
And what do we notice in COVID there was a.
Speaker 11 (32:19):
Whole blossoming of new indicators of high frequency demand. What
was that You apply a lot of resources with a
lot of information.
Speaker 9 (32:31):
They're going to do their best and that's what they're doing.
Speaker 6 (32:33):
Now.
Speaker 5 (32:33):
There's not a ton of debate about what the FED
will do the rest of the year. How are you
thinking about next year? Especially as Lisa was just mentioning,
the treasure Secretary just wrapped up his interviews for who's
going to lead the FED?
Speaker 9 (32:43):
Completely different. This year is easy.
Speaker 11 (32:46):
This year is let's agree on a macro forecast. Let's
think how has the FED previously acted, what is an
appropriate policy rule? And then just plug your numbers in
and that will get you probably another half point of
easing in twenty twenty five. It's a closer call toward
the end of the year exactly, because maybe inflation will
(33:10):
come up, maybe the economy won't soften as much as
they're worried because they're easing. As for risk management, they're
buying insurance by the end of the year, they may
not need it next year. Completely different. Why because the
Federal Reserve system is set up so that the leadership
(33:31):
of the FED turns over with the political process, So
the administration will get new slots and the Federal Reserve system.
The whole is set up to give the board pre
eminent role in monetary policy, so the White House is
(33:51):
going to use that.
Speaker 3 (33:52):
As an economist watching this, does it worry you that
you've seen such a devaluation of the dollar and that
you've seen gold increasingly take hold as a haven type
of instrument.
Speaker 11 (34:03):
So I have a Bloomberg worksheet right on my desk,
which is independence Watch. What do you look for if
there were concerns about the future of central bank monitor
policy making in the United States? You would look at
non dollar assets, so you would look at gold, You
look at the price of some crypto.
Speaker 9 (34:26):
You would also look.
Speaker 11 (34:27):
As hard as you can at the whole term structure
of US interest rates.
Speaker 9 (34:33):
A little worrying that, yes.
Speaker 11 (34:37):
The very little volatility in the bond market ten years
has been flatlining, but the ten year ten year forward
is drifted up, and some measures of inflation compensation have
come up. Thus far, not a lot of warning flores
flares and markets about worries about central bank independence, but
(34:57):
we think that's going to come.
Speaker 2 (35:00):
This is the Bloomberg Surveillance Podcast, bringing you the best
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