Bloomberg Audio Studios, Podcasts, radio news.

Bloomberg Audio Studios, Podcasts, radio news.

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie 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 terminal and the Bloomberg Business app.

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie 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 terminal and the Bloomberg Business app.

And we did get this morning, an Marie a response from China yep.

And we did get this morning, an Marie a response from China yep.

The Ministry of Commerce coming out and saying they vow to take measures to defend their rights.

The Ministry of Commerce coming out and saying they vow to take measures to defend their rights.

They say that.

They say that.

They resolutely oppose what the US is doing this morning with these tariffs. They say the decision is quote political manipulation, and also Lisa urging the US to cancel the ector tariffs and correct this quote wrongdoing.

They resolutely oppose what the US is doing this morning with these tariffs. They say the decision is quote political manipulation, and also Lisa urging the US to cancel the ector tariffs and correct this quote wrongdoing.

Let's see whether that works.

Let's see whether that works.

Joining us for the rest of the hour is former National Economic Council Director Gary Cohene. Gary so much to work through here in terms of whether it's tariffs, whether it's the fiscal policy or whether it's the deficit.

Joining us for the rest of the hour is former National Economic Council Director Gary Cohene. Gary so much to work through here in terms of whether it's tariffs, whether it's the fiscal policy or whether it's the deficit.

I want to start more broadly.

I want to start more broadly.

This question of how much are from some of the fiscal policies directing investment theories right now in terms of where some of the money is going and what gates are being put up.

This question of how much are from some of the fiscal policies directing investment theories right now in terms of where some of the money is going and what gates are being put up.

Well, Look, fiscal policy and monetary policy are directly impacting how money is being spent, what money is available today, and I think that's even.

Well, Look, fiscal policy and monetary policy are directly impacting how money is being spent, what money is available today, and I think that's even.

A more important topic.

A more important topic.

We have gone through a pretty vicious cycle over the last four years where we went from a cycle of zero interest rates, an abundance of capital capital available for almost all startups in this country and funding at various stages of your progression from startup to early stage, to mid stage to late stage to IPO, to a place where we are today where there's very little investment capital available for young companies and startup companies and the IPO market just starting to reopen. So that is all a function of fiscal policy monetary policy, because they're interstricably linked. And when people were not getting a return on their capital in the bank and there was a zero risk return, zero risk assets out there, people bought assets that they thought could provide an enhanced return for them, so they were willing to take more risk. They were willing to invest in startup companies. Today you can go out and buy a six month treasure bill and get five point three five point four percent on a tax preferential asset. So we have changed the whole mentality of the way people think about holding capital, investing capital, recirculating capital. Also, with the capital markets have that then closed for so long. A lot of that capital that was invested in three four, five, six, seven years ago, many of those people thought it had a three four, five six year duration. They would get liquified by taking those companies public, and then they would recirculate that risk capital back into the financial markets. They have not been liquefied because the capital market has been closed, so therefore that risk capital does not get to recirculate back.

We have gone through a pretty vicious cycle over the last four years where we went from a cycle of zero interest rates, an abundance of capital capital available for almost all startups in this country and funding at various stages of your progression from startup to early stage, to mid stage to late stage to IPO, to a place where we are today where there's very little investment capital available for young companies and startup companies and the IPO market just starting to reopen. So that is all a function of fiscal policy monetary policy, because they're interstricably linked. And when people were not getting a return on their capital in the bank and there was a zero risk return, zero risk assets out there, people bought assets that they thought could provide an enhanced return for them, so they were willing to take more risk. They were willing to invest in startup companies. Today you can go out and buy a six month treasure bill and get five point three five point four percent on a tax preferential asset. So we have changed the whole mentality of the way people think about holding capital, investing capital, recirculating capital. Also, with the capital markets have that then closed for so long. A lot of that capital that was invested in three four, five, six, seven years ago, many of those people thought it had a three four, five six year duration. They would get liquified by taking those companies public, and then they would recirculate that risk capital back into the financial markets. They have not been liquefied because the capital market has been closed, so therefore that risk capital does not get to recirculate back.

So a little bit of.

So a little bit of.

The natural cadence of capital moving in and out of risk assets has changed, both because of fiscal policy and monetary policy.

The natural cadence of capital moving in and out of risk assets has changed, both because of fiscal policy and monetary policy.

There's a lot to impact right there, are you basically saying that On the monetary policy side, low rates usually benefit the smaller, more leverage companies. Rates go up, that benefits more some of the larger companies that are able to be sort of turn out their debt structures in a more considerable way. Are you saying that fiscal policy also benefits the bigger companies more because they're the ones that are eligible for some of these grants.

There's a lot to impact right there, are you basically saying that On the monetary policy side, low rates usually benefit the smaller, more leverage companies. Rates go up, that benefits more some of the larger companies that are able to be sort of turn out their debt structures in a more considerable way. Are you saying that fiscal policy also benefits the bigger companies more because they're the ones that are eligible for some of these grants.

I didn't really say what you're saying.

I didn't really say what you're saying.

I don't think higher rates help anyone. Okay, if you're a large company and you're still running a large debt portfolio, you're always you're always worried about your weighted average cost of debt.

I don't think higher rates help anyone. Okay, if you're a large company and you're still running a large debt portfolio, you're always you're always worried about your weighted average cost of debt.

You're whackedy, so.

You're whackedy, so.

You're thinking about what that is, and the lower it is, the better it is.

You're thinking about what that is, and the lower it is, the better it is.

You know, ultimately, at the end.

You know, ultimately, at the end.

Of the day, you sell your goods or you sell your services to your customers. Then you've got your expense line, which is usually the biggest line, and the expenses is salaries and costs. But then if you get down a little bit down, cost of debt is a big item. So to the extent that cost of debt goes up, the price of your goods or service has to go up. So companies, you know, either the profit margins contract as interest rates go up, or they have to raise the price of their goods.

Of the day, you sell your goods or you sell your services to your customers. Then you've got your expense line, which is usually the biggest line, and the expenses is salaries and costs. But then if you get down a little bit down, cost of debt is a big item. So to the extent that cost of debt goes up, the price of your goods or service has to go up. So companies, you know, either the profit margins contract as interest rates go up, or they have to raise the price of their goods.

So in a perfect.

So in a perfect.

World, no one really wants interest rates to go up, but there is a sort of middle ground where interest rates are a level low enough where they're not really affecting and the economy is growing without fiscal stimulus from the federal government. The question is really more when fiscal stimulus from the government comes in, how does that react. And right now we actually have one of the most unique periods of time because we've got, on one hand, we've got the Federal Reserve, which is trying to raise rates to slow down economic growth to get inflation under control, and we've got the federal government on fiscal policy on the other side, looking to invest capital to grow the economy. Those two things are countervailing forces. We don't see a lot of times in our economic history when we've got both of those things going on at.

World, no one really wants interest rates to go up, but there is a sort of middle ground where interest rates are a level low enough where they're not really affecting and the economy is growing without fiscal stimulus from the federal government. The question is really more when fiscal stimulus from the government comes in, how does that react. And right now we actually have one of the most unique periods of time because we've got, on one hand, we've got the Federal Reserve, which is trying to raise rates to slow down economic growth to get inflation under control, and we've got the federal government on fiscal policy on the other side, looking to invest capital to grow the economy. Those two things are countervailing forces. We don't see a lot of times in our economic history when we've got both of those things going on at.

The same time. Usually we're in unison.

The same time. Usually we're in unison.

Usually the Fed's trying to grow the economy by lowing rates and the government is trying to spend money to grow the economy.

Usually the Fed's trying to grow the economy by lowing rates and the government is trying to spend money to grow the economy.

That's normally what you see.

That's normally what you see.

Is you're coming out of a very tough economic period. When you're in a very robust economic period, the Federal Reserve is raising interest rates trying to slow it down, and the federal government does not need to spend money because you're in a very robust economic time. This time it's very different than the historical past.

Is you're coming out of a very tough economic period. When you're in a very robust economic period, the Federal Reserve is raising interest rates trying to slow it down, and the federal government does not need to spend money because you're in a very robust economic time. This time it's very different than the historical past.

As an investor, who do you bet on winning the FED or fiscal policy?

As an investor, who do you bet on winning the FED or fiscal policy?

You know, I don't know if there's a winner or a loser.

You know, I don't know if there's a winner or a loser.

I think you have to be realistic to what's going on and who's trying to do what. The Biden administration has been pretty consistent on their fiscal policy agenda. They have been trying to spend money and put money into the economy since day one, since the first COVID relief to one point nine trillion dollars they put in early, and they continuously find ways to put money into the economy, as recently as relief of student loans. So they're continuously looking at ways to fiscally stimulate the economy. The FED, on the other hand, is responding to the outcome of that money being put in the economy.

I think you have to be realistic to what's going on and who's trying to do what. The Biden administration has been pretty consistent on their fiscal policy agenda. They have been trying to spend money and put money into the economy since day one, since the first COVID relief to one point nine trillion dollars they put in early, and they continuously find ways to put money into the economy, as recently as relief of student loans. So they're continuously looking at ways to fiscally stimulate the economy. The FED, on the other hand, is responding to the outcome of that money being put in the economy.

There's a cause and.

There's a cause and.

Effect, you know, many of us think there's the effect is so much money being put in the economy, the money supply expanding so quickly that you've got too much money chasing too few goods, and therefore you had an inflationary time, inflationary pressures. So the FED is responding to the to the effect of the cause, and they are raising rates trying to slow that down. So if I were going to bet the Biden administration will continue with fiscal stimulus. In fact, they have a lot of stimulus already approved where they have not given out the money, so that money has not fed through the economy, and the FED will continue to monitor the financial conditions, and most importantly, they'll continue to monitor the path of inflation based on the data that they get, and they will decide what great policy looks like based on that.

Effect, you know, many of us think there's the effect is so much money being put in the economy, the money supply expanding so quickly that you've got too much money chasing too few goods, and therefore you had an inflationary time, inflationary pressures. So the FED is responding to the to the effect of the cause, and they are raising rates trying to slow that down. So if I were going to bet the Biden administration will continue with fiscal stimulus. In fact, they have a lot of stimulus already approved where they have not given out the money, so that money has not fed through the economy, and the FED will continue to monitor the financial conditions, and most importantly, they'll continue to monitor the path of inflation based on the data that they get, and they will decide what great policy looks like based on that.

Gary, I want to ask you about the next fiscal fight, which is the Trump error tax cuts. They are coming, they're expiring next year. Do you think they should be extended?

Gary, I want to ask you about the next fiscal fight, which is the Trump error tax cuts. They are coming, they're expiring next year. Do you think they should be extended?

So?

So?

I think tariffs is one of the most interesting topics that we dealt with when I was in the White House, and I think the Biden administration's dealing with now.

I think tariffs is one of the most interesting topics that we dealt with when I was in the White House, and I think the Biden administration's dealing with now.

You know, it's interesting.

You know, it's interesting.

Despite a lot of rhetoric, the policies are starting to bend towards each other. It's hard to know the difference between the two let's call them candidates policies to tariffs, they're evaries.

Despite a lot of rhetoric, the policies are starting to bend towards each other. It's hard to know the difference between the two let's call them candidates policies to tariffs, they're evaries.

I'll talk about tariffs.

I'll talk about tariffs.

So when you look at tariffs and you think about tariffs on things that we manufacture in the United States and we can sustain ourselves, I think it makes sense to tariff a country that is importing things in the United.

So when you look at tariffs and you think about tariffs on things that we manufacture in the United States and we can sustain ourselves, I think it makes sense to tariff a country that is importing things in the United.

States at a buli low cost.

States at a buli low cost.

So we know that China has some real economic advantages. We know that they don't pay fair market labor. We know that they don't have a cost of capital. We know that they don't have environmental restrictions that US companies have, so we know they've got a competitive vantage.

So we know that China has some real economic advantages. We know that they don't pay fair market labor. We know that they don't have a cost of capital. We know that they don't have environmental restrictions that US companies have, so we know they've got a competitive vantage.

So if they're using that competitive.

So if they're using that competitive.

Vantage to dump products in the United States that we make and therefore they're displacing US manufacturers and US jobs, yes we should protect our border. On the flip side, if they are exporting and we are importing goods that we need that we do not make in the United States and there's no replacement for us in the United States, and we put a terrify on it, it basically becomes a consumption tax. You and I and all of us are going to buy those products. We're now just paying more for the same product.

Vantage to dump products in the United States that we make and therefore they're displacing US manufacturers and US jobs, yes we should protect our border. On the flip side, if they are exporting and we are importing goods that we need that we do not make in the United States and there's no replacement for us in the United States, and we put a terrify on it, it basically becomes a consumption tax. You and I and all of us are going to buy those products. We're now just paying more for the same product.

Do you think that we're going to see more of these walls go up, whether or not Biden or Trump get in the lighthouse next year, Like how high are we talking?

Do you think that we're going to see more of these walls go up, whether or not Biden or Trump get in the lighthouse next year, Like how high are we talking?

You know, I think there's a thought right now that the walls should go higher. I think at some point there is diminishing re turns. You know, we've got a lot of historical data on putting tariffs in whether there were old steel tariffs on their other presence. When I was in the White House, we did a three oh one on washing machines, and if you look at the whole theory of what happened with washing machines, it's quite interesting. Yeah, we put teriffs on washing machines, but the prices of dryers went up equally with washing machines, because you know, the manufacturers think, well, people think washers and dryers cost the same thing, even one had even though one had terriffts on it and one didn't, you know, very inflationary to buy a washing machine and a dryer. Did it bring manufacturing back to the United States?

You know, I think there's a thought right now that the walls should go higher. I think at some point there is diminishing re turns. You know, we've got a lot of historical data on putting tariffs in whether there were old steel tariffs on their other presence. When I was in the White House, we did a three oh one on washing machines, and if you look at the whole theory of what happened with washing machines, it's quite interesting. Yeah, we put teriffs on washing machines, but the prices of dryers went up equally with washing machines, because you know, the manufacturers think, well, people think washers and dryers cost the same thing, even one had even though one had terriffts on it and one didn't, you know, very inflationary to buy a washing machine and a dryer. Did it bring manufacturing back to the United States?

Yes, it did.

Yes, it did.

We brought the foreign manufacturers, you know, the LG's and the samsings that were that were importing in the United States.

We brought the foreign manufacturers, you know, the LG's and the samsings that were that were importing in the United States.

Did they open manufacturing United states, Yes they did.

Did they open manufacturing United states, Yes they did.

So we did create some jobs, but we really increased the price of the washing machine and the dryer. So there's a lot of historical data on what happens when you tariff.

So we did create some jobs, but we really increased the price of the washing machine and the dryer. So there's a lot of historical data on what happens when you tariff.

Bi WTI hovering around seventy nine dollars a barrel as traders await Ope's next move and inflation data. Meanwhile, on the other side, copper touching its highest level since twenty twenty two, fueled by forecasts of a global supply deficit. Jeff Curry of Carlisle joining US now and Jeff, that's where I want to start. Traditionally people focused on oil prices. Right now, what we're seeing is oil steadying. For seeing the rest of the oil, the rest of the commodity complex surging ahead, up some eight point two percent since the end of February.

Bi WTI hovering around seventy nine dollars a barrel as traders await Ope's next move and inflation data. Meanwhile, on the other side, copper touching its highest level since twenty twenty two, fueled by forecasts of a global supply deficit. Jeff Curry of Carlisle joining US now and Jeff, that's where I want to start. Traditionally people focused on oil prices. Right now, what we're seeing is oil steadying. For seeing the rest of the oil, the rest of the commodity complex surging ahead, up some eight point two percent since the end of February.

What makes for the divergence.

What makes for the divergence.

Copper is the new oil. We put out a piece back in twenty twenty one. Now making these bullish arguments, and by the way, they haven't worked out. But I talk to a lot of people who will say copper is their highest conviction trade.

Copper is the new oil. We put out a piece back in twenty twenty one. Now making these bullish arguments, and by the way, they haven't worked out. But I talk to a lot of people who will say copper is their highest conviction trade.

I wear my copper bracelet right here. It is the highest conviction trade I've ever seen.

I wear my copper bracelet right here. It is the highest conviction trade I've ever seen.

If you've got decarbonization, green cap backs demand, AI, data center demand, military demand, it takes twelve, sometimes twenty six years to bring on new supply.

If you've got decarbonization, green cap backs demand, AI, data center demand, military demand, it takes twelve, sometimes twenty six years to bring on new supply.

You can't come up with a better story.

You can't come up with a better story.

But the bottom line, we've been telling this story for three years, and maybe now it's beginning to work. I'm confident that this time it's liftof and I think we're going to see more momentum behind it because you have three sources of demand this time around, meaning green cap X, AI plus military. Back in twenty twenty one, all we had was the green capex demand, and now it's.

But the bottom line, we've been telling this story for three years, and maybe now it's beginning to work. I'm confident that this time it's liftof and I think we're going to see more momentum behind it because you have three sources of demand this time around, meaning green cap X, AI plus military. Back in twenty twenty one, all we had was the green capex demand, and now it's.

In full force. Supplies not there, Inventories are tight.

In full force. Supplies not there, Inventories are tight.

Prices have more than doubled going back to March of twenty twenty and I'm looking right now, how far more is there to rally at a time where you're still wearing your copper bracelet.

Prices have more than doubled going back to March of twenty twenty and I'm looking right now, how far more is there to rally at a time where you're still wearing your copper bracelet.

I think, you know, our target was fifteen thousand dollars a ton, when it's trading you know, just a little bit above ten thousand as of this morning, which means you know, it's got a long ways to go.

I think, you know, our target was fifteen thousand dollars a ton, when it's trading you know, just a little bit above ten thousand as of this morning, which means you know, it's got a long ways to go.

Where do we come up with that fifteen thousand? It was the highest real price ever reached in nineteen sixty eight during.

Where do we come up with that fifteen thousand? It was the highest real price ever reached in nineteen sixty eight during.

That housing boom. So we don't know where demand destruction occurs. All we do know is that bringing on new supply is very difficult.

That housing boom. So we don't know where demand destruction occurs. All we do know is that bringing on new supply is very difficult.

So we're going to learn.

So we're going to learn.

Where those price levels are where you begin to kick out demand.

Where those price levels are where you begin to kick out demand.

But I go back to the two.

But I go back to the two.

Thousands and that's bullish on oil then as I am copper today. You know, oil ended up going up from twenty to one hundred and forty seven times, so you know, the upside on copper think is very significant.

Thousands and that's bullish on oil then as I am copper today. You know, oil ended up going up from twenty to one hundred and forty seven times, so you know, the upside on copper think is very significant.

We're seeing a lot of supply when it comes to countries outside of OPEC. Plus, Jeff, do you think that potentially we're on a bearish trajectory when it comes to the oil market for this year and next.

We're seeing a lot of supply when it comes to countries outside of OPEC. Plus, Jeff, do you think that potentially we're on a bearish trajectory when it comes to the oil market for this year and next.

Absolutely not.

Absolutely not.

You know that one of the big sources of oil supply over the last eighteen months came from sanctioned countries, you.

You know that one of the big sources of oil supply over the last eighteen months came from sanctioned countries, you.

Know, Venezuela, Iran, Russia.

Know, Venezuela, Iran, Russia.

Yes, they've attacked these these sanctions and clapped down, but they don't come into effect until after the election one hundred and eighty days from now. So that's been one of the big drivers and also an energy to I don't forget the massive surge in coal production that occurred in China, Indonesia, and India over that same time period. So there's a lot of energy in the system that has backed up that needs to be eaten through. When we think about the underlying demand, you know, it's not spectacular like it is in.

Yes, they've attacked these these sanctions and clapped down, but they don't come into effect until after the election one hundred and eighty days from now. So that's been one of the big drivers and also an energy to I don't forget the massive surge in coal production that occurred in China, Indonesia, and India over that same time period. So there's a lot of energy in the system that has backed up that needs to be eaten through. When we think about the underlying demand, you know, it's not spectacular like it is in.

Copper, but it's rock solid.

Copper, but it's rock solid.

You know, it's well above long term average growth rates.

You know, it's well above long term average growth rates.

You're going into the gasoline.

You're going into the gasoline.

Driving season jet fuel and by the way, I remember, global warming means your cooling season is going to create more demand. In the past, we didn't build inventory, so that three Q bowl story is still very much intact driven by fundamentals, even without any geopolitical risk price team. Also on oil, I want to note that when we look at positioning, it's down to the fourteen percentile.

Driving season jet fuel and by the way, I remember, global warming means your cooling season is going to create more demand. In the past, we didn't build inventory, so that three Q bowl story is still very much intact driven by fundamentals, even without any geopolitical risk price team. Also on oil, I want to note that when we look at positioning, it's down to the fourteen percentile.

Now.

Now.

This market is basically no long positioning in it right now, and we're still sitting at eighty three eighty four dollars a barrow, which is a testament to the underlying strength.

This market is basically no long positioning in it right now, and we're still sitting at eighty three eighty four dollars a barrow, which is a testament to the underlying strength.

You know.

You know.

Putting it all together, I want to emphasize commodities are still the best performing an asset class despite the pullback in oil prices.

Putting it all together, I want to emphasize commodities are still the best performing an asset class despite the pullback in oil prices.

Jeff, let's talk about gold for a moment. I'm not wearing any gold that I can hold up. But it's a time where investors can get real yields in short term parts of the market.

Jeff, let's talk about gold for a moment. I'm not wearing any gold that I can hold up. But it's a time where investors can get real yields in short term parts of the market.

Why are gold prices still.

Why are gold prices still.

Going up and how much of that is activity by the central bankers.

Going up and how much of that is activity by the central bankers.

Well, I think a big difference between this commodity rally and any other commodity rally most any human being alive.

Well, I think a big difference between this commodity rally and any other commodity rally most any human being alive.

Has ever seen before is it's not accompanied.

Has ever seen before is it's not accompanied.

With dollar resigning. I meaning think about the petro dollar system. Oil prices go up, Saudi Arabia accumulates more dollars, they plow it into US treasuries, puts downward pressure on rates. Dollar begins to weaken, which reinforces the reflation, and it becomes a virtuous cycle between oil prices and the dollar, reinforcing higher commodity prices.

With dollar resigning. I meaning think about the petro dollar system. Oil prices go up, Saudi Arabia accumulates more dollars, they plow it into US treasuries, puts downward pressure on rates. Dollar begins to weaken, which reinforces the reflation, and it becomes a virtuous cycle between oil prices and the dollar, reinforcing higher commodity prices.

That's not playing out this time.

That's not playing out this time.

Why because many of the bricks country back in November of last year, decided to start to trade with one another using local currencies and then settle the differences in gold.

Why because many of the bricks country back in November of last year, decided to start to trade with one another using local currencies and then settle the differences in gold.

So what we've replaced.

So what we've replaced.

Dollar recycling with is gold recycling, and that has created this upticking gold despite a stronger dollar. Normally, you would look at the fundamentals today and you would go, oh, gold should be going down, real rates are higher, dollars stronger.

Dollar recycling with is gold recycling, and that has created this upticking gold despite a stronger dollar. Normally, you would look at the fundamentals today and you would go, oh, gold should be going down, real rates are higher, dollars stronger.

Those are all the dynamics that put down where pressure on gold. Instead, gold's going up.

Those are all the dynamics that put down where pressure on gold. Instead, gold's going up.

What's driving it is that strong demand coming out of these emerging markets where they're now recycling into gold as opposed to US treasuries creating that dollar recycling theme. So this still things still has more lights to it. You know, we see more upside in gold prices from here.

What's driving it is that strong demand coming out of these emerging markets where they're now recycling into gold as opposed to US treasuries creating that dollar recycling theme. So this still things still has more lights to it. You know, we see more upside in gold prices from here.

I guess, Jeff, what we're trying to get at is there some stories that people have been banding about all year, whether it's the ev transition or some of the great buildout that's going to require more copper usage, whether it's some of the central banks shifting more to why do they have so.

I guess, Jeff, what we're trying to get at is there some stories that people have been banding about all year, whether it's the ev transition or some of the great buildout that's going to require more copper usage, whether it's some of the central banks shifting more to why do they have so.

Much further to go?

Much further to go?

If it's a lot being priced in and speculators coming in and trying to get ahead of them and putting it up even further, what gives you a sense that there could be a catalyst for another leg higher in the near term.

If it's a lot being priced in and speculators coming in and trying to get ahead of them and putting it up even further, what gives you a sense that there could be a catalyst for another leg higher in the near term.

Because you need to destroy demand right now. You're running on fumes of.

Because you need to destroy demand right now. You're running on fumes of.

Very low inventories, particularly of copper. You have no way to bring on new to supply.

Very low inventories, particularly of copper. You have no way to bring on new to supply.

Once you're rout, when.

Once you're rout, when.

Prices began to spike, they got a spike high enough to bring demand back in line with supply. That's we're going to find out where that elasticity of demand really exists.

Prices began to spike, they got a spike high enough to bring demand back in line with supply. That's we're going to find out where that elasticity of demand really exists.

The only one way you.

The only one way you.

Can ever observe is going back to the nineteen sixties, which suggests maybe it's fifteen.

Can ever observe is going back to the nineteen sixties, which suggests maybe it's fifteen.

Thousand, but we really don't know. We're going to find out.

Thousand, but we really don't know. We're going to find out.

We didn't find out in the two thousands bull market because China was never forced into a situation where it had to consume and you had to ration demand out. That's why we peeked out in that ten thousand dollars ton range to where we are right now. So going forward, no inventory, remember really strong demand from all those sources you talked about, There's not enough to go around.

We didn't find out in the two thousands bull market because China was never forced into a situation where it had to consume and you had to ration demand out. That's why we peeked out in that ten thousand dollars ton range to where we are right now. So going forward, no inventory, remember really strong demand from all those sources you talked about, There's not enough to go around.

Somebody's going to have to drop.

Somebody's going to have to drop.

Out, and that's where we're going to find out where the high the high print is on this market.

Out, and that's where we're going to find out where the high the high print is on this market.

Jeff, if I could just go back to your answer earlier on the oil market, and you see this very bullish market happening, and you see potentially we're not even at peak driving season. If we do see gasoline prices in the United States go pass four dollars a gallon. Are you expecting the US to tap the spr.

Jeff, if I could just go back to your answer earlier on the oil market, and you see this very bullish market happening, and you see potentially we're not even at peak driving season. If we do see gasoline prices in the United States go pass four dollars a gallon. Are you expecting the US to tap the spr.

Yeah, there's a lot of other levers that can pull to put downward pressure on oil prices.

Yeah, there's a lot of other levers that can pull to put downward pressure on oil prices.

That's why, you know, I'm far more bullish on.

That's why, you know, I'm far more bullish on.

Base metals copper than I am on oil, particularly until you get after the election. Because you know, when you look at what drives elections, what drives the populace focus, it is the economy and inflation. So keeping oil prices and gasoline prices under wraps over the course of the next six months I think is going to be critical to the administration and the government. And we've seen this play out election after election, so I can't see why this one would be any different. What is that limit you know on the oil means you can get up into the high nineties. Maybe you know, you could toppo over one hundred or something like that in the midst of the cooling season, but you know, would it be lasting. No, it's not like the underlying copper story where it doesn't really impact the underlying inflation. Now you throw in something like a you know, some surprise problem in the Middle East or something like that that could open up the upside. But I think you know, you're you're going to see governments around the world doing everything they can to fight this. In One of the ways is you know, turning a blind eye to you know, sanctioned oil, sanctioned.

Base metals copper than I am on oil, particularly until you get after the election. Because you know, when you look at what drives elections, what drives the populace focus, it is the economy and inflation. So keeping oil prices and gasoline prices under wraps over the course of the next six months I think is going to be critical to the administration and the government. And we've seen this play out election after election, so I can't see why this one would be any different. What is that limit you know on the oil means you can get up into the high nineties. Maybe you know, you could toppo over one hundred or something like that in the midst of the cooling season, but you know, would it be lasting. No, it's not like the underlying copper story where it doesn't really impact the underlying inflation. Now you throw in something like a you know, some surprise problem in the Middle East or something like that that could open up the upside. But I think you know, you're you're going to see governments around the world doing everything they can to fight this. In One of the ways is you know, turning a blind eye to you know, sanctioned oil, sanctioned.

Products, you know. So there's a lot of methods.

Products, you know. So there's a lot of methods.

Other than tapping the spr that can be used to you know.

Other than tapping the spr that can be used to you know.

Also relaxing environmental regulations.

Also relaxing environmental regulations.

We've seen them use that in the past as well, So there's lots of tools at their disposal.

We've seen them use that in the past as well, So there's lots of tools at their disposal.

Jeff Carry of Carlisle, thank you so much. Keep wearing that, you know, copper bracelet until you hit fifty thousand or bus Thank you so much. Crude slightly down, But this is a market that really is on hold as we wait for some sort of sign of a catalyst of whether we're heading toward that immaculate disinflation or maybe not immaculate, but at least a soft landing versus stagflation. Brian Lovett, who is with us for the hour, I want to ask you about the latest Bank of America fund manager survey, which came out and showed investor optimism at some of the strongest levels that we've seen going back to twenty twenty one, even as investors are expecting a deterioration in earnings and a deterioration in the economic growth trajectory. Is this entirely dependent on the FED cutting.

Jeff Carry of Carlisle, thank you so much. Keep wearing that, you know, copper bracelet until you hit fifty thousand or bus Thank you so much. Crude slightly down, But this is a market that really is on hold as we wait for some sort of sign of a catalyst of whether we're heading toward that immaculate disinflation or maybe not immaculate, but at least a soft landing versus stagflation. Brian Lovett, who is with us for the hour, I want to ask you about the latest Bank of America fund manager survey, which came out and showed investor optimism at some of the strongest levels that we've seen going back to twenty twenty one, even as investors are expecting a deterioration in earnings and a deterioration in the economic growth trajectory. Is this entirely dependent on the FED cutting.

Well, it's not entirely dependent on the FED cutting. You know, as I had said, if you look at years like O six, you look at yours like twenty nineteen or even now, market can do very well with the FED on hold. So the good nominal growth environment has been supportive.

Well, it's not entirely dependent on the FED cutting. You know, as I had said, if you look at years like O six, you look at yours like twenty nineteen or even now, market can do very well with the FED on hold. So the good nominal growth environment has been supportive.

I do suspect like the Bank of America survey.

I do suspect like the Bank of America survey.

Says that things will slow you think about slow down. We'll see if the FED feels comfortable cutting within that.

Says that things will slow you think about slow down. We'll see if the FED feels comfortable cutting within that.

I think they would like to.

I think they would like to.

But I think what investors are looking to is over the next few years we're going to be normalizing the yell curve. And if you can normalize the yield curve without a meaningful without having had a meaningful disruption and economic activity, that should.

But I think what investors are looking to is over the next few years we're going to be normalizing the yell curve. And if you can normalize the yield curve without a meaningful without having had a meaningful disruption and economic activity, that should.

Be a positive. I've said over and over that.

Be a positive. I've said over and over that.

Peak inflation, peak tightening, peak interest rates over the next few years should be good for equities, and I continue to stand by that, which is the reason why I'm.

Peak inflation, peak tightening, peak interest rates over the next few years should be good for equities, and I continue to stand by that, which is the reason why I'm.

This fund manager survey Amrie.

This fund manager survey Amrie.

We did see this optimism of several rate cuts this year, even with a deterioration and backdrop. Because of this promise of potentially peak yields, Michael Hartnan over a Bank of America did raise the specter of stagflash, which is something that Jay Powell has shrugged.

We did see this optimism of several rate cuts this year, even with a deterioration and backdrop. Because of this promise of potentially peak yields, Michael Hartnan over a Bank of America did raise the specter of stagflash, which is something that Jay Powell has shrugged.

Off, left off. There is no stag there is no flation.

Off, left off. There is no stag there is no flation.

This is the biggest headwind right now that.

This is the biggest headwind right now that.

A lot of people say to equities. A lot of people are saying it's equities.

A lot of people say to equities. A lot of people are saying it's equities.

David Malpass, former head of the World Bank, this is his whole thesis into what we're actually seeing in some of the data he's looking at. But I look to the global fund manager survey sentiment not as closed eyes and sell levels, but risk assets are vulnerable to more evidence of stagflation. Brian, do you see any evidence of stagflation?

David Malpass, former head of the World Bank, this is his whole thesis into what we're actually seeing in some of the data he's looking at. But I look to the global fund manager survey sentiment not as closed eyes and sell levels, but risk assets are vulnerable to more evidence of stagflation. Brian, do you see any evidence of stagflation?

I like the way Lisa put it, and I was going to say, I don't see stag and I don't.

I like the way Lisa put it, and I was going to say, I don't see stag and I don't.

See Flationwell, exactly, So let's.

See Flationwell, exactly, So let's.

Start with flation.

Start with flation.

If you look in the bond market, whether it's the three year break, even the five year break, even the bond markets expectation for inflation, they're all very stable, very much within the Fed's comfort zone. Now with regards to stag, it's certainly not a stag economy.

If you look in the bond market, whether it's the three year break, even the five year break, even the bond markets expectation for inflation, they're all very stable, very much within the Fed's comfort zone. Now with regards to stag, it's certainly not a stag economy.

Are things going to slow?

Are things going to slow?

Well, yeah, that's ultimately what we wanted to have happen. As things slow, inflationary pressure should moderate. You're already starting to see it when everybody talks about the momentum of inflation over the last few months. Hasn't been too much on the consumer side. Very critically, it hasn't been wages. Wages have been generally benign. It's been a lot of important inflation. And what are you starting to see already with commodity prices, what are you starting to see.

Well, yeah, that's ultimately what we wanted to have happen. As things slow, inflationary pressure should moderate. You're already starting to see it when everybody talks about the momentum of inflation over the last few months. Hasn't been too much on the consumer side. Very critically, it hasn't been wages. Wages have been generally benign. It's been a lot of important inflation. And what are you starting to see already with commodity prices, what are you starting to see.

With oil kind of moving down?

With oil kind of moving down?

And so I think that what ends up happening when we get to these pivot points, And Lisa, you started the show at that pivot point, People for whatever reason, think of the worst environment that they can imagine.

And so I think that what ends up happening when we get to these pivot points, And Lisa, you started the show at that pivot point, People for whatever reason, think of the worst environment that they can imagine.

Right, Grafic thinking, yeah, you're watching Lisa.

Right, Grafic thinking, yeah, you're watching Lisa.

Yeah, all, well, she just said pivot She didn't say patashrophic all of a sudden, it's going to be the nineteen seventies again.

Yeah, all, well, she just said pivot She didn't say patashrophic all of a sudden, it's going to be the nineteen seventies again.

And yet this is a very different environment.

And yet this is a very different environment.

If you look at the misery index, which is the unemployment rate plus inflation, it's historically quite low right.

If you look at the misery index, which is the unemployment rate plus inflation, it's historically quite low right.

That doesn't suggest stagflation. Now, could it move?

That doesn't suggest stagflation. Now, could it move?

Yeah?

Yeah?

But what is inflation going? I don't think it's heading higher here.

But what is inflation going? I don't think it's heading higher here.

Part of the problem that a lot of people are looking at, and including Philip Jefferson yesterday of the Fed when he was speaking, is we just have seen this persistency to inflation.

Part of the problem that a lot of people are looking at, and including Philip Jefferson yesterday of the Fed when he was speaking, is we just have seen this persistency to inflation.

And what we've seen.

And what we've seen.

Is an actual acceleration, a reacceleration in the first core inflation data versus the last quarter of last year.

Is an actual acceleration, a reacceleration in the first core inflation data versus the last quarter of last year.

This could be a year over year comps.

This could be a year over year comps.

But you take a look yesterday as a New York Fed consumer sentiment survey and inflation expectations.

But you take a look yesterday as a New York Fed consumer sentiment survey and inflation expectations.

And you could see they are creeping higher. And it's not.

And you could see they are creeping higher. And it's not.

Just just broad based, but also for home prices, which were supposed to be the most affected.

Just just broad based, but also for home prices, which were supposed to be the most affected.

By keeping rates where they are.

By keeping rates where they are.

So at a certain point you have to look at that and say, hold on a second. We can dismiss this as going to be disinflation, but we expected that pivot point last year.

So at a certain point you have to look at that and say, hold on a second. We can dismiss this as going to be disinflation, but we expected that pivot point last year.

We expected that pivot point six months ago.

We expected that pivot point six months ago.

If you ignore what the data is actually showing, that will be another error.

If you ignore what the data is actually showing, that will be another error.

Correct.

Correct.

Although the question is when we see things ticking up a little, they're off of low levels. Some of it's being driven or relatively low level, some of it's being driven by commodities, and some of it's likely being driven If you look in the Consumer Price Index report by some of the lagged effects of shelter housing in rents had come down over a year ago, particularly rents.

Although the question is when we see things ticking up a little, they're off of low levels. Some of it's being driven or relatively low level, some of it's being driven by commodities, and some of it's likely being driven If you look in the Consumer Price Index report by some of the lagged effects of shelter housing in rents had come down over a year ago, particularly rents.

I mean, I don't know which one.

I mean, I don't know which one.

We want to look at, but if we believe the Zillo numbers or others, those rent numbers should be down by now, so it's not being captured necessarily in the Consumer Price Index FEDS preferred measure of inflation below three percent, that's the core personal consumption expenditure. As I mentioned earlier, the tips break evens relatively benign. So I think what the I wonder if the consumer when they're being asked, are they thinking about the high cost of living, which is now part of our life, or are they thinking about the change and the change and the rate of change. It's kind of like everything I learned I needed to know in kindergarten, everything I learned I needed to learn in calculus class.

We want to look at, but if we believe the Zillo numbers or others, those rent numbers should be down by now, so it's not being captured necessarily in the Consumer Price Index FEDS preferred measure of inflation below three percent, that's the core personal consumption expenditure. As I mentioned earlier, the tips break evens relatively benign. So I think what the I wonder if the consumer when they're being asked, are they thinking about the high cost of living, which is now part of our life, or are they thinking about the change and the change and the rate of change. It's kind of like everything I learned I needed to know in kindergarten, everything I learned I needed to learn in calculus class.

So ultimately this is like that.

So ultimately this is like that.

Ultimately this is going to in my opinion, it's going to moderate. We'll look back and say, remember we were worried that the economy was too strong, the consumer was too strong, it was all inflationary. Then we'll be in a slowdown and the market will do a ten percent decline in a slowdown, and we'll be saying, gee, I wish I really miss those strong nominal growth days.

Ultimately this is going to in my opinion, it's going to moderate. We'll look back and say, remember we were worried that the economy was too strong, the consumer was too strong, it was all inflationary. Then we'll be in a slowdown and the market will do a ten percent decline in a slowdown, and we'll be saying, gee, I wish I really miss those strong nominal growth days.

The thing is, though, and when Lisa brings up the New York Fed one year inflation expectations to survey, the bank said that responders project inflation a year from now at three point three percent. That's much higher than where we are today. How much does that inflationary concern on top of consumer's minds change how they're potentially going to go out and spend the remainder of the year.

The thing is, though, and when Lisa brings up the New York Fed one year inflation expectations to survey, the bank said that responders project inflation a year from now at three point three percent. That's much higher than where we are today. How much does that inflationary concern on top of consumer's minds change how they're potentially going to go out and spend the remainder of the year.

Well, we're starting to see, if you look at the Michigan survey, the consumer is starting to say that these prices are becoming some are problematic.

Well, we're starting to see, if you look at the Michigan survey, the consumer is starting to say that these prices are becoming some are problematic.

And so remember the.

And so remember the.

Recent move we've had to move in oil prices, we've had to move in gasoline prices. Those are starting to moderate, at least on the oil side, starting to moderate here. And so remember we started this by saying can the consumer hang in right? And the consumer saying things are things are likely to slow here a bit. You saw it in the Home Depot numbers, and so we shouldn't be you know, we shouldn't be well on this side. The sentiment says inflation is going to keep going, but the numbers are showing that they're moderating. Again, from our perspective, if we look at the consumer momentum, pretty benign, wages, pretty benign. A lot of it has been this implore price inflation that now seems to be moderating.

Recent move we've had to move in oil prices, we've had to move in gasoline prices. Those are starting to moderate, at least on the oil side, starting to moderate here. And so remember we started this by saying can the consumer hang in right? And the consumer saying things are things are likely to slow here a bit. You saw it in the Home Depot numbers, and so we shouldn't be you know, we shouldn't be well on this side. The sentiment says inflation is going to keep going, but the numbers are showing that they're moderating. Again, from our perspective, if we look at the consumer momentum, pretty benign, wages, pretty benign. A lot of it has been this implore price inflation that now seems to be moderating.

You mentioned Home Depot.

You mentioned Home Depot.

Let's just give you a rerun of that if you are just joining us. They did report earnings, comparable sales coming in light down two point eight percent versus the estimate of two point two percent. You could see customer transactions were down about expected about one percent. The key here and why you're not seeing a bigger move really is that they still keep all of their twenty twenty.

Let's just give you a rerun of that if you are just joining us. They did report earnings, comparable sales coming in light down two point eight percent versus the estimate of two point two percent. You could see customer transactions were down about expected about one percent. The key here and why you're not seeing a bigger move really is that they still keep all of their twenty twenty.

Five year forecasts.

Five year forecasts.

The comparable sales about still down at one percent, sales still increasing by about one percent, earnings per share growth about one percent. So this really does seem to point to stability.

The comparable sales about still down at one percent, sales still increasing by about one percent, earnings per share growth about one percent. So this really does seem to point to stability.

As we heard from Brian.

As we heard from Brian.

Here is also this idea that yes, there is a softness due to people maybe not moving. I've already done a lot of the home improvement, but there is this sense that people still have money to spend. If there is one takeaway, Brian from this earning season, what would you say it is It's.

Here is also this idea that yes, there is a softness due to people maybe not moving. I've already done a lot of the home improvement, but there is this sense that people still have money to spend. If there is one takeaway, Brian from this earning season, what would you say it is It's.

A mixed picture. But I would say the biggest takeaway is.

A mixed picture. But I would say the biggest takeaway is.

That everybody thought we'd be in a recession by twenty twenty three, and we're still growing earnings ten percent in the quarter, and so it's still a good nominal growth backdrop. And everybody's worried whether inflation's two eight to three percent three three. Remember, businesses make money in nominal terms, and so a good nominal growth environment is supportive for corporate profitability. And what I say to you know, investors, if you know they were so worried we'd be in a deep economic downturn by now, the reality is things still are good and companies are still benefit. It's mixed, right, We're seeing more from tech, We're seeing more from financials than perhaps energy or some other parts of the market, but again another good earnings period.

That everybody thought we'd be in a recession by twenty twenty three, and we're still growing earnings ten percent in the quarter, and so it's still a good nominal growth backdrop. And everybody's worried whether inflation's two eight to three percent three three. Remember, businesses make money in nominal terms, and so a good nominal growth environment is supportive for corporate profitability. And what I say to you know, investors, if you know they were so worried we'd be in a deep economic downturn by now, the reality is things still are good and companies are still benefit. It's mixed, right, We're seeing more from tech, We're seeing more from financials than perhaps energy or some other parts of the market, but again another good earnings period.

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 opp

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 opp