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This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along with Tom Keen. Join us each day for insight from the best in economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern Remark Global Headquarters at New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. Let's check in with Zanne Saunders. We need some help here, chief investment strategist for Charles Schwab Lizan. I mean, I'm looking at the S and p NASDAC both up double digits this year. We had a real scare. I guess almost three weeks ago on that crazy Monday. Where do we go here? For the remainder of the year, We're all gonna be paying attention to fed Truman Pale today, Let's think a little bit beyond that. How are you feeling about these markets going forward?

This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along with Tom Keen. Join us each day for insight from the best in economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern Remark Global Headquarters at New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. Let's check in with Zanne Saunders. We need some help here, chief investment strategist for Charles Schwab Lizan. I mean, I'm looking at the S and p NASDAC both up double digits this year. We had a real scare. I guess almost three weeks ago on that crazy Monday. Where do we go here? For the remainder of the year, We're all gonna be paying attention to fed Truman Pale today, Let's think a little bit beyond that. How are you feeling about these markets going forward?

Well, you talk about the big scare, and it really was just concentrated in that one week, and in particular on August fifth, and that had a lot to do with the unwinding of the year Yan Carriy tret But even before that, the calm really was only on the surface. Even before the pullback that brought the Nasdaq into correction territory, you had had no more than a seven percent draw down in the Nasdaq, but the average member maximum draw down just here to date was negative forty percent. That's now negative forty three percent, alongside at the index level the Nasdaq being down thirteen percent. So there has already been a tremendous amount of churn and rotation and even turmoil under the surface, maybe more reflective of all of these uncertainties that were still dealing with and what you would pick up if you just looked at the index level. Jackson Hole is important. Obviously, the September FOMC meeting, we're thinking twenty five, not fifty, barring a more significant surprise in some combination of the PCE that's coming up and the jobs report. But at this point we're penciling in twenty five is the start point.

Well, you talk about the big scare, and it really was just concentrated in that one week, and in particular on August fifth, and that had a lot to do with the unwinding of the year Yan Carriy tret But even before that, the calm really was only on the surface. Even before the pullback that brought the Nasdaq into correction territory, you had had no more than a seven percent draw down in the Nasdaq, but the average member maximum draw down just here to date was negative forty percent. That's now negative forty three percent, alongside at the index level the Nasdaq being down thirteen percent. So there has already been a tremendous amount of churn and rotation and even turmoil under the surface, maybe more reflective of all of these uncertainties that were still dealing with and what you would pick up if you just looked at the index level. Jackson Hole is important. Obviously, the September FOMC meeting, we're thinking twenty five, not fifty, barring a more significant surprise in some combination of the PCE that's coming up and the jobs report. But at this point we're penciling in twenty five is the start point.

The zan Tom's going to be so sorry that he missed you. I just got to say, if we see those cuts not in a recession, oh hello, not in a recession, does that change the leadership profile like no financial stay with tech? Does it change how you think about it?

The zan Tom's going to be so sorry that he missed you. I just got to say, if we see those cuts not in a recession, oh hello, not in a recession, does that change the leadership profile like no financial stay with tech? Does it change how you think about it?

Yeah?

Yeah?

What does tend to happen is if you look at past cycles and you see the FED operating more slowly, ostensibly because they're not combating a recession or a financial crisis or some combination thereof. Not only do you see milder maximum draw downs within say the six months or up to a year following the initial cut, you tend to see more of a cyclical bias in terms of what does well at the factor level, at the sector level. In contrast the fast cutting cycles where sensibly they are combating a recession and or financial crisis, like was the case when the FED started cutting in six we all know what was still ahead of us. That was those were backdrops where there were greater maximum drawdowns and more defensiveness in terms of factor and sector based leadership. So I actually say to people who are looking for or hoping for an aggressive FED, be careful what you wish for. It's the why behind the FED starts a cutting cycle and the level of aggressiveness that defines how markets behave.

What does tend to happen is if you look at past cycles and you see the FED operating more slowly, ostensibly because they're not combating a recession or a financial crisis or some combination thereof. Not only do you see milder maximum draw downs within say the six months or up to a year following the initial cut, you tend to see more of a cyclical bias in terms of what does well at the factor level, at the sector level. In contrast the fast cutting cycles where sensibly they are combating a recession and or financial crisis, like was the case when the FED started cutting in six we all know what was still ahead of us. That was those were backdrops where there were greater maximum drawdowns and more defensiveness in terms of factor and sector based leadership. So I actually say to people who are looking for or hoping for an aggressive FED, be careful what you wish for. It's the why behind the FED starts a cutting cycle and the level of aggressiveness that defines how markets behave.

Lizanne, what did you learn from this earning cycle that we just pretty much closing up this week?

Lizanne, what did you learn from this earning cycle that we just pretty much closing up this week?

So you know, the beat rate and the percent by which companies beat was about in line with recent averages, better than long term averages. However, the same cannot be set on the top line growth, So you had a below average beat rate on revenue growth, you had a below average percent by which companies beat. Not to mention the fact that third quarter estimates trend to down even though second quarter ended up being loftier than expected. Within the sort of AI theme, I think part of the reason why you went into correction mode for call it the Magnificent seven, et cetera, that group of megacap names, is because there was a lot more emphasis on the maybe the timing gap between the expenses associated with AI and the revenue generation associated with AI. The last thing I'd say is, I think there's increasing attention on the revenue side of the equation because revenues in general tend to correlate more with what decisions made about the labor market more so than bottom line growth. So I think those weren't focus in the second quarter will continue to be as we approach the end of the third quarter.

So you know, the beat rate and the percent by which companies beat was about in line with recent averages, better than long term averages. However, the same cannot be set on the top line growth, So you had a below average beat rate on revenue growth, you had a below average percent by which companies beat. Not to mention the fact that third quarter estimates trend to down even though second quarter ended up being loftier than expected. Within the sort of AI theme, I think part of the reason why you went into correction mode for call it the Magnificent seven, et cetera, that group of megacap names, is because there was a lot more emphasis on the maybe the timing gap between the expenses associated with AI and the revenue generation associated with AI. The last thing I'd say is, I think there's increasing attention on the revenue side of the equation because revenues in general tend to correlate more with what decisions made about the labor market more so than bottom line growth. So I think those weren't focus in the second quarter will continue to be as we approach the end of the third quarter.

Do you think Nvidia next week is going to be a market event or an in video event?

Do you think Nvidia next week is going to be a market event or an in video event?

Tell me what they report, it's, I mean, certainly going to be incredibly important to either affirm what has been valuation expansion, not just there, but in in the broader space. I don't cover the stock, I don't cover any individual stocks. I don't want to say it's make or break, but these days a name like that can be make or break in terms of the importance of that report as a feeder into the narratives that have sat behind where leadership has resided, where valuation expansion has been most robust, and the opposite.

Tell me what they report, it's, I mean, certainly going to be incredibly important to either affirm what has been valuation expansion, not just there, but in in the broader space. I don't cover the stock, I don't cover any individual stocks. I don't want to say it's make or break, but these days a name like that can be make or break in terms of the importance of that report as a feeder into the narratives that have sat behind where leadership has resided, where valuation expansion has been most robust, and the opposite.

And so that kind of goes to I guess a question I ask a lot zandwich. Is it seems like for the longest time this market has been driven by technology and for good reason. I mean, and technology has been a leading driver of this market. Is that still the case?

And so that kind of goes to I guess a question I ask a lot zandwich. Is it seems like for the longest time this market has been driven by technology and for good reason. I mean, and technology has been a leading driver of this market. Is that still the case?

It's not recently? You know, so far this quarter, the Magnificent seven is underperforming the rest of the market. If you look at the past month or so, and you look at where fun flows have been concentrated in the ETF space, it's actually been in areas like utilities and in real estate. So I think it's that anticipation of a FED finally moving into cutting mode that is given a lift to those more sensitive areas, and you've commensurately seen outflows and tech. I don't know that that persists in any kind of linear way. I think what's been shown over the past month or two is that there's not only money looking for opportunities outside of the Magnificent seven, but there's also still a lot of interest in better entry points in some of those names. So I would expect more of a choppy pattern, but you clearly have seen a shift in leadership more toward those interest sensitive areas as we await the September FOMAC meeting.

It's not recently? You know, so far this quarter, the Magnificent seven is underperforming the rest of the market. If you look at the past month or so, and you look at where fun flows have been concentrated in the ETF space, it's actually been in areas like utilities and in real estate. So I think it's that anticipation of a FED finally moving into cutting mode that is given a lift to those more sensitive areas, and you've commensurately seen outflows and tech. I don't know that that persists in any kind of linear way. I think what's been shown over the past month or two is that there's not only money looking for opportunities outside of the Magnificent seven, but there's also still a lot of interest in better entry points in some of those names. So I would expect more of a choppy pattern, but you clearly have seen a shift in leadership more toward those interest sensitive areas as we await the September FOMAC meeting.

Yeah, and from that top that we hit in July, the socks the semi index is down like thirteen percent, so I mean they've definitely rolling over quite a bit. Last we question LEZAN is today going to be a market event?

Yeah, and from that top that we hit in July, the socks the semi index is down like thirteen percent, so I mean they've definitely rolling over quite a bit. Last we question LEZAN is today going to be a market event?

I doubt it.

I doubt it.

I think given the emphasis on data dependency and the fact that we still have PCE and the jobs report in front of us, Powell may touch on the BLS benchmark revisions, but I can't imagine he has the data that would suggest a significantly more dubbish shift than what's built into expectations. So status quo for the most.

I think given the emphasis on data dependency and the fact that we still have PCE and the jobs report in front of us, Powell may touch on the BLS benchmark revisions, but I can't imagine he has the data that would suggest a significantly more dubbish shift than what's built into expectations. So status quo for the most.

Part, Right, Lezanne, thank you so much for joining us. Always appreciate getting a few minutes of your time. Listen Sanders. She's a chief investment strategist for Charles Schwab. We've got the Democratic Convention done in the book, same for the Republicans. So now I guess both candidates hit the campaign trail and they go hard until early November and November five when we get this election going. Tita Fordham joins us. She's a founder and geopolitical strategist for Fordham Global Insight. Tina, what do you make of the week that the Democrats had in Chicago? What do your takeaways?

Part, Right, Lezanne, thank you so much for joining us. Always appreciate getting a few minutes of your time. Listen Sanders. She's a chief investment strategist for Charles Schwab. We've got the Democratic Convention done in the book, same for the Republicans. So now I guess both candidates hit the campaign trail and they go hard until early November and November five when we get this election going. Tita Fordham joins us. She's a founder and geopolitical strategist for Fordham Global Insight. Tina, what do you make of the week that the Democrats had in Chicago? What do your takeaways?

Well, what our high energy event?

Well, what our high energy event?

There wasn't a lot there for investors or business leaders to really grab on to, but that wasn't the point of this exercise. It was an interesting kind of romp through Democratic Party leaders from the past, with the Obamas and the Clinton's.

There wasn't a lot there for investors or business leaders to really grab on to, but that wasn't the point of this exercise. It was an interesting kind of romp through Democratic Party leaders from the past, with the Obamas and the Clinton's.

The future with Buddhajdge and AOC.

The future with Buddhajdge and AOC.

And then Harris's acceptance speech last night, so you know, quite an endeavor.

And then Harris's acceptance speech last night, so you know, quite an endeavor.

It was truly historic, honestly, I mean even my ten year old daughter asked to watch her speech. Yeah, like maybe maybe she was also trying to stay up later, but she genuinely seemed to want to watch her acceptance speech. It was definitely an historic moment. As Paul pointed out earlier Tina, she also Kamala Harris moved away a little bit from some of the leftter policies that we've seen for the Democratic Party, particularly in climate What does that tell you about where she's headed and what her messaging and policy will be over the next three months.

It was truly historic, honestly, I mean even my ten year old daughter asked to watch her speech. Yeah, like maybe maybe she was also trying to stay up later, but she genuinely seemed to want to watch her acceptance speech. It was definitely an historic moment. As Paul pointed out earlier Tina, she also Kamala Harris moved away a little bit from some of the leftter policies that we've seen for the Democratic Party, particularly in climate What does that tell you about where she's headed and what her messaging and policy will be over the next three months.

If she wants to win, she has to move to the center.

If she wants to win, she has to move to the center.

What we saw last night and the messaging that was coming through this past week at the DNC was a clear shift away from the Bernie Sanders, the hard left, and from candidate Harris from twenty twenty right.

What we saw last night and the messaging that was coming through this past week at the DNC was a clear shift away from the Bernie Sanders, the hard left, and from candidate Harris from twenty twenty right.

She has walked back a.

She has walked back a.

Number of those positions, a bit of economic populism in the little that we've seen on that front, but she was very much campaigning on being a president for all Americans, for the middle class, and also not othering herself by talking about gender or race. That's a big contrast compared to Hillary Clinton's approach.

Number of those positions, a bit of economic populism in the little that we've seen on that front, but she was very much campaigning on being a president for all Americans, for the middle class, and also not othering herself by talking about gender or race. That's a big contrast compared to Hillary Clinton's approach.

Tina, what do you expect the strategy to be from former President Donald Trump? Here over the next three months?

Tina, what do you expect the strategy to be from former President Donald Trump? Here over the next three months?

He is going to have to catch up a lot quicker than we've seen so far.

He is going to have to catch up a lot quicker than we've seen so far.

Democrats are playing offense, which is something they haven't necessarily done well. They're not historically a terribly disciplined party, which is why I think these last few days have been so effective. In September, the rubber hits the road with the polling, we'll see if there's been a convention bounce. But Trump is on the defensive and none of his lines of attack seem to have.

Democrats are playing offense, which is something they haven't necessarily done well. They're not historically a terribly disciplined party, which is why I think these last few days have been so effective. In September, the rubber hits the road with the polling, we'll see if there's been a convention bounce. But Trump is on the defensive and none of his lines of attack seem to have.

Really stuck just yet.

Really stuck just yet.

The debate on September tenth is going to be where all of this comes into focus, and I think it's going to be a tough night for Donald Trump.

The debate on September tenth is going to be where all of this comes into focus, and I think it's going to be a tough night for Donald Trump.

What do you think? What do you think Independence and modern Republicans are making of this race right now?

What do you think? What do you think Independence and modern Republicans are making of this race right now?

Well, we're just starting to see that data coming in. Frank Luntz, the Polster, has talked about some of his focus groups where there is some evidence that Independence are moving toward Harris. Harris is still struggling though, with non college educated voters and.

Well, we're just starting to see that data coming in. Frank Luntz, the Polster, has talked about some of his focus groups where there is some evidence that Independence are moving toward Harris. Harris is still struggling though, with non college educated voters and.

A number of men. But it's really early days.

A number of men. But it's really early days.

Remember that, you know, most people have a life and aren't political junkies who are glued to political conventions, let alone and watching them in the middle of the night as I am here in London, So it will take time to filter through. Americans don't tend to really pay attention to elections until September or October. Of course, Trump is a known quantity and Biden was a known quantity. But this past week has been Kamala Harris really introducing herself to the American people and Tim Walls alongside her, and we need to wait and see what the reception has been.

Remember that, you know, most people have a life and aren't political junkies who are glued to political conventions, let alone and watching them in the middle of the night as I am here in London, So it will take time to filter through. Americans don't tend to really pay attention to elections until September or October. Of course, Trump is a known quantity and Biden was a known quantity. But this past week has been Kamala Harris really introducing herself to the American people and Tim Walls alongside her, and we need to wait and see what the reception has been.

Tina, how do we get to the point where these elections come down to six or seven swing states and that it? How do we get here?

Tina, how do we get to the point where these elections come down to six or seven swing states and that it? How do we get here?

Well, we've been in this place for quite a while now.

Well, we've been in this place for quite a while now.

This is the fifth US election that I've covered as a professional political analyst. Was ever thus, as long as I can remember that these swing states hold so much sway, be careful saying that ten times fast, and it means that we're gonna be on a knife edge right going into this campaign. Harris can take nothing for granted, and Trump can't make any missteps the fundraising, the.

This is the fifth US election that I've covered as a professional political analyst. Was ever thus, as long as I can remember that these swing states hold so much sway, be careful saying that ten times fast, and it means that we're gonna be on a knife edge right going into this campaign. Harris can take nothing for granted, and Trump can't make any missteps the fundraising, the.

The appearances, the messaging.

The appearances, the messaging.

I'd argue that Trump needs to come up with some other messages. What happens with our f K Junior stepping aside and potentially, you know, casting his support for Trump. We're talking about splitting the difference on one point five, you know, percentage points, but that's how close it's going to be.

I'd argue that Trump needs to come up with some other messages. What happens with our f K Junior stepping aside and potentially, you know, casting his support for Trump. We're talking about splitting the difference on one point five, you know, percentage points, but that's how close it's going to be.

Yeah, there was a John Oliver piece on our f K Junior saying like we can write them off as like being crazy or whatever, but he actually has a lot of votes, and a lot of them are in swing states, and their percentage of they're very small percentages, like let's say one percent, but that could, as Tina just pointed out, swing the election. On that point, when do you think we're going to get more policy from Kamala Harris? That then CEOs in Wall Street can kind of understand her a little bit better. And when is she going to sit down with a journalist she.

Yeah, there was a John Oliver piece on our f K Junior saying like we can write them off as like being crazy or whatever, but he actually has a lot of votes, and a lot of them are in swing states, and their percentage of they're very small percentages, like let's say one percent, but that could, as Tina just pointed out, swing the election. On that point, when do you think we're going to get more policy from Kamala Harris? That then CEOs in Wall Street can kind of understand her a little bit better. And when is she going to sit down with a journalist she.

Promised to to dis interviews at the end of the month. I mean, let's remember what a world when in timing this has been I'd say she used the convention exactly the right way, which is unify the party. Democrats are not very disciplined, and we didn't see you know, kind of eruptions into protests of pragaza and the things that were feared. How many columns did we all read about whether this would be a replay of nineteen sixty eight Chicago.

Promised to to dis interviews at the end of the month. I mean, let's remember what a world when in timing this has been I'd say she used the convention exactly the right way, which is unify the party. Democrats are not very disciplined, and we didn't see you know, kind of eruptions into protests of pragaza and the things that were feared. How many columns did we all read about whether this would be a replay of nineteen sixty eight Chicago.

Many of many of them, Tina, Yes.

Many of many of them, Tina, Yes.

Many, many, many, and nothing like that transpired. So you know that box is ticked, the party is united behind her and in mainstream message. The next stage, I would argue, is more detail on policies. We see both Harris and Trump being pretty heterodox in their economic policies in their different ways. How much Harris will provide detail, You know, there's not a lot of upside for candidates in doing that, as much as of course corporate leaders, business leaders, investors are looking for more detail. Providing that is likely to see her lose votes, and so it's going to be very careful balancing act.

Many, many, many, and nothing like that transpired. So you know that box is ticked, the party is united behind her and in mainstream message. The next stage, I would argue, is more detail on policies. We see both Harris and Trump being pretty heterodox in their economic policies in their different ways. How much Harris will provide detail, You know, there's not a lot of upside for candidates in doing that, as much as of course corporate leaders, business leaders, investors are looking for more detail. Providing that is likely to see her lose votes, and so it's going to be very careful balancing act.

I do think she'll say more.

I do think she'll say more.

She's already walked back the kind of poor reception that the price gouging on goods saw.

She's already walked back the kind of poor reception that the price gouging on goods saw.

Her policy on that didn't land very well.

Her policy on that didn't land very well.

But right right now, she's got to make sure people know her and feel safe with her. I mean, well, if I can carry ongoing just for a moment in our business.

But right right now, she's got to make sure people know her and feel safe with her. I mean, well, if I can carry ongoing just for a moment in our business.

We talked to global investors.

We talked to global investors.

Especially here in Europe, and the remarks that she made on the US not abdicating its global authority is actually the number one question that we have from international business. Is the US going to remain part of the global security architecture? So that was quite an important point for an international business audience.

Especially here in Europe, and the remarks that she made on the US not abdicating its global authority is actually the number one question that we have from international business. Is the US going to remain part of the global security architecture? So that was quite an important point for an international business audience.

Tina, what role, if any, do you expect President Biden to play in this campaign?

Tina, what role, if any, do you expect President Biden to play in this campaign?

Good question.

Good question.

I suspect it will be a subdued role, and again we need to see how the numbers evolve.

I suspect it will be a subdued role, and again we need to see how the numbers evolve.

He was treated as a conquering hero. A lot of love for Joe Biden at the convention. It's not clear necessarily whether he would be an.

He was treated as a conquering hero. A lot of love for Joe Biden at the convention. It's not clear necessarily whether he would be an.

Asset on the campaign trail or for fundraising. I mean, Harris's fundraising numbers have been through the roof. She's out fund raising Trump by you know, a couple of times over. But what Biden can do with his time, you know, yes, he's lame doc until January twentieth, twenty twenty five, might be quite interesting to watch. So for example, the fact that he's not campaigning, might free him up to do more on the Middle East.

Asset on the campaign trail or for fundraising. I mean, Harris's fundraising numbers have been through the roof. She's out fund raising Trump by you know, a couple of times over. But what Biden can do with his time, you know, yes, he's lame doc until January twentieth, twenty twenty five, might be quite interesting to watch. So for example, the fact that he's not campaigning, might free him up to do more on the Middle East.

I think we haven't heard the last from Joe Biden.

I think we haven't heard the last from Joe Biden.

Hi very good, Tina, Thank you so much for joining us. Tina Fordham joining us here, founder and geopolitical strategist for Fordham Global Insight. We have the FED. They're in Jackson Hole, FED Chairman J Powell, A lot of economists out there is a whole world looking at Jackson Hold head aches.

Hi very good, Tina, Thank you so much for joining us. Tina Fordham joining us here, founder and geopolitical strategist for Fordham Global Insight. We have the FED. They're in Jackson Hole, FED Chairman J Powell, A lot of economists out there is a whole world looking at Jackson Hold head aches.

Do you think I don't know? I mean I think that all the economists are looking at it. Do I think my mom is tuning in? I highly doubt that.

Do you think I don't know? I mean I think that all the economists are looking at it. Do I think my mom is tuning in? I highly doubt that.

Yeah, But if I'm an economist sitting in London.

Yeah, But if I'm an economist sitting in London.

I'm probably you're into it.

I'm probably you're into it.

If I'm a professor of economics, say the London Business School, like doctor Funny and Starve Rokova is, she's probably paying attention to Jackson Hall. Doctor Stvakova, thanks so much for joining us. I think I'm getting your name right with a little help. What are you looking for from FED Chairman J Powell today? Is you try to frame out what it means for the global economy.

If I'm a professor of economics, say the London Business School, like doctor Funny and Starve Rokova is, she's probably paying attention to Jackson Hall. Doctor Stvakova, thanks so much for joining us. I think I'm getting your name right with a little help. What are you looking for from FED Chairman J Powell today? Is you try to frame out what it means for the global economy.

Thank you so much for having me.

Thank you so much for having me.

Always a pleasure to be here, so I.

Always a pleasure to be here, so I.

Don't believe it's going to be a speech in which power we will want.

Don't believe it's going to be a speech in which power we will want.

To store financial markets by surprising them in either direction. So we have the elections around the corner, and he wouldn't want to appe overly political, even more so given Trumps threats to the FED independence. So it might be one of those instances where Powell essentially puts much more weight on average market expectations than normal. So the average expectations at twenty five basis points, so if he says anything, probably will.

To store financial markets by surprising them in either direction. So we have the elections around the corner, and he wouldn't want to appe overly political, even more so given Trumps threats to the FED independence. So it might be one of those instances where Powell essentially puts much more weight on average market expectations than normal. So the average expectations at twenty five basis points, so if he says anything, probably will.

Because it's done with just twenty five basis points.

Because it's done with just twenty five basis points.

Now this brings me to forecasts.

Now this brings me to forecasts.

What are we going to learn if anything, in terms of forecasts for guidance GDP grow of inflation. Again, unfortunately, I don't think he's going to review that much on the one hand, and he do not want effectively to make markets revise their expectations in terms of the policy rate path up or down in order to not generate massive movements. But at the same time, there is a lot of concertainty of pots coming forward. Right, so we have elections, we have two candidates with quite different policies on the agenda, so it is hard for the FED as well as anyone else to forecast what is going to happen over the next year. Now he has to talk about something, right, So if you want to avoid expressing a concrete view on where the economy is headed, what do you talk about?

What are we going to learn if anything, in terms of forecasts for guidance GDP grow of inflation. Again, unfortunately, I don't think he's going to review that much on the one hand, and he do not want effectively to make markets revise their expectations in terms of the policy rate path up or down in order to not generate massive movements. But at the same time, there is a lot of concertainty of pots coming forward. Right, so we have elections, we have two candidates with quite different policies on the agenda, so it is hard for the FED as well as anyone else to forecast what is going to happen over the next year. Now he has to talk about something, right, So if you want to avoid expressing a concrete view on where the economy is headed, what do you talk about?

So my prior and my guess is that he's going.

So my prior and my guess is that he's going.

To try to essentially focus on insights related to the topic of this year Jackson's COPE conference, which is reassessing the effectiveness and transmission of MOUNTI policy.

To try to essentially focus on insights related to the topic of this year Jackson's COPE conference, which is reassessing the effectiveness and transmission of MOUNTI policy.

So he can touch upon many issues.

So he can touch upon many issues.

But my prior is that there should be hopefully something on the fiscal monitary policy and access, especially in times that fiscal.

But my prior is that there should be hopefully something on the fiscal monitary policy and access, especially in times that fiscal.

Policy going forward will continue playing a central stage for the FED optimal montary policy debates.

Policy going forward will continue playing a central stage for the FED optimal montary policy debates.

So if don't get intuition on okay, what is the forecast for you know, any commitments on the policy rate, then might understand a little bit better what would be the trade off the fact we will keep a close eye on going forward.

So if don't get intuition on okay, what is the forecast for you know, any commitments on the policy rate, then might understand a little bit better what would be the trade off the fact we will keep a close eye on going forward.

Funny, when you take a look at the at the balancing between inflation and the labor data, it does seem like there are still many FED officials who are genuinely worried about the inflationary trajectory that we need to continue to see more data to know the disinflation is taking hold. On the other hand, we clearly see some members who are willing to cut in July that are worried that a little move in the labor market data can translate into a big move into the unemployment rate. Where do you think that Ja Powell is going to tread that line?

Funny, when you take a look at the at the balancing between inflation and the labor data, it does seem like there are still many FED officials who are genuinely worried about the inflationary trajectory that we need to continue to see more data to know the disinflation is taking hold. On the other hand, we clearly see some members who are willing to cut in July that are worried that a little move in the labor market data can translate into a big move into the unemployment rate. Where do you think that Ja Powell is going to tread that line?

Again?

Again?

I think twenty five basis points is nothing in terms of real effects on the economy, right, So I think he is going to try, really try to position himself in terms of not moving markets before the elections.

I think twenty five basis points is nothing in terms of real effects on the economy, right, So I think he is going to try, really try to position himself in terms of not moving markets before the elections.

So consensus expectations of twenty five basis points, is he going to come and do something drastic relatively what markets expect, endangering potential swings because, for example, if the cut is higher, trumping Video is going to blame him. You know, if there is no cut, you might Ria is going in the other direction. So I think they're just going to wait.

So consensus expectations of twenty five basis points, is he going to come and do something drastic relatively what markets expect, endangering potential swings because, for example, if the cut is higher, trumping Video is going to blame him. You know, if there is no cut, you might Ria is going in the other direction. So I think they're just going to wait.

I don't think the current data necessitates any you know, particularly big movements.

I don't think the current data necessitates any you know, particularly big movements.

Twenty five basis points cut is perfectly reasonable based on.

Twenty five basis points cut is perfectly reasonable based on.

The data that we have right now.

The data that we have right now.

It's what markets expect.

It's what markets expect.

It's pretty much safe to stick to that and just wait and see the data coming ahead, and of course the outcome.

It's pretty much safe to stick to that and just wait and see the data coming ahead, and of course the outcome.

Of the elections.

Of the elections.

Now, one thing that's very interesting is and usually when we have elections, right this is this works in economics.

Now, one thing that's very interesting is and usually when we have elections, right this is this works in economics.

It's uncertainty shock.

It's uncertainty shock.

And you know the before Biden and the moment Mawa, Harris and Trump.

And you know the before Biden and the moment Mawa, Harris and Trump.

They have very different policies in terms of fiscal policies.

They have very different policies in terms of fiscal policies.

But also regulatary policies.

But also regulatary policies.

So you would expect that, you know, forums are going to postpone investment waiting in order to see who is going to get elected, put the inter generating Organization, which would have made the FED cut sooner. But we don't see that in the investment numbers, and that is something quite interesting. I mean, corporate tax proposals are very differently across the two campaigns. That for me is a bit puzzling that we don't see much action on the investment numbers in the US in terms of you know, essentially people delaying.

So you would expect that, you know, forums are going to postpone investment waiting in order to see who is going to get elected, put the inter generating Organization, which would have made the FED cut sooner. But we don't see that in the investment numbers, and that is something quite interesting. I mean, corporate tax proposals are very differently across the two campaigns. That for me is a bit puzzling that we don't see much action on the investment numbers in the US in terms of you know, essentially people delaying.

Investment in order to see the resolution of the uncertainty of the elections.

Investment in order to see the resolution of the uncertainty of the elections.

So, Professor, I guess one of the rests that some investors have here in the US is that this federal reserve is already behind the curve that in fact, we are already in a recession or dangerously close to one. Do you think that argument has merit?

So, Professor, I guess one of the rests that some investors have here in the US is that this federal reserve is already behind the curve that in fact, we are already in a recession or dangerously close to one. Do you think that argument has merit?

No, I would disagree in the sense that so first of all, I don't think that the lacks that big in terms of how quickly multi policy can impact the real economy. So the perspective of the FED is probably yes, if we try, if we start to see, you know, a sequence of announcements of mutful news that May is concerned about reization, we can act quickly enough to offset that.

No, I would disagree in the sense that so first of all, I don't think that the lacks that big in terms of how quickly multi policy can impact the real economy. So the perspective of the FED is probably yes, if we try, if we start to see, you know, a sequence of announcements of mutful news that May is concerned about reization, we can act quickly enough to offset that.

So I don't think preemptive actions and needed.

So I don't think preemptive actions and needed.

Particularly if you think about the outcome of the elections on both sides of the two campaigns.

Particularly if you think about the outcome of the elections on both sides of the two campaigns.

So like if you take, of course, on Kamala Harris following what.

So like if you take, of course, on Kamala Harris following what.

Biden is doing, fiscal policy is based passionary, which generates inflation.

Biden is doing, fiscal policy is based passionary, which generates inflation.

Right, So at the same time, Trump might increase sanctions.

Right, So at the same time, Trump might increase sanctions.

And tariffs, which is going to increase the private import goods.

And tariffs, which is going to increase the private import goods.

Which also my generate information. So rushing to.

Which also my generate information. So rushing to.

Cut now and having to increase after, I think it's more dangerous for the fact, based on you know, they don't know what's coming in terms of physical policies which clearly are going to.

Cut now and having to increase after, I think it's more dangerous for the fact, based on you know, they don't know what's coming in terms of physical policies which clearly are going to.

Fit into multi policy or regulatary policies.

Fit into multi policy or regulatary policies.

So it's much more dangerous to have a lot of butts now and then to have to justify increases because this is going to increase even further stock market voltility and bond voltility. And we've seen how voatile essentially asset prices are to even a single anatos, Right, So I think the courses of.

So it's much more dangerous to have a lot of butts now and then to have to justify increases because this is going to increase even further stock market voltility and bond voltility. And we've seen how voatile essentially asset prices are to even a single anatos, Right, So I think the courses of.

This volatility at the moment before I let you go. You also do a lot of work on the Russian economy, and the IM published a forecast back in April the Russian economy will grow by three point two percent this year, really contrary to many others beliefs. What do you think about that resilience of the Russian economy.

This volatility at the moment before I let you go. You also do a lot of work on the Russian economy, and the IM published a forecast back in April the Russian economy will grow by three point two percent this year, really contrary to many others beliefs. What do you think about that resilience of the Russian economy.

Well, so the higher growth is associated also with high inflation because of fiscal expansion, right, So essentially they're investing.

Well, so the higher growth is associated also with high inflation because of fiscal expansion, right, So essentially they're investing.

In the military, which not surprisingly is fitting into inflation and higher growth. But what's interesting on the Russian front is the recent expansion on the sanctions from the US side, So the secondary essentially sanctions where now Chinese banks, Turkish banks, India banks are not willing to facilitate trade between Russia and China. Russia and Turkey, et cetera, because they're going to lose access to effectively the US dollar market. Right, so now we expect that these things are going to bite. I mean, they are discussions that Russia is looking into bartered transactions with China.

In the military, which not surprisingly is fitting into inflation and higher growth. But what's interesting on the Russian front is the recent expansion on the sanctions from the US side, So the secondary essentially sanctions where now Chinese banks, Turkish banks, India banks are not willing to facilitate trade between Russia and China. Russia and Turkey, et cetera, because they're going to lose access to effectively the US dollar market. Right, so now we expect that these things are going to bite. I mean, they are discussions that Russia is looking into bartered transactions with China.

Essentially, we give you oil.

Essentially, we give you oil.

You give us inputs for our military production that it's not so easy to implement, granted that a lot of the producers are private. Having said that, the Chinese government can potentially facilitated transaction.

You give us inputs for our military production that it's not so easy to implement, granted that a lot of the producers are private. Having said that, the Chinese government can potentially facilitated transaction.

So we will wait and see how binding and restrictive.

So we will wait and see how binding and restrictive.

Essentially, these new.

Essentially, these new.

Round of sanctions are moreover now the door can be treated only at s so there are a lot of interesting developments there. So hopefully they will have a bigger bite than what we've seen so far. I mean, the robo hasn't appreciated as much as we would like it in order to factor in the severity of the sanctions.

Round of sanctions are moreover now the door can be treated only at s so there are a lot of interesting developments there. So hopefully they will have a bigger bite than what we've seen so far. I mean, the robo hasn't appreciated as much as we would like it in order to factor in the severity of the sanctions.

All right, doctor, thank you so much for joining us. Really appreciate getting some of your time here today. Doctor Vania stuff Rakeva, President of Economics at the London Business School. If there's any ever any place in a world where you could probably lose the suit and bow tie, it would be Jackson holwayan totally. However, Tom's chosen not to do that, so he is in full Tom Keen regalia. Tom Keen. He is a host of Bloomberg Surveillance on radio on YouTube. Tom, give us a sense of kind of how your stay has been out there. What are you hearing from all those smart economists out there.

All right, doctor, thank you so much for joining us. Really appreciate getting some of your time here today. Doctor Vania stuff Rakeva, President of Economics at the London Business School. If there's any ever any place in a world where you could probably lose the suit and bow tie, it would be Jackson holwayan totally. However, Tom's chosen not to do that, so he is in full Tom Keen regalia. Tom Keen. He is a host of Bloomberg Surveillance on radio on YouTube. Tom, give us a sense of kind of how your stay has been out there. What are you hearing from all those smart economists out there.

It's a really interesting year here. I think two or three weeks ago, Alex and Paul this was maybe a non event or at least something more subdued, and now it's taken on a renewed urgency. The world of economics, finance, and investment. It is going to stop for the Powell speech this morning. And where do you see it. You see it in the data check that Lisa Mateo just gave us. We still got real rates range bound, the two year yields four percent. But that equity market just says, screams soft landing ready to go. A lot of the interest today paragraph to paragraph in the speech will be how Chairman Powell frames the path to that hope for soft landing.

It's a really interesting year here. I think two or three weeks ago, Alex and Paul this was maybe a non event or at least something more subdued, and now it's taken on a renewed urgency. The world of economics, finance, and investment. It is going to stop for the Powell speech this morning. And where do you see it. You see it in the data check that Lisa Mateo just gave us. We still got real rates range bound, the two year yields four percent. But that equity market just says, screams soft landing ready to go. A lot of the interest today paragraph to paragraph in the speech will be how Chairman Powell frames the path to that hope for soft landing.

I have heard, and I have it on good authority, that Tom Keen is the only one wearing a suit. But maybe maybe this changes by the end of the day, Tom, is there any feeling on the ground as to where the FED is leaning more? Is it the inflation concerns or the labor concerns.

I have heard, and I have it on good authority, that Tom Keen is the only one wearing a suit. But maybe maybe this changes by the end of the day, Tom, is there any feeling on the ground as to where the FED is leaning more? Is it the inflation concerns or the labor concerns.

They've got a dual mandate, as we all know, and that dual mandate goes back and forth. I would say, typically it is an inflation guess on the ISLM theory. It's on the LM curve. Recently we've really come over to a look at the real economy. What's going on with GDP. The unspoken here, and frankly, part of the research papers that will be given is the mystery of the new technology and the productivity and what it's doing to the economy and the labor force. And the immediate thing, Paul, the absolute immediate emotion here was that stunning eight hundred thousand job revision that we saw a few days ago. Was that because of technology or was that because of a cratering economy?

They've got a dual mandate, as we all know, and that dual mandate goes back and forth. I would say, typically it is an inflation guess on the ISLM theory. It's on the LM curve. Recently we've really come over to a look at the real economy. What's going on with GDP. The unspoken here, and frankly, part of the research papers that will be given is the mystery of the new technology and the productivity and what it's doing to the economy and the labor force. And the immediate thing, Paul, the absolute immediate emotion here was that stunning eight hundred thousand job revision that we saw a few days ago. Was that because of technology or was that because of a cratering economy?

Tom?

Tom?

To what extent are the folks out there in jacksonvill Are they paying attention to what has been happening in Chicago over the past few days with the Democratic National Convention.

To what extent are the folks out there in jacksonvill Are they paying attention to what has been happening in Chicago over the past few days with the Democratic National Convention.

A little bit, I would have everyone go to gregyp the wonderful Greg Up writing in the Wall Street Journal, who sort of summed up the non economics of our political moment. I would say they're really not focused on Milwaukee or Chicago, but very much they're focused on November fifth. There will be an election I would like to see today. I'm not sure we'll see it, but it would be good to see a sentence or to reaffirming the Fed independence that's been there really since nineteen fifty one, tested by Truman, tested by LBJ. To see a reaffirmation of that, as we saw in the Powell press conference wouldn't be a surprise.

A little bit, I would have everyone go to gregyp the wonderful Greg Up writing in the Wall Street Journal, who sort of summed up the non economics of our political moment. I would say they're really not focused on Milwaukee or Chicago, but very much they're focused on November fifth. There will be an election I would like to see today. I'm not sure we'll see it, but it would be good to see a sentence or to reaffirming the Fed independence that's been there really since nineteen fifty one, tested by Truman, tested by LBJ. To see a reaffirmation of that, as we saw in the Powell press conference wouldn't be a surprise.

So Tom, I also, I don't know if you heard it earlier. I had a dream that you were in last night that you were like, Hey, Alex, should I go to the million dollar Cowboy bar before my hits on Friday? And I was like, I don't know, Tom, how do you feel about that? And You're like, I don't know, And then eventually you wound up going did that happen?

So Tom, I also, I don't know if you heard it earlier. I had a dream that you were in last night that you were like, Hey, Alex, should I go to the million dollar Cowboy bar before my hits on Friday? And I was like, I don't know, Tom, how do you feel about that? And You're like, I don't know, And then eventually you wound up going did that happen?

Now?

Now?

The romance of it, and this is true almost every year, is we need to get back from Monday Morning. Paul and I got to do the Monday Morning Show, which means you get on the airplane and go. So this year we are a million dollar cowboy bar free very Oh.

The romance of it, and this is true almost every year, is we need to get back from Monday Morning. Paul and I got to do the Monday Morning Show, which means you get on the airplane and go. So this year we are a million dollar cowboy bar free very Oh.

Okay, so my dream was a total misnomer.

Okay, so my dream was a total misnomer.

Thanks.

Thanks.

That's highly disturbing. I have actual another real question for you, though, How much is a conversation about Japan and the Bank of Japan showing up this year in the conversations.

That's highly disturbing. I have actual another real question for you, though, How much is a conversation about Japan and the Bank of Japan showing up this year in the conversations.

It's a really important question, Alex, made more so by the inflation report. Inflation won't go away in Japan, and that puts a pressure on them to bring those fiction of an interest rates higher. They need to go higher in interest rates, of course, which means all of their fixed income prices go down. Japan has not overtly discussed, but it's on everyone's mind. Is not so much being a dysfunctional theory, but to be kind, being an original theory. I see the sun just coming out here at Jackson Hall. When we're done with this, I'm going to turn around and look where the deer in the antelope play exactly.

It's a really important question, Alex, made more so by the inflation report. Inflation won't go away in Japan, and that puts a pressure on them to bring those fiction of an interest rates higher. They need to go higher in interest rates, of course, which means all of their fixed income prices go down. Japan has not overtly discussed, but it's on everyone's mind. Is not so much being a dysfunctional theory, but to be kind, being an original theory. I see the sun just coming out here at Jackson Hall. When we're done with this, I'm going to turn around and look where the deer in the antelope play exactly.

We were just actually talking about that here in New York. Ti'm I said, boy, it's stark out there in Jackson Hall for six twenty in the morning. Tom, is there talk out there about the I guess the economic exceptionalism of the US versus other parts of the world, because I'm guessing there are folks out there from other parts of the world.

We were just actually talking about that here in New York. Ti'm I said, boy, it's stark out there in Jackson Hall for six twenty in the morning. Tom, is there talk out there about the I guess the economic exceptionalism of the US versus other parts of the world, because I'm guessing there are folks out there from other parts of the world.

There is.

There is.

It's written about Ambrose Evans. Pritchard had a sharp essay in the Telegraph in the last twenty four hours asking what does the world when the American exceptionalism ends? And that's one of the worries about recession and GDP slowdown and the rest. What I would suggest is, and particularly you know, you come out to Wyoming, You come into the airport here, Alex and there's forty seven golf streams lined up. You know, the prosperity of the West, the prosperity of technology is substantial in America. It's in your face in Wyoming. And there's a real understanding that we lead it that you just had on Dan Ives at webbush lifting up as in Vidia estimate, and of course at Vidia I believe it's August twenty eighth. Maybe I don't think in Nvidia is more important than Chairman Paul's speech, but maybe it's close.

It's written about Ambrose Evans. Pritchard had a sharp essay in the Telegraph in the last twenty four hours asking what does the world when the American exceptionalism ends? And that's one of the worries about recession and GDP slowdown and the rest. What I would suggest is, and particularly you know, you come out to Wyoming, You come into the airport here, Alex and there's forty seven golf streams lined up. You know, the prosperity of the West, the prosperity of technology is substantial in America. It's in your face in Wyoming. And there's a real understanding that we lead it that you just had on Dan Ives at webbush lifting up as in Vidia estimate, and of course at Vidia I believe it's August twenty eighth. Maybe I don't think in Nvidia is more important than Chairman Paul's speech, but maybe it's close.

Yeah, all right, we'll see. Yeah, we're gonna be all locked in on that next week. Tom King, Thanks so much for joining us. Appreciate your reporting out there. Tom Tompkin, Bloomerg Surveillance. This is the Bloomberg Surveillance Podcast, bringing you the best economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and The Bloomberg Business Apple

Yeah, all right, we'll see. Yeah, we're gonna be all locked in on that next week. Tom King, Thanks so much for joining us. Appreciate your reporting out there. Tom Tompkin, Bloomerg Surveillance. This is the Bloomberg Surveillance Podcast, bringing you the best economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and The Bloomberg Business Apple