Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene and Paul SweeneyAugust 9th, 2024
Featuring:
Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance
Bloomberg Audio Studios, Podcasts, radio news.
This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. 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 am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. Joining Katherine Greifeld in Paris. It's Julian Emmanuel. This is exciting. You're going over to Paris. Never been You've never been now, My word, it's fabulous. And it's even more so now because we've all how successful the Olympics are. Like, you're coming in fourteen fifteen days later, which is cool.
That's okay.
Water Polo's waiting for us.
I've watched a little of this water. I mean, are you is a river? No, it's not in the river, but it's in a deep pool. And it's astonishing to watch the athleticism and their ability to tread water for what thirty forty minutes.
Unbelievable stamina. I mean really one of the most intense stamina sports there are.
Do you have lots of like preparation you two be like watching like where to eat and all that.
No, but I'm going to bring.
A float for their watching. Yeah, the water, that's good.
Okay, lace frend cheese is wonderful out on YouTube.
L e s that's the Yeah, sure, nail cheese.
They're really quite good out there, Julian Emmanuel in the stock market is a bullmarket dead?
No, not at all. And we've talked about this over the years. Every little once in a while, every few years you get a really really strong signal from the options market. And on Monday morning before the opening, there was abject panic. And if you look at the last forty years, every time you buy abject panic, a year later you've made money.
I got to ask, interrupting, what does abject panic look like? At Evercore Isi with Ediheyman with a black marker, and his is what does abject panic look like?
Well, the Fortress signment, well we know it looked like vix hitting sixty five, but there was a very frank and open debate about whether the FED was behind the curve and what should they do, and the consensus was is that this too shall pass, and the Fed's going to cut in September, and lo and behold if the FED actually cuts in September, and the recession, which there's still lots of elements of weakness out there forming, and we know that if the recession holds off until twenty twenty, we certainly think we have further to go in the rally.
Chilian, You've written a wonderful note encouraging us to exercise calm at moments like this. How do we do that? What's giving you optimism that this too shall pass?
Well?
I think this is again one of these very strange times where if you think about the Bank of Japan, their timing was absolutely off, terrible in hiking rates. And the way I think about this, and it really actually makes sense allegorically, is when the FED first hiked rates in December of twenty fifteen, and it was you know, oops, I did it again. They didn't hike for another year. You actually set off a freeze in the credit markets that was happening anyway because of energy and then you had an incredibly strong year in twenty sixteen. And that's how we see the table setting up. It's you know, it's pick away at the names and the themes that you like.
What do you say to those who are more pessimistic, shall we say when they look at earnings from say these big tech companies AI specialists in particular, and worry that the promise of this isn't meeting reality at least not yet.
Well, Look, adoption of AI on the corporate route level is slower than we would have expected.
But the way we.
Think about it is, and Tom, I know you'll remember this because I was there as well, but in the early nineties you brought your own personal computer to work because corporate America hadn't adopted personal computers yet, and then.
All of a sudden they did.
That's what's going to happen here.
John Authur's talking to me about this earlier this week, Tom saying this.
Is on the big tip.
It is on the did you see side.
Do you see how Curry gets a big take plug.
In that was like a shameless plug alleoop that we continue, please, but making the point that you look at how adoption of the Internet went, and that took many years before it became a thing. In all the while, you saw these companies kind of fall into the ways I digress.
Go ahead, No, it's like poetry there for a moment. What you don't know, folks, is Julian Emmanuel has the must read morning note in the equity markets. We're in one single paragraph. He parses out revenue and earnings dynamics. If you get ed Heiman's economy, don't you get a lower nominal GDP? And do you model out revenue coming in revenue growth?
It is likely to be slower than it has been. But you know, anything that's call it north of two and a half to three percent is going to be just fine.
Rations will adapt.
And what's interesting is, and remember, we have been as a society, been waiting for this recession for two years for the most part. And I would suggest to you that part of the reason that margins have stayed as elevated as they've been is because corporate America has been waiting as well and has already begun the process of adaptation. And so for us, even if we do get a downturn, it is likely to be mild. It will certainly have an effect on the stock market.
I mean, you and I have absolutely nailed what we see with an Atlanta GDP now, which is quartered to quarter to quarter to qorda. We underestimate a solid American economy. Do we still see solid relative to the gloom of recession?
We do?
And importantly, and again you know, this head has been at the forefront of the inflation decline call for two years now and lo and behold, after some bumps at midyear, we're seeing that we're back on the path for the likelihood of inflation. And think about it. What we saw in terms of financial conditions the last couple of weeks. Is inflation going to go higher or lower in response to those kinds of conditions, I would suggest the answers lower.
In the tornado of this week, Michael Gapin from Bank of America came out with a note kind of categorizing the nine times in recent history we've had these intermeeting cuts and he you know, nine eleven, it's what happened with COVID et cetera, et cetera. And he comes to the conclusion we're nowhere near that level of crisis.
Yet.
I'd love for you just to comment on this in context. Again, it's been a it's been a whirlwind week, big ups, big downs. Put that into sort of a broader historical context. That level of panic or sense of crisis that maybe some investors had over the course of the week.
No, and and and look again, when you have volatility, and it wasn't just the equity markets, and it was you know, Japan's equity market was down ten percent, FX went crazy, interest rates when crazy. That kind of you know, sort of cumulative within the context of thinking about all the events in July that transpired politically, if nothing else, such that we got to a point where earlier this week everything we were thinking about virtually everything was called into question. But you put it all together, and I think you know the reason the market responded so positively to the weekly Jobbles claims, you know, the most on the ground statistic is because the recession is not in sight. And frankly, what this does is what it typically does when conditions get this tight. We all know the Bloomberg Financial Conditions Index is it resets that wall of worry, and that's very important for bull markets to be feeding on.
You're confident there'll be some calm next week when you're overseas watching the Olympic Games. I mean, these feel like things have kind of equilibrated well.
With the vix in the twenties. Still, you can never be confident of the calm. And we've certainly got some very important inflation numbers next week. But we do think that the violence of what we've seen this week indicates that, in all likelihood, the worst of it is over.
Tom, Are you of the mind that job's number was an aberration the one that we saw that.
To listen very carefully to people like Ana Wong who are telling us. And Rick Reader at Black Rock had a spectacular aggregate revisions chart showing how the joy of the pandemic everybody's dampening down to a different job dynamic, a different job economy. And you know, I don't know the when of it. I think the win of it next. I mean, Julian's called eight of the last six recessions. I mean, you know, he's like the pro can can I give you one YouTube video besides Bloomberg surveillance? Of course, Les Frenchie, Let's Frenchie do one video on the five places to have beef Bergagnon in Paris, and they start with my favorite, it's just off Rue Duffine at the river where they swim. You come down ru Duffine. It is just tucked into the left there.
So many people can relate to this.
And it's probably it's probably so twenty twenty five. But you know, said tell them you'll eat in the kitchen, but it's just your first time.
Do people mistake you for being French when you're there?
No, they don't, although although I've had a lot of feedback from dephlopperg'speedo, Yes he's swimming in the river. That really that really got the week started. Or Julian Emmanuel on his way to Paris to have lunch with Katherine Greifeld as well. She sent some shish boats somewhere. We're going to start an important conversation here, David Gurrow with a encyclopedic knowledge of the American politics, and uh, it starts strong. David Gurra was Zach Cohen.
Zach, great to have you with. Zach Cohen covers Congress for Bloomberg Government and always great to speak with you. I mentioned a moment ago, big weekend for campaigning Kamala Harris has been on the campaign trailing awful lot Donald Trump heading to Montana, Let's start there. He got some criticism during that press conference yesterday for not being out on the trail as much as has his opponent. What was his response to that and why is he going to this county in Montana? I think went for Joe Biden the last time around. What does he see as the kind of possibility for him in the Republican Party in the great state of Montana.
Well, Montana certainly isn't competitive at a presidential election level, but it's hosting a really key Senate race. He's actually going to be campaigning with the Republican nominee for Senate there, Tim Sheehy, a former government contractor and firefighter, and that race could determine control of the Senate. He's running against Senator John Tester, chairman of the Veterans Affairs Committee, one of the most vulnerable incumbents up for re election this cycle. Actually, in fact, the polling at this point so she e leading Tester and a narrowly divided Senate where it's essentially already get fifty fifty with the loss of the West Virginia Senate race. With Joe Manchin's retirement, Montana I could tip the scales and give Republicans a now right majority regardless of who wins the White House. And so you know Trump obviously, you know there's no love lost between Trump and Tester. There's a long history there. But certainly Montana's an opportunity to not just you know, appeal to a base crowd in a place like Montana, but also a place to try to build a governing majority, which of course you need the Congress in order to do that.
How does a guy like John Tester, Senator John Tester view Kamala Harris's pick to be her running mate? How does he see Tim Walls and what does that mean for the calculus in his home state having Walls on the ticket.
And Tester is one of the people every time I've talked to him about this, he says, I'm focusing on my own race. He's focusing on his efforts to actually rebuff the Biden Harris administration in a couple of places, on things like firearm access Paraguay and beef imports of all things that you know, sort of the hometown issues that Montana voters care about. His campaign ads are all about public lands and accusing she he of being from out of state and trying to enrich himself with government contract as I mentioned earlier. And so that's the path to victory for Tester, somebody who has a long record in the state of being a Montanan and trying to avoid the top of the ticket. I'd be shocked if he even shows up in Chicago.
But parent exports you I was gonna say, you two guys, get going. I feel like I'm on a cable TV program. Paragray and Beef Exports. You two would bring in bart conversation, get the Capitol grill and Washington Gerden Cone and bring the conversation to a hall. It's not Zack Amy Walter Cook political report. I believe it's this morning. Maybe last night. Arizona, Georgia and Nevada moved from lean Republican to toss up. That's really where we are in the Sunday talk shows. All of a sudden it's a toss up election.
Yeah, certainly. I mean the Arizona, Nevada, Georgia always really competitive. I think it's part of the reason why Mark Kelly was on the short list to be Harris's running mate, the senator from Arizona. That might be one way to try to boost Hern out there. Arizona in recent memory basically had every Republican officeholder or every state wide office holder was a Republican. Georgia obviously flipped two Senate seats, not just four years ago when Biden managed to carry the state, and the Nevada had the closest Senate race of the entire map in twenty twenty two, and so certainly no surprise there that these are the really critical states. And so Nevada, I think especially it's got a Senate race there, Jackie Rosen ends up for re election. It'll be really critical for Democrats to try to boost turn out Las Vegas and Clark County and try to keep down their margins elsewhere. But that's gonna be a tough race. Actually. Rosen is one of the few that Trump called out in his Milwaukee speech as an incumbent that he'd like to beat.
November pro tip, David, Seriously, how do you and Zact Cohen and your brethren? How do you remember all the names?
I don't remember them as well as that does. But he, I mean, he's living. How do you do it like seeing them on that hill is?
I mean, all I got to worry about was, oh, that's it? Save us again? Was that Cohen here?
Zach, I'm gonna guess that you know you like I Before the US played Servia yesterday in basketball in Paris, maybe watch this press conference at mar A Lago and something that came up with the prospect of these debates happening over the next four to six weeks, Donald Trump saying that he'd agreed to three of them. What is the likelihood of that happening just because I got to clear the calendar if they are in fact going to happen, and why are these so important to him?
Now?
Why has he had this kind of change of tact toward these debates.
It does sound like there's at least going to be one debate on ABC, I believe on September tenth, and so that'll be sort of the first opportunity that we're going to see Trump and Harris side by side in a debate, something I'm sure Harris has been looking forward to since she ran for president in twenty twenty. And there might be another debate beyond that with NBC later in September. The Harris's campaign has ruled out a third debate that Trump has pitched to be on Fox News, obviously much more of a conservative news channel, and so we might see more pas September, but at least that ABC NBC debates are the ones in play right now. Trump had said that he didn't want to debate Harris as long as she was the presumptive nominee, which was the sort of weird two weak stretch where she clearly had the delegates and the support of the party members that really decide these things when there aren't primaries to do so. But now that delegates have made her the nominee actually in advance of Chicago in or to make the ballot, she is the bona fide nominee, and it creates an opportunity to have this discussion.
Zach, I'm in charge of dumb questions here. Will there be a vice presidential debate?
There will be a vice presidential debate between Minnesota Governor Tim Wallas and Ohio Senator JD.
Advance.
In fact, Walls has already made pretty clear he's looking forward to that particular contest, and that'll be a really fascinating lineup between two military veterans with very different worldviews, who both are trying to appeal to the heartland, to the Midwest, which are really key battleground states. Maybe not so much Minnesota, but places like Ohio, Wisconsin, and Michigan that could decide not just the White House but Congress.
One more question, what's the one race I should read in on this weekend in the Zach Cohen world. What's the one race where I should try.
To be on the edge of make it as esoteric as possible so we can My.
Colleague mate, she he actually just wrote a really nice preview of Ilhan Omar's reelection race in Minnesota. Their primaries are coming up on Tuesday. Omar obviously a member of the Squad, very progressive, very critical of Israel. This primary will be the next test of whether, after the fall of Jamal Bowman in New York, Corey Bush and Missouri, whether supporters of Israel able to oust some of their most critics in Congress.
Zach Cohen, thank you so much, hugely beneficial, really really appreciate it. Cohen, folks, you can't do better than that. On YouTube. You can tell she's wearing red. There is no other color wardrobe in her closet. Joining us now Pamela Witten, President at Indiana University, the executive producer of Bloomberg Surveillance with John farroh is a sterling graduate of Kilroy's at Kirkwood. Didn't know that at Indiana at University, Joining us now, Pamela Witton, Pamela, there are two sides to every university across this nation, and for you, it's who's your hysteria on October eighteenth, to get back to the cadence of a campus, the academics, your world class theater department, all the engineering you're doing, and also what occurred on dun Meadow last year and the huge battle you had with faculty over a rhetorical moment. Is Indiana University commer as you go into the fall term?
Well, good morning, good morning, Thanks so much for the chance to talk about about Who's your Nation? At IU, Like all universities, you know, we across the US, you know, we've we've we've all experienced the opportunities and the challenges of everybody expressing themselves and in ways that are that are important to do to you know, respect, the opportunity for free speech, and at I you, that's the value we have, it's a value will continue to have. But we also recognize that we've got to do that balanced with making sure everybody is safe and that university operations are not disrupted. So we did some really good collaborative work over the summer across our campuses with all constituents, and our Board of Trustees just passed a pretty thorough policy for us just within the last few weeks that frankly makes it clear to everybody what the rules are moving forward. And so we think we're in good shape and we're excited really about a wonderful upcoming fall semester.
President, wouldn't let me ask you about the thanklessness of being a university president. I note that there are a lot of openings at campuses across the country right now, and so many of them, including my alma mater, Cornell, have decided they're going to postpone that search for a couple of years, maybe till the dust settles, maybe until people think that these jobs have more appeal. Could you speak to that, just the way that this job has changed and the pressure that you and others in your position are under at this point, it is a different environment, a different atmosphere where you've got vociferous alumni, students speaking up. You have a lot of constituencies that you have to appeal to, and I wonder if you could just speak to the challenges of that and why despite all of that, this is still a job that you so evidently love.
Well.
You're right, higher education has changed a lot in the last couple of decades. You know. I've been in higher it since the nineties when I started my career as a good old college professor, and and just love that time as well. But the world has changed, right, and so what we see and we face in terms of strong opinions and challenging way things are communicated and way you know, misinformation moves around social media, et cetera. I don't think we're that different than any other place, you know, frankly around the world as well. And it's always about the north star, right. If you love the opportunity to shape and to set a vision for preparing students for just incredibly wonderful lives professionally and personally, then you want to be in higher education. If you love the opportunity to you know, shape the direction of research and discovery that changes lives. You want to be in higher education. And from the perspective of I, you if you recognized, you know, as a state's flagship institution, and I really believe in public higher d personally as well, and the role of flagship place and making your state in our case, Indiana is a better place to live. You want to be in public higher education. So it's about keeping your eye on the prize and recognizing that in the end common outs that we really all want.
You leading your note with this disease that's out there that kids are just floating through. That's a phrase my mother used years ago. Now, you had a guy named Bullard who took a PhD at Indiana University, and he's at another school a bit north. I think, I don't can't remember what school James Bullard's at right now. But Pamela the laureate Eleanor Austrom, who I was honored to speak to the day she won the Nobel Prize, is about the rigor of Indiana economics. Tell us how you're bringing rigor to economics and continue how you're crow barring undergraduates into Hey, it's not a party school.
You're here to study, so riginal, I have to make sure that you are clear because most people aren't. On the breadth of Indiana University. So we are actually Indiana University in Bloomington. You know, forty seven thousand students were now IU Indianapolis Research University in Indie and the twenty five thousand students five regional campuses, two subregional campuses. The biggest medical school in the country is at IU.
Purdue. I have to interrupt. Is Purdue a regional campus of Indiana University?
Well, I think it probably wishes it.
Continue on the rigor that you're demanding.
And so you know, we have different campuses with different missions and different types of students as well. And as our students come in, we're really up the game for them in terms of expectations when they study. But also we own a lot of that ourselves, and we recognize that you really have to be forward thinking and addressing how students need to learn moving forward. It can't just be the traditional old fashioned way in the classroom. So for example, we have agreements with almost nine thousand partners to make sure that our students are engaged and have opportunities not only inside the classroom but outside the classroom, so their career ready when they move forward. We just announced a new co op program. You're probably familiar with the Kelly School of Business, truly a gem, one of the best in the country. If you come to Kelley and in Indianapolis. Now you can study in a co op which is opportunity to work with business throughout our state and beyond, which is just amazing. So we are expecting them to come in ready, but we want to own making sure they have an amazing experience as well.
Pamela Witten, Indiana University, thank you so much for joining Blimber. Your dad. Look at the front pages. Lisa Matteo hour David, this is where we do whitty stories with Lisa Matteo.
I love the wit which I started out and.
I said, why are we doing this? This is the most popular we do. No, you love it in our six hours of broadcast. This is the single best idea three of which God Lisa, what he got for us here?
Well Olympics fever right, you see all the athletes getting their medals everywhere.
Right if you do breakdance and I'm walking out his studio, just.
You wait, that's the next hour. No, kidding, but the olympsa doing something different for the first time in Paris, are actually giving medals to those Olympians that were beaten by competitors that were found to be doping. So they these people have been waiting for years and for years, this happened. Yesterday you had a handful of figure skaters from the US and Japan. They were from the twenty twenty two Beijing Winter Olympics. They're finally getting their medals because of that that was happening. And then today you have ten athletes being honored medals as far back as a two thousand Summer Olympics. So this has been a big problem with the Summer Olympics, the doping scandals, and when these athletes can really start to get their medals, and it's starting to happen now.
I saw this yesterday. It was in the Trucadero Gardens, I think, and very emotional. They've waited a long time for it, and I think some people carried on with their lives competing, retired now came back for it. But you know, a beautifully done them. I've enjoyed all the Olympics.
Tom.
I don't know about you, but I think Paris has done well.
And what I've learned here I think I've mentioned this, folks is I'm loving watching it on YouTube. I'm just loving it. They don't they dope me here, you know, it's part of the thing to do. And they found they found juniper berries the heart of that.
Oh yeah, all the botanicals.
There is that serious stuff and there's a lot of this going on.
Well for years and for years it's been going on. So they're trying to crack down. They're hoping this kind of brings light to it. But there could be another Olympic sport coming up. You may like this one. It's competitive hobby horse riding.
Hobby come to America.
Okay, stay with discuss because we have pictures to show on YouTube. So but you know when you hop on the stick and you do the stick horse. Okay. So it's coming to Michigan tomorrow, reportedly the first time in the US. Here's some pictures of what it looks like. If you're tuning in on YouTube, please enjoy this. Yes, about one hundred and twenty five people are going to this Michigan competition.
These are adults, and these are adults.
Okay, eight hour competition. You have dressage. It's this multi step routine set to music, so they do all this, thank you, yes, dressage, thank you. You would know this barrel racing when they move in this pattern around the cylinders and then jumping over poles like you see the dogs do in the competitions, but these are like three and a half feet high.
Program note. Yeah, speaking of massage, we make jokes about it, but Catherine Greifeld is worlds. We make jokes, but unfortunately she dusts. The horse are the real deal, and she was scheduled to be with us today. Do you know I've been to Paris five times and I've yet to get on Alan Ducassa's boat in the River Seine. You go down, it's like Audrey Heppern and Carrie Grant. You have wine and over priced champagne. Grey feld As speak. Let me get it out here. It's two pm.
Two pm.
She's getting dressed right now in the Celine Lewis mutant thing to go in the damn boat tonight that I'd never been able to get on. So we'll have Catherine greyfeld on as we can. Drisage champion, hobby, horse hobby.
It's not a joke though, I mean it's a real sport. They hire trainers and and some of them are getting serious injuries from it too.
It's very dangerous getting injuries from if you try this time, I might even chip in for the flight.
I would hay to see that next. Okay, Uh, this one's a doozy for my husband who he was addicted to online shopping. Amazon deal let's shoppers buy products on TikTok and Pinterest without having to leave the app. So it's making easy making it easier for you to shop. It's this new partnership that they're doing. So you link your profile from TikTok and Pinterest to your Amazon account and then you buy directly from the ads. It's a click, and that's.
All it is.
Instagram was doing, but even easier, easier. Let's do this tangential Lisa to this week where we saw the collapse of the drug stores. To me, all the stuff you used to buy at the drug stores, you're now buying on Amazon. Am I wrong?
You can buy anything on it.
It's so funny, it's so easy already, I'm a little worried you take down any barrier to doing this. You know, if I can just click the picture.
Where are we in five Seriously? Where are we in five years? Folks? Is what I would say. I mean, I mean, you know I used to go to CVS, d Wayne Read, Walgreens whatever, and you.
Don't order in it.
I know, for my kid's bill I get all the time from Amazon. It's and you can get in the pharmacy and it's all when you.
Run out, When you run out of like the wax or stuff you put on a fiddle bowl, you go to Amazon.
Oh yeah for the right Yeah, and that's there tomorrow, mightn't be there today. I mean you can get it, so next, what do you go?
Last one? Disney reportedly once to spend at least five billion dollars in the UK over the next five years to make movies tv shows. So this is something new from the Financial Times. Yeah, they spoke to their European boss because you had Deadpool and Wolverine. Right, huge success so far has been that was filmed in UK's Pinewood studios. So that's one of the things they use it to make a lot of their films. They've spent about three and a half billion dollars in past five years to make it. Okay, it did a lot there. They have four films already being scheduled finished to work there. The Skywalker Saga movie series that was filmed there too. But it's not just that. I mean it's a Disney plus it's national think Shovin.
For Hulu, so much of what we think is Japan was north of Vancouver.
What is your movie diet? Like, we know a lot about your reading, Robert Kaplan and whatnot, but what's your what's your movie diet? What do you like to watch?
My movie diet is basically a gunpoint. We're watching a movie, or you know, we're watching a movie. It's really actually right now, really sad. You know, compared to.
Most people, you're not going to see.
No I made for you. But you know, I don't, you know, I'm.
Like you going to see it this weekend.
What said is there's a great chart this week. I'll give credit to the Wall Street Journal. Paul and I talked about it. It's irrefutable. People are going to the movies less. I mean, it's watch it at home, we're all. I did watch a gunpoint. I had to watch Red to Bruce Willis, and it was you know, it's what it is. Star turn Hell mirrors in it. But it was beautifully executed. I was shocked at like the camera angles, the editing frame to frame. They took a lot of care in it and it made like one hundred ga jillion dollars. But you know that was great. Okay, Lisa Matteo, thank you so much for the newspaper. This is a Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment, and international relations. 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 am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.