This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
What is it?
Well, when tomorrow comes, That's when we hear from fed share J. Powell two pm. We get the decision. Thirty minutes later, we're going to hear from the man himself. It's the sixth meeting of the Federal Reserves Policy Setting Commeting Policy Setting Committee. We're going to have all the US Central Bank's latest view on economic projections on the US economy. Is it going to be a snoozer? Or
might there be some possible fireworks with his view? Back with us, we got doctor Stephen Skanky, chief economic advisor at keep Point, also a former US Treasury and White House National Security Council staff member, joining us on Zoom from Washington, DC. Also with us, Anna Wong, chief US economist for Bloomberg Economics, on Zoom from our Washington DC bureau.
Doctor Skanky, good to have you with us. It's a good day to talk to both of you, especially ahead of hearing from FED Chair J Powell tomorrow, the committee meeting today. Of course, what's top of mind for them, do you think, doctor Skanky.
Well, they're still trying to figure out whether inflation is had just taken a break and is not going to rebound. Certainly, they're concerned about the high oil and energy price numbers and what that's doing in gasoline on the headline, and how that translates through to core inflation. So that's that's certainly a concern. The other concern is that the economy still seemed to be growing pretty robustly for all the
reason that we think consumer spending should be slowing. The latest numbers last week didn't show that at all, and that's got to be a concern for them.
I want to bring in Anna Wong, but first, speaking of headlines, the Treasury tenure yield rising to four point three six five percent, the highest going all the way back to two thousand and seven. Anna Wong is chief US economists for Bloomberg Economics, and you've got a great piece out about why a soft landing call always precedes recessions. Take us into the history there, and also why you know you think it's a little too early for people to declare soft landing this time around.
Yeah, so, you know, we have seen four recessions in the past, say since nineteen ninety, and preceding each of those four recessions there had been a chorus of soft lending optimism. So you could actually look up the word soft lending across news headline and it's very clear that that's the trend. And so in that piece we ask what is the reason for why soft landing hopes always peak right before recession? I think I think there are a couple of reasons. Number one is that economists forecasting
tools tend to depend on linear relationships. Unfortunately, unemployment does not follow a linear distribution data generation process. In fact, during recessions, unemployment tends to jump on a non linear in a non linear way. So as a result, when people think linearly, the mean forecast would suggest that unemployment rate would only you know, slightly rise to three point
nine percent by the end of this year. And that might be the number that the Fed officials, the median participant to write it, would write in in the updated SEP tomorrow, three point nine percent unemployment by the end of this year. That is entirely consistent with a linear way of thinking about the world. But if you think about the risk, and we calculated the risk around that mean forecast using historical data, in fact, it shows you that the upside risk for unemployment is actually much much
bigger than the downside risk to unemployment. So this is why we think overall that there's still substantial risk of a recession before the.
End of the year.
Doctor Snaky way in on that, do you think do you agree with in along that there's substantial risk of a US recession by the end of the year.
Well, I certainly agree with annas Research and Analytics on this, and yes, there is a risk of recession before the end of the year. I happen to think that it's more likely to bleed into twenty twenty four than necessarily show up here. But there are a lot I mean, we know that there's a lot of things that are going to be happening in October and November that could
very quickly push consumers spending down. Other things on the trade front, business and certainly tim as you mentioned, the high the record high tenure treasury, how does that affect the psychology of business investing and so several things could all of a sudden start to spook decision makers and we end up with not only a weakening but even possibly a negative GDP growth by the end of the
fourth quarter. The other thing is is money supply has been in a negative growth period for now over a year, and historically that correlates very highly with recession. That would if you sort of try to time it out, I'll look more into early twenty twenty four than at the end of twenty twenty three. But even that historically has
not been a tightly timed at eighteen months. So that's another factor out there that we don't talk about very much, but still a very real factor in how this thing could turn quickly.
So doctor Wong, tell us how you think the FED is going to handle I don't know, talking about the uncertainties that have come up over the last few months here, the fact that the tenure has risen so much, the concerns that you raised about unemployment. Talk to me about how you think the FED deals with this with regard to how it's thinking about its interest rate path and potentially cutting in twenty four.
Yeah, so you know, Chairman Powell has already told us very clearly how he deals with uncertainty. At the Jackson Whole speech, he said that when there's uncertainty and when there are still some lack of monetary policy operating in the background, he would move slowly. And uncertainty is what we are going to have in the next couple of months. As Steve said, we have you know ua w strike
ongoing right now, We still have that Hollywood strike. We have a potential government shut down looming that if it lasts for a month, we expect that it will raise unemployment rate by point two percentage point and at which point the psalm's rule for kickstarting a recession would be triggered. So I think that Powell would definitely perceive all these risks as telling him that they should wait for more information. So I think it's unlikely that the Fed will race
rate in November. However, it might be that he would be holding out the door open for December hips or even January.
January hike, a January hike. So much of our conversation over the last few weeks it's focused on November. Doctor Skankey is, what's your impression here do you think we'll see a Well?
I agree with what Anna said. I don't think that the Fed is going to raise rates when they announced tomorrow, but I do think that Cherah Powell will qualify the decision not to raise rates indus remarks by saying something like rate hikes can resume if needed. I think the hold will will also have some other hawkish elements or hawkish connotations. In the dot plot, they might even show the possibility of another rate hike, if not in November
in December, could happen early in January. So the dot plot and the updated Summary of Economic Projections will be important and very interesting, for example, to see if they ratify the notion that the GDP is still growing steadily, albeit maybe a little bit weaker than the two percent path that we're on right now. And how do they factor in higher oil prices when they look at PCE inflation.
And what do they say about unemployment. Yes, again as Ada said, unemployment does not increase linearly, and they've they've been more hawkey shot that. So it'll be very interesting what we see in the doc lot and the SEP will probably be way more interesting than what they say about not raising rates.
Oh interesting, I mean, I'm looking forward to the sep but also of course the press conference as well. Doctor Wong, tell us if you have one, if you could ask J Powell one question tomorrow, what would it be?
I would ask him whether he thinks that the strikes is suggesting that maybe inflation expectations are not as anchored as it seemed. I mean, we've already seen central bank officials in other countries, such as Reserve Bank of Australia, suggesting that inflation the expectations may not be anchored, given that union workers are able to demand higher wages, and we're seeing exactly that happening in the US.
How do oil prices and gas prices factor into inflation expectations?
Anna, Well, that's it's like a chicken and egg problem from the FEDS perspective. If they believe that inflation expectations are anchored, they will look through the increase in oil prices. But if they don't believe that it's very anchored, they won't look through it. So I think the inflation expectations question is really the core of what they will do.
Doctor Skanky ten seconds. One question that you would ask J Powell tomorrow?
What's the corrector point for deciding that the rights need to be increased again either in November or December.
All right, there, It is really appreciate both of you joining us this afternoon, the eve before we hear from FED Chair J Powell tomorrow. That's doctor Stephen Skanky, chief economic advisor at keep Point, former US Treasury and White House National Sercity Security Accounts staff member. Also doctor Anna Wong, chief you has economist for Bloomberg Economics.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube.
His next voice is going to sound familiar because we caught up with him at the Milkin Institute Global Conference earlier this year. So great to have back with us in studio. Hans Kobler. He's found her managing partner of Energy Impact Partners. They have about three billion in assets under management. They invest in clean energy technologies and they help deploy them through partnerships with companies trying to decarbonize. He is in town for Climate Week, and as I said,
he's here in our Bloomberg Interactive broker student. Nice to have you here with him and myself being here. Welcome back. Come on close to the mike because you want to make sure we can hear you. The energy transition. Let's start basic. How's it going.
It's going well, it's picking up momentum. We had the first year in history that more money will spend on energy transitioning on traditional energy one point one trillion. So the momentum is building a tipping point. It's a tipping point, it's but it's the beginning. It's the first inning of a long, long race. You know, if you believe McKinsey and some forecasts, we will need eight nine trillion dollars
a year one hundred and fifty trillion. That's fifteen internets or one and a half times the global economy spend therever the next few decades. That's a lot, and we may or we may not get there, but we are taking it serious.
So it's picking up momentum.
One thing that I think about when it comes to the energy transition is the role of nuclear power. And here in the US, it's a really checkered history, it's a really checkered past. It's very expensive for us to build nuclear power plants. They're always cost overruns, and then you have the legacy of Fukushima three Mile Island in Chernobyl. What are your thoughts on nuclear?
I think so we have a lot of corporate partners in our investor group. The Southern Company was the last one here to try to build a nuclear panther. They finally got them all online, which is right. We have ed f as an investor that had fifty five in the country running and half of them didn't work when they when they shut down. The Russian gas and Tepco
was an investor too, so nuclear. You know, the clean energy transition is amazing, and a lot will be wind and solar, but you need the baseload and nuclear is still the best way to get to the baseload. So I think it's critical to keep that in the Arsenal and from Germany originally, I mean you can tell tell the accent. You know, the probably the greenest country that has most ambitions to go clean. They spend the tonne and they shut down, which is a stupid thing to do.
It's I mean, is this reversible.
Yeah, but it's hard. It's hard.
Once you shut down an industry, you have to build up the talent to build new to build new nuclear plants.
You can, but I guess can we transition to net zero without nuclear?
Crucial?
Is it hard?
The transition to net zero is not only converting what we have today, but to deal with the demand that we are facing. We have had a flat demand curve in this country for twenty years. We are now electrifying transportation. We're building data centers running on AI where one Google search, where one AI search is taking about fifty to two hundred times more power than a Google search. So you're talking about doubling the infrastructure that you've built over one
hundred years. You know, Musk is out there saying no, no, no, whatever you are calculated, it's going to be tripled. So you need a lot of electrons and so there is not one solution for that. That means we have to use different tools in the toolkit to get there and get there a lot faster than we have been.
But can we do it this energy transformation without nuclear?
Yes, but I think it would be a lot cheaper if it did it with nuclear. And at the end of the day, we have to address something that we call in the industry trilemma. Everyone wants to go clean, but when you face not having power at all, security reliability gets on the horizon. And when the Germans pay twelve times more for natural gas than the Americans and four times more for electricity, then affordability comes in right. So that's an equation. This trilemma is an equation very difficult.
But also motivation perhaps to invest in renewable sources that in the long run are less expensive.
Absolutely, but in a way in our view, the only way to solve that equation of this trilemma is to really to apply innovation. That means you need new technologies, great technologies, and you need to collaborate.
You need to.
Involve the incumbents. The existing infrastructure sits on, sit on trillions of dollars of investments that we have to help them get there faster. That's by the way, it's a business model that we have where we team up with corporates and bring them together in a room with the innovators and the capital to forge the alliance is to accelerate that transition. It's look, everybody wants to see the rosy sky, but you've got to be pragmatic about it,
and that means. That means we got to work together and work faster and harder than we have in the past.
So when you have those conversations and those collaborations, what is it that you speak most about? Tim brought up nuclear, right, and we feel like it has become such a no, no, it is it nuclear? Is it hydro? Is it solar? Is it? Like? What is it that people that you guys spend a lot of time talking about with your oartners?
Yeah?
Yes, yeah, yeah, yes. So it is a complex undertaking. We need to decarbonize supply, We need to create a lot more supplies. So that's one folks there. The second one is we need to create sustainable demand. That means electrifying a lot of the industries, from transportation to home heating, to the data centers, indoor agriculture. And then you have to deal with the high intermittency you create. So I was just telling you it's two to three times more power that we need, but at its peak it could
be five times as much. You know, it's like building a church for Easter Sunday, and we've got to somehow we have to balance that, and that means you have to invest in transmission distribution, which is very difficult.
Right.
It took fifteen years to get the clean electrons from Canada through two of the greenest states to New York. Because nobody wants to build anything in their backyard. You build storage, and great technologies are coming up. You an investor in form, you investor in power and so. But that's a lot of space that is needed. Takes some time. Or you digitize the communication between the customer and the supply and you tell them, look, don't charge your car at six o'clock to it at midnight.
It turned down. It's nice years. Just don't cool right now because everybody's cooling.
Can I ask you, with only about thirty seconds left here, would you invest in a fossil fuel energy company? No, oil and gas company? No, you wouldn't anymore. No, even though it's going to.
Be doing for some people.
You know, look, we need certainly natural gas form.
I know you're kind of talking your book because that's.
The way we need natural gas a long long time, okay, But we personally would not invest. We are fun focused on you know, we are Article nine fund. We invest in things that decarbonize the globally.
But if you weren't would you.
If I was a financial bssit would okay?
All right? Love having you come here, always provocative. I always learned something. Come back soon, yeah, Hans Kobbler, he's founding. Do you took a founder managing partner Energy Impact Partners?
Here in our studio, you're listening to the Bloomberg Business Week podcast.
Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven.
Thirty Climate Week in New York against the backdrop of the seventy eighth session of the You in General Assembly. You know that we've been talking about it.
They have.
The UN has identified seventeen specific SDG sustainable Development goals, including building out resilient technology infrastructure. And to get there and reach some of those seventeen SDGs, the UN has highlighted high impact initiatives, among them unlocking the data dividend, which our next guest participated in an event that happened
here this week with us is Johannes uting Am. I saying it right, perfect Okay, he's being kind, but he's executive head of the Partnership in Statistics for Development in the twenty first Century. The acronym is Paris twenty one, which is hosted by the OCD in Paris. I have to say that Johanna's former member of the UN Secretary General's Expert Group on the Data Revolution. He's a development economist,
expertise and employment, social protection, healthcare, financing and gender. He's looked at the world in a lot of different ways and we were delighted to have him here in our Bloomberg Interactive Brokers studio.
Welcome, Welcome, Thank you very much for inviting me.
Well, thank you. And I've learned about Paris twenty one because my daughter has done an internship with you all this summer. So full transparency, but I've learned a lot. Tell us though, in your words, your mission and your goals, what you guys are all about.
Paris tonty one stands for Partnership in Statistics in Development for the twenty first Century. We basically do three things. We help countries with technical capacity development national statistical offices, so we help training of managers in statistical offices in
poor countries like Wanda and others. So we organize trainings, We help with coordination in many parts of when you produce data, there are many ministries involved, there are development agencies involved, and we help them with to get coordinated.
And last but not least, we do advocacy.
And you just mentioned the UNGA week, the SDG summit, and we do advocacy for more and better funding for data and statistics.
Well, what's interesting in a world that's overrun with data we just assume it's good. We don't say it's good. We talk about biased data and kind of dirty data, not great data. But not all data is good, not all data is productive or useful, right, And so you guys are involved in that helping countries develop infrastructure so that they can actually accumulate their own data sets.
Correct, absolutely correct.
I think what is a bit difficult sometimes to understand is, on the one hand, we have a data tsunami. We have all these data digital data, which is very good, which is feeding artificial intelligence and innovation. On the other hand, we have and on the other hand we have data gaps, terrible data gaps, and in some countries we don't even know of how many people in a country are living. We have difficulties to measure burst rates and to register those people.
We have a lot of data gaps in the SDGs.
We in particular on climate change or gender equality. We are literally flying blind. So we are supporting as Paras twenty one with our partners to close those data gaps, to be able to do better decisions, but also to hold our governments accountable. I think that's also a very important aspect of this. So that if you say you want to read use poverty in a given country by six percent, you want to have the start point and the endpoint, and you want to see if this is on track.
We've talked a lot this year about AI and the impact that AI is having on companies whose stocks are publicly traded. What about when it comes to your work and how you can use AI to make sense of this data and help these poorer countries actually make positive change? Are you using it?
An excellent question?
I mean, what we see is that there are two I mean, we often talk about silos, right, I mean, and this is a real siite of On the one hand, we have people talking about the data that you were just mentioning feeding into the algorithms and that supporting these AI driven innovation. And on the other hand, we have data for development, which is an owned space by itself, and there is not enough crossover.
If you look at the G.
Twenty statement at the last one, there is a working group on Data for development and there's a working group on digital data. So there is yet not enough overlap. I think it's about to close. And artificial intelligent for the public good is of course very important, but also the quality of the data that you feed into it is essential.
Garbage in, garbage out exactly.
So the quality of the data to help countries produce verified quality statistics even is very essential and often unfortunately not in the spotlight.
Well, you can't have transformative I'm stealing words from you guys, by transformative policy without transformative data.
Correct, absolutely correct.
Yeah, well, and I'm curious about you know, in a world where there's lots of stress points, I'm thinking, you know, the hottest world, you're right, hottest temperatures on record, So there's a lot going you know, a lot of focus on climate, but investment in infrastructure systems so that the data collection is better. How tough is that to get the money going where it needs to go.
That's unfortunately it is a very very difficult exercise. So we currently spend around six seven hundred million on data and statistics from Official Development eight ODA eight and this is less than a percentage point since here. So we would need to ramp up significantly the international support for.
Data and statistics.
But we also need to convince countries to invest part of their taxpayers' money domestic resources into it and the payoff. I mean, the thing is if I invest into a hospital, if you're a minister, what would you do? Would you invest in a hospital, or in vaccination or education or would you invest in a national statistical office? We're probably the first, yeah, because then you can show after two three years is done. These benefits for investment in national
statistical systems will only take time. The benefit will take time ten fifteen years later. They feed into everything else.
Sell us on it. You know, if you're trying to sell a minister on making this investment, how do you do it?
What's the cost by not making those investments.
What we say is if you want to have I mean, for instance, economic growth, I mean it's very critical to have very good understanding about key economic indicators right, and if those are not sort of measured in your country, you will not be able to, first off all, to make very good decisions. You will not invest your public resources very efficiently. You are not even able to tell you if you do it or not. So in that sense, we are not asking for a lot of money. It's
it's pe nuts. It's literally pe nuts, and there are a lot of we have a lot of good tools attend to help. So I think for a minister, and many planning ministers actually know this and they are behind this. It's sometimes just the politics behind, which is a bit difficult.
No politics, But what's interesting I think about the amount of investment decisions that are made up of like all of the US economic statistics or global statistics right in the developed world. We've got about a minute and a half left, Johanna's you know a lot of times a little more. Sorry, okay, you know, it's been that kind
of crazy day. So I think about, like our audience who's listening, a smart financial investment audience, what is it that they need to understand about again the importance of it and potentially the payoff. What's being missed by not accurately having data on a lot of different countries.
I think we have to talk about the opportunities and the opportunities we will have next.
Year in Meddelin or World Data Forum.
So all your listeners, your community is quarterly invited because we are working more and more with the private sector, of course with the big companies that have a lot of data that makes those data. Also because we were asking about AI, I will later today attend by Google and I for public good. There are many other companies who are actively engaging. I think they could do a little bit more though, and also sees it as a public good. So I think for the many of our
colleagues and partners from the private sector, I interested. So are civil society organizations, by the way, and to bring them together in multi.
Partnership, that's the partnership part is very important.
How can we make the data collection easier from the perspective of these countries, And I'm thinking about public private partnership specifically. I mean, think about the data that you know a mobile phone company has about what somebody does
on their phone, transactions that they make. I mean, you can you can get really granular information that can tell stories about an economy, what's the role of a private company and in working with the government to provide that data, because there are some privacy concerns too.
It's on point exactly how you say. On the one hand, I mean, we call this public private partnership, and there are some really very nice public private partnership out there where telephone companies share confidentially and secured the data. But of course it's a business risk as well. I mean, and you have to see what has happened to this
data and so on and so forth. But there are some very good, promising examples of how what we call big data, specifically on geospatial data is used, for instance, on poverty mapping day and night satellite imagery, so you can look at a given country and you can compare the light nights, and you can compare it with a day, and then you can make a sort of calculation do these people.
Have light electricity or not?
And from this with other data, you can estimate hope poor people are and you also know for your investors where maybe you can put some infrastructure to solve this problem.
And that's what I was thinking about. It was interesting. I was over at the earth Shot Prize Bloomberg Philanthropy's event, and we talked with some of the finalists of the earth Shot Prize and they've come up with different ways to decarbonize the world. And one of the things, let's talk about what you're doing, But then it's like, what's the impact. Talk to us about some of either the data sets that you have helped accumulate and what it has led to if you give us some examples.
Of course, I mean we have been we do a lot of country work and in specific the one area which is very important, it's on gender.
So in some parts of this.
World, I mean through our support in the Malidivs in Colombia, in Africa, in many countries we have no more sex disaggregated data, which is fantastic for many different purposes.
I mean this wild so basic right now.
Yeah, absolutely, I mean to to sort of to know of how many men and women there are children. So we have quite a couple of countries where we can show success, where we can show impact, and this impact is leading governments also to invest more into data and statistics. So you can say the glass is maybe more half full than half empty in our area. But through these events like what we have here at the highest level that we had the DSG. I mean, AMohamed was opening
the High Impact Initiative. We had another event, just a breakfast on seven am in the morning, full room, very very important people. So there is more consideration for the topic. And I'm rather optimistic than for the next eight years that we can give it a big push and we will be able to convince more people that this is an important part of the development nexus.
Johannas you talked about Google and Like or the media you're going that you've had, or the conversations you've had, and I do wonder about how much increasingly the private sector complain all of this. It's interesting. We had a guest yesterday and we talked about the roaring and the crash and FDR, and we talked about who were the power brokers back then? It was you know, the Carnegie and you know those kind of folks who are industrialists.
Today's power brokers are the data CEOs and the data companies. What you are trying to do, does it increasingly have to come from the private sector or does that not necessarily give you the purest data that you want.
It's a very very important question. They have so much They have so much data, but of course data is also linked to power, and it has lots of questions about confidentiality. It's about the use, the safe use of the data, and of course these companies want to make business. What we are talking here is about a public good. So if you talk specifically about a specific subcutory like official statistics, I would say this should stay in the
hand of governments. There are certain criteria, we have principles for how to produce those things. It's a public good. We don't know what happens to those data, but I think some of these data is just essential for the government, for private sector, for civil society as well, to see where a country stands, how is it about the education system. So to leave this to the private sector, I don't think it's a good idea to have the private sector
feed into those official statistics. That's a very different question. We need to be on the same level playing field. And we just talked about the numbers. If you look at the budget of an official statistical office in a poor country and you compare it with any other private sector of funding, it's very clear where the power relate, how the power relationship is.
We'll invest your money, not flow in if you don't have those data sets well to some expensehip.
Absolutely, I mean it's flowing in. But then we make in some countries where we this birth registration that I mentioned be registration, this is terrible. Mistakes are possible and also sort of investments that are not sort of leading to the estimated results.
I mean the middle class for instance, you want to know as a as an investor, the middle class in India is it? Is it five hundred million?
Now?
How big is it?
Actually?
Do you always trust the data?
No?
No, not at all. I mean there is I mean there were no but.
There is calling out individual countries specifically or feel free to.
Yeah, I mean that there are. Can they can talk about the past.
Even the developed markets, right, we questioned some of the.
There are two examples that very well known and it's Greece and also Argentina at some point in the past. And there was about the inflation CPI, which is very well documented. So the the good thing is that there is a trusted community that would call out those misbehavior. There's also a misunderstanding. Sometimes there is not one choose in the data that is not it it's not truths.
It's what's important is you make it.
Very clear that you by to statistical standards and that the data is sort of produced with a certain quality standards, and you make it very open, and then you can start a debate about it, which is really more fascinating than you sometimes tend to believe.
I know, for my daughter, because you don't work with you guys in gender, Why gender versus healthcare versus employment versus financing, or how do you choose where you want to focus on? How does that or is that determined by the money that comes in in somebody's interest, or how do you figure because there's so many probably different ways you could go.
Absolutely, I mean the demand is immense. I think many of the questions around gender are underpinning.
Every other sector.
If you look at development, we look often at sectors, we look at agriculture, we look at health, we look at education. If you try to improve all those sectors, and the SDGs have seventeen different quote unquote sectors, gender is underpinning everything. I mean in terms of if we invest in good investment in gender statistics, which could be I mean sex disaggregated data, but also a gender based violence, which is important to document as well, so it's.
Underpinning all other sectors.
And what you also probably have talked about quite a lot in the show is about the economic benefit to use the potential of women's empowerment, in particular, for instance, to access to ownership rights of resources, land, credit, insurance. So once you unlock this potential, once you have an opportunity and you know how many women have access to land and what kind of land and credit and education, this will help you to make targeted investment and which
helps for all other sectors. So it's a huge multiplier effect. Next to there's an intrinsic value that women and men should be treated equally.
Okay, what about when it comes to data collection and how different countries are collecting data? Are you seeing, you know, in terms of developing countries where they don't necessarily have the infrastructure built in, are you seeing them investing technologies that are so called lead frogging technologies that allow them to sort of bypass the big infrastructure investments that were
made in the past. And I'm thinking, like, you know, ways to provide internet to folks without wireline broadband, you know, without actually digging holes using satellites, being able to use data collection instead of launching satellites, use drones for example.
This is happening and I'm personally I collected myself when I did my master's thesis. I went to a couple of countries and collected data from my own seasons. So I was working with national statistical offices and we had
these paper forms. So you went with a paper form with a questionnaire and you asked all these questions and then you went back and then you had to type it in that I have seen statistical office packed with lots of paper and it looks like in your office small less anyway, So this is changing now using mobile phones and copies and and and different forms of basically collecting the data electronically.
And this is happening.
Even in poor countries, so there are technolog You said it very nicely that this leap frogging is happening.
I mean we are not seeing.
We also work at the OECD with of course rich country statistical offices, and you can really see the difference of how national statistical office, in particular in these middle income categories like Philippines, eventually Ghana, Columbia, how they jump over this and how they change the infrastructure and through very different forms of using modern technologies.
And this is really how very very nice to see.
Well, I know in our prop call I said, you're kind of openable. Windowed is something that we are not necessarily aware of, and we just take for granted that there's so much data everywhere. So this was really enlightening.
Thank you so much, Thank you so much.
Safe time to be here, so enjoyed it. Johannes Shutin, his executive head of the Partnership in Statistics for Development in the twenty first Century aka Paris twenty one. This is still Parmark.
Journal.
Now about you let me drive?
Oh no, no, no, no, who's going to jog home?
Honey?
Please gravels. Let's mate, I want to try.
It's a good question.
This is the drive to the Globe dot com thing?
Well, Bun on Bloomberg.
Radio, all right, everybody, Carol Master along as him stead Who is that?
I just can't who is that?
We're going to talk about more of what I was doing. Later on, we were at the earth Shot Prize in the Bloomberg Innovation Summit here at the Plaza in New York City. But it's all about innovators who are doing very cool things. A lot of it is about how can we improve the climate. I'm sorry I missed reduced the carbon footprint.
I'm sorry I missed it.
I'm glad you're being William was a little ticked off.
Did you tell him? I said, high, I will like okay, but I was holding on the fort Don't worry.
He did talk about this Treasury tenure yield rising to four point three six five percent high since two thousand and seven. He did not, But nonetheless we are talking about it. We want to see what Charles Tan has to say, because this is definitely in his wheelhouse. He's co the io of Global fixed Income at American Centric Investments. He's here in our Bloomberg Interactive Broker studio and he's been watching how the sausage is made. Thank you, thank you, welcome, welcome.
Ten year, five year, we've seen the highest yealed since seven significant.
Absolutely, yeah. So you know, over past the couple of years, I think some of the major changes in a global economy and also global inflation markets are leading to this higher inflation and not surprisingly higher rates environment. And you know, we think having said that, we feel like, you know, tomorrow is a FED meeting, right, so that could well
be the end of this you know, hiking cycle. We are expecting what's so called about like a hawkish you pause tomorrow, meaning that you know there were a pause.
But you read the Bloomberg story. That's at hawkish past.
Okay, yeah, that has been that's actually been sort of the market consensus for for a while. So and we're definitely going along with that, you know, the the market on sentence on this one. But you're not gonna pause and not gonna sound the hawk ish. So there still might be a chance of a hike in November, but a we believe by the time when no Womber comes around, uh, the economic data will be weak enough for them to say it this is it.
Okay, I'm gonna just throw this out there. I'm gonna get a little crazy.
Okay.
I was walking in the office yesterday and we're to that point in the economic cycle where a colleague of mine who you know, doesn't you know, he stops me, knows what I do for work, and he's like, I want to talk to you about bonds, and he's like he's close to retirement, He's like, why would I not buy two year bonds that yield over five percent?
Right now?
He's like, I've ignored bonds for years, right, why would I not do that right now? And I said, first of all, I can't provide investment advice. Friend, I have no idea, but I'll ask I'll ask Charles all about it.
Well, I would say, you know, your colleague is it's definitely on the right path, you know, because you know this is a very uh, the very first time in multiple years. Actually, investors and savers, if you're retirement nurse thing about savings actually getting a really you know, attractive yield. Right, So you talk about a five percent you can put your money in the money market, don't worry about it, or can put your money in buying treasure reviews. Five percent,
that's it. You feel pretty good about it. If you're willing to take a litt bit more risk. Let's say in a way you actually recently launch a new product called fusing that's an ETF floating rate instrument. A little bit more risk, double a rated. You know in the bond world, you know highs this trip away doubles in it. Then you know high those kind of things. So double A average is very high quality.
So is this corporate?
This is a corporate structured and also floating rate mortgage boond altogether floating rates. You don't take any risk on a floating rate interest rates. It takes a little bit credit risk. You get a seven percent. If you're a little bit more adventurous, you can go into high yield the bank loans you can get a to ten percent. Right, So there's a far cry from a merely like a you are and a half two years ago.
Right.
If you compare bonds today versus the stocks, it's also the polar opposite. Two years ago, I think you know, Bonni yield as we know was almost zero, and you know stock dividend yield was about like two percent and earning about five percent. Today Bonnie yield is about five to six percent seven percent. Can take a bit more risk. But where is dividend one point five percent and where is earning? It is only four percent? Right, So that's why you're seeing a lot of you know, flows into
money market funds, into you know, short duration funds. And I think your friend is really having his mind in.
The right place.
But that's interesting talk to us about where the investment money is going. Is it all short duration at this point?
I think so far. Uh, you know, the flow, the vast majority of flow are going into the short end money market funds in but which is out of history. Just really sure, right, But we also believe there are opportunities now with the FED, you know, almost at the end of the hiking cycle, the ten year you just mentioned about the four point three six percent, we think
it looks attractive. The reason we think it's attractive is because you know, when you have a recession, when you have economic slowdown, when inflition comes down, interest rates tend to decline right when that declines, and you can you know, add you know, sort of more duration to a papoli by buying not only in front end but also you know, five year bomb, seven year boond, ten year bomb.
But investors aren't doing that yet.
Not yet, because they because they don't know if the hiking cycle is done. I think there is more room to run on yields.
I think there is anxiety about, you know, the sort of when the hiking cycle will be down and what that means for.
That's an understatement, yes, absolutely right.
Well, honestly, I think the whole anxiety and all caps exclamation point, exclamation point, the whole world.
Is beating on. You know, is the infliction really turning or it's going to be actually reviving at a sort of But.
To that point, fundamentally, it's interesting coming from the earth Shot Innovation Summit that we do here at Bloomberg. You know, it's all about reducing the carbon footprint. But we are in this interesting cycle where we it feels like more companies are getting more aggressive about their ESG aspects and
reducing their carbon footprint. I mean, hottest year on record already, yes, globally, So I do wonder those shifts, some of those things that are out there, doesn't mean that the inflation picture is higher than it's been And do we need to accept that?
Yeah, I think even if the FED will not, that's right.
So I think that this inflation sort of a trend is a very complicated question, you know, as it should be. The way we look at it is this, you know, we think that inflation in the near term called it one to two years, is going to be going down, but then over a three to five year time horizon you may well come back. So this is what we
call cyclically you know, down but circular up. Why we think of that the case near term one two years, you know, in that term horizon, we believe they're going to be hard lending, be a recession, and in the recession, you know, demand will go down and the supply will naturally go up, and you know, the trend of inflation naturally will go you know, go down in that time horizon.
Another factor really is money supply. You know, I'm sure you know over the past two or three years, there's a huge supply in money supply, right, so now money supply, and we're going.
To talk about with the New York State Controller Thomas di Napoli. Like in the last three years, it's been great for state cities, right They've been able to cut taxes because there's been so much money coming in very different environments.
Exactly, so you know, you know, and to right now is contracting, which is supporting sort of that inflation will be down at least for the next couple of years. But then longer term, we believe there are many structures sort of changes in the globe economy, including esg energies, you know, lacks of energy sort of an investment but there are other forces at work as well that will push that inflation search.
Yeah, that makes a lot of sense. Bridge gets Wan to talk with you. Thank you and thank you for dealing with our craziness.
Before we went on.
Get a little idea behind the scenes, Charleston, He's Cocio of Global Fixed and come over at American Century Investments. Here in studio.
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