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 and inflation Report coming to you right now from across America. I'm waiting for the data, particularly on that critical three tenths of a percent data, and it comes in a little elevated away from the free lunch people were talking about. Instead of zero point three, it's zero point four year
over year, not three point four. It's a lofty three point five. And the big one, the wildser to meet Paul Sweeney, is three point seven. Core year over year comes out at three point eight with a spirited real average hourly earnings, The markets react.
S and p five hundred just ticks down pretty solidy down seven tens to one percent. The nastac off about nine tens a one percent rate on this data. Go to the yield space, Tom. The two year treasury, the one that's really tied to short term rates, up eleven basis points, just in a couple of ticks. Here, the ten years up nine basis points four point four in.
The real yield explodes out ten basis points a higher inflation adjusting yield two point zero nine percent. I'm taking some time here, folks, so I reckon digest this market moving data curve spread a little bit of disinversion, but the real dynamic is just simply in level. I'm not going to mince words. I said this on Monday. I
was just guessing. Now I'm not guessing. We are on the five percent watch for the US full faith and credit two year yield four point eighty seven percent rounded up twelve full bas points of movement a ten year four point four to six. There's prosaic ideas, like what does this do to a thirty year mortgage? Is one idea? What does this do to money market funds? Paul? What do we start doing? Is it another half a trillion dollars this week and the money mark.
It's interesting time.
I'm just looking at the top live on the reporting on the Bloomberg terminal, Chris Ancy, senior editor for Bloomberg, who says, this is going to really question the feasibility of a June FED great cut, that's the bottom line.
He's had time to look at his studios in Princeton with Bloomberg Intelligence Ira Jersey and will have Neil Dudda with us in moments as they both digest the data. I right, I guess I got to go to the FED chit chat. This is about as no June cut as we've ever seen.
Uh, no June cutting. We're gonna start pricing out July in a hurry as well here Tom, So you know it very likely when you keep on this was not the worst data obviously that we could seen right off. Zero point five would have been worse, for sure. But it just shows you that the the disinflationary environment is is is lagging now. So the you know, the the idea that we were going to continue to have a
slow decline of inflation just hasn't happened. And now we're we're starting to see a leveling off, and because of that, it's going to be harder and harder for the Fed Reserve to start cutting interest rates, like even make the case that they need to start start cutting interest rates
and and calibrate their uh, calibrate what they're doing. So so it wouldn't surprise me at this point if if the majority of the market started the price for the first full cut to be in November at some point in the next couple of next couple of days, because you know, if they don't cut in July, then then I think that they would just prefer to wait instead of, you know, making a first cut in September. They'll say
that they would. Every meeting's live. Yeah, quite frankly, they've never actually cut within a month of the election, so I suspect that they'll they'll skip in September and then go to November.
It's like saying Arsenal list and Villa is a snooze fest. It's it's live. The Vicks fifteen point seven zero of point seven to two down futures negative three hundred SMP futures negative forty six. Paul, let me lay out the FED meetings May one June twelve July thirty one, and the one I've been watching, which is September eighteenth. Forget about the politics, forget about the election. They're going to have a lot more data into the Q three.
Season YEP end of current from a Bloomberg economy saying no surprises here. Shelter and gas prices are fingered by the BLS as the main culprits here in the higher inflation print here. So I mean, IRA is the Fed just saying again, we're data dependent. We're seeing a little bit of stickiness here, a little bit of a resurgence here in core inflation.
So it's okay.
Wait, is that kind of how you think they're going to message it?
Yeah, I think they almost have to mention it that way. And you know, we get the minutes today and you're not going to revise the minutes because of this number. But I think as we get into and you hear some of the Fed speak going into the quiet period before that that may meeting that Tom just mentioned, you know, one of the things that you're going to look at
is the shorter term. Right. You've heard Governor Waller and as well as other members of the Federal Reserve talk about the kind of the shorter term momentum of inflation. And when you look at the three month annualized core inflation rate right now, it's at four point five percent. It was at four percent back in January, So that's accelerating, right, So that's a that's not a good sign.
Now.
Granted, seasonally this tends to be a time when inflation's a little bit higher anyway, so you have to get with a little bit of a grain of salt. But it's still moving in the wrong direction, right, And I think that that's one of the keys that you can take away from this report is that yes, people will nuance this and say, oh, well, it's housing lagging. There's all these other indicators. Prices obviously, you know, feed into
at least some of this report today. But nonetheless, like in aggregate, you're still looking at an economy that doesn't have stable inflation quite yet.
We're we're gonna rep up the script here. We're with Ira Jersey. He will continue with us, and Neil Dutta will join us in a moment commercial free to you across America until the nine zero zero hour with the support of Commonwealth. We thank them for their work with our Economics Commonwealth, supporting more than two thousand independent financial advisors with the solutions they need to grow a thriving business. Commonwealth go where you grow. Visit Commonwealth dot com to
learn more. We're thrilled. Also tell you schedule Tracy Alloway and Joe Wisenthal will rip up the script there as well and talk to mister Wisenthal and miss Alloway about this important inflation report. Down negative three point fifty SPX futures at negative fifty five to VIX out at fifteen point eighty seven. As Paul mentioned, the two year yield four point eight nine percent now a fifteen basis point higher yield, lower price on the two year yield. Ivery Jersey,
please please stay with us if you can. Neil Dudda joins now from Renaissance Macro. Neil. This goes right to the ambiguity, which you think is constructive. If we have a little inflation, I guess we're gonna get a little bit of nominal GDP. Does inflation adjusted GDP get crushed? Are you in like some two percent doom and gloom crew with real GDP?
Well, well I'm not dooming gloom on on real growth. But you know, I think I agree with Ira that you know, today's inflation number does push out the timing, and I think you know, what's important for I think investors to kind of think about here is just how path dependent is that first cut. I mean, you know, if it's not July, then are they are they not going to ease right before the election? I mean, how much of that to enter their thinking. It's something to
think about. The one thing I would say is that you know, much of the upside surprise and in the core CPI number this morning was driven by medical care services inflation, and it's important to keep in mind that, you know, there are differences of scope between the CPI data and the pc data, and the CPI data is running, you know, over a full percentage point higher than PCEE.
That's about twice almost three times what's normal, and so you know, in some respects, I do think the margin might be for stating how important CPI is for the FEDS reaction function. But you know, it's a bad number and at the margin that pushes the timing out.
Pausing to jump in here, Marcus to tier eight negative seventy on SPX futures down features negative four fifty.
And Tom just on the currency front, dollar yen breaches one fifty two, you're yeah, one six four spot three seven, So a little bit of weakness there. So, Neil, where's inflation coming from?
I mean, I don't know.
I guess we always thought that this, you know, last hundred basis points or so of reducing inflation would probably be the toughest.
Where are we seeing inflation these days?
Well, you're seeing it. I mean you're seeing it in motor vehicle insurance. That was a big driver for inflation last month. You also saw it in apparel, so a parallel prices rose quite sharply. You know. Keep in mind, though, I mean what I would just say is that you look at apparel prices, they rose I think seven tenths of one percent in March, and that's following a big increase in February. But taking a step back, people are already making a trade off, right, So if you look
at real consumption of clothing, it's already declining. So in some respects, that is not the kind of inflation that should be worried about. I mean, that's not demander of an inflation. If people are cutting back in the areas that are going up in prices. That suggests that people are making a trade off already and there's somewhat resistance to higher prices, which then raises the question about how long those price increases can stick. You know, motor vehicle insurance,
you know, it was going in the right direction. It was still very elevated, but it was going in the right direction for the last few months, and now it's right reversing, you know, but we did see things like car prices come down, so I'm not really sure what to make that. And ultimately, if the underlying value of the asset itself, which is cars, right's going under price, you'd expect, you know, the insurance cars.
Okay, I want to go to Ira right now, and then Neil Dudda with the same question. We're going to go Mafi here because Duda won't come on unless we go mathe Ira. It's real simple. The ten year reel yield is now out over two standard deviations up to two point zero nine percent. It did it in February Valentine's Day when we all had to buy Lisa chocolate
killed us. And then from December it's been a lift from one point seven zero up to two point zero nine Ira Jersey Are we had a critic a point for the real yield.
I don't think so. You know, the real yield is so to the way that we look at the real yield that basically two components describe most of why we're pricing where we are two percentage for ten year really yields. So first is just volatility in the market, right, so you're going to do when when the market volatility is high, you're going to demand a higher really yield and number one. And then secondly, and I think that this is important and one of the reasons you're seeing the big sell
off today there, and that's monetary policy. So so you know, if if if the difference between the Fed Fund rate and uh and and CPI or PC whatever inflation measure you have you want to use, is relatively high, and then certainly, you know tips yields, you have to price that in as well. So so so those two factors tend to
tend to drive this. And the fact that now that the market's starting to price out some of the early cuts and starting to price out some you know, that terminal floor that we were talking about earlier now the terminal rate floor is moving up as well. You'd expect this see somewhat higher real yield, and you're seeing that now.
No, it's not.
I mean, it's not unattractive quite frankly, Tom, you know, two percent plus inflation is an interesting I think is our interesting levels to think about for for tips versus versus nominal treasury done.
I look at the five year inflation adjusted yield and we're back to a November almost pre Thanksgiving pricing here four point five three percent. What does a four point five to three percent five year real yield due to American business?
I mean, I think at the margin it you know, I mean, obviously it raises the cost of financing. I think what it does, I think it you know, frankly, what it makes look more ridiculous is the FEDS longer run expectations for where neutral rates are. I mean, clearly, you know this is an economy that can still work at high rates at these rates. I mean I think
that much is clear. But you know, I think what it does suggests is that you know, the FEDS expectations for where neutral well be is just frankly too low. And I think, you know, every month that goes by where you get a combination of strong jobs growth and higher inflation. I mean, I think that that kind of basically cements that case.
Boy, I'm looking at just a couple of categories here, Tom. Car insurance was up twenty two from a year ago.
That's so much.
Show you what's going on the show right now. I mean, I'm sorry, this is a fixed cost? Can I say that?
I think?
So?
Yeah, I got to pay it every every month. I mean, I know, you know, you know, you've got the Bentley and everything. But for those of us, I mean you.
Say car insurance, except that's like breathing air. You have to pay car insurance, right, you have.
To pay it. I mean, but as I say, I mean, it's it's it's interesting because it's it's interesting because it hasn't moderated yet when you look. I mean, ultimately, these things should follow the underlying value. I mean, what are you ensuring? Right, you're insuring a car? What do we know about the price of cars? The price of cars is actually going down. That's why poor commandit a CPI in this number was you know on the software side, so you know there is you know, there is some
of that going on. I mean, could just be timing, but you know, you have to take these numbers as they come to you. Given the uncertainty that Fed's been talking about, and I think, you know, at the margin that kind of it should push them to err on the side of waiting.
Hey, Ira, you know, looking at the ten year treasury here, we're almost fourteen basis points pushing up four point five zero. You know, I have I know nothing about the bond market, and I say that proudly four to four and a half percent was kind of my range for the ten year.
Do I have to rethink that.
Well, four fifty one is a very important technical level on the charts. We've been highlighting that level now for about ten days. You break there and we can certainly get back toward four point seven percent pretty quickly. I would like to say something that you just comment on, something that Neil just said, and that's that higher terminal, the terminal floor. Right, So the idea that you know two and a half percent is no longer or the
kind of the base case. I think there's there's a recency bias that a lot of investors have, and certainly members of the Federal Reserve and the FED staff have and that's that you know, we we've come down and that the that terminal rates, that that the that our star is basically much lower than it was, say in
the nineteen nineties or nineteen eighties or seventies. You know, I don't think we're going back to the nineteen seventies or eighties, but certainly, you know, our star the real funds rates, so the real neutral rate has to be higher than it was, you know, prior to prior to to COVID, because because there's a lot of there's a lot of structural issues that have shifted pretty significantly since COVID.
We've talked about all of them, right, whether it's immigration, work from home, like, there's a whole bunch of things to think about that way. But the idea that that our star and that the real rate is higher, I think is something that's that's underappreciated by a lot of policy makers, and I think that that that's going to take some time for them to get it into their psychology. That yes, you know, maybe three percent is the new two percent.
One final question, you guys, you've got to go to our other esteem guests here. Neil dot As simple as I can, is America oppressed by inflation? Now?
I wouldn't say that America is oppressed by inflation. I mean if you ask, if you ask consumers about their short run inflation expectations, they've actually been going down, even though we've been seeing these upside surprises on inflation. And you know, I mean so I think that to me, that disconnect, frankly, is quite interesting. The fact that inflation expectations have been moderating. I mean, we just saw that this week with the New York Fred Right consumer expectations data.
I think that, to me is one reason why I'm a little bit skeptical that what we're seeing so far this year is kind of the underlying trend for where inflation is. But the data are with the data are as I mentioned. But you always have to kind of go back to first principles, Tom, I mean, ultimately, unit labor costs are are are we? I mean, where's the inflation really, you know, coming from? You have to start
worrying about it. You know, at some point soon if inflation continues to surprise in this fashion, you have to worry a little bit about, you know, declines in real wage growth weighing on consumer spending at some point later. So I do think that that's something that should begin to enter the conversation if this continues.
Somebody just sent it in a lovech YouTube. What am I going to be looking at? I'm going to look at Jason Firman up at Harvard who does a wonderful annualized inflation series. I'm sure I'll get that out on Twitter here in a moment. Future is negative sixty four down features at negative four hundred. Thank you Ira Jersey of Bloomberg Intelligence. Thank you Neil Dudda of Renaissance Macro
with a real market moving that report today. We are fortunate and that we're going to talk about their show Oddlines is just genormous Apple podcasts where you see it, you know, you look, you got a charitable you know, and there's a Joe and Tracy the Tracy and Joe Show.
And yeah, all that.
We'll talk about Oddlets, but we're going to open up the conversation with Tracy Alloway and Joseph Weisenthal here just about inflation. Tracy, where are you seeing inflation? We've been making jokes about it, except it's not funny.
Well, my personal basket of inflation is all mayonnaise, so that's how I measure it. I haven't looked at up the component change in the in the Mayo index just yet this morning, but I plan to right after this interview. Look, I think most of the unexpected rise seems to have come out of shelter costs and gasoline, or at least that's what the BLS said. I think the really interesting thing here is, and Neil and Ira, we're kind of
touching on this. You know, we can talk about the neutral rate, our star, the natural rate of interest all we want, but the inflation data doesn't seem to be
bearing out that entire thesis. And in fact, I thought it was really interesting last week it kind of flew under the radar, but the Bank for International Settlements published a paper where they basically said, like, our star is kind of useless and we should probably just be looking at observed inflation instead of trying to observe this unknowable neutral world that's.
Called the gospel. According to Tom King, Joe, what's your insight here right now? Inflation's oppressive. I just quoted Argentina with two hundred and seventy six percent annual inflation that's oppressive, that's oppressed crust.
Well, we still have real wage growth, as Neil was talking about. As Neil mentioned, even consumer's own expectations for inflations via various surveys have come down. So I think there's an argument that we're not being pressed oppressed by inflation.
It's still bad.
You know.
There's two things that I'm thinking about, which is that there is this view among many, the sort of Powell Waller Bullard camp I would say that policy is tight right now and on some level you and this goes to tree point about the unknowability of neutral. It's like, if inflation keeps surprising to the upside and maybe accelerating a little bit since the last year, what are these words tight even mean in the context of the observed
reality that inflation is drifting up. The other thing I keep thinking about, you know, we have futures down today currently, S and P futures down one point two percent. The story, the story of twenty twenty four has been hotter than expect, inflation prints and a red hot stock market. Nonetheless, so in the short term, yes, this is certainly a bump. But it has been interesting that those that first cut keeps getting priced out further and further into the future.
Now just fifty cuts, fifty bases points priced in, and by and large, the stock market, by any outside of today, still doing phenomenally well.
Exactly, And Tracy, I'm just looking, you know, for context, seeing Bloomberg reporting here sheltering gas combined contributed over half of the overall monthly increase.
That's kind of what.
People feel month to month, day to day. This is a you know, I was I put in our internal chat, this is a problem for President Joe Biden.
I mean inflation. You don't want to see that thing coming back.
Well, I guess there's two there things we're kind of learning here, which is one, a lot more people seem to care about how much things cost than the actual employment rate, right, Like, the number of people buying stuff is just always going to be bigger than the number
of people who are actually unemployed. So I think, you know, it's great that the Fed can go out and say, well, the labor you know, the unemployment rate is at decades low, But the thing people see the most in their day to day lives is the grocery price or the price
of gas or whatever. So that's one thing, and then the other thing I would say is, you know, I think Biden has been tackling this issue in some new and slightly innovative ways, including talking about price gouging, talking about profit margins, and again, the rate of inflation on the stuff that is a daily need for people is where we see the most impact. Right, So people have to buy food, they have to gas up their cars, whatever. They don't have a lot of, like Drew, competition in that market.
Paul and I don't have a real life. We don't travel. You guys are like jetting around, you know, the golf stream and usual. The rest of the country. Are they in I guess Arkansas or Texas? Are they in disinflation while we're oppressed here in New York.
I mean I don't think so.
I mean I don't think so at all.
You can see the regional CPI number.
Yeah, And I don't think there is some pocket of the country that's escaping it.
And in fact, I think.
In a lot of these markets you see hotter than expected inflation in part because there's just been so much rapid growth and so much strain on the local resources due to the influx of population, which kind of maybe negates other advantage.
Yeah, I'm got to talk about out lots or when we put put in the time out here, they're handlers, they get upset. Yeah, a writer, you go off, go off the thing. I mean, if you're in Calverton, New York, out by the Hamptons on a given weekend and you gotta figure out what to do with acreagew you weigh in with attractors, apply cup cadet fifty four inch, twenty four horse power riding lawnmower. That's what you Tracy as too. You guys talk to Well, she's got the man's mode
out for the dog. I mean the dog. The dog needs exercise. But what did you learn? I mean this is like classic odd lots. Yeah, you're talking to tractors supply. What you learn?
So we had the CEO out tomorrow. It comes out tomorrow and we're gonna learn why Tracy keeps having to spend more and more money.
I on the modal tractor supply customer.
But the other interesting, the really interesting thing economically with them, and it even speaks to what you were talking about with Texas and Arkansas. All that is that there are some COVID booms that happened in un reversed peloton Zoom, et cetera, and then we sort of went back to normal. This move out of the cities has not really negated, and people are moving further and further and further apart.
This was not just a one off shot, and so it benefits their sort of strategy which they sort of proudly say, we don't have anything near New York, but we have three stores Neurodeska Texas.
Paul, you're living this and Joe and Tracy I don't have a life. But the bottom line is Joe is one hund I saw you just today with the eclipse Monday Tuesday into this Wednesday. I'm sorry, they're out in Calverton interrupt I know. I mean, that's all there is to it. You guys.
Also had a recent interview with about US Mexico Freight. I got to think that is a great growth story. I think about the with the Canadian Pacific bought that railroad dow thing from Canada all the way down to Mexico.
Yeah. So we spoke with Matt Silver, who's the co founder of this new company which is building technology basically to facilitate cross border trade between the US and Mexico, and he's been talking about how it's booming. You know, there was always auto production manufacturing in Mexico, so that's
really picked up. And the one the point that he made, which seems kind of obvious, but I guess I hadn't internalized it, was the idea of Mexico having a competitive advantage just because of its geographic location next to the US and the fact that it's in the same time zone. You can go down to Mexico, drink tequila with a potential business partner, and fly back to the US in a day. Right, try to yeah that too. You need recovery built in.
Guys, Thank you, thank you. Alots out on Apple podcasts. I'm spending a lot of time looking at the podcasts and odd lots leading away from Bloomberg with some intelligent conversation, really interested in tractor supply. As Tracy looks at the cub cadet.
You got to go, Tom. They have the baby chickens right now. They're very cute.
Oh good, that would be good. The baby chickens with that little kennel feet, that would just be I can't imagine. Stephen Rashudo We're like, yeah, rashudo econ, we're econned out. Except wow, what a report with miszoo. Good morning, sir. Did you expect this.
We're not as bad as these numbers, that's for sure. The reality is, though we have been in the camp that basically the data was going to keep the Federal Reserve from doing what the Fed wants to do, which is cut interest rates, and that the economy fundamentally is healthier than a lot of people anticipate, not surprised by it in that regard, but surprised on the month over month changes.
What about fixed inflation costs? At the ECHOS building when they sit around the table, are they going to talk about we have to eat, we have to pay car insurance, we have to pay rent or a mortgage averaging out now at whatever it is, five to six percent up to the seven point three percent. Do they talk about required inflation costs versus luxury inflation?
Well, they really should, because at the end of the day, they're trying to maximize social welfare, and their concept behind keeping the labor market as tight as it is is to try to drive up wages. The problem is by keeping the labor market tight in an environment where all the excess capacity is used up in the system is it creates inflation. And that's when you get into the situation, as you indicated a few seconds ago, in terms.
Of negative real wages.
So your attempt to try to maximize social welfare by keeping a labor market tight could go against you if CEOs and companies feel they have pricing power. And after seeing this kind of improvement in the data, you're starting to see that that's a broad based improvement in the inflation numbers. Arise in the inflation numbers is telling you that more and more people feel they do have some pricing power left, and that's why it's working at the detriment of their desire to maximize social welfare.
So, Steve, I think the initial round of inflation that we saw from a pandemic, a lot of folks saying, hey, this is supply side driven, it'll play out.
Is that still the case?
Well, it did play out, and the reason why fear people all the time. AH, inflation was up at nine percent, now it's at three. All this is happening because of the FED. It's not happening before the FED. It was happened as a result of the supply side and the fact that even though monetary fiscal policy he's still very very accommodative, it's not as accommodative as it was. So between those two factors, you've taken inflation down to the three plus percentage points. Getting it from three to two
is a very different story. This is where the FED has to get involved, and the FED has been telling you over and over again, we want to cut rates, and it's been damaging their ability to create a better inflationary environment.
When you see inflation at maybe just the last three months ticking up a little bit, does that change your economic outlook as it relates to the consumer and the retail sales and all these types of things that probably go into your GDP model.
Well, I mean it reflects more what we've been saying. We've been in the camp that the labor market is tied and the Fed's not going to achieve its inflation target. So at some point, you know, the FED either just walks away from its inflation target, which is a risk, but then that implies higher long term interest rates, and that goes against the desire of the same people who want to cut rates because they want to see lower
mortgage rates. They want to see people be able to afford to buy homes, and therefore they get the cells into this catch twenty two and they haven't been able to get themselves out of it because the economy is fundamentally healthy.
And now they are just looking at the WRP function pushing out maybe only fifty fifty basis points for the entire year this year and a big contrast to how we started the year with a lot more cuts pract factored into the market. Does the Fed wait till September?
I don't know.
Well, they certainly have another opportunity in June when they redo the dots again. I mean, my personal preference would be that next year when they do the review of monetary policy, they eliminate the dots.
I think the dot's cool.
We have a function on the Bloomberg terminal, dots go yes.
I think that can go I would say, I would say, with great respect to mister Bloomberg, can the dots go go away? Yes? Please go away?
Thanks, And I think that would be a positive step in the right direction for them. But you know, until we get that, I think you're probably waiting to June. I don't think you'll get any real messaging coming out from the May FMC meeting.
I want to go political here, which is not you know, it's not that you're not comfortable with that, Steve. You're so able that you can answer this beautifully. I'm sorry, but inflation is the halves and they have nots. The President's got to address this. This is now one two, three months of persistent inflation. But to me, there's a great separation in America. For example, Paul and I'm thinking of the great Barry Hinckley from the iconic Hinkley ship family.
He's trotting out Martha Stewart Skyland's too Hinkley pictic boat. And because he's helping Martha slide into a Hinckley picnic boat. And this is popping like one point seven to two million. This is a this is like gorgeous. This is you know, Purcelli takes us down the Hudson River to go over to Pigum. Okay, you know, Steve shutdo, I'm sorry, there's a halves and have nots to inflation. The fancy people that have Hinkley picnic boats, they're not worried about this report, are they?
No?
But You're right.
There is a real difference, and this comes down to the maximized social welfare. The people that they supposedly say they want to help, they're not helping with the policies they're creating. And that's the underlying problem for this administration. They have loaded the Federal Reserve with a bunch of doves, and those doves really want to cut interest rates in an environment where the economy is telling them you shouldn't
be cutting interest rates. And then there's this academic environment that you get from a lot of Wall Street economists, which way, well rach are just naturally too high. I wish they would just come down and normalize. People don't know what normal is.
Yeah, but it's Steve that those academic economists in the market economists are people that either have want or aspire to a Hinkley Picnics. They do. They're not our listeners out there living this.
You're one hundred percent correct, and this is why the mistakes the Fed are making is basically allowing this economy to stay too height, that high, too tight, or too hot, that you are actually creating pricing power for corporate America, which then wants to create double digit returns, and that double digit returns is what then drives at equity price. And now equities are having a hitting year. But let's be honest, they had a hell of a great run in the first quarter.
You know, Martha Stewart's picnic boat is Skyland's too. Do you know what mine would be? Drama me drama on the beg Steven Rashudo, thank you so much, Barry Hickley and Martha Stewart, thank you so much as well for giving us inflation perspective. Lisa Matero Report Bonds, Lisa Maateo, there was almost too many choices this morning.
Here, there's a lot, There's a lot going on. There were some good stories this one. I have to ask you. If you're traveling on a plane, have you ever been asked to change your seat?
Sure you have, Yeah, And this is the way I think about it. When I having four kids traveling back and forth to San Francisco for twenty five years, many times we ask people to kind of help out and switch seats so it could be together. So now I'm on the flip side of that, and I try to be as accommodating as I can. But if somebody asked me to move from my aisle seat, which is my preference. It's like a middle seat. I don't care even if there are kids who want Somebody an.
Economy who has an aisle seat often is paying extra for it.
And that's the new one.
This is the problems because people are paying extra for seats now right Passengers are paying more for seats, and then they don't want to pay more, so they just use the option to just go wherever. But then when they get on the plane in the cabin, they're starting to ask other people. You know what, I just switch with you.
I just sent afterthought to Edinburgh. Okay, it was outrageous. It was like I thought it'd be seven hundred bucks and it was twelve thirteen hundred bucks. And one of the overlays was aisle seat or window seat, and the second overlay was oxygen.
And I said, we'll pay.
Up for oxygen yep as well. But is the answer that people are being rooted down and nuts?
It's the answered is that it's causing a lot of tension in the cabin, and there's so much tension and travel to begin with. So the Wall Street Journal has a really good look into this because you have the passenger who was asking and they're like looked at as like a cheap scape. Then you have the person sitting in the seat who looked at like a jerk if they don't change the seed. And then you have the airline stewardesses who were called the middle and they just
want to sit there and say, not my problem. Yeah, it's up to you guys. You bottle it out, all right. Theater owners they're saying that blockbusters are not enough to help them survive. They like the Barbinheimer, you know, that whole trend of it, but they need more than two movies to survive.
Paul start there. You had a one off, was Barbonheimer, like just one lovely summer?
No, I mean there's a lot of stuff.
Twenty four is gonna be the summer of twenty four is gonna be okay, twenty five and twenty six are gonna be continue.
Yeah.
No, And it's a probably because you've had like, you know, big hits like barbon Higher, but then you had the sleeper hits. You had the Five Nights and Freddy's. You've had that one.
Five I love it.
You didn't see the Five Nights Freddy I saw that one, but it made so much money it was a sleeper. Then you have the Taylor Swift, the Beyonce concert films trying to pump in money. But then you have the Hollywood strikes also that hurt. You have a competition from streaming, and that's another issue that the theaters are dealing with. So we'll see where it goes.
But do we still have movies that do like one hundred million? Yes, yes, there's still blockbusters.
Sure, a blockbuster today really has to be like a billion global, global, global, And it's not.
The superhero ones, not as not as much of a money maker as they used to be.
Interesting, I've been to the theater since time began. Oh no, I mean.
It's support and that's some great, big old theaters.
What I remember. I know we got to continue here, but I remember when the kids went all the time, and then one day they just stopped and it was because of streaming and Netflix. Yep, they just stopped going.
If that's my convenient.
Max, What do you track and field? This one is interesting from the associated.
For med field.
It's going to become the first sport to introduce prize money at the Olympics. The World Athletics. They're the governing body of the of Athletics. They say they're going to pay fifty thousand dollars to gold medalists in Paris. It comes from this big pot of two point four million dollars they're setting aside to pay them. There's forty eight events in track and field, so that's how it's going to break down. If you're on a relay team, you have to break up the fifty thousand dollars. But it's
the start of something new. Paying these athletes to win the time.
They were amateur. Doesn't that break the whole amateur thing?
Correct? But neilil cashish, you know, to go along with it all right, and there's more to come. They're actually thinking of payments for silver and bronze medalists. They're planned to start from the twenty twenty eight Olympics in Los Angeles.
I mean to me, I've been wading lamand English. I really recommended folks to the Laman, the great French newspaper, and they have a very inexpensive all English site which I find fascinating. And of course there's no other debate. Are they going to get in the river and swim so what do you do. You got to pay somebody ten thousand bucks to get in the river. Exist it's not it's not pretty. I mean it's not. You know, at some point, if we get closer.
You've got his suite all set up in Paris for the Olympics.
We do. You know, we're on the back side, away from the street, and you know we're looking out and they get the cigar you know, garden sure v r X or whatever cigar bar.
All right, but you know we're all set up for the summer.
I felt is going to be out with Gus in the horses. Yep, just taking Gus the horse and they're hanging out. I think it's out by Versailles.
Okay, very exciting.
Next, finally, if this we don't want to hear this on the early morning shift when we come in, but declf becoming the hottest thing in coffee right now. You know, you have alcohol free cocktails, you have meat free hamburgers. So now d calf is becoming the new thing.
Uh.
The reason why is become new techniques and caffeine removal. They've started without using chemicals, so it's becoming a little bit healthier, I guess.
People drink right cafe a coffee versus DCAF.
I don't know the percentage there, it's.
Not, but it's becoming this high thing because there's different competitions, like these high class competitions and DCAF was actually won a top prize for the first time in like this competition's twenty year history. So it's starting to pick up a little bit.
The tang here, and folks, I've been using tang zero. You know, the sugar became a problem and tang zero's great, but you guys deserve to walk by the DCAF excellence of Senkall Senka was too. Yeah, I assume Senka is still around. Lisa, thanks so much. That is Lisa Matteo with the newspapers. 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,