CPI, Eco Data, and Ukraine

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Concerts Center here at Chief Economists yeaws to get us to the report, Rebecca Patterson's scheduled after its commercial free across the nation in this hour cons there's no whisper number. How do you guess the inflation report? If there's so many subsets, do you have to go down to each subset to try to peace out a guestimate?

Yeah.

I mean we've always had a granular view of forecasting inflation, but it has gotten more granular given what's happening with tariffs, and of course we're looking at the impact of commodities prices. We have other idiosyncratic factors like what's happening with beef shortages. So there are a lot of cross currents going on in this inflation.

It's the biggest weight or like everybody's sucking use cars. Don't tell me use cars as a big weight, is it?

It's not a big weight real estate. It's really important.

And in fact, we're seeing new tenant rent in the New Tenant Rent Index starting to rise. We're seeing people preferring to rent rather than own, so new households that are forming are renting, and that's pushing up rental prices in the New Tenant Rent Index. We're going to see that feed through to all the components of the CPI in the coming months.

If inflation is creeping up, that's kind of a tough environment for the FED to cut rates, isn't it.

I mean, creeping or shooting is Both of them are tough, right, But I think what makes it especially tough, right is that services inflation is elevated and sticky. It came down and then it sort of stalled out. Meanwhile, goods prices were close to flat or zero. That's not the case. Goods prices are rising at zero point seven percent a month over month. They're thirty five percent of the index, and they're going to keep rising.

And so if.

Services prices continue to come down, even slowly, you're still going to see that overall index increased.

So what's your blooded number at EIU out twelve months? Are you guys two ish three ish high three.

This is a trick.

This is a trick question time, because if we look at the you want to look at what the FED is going to look at, They're going to want to look at the three month annualized rate.

So we expect that to start.

Moditoring in the end of Q two, beginning of Q three next year, and we expect that to come down to like a two point three two point one percent.

Did you say next year next year? Three quarters out, four quarters out?

Yeah, Yeah, it's going to take some time.

Are looking for results September seventeen.

Oh if we.

So, I mean again that that's inflation here. How about kind of the labor market? I mean, that's another thing that I think people feel comfortable with where kind of we are here.

But they say, well, if you look under the hood, some of the trends there might be going the other way here.

Well, we've been concerned about the under the hood since the start of the year, and it's the under the hood that has made us have our call that we think the FED is going to cut, and we think they're going to cut in September. We think there's a good chance they get in two more cuts before the end of the year.

Yep.

Do you think the labor market is going to This is like, I'm I got a textbook. I got Rick Michigan's textbook at CLUBB. You pick a constant, you pick the textbook. You're telling me they're going to cut interest rates with a three point x percent inflation.

Well, I'm going to chuse Stan Fisher as you you talked about him earlier this morning.

And here's the thing.

We know that the tariff inflation impact is going to be dare I say the word transitory. But the but the issue is what is happening with that services inflation? And there are compliments of service in this inflation, like transfer in ortation where we're seeing falling demand.

Uh.

And the real question is how much can the consumer take in terms of say auto inflation.

We go to surveillance transitory correspondent Lisa Matteo. Right now, how's that transitory inflation at Costco?

Lisa, it's not doing so well?

So well on a day to day constance hunter like in consumption, I just don't see transitory.

Well, it's well, it's present, But the question is is it is it?

Is it going to last for several years?

It seems unlikely it will last for several years because the economy is weakening under the hood.

I got, I got a hate letter yesterday. Paul doesn't know this. Folks, Lisa and Paul get the love notes. Michael Byrn, I get all that hate mail constance. It was a hate mail against you and all the others. The audience detests when smart people like you say inflation is a one off and after the lift and inflation will all be okay.

I didn't it will We'll be okay. A lot say well, we'll be okay. It is a tax on the consumer. It helps to push growth lower. It is painful for households. It makes it harder for people to afford basic necessities.

Let's let alone.

Some of the nice to have that they want to spend money on. It's very, very challenging.

So you're saying the fetia cut even if we get a rising inflation rate.

The fetcha cut if we get a rising inflation rate and continued confirmation the labor market is weaking, weakening. They have to see that labor market weakening cut.

I agree, it's back to the labor market.

Poll retail sales on Friday, How do you care that the consumer is doing.

Out there, Well, it depends on what you're buying.

But you're starting to see you're starting to see an impact across the board. You're seeing actually a pullback and in some of the revenge spending out of the pandemic. Right there're still seemingly endless spending on things like leisure and hospitality that is coming down.

So we expect.

Restaurants to solve, and a little bit. Home furnishings is weak. Obviously, we have a really troubled and problematic housing market, so we're not getting the lift from growth from a from a growing housing market, so we're expecting home furnishings.

To be soft.

So we are we are looking for that softness under the hood to come through. Now we have to point out the juxtaposition here is everything that's happening in tech and AI. We are seeing continuing to see a boom in spending there and that's where you get the lift in in capital investment.

But the other investment out there, I mean, I mean I thought of this earlier, folks, we didn't bring it up on air. Let's do it business investment away from technology, business investment. How do you characterize that grim.

Yeah, it's zero, it's negative, negative, it's declining, declining, and we think and we think that's going to continue. And and our forecast at the beginning of the year sort of cast us back to March when we were looking at the rising level of uncertainty, was that this level

Right, I'm not going to Why would I.

Drive down the road at ninety miles an hour when it's really foggy outside, I'll go forty five instead.

Has that eased up a little bit in the last couple of months as well?

I recognize that, Well, it's eased up, but we're still significantly above previous spikes and of course above previous stasis levels.

So what's your number or in a headline, CPI, are you on survey? Are you disinflating or increased inflation?

Well, we're looking at zero point three percent month over month and about two point eight on a year every year.

Two point eight year every year that's sort of where we are. Well. CPI month over month is zero point two is a survey, So you're a tick above.

I'm a tick above.

Every little tick matters right well, and.

It matters especially for that annualized rate.

And it also matters where if people are feeling prices go up in things that they purchase frequently, it takes it psychologically. That takes a bigger bite out.

So what we have here at Bloomberg, just to give you a snapshot of is the constance one Hunter twelve seconds to adjust to this. But what we have here is the data that we all talk about in the media. And then Michael McDonough and our team develop off the Bureau of Labor Statistics a wonderfully colored chart which tells a story. And I have core goods instantly here from the report. It is zero point one point five to one. I have no idea what that number means other than

Ron yep, and we're seeing it in autos. So if we look down in the detail, use cars and trucks are now row zero point five percent month of a month four point eight percent year over year. And like I said, services is sticky, right, we have services less energy services at zero point four percent month over month, three point six percent year over year. And with those sticky services, I will have to say it's going to

Should we say what the market's doing? Paul Sure? I think we should five basis points in a lower yield on a two year yield, the ten year yield and three basis points the equity markets lived from flat up to futures up twenty eight and the vicks in almost to stick fifteen point four eight punk.

Yeah.

The three point one percent annual increase in the core CPI takes that measure back to the height since February. I'm looking at the Bloomberg Live top.

Live can to list them there stand right on.

Top of that, I mean the top like these blogs. These guys are all over it.

It's awesome now Chris and the entered team.

Yeah, veryxy so.

Wh sp fiatures up twenty four, Dow up one ninety, and NASHTAC up one hundred and five points, it's four tens to one percent.

So certainly a move there constance.

I mean, you know, it's calling into question that two percent ish kind of target that the FED has for inflation, whether it's core PCE or however you want to define it. Is that a realistic goal these days in this economy.

I just don't. A.

I'm not sure whether they're fixated on the number. B. I'm not sure how we get there.

Well, should I answer the easier questions?

First?

The reason they're the reason that it's two percent is because you need to have some inflation to grease the wheels of growth, right, you don't you don't want to tip into disinflation or deflation. On the other hand, you don't want inflation to be a factor in businesses making their decisions. And the problem with the level we have now is it is a factor in businesses making their decisions,

Yeah, just an extraordinary here so again kind of the CPI, Right, Yeah, I gave you your point two percent, Tom, I kind of spot on line. I mean that core that ex food and energy you're on your one percent is kind of getting some play, folks.

Here's here's the core CPI three monthly annualized is published by bl S. This is from April two point one. It went down to one point seven, it went up to two point four, and now the three month annualized is up to two point eight. Every textbook I have, Constance Hunder tells me it's really hard to cut rates given a three month trend of the three month annualized statistic.

Right, And if you look at the Fed's work on this, going back to the previous time that we raised traffs admittedly by substantially less, right, it was that they should look through this. Now the question is does a larger teriff rate warrant the same look through. I think the FED has telegraphed to us that they think it doesn't, But does it.

Warrant zero look through that also.

They have they have seem to have telegraphed that they think it doesn't warrant zero look through. If you look at the dot plot, if you look at some of the things that different FED governors have been saying, whether it's Mary Daily, whether it's Neil Kashkari, right, Fed governors that FED presidents have been saying, look, we see weakening under the hood. And remember the FED funds, tart run funds right right now is restrictive? Does it need to

And this this headline here from Mark Niquet, Thank you Mark for this. Just it's amazing. Our Bloomberg team gets us out us core CPI picks up fastest pay since January on services. Constance Hunter, thank you so much. Just brilliant with the EIU. This morning, Rebecca Patterson said time you really need to wear makeup? And I said no, All our handlers are saying YouTube is We're makeup free on YouTube at least I am, So we'll go with that.

No, I mean, the United States has the best government data in the world by a lot, and there are dedicated civil servants who literally go around the country checking prices in every community, of every variable and making sure the data is as clean and reflective of what's really happening as they can.

My textbooks say, you got to be nuts. You can cut rates given a two ish three ish three month annualize inflation. Do you see any sense of transitory in these statistics.

I think we're in a new regime for inflation. I think we're in a new regime for bond yields. So if the economy slows a lot which Constant Constance was talking about right before me. If the economy slows enough, that's going to help pull inflation down. But that's not a situation anyone wants, right. Usually you get deflation when you have.

A deep recession. We don't want that.

But I think for the Federal Reserve, I was trying to look at when is the last time we got this rate cuts with inflation above target and the job market softening? But okay, okay, nineteen ninety five. So at the time they did three twenty five basis point insurance cuts, inflation was running about two point three, so lower than where.

We are now.

The job market was okay, but the economy broadly was softening, and so they said we're going to try to massage this a little bit, and the stock market obviously loved it. It was up about fifteen percent over the three cut period the SMP, and I think that's probably what we're going to get this time. I don't know if it's one cut, two three. I lean towards less frankly because of the inflation risk, and I think they'll they'll do

Bloomberg Intelligence US rate strategist Are Jersey out with the first take, saying, basically, the CPI print with the CPI running at zero point two percent on the headline, suggests that the pc print will allow the FED to ease in September. So that's the first take from Ira Jersey here.

What do you make?

What did you make, Rebecca last week of the labor data and then the president firing the BLS head and all that kind of stuff, What did you make of all that?

I mean, is there an opportunity for the government to modernize its data collection? Absolutely? But this is not easy, right if you think about people do analysis of data looking back ten twenty fifty in some organizations one hundred years. If I suddenly change how I collect the data, I have to make sure that new methodology doesn't screw up how I look at the old data. Right, we don't want apples and oranges. So it's actually a very difficult process to make these changes, and you.

Need resources to do that.

The government has cut the budget for the BLS the Bureau of Labor Statistics, so they have fewer resources, not more to this modernization. But I do think they would agree that this is the direction they should go. Try to see what tools are out there they can use to include in this process to make sure the data is as relevant and reflective of the economy as possible. Firing the head of the BLS I think was performative

Mckey's going to be with a cerin a bit, but let's start with you, Rebecca. My biggest problem with us. You and I've talked about this before as we set up, and I'm not going to blame ail in green Span. I'm going to think it's going to come on behind green Span. This idea that if we cut rates, once we've established a new vector, a new trend of cutting rates, why can't they come out, given the mess we're in, whatever anybody's politics, and say we're going to do a

I think that's what they'll try to condition the market towards that we felt there was room to make this one insurance cut, and then we're going to continue to be data dependent and see what's needed. The job data is really tough. I was just looking before I came in this morning. On one hand, you have the small business sentiment survey this morning. Small business is a huge

Are the separations in America? I mean, I think ludite nineteenth century, I mean book where we are is a nation and we're almost needing to prescribe rather two or three FED policies. How can they do an aggregate FED policy, Paul, to help the users of chat GBT exactly and perplexity and people flat on their back and des moines, I still get it.

Think about Europe, right, you have a central bank governor from Italy who's going to have a very different view than the central bank governor from Are we.

Different, brilliant, Are we any different on that?

No, we're not.

And that's part of the reason the FED was set up the way it was to have a representative from Kansas City and one from Texas and one from San Francisco, so we represent the different economies within the US and ideally they can debate and come up to an aggregate view that's not perfect for any given region, but is optimal for the economy. That's that's the goal, and that's why they're set up that way, and honestly, I don't know a better way to do it.

A surprised at the stock market keeps seeing all time hunts every day.

No, it's oh concentrated in tech, and my perception is that there is a lot of belief that in the next whatever one to three years, we're going to break into superintelligence and you're going to have a hockey stick moment for those stocks, similar to what we saw after GPT was launched two years ago, two and a half years ago, and no one wants to miss that return. So everyone's, as they say, holding on for dear life.

Just so you know. This surveillance on August twelfth, the break and super intelligence. It's surveillance is have your offspring done their summer reading list? That's what we call super intelligence. Right now, Lisa, how are we doing over there? I mean, there's their second book, second book out of what eight?

That's awesome.

You're there, You're there, success, check the box.

Kuse me, Rebecca. I got to switch here and apply this economics and this inflation. The market's loving in futures. I'm thirty three right now. Over to the oddity of this market. You have handled really serious family high net worth work at Bessemer just as one example, how do you invest in this chaos? If you want to be measured, want to be prudent, but must participate in the growth, do you buy more? Nvidia is at the solution.

No, I wouldn't hear at these levels, but if I owned it, I also wouldn't be rushing to disinvest I mean my approach has been for most of this year to have be invested in equities, have a Barbelle approach, so the tech sector, which is a structural theme despite the valuations, but then to protect your downside with some defensive sectors like utilities or consumer staples. And you know, we've been talking about this for well over a year

So evaluation here. You mentioned the concentration risk.

Yeah, we haven't seen that really since the late nineties. Now this is a different environment from the late nineties. These companies have real earnings, real cash flow, but still that concentration risk.

It certainly makes me concerned.

Yeah, I agree with that, and again that's part of the reason I want to have this Barbell strategy. When you talk to the CEOs of these large language models, these megacap companies, megacap tech companies.

They don't know.

They don't know.

How this story ends, and they'll admit that, and I think they do publicly. So you're taking a risk with this. You're counting on this inflection point moment for technology and that over time it spreads through the economy. I think looking for AI beneficiaries, not just the KEAI companies, is a smart play. I think there's other thematics and they're getting priced in, but I think they still have runway

I got to call at Kansas City Fed today and beg for a chair at the Pioneer Grill for breakfast. Sounds good. I think it's on Friday when I'm there. Are you going to be a checkson a hole?

Sadly, I'm not.

I'm going to Are you not going to be there?

Because I'm also a mom and I'm going to make sure my daughter is set up for a great school year?

There you go, fun, It is time the.

Door you do a dorm room like with the TV in the Nine Yards. No, no, no, No, this was a major debate a couple of nights ago. We're not doing this. I don't judge.

If someone wants to deck out their kids dorm Lisa, help have fun, but no, I'm more of a I'm going to get you there, make sure you have the basics you need. Thank you, you're a grown up. You can do this, go for it.

Yeah, but my kids are perfectly Some of these kids go to school today and it's like moving a house.

There's a thing as a bed party.

You have a bed party so.

That the kids come to the house and they decorate your child's bed in all the whole you know, merchandise of the school.

It's a thing now.

I mean, God bless America.

I guess we are.

I mean there's a reason sixty eight percent of GDP is consumption because people can be convinced they quote unquote need to spend on this. And again, no judgment. If they want, if that's how they want to spend their money, fine, as long as they can afford it, As long as these people are financially literate.

I talked to McKeith, tough it out, tell your daughter, kick her out the door. We'll see in JACKSONA Rebecca Patterson, thank you so much with the counsul on Ford relations, some important essays recently in the media. Just brilliant. There.

You're listening to the Bloomberg Surveillance podcast. Catch US Live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch US Live on YouTube.

Joining us now for Bloomberg Intelligence and fixing Irid Jersey as well. Ira. As you set up to write to the end of the week, are you looking at bills, notes, bonds or are you looking even more short term than that?

Well, actually medium term, but we're looking at we're looking at real yields and what tips are doing and what they're suggesting for inflation going forward, because obviously the market and how it prices for inflation going forward is going to be one of the determinants that the Federal Reserve is going to use for determining whether or not, right it's close enough to its target of two percent to cut rates maybe as early as September.

Okay, but I'm seeing in a real yield, Am I right? The real yield as a general statements within range has it broken out up or down?

Yeah, it's been in this range for the better part of this year. You know, call it on the tenure about one and a half percent to two percent, and you know we're towards the top of that right now. And I suspect that over time as the Federal Reserve cuts interest rates. Whether or not that's warranted is one thing, but you will see probably really yields move a little bit lower, but it will be move lower in a

Neil dudd It just out with a note from Renaissance Macro. He says, you know, for the Fed July CPI data lately cements a September rate cut. You think that's how the market's interpreting IRA.

Yeah, so the market's almost fully priced for a September rate cut. What's interesting is that we're priced now for a September rate cut and a December rate cut. My feeling is is that once the Fed starts to move, they're going to move and keep going. They're not going to skip a meeting just at random. So I think that if they do cut in September, they'll also go

Then why why well cut? Yeah?

I think they haven't cut because they are worried about inflation, right, They're worried about another another spike of inflation, and seeing with with all the tariffs and the like, they are concerned about about that. And also until recently, remember the job market seemed to be holding up reasonably well and even the wages continue to grow close to four percent.

And that's where I'm looking at the labor economy more than the inflation focus is the focus to your Avery Jersey, thank you so much. With Bloomberg Intelligence.

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This conversation is so timely, so important. We're going to place it before CPI right now. As you know, the President and mister Putin will meet in Alaska. Site unknown and Marie Horden are reporting on that each and every day, and Ukraine is on the periphery. Kira Rudik is of the Ukraine Parliament, serving as a People's Deputy of Ukraine and from the Holos party, and we're thrilled she could brief us this morning. Kira, all of Ukraine must be

Hello, and thank you so much for having me. Well, the best outcome would be that President Trump wouldn't take yet another public humidiation from Russian President put In, and that he will get finally annoyed and will impose sanctions that he has promised and tariffs on everybody who is buying something from Russia and will go ahead on continuing pressuring Russia. The best outcome would be for President Trump to realize yet again that it's not Ukraine that is

Should Ukraine give up territory, acreage land?

The main question here, because you know everybody's asking should Ukraine give up territories? The main question is for what? And the second question is who or what will make sure that in this case Russia would not attack us again, Because asking Ukraine about territories is a simple question, Asking who will make sure that Trashia will keep the part of the bargain, whatever that bargain is, is a complicated question.

Years, Kira, For those in your country that advocate for peace, what is that kind of based upon? What would be an acceptable reasonable peace negotiation form? Do you think.

Again, like when we are talking about peace, of course people here on the ground they want peace, and we are all exhausted.

Of the war.

But we also know again that whatever you agree with Russia, it's very hard, almost impossible to make them stick to it. So whatever talks are about heritories, about any agreements, the first thing is how do you President Trump or European leaders or whoever, how do you pressure Russia to keep

This unique situation. And if we assume mister Zelenski is on the outside, what do you need from Europe? Are you looking the individual nations, Heiro rudic Or you're looking to Brussels of a modern European Union.

What worked for us in the past is working with the individual nations. So we didn't get like certain amount of weapons from NATO as it is, but from countries like Britain, like Denmark, like Norway, like Germany, France. So it works the best when we are working with the individual nations. And the overall truth is we want everyone just to execute on the promises that they have already made. If that was done, we will already be in the

Right now, when you're in New York again, we would be honored to have you in. Kier Rudik is a member of Parliament for the Ukraine for Ukrainian Government. I should say she's the People's Deputy of Ukraine, leader of the holiest Party.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple, Corplay and Android Otto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

Juvensteinis and the rest of the elite of the United Kingdom have lived it. I'm going to say two years ago they had a modest pension issue where they basically had a marketing concept around pensions, which blew up. I mean, just let's cut. Let's just leave it at that because of time. He Peu von steinas with Oliver Wyman, just wrote an essay. You know, Tracy Eloway and Joe Wis them roars. He wrote it. You know he's the kill and you wrote an essay for ad lites. The next

Well?

Thanks for having me back on, Tom Well. The first lesson I learned is never to I don't own the title, the headline and the rock stars to use the title. Look, I think that if you look at a retirement savings around the world. You know, in the States a defined benefit scheme has about twenty three percent in real estate fixing come private equity Australia twenty to thirty points. But for US retirees it's close to zero. It's actually about

That's a debate.

Let me get the line up here. Are you telling me that Lisa Mateo in or two or John Tucker in his two oh one K John Tucker goes into private credit, he's going to get the quality the three phone calls from Blackstone's going to get. I just don't buy it. I mean, how do we know that we're going to have quality private credit in a reserve vehicle.

Look, I think it's a great question. So I think you've got a couple of layers to this. So the first is there's a whole bunch of fiduciaries who run these systems. So there's investment consultants, there's planned sponsors. And I think also these assets are not going to just be thrown into a portfolio. They're going to be probably in an evergreen fund, so in a thoughtfully managed, professionally

We haven't seen private credit experience a significant prolonged economic downturn, have we. We don't know how it's going to perform in a capitalic constrained environment. What's the what's the thinking there?

Look, it's a great question.

So I mean, one way I think about it is that as the as the universe of what's in private credit spans, it's going to drift towards what we've learned from the banks of the lot twenty or thirty years, because effectively these are bank loans which are being put into private structures. There was a FED study about two years ago, so it's a bit dated now, which showed that the loss the probability of default was about a third lower for the private credit loans at that stage.

But you're right.

As the industry scales, there'll be good decisions and bad decisions and so naturally returns will.

Probably cold down the market.

Look, this is this is one of the ask this is one of the really critical questions. So the moment they're marked probably every quarter, every quarter, every quarter, Oh, come on, and that's note. So what we argue in that piece for the rock stars was that the pricing conventions will need to evolve so they're done at least on a monthly basis.

Say, is this a new thing or Colm Tracy and Joe rock stars? Yeah, is that like a new thing? That's a mandate? Okay, continue the rock starts so every ninety days in no way.

So that's why.

But this so as you move from money being managed for institutional investors and coming into wealth, there's a number of things which will have to change, and obviously around that ecosystem for a better word, you know, pricing will change the structures. You know, there's a lot of work which is being done and people.

Are going to have a limitation and how much they can have in private creditor for that matter been done.

So if we think about in the retirement system. Look, we've only just had the executive order last week, so there's a lot of work still to be done. But it's like rewirement, right, So going back to it, there's at least three layers of fiduciaries. I think the fiduciaries will have you know, will want to pilot, they want to experiment, they want to go slowly. Give you an example in the Australian system. Let's take the Australian super Fund.

Australia has twenty three plus two twenty five basis points in alternative.

Twenty three twenty three points not basis points points, So twenty three percent of the Australian super Fund which.

Is alternative investments.

Yeah, now that's across really stay of equity.

In the Veronicas, Tom, you know the Veronicas, we do a lot of work with registered investment advisors here at Bloomberg and Alex Steel and I did a bunch of remotes with them, and I was shocked at the amount that an average registered investment advisor, a retail advisor in any town USA has an allocation to private alternatives.

I thought it would have been.

Five percent, six percent. No, it's twenty twenty five percent. That's just amazing. But I'm guessing not a lot of that is in private credit.

At the moment. It'd be not that much.

Although actually, you know interesting if you look at these sort of private credit funds for wealthy that's called called evergreen funds, they're not only for a wealthy of they can be for institutions YEA. To date, they're growing about sixty percent compound probably makes it the fastest growing part of the investment ecosystem. So it's growing, it's growing.

Keevan Steina's with this area are commercial free until nine am. We welcome all of you across at the nation. Good morning across the United Kingdom as well. Mister van Stinez is with Oliver Wyman, run YouTube. Subscribe to Bloomberg Podcasts a live Chad effervescent this morning to say at least read, agree to the screen extremely quiet tape here nineteen minutes away from the CPI.

Paul with you please, I mean, I'm shocked, Hugh.

I want to what your view is. Why are the banks allowing this business to go away? From the private credit business. I started my career at the Chase Manhattan bank leverage lending to the media sector. You know, we make money upfront, and we did the deal we did lve Woark plus three, we sold off. We syndicated all of our risk off the balance the solid to banks all around the country so we had no balance sheet risk, and then the next day we turn around to do

Look, Paul, I think it's a great question.

I think actually the wins are slightly changing on this,

Okay, I mean everybody wants in on this. I get it. And it's an umpteen trillion dollar fronk plan. What are you worried about, Hugh Vanstein, is what's the you know, paragraph three, page twelve of the red hearing ages ago, what's the risk factors here?

Look, I think there's there's a there's a number of things. So as you move towards the wealthy in retail, I think, as you said, Tom, we need to get the pricing conventions, the right structures, the right cash flows. There's a whole bunch of stuff around the engineering of the of the plumbing. And look at what we've learned in finance is often it's the plumbing which actually creates the problem rather than actually just the assets something.

So tranches, folks, are not a trench, a trunch. Tranches are high quality pieces of whatever it is down to a lesser quality. We learned in seven that the quality tranch is moving was a really ugly mover for institutional money. Is private credit going to be trenched out? So you know in your four oh and K the level of risk of private credit you're going to have in your portfolio.

So this is a that this is something that I expect. I think the ratings agencies are all over this space. They see a new business in trying to rate a much larger amount of the private credit space too. And look, Tom, I think we need to be careful here between the risky stuff, the non investment grade and the ig that you know what tripped us up in the financial crisis was buying an awful lot of the stuff that people

We got to do a joint interview with Hugh von Steinas and Mark Kearney. Well, Curry is a little occupied something, so I think thank Yousina's working with the Bank of Them a bit ago.

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Eleven thirty were.

The Newspaper's Lisa Matteo.

Okay, Tom, I thought you would get a kick out of the story because I know you love the dreaded Yankees as you call them. They have the star studded roster, right, the three hundred million dollar payroll. But the question and every fan's mind is what the heck is going on?

Right?

Why is the team not showing up?

They came out of the weekend barely clinging to the half game lead over the Cleveland Guardians to get that final Al wild card spot. So the Wall Street Journal kind of puts the spotlight on the ownership and points to hal Steinbrenner, who took over the family business like seventeen years ago, a different managerial philosophy than his father did. They said that house a little bit loyal. You know, he doesn't scream and do all that kind of stuff. But the question there is when does he step in?

In the playoffs pretty much every year.

They were the World Series last year, but Yankee expectations are uniquely higher than everybody else in the sports. It's when the World Series orts a it's a bad year.

Can we note even though we lost last night, the ace for the Red Sox is pitching. The ace for the Yankees has been out all year.

Yeah, that's that's a big deal.

That's key.

That's a big deal.

And so we started the airplane just fantastic, But the last fifty games have been terrible, so we'll see if they can turn it around.

But they've got time to turn it around.

You have time with a wild card, I mean exactly.

You know, I think the Chicago White Sox are reaching for the worst right now. You're still in it.

Next, okay, we'll take you over to the labor market.

This is interesting.

The Wall Street Journal is saying the era of those big pay raises for low paid workers could be over, or at.

Least maybe taking a pause.

It's it's a different site before, you know, the year right before the pandemic and then right after the pandemic where we saw the opposite of it. You know, it pointed to the July jobs report which kind of compared you know, leisure and hospitality workers, you know, a three point five percent increase from a year earlier, and then you had the information sector that was up about five point four percent. But what it really does, it's a good look into the history of the wage gap and

The history of it.

And how college Sun's got a summer job. I'm shocked that it was getting paid per hour.

I mean it's like a real paycheck. I'm like, dude, what do you can do with all this cash?

Like, what's there? Lisa, let's stop to show your folks. Lisa and Tom Keane asking Paul, how do your children are all gods? They're all employed?

Not hu, she cut him off. But it depends on the sector.

Like my nephew just got a job. He's still in college, but they guaranteed him a job making six figures before he's even graduated.

Yeah, I think just for the like the you know, the hourly worker.

Amazon is the market.

I mean, it's not the.

Federal governor, the market government market center.

Absolutely.

I mean, because they employed so many people and they're paying up and that's you have to match it.

So anyway, thank you.

Okay, swifties waking up to a real treat.

Did you know it was.

A surprise album drop from Taylor Swift It is the Life of a show Girl, and she revealed it on her boyfriend Travis Kelsey's new Heights poss Still Together. They're still together. This was the announcement on Access. She pulled out a vinyl record from a briefcase.

Take a lesson mc green.

Yep, this is my brand new album, The Life of a Showgirl.

If that is it?

Okay?

So the videos posted at twelve twelve New York Time on the twelfth, her twelfth studio.

Album, You Get I Get It.

Okay, see the theme.

Okay. It comes after her eleventh album. The official release date it hasn't been announced yet, but pre.

Orders now available.

So that was the whole thing together. I mean they're in an age.

Yeah, she's still going strong.

They are, they are, but if these are are rejoicing this morning.

But she just got off like a monster tour. That was a couple of years, right, yes, yes.

Yes, so now so now comes the next album.

All right, this is just you know, out of COVID. I mean, I mean, she invented the self help record in COVID, No kidding, those quiet records.

Jack in a big fight against him.

Yeah, you know it is Shrewd the right wok.

Yeah, totally.

Yeah, she's like a big time Shrewd and she's killing it. Lisa Matteo, thank you so much.

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