Surveillance: Inflation with Jamie Dimon (Podcast)

down with Bloomberg's France saint. Thank you so much, John. Yes, we're in London and we could not be more pleased. I say the Royal Weed. We're really delighted. Speak to Jamie Diamond, thank you so much for taking the time. Walster in London speak to us. So the Fed, the Fed, the Fed today we're expecting fifty basis points hikes. What happens to inflation? Here? Is this your biggest concern? So first all, Francine happy to be here and give it

a little perspective. We have and this this is contradictory about to say both the true very strong US economy. They consumers in great shape, lots of money spending the money, jobs, of plentiful wages of going up, though everything is distorted by inflation and all that, but those are good news. And businesses are in very good shape. And the FED is going to have to raise rates and reverse Q

eight and they're gonna, you know, if they can. They're gonna try to slow down the economy enough eight percent starts to come down over time, and I wish them the best. You know, we're a little late, but you remember two years ago we have fifteen percent unemployment and no vaccine. So I think people should take a deep breath, give him a chance. And I think they're gonna move. I think the sooner they move, the better. So yeah,

they're gonna be raising races. Breath, But can they engineer a soft planting or is there a worry of recession? Of course, but none of us will ever know, right, But if I had to, I'm not a betting man. I just the odds of the following something like, yes, they can engineer soft landing, a third of persent chance, probably a third of percent chance. They can engineer a

mild recession. Think of we've had mild FED induced recessions before, you know, where inflation goes up one and a half for two percent, everything slows down, phases coming down, and it's six or nine months, and then there's a chance it's gonna be much harder than that. And then in the face of all of that, you have Ukraine, which is a huge global issue. And do you fear the FED and do you fear a policy mistake from the Fed? And what does does to consumers? I'm not I'm not

afraid of the FED. You know, I'll change this subject a little bit. I think America needs very good domestic policy to improve the growth the economy, which makes the FED job easier. And that is about regulations and rules and policies and improving projects and things like that. So you have increased the supply side as opposed to, you know, do something the demand side. So the FED job would be easier if we had very rational, thoughtful economic policy.

What could go wrong? But I mean, when you talk about, you know, a strong US consumer or strong business. You talked us about storm clouds, what are those storm crowds? Clouds? And what's worst case are your I hate the word unprecedented, but there's kind of fiscal and monetary induced unbelievable growth in the U S, which was true around the world, though it's obviously slow going down in Europe. That's abnormal. We've never really quite had that before. We've never had

q T before. So you know, you look at QUEI, that's one of the greatest experiments ever done. They're gonna be writing books for fifty years on it, and we're gonna have to reverse it, and that's a huge change in the flow of funds over time around bonds and rates and stuff like that. My own view is that Rachel probably will still have to go up from here. Uh. And then you've got Ukraine, which you know, I think

is a potent. When you look at Ukraine, obviously the wishful thinking is that we have a FED and dew slow down works. The world is fine, Ukraine resolves, but there's a chance that this goes on for years and you completely rattle global energy markets, wheat markets, commodity markets, and you know that we need, as you know, the Western world needs to be prepared for that and needs to take every action today to be prepared that that

can get really bad tomorrow. And you know it gets really bad tomorrow, you don't have time So how do you handle that? How what what's your plan B if it does go shape. I like the fact that it will deal with it, you know, I mean that's life. I mean, I like, in my view the most important thing is American growth and that America. You know, I called this Marshall Plan for Energy that we do everything we can and this doesn't violate climate change, it doesn't

change anything about long term objectives. But we do everything you can to get oil and gas into the hands of Europeans so they don't freeze in the winter. You know. And again I'm not saying it's going to happen, but you know, you have a couple of problems out there that the national energy stuff is, the global energy is precarious, and if oil goes to that's a huge problem for people. And we should do everything we can today. We need

to pump moral and gas. We do. I feel like at the US Frankers they could drill mar We get confused about policy and that somehow doing that is bad for the climate. It's not. You know, we need you know, if you want transitioning gas, replace called and we should approve all the gleen stuff too, even the green stuff. Takes five years to ten years to approve. In the United States, I mean, America's needs to get us act

together and they should have a war room. They shouldt everyone involved, get all the people and say what do we need to do in a consistent careering way. We need to get more gas to LERG terminals. We can't do that without a gas pipeline, you know. And so we're just not national anymore. We we we we have misconceived notions about how we gonna get things done, and so they're trying. But the roll of Europe and this

could Europe see a recession because of the energy prices. Absolutely, you know, our condoms would say that you had slowed down to two percent of something. But the problem with right now and the economs would agree with me. We're looking at a static analysis that if things stay the way they are, but you and I know for certain things don't stay the way they are. And my view is as a very high chance that oil go higher. That only takes a million to two million barrels off

the market a day. That can drive prices up thirty or forty dollars, and so we should prepare for that today. And uh so but but but I like the fact. I think it's great that the Western world has gotten together and who would have thought would get Sweden, Finland, Germany, Switzerland, all of us. But that working together part we need to make permanent for global security. First of all, just going back to the European economy, how quickly could we see a recession and how deep could it be? I

don't know. I mean, you know, I hate to guess the future. No one really knows the future. I've never seen any really guess it. Well, but again, if you have, if Ukraine gets worse, I would assume that you're going to go to a recession and may take a couple of cores, but I would assume that our sanctions working. So are the sanctions trying to deter Russia from continuing the war and you crying? Or is it just to

try and put the Russian contom there? Well, sanction is not the same of having tanks and airplanes, okay, but they are working to the extent that you know, the Russian GDP is gonna drop by ten or fift with the current sanctions. Remember there are sanctions that also the export controls and stuff like that, And you know, the next round. If you're really stop stops oil, and you can really stop oil being delivered, you know Europe, I mean Russia, you can get another teen percent down. So

it's a tool in the tool kit. It's not definitive, which definitive is tanks, So you know we're not don't don't confuse the two, but you know one is a pretty powerful The sanctions are pretty powerful to all. But if you expect this to last for I think you said years. I don't expect it. I said we should be prepared for it too. I don't know what's going

to happen. But how do you see this ending? And actually, if you're if you're a president of the US, if you're a president of the Commission, if you're the FED, right now, you need to game theory and it could go either way. It's like a three way system. So what do you do is listen. I think it's a mistake to guess at which one will be. It should be all three of them. And I think, you know,

I think basically the Cold War is back. I think the whole world learned something that we always knew that national security is always the most important thing, but it kind of recedes in the background. We're all doing well, but now it's the most important thing. It should be the most important thing for the rest of our lives. So maybe we all learned that that is a permanent

date of affairs. The Cold War is back. Uh. The Allies have to call ESCE and not just for military purposes, but for global economic strategic investment purposes, so that we've got a safe world if and if we don't do that, you know, you would you see Ukraine, you can see all around the world. You will see forms of chaos.

So the impact on the economy, I mean, would you go around a trading floor until the young kids that I've never dealt with inflation that actually interest rates could be about five shortly, of course, of course that's you know, things change, and you know, I mean, I think you can easily see five percent bonds. The bonds have already ten year bonds. Were reacted dramatically and hopefully it won't go a lot. But I don't think it's a disaster.

I don't think a slowdown as a disaster. I don't think a many Look when you say a many recessions, I feel for the people get hurt in that but it's not a disaster for the world economy. I think the potential outcomes Ukraine are And you've got to just separate the two and just remember when you talk about war, we didn't know how bad Vietnam is going to get. We don't know how long Gfghaistan was gonna last. The Russians, you know how long ifgast was gonna last. You can

go war after war after war. They were not predictable. You didn't know the World War War was gonna be like that. You didn't know the World War two is going to start in September of nine. So I think predicting the outcomes war, you've got to be very curious. So why our markets so relaxed? That's markets, you know. I'm that can change just like that. Do you think it will? Are we expecting a big comm guessing? I

don't know. I mean, again, fancying my job in life, I will serve our clients with thicker thin and our country and stuff like that. And of course we're always I mean, as a rule of thumb, we're always prepared for bid outcomes, not because we're predicting them. Because I need to say to the shareholder of the American public, my regulators, you know, the UK that JP Morgan will be safe and sound and help your country and your people if things get bad, and that is our job.

Now we're dealing with a whole bunch of different things, and we're prepared. You know, we have extraordinary capability and capital, but earnest power. And where's China and this right now? Look, I my view is that China can't possibly like this, and they're playing if you look at them, they're playing a very neutral role. They're not trying to anger the United States. They know that the American Congress may very well, the Congress, not just the President, can come in and

put you know, the secondary sanctions. They do three point five trillion dollars of trade with the West, imports and exports. They a hundred and fifty billion with Russia. Okay, one number is critically important. Sanctions against them maybe bad for the Western world, it will be even worse for them, and so they don't need that. They want to grow their country, they want to expand you know, maybe they don't like the West so much. They like this. I

don't I just don't believe that's true. I think that they're caught between a rock and heart place that had the so called ally who's putting them in a difficult place? Can we still rely on China given the COVID zero policy and actually the shocks that's coming just from from that policy continuing. I think China has done. You gotta put China perspective. It's done a very good job developing itself over thirty or forty years. It doesn't have all

the strains to the Western world. Okay, it doesn't. It doesn't have our food or water, or energy, or innovation or rule of law. You know that the the the competition of ideas. You know, autocracy has huge negatives. They don't have enough food, war and energy. Their their neighbors are very complex Russia, Indian Pact and Afghanistan, Philippino and Japan, Korea. It's hard for them to be expansion there. Uh, they

don't have are a lot of things you have. So yes, I think we should be worried about them, and I think the West should negotiate, you know, how we're going to deal with trade, unfair competition, I p if, but sit down with them, you know, work work it through with them. We should don't need to be afraid of them. We should be afraid of is our own incompetence, not dealing with the Chinese as long as we stay together.

If the Western world doesn't stay together, no little cherry pick every nation and and then you'll you'll end up what we had with Germany and North Dream too, which will be that would be a problem. Are you committed to China? So if we're seeing a splits and we're seeing the HSBC and an investor activism, could you see big banks actually being split into because of this East West tension? I think again, you gotta look business. You run for thirty or forty years. So we've made a

big investment in China. The Greater China, including Hong Kong, etor you know, will be thirty or four percent in the global market one day. There there they will be a fully developed nation in twenty or thirty years, their politics will change. Is there a chance of a very bad outcome that you know, the world completely separates. There's a chance, you know that that will be bad for

JP Morgan, but will survive. But I think there's a much bigger chance that that the blocks will negotiate strategic economic a bunch of other arrangements. Like I said three point five trade, where will change, what will change, it'll it'll take time. What will change is anything to do with national security anything. So think of AI five G, penicillin, rare earth, semiconductors, those supply chains will be brought back. As Janet Young said, the day will be friendly sourced

doesn't be in the States. It's got to be in an ally, and so I think old nations are going to do that. China already does that. So this is a unilateral thing. And I think the rest of the trade will be fine or fundamentally fine. And they may that may take time, but you know, but that will happen over time. And it's kind of a little surprising to me how much the Western world relied on China, not not for trade and for sneakers and for shirts and stuff, but for rare earth. But they have them.

We don't know we do. That's that's that's the whole thing. America's got tons of rare earths. It's just quote will cost a lot more money to take it out and smelt it, and therefore and their environmentalists and all that.

That's why I'm saying national security. If I was in Why it's the only thing I'd be doing now is national security, and I'd be making decisions every day about how we create more secure energy, rare earth commodities, wet, all the things that the world's gonna need, not against China but to protect the Western world and um so all these things could be done. America is not used to have an industrial policy. To do that successfully, you're gonna have to have some form of industrial policy where

you're doing some kind of subsidies. It should but but be clear, I don't want to subsidize a company. I just think some of these things need to be brought back to the United States. Probably be inflationary, right, does it is crypto? I think head against inflation, right. No, I think the higher rates go, the more cost to hold an asset. Doesn't produce at of things. So, but I think national secure already is number one. I would not do something because of inflation because of national security.

They are completely different, and people shouldn't get confused. Two. And you know that this is why the America has to take leadership and that this is a matter of national security. If everything turns out fire in Ukraine, but I'll take a deep breath and say we overreacted. I'd rather that then we all take a deep breath and say, my god, we were not prepared. And when it comes to Roe v. Wade, we've been talking about nothing else for the lost two days. What does it mean for

JP Morgan? And I'm not going to get involved in that. I think it's a mistake. You know, these things are very complicated, and you know people pass laws everywhere. There's actually a hundred things in the law. It's not it's not there are a hundred things in all these laws, a hundred like And so when you people say support this, support that, all you're doing is being sucked into support

something you probably shouldn't. I've looked at all the voting laws and looked all these laws, and you look at them. I agree with some of the things they say. I don't agree with some of the things they say. In New York does a better job than Georgia this. So I'm not gonna get sucked into saying I support your law. But instead of support, I mean, do you see actually for for such a big bank in the US having

to shift because of policies? Will deal with it. I don't sit here and fear that whatever it is, we'll deal with it and we'll take care of our people like we've alway said we would. All right, Jamie Diamond, thanks so much. I need to talk to you about the UK. We need to have a conversation as about the UKNSA city of London, Jamie Diamonds, and we'll have plenty more from London throughout the day. Fancying lankwith thank you.

Sitting down with Jammie down the CEO of JP Morgan Chase, do you have a two hard discussion on us today with Kenneth Rogoff that we squeezed into a matter of minutes. We do that again with the laureate from New York University. Paul Romer joins us. He is a different economist and that from day one the gentleman of Colorado has done academics at Rochester and beyond where he has said, always consider technology. Paul Romer joins us at this morning, professor,

thank you so much for joining. I want to go back to the heart of it, indogenous technological change. Do we actually understand what technology is doing to the American labor economy, to people in our many death stiles yea so there's a good way to see if some of the problems were experiencing the US are technology based. Look at other countries, same technology shocks are hitting all countries.

And what's unfortunate is the US really stands out as an outlier with this declining fraction of adult males, adult females who are working. All of the other countries Britain, Germany, you know, they're seeing these steady increases. So it can't be technology which is explaining this decline in the US. Jeffrey Sachs would agree with you his book over ten

years ago. Now I really got out front on this from a whole different angle, I would say, Professor Roman, Professor Sax, two different views on a part of America that can't get a job. Why can't they? Yeah, I think can't get a job is not quite right because we've got all this evidence that there are jobs that are available right now. The returns to work, just the compensation you get, the quality of what the work is

like is just not high enough. We've let this deteriorate through a couple of decades now, and what we have to commit to is that everyone should be working. But if you work, you should uh, earn enough to make it worth your your trouble. So these increases we were seeing for jobs like a gas station at end increase, that's catching up for the clients that we tolerated for

for much too long. And uh, we should we should be pushing for more increases in wages, more attractiveness of work, because we can't live in a society where people just check out, especially adults. Adults checkout and don't work. And Paul, you're saying, this is the participation rate still hasn't gotten back to where it was pre pandemic. I still below that. Still you're talking about the need for even fast stir wage increases at a time when people are very concerned

about the highest levels of consumer price inflation. Going back to Night one, how much do you think that the flood of money put into the economy during the pandemic, the checks sent to individuals, actually undermined the ability to engage in fiscal stimulus like what you're talking about to get more people into the workforce. Well, you have to think about targeting the fiscal stimulus, like what would be a targeted measure. We could have a subsidy for wages

at the bottom end of the wage distribution. The government could pick up part of the cost, or we could be like other countries, we don't make the worker in the firm cover the full cost of the health insurance for the worker. There's ways to target spending to make work more attractive that that don't involve just like sending checks to to everybody in the economy. And if you think about inflation, it's a weighted average of a bunch

of price changes. So the wrong response right now is to say we want to make those gas station attendants have uh lower wages or stop them from getting wage increases. There's a lot of other prices in the economy that we could be putting some pressure on without hammering the low wage workers who have been hammered for two decades.

There's the show and then there's the will. And as we talk, we know that President Biden is going to speak at two pm today to talk about deficit reduction, to appeal to a lot of voters who are concerned about how much the debt limit and the debt has increased in this nation. What do you think will happen given that the fiscal stimulus that you're talking about is unlikely and given the pace of inflation, how it's being targeted right now. Let me be honest, um on especially

in the realm of politics. I've been telling everybody for about four years now, add more variants to your estimates, put more weight in the tails. We've seen more astonishing unexpected things in the last four years than in the rest of my lifetime. So I'm not I'm not gonna make any strong predictions about what's going to happen in the politics. All I can tell you is what I think should happen, and we should make we should make

work attractive for everybody. Paul Roman, this is great. I love it how the Nobel laureate folks is telling us there's been four once in a lifetime events in the last four years. Professor Roma, I want to go to the behavioral heart of the matter, and maybe this is

very Jeff sax Like and others as well. Did all of this wage challenge and disincentive start with executive bonuses and the way that executives are compensated, and that well meeting executives look at that if they give a wage growth to their lower two death siles, three death siles of staff of labor they're taking dollar for dollar from their bonus. Yeah. Yeah. To be honest, I think economists contributed to this because we argued, uh, and I was

one of them. I these sounded right to me that if we made the compensation for exact citives more variable, they'd have stronger incentives to do their jobs well. But more variable got translated into just higher payments almost across the board, and so we provided cover for this change in norms um and at the same time, we didn't pay enough attention to the really serious lagging effects we

were seeing in the rest of the economy. And there were many beneficial effects from opening up to free trade, but we understood at the time that one of the harmful effects would be that people would lose jobs in manufacturing. And we always said, well, you can do something to help those those workers. So everybody benefits from trade. But the problem is we didn't do that something, and so they suffered. One of the things here, folks, that we need to say, as Professor Romer is truly expert at

monetary theory as well. You're having a cup of coffee today with the Chairman of the Federal Reserve System, and he's looking at you saying, tell me about technology, tell me about labor, tell me about the dynamics of the American economy. Should he care about that or does he need to stay riveted on a FED mandate in the purity of what a central bank does? You know? I think I would tell him to stay focused on his mandate,

which is really to watch inflation. And if you think about what was most damaging in the end of the seventies, it was the sense of living in a world where things are out of control. And what vulgar Re established for us was that there was somebody who was in control and would bring inflation down. I think the job of the FED right now is to show that they can bring inflation down, both technically and politically. They've got the room to do that, and they will. He needs

to reassure people and give them confidence. But I think we really need to not let Congress and the executive branch off the hook on the rest of economic policy. It's their job to think hard about what do we do to make work and economic life attract of everybody.

But one of the biggest questions is whether the Fed's going to try to get back down to a two and a half to two percent inflation rate in the near term, and that this will decide how quickly they have to go in the potential destruction to the economy. Do you think that they should target a higher rate of say three percent or more the adam posing like kind of idea. I'm I'm persuaded by that argument. And three. You know, Olivia Bonch Harden were signing about four percent

for a while. I think either of those numbers would be fine. But the argument you hear about that against that as well. If it's three or four percent, it'll it'll also be six or seven or eight or nine. And that doesn't make any sense to me. We could target a stable four percent inflation rate if we wanted to, or a stable two percent. I think we'd be much better off at a stable three percent, maybe better off at a stable four percent. Paul, you lived the Colorado Boom.

All I did was go down to the sink and boulder and have Beer's course three two is like your course three to light, Paul is your father's fault. I want to make that clear, just so we understand that you live, take that, you'll take that you live the Colorado Boom. I can't say enough about that. There's a part of America like in Ohio with the primary we saw yesterday screaming that they want their Colorado boom. How do we move the Colorado boom to Ohio without the

cores three to beer. Yeah. You know, one thing that we aren't paying enough attention to is that the jobs can come to the workers, but the workers ought to be able to go to the jobs. UM mobility has gone down, like cross state mobility, partly because we've put restrictions on the supply of new housing. Housing has gotten so expensive in places that have these hot, these hot labor markets. So this is not something you can turn around in a quarter or a year. But we should

be trying to increase the mobility of labor. And also recognize a point I've been hammer around for a while, which is that the future is in cities. And we kept be talking about how do we bring life back all this kind of manufacturing and other kinds of economic activity to small rural towns. It's not going to happen. We've got to make room in cities for everybody who wants to move there, to move there and get a job. Paul has been fantastic listening to you. Thanks for giving

us your time. Paul Runner, there of n why you John Us now? Ben Laidler Global Markets Strategies, to eat Tire to Tamas what he really thinks not far from peak Fed fear? Ben Laidler, what makes you think that? I think we've we've priced in three and a half percent for the terminal FED funds, right, We've got this sort of double barrel tightening going on, Holliday's tightening and the Fed funds. Right, I think we're pretty close to

peak inflation eight and a half percent. I think the market sort of jaw bones are tightening of financial conditions and economic conditions already sort of weakening. So I'm not sure what entirely there yet, And I don't think power is gonna tunnel dubbish on us, But I do think markets have priced in a lot here um, and and we're very sensitive to a little bit of loosening of this sort of Fed vice that we've been caught in. Right,

They've been driving down valuations and driving up recession fears. Uh, And I see both of those loosening off a little bit over the next few weeks. So when do you think that financial conditions have tightened enough, and it starts have sold off enough to slow the economy enough to get inflation back to a reasonable point for the FED. I think we're well on our way right where equities are are in a correction, mortgage rates are over five cent, we have real real yields for the first time in

in years. The economy is slowing, not just in the US but around the world. If there is a silver lining to what's going on in China and what's going on in Europe is the whole world is now clearly slowing. So I think you put all that together, and I think, along with the again these expectations, So this unprecedented sort of double barreled FED tightening here both off the balance sheet and the and the interest rate. Um, I think, I think enough being done. And again I think, um,

we're primed for more hawkishness, and we don't get that. Again. I see the jaws of this vice loosening off a little bit, and and equities training better than they certainly have done over the last few months. And that's the broadest story I want to talk about. A single name. T K. You've seen this move and lift this morning down twenty in the pre market, it's about access to

labor and the cost of labor. And I imagine, yes, Lift has its own unique problems and Uper maybe shares them, and we'll hear from over a little bit later this morning. But I'm surely that's a signal about the broader issue in the US labor market at the moment. And Ben Ladler, I mean, what this comes down to, our models of digital models that are not profit later? Is profit all that matters now, Ben Ladler, It is the only anchor

for this market. I mean, just to be gross and simplistic, you're only there's only two ways to make money in equities, right either valuations carp or only to go up. Hopefully they both go up together. But right now evaluations have been falling, and if the Fed States hawkish, they may continue to fall. So it's all on earnings. And luckily, the big silver lining to all this is a corporates

remain in very good shape. I mean, despite the sort of headline numbers and some sort of high profile misses, earnings and beating expectations on both sides of the Atlantic, profit margins are near record highs and very resilient, and and corporate CEOs of voting with their balance sheets, and they're investing very aggressively, and that's your closest leading indicator. That's what earnings are going to be in the future. Ben labor of Open great to catch out, buddy, as always.

Right now, we're going to digress to the issue of the moment, which is riveted America. And what we do with surveillance is we've done with Ukraine, as we've done with COVID is literally fine legit experts. That would be a comark. She's senior fellow at the Brookings Institute, yes, professor at Harvard, but far more she is a student of presidential success and failure, and a book of another a number of years ago, the end of government as

we know it, making public policy work alloying. You wrote a definitive essay I thought very balanced for Brookings yesterday on this raging debate of abortion, and at the end of it you predict off of the mask experience of COVID, a tsunami, a fury. When does the tsunami hit? Um, Hello, and thank you for having me. Um. The tsunami is hits hit yesterday. Look at hit last night with the

demonstrations outside the Supreme Court. I think these will continue, and I think what it's gonna do, it's going to increase turnout for the mid term elections. So a sleepy and kind of indifferent Democratic electorate I think has gotten a big wake up call, and I think people are going to come out to vote in November, perhaps even up ending some of those elections which we were assuming

was going to go to the Republicans. Laine Linda Greenhouse, among others, have walked through the Mississippi circuit approach and what the Supreme Court traditionally has done. Is any of that nuance gonna matter in this debate? Or is it so polarized and each and every American so decisive of their choice on the choice of abortion that all the niceties really don't matter. It's an interesting question because part of what we're going to wait and see is how

this in fact plays out. Um, there will be states that will still offer abortion, but at six weeks or at fifteen weeks, okay, So um, you know this doesn't mean automatically abortion disappears everywhere. And the more interesting thing that's been happening is while attention has been focused on the UH States getting rid of abortion. There are other states like Maryland, Connecticut, Oregon who are increasing their abortion workforce.

They are allowing non doctors other other health professionals like like nurse practitioners to perform abortions. They are getting ready for the abortion influx. So people are going to be traveling to get abortions. It's um, it's abortions will not be appropriate, but that people will be traveling. As your map shows, um, some will have to travel very far.

And this is going to, like all things, it will have a small effect on the well educated and people with money, and it's going to have a big effect on poor women who can't afford to travel or who can't even get the information about traveling. So it's gonna have a very disparate effect. But we will have abortion providing states and abortion banned states. Here's a question about how this transforms the election heading into the midterms, a lot of people saying that this was a leak to

impart in order to galvanize voters. There's a lot of speculation all sides. Putting all that aside, do you think that this fundamentally reshapes the Democrats chance of actually being a little bit more successful in the midterms. I think it does. I think it's a fundamental reshaping um, particularly in the Senate. Okay, I think that the Senate races, because there's statewide races as opposed to districts drawn from one party or the other. I think this fundamentally increases

the Democrats chances of holding the Senate. UM. I think there's gonna be real outrage at just the the interference here in people's lives, and the irony is that many of the same people advocating this rather draconian choice about what women should do with their bodies were also the same people who are arguing for um medical choice and medical freedom when it came to whether or not they got a COVID test or a COVID shot. So this, this is this is going to really get people riled up.

It has already. I think it will continue to rile people up all the way through November. Elaine, wonderful to hear from you this morning. Thank you. Elene came out that of the Brookings Institution, I want to toss out right now, and we're doing this as we introduced Barbara Corker and who we like to talk to once a year twice here she is a dynamo of the five bureaus and joins us today. But I don't want to

make a joke about this. People magazine does it absolutely killer issue every year on women across all of entertainment, across all of enterprise and capitalism, and Barbara, they have selected you as a beautiful person. I mean, we were

talking about Adell earlier in the show. I don't want you to sing like Adele, but I guess we can talk about your wheelhouse year, which is real estate, all the other things you've done over the years, Barbara, We've never seen rent and housing in this city the disaster that it is today. How do we extricate ourselves from this train wreck of real estate pricing? Well, it's not a total train wreck, because it depends upon whose viewpoint you have. If you're a buyer right now, you're complaining

that you can possibly afforded. Interest rates have gone from what two and a half percent to five point three I think as of yesterday, and so everything's less affordable. So it's a train wreck from a Buias view. But interesting, Tom is the buyers. I'm not slowing down. People are still grabbing real estate, So nothing is happening, and that's making a lot of people nervous. It doesn't make me nervous, honestly, because I see that the under footings of the market

are very solid. They're real usage buying real homes that are highly leveraged, and they aren't loaned out with crazy, crazy configurations. If I look at Cork and Group, you know that you built from scratch. If I look at it on say Tony Madison Avenue or down in the fancy downtown area, the number one fear is we don't want to make New York City look like a given East German city. We don't want row after row of

ugly high rise high rises. How do we create more housing that mayor Adams wants without looking like a given city in Eastern Europe. Well, the reality is that they're not going to be putting affordable housing right next door at the fifteen million dollar condos. It's just not gonna happen. So, whether you like the concept that there are some poor neighborhoods and some very very rich neighborhoods, that guy has been cast in New York a long long time ago.

There was never a time when Midtown Manhattan was inexpensive, nor will they ever be, I hope, But the problem really is in the city's court for making affordable housing. Our supply is like a third of what we actually need, and I think those public work programs are going to happen, and I don't think they're gonna happen in the part of town that people want to impress their friends with.

It's just not going to be Barbara, you're talking about how the footings of this market are incredibly solid, that people are not leveraging their purchases. Are you saying that the housing market of two is more immune to the rising interest rates that a lot of people are hoping will damp in some of the price increases that we've seen on homes. I'm not saying it's totally immune, but it's better equipped to handle it simply because you don't have leverage buying in the sun Belt right now, about

one and eight homes of being purchased by investors. That worries me. You didn't see that two years ago. So that makes a buyer that I'm not as confident as a regular buyer who's going to raise their kids in that house. But the people who are buying homes today are not highly leveraged, and there are no bank programs that make them more tempt them to be leveraged out, and so that gives me a great, great peace of mind. Of course, interest rates is a partner in the housing market.

If those continue to shoot up, the government will put down the housing market and with it the inflation and all the problems will follow. The housing markets a leader in the inflation category, so that if that changes, if if people are irresponsible in the government in that regard, of course we could demolish this housing market, but nobody's

really expecting them to act that way. What would you map you share my competence, What would you be investing in right now, Barbara, if you had a million two million dollars. What I'm investing is secondary cities. Used to be that the primary cities like New York City Chicago was the best place for investments in real estate, and of course I love that because it's a slow way to get very rich. But what I'm doing right now is I'm investing in minor, minor cities or secondary cities.

I should call them or they'll be offended, like Baltimore UM and many of the small cities in the mid West because the inflation rates are greatest there in real estate values, Barbara, like Chicago or Los Angeles or Miami, right as a set in darry City. Yes, thank you very much for giving me my words, Barbara. Barbara a simple question which so many people want to know. If house prices go up, should people's property texts go up? No? I just don't think so. It would break the back

of the housing market. You can't have that. People can't take it on both sides. Okay, Barbara cork And thank you so much for joining the Corkin group and featured in People's magazine. Really good to see that as well. And you know her from Shark Tank. I should say.

This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course on the Turn. I'm Tom keene In. This is Bloomer