This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrell and Lisa Abramowitz. Join us each day for insight from the best an economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App.
Join us now. See Michelle chief flowed with Strategus, the principal wishing she never woke up early this morning. See you a good morning, Good morning.
It's great to be.
Great to have you with us. This recession chat. What underpins it? Where's it come from? I think a lot of people might look at this situation and say, well, yes, inflation's a problem, but I'm looking at unemployment three point five percent. Claims have ticked a little bit high, but they've come back in again. Where's the recession chat come from? Apart from maybe with you.
One, well, so we are do you one? I think the problem is that we've been talking about recession for ages and ages and ages, and as you said, people are getting a little bit tired of the discussions. But if you look around the economy today, it looks fairly strong. Yes there's a soft snow like slow down happening, but generally speaking, things look okay. And I think the main reason is that the labor market is underpinning everything. But if I put my economists hat on, labor market is
typically the last one to fall. It is the most lagging indicator here, but it's also the most important, so we can be watching. You know, the lending survey is going to be really important. There is a very very close correlation between lending data and employment, so as you see a lending contract, you should see job losses increase. So we are expecting recession late this year and over. It keeps being pushed out, but it does look very very likely. Given the amount of FED timing you've seen.
Todate, markets are almost hoping for this recession. Bring it forward, let's get it over with, and then we can start with the next cycle. And it seems like that impatience has been embedded in all of the bearishness that we've felt. What's worse for risk acids though, a recession at this point or stagflation.
Oh, stagflation by far that that is the worst case scenario.
You know.
One of the things that has been the underpinning markets to this point is this idea that at some point in the next six months eight months, is that the FED is going to start cutting rates. There is a lot of assumption out there that inflation is going to keep coming down. That is the consensus forecast, and there's very very little dispersion in those expectations. So inflation, if it were to reignite and start moving up, that takes away everything which is underpinning the market today.
So if we get this ECI print showing that employment costs reaccelerated, which some people expect that to be at the base case, what does that mean in terms of exactly what you just said.
Right, That means that the Fed's job is not done. You know, we I think are seeing that. Look, we're getting towards the end of the tiding cycle. Everyone believes that there's going to be a rate hik in May, but almost no one is talking about beyond mey. The other part that nobody's talking about is not only that could they pause, but why couldn't they also return to the market in September with the new rate hike if things are not going as planned. You know, they have
said that they're very data dependent. They have said that they need to watch and see what the impact of feed tidening is going to be. And if you're not seeing wage growth come down, then if actually you're seeing inflation really plateau at the kind of a four and a half percent level, what's to stop them from doing
a new rate hike? Now that I want to clarify that is not our baseline expectations, but I would put a fairly meaningful chance on that, probably more than what the market is putting right now.
You're ever from London. Can you tell me so far this week and the conversations you've had the kind of differences that you're experiencing in the conversations here about the US versus, say London about the US, Are they different at all?
They are a little bit different in that no one in the UK is talking about the debt limit, I mean. And I find that for international investors generally they kind of, yeah, we go through this every few years and it always passes okay. And I find that in the US there is definitely a lot more concern. Almost every single client conversation I've had that has come up as.
A really significant Who's got it right?
Can I see international?
You think so?
I do. I think that the chances that the chances of it devil are higher than they have been previously, partly because its administration is so belligerent, and that volatility is very disruptive when the market is already very, very vulnerable to any kind of disruption. I shouldn't have said that. I don't take it back, Okay, So that is what is disruptive. But I do think that things will eventually all get past. I'll be fine.
I'm not here to correct you either. This was wonderful. Do you want to talk about US politics sometime in the future? Next week, the week after that? We could do a weekly segment, couldn't. We should always ask what the people in London think about the situation over here, but they have a very very different view on things.
That was fantastic.
It was like, can I say the truth? Okay, I won't here, here's what I'm going to tell clients. It's okay.
That is interesting though, see that they seem to be shaking off it. What do you think it is about the US based investor and why they're so much more obsessed with it here, and I wouldn't. Maybe I'm using that word obsessed loosely. Why they're paying more attention to it here? Is there good reason for it?
I think this is standard of investors. You look at your own local market, and you're always more active by your own market. That goes across the board. I'm probably more nective about the UK than my US colleagues. The same thing in the US, same thing in Hong Kong, China every day.
Daniel from Iowa just emailed me, emailed in and said President Biden is not.
Sorry.
Angel.
As a chairman of Principal, I appreciate it's snow email on his screen. Don't worry about a shot of Principal Asset Management joining us now is Phil Orlando, Chief Equity Market Strategistic Federated Hermes for wonderful to catch up with you, sir. I want to go back to the question. We started this program with just how much momentum is in this economy from Q one gun into Q two and looking at through the rest of the year.
Not much that that. You look at the GDP print yesterday at one point one percent, we were at one three I think we were adding near low on the street, so that was was a tough number. And regardless, our view is that its first quarter of GDP is going to be the high water mark for the year. We're expecting negative GDP prints in the third and the fourth quarter of this year. There are some folks that are
looking for negative prints the beginning of next year. So our view is that economic momentum is going to be downshifting here over the course of the next year or so.
Phil Landa, I want to talk about selling May and go away. You have an arc of the market, an arc of many Mays that were successful, in many Mays and summers that were less than successful. What does the character of selling May and go away this year?
I think it's sort of negative. That you've had a very powerful six month rally that's taken the market up about twenty percent here from the mid October lows last year into the forty two hundred level we've seen here just recently. As we look out over the next couple
of quarters, you've got inflation that's still sticky. Is about how persistent, how hawkish that a reserve is going to be earnings or decelerating questions about recession, questions about the impact of banks tightening their lending standards, reduced in their loan volumes. Then you've got the whole debt ceiling issue that will probably, you know, come to fruition here in
the third quarter. So for all those reasons, our guess is, you know, the market will probably grind lower over the next six months.
Lisa then Ladler of ETRO this morning with an absolutely brilliant many decade history of this cliche selling mayon go away. His answer is it's valid, and he really speaks of the mystery of the summer doldrums this year.
Well, I think everything's been a mystery. Frankly, twenty twenty three could be chalked up as a full on mystery. And one of the big mysteries is what playbook do we whip out and Phil when you're talking about some sort of downshifting in Q three and Q four. Is this a recessionary playbook or is this a stagflationary playbook?
Our view is that we don't know. We're going to be data dependent, but right now, the title of my presentation for clients this year has been Recession Watched. For twenty twenty three. We're watching the data as closely as anyone. And again we've got negative GDP prints in the third and the fourth quarter of this year. I've seen some economists with negative GDP prints in the first half of
next year. So somewhere, you know, within those winter months, we're going to be coming up to that razor's edge of whether or not the economy slides over the edge in or recession pill.
As you know, the market is not the economy, So can you give me the market co equity leadership which pockets of stocks you want to be in.
Well, if we're right that this twenty six month rally here reverses over the course of the next six months, but I think the answer to you know, we've got the NFL draft going on. I think we want to keep the defense on the field right now. So we like cash, we like treasuries, and we like defensive equities in stable demand categories. So large and small cap value stocks and international stocks have low pees, low betas, high
dividend yields. So our mantra here is let's hunker down, preserve some capital until we've got some clarity on some of these issues we've just talked about over the next couple of quarters.
I can't get it's a buy on the rally and the home builders on the S and P five hundred fill.
The homebuilders have looked impressive here over the course of the last couple of months. We've been in a housing recession for the last seven or eight quarters. There's still tremendous pent up demand and the home builders have done better over the last couple of months. How sustainable is that. If the economy goes into recession, we'll have to see. But the homebuilders look attractive here.
No question, something's going to give. Just amazing Fidolanda federates it.
You know, we really haven't struggle here because the Yankees are two games ahead of the Red Sox end of April. You know, the season really doesn't start till July fourth, but the Yankees are two games ahead of the Red Sox. There's three teams out of the Yankees, which says it all on the miserableness of Doug Cass and Tom Kane,
Paul Sweny and Tom Kane with us. Doug Cass of Sea Breeze as well, and Doug you want to link this into the markets right now, and I'm talking about the hunch that George Steinbrenner had years ago to get John Cashman's kid an intern job at the Yankees, which turned into the New York Yankees general manager's decisions of the X decade or so with Brian Cashman. That's worked out, hasn't it.
Yeah? Sure, I don't know if you're aware of it that I was very close with John Cashman. Brian's that he was president of Castleton Farms, which is the leading breader of harness racing up standard bred horses. I drove bread and raised tarn sources. John was a gem real.
I mean, this is great, Doug.
But again, remember Tom and Paul. There is always a baseball analog for the markets.
There is, But the baseball analog here is mister Steinbrenner's hunch. What's the hunch out there now killing you and your widely acclaimed caution on the market.
Well, I think that if you're if you're buying stocks here with the S and P at forty one thirty five, I recommend prayer. The bottom line is that we've moved back this week into a net short position after being cautiously optimistic and non consensus most of the year. We've had a good and profitable last year. At Sea Breez, we're having an excellent twenty twenty three and we're profitable in April. But we think that the market risks are
multiplying and are non trivial. I also recommend prayer to the New York fans, and I'll explain why, because I see a very strong similarity between the S and P index and the Enanke's starting lineup. Today's stock market is non inclusive. By that, I mean it's top heavy. Tome. I mentioned to you, and you quoted me yesterday on surveillance, you take out the seventh largest large cap tech stocks and the S and P into Wednesday's close was down
two percent and Nasdaq was flat. So to me, you know, the Yankees can't win a pennant in the World Series without Broder contributions from all the players, nor can the S and P make much further progress with seven stocks accounting for most of the game. So just look very quickly, and I will make it quick. At the starting lineup. The first half of the Yankees are great. The batting order in the bottom is terrible. Look at the Machine and Torres back to back belly to belly with home
runs last night. At the top of the Yank orders, Yankee order, we got Volpi, who is as good as Gogle Google. In the last seven years, he's batted over four point fifty. Aaron Judge, of course is Meta, Rizzo is Netflix, le Mayhew is Apple, and Toares is Navidia. But at the bottom him half boy. It's a mess. Piazza. He's first republic Bank Cabrera. He's batting like Horizon. I
caravan with. I'm sure so the markets leadership is marrying and I can and I can't recall since the nifty fifty period that ended in nineteen seventy four, such a divergent divergence, and importantly, from a longer term standpoint, I see the next several years as very similar to the years following the bust of the nifty fifty in nineteen seventy four.
This is so important, Paul, Paul, I want you to jump in and his Doug and I can blyther way forever. But the nifty fifty of my ute is stunning.
Yep, absolutely, Hey, Paul, Yes, you know, I invocus Kooperman. Does I see seven years ahead to invoke Joseph in the Bible, in the Book of Genesis, just as we did following that collapse in the nifty that I guys read. Did you guys read the coach interview in the Financial Times this week? Did not stand the man, and I don't mean stam Usual, Dan Druck and Miller. He's also looking for ten lean years. So I'm in good company.
This guy saw like Red Sox fans, Paul Save.
We haven't got the O's plane six eighty baseball here. Hey, Doug, Should I be worrying about this whole real estate thing out there? I mean, you walk through midtown Manhattan and the buildings are just empty. Nobody comes in on Mondays or Fridays. That's a problem in and of itself for all the local retaillers. But how about the banks owning all this mortgage debt?
Yeah, I think it's from a fundamental standpoint, the situation is certainly suboptimal. The Federal Reserve faces the trilemma the talent, the challenge of simultaneously reducing inflation, minimizing the economic growth and jobs, and maintaining the stability of the financial system. We have stubborn inflation, declining global economic growth, and we're doing nothing to improve supply demand situations for commodities, especially oil.
There is this, getting back to what you asked me, there's an unprecedented maturity wall in which a commercial real estate eight has almost one point five trillion dollars resetting. Corporate lending, consumer loans, mortgages will all be resetting at much higher rates. If capital is available at all, and I sit on a number of public boards, I see
firsthand the reset in the cost of capital. So I don't think current valuations are consistent with a five percent benchmark interest rate, and they may even be too high for zerp QE in that world that many, including the interest rate futures market, is suggesting, but no longer exists.
Paul Sweeney brings us up, folks, because he knows the Dougcast wheelhouse. And I'm going to say this right now, because Cass is a pinata out on Twitter. If he shortens stock goes up an eighth of a point, he gets handled. But the answer, your folks is Doug Cast back to Kidder Peabody a few years back. Actually you read his bank research, it was there was an acuity to it that was really quite something. Doug on First Republic I've dated, and I got to be very careful folks,
because I don't editorialize. It was a marketing scheme wrapped around a bank. You're a bank analyst. Should the government institutions come in, Dougcass to do an FRC workout?
You know, I remember meeting Harry Keith who formed Keith, Briett and Woods with Norbert Woods and Ing Briette and then Tomas show to ultimately a good devel of mind took over.
Under great courage under the crisis of DNA seven.
And Harry Keith once said, bank stocks trade always trade between hatred and apathy. That basically describes what's going on. Look. First Republic's management committed its own set of errors. That bank became a very aggressive mortgage lender to the wealthy, leaving it with many below market mortgages as its funding
costs rows dramatically. Someone in charge should have seen that, just as someone running Silicon Valley Bank should have known that interst rates would rise and destroy the value of the portfolio. But every time there's a financial crisis, we're reminded that bankers are among the least sophisticated economic actors in the financial ecosystem, They invariably turn out to be the last to know what's going on and what's like
unlikely to happen in the future. Perhaps the reason for this is being a banker is incompatible with questioning consensus thinking we got time.
I got just time for one question, Doug, because John Tucker walked in and he needs a space as well, Doug Cast, not your single best buy? What's your single best short right now?
Wow, that's a tough call. I'm gonna say my single best short right now are the triple Cubes?
That cubes? Yeah? Yeah, okay, Doug, we got to leave it there. Thank you so much and great, you know, I really you know the Yankees are two red, Sox are two back.
Yeah, I mean the razorre twenty one five who plays eight hundred baseball? You know, And is anybody watching it in Tampa?
That's well, that would be Dougcast. Thank you, Thank you so much for joining us to Seabury see him out Seab's partners and actually running real money down there. I should point out as well. We're going to get right to it right now because this conversation is two to two important. Lisa Bramwinson. Tom came mister Farrell waiting with doctor Olarian for the next hour's festivities and with us. And this is really important. As Robert Silentek, he's president, chief executive
officer at c b R. Who is CBRE. What you need to know is if you're a computer guy out of Ames, Iowa, and you get a job in Texas and real estate over a number of years, maybe it prepares you for the great financial crisis of two thousand and seven, two thousand and nine. Bob Silantik has been on the watch at CBR three CBRE, I should say, through now not one, but two crises. And he joins us in our studios this morning. Thank you, thank you
so much for joining Bloomberg at Thanks counting. Good to be you, more than anybody I know, push against a stereotype of real estate investment trusts. O MG, we're all going to die the stocks of creator. Your stock is down, but you've got a twelve percent total return over the last twelve years. CBI is the outlier. What is your best practice removed from the volatility train wreck of REITs?
The best practice in the regard you're talking about, Tom, is that we are very diversified. We're a diverse fight across asset type, diverse fight across service type, diverse fight across geography, and diverse fight across client type. And we're
very substantial across all four of those dimensions. So as things EBB and flow, as secular trends emerge, we can push resources into the areas that are favored, as we've done over the last few years by pushing resources into multifamily and pushing resources into warehouses, and pushing resources and outsourcing and project management, and that's worked very well.
For bloom Is leading the academics on work from Home out at Stanford. It's you know, we all know it's sort of Graham and life changing and all that. That part of CBRE that is in the cliche of midtown Manhattan sea to Shining Sea that's empty. Is that going to continue? Is this legitimate emptiness that we see now.
It's a legitimate backing off of the amount of office space that'll be used. But there's some important trends that are contrary to that. So, for instance, companies in general, and certainly here in New York, there's some famous examples here in New York of leaders that want to get their people back in. Well, the way you get your people back into the office is you create great environments
in that office space. And so what you see across New York for the past several quarters, even though office leasing is down, and in the first quarter it was down by about a third year over year, we are running ahead of pre pandemic levels as it relates to high priced office leases, because people want to be in those best buildings.
I got a brilliant CBI. He takes over the Lincoln Tunnel.
That'll fix Well, yes, perhaps we'll have a fancy Lincoln Tunnel. This is the issue. Though you have dead office space that isn't retrograde, that isn't retrofitted for the sort of fancy experience. What happens to that? Are there just basically no man lands of old office space that no one wants.
Well, Lisa, we'd love to have an answer for everything, but we don't. And one of the quandaries we're faced was as an industry is there are going to be some antiquated office buildings and it hasn't been figured out yet. What's going to happen? You know, there's a lot of talk about can you convert them to multifamily residential. Some
of you can't, some of them you can. Ironically, the ones that are most able to do that are the older, smaller floor plate buildings, some of the ones that were built in the seventies and eighties, with the very large floor plates and a small amount of elevators relative to the floor plates, etc. It's just not practical to convert them into residential. So we'll have to see what happens.
There's a larger question here, especially as we're on the precipice of some change in the economic cycle. We don't know when, we don't know what. But it seems as though there has to be a right sizing with housing prices that have remained resilient and rents that have come down with an economy that is stagnating in certain areas, and even with commercial rents staying relatively elevated, which is going to give our valuation is going to fall more in the property or our rent's going to fall.
I don't think you're going to see you're talking multifamily resident that yet. Yeah, I don't think rents are going to fall a lot and multifamily residential. And the simple reason for it is even though you have interest rate issues, etc. Demand supply is still very real in that product type,
like it is in most product types. And the fact matter is you still have slightly less than average historical vacancy rates in multifamily residential and those high interest rates are causing single family homes to be more expensive, which is pushing people into multifamily rental properties. So I don't think you're going to see a big decline in rental rates at all.
I got eight ways to go here. I could go to Miami, I could go to Europe, and you know, talk about what you're doing in Los Angeles or frankly boom southern economies where everybody from New York's moving to, including your Texas as well. Forget about it. Let's go to the Pacific Rim in China. C b R E has a prism on Asia, like no one do you buy the idea that the West can continue to work with China and they'll see stability in their property market, which is the mother of all volatile markets.
Well, I was. I was in Asia in Hong Kong about three weeks ago, and like so many things tom the news, the sensationalism around the political challenge.
What's the reality.
The reality there is that we're doing a lot of business in China, and our business in China is growing, and there's a lot of business being done between the US and China and a lot of effort to get US companies in there. There is political risk, for sure, but those are the largest cities in the world, or
some of the largest cities in the world. And one of the things that's happening as it relates to commercial real estate is intermediation, which we've had here in Western Europe and in parts of Asia forever but not so much in China, is becoming more and more prominent there. So we expect to grow our business substantially before we.
Let you go, and unfortunately it is too short. I do want to just get your view on what the pricing impact is going to be of some of these regional banks with pretty big portfolios of loans that wreck that back commercial real estate. What is the likelihood of some forced sales that really bring down prices?
And in your term, there's going to be some forced sales, Lisa, But here's something that just gets missed. If you look at commercial banks assets across the United States, less than one and a half percent is in office buildings in office building loans, So yeah, there could be there is some pressure now with less capital available, less debta available from commercial banks for office building that's being backfilled by other sources of capital, private sources of capital, debt funds,
et cetera. The gsees there is going to be down pressure. There is going to be some trouble as it relates to the regional banks, but it is certainly not huge in a way that would be ruinous for the commercial bank industry.
What about other sectors within the real estate? Are there other areas that are more exposed based in the concentration of these banks.
Fundamentals are really good in other areas. And when I talk about fundamentals, occupancy rates and rental rates. So just to give you a few industrial three and a half percent vacant, institutional quality, multifamily less than five percent vacant, retail rents around their way up around the US. Hotels doing very well. So the fundamentals and things other than office are actually quite good right now. I'm sure both of you had experiences trying to get into restaurants lately.
I mean, oh no, it's I don't have a life. Lisa has a life, Pharaoh has a life. I don't have a life.
So again, headlines are partially accurate, and it's totally accurate, but not you really silentic.
Just he just shows up at any restaurant across the country and Bob, please, did you get the check? Pop silentic as.
Long as it's fast food, Pops silentic.
Thank you so much. With C B r E a real estate update. If you live a study of disruption, which many do, you do it at Babson College, and that is the land of the great late hugely missed Clay Christiansen. You're in Timmer joins us of Babson of Wellesley in a fidelity of Boston this morning with exquisite technical analysis on where we are. I'm just going to cut to the chase within your first five charts for FCO. You say we've been in a ten months no man land.
When do we know we're escaping up or down? Are ten months no Man's land?
Yeah? So we all know how the cycle began, and we all want to know how the cycle will end
and will it end? With the Fed, you know, raising rates one more time next week and then pausing, which I do think is a likely scenario, because we know from history that the FED raises rates to more or less add or above the inflation rate, the trailing inflation rate, and so the core pcees at four to six, presumably on its way down, and the FED is now near five, and of course the tips break evens are somewhere two
to two and a half. So on that, by that measure, the FED is well above the neutral rate, if you will, So I think for the FED it's mostly a question of how quickly do they go back to neutral, which will be around three percent, and my guess is not not very And then the other question is about the earnings front. Right, so the market is price in a modest contraction earning. So there's your modest mild recession, you know, scenario, which I do think is likely second half of the year.
But the market's very capable of looking through that, of course, as it as it always does, and so on that. On that, by that measure, you know, we could see a forty percent expansion in the multiple at some point, and the expansion at the bottom in October was fifteen and so that gets you to twenty one times next year's earnings of two twenty five two thirty gets you
back to the new high. So that's the half the glass half full scenario where the market deals with the FED deals with a modest slowdown or contraction in earnings and then a recovery. And obviously the big question is how good are those earnings forecast? We know that the consensus numbers tend to be optimistic, and so far the numbers for this quarter have been okay. But that that becomes really the main question. But if you look at the internals, right, the S and P five hundred equal
weighted index has gone nowhere in ten months. The small caps are at the lows, microcaps are at new lows, but the megacaps are at recovery highs. And so the market has been all over the place. And this, you know, these trading range is now ten months old, and back in twenty fifteen it was from August fourteen to February sixteen,
ninety four was a trading range. So if a trading range is all we're going to get, you know, after all of this craziness of the last three years, you know, little bubbles because of financial repression, and then a massive rate reset, then I'll take that as a win. But the earnings need to you know, the market can look past in earnings valley, but it can't look past in earnings abyss. And so that really is what it comes down to.
Its lost decades are unusual. We've seen them through history and recent history as well. Look to Japan as an example of that and other areas as well. European banks for much of ten years, that's basically nothing. When you look at the US equity market after what many people consider to be abubble, that's burst, do you see the potential for a lost decade in equity market returns to the index level in this country?
Well, we had one, of course in the two thousands, the seventies, the thirties and forties. You know, I call them secular bear markets. And secular ball markets tend to last about eighteen years produce about an eighteen percent rate of growth. And secular bear markets tend to last about fourteen years and produce basically zero growth or negative real growth.
And so one of the big questions is is has a secular ball market that I think started in nine has it ended and it would be a shorter than usual one, although the one from nineteen twenty one to
twenty nine was very short and extremely powerful. So when you look at valuations and you look at you know, the new inflation regime, assuming for a moment that it's going to be above the FED target zone, and you look at interest rates possibly having made secular lows, that would argue for a more modest valuation regime, which would go in line with kind of a secular bear market. But you know, to call it another last decade, I'm
not prepared to go there yet. A lot of that does come down to financial engineering, and you know, converting earnings into share buybacks, and that's been an extremely powerful engine as well as M and A. Right, if you go back to the end of the financial crisis and you look at the supply and demand of shares by corporates themselves, IPOs and secondaries about two and a half trillion of supply, m and A and buybacks, which is a retirement of shares from corporates about eight times as high.
So it's been a massive imbalance of the supply of shares and the demand for shares, not even counting end investors, it's just the corporates. So if that if that engine keeps going, then I think the bull market stays alive. But if a higher rate or a tighter fed regime kind of you know, slows down that train, then I think there's there there's reason to think that it could be otherwise.
Just quickly, is a sixty forty portfolio going to work in a higher inflation environment with slower growth?
So I've looked at this going back one hundred and fifty years, and when the inflation rate trends or is sustained above the historical average, which is three percent, then the sixty forty doesn't work. The forty does not is then positively correlated to the sixty. So the question is, you know, we were at about a two percent regime. We're now at about two and a half if you look on a ten year rate of change basis. So it really comes down to whether the inflation situation remains
structural or transitory. And it's interesting I just did a deep dive on the nineteen forties. I read the History of the Federal Reserve by Ellen Meltzer, and you know, they had twenty percent inflation in forty six and forty seven when the price controls were lifted and at the same time the monetary growth started to reverse, and so
it really was transitory back then. And you know the kind of the post COVID pent up demand versus the post war there are some similarities, there's some similarities.
And then we got to deflation, Eisenhower's true deflation of fifty two to fifty three and then John that gets you to two to three percent interest rates. Right now, do you predict a follow on disinflation deflation?
Well, I mean the monetary base or the money supply numbers are have rolled over, which is what they did in the second half of the forties after obviously expanding, you know, rapidly from forty two to forty six, and then once the price controls were lifted, you had a
one time price shock. And so hopefully this was a one time price shock, and if so, then the inflation averages go back to kind of the historical average and then sixty forty continues to work and you know, the forty this year is sort of doing what it's supposed to be doing.
So this was a clinic. King, you're in thank you, it's going to see you in New York too. You're in some of that Fidelity Investment.
Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and anywhere else you get your podcasts. Listen live every weekday, starting at seven am Eastern. I'm Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can watch us live on Bloomberg Television and always I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and this is Bloomberg