Surveillance: Trump Deserves Nobel Prize, Bremmer Says

one m Darta joins us. Michael Darta with MKM Partners, thrilled he could be with us this morning. I thought the meeting yesterday Michael Darda was absolutely original, I said to Michael McKee as I was walking out of the starship here yesterday. I wonder what Alan Meltzer would have thought of this original policy, How original, how off theory

was the FED yesterday? Thanks for having me. Tom Well Powell described what the Fed did was as very powerful for forward guidance, but markets looked at what the Fed did did as more or less a nothing burger. Right, so inflation expectations didn't really move, and the FED in its forecasts actually didn't predict that it would succeed in average inflation targeting. Nowhere in that forecast is two p plus inflation. Uh. Instead it's two percent inflation, but only

after four years. And so you know, as you were talking and discussing earlier, you know somewhere disappointed in that, and and markets didn't really move the immediate response to to the Fed is what you want to look at. There were some disappointments with the press conference, but um, I think you know, the f didn't move the needle in the way. Maybe they hoped just to drill in. What was the main disappointment that the Fed didn't come out and say that they're going to buy an indefinite

amount of long term debt. Well, I think it's in the forecast, right. I mean, average average inflation targeting means if you've been below two, then you seek to get above two. But nowhere in the FEDS forecast is above two percent inflation. Um. And it's a pretty long horizon. You know, four years to fully recover is not a lost decade, but it's you know, certainly not a speedy

return to full economic health either. Mike, You've got to say, it's absolutely ridiculous to be upset in the last twenty four hours. Grant said chaman Pass performance wasn't all that in the news conference, November five is the next mating for the Federal Reserve. I understand something happens a couple of days earlier. Mike. Surely we've got to understand that the Federal Reserve could not fire all its bullets had of the election in America. Yeah, I mean, you know,

that's an argument for sure. And I am encouraged at least that inflation expectations are holding up, they're not sinking, but the bond market doesn't expect the FED to get back to two inflay and really over an indefinite horizon. And so you do have to ask yourself the question. If the Fed is telling us they are not out of AMMO, they could do more, but they're not forecasting success, then why are they not changing policy. I think it's

a very legitimate question that needs to be asked. That was the question economists we're asking in the news conference as well. Mike. Forgive me, because I've got to do this right now. I've got to turn to cable and get an intraday chart up and look at pounds sterling pound sterling is falling off a cliff right now, the pound against the US dollar at one to break at one and down by a half of one percent. We mentioned this very briefly just five minutes ago with Bloomberg's

Guy Johnson. Governor Bailey has been flirting with negative interest rates. This is a Bank of England now actively preparing to execute negative interest rates. The Bank of England will engage with regulators on how to implement negative interest rates. Mike, I would love your thoughts on negative rates, not just in the UK, but across Europe, Japan, Switzerland. What is your response to these kind of headlines on the Morning

Light this morning? Yeah, well, I mean if the pound is moving down on those expectations, then you would have to characterize it as an expansionary move, right. I mean, I've heard a lot of commentators say that negative rates are contractionary, self defeating. But if you signal a policy move and the currency depreciates, that's actually expansionary all other things equal. The US doesn't look like it's headed net direction.

Powell has thrown cold water on it, and obviously, um the experience in the Eurozone in Japan have been disappointing, but don't forget that we've had many policy missteps in those regions where central banks tried to get off the zero lower bound prematurely and put business cycles at risk or fortified deflationary pressures. So you don't end up in a zero rate scenario unless things have gone really wrong for a long time beforehand. Right, catch up as always,

Marco down to that. M campound is right now, Michael gap in with us with Barkley's or chief US economists. Michael, I want to really get away from Fed policy and talk about where we are in terms of g d P within Q four and then into two thousand twenty one. I think we've lost sight of the guessing of what real g d P will be. Good morning, Tom, and

thank you for that. So I think there's been clear evidence of deceleration in the data this week, right, so we know we all came out of lockdown and things bounced quite strongly, and that gave us solemn momentum into July. The retail sales data yesterday coming in the cord down on the month, I think tell us that there's a lot less momentum as we head into into Q four and I know we're all used to every fiscal deadline bringing action, but you know phase four is you know,

it's on life support for sure. Uh. And if we're not getting any additional benefits for households and replacement of loss wage and salary income, it does look like the pace of improvement is certainly going to going to slow. So somewhere in the load of mid single digits for growth rates in in Q four seems to be reasonable, which would be a you know, pretty significant deceleration off the roughly twent that that consensus is looking for in Q three. So I think it is related to two things.

The shift where hey, we've we bought all the goods we're going to buy, and so further growth has to come from services and we know those are COVID affected areas, and fiscal stimulus keeps getting pushed out. So those are the two forces I think that I mean, things are really going to decelerate now, and as we move into Q four, Michael, it's all about jobs, And as Mike McKee was saying, there is increasing concern that the job's data is really messy. How much integrity does this data have?

It still has? I would say some useful integrity. Um, I agree with the need to downplay the signal from the pandemic numbers, and even the initial claims data is something that that we're paying less attention to. Continuing claims still seem to have a pretty good signal to them. So the direction seems to be one of more modest improvement. Look, this is just one of those periods where it's it's a data point that has lost some of its relevance.

Over time, it will become more relevant again. So we we just downweight some of the signal that that's coming out of it, but we don't ignore it entirely. Michael, you've got your finger on the pulse of the conversation that we had through the summer with pretty much everybody. So many people expected that late summer slowed down, it didn't develop, and they capitulated and embrace the idea that

what we're seeing is a self sustaining recovery. Are you saying we're not on What we really need now is more fiscal juice. So I think we've been I've tried to be consistent in saying we we do think another round of of assistance for households, like a three to four months, maybe five month kind of period would would be critical in terms of providing a greater bridge and underpinning that virtuous cycle. Right, it worked coming out of

lockdown because households had resources to spend. Personal income in July was about seven percent above where it was in February wage and salary and was about five percent below where we were in February. So it was the federal assistance that was key in helping to underpin that initial rehiring and therefore improvement in production. And I do think a little more to bridge us into your end would

be useful. It doesn't mean the economy can't continue to recover without it, but I think it will be slower and I think it will be more uneven. Is that what shaman Paus's whitey full? I think so? I mean, I think it sounds to me like the message he sent yesterday was we we've done what we're going to do uh and and we've implemented flexible average inflation targeting where since we're going to be at zero for the next three to six years, we'll be buying assets for

the foreseeable future. The outlook from here is heavily dependent on fiscal policy, and whether or not we get a vaccine, what happens. We'll have to see how those developed. Well. Of course, the President tweeting out here vaccines coming very shortly, literally matter of weeks. I believe the science community would

beg to disagree with that. Michael gabon what if we don't get fiscal policy, what does that do in terms of tenths of a percentage point to anybody's GDP guests, I mean, it's probably more than than tents of a of a percent. I think at least what most forecasters have been penciling in a trillion or more in fiscal stimulus, So those are they would be bringing down growth forecast fairly, fairly markedly. The vaccine obviously would push things in in

the other direction. So we we actually put in just a relatively small Phase four package. We put it in on our forecast March. It was like billion. You know, billions are are not trillions, of course, um, and so I would say we have less s adjusting to do on that front. But I think you're talking more percentage points, not tens of a percent if if we're not getting

getting Phase four spending or something beyond the election, for sure. Michael, how worried are you about scarring on the labor market, particularly with younger workers who have some of the highest unemployment rates. Ever, I would say there at the at the moment, I'd say I'm I have mild worry to

medium worry. And by that I mean when, yes, the unemployment rates come down and the level of unemployment has come down, but underneath that, the number of unemployed workers that are being classified as permanently out of work, that number is rising. It's it's It was a little over four million in the last employment reports. So the bad news is it's rising. The reason I wouldn't say I'm extremely concerned is after O eight oh nine that number

was over eight million. So there is some evidence that's scarring and labor markets is happening, but on a relative basis at present, it's only about half as bad as we saw after O eight oh nine, and we'll see where that number goes. No vaccine likely means that number is going to get higher. If we do get a vaccine, that's why we available sometime around the middle of next year.

That should limit the degree of labor market scarring. Michael Kaype and always Left catching up with you time this morning, and we appreciated Michael. Thank you Michael Cape and that of Barcley. You can go back to a girl have showed up, I mean literally showed up in New York and said hello, I'm here when she was eighteen years old. She stopped traffic years ago with a T shirt on the Tonight Show and that latch Rebecca Minkoff, after pursues in the rest, she joins us now on the state

of her collapsing fashion industry. Rebecca Minkoff, wonderful I have you with us. How are you going to make it to the other side. You've been resilient more than anybody I know. How do you get to two thousand twenty two? I think we get that. We get there by being resilient, by being innovative, and you know, you really get to go back and flex your entrepreneurial skills. This is the test for any entrepreneur. Can you do it? You cannot

rest on your laurels right now. And my co founder and I have done nothing short of a miracle by keeping our company together. I can't imagine when you first walked into Robert bergs Bergdorf, Goodman and saw your product on the second floor or the fifth floor or whatever. In two or three years, are people like you gonna have product and department stores or are they done? You know,

we're not done. Obviously, the pandemic has changed everything and overnight seventy percent of our business was shut down due the due to the pandemic. But we're seeing a resurgency. Stores are coming back. It's going to be slower, it's going to be different. The relationship will certainly change, but um, we're getting requests for orders that currently we can't build from these stores. Where are these store or is are

they in big cities or is the location changing? You know, we've had requests from our past stores, whether it's the Nords from opening back up or you know the slow sort of as these cities get allowances. Um, they are in the bigger cities, and I don't know that you'll see a huge resurgence with department stores and smaller cities. But we are seeing that specialty stores that are allowed

to reopen are also requesting product. And because of that, we're actually bring back certain staff that we're wholesale related only because we can't uh service these clients as well as we need, and so we're bringing back staff we had furloughed in order to service those clients. Rebecca, how do you compete with sweatpants and an arrow of working from home? Here's the beautiful thing. We have a really popular Janine sweatshirt that we've had for several months that

we cannot keep in stock. It has the perfect zoom shoulder, and now we're getting in a sweatsuit coming this holiday season. You're gonna get her invaluor you get her in a hoodie, you get an address. So we are listening to our customer and we're giving her fashion, but a big, very very comfortable way. Rebecca, I want you to talk about how you got a branch out. You've done a great job of that. I mean it was one story of person.

You've gone so far beyond that. I mean, Lisa A. Bramo, it's needs little min cough, There's no question about that. But you know that the creative survival, where is all that product discrimination going? What's your vision of how you're gonna parse brands over the next twenty four months. So I think that we're are seeing and it needed to happen, a complete fashion reset. I think we were all in a hamster wheel. We were designing too much, we were

clogged with inventory. So one of the things we did with launching Little min Cough is partnered with a platform called Residents. It's inventory lists by a degradable and made with earth friendly chemicals, and there's almost zero waste because they literally print the pattern on fabric and cut around it.

And we're expanding that to women's because we see that a woman is actually becoming more conscious about waste, about fast fashion and it's harm to the environment and workers, and so we're embracing that and fully utilizing everything we can to grow that segment. Um. It's called r M Green but with any after our store on Green Street, and so that launches in the next few weeks um, in addition to the Little Minkoff which is already there. Rebecca, as an entrepreneur and as a mentor to a lot

of entrepreneurs, is Amazon the enemy you know today? Uh, you know there is a big divide, many divides actually, but I think that right now we're selling on Amazon. When our entire business, you know, uh, with the exception of our own site, went offline, we needed to be able to find partners that were nimble and quick and would work with us. And so we've had an incredible partnership. And I think as long as you can set those

rules and they are followed, and they're fantastic place to be. Rebecca, I look at the tech structure that you have to deal with. You've got politicians looking for the rich people buying fancy Rebecca Minkoff stuff to crush you in New Jersey and other states. Is well, what kind of support do you need from fiscally beleaguered politicians. I think they need to turn their fight elsewhere. They should probably worry

more about equality. They should probably worry more about, you know, making sure that people who are not with jobs and who need more financial help get that support. You know, we elect these politicians and they should be worrying about the people that need help the most, versus you know, crushing businesses that are trying to survive and really contribute to the economy. Very good, Rebecca Mankoff. Too short of visit.

This is a joy, as we had Joyce chatting with us of JP Morgan in the last tour Ian Bremer joins us now with Euraise your group and somebody asked me yesterday, are you doing that New Year's kick off? And I'm thrilled to say we're planning that right now with the wonderful people at Eurise. Your group, Ian Bremer, a new book scheduled here. Maybe it will adapt an adjust to the presidential election. Let's start with Ian Bremer on our international relations and our next president and what

does second term presidents do on international relations? If President Trump takes the trophy this time, how do presidents adapt in a second term? Well, I mean, I think one thing to say is that when you have a change in president and a changing party, the idea that foreign policy is going to be dramatically different is usually oversold by the analyst. Is usually more continuity, there's usually more

constraint um. In the case of Trump, of course, so much of what he focuses on his brand building and his electioneering that the dangerous period for US foreign policy is much more in the run up um to November and perhaps right after when votes are still being counted and we don't have a solution, than what happens after January.

For me, the foreign policy differences for Trump if he gets the second term um have more to do with the constraints on his ability to run if the election itself is seen as a legitimate by half of the country. And I think, frankly, we're in that situation no matter who wins, coming up in November. So there's a lot that's unprecedented here. But it doesn't have as much to

do with second term or not. It has more to do with the nature of this election, the nature of this backdrop, um and and the nature of President Trump himself. There's a derby for the Nobel Peace Prize Senator around our foreign policy with the Persian golf, the Arabian Sea, or whatever you want to call it. And depending on which side of the shore you're, Mr net you know who's involved in that as well as our president deserve

the Nobel Peace Price. I mean, if you want me to say something UH really controversial, I can say he deserves one more than Obama did. At the time that Obama received it, of course, that was a symbolic UH prize at that point. It was a hopeful prize. It was aspirational, and it was overtly political, which is why everyone thought it was kind of a mistake, sort of including Obama himself at the time. Of course, Trump's had a lot of foreign policy missteps on his on his watch,

but he's also had some successes. And I'll tell you nothing will drive out the trolls more than when I give the president credit um for things he's done on foreign policy when he's gotten in right. One of those things has been uh normalization of relations between Israel and the UAE, Israel, UM and Bahrain. Uh. You know, with every president for decades now had has tried to cut their teeth in the Middle East on being an honest

broker between Israel and the Palestinians. We're not an honest broker. Israel is our best ally in the region, and the Palestinians we have at best poor relations. Um that that band aid has been ripped off. Our best relations are with the Israelis and the Gulf monarchies. And Trump embraced that from day one. He knew that the first trip he made outside the U S as president, first to

Riad and then to Israel went very well. And and meanwhile, our biggest adversary in the region is Iran, and we share that adversary with the Israelis and the Gulf State. So the fact that you've had an administration that's not been in a sense constrained by or burdened by American history in the region made it much more possible to

effect this breakthrough. And it's a real breakthrough. And by the way, if Biden wins, it's actually gonna be there's a shot that he could actually move on Israeli Palestinian peace because of what Trump has done here is now obvious to the Palestinians that they actually don't have friends in the region, so they're under a lot more pressure to get something done than they were before. What are the chances he in that that Joe Biden wind Um I would say today, I think they're about six thirty five,

but it's tightening over the next seven weeks. I suspect that we'll get closer than that. I've got high confidence that the U. S economy continues to improve, about moderate confidence that numbers around coronavirus cases and hospitalizations and debts will continue to flatten somewhat. And I've got moderate confidence that social instability and violence um in overwhelmingly blue urban

centers in the US will continue to increase. All three of those at the margins helps Trump in a race where the overwhelming majority of Americans have already decided how they're going to vote, So it's gonna be close. But I think more importantly, I think it is almost certain that it's going to be contested. We're not going to find out who has won the election on the day, and President Trump will probably have announced that he's one, and how we deal with that it's gonna be a

lot more challenging than Bush Gore had two thousand. Let's poway. You know, is there something that Joe Biden can do to get ahead in the polls, or is there something that you know President Trump can do, or no matter what, is it going to be close? Well, this election is going to be overwhelmingly a referendum on Trump. Biden is not offensive to most Americans, but they don't have the same level of enthusiasm. You're not going to get vote parades out there for Biden the way you do for Trump.

Having said that Trump's support base is narrower than Biden's, what do you do in that environment? I mean, you know, it's almost impossible for Biden to make it about him unless he makes really significant gaps. I think his choice of running mate Kamala Harris was a very smart one. Um. It won some votes indeed, Americans for example, UM. And it also helped them with some independence in a way that others that were being considered would not have. So that was a win. I worry about the debate. UM,

you know you. I think Biden has to get Um. He can't. He can't try to hit Trump. One for one, he has to play the character card. He has to talk directly to the American people. He has to sort of with Trump say oh there you go again. Donald. There has to be the subtext of this is insane and I'm the real presidential character. But he also has to come across as strong and as capable, because you know, we all know that if Biden looks like he's missing

a step or two, that's a vulnerability for him. And the Republicans are doing a better job going after and playing dirty than Project Lincoln and the Democrats are against Trump. That's just a reality. And we've got so much more to talk about. I want to ask you one question. I want you to play domestic political guy. Here. I was standing four years ago watching a TV attend something PM when I realized President Trump was gonna win, and he one in the suburbs of Philadelphia and the other

suburbs across this nation. What are those suburbs gonna do? What is your sense, is an outsider to the domestic political game, what is your sense of what the vaunted suburbs are going to do? Yeah, I suspect they're going to swing a little bit more for Biden. But let's be clear, Republicans in those suburbs are more concerned about law and order. Democrats in those suburbs are more concerned about the pandemic. Republicans in those suburbs are overwhelmingly going

to vote in person on the day. Democrats in those suburbs are going to vote overwhelmingly by mail. The pandemic matters here, and the fact that the president has decided, with a lot of help from the Attorney General, the voting by mail is I legitimate it and so you shouldn't count those votes. Those votes are gonna be stolen,

Those votes are gonna be rigged. That's enormously important, And what plays out in the two weeks after election day in terms of those ballots is really much more about what we're gonna play for than than just how the members of those suburbs end up deciding themselves. This is this is an election, Tom Francine, where afterwards, I think almost no matter how it plays out, unless it's a landslide,

and I don't think it's gonna be a landslide. I think a decent piece of the American public is gonna believe that the election is unfree and unfair, and by the way, I think there's a decent chance that will indeed turn out to be the case. I've never said that in the US election performer. I'll say that about elections in developing countries, I'll say that about authoritarian states, never said about the United States before. It's gonna be

a very ugly few months. There's no question about that, all right, even thanks so much Inny Bremmer there if you're Ratio, some pretty strong words. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio