Surveillance: U.S. Recovery With Bernstein

Economic Advisors Member. Jared, we appreciate your ongoing transparency off the back of a huge effort to deliver at one point nine trillion dollar plan. Let's start with this, how unique this moment is and why a unique approach is required. Yeah, it's a great question. Uh. The American Rescue Plan, which we expect to pass the Congress any moment now, is certainly one of the most consequential and one of the most progressive pieces of legislation in in in Reese Intoor

even distant American history. We're talking about getting four hundred dollars in checks out to almost a hundred and sixty million American families, and those checks start going out the door days after signage. Uh. In fact, speaking of deadlines, UH, in just a few days, about eleven million Americans risk the potential of losing enhanced unemployment benefits if we don't extend them, which is of course at the heart of

the American rescue plan. And then there's of course the crucial issue of finally gaining control of this virus, producing, distributing the vaccine, getting shots and arms so we can get to the other side of this crisis and launch a robust, reliable, and inclusive recovery. The shock is different, yet we have been conditioned by the previous cycle, and the lessons learned from the previous cycle being applied to

this one, not Yad. That's something I'm struggling with. We've been conditioned by the previous cycle that we need to do more because the recovery was so so shallow. If the shock is different, why are the lessons that we've learned previously? Person, and to this one, I think the critical lesson there is the one you've said, and I don't think that, if anything, the magnitude of the shock would would really emphasize that lesson, which is that our tendency has been to do too little, not to do

too much. You know, when I came up in this business, there was no such thing as a jobless recovery. You had these more v shaped dynamics, and you know, a bunch of folks refurlowed from the factory. The shotka went into the rear view mirror, and a bunch of folks came back. Now, we've had these sluggish, jobless recoveries that often set up UH an expansion that underperforms. That's not the way Joe Biden wants to see his administration get

out of the gate. And with the American rescue plan behind us, we think again, especially with getting the finally, getting this virus behind us is so critical to launching not a wait and see, not an on to get off again kind of recovery, but a reliable recovery that would be durable. Dr Burston, good morning, thrilled to have you with us today. You did a front line interview and the heat of the financial crisis talking about you

guys in hair. In a recession, your critics will say you are manufacturing a boom economy with this stimulus, and they will then go on to say you are manufacturing new higher inflation. Defend the administration. Sure, Well, first of all, I don't hear too many of those voices outside of partisan Republicans. Um even even some economists who've been worrying about overheating and critical of the magnitude of the package have recognized the support and recognized and support the importance

of rescue and relief. But let's talk about your inflation question. I want to tell you about the three sas Okay, you ready for the three s is spending, slack, and savings. So spending, by which I mean spend out. Uh. The spend out of the American Rescue plan does not occur in one month or two months. It is true, and it's very important that the checks and the unemployment insurance, the enhanced benefits get out very quickly, right out the door. But the planets spends out over a couple of years.

So some of the folks on kind of the overheating team don't recognize the spend out pattern. Then there's slack, Okay, there is still way more slack in this labor market time. And I think your question implied. We have an unemployment rate for African Americans of nine point nine percent, eight point five percent for Hispanics. Nine point five million jobs in the whole still that's deeper than the deepest part of the Great Recession. And then of course savings the

other suh. Some of these benefits, some of these uh, parts of the American rescue plan will be at least initially saved by people who will then use it to meet accumulated debts, say from rents and mortgage forbearance. That too puts downward pressure on price pressures. But Jared, we've had a number of economists come on and say that that was actually perhaps a bit overstated, that actually consumers are not as indebted as they have been in the past,

There isn't as much debt to pay down. That is one argument, but there's another argument saying, yes, the depth of this crisis was deeper in some ways in the last crisis, but it was very different and the bounce back has been much faster than economists are predicting. What makes you confident that that isn't a sign that we're going to get some sort of growth that was going to be turbocharged and the inflation also with it. That will be a very different picture than what we've seen

in the past ten years. Yeah. Well, first of all, let me talk about the debt issue. And for that, you know, you might want to consult with our good friend Mark Zandy, who has been tracking a very specific type of that, which is the type I've had in mind, and that's for people who've been benefiting from rent moratoriums and mortgage forbearance. This type of debt is uh, I think, quite escalated right now, and it's precisely the type of debt. And there's some evidence for this that folks are using

these benefits to spend down. You know, eviction risk is still upon the land, and and and the American Rescue Plan addresses that head on. Now. You talked about the pace of the recovery. Every forecast I've seen has a couple of things common to it. One is that we

will grow above trend this year and next year. And that is precisely the kind of growth rates that the American Rescue Plan is supposed to set off again in a reliable sense, because we finally put the virus behind us, We've safely opened schools, we've gotten families and business as a relief they need. But these forecasts also showed heat, yes, heat in terms of interest and inflation rates, but not overheat.

And I think that's the key, j before we let you go in about thirty seconds, if you can, something you've been finding for for a long long time will not be in this bill that goes through the House today. It's a high minimum white what's the administration's message to progressive members of the House who didn't get what they want either. President Biden was disappointed by the ruling of

the Senate parliamentarian to keep this out of the bill. However, that doesn't mean he's at all putting this fight behind him, and in fact, he continues to be extremely committed. I got an email this morning to that effect, and I won't divulge what it's said, but I will say that the administration remains that the administration, our administration remains absolutely committed to finding a path forward on a fifteen dollar minimum wage, and that's going to be work that you'll

hear a lot more about going forward, Jared. Hopefully we'll hear from you soon. This is truly a big, big effort down in Washington, d c. And it deserves transparency, and I'm pleased we're getting it from you today. Jared Bernstein, there, the U. S. Council of Economic Advisors member, let's bring it Bruce Cansman's som JP Morgan, chief Economist and head of Global Economic Research, Bruce Great to catch obvious. Typically we'd start with the analysis, then we get to the forecast.

Can we just start with the call? What is the call from you and the team for this year? So we've got the US economy growing at a six and a half percent pace UM with the middle part of the year uge almost nine growth for the next two quarters. I would just want to emphasize the global dimension of what's happening here. The US is lifting largely a physical stimulus, but we don't want to ignore the lifting you get in Western Europe coming as the virus starts to fade

as the vaccines come on. That's as big a lift in our forecast. So we have both the U S and Western Europe booming over the next couple of quarters, and our mobility and disease are suggesting that that lift in Europe started in February. That's right where I want to go, Dr Kasmin, and I'll go to Columbia University. Let's de tell your world leading market economics with the

academics of Xavier sale E Martin. If I look at growth economics right now, How does the stimulus actually work and the emerging markets of Professor salet E Martin or in the JP Morgan world, how does it actually diffuse worldwide? Well, that's an interesting question, and I think what we're going to see is just the dominant effect of of spending in the US and Western Europe, which is gonna be

sucking in imports from the rest of the world. Um, that is gonna lift everybody, but there are offsets in terms of higher interest rates, in terms of central banks in emerging markets, not the FED of course, beginning to move towards tight policy. The net effect of this is a very clear positive. The other reaction, which I think is important is China. They've had a very successful recovery. They're gonna sit on the demand they get from the

rest of the world and tighten policy here. So Chinese demand is gonna slow, being somewhat of an offset against it otherwise booming global growth picture brus How much is this to recovery from some of the lost productivity, the lost growth that we saw in and how much are

we entering a new cycle of potential inflation. Well, the way we've been thinking about this is to recognize that there is a huge bounce that's coming as we normalize, as we get bottleneck pressures, as we're seeing commodity prices. So the inflation pick up here looks to us like it's gonna bring us and global inflation possibly to the highest space we've seen in a decade. I want to fade that. I think there's a lot of temporary forces that are gonna start to dissipate as we get later

in the year. However, I think behind the scenes, what we're seeing is committed pol sees. We're seeing with this stimulus, a very healthy balance sheet on the part of the household sector. We're seeing the interaction of FED policy and fiscal policy. So I want to buy the reflationary trend, and I want to fade the bounce that we're going to see in the next few months, which is going

to weigh over state the degree to which this is changing. Bruce, do you think that will be the dominant market narrative later this year when we get that better data And I keep going back to this story because it's so important the data will get better. We can only agree on that. Whether you bearish or bullish, what the bears believe is that the inflation starts to run away and that the market starts to tighten up and then bring

forward FED hikes as well. Do you think everyone else gets your view of the world, or enough people get to that view. I think there's no doubt as we go through the next number of months and we see inflation spikeire as we see these huge growth numbers, the debate is going to be are we gonna overshoot our inflation? Is the FED going to have to move earlier? I think the FED is going to be an anchor here, basically telling us that at least until the end of

twenty two, they're on hold here. They're not gonna change. They're they're thinking anytime soon. And I think if we're right, what we're gonna see is the inflation numbers settled down, but I think in an underlying sense show signs that it is moving higher here. So I think the bottom line here is that we're gonna definitely buy this as a very different event than what we saw after the

global financial crisis. But we've got to get through this scare, and I don't doubt that there's gonna be a lot of talk about whether inflation is getting out of control here verse I mentioned the X axis, the timeline moments ago. Michael Faroli has been a great leader on potential g d P. What's the Chasman timeline to get back to two potential g d P? Are we grossly off? Is

it much farther out than we think? I think that's a really hard one, Tom, And we're kind of struggling with trying to figure out the lasting implications of what's what's happening here. Um. There are clearly some negatives here in terms of having created disclok asians, scarring in the labor market that are going to continue here for some time. Um. But at the same time, we're getting a boost to growth.

It's not only lifting growth back to its previous level, it's actually raising it above the path we were on. And there's some real possibilities here that that dynamic, if it's sustained, creates positive factors. Our potential growth estimates for the US are one and a half. We haven't changed that yet, but I have to say I'm somewhat agnostic about what the next couple of years are going to

deliver on that front. Bruce always get to see you and great to catch you out, Bruce Kasman that Jap Morgan, chief economist and the head of Global Economic Research. This is a joy on. On March tenths we get out front of what is possibly my book of the summer. I'm not willing to say that yet, but boy does James Travinis go to the top of the pile. Ad Mr Venus provides value as Bloomberg opinion. Calumness, the former NATO Supreme Commander, We're thrilled that you could join us

with Ackerman and Tavita's two thousand thirty four. It's the three o the three page novel that begs to be read now. Ad was Tavidas, thank you so much for joining us. The banner that begins your book is chilling. It is a March day in two thousand thirty four in our United States Navy is in the South China Sea, looking and staring at China. Is there a risk here that we need to wait for war with China before two thousand thirty four? Low risk over the next few years.

But the reason we set the book about fifteen years in the future, Tom, is because that's when the trend lines really start to look difficult, shall we say. Chinese cyber capability goes up, their maritime capability goes up, their ability to employ stealth, their determination to hold on to the South China Sea where the novel opens. It could be a collision, It could be a miscalculation. We ought to worry about it. In twenty thirty four is a

cautionary tale on page six. I think this is so important, John, the couple sliding in a couple of beers at the Old Abbott Grill or the hay Adams Bar, and then they came back later. I mean, forget about that, John, this is outrageous where stravitas. John Farrell is going to the fiction of someone having cocktails at the hay Adam Hotel. So much Tom, because this is the same approach that you have in foreign relations. This wall, Admiral, were set that scene at the Willard Hotel, which also has a

great ground driving bar. So there we go. Well, my d C bars not to work. I'm sure you've shared a drink with Tom at several of those bars as well, Admiral. Looking forward and how this relationship evolves, There has been talk and I believe it came from the South China Morning Post and just yesterday in the last twenty four hours that there could be a meeting with the top end boys between the United States and China, potentially in Alaska.

How do you think this relationship resets, what's the approach and how is it different to what we saw with the previous administration. I think you'll see the Biden team work from a script, if you will, they'll create a strategy that will put together military deterrence, diplomacy, economic tools, cultural tools, strategic communication, and above all work with our allies. That's the formula here. The Trump administration was very episodic, very tactical. I think you're going to see a more

strategic approach. That's what we need. This is the big strategic challenge of this part of the centry. What's the objective? What do you think the objective should be. I think a strategy ought to see to confront where we must and we can't turn over the entire South China Sea to China as territorial waters, which they claim. We've got to confront them there, but we have to cooperate wherever

we can. We have to find zones of cooperation example the environment, example, prepare for the next pandemic, example, work together on medical diplomacy in the developing world, so confront where we must cooperate where we can, Let's avoid the scenario at all costs. Admiral, you're giving me permission to go with gloomy what ifs, which is basically what I like to do with my pastime. And I'm wondering as

you look towards what some of the risks are. I'm curious, what does a world war look like in a post nuclear era. It's going to include cyber as a significant component, particularly by the end of this decade, as quantum computing collides with what we think of traditionally as cyber bits, ones and zeros, and computing much more complicated, opens many more abilities. Stealth will be even better than it is now. Space will be an important component. That's why the United

States created as Space Force. And finally, you're going to see good old fashioned naval conflict here because, uh, for better or for worse, We're not going to get into a land war with China. It's going to be played out in the scenarios of the need more than anywhere else. Do you think that the United States has both the intellectual capacity in the government jobs that need to be filled in order to prepare ourselves for some of the cyber attacks, as well as the investment on the private

side towards some of these resources. You put your finger on the key element here, which is private public cooperation. The government can't do this by itself. A good first step would be to create a cyber force, just like our Space Force was created a year or so ago. But secondly, there has to be pretty seamless cooperation across

this enormous threat surface that we're facing. So we've got work to do in that regarding and we're gonna have to compete Hart with Silicon Valley to bring that talent to bear on this problem in cyber James, the shocking immediacy of this book two thousand thirty four, from your heritage of coming out of San Diego on a boat when you were a kid, and of course also Elliott Ackerman's wonderful word, the realism of this is tangible. Is our US Navy too ready to do what's in two

thousand thirty four? Yes, and they are already at sea. The challenge is going to be numbers of ships. And even now this makes surprise you tom but China has more warships than the United States does. Ours are more capable. We have those big, beautiful nuclear aircraft carriers. China is gaining air speed in this regard where I don't mean to interrupt bed, but this is so important. We've lost Hong Kong. We can't show the flag there anymore. I believe where is our harbor is? We base affairs out

of the South China Sea. We're gonna be forward time from Guas and that's gonna be the board based. Remember it used to be Pearl Harbor. Now you're all the way forward to Guam. And a second important piece of this is up in Tokyo Bay, ironically enough, where the World War two ended. That's our large just naval base in the Pacific is in a place called Yakuska, Japan. In Tokyo Bay. That's where the seventh Fleet is based. They will go forward. They'll also operate out of bases

in South Korea. It's good to have allies in this one, admirable. I want to finish out by what you think this is going. You've told about the objective, and I think it's really important to understand where things aheading and whether we can just slow them down, or whether we can change the outcome. Do you think the outcome is already predetermined now? I do not, although we ought to be concerned.

If we look back in history, so often when there is an established power Athens confronted by a rising power Sparta, or an established power the United Kingdom a hundred years ago challenged by a rising Kaiser's Germany, so often those scenarios do lead to war. We can still avoid this. That's why we wrote four to lay out a cautionary tale. We need a strategy to do that that employs all elements of US national power. And we need to understand

China better. Today China knows us better, we know China. We have work to do, Admiral, before we let you go. Why a novel? And why now? I believe this is your first novel ever. Tom just may haveron it tried to throw it out at John, you did try to throw it. I just want to confirm that George Clooney is gonna play Strevitas, Leonardo DiCaprio is gonna play Lieutenant Faroh. Come on, It's a no brainer, all right? So I fix in because in fiction we can allow ourselves to

imagine the future. If I'd written a dry as dust policy kind of book interest items, but this reaches the big audience and want to let people know this is a real danger. James to Venus, how is our new defense secretary doing? I forgot his name? Secretary Lloyd Austin, one of my contemporary is a wonderful officer. He's opted to a terrific start by being steady, by being very concerned about the people in the forest. He's a real expert on the Middle East. He's gonna be spending a

lot of time focusing on the Pacific. I'm not sure if the President's listening. Go no sophisticated to human, So I'll give you that apple James to the President doesn't listen, But the two dogs are in front of the screen every morning. And good luck with the book release and we look forward to catching up with you soon. Apple James to vidis that of bloom Bug opinion columnist. Then

fulminates how Supreme allied Commanda. Then it is now a joy and annual visit for us with Craig Moffatt and Michael Nathanson of Moffatt Nathanson, the founding partners legendary at Sanford Bernstein. If you got your hands on their Black Book years ago, you read it cover to cover. In this folks, more than ever, we've spoken with Moffatt and with Nathanson the importance of our homes, our TVs. Our kids, and what the future is for media. This is must

listen for Global Wall Street. I don't even know who to begin with. I think Craig Moft is better looking. Michael, I'm going with Craig. Oh my god, start the time. No, no, you're never going to hear that where this Craig I was thunderstruck in your neck of the woods, wire and all that at the cord cutting that's going on when the pandemics over, do we continue to cut the chord? Sure, of course we do. And first of all, thank you

for having us on. It's always a pleasure for us to do this as well, so so thank you and thanks for the kind words. And look, of course we're going to continue to the cord cut. And I think what Michael and I have been writing a lot about over the last year is that this has now become

almost a self fulfilling prophecy. We talked about two vicious cycles that have started in chord cutting, where first it was about sports, where the sports contract x are are fixed for the programmers, their prices therefore keep going up. They have no choice but to push those price increases through to the distributors cable and satellite operators, who therefore raise their prices and make it less and less attractive

for anybody who's not a sports fan. Those customers leave, That drives the price even higher for the customers who were left, and you get this kind of this self fulfilling doom loop of more and more customers leaving. Now you're augmenting that with the media companies themselves getting rewarded for taking their best content and moving it over to their direct to consumer platforms Spot and a BOD and so that too is starting to accelerate, and you're strip

mining the traditional ecosystem. So there's I think we're past the point of no return for this transition and cutting now just moves all the way to Spot and a BOD for non sports. Michael Nathans, and since our last joint visit with the two of you, what I have been thunderstruck by is you know, I'll make it narrow the courage of Mr Iger at Disney, the courage of people to be bold. Do we see more Iger like courage in the coming quarters? Oh? With that a doubt, Tom.

They've been rewarded for that vision and that courage, and everyone is now going to emulate Disney because Wall Street has rewarded Disney for the execution of that vision, and people want the same narrative for their stocks. Right. So, in the past couple of months, Discovery, Viacom have all joined you know this bandwagon, Peacock, and Comcast, and as Craig said, because is going to accelerate all the media companies going to in their own word, you know, world's

accelerate growth as well, and followed Disney down the same path. Cleig, you said something that was really important non sports. This was his key phrase because right now Cable is holding onto sports and there is a question of how much of a lock grip Cable has on sports, especially as Amazon I think inks a Thursday Night exclusive deal with the NFL. What's your vision going out one to three years in the relationship, Craig, you know what, I'm going

to defer to Michael. He's really the expert on sports. Um and I think Michael has done a lot of really interesting works. So Michael, I'll let you answer that one. Thanks Craig, and thanks LUSA. Um So our view is that only the biggest events the NFL um X Thursday Night, Major League Baseball playoffs, NT Double A Playoffs, the biggest events will stay in the ecosystem. But you're starting to see, as you said, Li said, the chipping away of the course,

you know, course sports. So Amazon's taking a package. You'll probably see the NHL do some deals over the top of other with other companies. So the bundle is going to still have core sports in it, but now sports fans will have to maybe pick other streaming platforms to get you know, secondary sports. So it's going to basically, I think, lead to more and more inflation for consumers

when it comes to the cost of of of the video. Basically, well, there's raises a question, Craig, just in terms of at what point people are going to cut the core to have you done any research in sort of the price point at which people decide forget it it's just not worth it. Well, I don't sorry, I was just gonna say at least I don't think you can say it's it's just price anymore, because, as Michael was describing the vision of Disney, as the companies are rewarded for putting

their best content on their direct consumer platforms. It's more than just price. It's it's about the product itself. And you know, we've done some work on the video value chain that says you have to really think about, um, what what is coming being the aggregation of individual shows rather than the aggregation of cable networks, and cable networks themselves sort of disappear. And in that world, it is really hard to say there's a floor for for cord cutting.

If you define cord cutting as who's buying the traditional bundle of cable networks, there has to be a bundle of cable networks to buy for that to have a floor. Well, Michael, please, my will jump in. Okay. So our core thesis had always been there's the U S population that's a sports and news fan. As long as sports a new stad

in the bundle, the bundle will survive. But now you're starting to see that fragmentation of people putting their sports on their own services and in the bundle, and that's going to lead to real you know, the acceleration of court kind. I want to get to the lessons learned here, and I can go to Warner Brothers and all that mass with HBO, but I want to start the two of you and Craig. Let me start with you. Maybe that's wrong, but I'm gonna go there because Nathanson is

better looking than you. Craig, and and and what what I wouldn't want to say, Craig is a T and T. What a train wreck you published? It was a train wreck. We all knew it was going to be a train wreck. What were the lessons learned from a T and T s effort to go into the moffat Nathan's world? Well, the the lesson is when you overpay for for declining assets, bad stuff happens, right. I mean, I don't know that it has anything it tells you anything all that specific

about media as much as it does. You know, it wasn't It wasn't a mystery when they bought direct TV that they were overpaying for an asset that was poised to decline. We wrote it at the time, and lost of other people knew it at the time. They doubled down in part because they got into so much trouble on the direct TV deal that that they their dividend once again looked questionable, and they had to then spend even more to buy Time Warner. And in retrospect, remember

what Time Warner was. It had some wonderful assets like HBO, but it was still mostly a collection of cable networks that too now looks like it is a declining business that they paid much for. So so now they the problem they've got right now is the balance sheet, and and they have had that balance sheet problem for a while, and I don't see how they grow out of it. But Michael, to me, the major lesson here is the creative side. Disnety you know, hit a home run with

mandalor In and John favor I get all that. Do you see any evidence financial types can do creative I don't observe it. No, tom See, I was gonna say and jump on Craig's answer. The other lesson is you can't have a T and T management leading creative companies, right, And I think there's a certain degree of viewers that they had that they could run all these businesses and you can't write creating businesses. And the way that Disney approaches.

Their business is unique, right, and that is why Disney has been able to scale so quickly. And I think, you know, I think slowly, but surely we on the street have realized that not every management team is the same. And you see it in the outcome. I think you hit something, Tom that's hard to measure, hard to distinguish, but you know when you see it, right, And that I think is the other lesson of a T and

T time warner. At the end of the day, it's a great point because remember, this is not the first time they've done that. The old timers like me, the telcos tried to get into the media business back in the late ninety nineties and it failed miserably for all the reasons that Michael was just saying. Right, these companies do not do well in managing creative businesses. Yeah, guys, we're on a time. Let's do this again. Okay, let's do this again. This is like affecting every single listener,

every single viewer. We do MafA Nathan's and where that's their wonderful research. I do want to point out, don't ask Lisa me for their research. We protect the copyright of all of our guests, if you have any interest in international markets, This is, without question, our interview of the day, the interview of the moment. We had Bruce Casman on earlier of JP Morgan as leadership in economics,

and he needs to understand the minutia of em. He turns to Gabriella Santos of JP Morgan Asset Management as an aside. She speaks fourteen languages. Gabriella, wonderful to have you on today. The Chinese stock market is down for team percent. It is truly plunged. Why thank you, Tom in English is one of those languages, So we're good. Um. In terms of the Chinese stock market, we have seen a correction from those February highs Um. I think it has very much to do with a similar story to

what's happening in the Nasdaq in the US. Chinese markets are extremely growthy, they're very geared towards technology innovation, and they did extremely well last year during the pandemic, top performing market thirty percent, so came into this year with elevated valuations. So I think all you're seeing in Chinese markets is just a correction from a very very good year last What everybody wants to know Gabriella as your reset on emerging markets. You talk about a tug of war.

There's many tug of wars in many different parts of EM. Can you stay in e M, can you add new cash to e M? Or you do? Or do you dashed to America? Now? Emerging markets is for US both cyclically and structurally UH and overweight in portfolios UM. But I think it's it's important to understand how emerging markets have changed. UH. So it's a different Emerging markets at the beginning of this cycle than it was at the beginning of the last cycle. It is an index that

is a lot more growthy UH. It has a similar percentage of tech to the US about a quarter of the index. It has six percent exposure to growthy regions like China, Korean, Taiwan. So you can get a correction and broader e M markets when you have a correction and growth. If you're looking for cyclicality and emerging markets, you have to do that actively. You can't just rely on the benchmark. So for US, EM is really about alpha this year, it's really leaning into some cyclical areas

of emerging markets. For example in China, right it's playing the consumer recovery in China this year through consumer discretionary as well as Chinese banks playing the improvement in credit growth, especially for small and medium sized companies. Can emerging markets rally if the dollar doesn't keep weakening, Yeah, So I think the dollar has always been critical for emerging markets, and it's really a function of why the dollar is moving.

So there are really two extremes that cause the dollar to strengthen, and neither of those are good for e M. On one side, it's the US doing better than everybody else or US exceptionalism. We've had some of that here at the beginning of the year. And the other extreme is the US doing too poorly, and I was having fears of some sort of issue in the US and broader global economy. We've kind of been toggling between these

two extremes causing dollar strength. Ultimately, though, we think this is just a pause and what should be a broader cycle dollar weakness as we get to the sweet spot where the US is doing well but so is the rest of the global economy. So think it's a pause in em before we get a broader rally again. And this goes into your call where you said we see a positive setup for risk acids over the next twelve to eighteen months. The question is, and to me, this

is the key question. How quickly we move to mid cycle? What are you looking at? What are the benchmarks that you're looking at you determine the answer to that question. It's fascinating. This cycle is so different than the cycle we had last time, just the speed through which we're moving at. In terms of the economy, we look at the unemployment rate as a measure of where we are in the cycle, and we think we'll hit uh, you know, go back to full employment over two years from peak

to full employment. Remember that took ten years during the last cycle. So we're moving very fast here through the economic cycle. Now, the cycle doesn't end when we reach full employment, but it does slow down back to potential. In terms of the market even faster. Uh. It took us six months to reach all time highs again instead of five years, which is what took us last time. So I think we're also a broaching a more mature phase of the market cycle. Were return to auderate and

there are a lot more related to earnings growth. I mean, we're missed Gabriella, if I didn't ask you about Brazil. We had Lula once, we have Lula again. We've got Brazilian real and retreat. It's one of my great great miscalls of my my career. I was totally wrong on Lula and the prosperity of Brazil. Can he do it again? So? I think that's the big question and investors, if you look at the way the Brazilian rail has been weakening or long term bond yields have been moving, I think

investors are answering no to that question. Um. And and it's all about the kind of team that a potential president Lula could get together. And there's a perception that this time around things are so polarized, um, that we would really see a less orthodox team than the first time around. So I really think the balance of risks for Latin America has worse than significantly related to local politics. Gabby, thank you grant to catch you up coming science so

stat of J. T. Mulgan Asset Management. 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 terminal. I'm Tom Keene, and this is Bloomberg.