Evercore ISI Chairman Ed Hyman Talks Fiscal Policy

Bloomberg Audio Studios, podcasts, radio news. Ed Heheiman joins us chairman Evercore Isi, and of course out with a must read note. And it's almost comfort to me, edheymen to see your note and just observe that, you know the basic idea. You start, like Alan Greenspan with trucking. Explain why at Evercore ISI, where everybody hangs on every chart and every paragraph, why does edheymen start with the trucking survey.

It Cause it's the most important thing to start with. So we survey about forty different industries, and you might ask yourself which one correlates with the economy most, and the answer is trucking. The survey's overall, you know, trucking, retail, autos, et cetera overall beat trucking by itself. But trucking has the motion and so and that survey also has hooked down. I'm looking for message signal.

Well, can you signal now the certitude of a recession or the one of nb E R recession.

No, I've been I've been on the recession kick too long. So I'm trying to wean yourself, not wean myself of it. I'm just trying to. You know, my job is to help our clients, and this has not been helpful. Now at this point, the logic that monetary tightening Milton Freeman would make inflation go away has worked, and they'll curve being inverted should slow the economy, and we're getting some evidence to slow down, and so I should relax a little bit.

Okay, So what do you think if you're we're gonna hear from the Fed in a couple of weeks, We're gonna get some economic data today with jobs and tomorrow with the labor report. How do you think the US economy is performing these days?

It's okay, a little spotty. Okay, some places are just booming, not doing well, not holding up, not resilient. When some places are softer, like our trucking survey has gotten a little bit weaker, and construction is a little bit weaker in some retail, particularly when you get into the lower income categories, are a little bit softer. And the employment data, which is the key, Yeah, everybody knows that, but it's it's showing some size of softer.

We saw that with ADP. Folks in the markets move on it. Futures flat now, future futures negative thirteen nastick down six tens of a percent of VIC. This was a twenty level goes out to twenty one point two two. The Sweeney yield three point seven two percent in three basis points, and the two year yield a little bit of disinversion. You're a positive two ten spread. I haven't said that since the red sox last one. The real yield one point six seven percent. Paul, pick it up and talk about this.

We're gonna have the FED presumably cutting rates and maybe substantially starting in September. What does that mean for the US homeowner? I mean, the mortgage rates have been high, but not and it comes to the point where nobody wants to sell their home because they don't want to go to a new home with a higher more surge trade. How do you think that housing market's going to react to what should be the declining industrate environment.

It'll be good. You know, housing has had a real problem with lack of supply, and I find that everywhere.

Yep.

And we do a survey of home builders, of course you do, and that picked up quite a bit, about six or seven points on a zero to one hundred. When mortgage rates came down, and then this week it dropped two points. Okay, I don't know if it's noise.

Yeah, you've got a noddy acquaintance with Boden University. I should said Boden College up in Maine. But the real heritage just University at Texas. You have an inherent prism into the boom economy of Texas, of Arizona and the rest. Where do you see that five years from now? Where do we just continue to see this migration from California, from New York, from Illinois and the rest.

Probably probably you know, the tax situation is better. There's also a movement, particularly of young people like the University of Texas, to get away from a woke environment in the northeast. Frankly and so, and that's probably going to keep going on.

You've kept politics out of your newsletter. I would say anyone else. You've been really really good about it. So I'm going to quiz you now.

How you write it out?

Don't walk, Lisa, hold on him, He's not walking out of his studio Aedheim. And how do you dance around this unique presidential election to give advice within your newsletter to your clients worldwide?

So it's it's a dance. And Evercore has its roots in the very democratic group of people as founders with Roger Roger and Ralph Flashdain and they're terrific, and so I have to be a little careful he as a Republican, You're not. It's their firm, and I don't want to get in the way. But as we all know, it's fifty to fifty, and so it's too early to try

And just we want to come back and continue this discussion with that. Timen, are you a buller of bear right now? Can you add cash to a belief in stocks right now?

My technical analyst Rich Ross who's been very good. He was very bearish. Now he says he's balanced. I don't know what balance it means, right, So I'm not particularly bullish or particularly bearish. I own a lot of stocks on a lot of real estate. I'm nervous because things seem like they're too high, too expensive. Somehow, it's not a good answer for you, Tom.

That's okay, we'll keep your on Anyways. I love doing this with that hymen. Everybody thinks he's like on a phone with Jay. No, he's looking at you know, he's in here, literally looking, he claims. As we start, unit labor costs came in a little bit lighter. What do you say about wage growth moderating nominal GDP comes down? And then what do you say about the real wage? Are we going to get a negative real wage?

The ways look like they're really slowing, and inflation looks like it's really slowing, and proctivity has been really good. And I assume it got revised up a little bit because the GDP was revised up.

I don't have the revisions yet.

It should be out.

They'll be on a couple of minutes. See how many he's killing me?

And so you'll ever cost. I mean before the numbers was zero point five year and year, just an increase of zero point five and so inflation could be down to two percent without any trouble. And by some measures it already is down to two percent, so that that ship is sailed.

So it's it FED late in cutting rates? Ed do you think or because a lot of folks out there saying the FED should have been cutting rates for months now?

They're smarter than I am?

Are they too smart?

Could be too smart? I think the FED has been doing a pretty good job, and I'm generally critical of the FED. But either by luck or by skill, they have the path set now for cutting rates. And we got claimed this morning, so it makes me have a headache. And so they're you know, they got different mandates, so I don't necessarily think they should have will know better to answer that question. I do think that they were way off on raising rates. You know, the transitory story I thought was right?

Is it harder now ed Heiman to do the craft? You stand, he's got a little tall table. He stands out with a black one of those markers that if you get on your shirt and he's marked, Is it harder to do it now because of the mystery of technology, the mystery of productivity, the polarization of the labor force in America, the haves and they have nots. Is it harder to do now?

I don't think so. It's always been very hard to do.

I agree with that.

I'm not I'm not thinking it's any harder to do than it has been in the past. It's just been always, you know, very very difficult. In some ways. The hardest time was in the nineteen seventies, you know, when you had the embargo, he had wage price controls, he had inflation going nuts, he had Nixon resigning. I mean, it was pretty what are your clients?

What are your clients asking you these days? That's maybe unique, or just what do they really want from you these days?

I think they want a steady hand, a unbiased analysis of what's going on, and so I tried first to do that. You have the data on the ADP came out. It has is zero calories, It doesn't have any information whatsoever. It still moves to Wacket and we still look at it claims. On the other hand, you are very important, right, I.

Want to go to the Economic Club of New York and the heritage you're Paul, and to paint the picture. Folks in the old days, you're in a huge ballroom in New York with the elite meat degree and the fancy people are up on stage trying not to eat until the speech is done. That's a tradition, and you're starving and you're looking at your food, going when do I eat? And off to the wings, the left wing and the right wing looking out at the people the

What are you going to do with taxes? It'd be the main thing I would want to know.

Explain the distinction of the Harris tax policy is I'm not first a trial ballooned versus the Trump.

Too early fair too early? You know in the news right now there's a debate they say that Trump wants to take the capital gains tax rate up to thirty nine percent, maybe if Biden wants to take it up and Harris wants to keep it something more like twenty eight percent, but you know, as a conservative, I would rather keep it, you know, twenty one or twenty two percent.

Explain how the taxation of unrealized gains. Paul Sweeney bought Nvidia early. He's got a big unrealized gain and he's not selling that puppy, and select individuals, including the senator from Massachusetts, wants to text those unrealized kings. How does that harm not wealthy people?

I think it harms everybody because it hurts the whole capitalistic system. And so I mean that's one of the things that I would find the most discouraging. It also is impossible to administer, so I don't think that's going to make it, but it definitely is low on life. So broadly listening things would be good.

Broadly defined, where would you like to see the US tax system go over the next several years, because obviously, as you well well know, there's many different polar different thoughts on that. Where do you think it should go?

I'm happy with it right right now. I think we're paying enough taxes and so I'm not interested in, you know, seeing taxes go up. And I don't. I don't get this sense that the Harris Democrats group really are pushing for higher taxes either. There's some parts are, but I don't know.

How about the how about I would love to get your perspective on the debt and deficits. I've been hearing about it.

My entire life. Wait, I have to worry about it.

Yeah, you too, But you were directly involved with this with Pete Peterson, Paul Suga, Sam nunn An the others. I mean, someone say they've been crying, well for years, we're still here. But are we at a tip point now that those people talked about it?

So I don't think so, but I think about it all the time. I had a deep conversation yesterday with Lee Cooperman, who was extremely upset about it, and I said, Lee, bonniels are so low and the dollar is so strong. Those are the two things that would make you say this is now and it's.

Not Take your work into John Gollop's work. We've got to go here at Hymen, but fold your economics into the evercore ISI equity call.

So we've been on the equity call. Uh, we've been pretty bearish on the stock market, and so that's where I am right now. Frankly, we have a strategist and a technician that have different views.

Well that's good, it's a classic. It's at timen views.

Well no, but I'm just saying I listened to them. So right now, the economy's fine, earnings are good, inflation's coming down, Fed's going to cut and it's okay.

Edman, thank you so much for being with us today here, end of the job.

Nice to see Nice to see you as well.

Him with Evercore is SI dancing around the politics of the moment. We'll speak to mister Hyman here of the autumn as we can