RUSH TRANSCRIPT Even though ░░░░░░░░ s kind of a ░░░░░░░░ week as far as ░░░░░░░░ go is always someone ░░░░░░░░ about Mr Jeff cleveland ░░░░░░░░ the here in San ░░░░░░░░ principal chief economist at ░░░░░░░░ greasy and percent of ░░░░░░░░ loved having on the ░░░░░░░░ last year and half ░░░░░░░░ think you really have ░░░░░░░░ underappreciated economic voice and ░░░░░░░░ m wanting I m ░░░░░░░░ about it today because ░░░░░░░░ of the main things ░░░░░░░░ you ve talked about ░░░░░░░░ every turn We re ░░░░░░░░ have done real bearish ░░░░░░░░ the economy You said ░░░░░░░░ doesn t need to ░░░░░░░░ like that and you ░░░░░░░░ also assume that rates ░░░░░░░░ have a cap The ░░░░░░░░ as well so want ░░░░░░░░ through where you re ░░░░░░░░ now yeah I think ░░░░░░░░ the summer we went ░░░░░░░░ a growth scare so ░░░░░░░░ We have some downward ░░░░░░░░ to payrolls and a ░░░░░░░░ of conversations were about ░░░░░░░░ do We have an ░░░░░░░░ recession People were message ░░░░░░░░ Oliver saying that the ░░░░░░░░ needed to get on ░░░░░░░░ with an emergency meeting ░░░░░░░░ cut that that was ░░░░░░░░ mindset in the summer ░░░░░░░░ let us to that ░░░░░░░░ I guess yeah and ░░░░░░░░ kind of Sixty three ░░░░░░░░ five early September and ░░░░░░░░ we move back up ░░░░░░░░ think big part of ░░░░░░░░ is The data has ░░░░░░░░ out better We got ░░░░░░░░ better pair or poor ░░░░░░░░ unemployment rate ticked down ░░░░░░░░ little bit que three ░░░░░░░░ and consumer spending growth ░░░░░░░░ looks great keyboard looks ░░░░░░░░ we might grow three ░░░░░░░░ Everybody spending basically whatever ░░░░░░░░ can afford to spend ░░░░░░░░ now it seems like ░░░░░░░░ that mean on extended ░░░░░░░░ super super high and ░░░░░░░░ but it seems everything ░░░░░░░░ is getting scooped up ░░░░░░░░ up consumer We we ░░░░░░░░ at aggregate consumer income ░░░░░░░░ being the key driver ░░░░░░░░ spending the U s ░░░░░░░░ has income they will ░░░░░░░░ saving that a Income ░░░░░░░░ at five percent annual ░░░░░░░░ so that that s ░░░░░░░░ to sustain the economy ░░░░░░░░ we think it will ░░░░░░░░ to see growth over ░░░░░░░░ next six to 11 ░░░░░░░░ How much confidence do ░░░░░░░░ have that the creep ░░░░░░░░ are getting either unemployment ░░░░░░░░ continuing claims can move ░░░░░░░░ at a creep or ░░░░░░░░ even go the other ░░░░░░░░ because Once you open ░░░░░░░░ that pandora s box ░░░░░░░░ little bit That s ░░░░░░░░ of the whole you ░░░░░░░░ prevent version that type ░░░░░░░░ style What people say ░░░░░░░░ unemployment rate was three ░░░░░░░░ ticked up to four ░░░░░░░░ you ll usually just ░░░░░░░░ to rise once I ░░░░░░░░ to creep up Okay ░░░░░░░░ into what drove that ░░░░░░░░ in the unemployment rate ░░░░░░░░ big chunk of it ░░░░░░░░ think was people coming ░░░░░░░░ into the labor force ░░░░░░░░ or new interests the ░░░░░░░░ force So that s ░░░░░░░░ a dire scenario For ░░░░░░░░ we be much more ░░░░░░░░ sort of it was ░░░░░░░░ by lay offs so ░░░░░░░░ can never be sure ░░░░░░░░ anything all But just ░░░░░░░░ every week at at ░░░░░░░░ not the initial claims ░░░░░░░░ Don t think lay ░░░░░░░░ are picking up so ░░░░░░░░ think we can be ░░░░░░░░ confident about the the ░░░░░░░░ situation at the moment ░░░░░░░░ know how much I ░░░░░░░░ talk and bonds in ░░░░░░░░ data and the hard ░░░░░░░░ but then we got ░░░░░░░░ other element right now ░░░░░░░░ re talking about using ░░░░░░░░ Treasury secretary and are ░░░░░░░░ actually gonna cut all ░░░░░░░░ jobs I mean it ░░░░░░░░ like there are a ░░░░░░░░ things that are Traditional ░░░░░░░░ like really really take ░░░░░░░░ axe to like one ░░░░░░░░ two million jobs like ░░░░░░░░ swami told us that ░░░░░░░░ wants to do How ░░░░░░░░ you model How do ░░░░░░░░ figure out what happens ░░░░░░░░ I think first of ░░░░░░░░ there s we don ░░░░░░░░ know the details on ░░░░░░░░ could be implemented We ░░░░░░░░ t know the timing ░░░░░░░░ that So I think ░░░░░░░░ s something so There ░░░░░░░░ Think in the market ░░░░░░░░ be premature I always ░░░░░░░░ people at the federal ░░░░░░░░ you have federal employees ░░░░░░░░ most government employment is ░░░░░░░░ and local I don ░░░░░░░░ think there s a ░░░░░░░░ to eliminate those jobs ░░░░░░░░ re talking about school ░░░░░░░░ and bus drivers they ░░░░░░░░ going to go federal ░░░░░░░░ that s the in ░░░░░░░░ mind the low hanging ░░░░░░░░ yeah So I mean ░░░░░░░░ they re they re ░░░░░░░░ to cut some bloke ░░░░░░░░ know that I m ░░░░░░░░ with that It that ░░░░░░░░ good goal Is I ░░░░░░░░ t eat that s ░░░░░░░░ of the overall negative ░░░░░░░░ the us economy I ░░░░░░░░ t think we we ░░░░░░░░ very little details to ░░░░░░░░ on so we can ░░░░░░░░ be too confident in ░░░░░░░░ projections will be true ░░░░░░░░ taxes when our taxes ░░░░░░░░ be caught one is ░░░░░░░░ to be done One ░░░░░░░░ going to take effect ░░░░░░░░ this story for 20 ░░░░░░░░ six or 20 twenty ░░░░░░░░ that could have a ░░░░░░░░ impact on market Does ░░░░░░░░ The timeline it should ░░░░░░░░ on if we re ░░░░░░░░ things that are like ░░░░░░░░ six 20 point so ░░░░░░░░ s a very real ░░░░░░░░ time to pass policy ░░░░░░░░ see any that informing ░░░░░░░░ action of the last ░░░░░░░░ How much of it ░░░░░░░░ like Trump two point ░░░░░░░░ how much as is ░░░░░░░░ what we talked about ░░░░░░░░ into it better than ░░░░░░░░ economic outcomes I m ░░░░░░░░ from the Fed little ░░░░░░░░ The move in tens ░░░░░░░░ since mid September is ░░░░░░░░ data went away from ░░░░░░░░ grow scare people realize ░░░░░░░░ the things are not ░░░░░░░░ over yeah That s ░░░░░░░░ that s a big ░░░░░░░░ of it I think ░░░░░░░░ recently though the pricing ░░░░░░░░ in the Fed funds ░░░░░░░░ market for example I ░░░░░░░░ for the past three ░░░░░░░░ Oliver I ve been ░░░░░░░░ sure we have been ░░░░░░░░ that I was going ░░░░░░░░ hike more they would ░░░░░░░░ on hold for longer ░░░░░░░░ they would cut later ░░░░░░░░ fewer times Now I ░░░░░░░░ myself looking at what ░░░░░░░░ priced in I think ░░░░░░░░ the Fed could go ░░░░░░░░ than is priced in ░░░░░░░░ I think maybe the ░░░░░░░░ market tends to swing ░░░░░░░░ the the wrong direction ░░░░░░░░ two or three times ░░░░░░░░ year and it s ░░░░░░░░ maybe gone to too ░░░░░░░░ of Like sixty percent ░░░░░░░░ is your view then ░░░░░░░░ that should be locked ░░░░░░░░ one hundred tickets is ░░░░░░░░ I think that s ░░░░░░░░ It s still possible ░░░░░░░░ we heard last week ░░░░░░░░ you know we we ░░░░░░░░ we re still restrictive ░░░░░░░░ we are we re ░░░░░░░░ above neutral Why Because ░░░░░░░░ labor market has softened ░░░░░░░░ your to your earlier ░░░░░░░░ so they don t ░░░░░░░░ to derail the labor ░░░░░░░░ I think they re ░░░░░░░░ track We can get ░░░░░░░░ we think by the ░░░░░░░░ of next year Oliver ░░░░░░░░ be back to around ░░░░░░░░ percent corps peace Next ░░░░░░░░ ago Want to cause ░░░░░░░░ to the labor market ░░░░░░░░ still restricted So I ░░░░░░░░ the device is going ░░░░░░░░ keep reducing rates December ░░░░░░░░ good opportunity for that ░░░░░░░░ then we have for ░░░░░░░░ year How stop and ░░░░░░░░ should they be Given ░░░░░░░░ policy discussion to of ░░░░░░░░ should power be aware ░░░░░░░░ there could be not ░░░░░░░░ black swan but exhaust ░░░░░░░░ events that are not ░░░░░░░░ of the on economic ░░░░░░░░ I think they have ░░░░░░░░ look at the data ░░░░░░░░ it comes in and ░░░░░░░░ their projections try and ░░░░░░░░ pure yep and I ░░░░░░░░ one caught per quarter ░░░░░░░░ year because reasonable I ░░░░░░░░ that s a gradual ░░░░░░░░ You know that they ░░░░░░░░ eight meetings as every ░░░░░░░░ meeting so I think ░░░░░░░░ will give them enough ░░░░░░░░ but I think it ░░░░░░░░ the tax law changes ░░░░░░░░ are we going to ░░░░░░░░ what they are Is ░░░░░░░░ going to be sometime ░░░░░░░░ late next year and ░░░░░░░░ when they can take ░░░░░░░░ Think that s happening ░░░░░░░░ but this is stuff ░░░░░░░░ could play out over ░░░░░░░░ much longer period six ░░░░░░░░ quarters if they keep ░░░░░░░░ if you re looking ░░░░░░░░ a caught a quarter ░░░░░░░░ re looking for December ░░░░░░░░ then the fifty basis ░░░░░░░░ was the low for ░░░░░░░░ 10 year to the ░░░░░░░░ Does that relationship hold ░░░░░░░░ going forward where the ░░░░░░░░ they cut higher yields ░░░░░░░░ Right I think so ░░░░░░░░ I think about 10 ░░░░░░░░ yields for example three ░░░░░░░░ factors for 10 years ░░░░░░░░ Fed path of they ░░░░░░░░ cutting that should bias ░░░░░░░░ lower rates inflation premium ░░░░░░░░ I m right and ░░░░░░░░ get back to core ░░░░░░░░ at two percent middle ░░░░░░░░ next year then that ░░░░░░░░ put downward pressure on ░░░░░░░░ year yields then the ░░░░░░░░ factor really is that ░░░░░░░░ the third thing term ░░░░░░░░ and the lotta people ░░░░░░░░ that s just you ░░░░░░░░ the catch all but ░░░░░░░░ think what s included ░░░░░░░░ there is concerns about ░░░░░░░░ fiscal situation boxes we ░░░░░░░░ smoother yet well no ░░░░░░░░ Yet I mean we ░░░░░░░░ a big deficit to ░░░░░░░░ There s no doubt ░░░░░░░░ that I just traveled ░░░░░░░░ Europe so I would ░░░░░░░░ this is the European ░░░░░░░░ clients asked about is ░░░░░░░░ s going to be ░░░░░░░░ to pay pay interest ░░░░░░░░ it s bills So ░░░░░░░░ if they do this ░░░░░░░░ caught program and it ░░░░░░░░ has meaning behind it ░░░░░░░░ would that didn t ░░░░░░░░ term premium very yeah ░░░░░░░░ get you cut bloated ░░░░░░░░ level you cut back ░░░░░░░░ spending You get the ░░░░░░░░ house in order to ░░░░░░░░ a little more optimistic ░░░░░░░░ the deficit Percent of ░░░░░░░░ will start to shrink ░░░░░░░░ will help your term ░░░░░░░░ That could get you ░░░░░░░░ lower 10 year yields ░░░░░░░░ gosh Well I guess ░░░░░░░░ to come back then ░░░░░░░░ the rates connection the ░░░░░░░░ connection to the long ░░░░░░░░ that fifty be in ░░░░░░░░ low and the eel ░░░░░░░░ our assumptions of hey ░░░░░░░░ cut yields come down ░░░░░░░░ far That relationship I ░░░░░░░░ it s just day ░░░░░░░░ fifty in September Maybe ░░░░░░░░ was a lot of ░░░░░░░░ the same time data ░░░░░░░░ for sure Clients all ░░░░░░░░ lot of people on ░░░░░░░░ fiscal concern Inflation concern ░░░░░░░░ perhaps due to Trump ░░░░░░░░ so that pushed up ░░░░░░░░ So you just have ░░░░░░░░ over here Here s ░░░░░░░░ that might be a ░░░░░░░░ more overlap at all ░░░░░░░░ than correlation Necessarily when ░░░░░░░░ talk with our I ░░░░░░░░ from your perspective isn ░░░░░░░░ a car miss what ░░░░░░░░ hear and what are ░░░░░░░░ main discussions is pretty ░░░░░░░░ and what s a ░░░░░░░░ and I ve just ░░░░░░░░ saying we ve looked ░░░░░░░░ five or six periods ░░░░░░░░ around 19 Seventy where ░░░░░░░░ had a fed cutting ░░░░░░░░ you had the economy ░░░░░░░░ in a recession Oliver ░░░░░░░░ continued growth and in ░░░░░░░░ handful of periods where ░░░░░░░░ s happened it s ░░░░░░░░ risk On I mean ░░░░░░░░ s be good for ░░░░░░░░ And predominantly hundred and ░░░░░░░░ billion under management mostly ░░░░░░░░ fixed income but it ░░░░░░░░ to tell you that ░░░░░░░░ tells you stay bullish ░░░░░░░░ stocks large cap small ░░░░░░░░ whatever also good for ░░░░░░░░ bonds Those five or ░░░░░░░░ beers that we looked ░░░░░░░░ was good environment for