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Speaker 1: Bloomberg Audio Studios. Podcasts.
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Speaker 2: Radio. News.
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Speaker 3: Huge reaction in the market here. The 10-year real yield explodes out five basis points. It was out seven moments ago, 2.70. Damian, price down and yield up dramatically, particularly that two-year. I guess lock it in, rate lift December 9th.
00:00:26
Speaker 1: Well, I mean, a lot of people called the softness in used cars and trucks. We saw that. But I mean, OER and shelter, I mean, I think we saw a pretty big number. Constance, remind me if I'm wrong here, last month, And I don't know. I mean, I'm trying to find the data here. I mean, what do we look like here?
00:00:40
Speaker 3: Yeah.
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Speaker 2: So, I mean, we look at shelter of 0.3 month over month. Again, that annualizes out to about a 3.3 percent rate, so higher than the Fed's desired level. But look at transportation services. We are still passing through energy costs to the services economy. And then one other thing I would say, and it's not, I have to get into the detail of the report that's not in the BLS release, but, you know, AI prices are a concern. And the upshot of the of the election is that there's going to be some slowdown in the build-up. So less supply and same demand equals higher prices.
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Speaker 3: Did I just hear you get a special report from BLS? Only Constance Hunter of EIU? Did you get a special? If only.
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Speaker 2: No, just going back into the later pages here and all the details and sort of parsing through it all. So let me get into that.
00:01:29
Speaker 3: Across America, she's looking at the data. What she's saying is, hey, wise guy, say something and let me read it. The report, the advantage of the Bloomberg is it all piles in here in real time, plus she's got her own sources, which we don't have. Red on the screen here, markets pull back a little bit. The VIX was, oh, 20.3. It's now 20.7. Yields go up. The two-year explodes out 13 basis points. And what does this mean for the rest of the world? Damian, your expertise here We mentioned Indonesia and the Philippines flat on their back.
00:02:05
Speaker 1: Well, what I look at is the components, and the two components that matter for emerging markets are food and energy. And if you look at month-over-month rate rise in food, I think 0.5% here in the U.S., if that's any indication of what's going on in emerging markets, that's not very good. And then energy, I mean, energy is still rising. Look, we've seen, obviously, you know, the November print will probably reflect what we've seen in Brent crude prices, you know, of late. But still, energy prices up 0.7%. This is a.
00:02:28
Speaker 3: Critical observation in that oils come in from 117 Brent down beneath 100 Brent. But we're still a ginormous level above where we were 12 months ago.
00:02:39
Speaker 1: Right, Damian? That's right. And look, I mean, just from my vantage point, whether or not what we saw with the midterms and it becoming more difficult for data centers and AI and all that kind of stuff, how does that kind of translate into prices here for the average U.S. consumer? I mean, we know that delinquencies are rising. We know the housing market here in the U.S. is on its back. Yeah, it's interesting.
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Speaker 3: Constance Hunter with us. She dives into the data. What do you see there, Constance?
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Speaker 2: She squints.
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Speaker 3: Do you see glasses? I'm just blind, and she can read the fine print. What do you see?
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Speaker 2: Well, I have contact lenses that are helping me correct for that, so I don't have to take glasses on and off. But I'm still squinting because this is a small print. But, you know, two things we were watching last month were telephone, telephone, cell phone bills. And that is still fairly elevated.
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Speaker 1: Really?
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Speaker 3: Yes.
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Speaker 2: 0.6 percent last month, 0.5 percent this month. And then the other thing was was education, which, again, 0.9 percent mother of month last month, 0.5.
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Speaker 3: Right.
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Speaker 2: So. So, yes, things that we all experience.
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Speaker 1: Not shocked.
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Speaker 2: Right. But the idea was that they might dissipate somewhat this month. They did a little, but not enough.
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Speaker 3: This is why we love having Constance Hunter and Phil Newhart with us here in a moment. Your inflation is the real inflation our listeners and viewers exist every day. That's not the same inflation of Chairman Warsh, is it?
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Speaker 2: Well, I'm not sure that that's true. I think that Chairman Warsh has presided over a Fed that hiked once, that has said they're going to hike another time. I think that Warsh is concerned about the fact that for everyday Americans, prices are going up.
00:04:19
Speaker 1: Well, I mean, medical care also here. I mean, these are the important factors. I mean, 0.3%. These are real life inflation. And yeah, I mean, look, on the whole, I mean, we haven't seen many sectors, you know, actually seeing inflation come down month over month in October. So, you know, yeah, we still are seeing inflationary pressures. Yes, Chair Waller's comments about a hike in December. Yeah, I mean, I guess it makes sense, but only two through the end of next year. I mean, obviously, you know, markets are expecting inflation.
00:04:42
Speaker 3: Well, let's get, Constance, where are you on this right now? One rate increase, December, whatever, 9th. And then what from there?
00:04:49
Speaker 2: Well, I think some of it depends on what happens in the equity market, right? And we have to think about the fact that, you know, people like Dan Ives are saying that if Jensen Huang leaves NVIDIA, we're looking at a 30% price decline there. Now, the market's not betting that he's going to leave. I'm not sure that's the correct bet. But I think we're in for some volatility in the background that could temper the pace of the Fed's rate hike.
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Speaker 3: Constance Hunter, thank you so much. With the EIU and macro policy perspectives, thank you so much.