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Jobs Print Takes 50bp July Rate Cut Off Table: Dudley · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul Sweene. You,
0:05
Speaker 1: along with my co host Lisa brahma Witz. Each day
0:07
Speaker 1: we bring you the most noteworthy and useful interviews for
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Speaker 1: you and your money, whether at the grocery store or
0:12
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
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Speaker 1: podcast or wherever you listen to podcasts, as well as
0:17
Speaker 1: at Bloomberg dot com. Well, it is jobs Day today.
0:23
Speaker 1: Two thousand jobs were added to the U S economy
0:27
Speaker 1: in the month of June. Kind of break that down
0:29
Speaker 1: and gives a sense of what it means and what
0:31
Speaker 1: the FED, how the FED might react. We welcome Bill Dudley.
0:34
Speaker 1: Bill is a senior research scholar Prince University Center for
0:37
Speaker 1: Economic Policy. Is also a former Federal Reserve Bank of
0:40
Speaker 1: New York President. Bill. We're gonna start off by listening
0:43
Speaker 1: to National Economic Council Director Larry Cudlow. He spoke with
0:47
Speaker 1: Bloomberg Television following this morning's job report. Let's take a listen. Now,
0:51
Speaker 1: I do you have an inverted YO curve, which I
0:53
Speaker 1: think is somewhat problesome for the longer term, but the
0:57
Speaker 1: break evens on the inflation you know, the tips break
1:01
Speaker 1: evens the five year Jonathan is one and a half percent,
1:05
Speaker 1: and that's the CPI number. So the pc deflated that
1:09
Speaker 1: the FED uses would be about thirty basis points less
1:12
Speaker 1: than that. So you're one a quarter percent inflation, which
1:15
Speaker 1: is way below the Fed's target and what most people want.
1:19
Speaker 1: And that's the reason I think they should take back
1:22
Speaker 1: the interest rate hike. So Mr Cutler saying, take back
1:28
Speaker 1: the December rate hike, Bill, Bill Dudley, what do you think? Well,
1:32
Speaker 1: I think it's still up in the air what the
1:34
Speaker 1: Fed is gonna do at the July of from C meeting.
1:36
Speaker 1: I mean this, this report was stronger than expected, and
1:40
Speaker 1: so I think what it does is it takes the
1:41
Speaker 1: fifty basis points easing idea off the table lease for
1:44
Speaker 1: the time being. And then the question is do you
1:46
Speaker 1: do to stand pat wait for more information or do
1:49
Speaker 1: you cut base points. Larry Cudlos obviously making the case
1:52
Speaker 1: of the Fed should cut rates because inflation expectations are
1:56
Speaker 1: you know, blow two. But the Fed has also taken
2:00
Speaker 1: into into account the fact that the economy looks like
2:02
Speaker 1: it's continuing to grow at a decent place. Payroll gains
2:05
Speaker 1: are stronger than what's sustainable over the long run. You know,
2:08
Speaker 1: steady stage is probably a hundred thousand of months to
2:10
Speaker 1: keep the unemployer rates steady. So I think there's gonna
2:13
Speaker 1: be an interesting debate. And obviously we have three and
2:15
Speaker 1: app more weeks of data before the FED meets, so
2:17
Speaker 1: I think it's still very much up in the air
2:18
Speaker 1: what the Fit's going to do with the July meeting.
2:21
Speaker 1: Former New York FED at President, I'm so excited that
2:24
Speaker 1: we have you today. One question that I keep coming
2:27
Speaker 1: back to is what is the feds ultimate goal? What
2:31
Speaker 1: is their ultimate objective and mandate? What's your view on that? Well,
2:35
Speaker 1: obviously they want to keep the economic expansion going, and
2:38
Speaker 1: there's risks on both sides. Risk on one side is
2:41
Speaker 1: that if they pursue a too easy Monterrey policy, inflation
2:46
Speaker 1: rises and then they have to slam in the brakes
2:47
Speaker 1: and that generates recessions. So that's risk on one side.
2:50
Speaker 1: Risk on the other side is that they tightened Entrey
2:52
Speaker 1: policy prematurely and that keeps inflation below their two long
2:58
Speaker 1: term objective. Uh and the comedy softens and people have
3:02
Speaker 1: basically asked to FED, why do you tighten Madre policy
3:05
Speaker 1: when inflation was below your objective, and so they're trying
3:07
Speaker 1: to balance those two risks. Do you think that it
3:10
Speaker 1: is wise for them to cut rates by at least
3:13
Speaker 1: fifty basis points by your end as markets are currently
3:15
Speaker 1: pricing in. Well, I mean, obviously depends on how the
3:18
Speaker 1: economy evolves. I don't see the economy is that week.
3:22
Speaker 1: I see the econmy is doing fine. It seems to
3:24
Speaker 1: me like it's growing about trend or maybe a little
3:27
Speaker 1: bit above trend. The labor market, in my mind, still
3:29
Speaker 1: looks like it's continuing to gradually tighten. So I guess
3:32
Speaker 1: if I were sitting there at the fo C, I'd
3:34
Speaker 1: be more on the patient camp. I probably would at
3:39
Speaker 1: the July meeting, I probably would say, let's let's have
3:42
Speaker 1: a statement that doesn't close the door to future eason,
3:45
Speaker 1: but let's let's wait and get some more information. So
3:49
Speaker 1: build this. FED has said publicly that it is data
3:52
Speaker 1: dependent aside from labor statistics. What do you think the
3:55
Speaker 1: Fed's really focusing on right now? Well, I think they
3:58
Speaker 1: are focused on, you know, one, what's the trajectory for
4:01
Speaker 1: GDP growth in the state of the labor market. But
4:04
Speaker 1: to they're also, as Larry Cutlows pointed out, they're also
4:07
Speaker 1: focused on inflation. The fact is inflation has come in
4:10
Speaker 1: below their expectations. So the core personal consumption expenditure deflator
4:15
Speaker 1: is rising one point six percent on a year over
4:18
Speaker 1: year basis, below the two goal. And also, as as
4:22
Speaker 1: Larry pointed out, inflation expectations look like they've dropped a bit.
4:27
Speaker 1: So that's another reason for the Fed to consider easy policy.
4:31
Speaker 1: And there's basically three paths to easing. One is growth
4:33
Speaker 1: is weaker than expected. The second path to easing is
4:36
Speaker 1: that inflation turns out to be lower than expected. And
4:38
Speaker 1: the third is that risk in the in the economic
4:41
Speaker 1: out look goes up because of perhaps uncertainty about trade policy.
4:44
Speaker 1: So there's lots of paths to get the Fed to
4:47
Speaker 1: an easier montroy policy. And I think that's really why
4:49
Speaker 1: easing is priced into the markets right now. When you
4:52
Speaker 1: were ahead of the New York Fed, one of the
4:54
Speaker 1: roles of that agency is to really monitor financial stability
4:59
Speaker 1: financial market, and I'm wondering what you see as the
5:02
Speaker 1: potential risks that are building with respect to inflated asset
5:07
Speaker 1: values if the Fed does cut rates, and given how much.
5:12
Speaker 1: How low rates have been kept for as long as
5:13
Speaker 1: they have Well, I think at the end of the day,
5:16
Speaker 1: I mean they're they're gonna be focused mostly on the
5:18
Speaker 1: growth outlook and the inflation out look. But they do
5:20
Speaker 1: have to be aware of the fact that there's not
5:23
Speaker 1: much evidence right now that Matrey policy is tight and
5:25
Speaker 1: if you look at financial conditions, financial conditions do seem
5:28
Speaker 1: actually quite supportive for growth. So the strongest argument to
5:31
Speaker 1: hold off, frankly, is that policy Monterrey policy is not
5:35
Speaker 1: holding back the US economy to any measurable degree that
5:38
Speaker 1: I can see. So BUILD Chairman pal has suggested that
5:42
Speaker 1: the FED might end it's quantitative tightening. Do you think
5:45
Speaker 1: that's a good idea. Well, they've already said that that
5:48
Speaker 1: they're going to bring that to the end at the
5:50
Speaker 1: end of September. There's been some speculation though that if
5:53
Speaker 1: they cut rates in if the July means, they might
5:56
Speaker 1: also move the ending of their balance sheet up to
5:59
Speaker 1: to to that at that point in time, I personally
6:02
Speaker 1: think they should just keep the balance sheet policy as
6:04
Speaker 1: it is today. We're going to continue to run our
6:07
Speaker 1: securities until September uh and then and bring that to
6:10
Speaker 1: a close I mean, basically tying the short term rate
6:12
Speaker 1: decision to the balance sheet decision I think is inappropriate
6:16
Speaker 1: right now, because the balance sheet decision is not motivated by,
6:19
Speaker 1: you know, what the FEDS trying to do in terms
6:21
Speaker 1: of the stance of monetary policy. It's motivated by how
6:24
Speaker 1: much reserves the Fed thinks should be in the banking
6:27
Speaker 1: system consistent with the efficient execution of monetary policy. And
6:31
Speaker 1: that's why they decided that they were going to end
6:33
Speaker 1: it in September. So I think they just should stick
6:35
Speaker 1: to that decision. So you said that monetary policy is
6:38
Speaker 1: not holding back the economy, that is the message when
6:41
Speaker 1: you look at the easy financial conditions. What would a
6:44
Speaker 1: rate cut accomplish then, Well, I think the rate cut
6:47
Speaker 1: would be you know, basically would be insurance, would be
6:51
Speaker 1: basically saying, look, we're unhappy with some of the uncertainty
6:55
Speaker 1: about the global growth outlook, and also would be a
6:58
Speaker 1: way of saying that we're on happy with inflation being
7:01
Speaker 1: below er two percent of objectives. So I don't think that,
7:04
Speaker 1: you know, fundamentally, it would matter that much to the
7:06
Speaker 1: economy if the Fed cut twenty five basis points or
7:08
Speaker 1: didn't cut twenty five basis points but be a way
7:11
Speaker 1: of uh exhibiting some unhappiness with I think the inflation
7:15
Speaker 1: trajectory so build. President Trump is out with some tweets
7:19
Speaker 1: this morning on the job's number and some other topics.
7:23
Speaker 1: But one of the tweets says the Trump says the
7:26
Speaker 1: FED quote doesn't know what they are doing. End quote.
7:29
Speaker 1: Tweets like that, to what extent do you think they
7:32
Speaker 1: impact members of the FED end or policy? Well, I
7:35
Speaker 1: think that the FED has been doing a pretty good
7:37
Speaker 1: job and we're in the we're basically now have the
7:40
Speaker 1: longest economic expansion at u S history, and I think, well,
7:43
Speaker 1: the President, with what wants to take most of the
7:45
Speaker 1: credit for that. I think the FED does are some
7:48
Speaker 1: some credit as well. Um, I think that basically the
7:51
Speaker 1: Trump's pressure on the FED really actually probably is counterproductive
7:55
Speaker 1: in the sense that the FED doesn't want to do
7:57
Speaker 1: something that is seen as caving into presidential rusher. They
8:00
Speaker 1: want to be seen as doing something that's appropriate given
8:03
Speaker 1: the economic outlook. So at anything, if anything, I think
8:06
Speaker 1: this probably makes the set a little bit more stubborn
8:08
Speaker 1: in terms of moving interest rates. Yet, President Trump has
8:13
Speaker 1: been speaking and he has continued to speak we'll bring
8:16
Speaker 1: you the headlines as they come out, saying that that
8:19
Speaker 1: FED cutting rates would help the economy, and he's very
8:22
Speaker 1: happy about the jobs numbers still with US Bill Dudley,
8:27
Speaker 1: who is the former New York FED President. Uh. You know,
8:30
Speaker 1: one interesting sort of outcome of this strong job's report
8:34
Speaker 1: has been a stronger dollar, with the dollar surging against
8:37
Speaker 1: peers today. This has also been a concern of President Trump's.
8:41
Speaker 1: He has tweeted about the fact that he would like
8:43
Speaker 1: to see it weaker, talked about currency manipulation. Would it
8:46
Speaker 1: be better for the U. S economy if the dollar
8:49
Speaker 1: were weaker at this point? I don't. I don't understand
8:53
Speaker 1: the argument. We're basically at full employment. Uh, economy is
8:57
Speaker 1: doing fine, it's growing at an above trent pace. Why
9:00
Speaker 1: would I want the currency to be weaker? Uh that
9:03
Speaker 1: all that would do is reduce the US households purchasing
9:06
Speaker 1: power of foreign goods and services. Um. You know, I
9:10
Speaker 1: also understand why a weaker currency is something that you
9:13
Speaker 1: want when you're operating an economy pretty close to full employment.
9:17
Speaker 1: I can understand a weaker currency of the economy is
9:19
Speaker 1: very weak and you're having trouble getting traction coming out
9:22
Speaker 1: of a recession by at the time when the economy
9:25
Speaker 1: is pretty close to full employment. I don't understand why
9:27
Speaker 1: you don't want a weaker currency at that point. So,
9:30
Speaker 1: but we've had economists and fund managers comment over the
9:34
Speaker 1: last several months that, uh, they think a recession by
9:38
Speaker 1: mid is a possibility, maybe a likelihood. What are your
9:42
Speaker 1: thoughts there. Economic expansions don't die of old age. They
9:47
Speaker 1: usually die because either the either there's an inflation problem
9:51
Speaker 1: and the federal reserves response to that by tightening Monterrey policy, uh,
9:55
Speaker 1: making Monterrey policy tight, or there's a big shock to
9:59
Speaker 1: the economy that the FED just can't react quickly enough
10:01
Speaker 1: to offset. There's not enough inflation for the FED respond
10:05
Speaker 1: aggressively to tighten Madre policy. So I think the risk
10:08
Speaker 1: of the receptive of a recession from that source is
10:10
Speaker 1: very very low. Obviously, there is a risk of a
10:13
Speaker 1: shock coming from the rest of the world, for in
10:14
Speaker 1: the U s econmun But you know, the biggest one
10:17
Speaker 1: that I think this trade policy. If trade policy, if
10:22
Speaker 1: more confusion is created about what US trade policy is,
10:26
Speaker 1: and that creates uncertainty about how businesses should invest, where
10:30
Speaker 1: they should invest, how they should orient their supply chains.
10:34
Speaker 1: That's probably the biggest risk of the economy right now,
10:36
Speaker 1: what happens in terms of US trade policy. Bill Dudley,
10:39
Speaker 1: thank you so much for being with us today. Bill Dudley,
10:42
Speaker 1: former New York Fed President and senior researcher at Princeton
10:45
Speaker 1: University Center for Economic Policy Studies, also a contributor to
10:50
Speaker 1: Bloomberg Opinion, Commenting on today's jobs report, Well, it is
11:08
Speaker 1: Jobs Day today, and what to day it is. The
11:10
Speaker 1: US economy added two thousand jobs in the month of June.
11:15
Speaker 1: You get a sense of what that means for the
11:17
Speaker 1: US economy and FED policy going forward. To welcome our
11:19
Speaker 1: next guest, Jim Bianco. Jim as president and founder of
11:22
Speaker 1: Bianco Research. Jim, thanks so much for joining us. Just
11:26
Speaker 1: give us your first quick take on what you think
11:28
Speaker 1: the jobs report today means for the Fed Reserve. I
11:33
Speaker 1: think it means that the subtle Reserve is now closer
11:35
Speaker 1: to making a mistake by not cutting rates at the
11:39
Speaker 1: July meeting, and they're going to probably push this off.
11:42
Speaker 1: I think the markets have been telling us that the
11:45
Speaker 1: funds rate has been too high, the Fed one too far.
11:48
Speaker 1: Last year, one fund statistic for you. There's forty trillion
11:52
Speaker 1: dollars worth of sovereign developed market debt in the world
11:57
Speaker 1: and it has a yield of less than the funds rate.
12:02
Speaker 1: Right now, the funds rate is becoming an outlier. Is
12:04
Speaker 1: one of the highest interest rates in the world. It
12:07
Speaker 1: needs to come down. The FED is going to look
12:09
Speaker 1: at this strong payroll number thinking they don't have to
12:12
Speaker 1: do that, and I think what you're seeing in the
12:13
Speaker 1: markets is a reaction that they may may make a
12:16
Speaker 1: mistake by not cutting rates. So, Jim, I know that
12:21
Speaker 1: you your voice, and this is particularly important because the
12:24
Speaker 1: White House actually considered you for one of the open
12:28
Speaker 1: positions on the Fed's board that you are interviewed for that.
12:32
Speaker 1: Can you just talk a little bit about what it
12:35
Speaker 1: was like interviewing with them. What were their questions to you? Uh?
12:39
Speaker 1: It was an amazing experience to be able to do
12:41
Speaker 1: something like that, and I'm honored that they gave me
12:43
Speaker 1: the opportunity to do it. Uh. They just asked me
12:47
Speaker 1: about FED policy, They asked me about my views of
12:49
Speaker 1: the world. Uh. They interviewed me because I'm a bit
12:53
Speaker 1: different than their typical candidate. Because Uh, the FED works
12:58
Speaker 1: through the financial channel, and they considered the idea of
13:01
Speaker 1: having somebody from a financial markets background as opposed to
13:05
Speaker 1: a traditional PhD background as a as a candidate, and
13:10
Speaker 1: I was one of the few, if I don't know,
13:12
Speaker 1: maybe the only one that was chosen with that kind
13:14
Speaker 1: of with that kind of background. And so it was
13:17
Speaker 1: it was a very you know, interesting, well uh ranging
13:22
Speaker 1: interview of a lot of different subjects, mainly about FED
13:24
Speaker 1: policy in the economy. So Jim Baith, based upon that
13:27
Speaker 1: interview process, what do you think the FED is is
13:29
Speaker 1: or what do you think the administration is looking for
13:32
Speaker 1: in the FED going forward? I think that you know,
13:35
Speaker 1: if you listen to Larry Cudlow or if you listen
13:37
Speaker 1: to any of the other administration officials, that they do
13:41
Speaker 1: believe that the Phillips curve, this idea that inflation and
13:46
Speaker 1: the employment or growth are somehow linked in a predictable manner,
13:51
Speaker 1: has been broken down. That you could see again today
13:55
Speaker 1: in the payroll report two four thousand jobs created and
13:58
Speaker 1: there was no uptick in wage growth. This is just
14:02
Speaker 1: basically thrown all of the FED models and all of
14:05
Speaker 1: the economic models forget to FED, all the economic models
14:08
Speaker 1: you know, on their ear because this wasn't supposed to happen,
14:12
Speaker 1: meaning that when you have the economy growing this fast
14:14
Speaker 1: and you have an unemployment this low for this longer
14:17
Speaker 1: period of time to really show no major worries about
14:22
Speaker 1: wage inflation, let alone overall inflation. I think that that's
14:25
Speaker 1: been a big theme of THEIRS. It's been a big
14:27
Speaker 1: theme of mind and a number of other people as
14:30
Speaker 1: well too, that we are in a different type of
14:32
Speaker 1: inflation world and we don't need to have interest rates
14:36
Speaker 1: as high as we did, say in previous cycles, when
14:40
Speaker 1: the relationship between unemployment inflation was different. So, Jim, when
14:44
Speaker 1: we asked about the jobs report, when Paul asked you,
14:47
Speaker 1: you said, Uh, it just sort of confirms that if
14:50
Speaker 1: the Fed made a mistake in December and that they
14:53
Speaker 1: should keep rates lower than where they are currently and
14:56
Speaker 1: reverse the mistake in December and accommodate more. And I'm
14:58
Speaker 1: trying to figure out what the goal of the Fed here,
15:01
Speaker 1: I mean, how much will that actually boost the real
15:04
Speaker 1: economy for the Federal Reserve to cut rates by basis points.
15:08
Speaker 1: Some traders are now predicting, Yeah, you know a lot
15:11
Speaker 1: of people asked that question a lot. You know that
15:13
Speaker 1: in the assumption there is that nobody cares about the
15:17
Speaker 1: level of interest rates, that if you were to lower
15:19
Speaker 1: interest rates, that that would not be anywhat of a
15:22
Speaker 1: stimulus towards mortgages and the housing market, or towards autos
15:26
Speaker 1: and auto loans. You know, Wall Street doesn't nobody, nobody
15:30
Speaker 1: in Wall Street bothers with interest rates. They're not at
15:32
Speaker 1: all interested in whether or not they move up or down.
15:34
Speaker 1: Of course, this is all ridiculous. It is an important
15:38
Speaker 1: factor in the economy, and I do think that if
15:41
Speaker 1: nothing else, what we're doing is correcting an imbalance, that
15:44
Speaker 1: the rates are too high, and that it may not
15:47
Speaker 1: necessarily mean that we're trying to stimulate the economy by
15:51
Speaker 1: lowering them, but more along the lines of we're trying
15:54
Speaker 1: to stop hurting the economy by keeping them where they
15:57
Speaker 1: are now. The inverted yield curve, that is a signal
16:02
Speaker 1: that that is that the yield on the tenure note
16:06
Speaker 1: is lower than the yield on the three month bill.
16:08
Speaker 1: That is a signal that rates are too high, and
16:11
Speaker 1: that if we leave that in place for month after month,
16:14
Speaker 1: and that would happen if we didn't cut rates, that
16:17
Speaker 1: cumulative effect could really retard the economy, and so I
16:22
Speaker 1: think that that needs to be respected and that what
16:24
Speaker 1: we're probably doing here not is injecting stimulus, but removing restrictiveness.
16:30
Speaker 1: I know a lot of people have a hard time
16:32
Speaker 1: with this, thinking how can two and a half percent
16:34
Speaker 1: interest rates be restrictive because they've got this long history,
16:38
Speaker 1: and how will remind them it's one of the highest
16:41
Speaker 1: developed world rates in the world. Everybody else is lower,
16:44
Speaker 1: and there's twelve trillion dollars almost thirteen of negative interest rates.
16:48
Speaker 1: We are an outlier and that is why it is restrictive,
16:52
Speaker 1: because rich interest rates should be viewed in context with
16:55
Speaker 1: all other interest rates. Jim Bianco, always a wonderful thing
16:58
Speaker 1: having you on the show. Thank you so much for
17:01
Speaker 1: spending your post July four Friday with us. Jim Bianco,
17:05
Speaker 1: President and founder of Bianco Research, also someone who has
17:08
Speaker 1: interviewed A four A an open fed position by the
17:11
Speaker 1: current White House. When it comes to Deutsche Bank, the
17:31
Speaker 1: question is how far will its planned cuts go, not
17:34
Speaker 1: whether there will be cuts and where will those cuts
17:37
Speaker 1: be most focused? Joining us down to talk about that.
17:40
Speaker 1: Stephen Aaron's, German banks reporter for Bloomberg News, joining us
17:43
Speaker 1: from Frankfort. Stephen, I want to just talk about the timeline.
17:46
Speaker 1: We've been talking about Deutsche Bank for a while. Are
17:50
Speaker 1: we getting closer to the bank actually announcing some sort
17:54
Speaker 1: of restructuring plan that we can then view as fact. Absolutely,
17:58
Speaker 1: we're moving. We're moving much closer the the supervisory board
18:03
Speaker 1: meaning that is likely to adopt the plan will take
18:07
Speaker 1: place on Sunday. We've been told the bank hasn't officially CONFIRMEDNUS,
18:11
Speaker 1: but it's very likely to happen, and that will then
18:13
Speaker 1: trigger under German securities law, will trigger a a obligation
18:18
Speaker 1: to inform the market. So expect something on Sunday. Uh
18:22
Speaker 1: And in fact, the the the announcement has already begun,
18:25
Speaker 1: with the bank saying today that the investment banking had
18:29
Speaker 1: god Ritchie's leaving the bank. So that's the first instance
18:31
Speaker 1: of the whole big plan now moving into action. So, Stephen,
18:35
Speaker 1: how expansive do you expect the restructuring to be. It's
18:41
Speaker 1: going to be big, possibly or even probably the biggest
18:46
Speaker 1: restructuring of Dutch Bank and its investment banking division, particularly
18:50
Speaker 1: in in decades. The job clubs could reach up to
18:54
Speaker 1: twenty tho probably stretched out over several years, but still
18:57
Speaker 1: it's a very large number. It's it would be more
18:59
Speaker 1: than fifth of the current workforce. The cuts will also
19:03
Speaker 1: very much hit the US. Again, it's not clear over
19:06
Speaker 1: what timeline and just how much, but it's clear that
19:10
Speaker 1: the face of the U S operations will will fundamentally change.
19:14
Speaker 1: There has been some uh some speculation, including by as
19:19
Speaker 1: published in Bloomberg News, that Deutsche Bank will get out
19:23
Speaker 1: of equities, trading, sales, research, etcetera. In the United States
19:27
Speaker 1: also that potentially could largely just newter the investment bank.
19:32
Speaker 1: We did see the investment banking chief of Deutsche Bank
19:34
Speaker 1: leaving the bank today or at least announcing that he
19:38
Speaker 1: is going to be departing. What will the restructure Deutsche
19:41
Speaker 1: Bank look like. It's going to be much more focused
19:45
Speaker 1: on companies, large companies and European large companies then it
19:50
Speaker 1: has been, and shifting away from a previous focus on
19:54
Speaker 1: institutional investors. So the trading components for those investors trading equity,
20:00
Speaker 1: these trading fixed income will be lower, especially over time,
20:03
Speaker 1: and parts that that cater to the capital markets needs
20:08
Speaker 1: and then the general banking needs of leuch corporate such
20:11
Speaker 1: as trade finance, cash management. Those businesses will will like
20:15
Speaker 1: her grow, Steve, do you expect Deutsche Bank in any way,
20:19
Speaker 1: shape or form to uh admit that they have I
20:24
Speaker 1: guess given up their aspirations to be a truly global
20:27
Speaker 1: investment bank here. I mean, they're not gonna say it
20:31
Speaker 1: like that, right, They're gonna They're gonna highlight just that
20:36
Speaker 1: they continue to have a global footprint. I'm not sure
20:39
Speaker 1: they're gonna completely shutter any any in outposts any countries completely.
20:45
Speaker 1: They probably, as you said, they may shut it completely
20:48
Speaker 1: the US equities, but it's not clear whether any countries
20:52
Speaker 1: will completely be dissolved the presence there so they will
20:56
Speaker 1: continue to head at the global presence. But yes, they
20:58
Speaker 1: will admit that there are your your focused banks. They
21:02
Speaker 1: have been admitting this actually for a while, and they're
21:05
Speaker 1: not going to claim anymore that they can still compete
21:07
Speaker 1: with the big US investment banks that now in the
21:11
Speaker 1: trading area especially have a much bigger presence than Deutsche Bank.
21:16
Speaker 1: Bank shares today up three point eight percent. I'm looking
21:18
Speaker 1: at the A d R s in the United States.
21:21
Speaker 1: I'm wondering whether there's any discussions still about a possible merger.
21:25
Speaker 1: I know that Commerce Bank and TB. We're looking at
21:27
Speaker 1: a potential tie up that fell through. Is that basically
21:30
Speaker 1: off the table? That concept definitely? For now. This restructuring
21:35
Speaker 1: now will is designed to happen without any big murder.
21:40
Speaker 1: They're still looking to grow their asset management business DWS.
21:45
Speaker 1: They're looking for takeovers there, but the bank itself is
21:49
Speaker 1: not currently looking at anything. They were previously talked with
21:52
Speaker 1: with Commerce bank A as you said, and they've even
21:54
Speaker 1: had some brief informal talks with ubs, but for as
21:58
Speaker 1: long as the share price is a low as it
22:00
Speaker 1: is now, that's not something that will happen, Steve. Do
22:04
Speaker 1: you expect Deutsche Bank to address the home market Germany? Uh,
22:08
Speaker 1: the concerns that it's tremendously over banked. Um. Kind of
22:12
Speaker 1: what is their strategy to try to shore up the
22:13
Speaker 1: profitability of their core market, job cuts and cost cuts
22:18
Speaker 1: Again in a nutshell, they earning money in the German
22:23
Speaker 1: freetail markets are extremely difficult. Interest rates set by the
22:26
Speaker 1: central banks are extremely low and so margins are low
22:30
Speaker 1: and compared to the competition is extremely tough. So the
22:35
Speaker 1: only way you can actually boost profitability is by taking
22:38
Speaker 1: out costs. And they have said that they continue to
22:41
Speaker 1: aim cutting the workforce in the German retail and commercial
22:44
Speaker 1: clients business by about two thousand a year. That's going
22:47
Speaker 1: to continue and uh and so we'll see if that
22:51
Speaker 1: at some point will actually yield a profitability that they
22:54
Speaker 1: think is sufficient. Steve Aarons, thank you so much. Steve
22:58
Speaker 1: as a German banks reporter Bloomberg News based in Frankfurt,
23:01
Speaker 1: focusing on Deutsche Bank at least. I'm not sure if
23:17
Speaker 1: you know this about me, but I am quite the
23:18
Speaker 1: grill master. I can cook just about anything on the
23:22
Speaker 1: grill and in a suit, and oftentimes in the full disclosure,
23:27
Speaker 1: Paul Sweeney has gone full cash today talking. We're talking
23:30
Speaker 1: full cash Paul Sweeney style, which is basically is pajamas
23:33
Speaker 1: with khakis and and and and in a collar shirt
23:36
Speaker 1: but not a suit exactly. So I mean, I think
23:38
Speaker 1: I've cooked just about anything there is to cook on
23:40
Speaker 1: a grill. But this Bloomberg Business Week, they were out
23:42
Speaker 1: with a story today that is making me rethink my strategy.
23:45
Speaker 1: Kate Crater. Kate is the food editor for Bloomberg Pursuits. Kate,
23:49
Speaker 1: thanks so much for joining us. This is articles, It's
23:52
Speaker 1: just fantastic. It's basically what not to grill on a grill,
23:57
Speaker 1: which is everything, which is almost everything, But let's start
24:00
Speaker 1: with the most obvious. Talk to me about the hamburger thing.
24:04
Speaker 1: I know, yeah, this caused some controversy at my unfortunately
24:07
Speaker 1: life look out this weekend, um yesterday, because we talked
24:11
Speaker 1: to a bunch of chefs and they said, actually, if
24:14
Speaker 1: you want the best burger, you shouldn't put it on
24:17
Speaker 1: the grill because you're losing like valuable fat and juices
24:20
Speaker 1: is just dripping into the fire. And so we are
24:24
Speaker 1: asking people to step away from the grill with the
24:26
Speaker 1: burger patties. This is ridiculous. I'm sorry, kay I come on,
24:31
Speaker 1: you're basically saying to people, you know, you guys think
24:34
Speaker 1: you could grill, but you you kind of you kind
24:36
Speaker 1: of stink stink at it. So just stop, I mean,
24:38
Speaker 1: give me a break. I mean, is it just the
24:40
Speaker 1: optical taste or or what's the I mean, it's basically
24:43
Speaker 1: no optical taste. I mean, of course, this is America
24:45
Speaker 1: and people can do what they want and they can
24:47
Speaker 1: grill whatever they want. But we did. It's um, it
24:50
Speaker 1: actually is kind of funny to think, like chefs watch
24:53
Speaker 1: amateur cooks um at the grill, maybe like Paul and
24:57
Speaker 1: are like, oh, you're doing that wrong. He just he
24:59
Speaker 1: just red in the eyes. He's like, I'm no amateur. Right,
25:03
Speaker 1: that's okay. Um, So tell us about this this article.
25:06
Speaker 1: You guys, you went out and you talk to interviewed
25:09
Speaker 1: chefs kind of all over the place about different types
25:12
Speaker 1: of food, right, exactly, right, Yeah, it's high grilling season,
25:16
Speaker 1: and so you know it really is fun. Like everybody,
25:19
Speaker 1: it's the it's high grilling season and food taste solicitus
25:22
Speaker 1: on the grill. But in fact, if you want things
25:25
Speaker 1: to be perfect, some of some things really shouldn't be
25:28
Speaker 1: on shouldn't be cooked on the grill. So something like burgers.
25:31
Speaker 1: Of course, I'm not sure how many people we really
25:33
Speaker 1: are going to dissuade from from putting patties on the grill,
25:37
Speaker 1: but some things like you see them in restaurants, santy restaurants,
25:40
Speaker 1: like grilled caesar salad. And it turns out that lettuces
25:43
Speaker 1: actually are not very good on the grill because they're
25:46
Speaker 1: so full of water that they will wilt and burn
25:49
Speaker 1: as you cook them, So you really shouldn't And likewise,
25:52
Speaker 1: another stuff from Washington, D C. Doesn't like to grill
25:56
Speaker 1: fruit because even though it's sometimes goodt if you grow
26:00
Speaker 1: something like peaches, they disintegrate on the grill and they
26:03
Speaker 1: also flavor your grill and they pick up any flavors
26:06
Speaker 1: that are there. So if you just cook some fish,
26:09
Speaker 1: then your peaches are gonna taste like fish. That's so good.
26:12
Speaker 1: So I was reading this this article, and I love
26:15
Speaker 1: that you did it. It got me really heated with
26:17
Speaker 1: a couple of the things. The Burghers really was just like,
26:19
Speaker 1: you know, you might as well throw something at the screen.
26:21
Speaker 1: You can let us, I mean, okay, whatever, you let
26:24
Speaker 1: people do what they want to do. There were some
26:26
Speaker 1: good points so, and I will say the whole concept
26:28
Speaker 1: of peeled shrimp on a grill, it does drive them out.
26:31
Speaker 1: And they were saying that there is a way to
26:33
Speaker 1: do it so that it won't dry them out. Right, Yeah, no,
26:36
Speaker 1: exactly if you have sell on shrimp, if you buy
26:38
Speaker 1: shrimp that aren't you know, that aren't pre peeled, then
26:41
Speaker 1: they are marvelous on the grill. That's really good is
26:44
Speaker 1: when you peel them, because they're really delicate and they're
26:46
Speaker 1: gonna burn. They're either going to burn or not cook well,
26:49
Speaker 1: depending on how high your heat is. And we actually
26:52
Speaker 1: looked at this a couple of years ago too. And
26:54
Speaker 1: another thing that people really shouldn't grill or shishka bab's
26:57
Speaker 1: with mixed you know, you see them and they look
26:59
Speaker 1: really to me, great, Come on, what are you gonna do?
27:02
Speaker 1: A boiler? So I'm gonna on a boiler. But the
27:05
Speaker 1: thing that you can do is put the same things on.
27:08
Speaker 1: So you can put like all your meat on one
27:10
Speaker 1: skewer and then you can put things like cherry tomatoes
27:13
Speaker 1: on another. But when you mix them up, the onions, like,
27:16
Speaker 1: I don't know if you've ever had them, but it's
27:17
Speaker 1: really hard to get onions to cook in a way
27:19
Speaker 1: that you want to eat them if it's next to
27:21
Speaker 1: something that cooks quickly, like shrimp. So just divide. It's
27:25
Speaker 1: just you just make like neat little piles, have each
27:28
Speaker 1: have a dedicated kebab, and then you are good to go.
27:31
Speaker 1: All right, I'm learning something and learning something, so let's go.
27:33
Speaker 1: Let's go to I mean, the one thing that made
27:35
Speaker 1: sense to me I saw in your article bacon, uh,
27:38
Speaker 1: is that just you know, the kind of the old
27:39
Speaker 1: fire hazard things. And I think I've almost you know, said,
27:43
Speaker 1: burn your house down. Yeah, fireworks and also uncooked sausages.
27:49
Speaker 1: So a lot of people cook something like kill Boss
27:51
Speaker 1: that's already cooked and that's fine, like totally grilled that
27:54
Speaker 1: grill that would fide be happy. But if you have,
27:57
Speaker 1: if you have, there's a lot of these artisanal uncooked
28:00
Speaker 1: ossages that you see, you know, links and links of
28:02
Speaker 1: them attached, or stick cut bacon, and that is like
28:05
Speaker 1: a fire hazard. As you were saying, you know, you
28:07
Speaker 1: can start a fire with all the fat in there,
28:10
Speaker 1: and it also won't cook well, you know, because it's
28:13
Speaker 1: probably gonna burn on the outside while it's still raw
28:15
Speaker 1: on the inside, and then you can't eat it, so
28:18
Speaker 1: you really shouldn't. And plus like if it's in the
28:20
Speaker 1: sausage and it's a casing, it can explode out. So
28:24
Speaker 1: there you go. All right, Well, Kate, you said that
28:26
Speaker 1: this caused a lot of controversy at the cook out
28:28
Speaker 1: that you had yesterday. What were people most jazzed over?
28:32
Speaker 1: Most ignited burger? I would say people were most ignited
28:37
Speaker 1: over the burgers. They really were, like, you can't tell me,
28:39
Speaker 1: top chefs can't tell me how to cook my burgers.
28:42
Speaker 1: But you know, actually there were people. I couldn't believe
28:46
Speaker 1: I had any support here. But my friend had worked
28:49
Speaker 1: as a fry cook for a while at the Beach Club,
28:51
Speaker 1: and he was like, it's true. If I'm cooking burgers
28:53
Speaker 1: for people who are standing there, I will cook it
28:56
Speaker 1: on a grill. But if I'm cooking my own burger,
28:58
Speaker 1: I cook it on a flat top. So I have
29:00
Speaker 1: some backup. So I see in the you spoke to
29:04
Speaker 1: the owner of Latin Latin, you know, Latin Grand Central
29:08
Speaker 1: Terminal Um in New York, and they said, yeah, they said,
29:11
Speaker 1: do not cook tortillas. That's something I've never even thought
29:13
Speaker 1: about cooking. You know what I think when people are
29:16
Speaker 1: making tacos, because it's a fun thing to do. You know,
29:18
Speaker 1: people are definitely expanding their repertoires on the grill. And
29:21
Speaker 1: you see people maybe cooking like chicken that they're going
29:24
Speaker 1: to put, you know, in to make tacos with. And
29:28
Speaker 1: that's really fun. But and so to facilitate it, some
29:31
Speaker 1: people will throw tortillas on the grill. And this guy
29:34
Speaker 1: is clearly a purist, the sky Julian Messina, and he's like, Nope,
29:38
Speaker 1: don't do it. Just it's better to wrap them in foil,
29:42
Speaker 1: or you can you can like keep them on again,
29:45
Speaker 1: you can heap them on a plantcha, you know, taking
29:48
Speaker 1: a step back, I do have to say, as the
29:51
Speaker 1: mother of two boys and who has understood the the
29:55
Speaker 1: importance of time, these chefs are kind of opening themselves
29:59
Speaker 1: up to sort of criticism that they're not really facing reality.
30:02
Speaker 1: I mean, it is so easy to throw things on
30:04
Speaker 1: a grill and fast and convenient that the idea of saying, well,
30:08
Speaker 1: you know, it's not perfect because maybe leads lightly will
30:11
Speaker 1: did is absolutely ridiculous for people who are trying to
30:14
Speaker 1: serve a lot of people, or who have small children.
30:16
Speaker 1: I mean, is there a caveat here that this is
30:19
Speaker 1: just their per personal preferences. Are they basically saying you're
30:22
Speaker 1: a heathen if you do it this way? No, I
30:24
Speaker 1: think I think all of them will allow. I mean,
30:27
Speaker 1: I think it would be hard pressed to find a
30:28
Speaker 1: check who was not cooked at burger on a grill.
30:31
Speaker 1: So I'm not sure any of them this is like
30:33
Speaker 1: the hill they're going to die on. But but they're saying,
30:36
Speaker 1: if you want the ultimate burger, like the best burger,
30:40
Speaker 1: it really is good cooked on a flat top, because
30:42
Speaker 1: then you developed that crust like it gets that delicious
30:44
Speaker 1: charred crust caramelized and you're not losing like juices and
30:48
Speaker 1: fat to the fire. But I can guarantee you that
30:53
Speaker 1: I'm sure they have all cooked burgers on the grill,
30:55
Speaker 1: and I'm sure in the future you will be able
30:57
Speaker 1: to bust them all cooking burgers on the grill. So, Kate,
31:00
Speaker 1: are people in your reporting are you finding that people are,
31:03
Speaker 1: you know, grilling as much or more than they used to. Yeah,
31:07
Speaker 1: I know people love it and people are grilling year round.
31:09
Speaker 1: Now that's the thing. You can buy so many different
31:11
Speaker 1: kinds of girls, whether you have like a small city
31:13
Speaker 1: apartment or a huge backyard. Um, there's so many different
31:18
Speaker 1: growth that are being built now to suit all kinds
31:21
Speaker 1: of lifestyles and the way people live. So people love
31:24
Speaker 1: to grill. And the other thing that's cool is you
31:26
Speaker 1: can grow over all kinds of things. You know, used
31:29
Speaker 1: to be the people were which is maybe talk about would,
31:32
Speaker 1: but now they talk about a specific kind of wood
31:34
Speaker 1: that they want to cook on. People are really geeking
31:36
Speaker 1: out on it and it's kind of fantastic. So Kate,
31:40
Speaker 1: if you are going to a barbecue at someone's house,
31:43
Speaker 1: what should you bring to the barbecue as a guest,
31:46
Speaker 1: that's a great less um. I think. I always think
31:50
Speaker 1: it's good to bring a bottle of rose because it's
31:53
Speaker 1: the drink of the summer, you know, and you know,
31:56
Speaker 1: then you don't have to fight about what people are
31:58
Speaker 1: going to grill on, you know, whether or not you
32:01
Speaker 1: should be grilling those burger patties. But um, what kind
32:04
Speaker 1: of barbecues you go to? One more people drink a
32:08
Speaker 1: lot of rose, I guess, But but I think, um,
32:12
Speaker 1: I think that's always a good thing. I think bringing
32:15
Speaker 1: dessert is good. You can find so many great, you know,
32:18
Speaker 1: packaged cookies and they come in like these really cool tins,
32:22
Speaker 1: or you know what else is there? You know what?
32:24
Speaker 1: Actually I brought to a party the other day because
32:27
Speaker 1: it's like such prime season as strawberries. So no I
32:30
Speaker 1: would eat cookies. But if you can find the fruit
32:32
Speaker 1: that's in season, there's so many farmers markets now, and
32:35
Speaker 1: if you get just like a really nice little basket
32:38
Speaker 1: of something, there's nothing better than that. Kay creator, thank
32:41
Speaker 1: you so much, Katis food editor, if you couldn't tell
32:44
Speaker 1: for Bloomberg Pursuits and just a fantastic article in the
32:47
Speaker 1: Bloomberg Business Week magazine. It's essentially the takeaways kind of
32:50
Speaker 1: what not to grill and why, and it's and the
32:53
Speaker 1: y comes from some famous chefs who kind of, you know,
32:56
Speaker 1: they kind of know where they're doing. Thanks for listening
32:58
Speaker 1: to the Bloomberg Penl podcastst You can subscribe and listen
33:01
Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer.
33:05
Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa
33:07
Speaker 1: abram Woyit's I'm on Twitter at Lisa abram woits one
33:10
Speaker 1: before the podcast. You can always catch us worldwide on'm
33:13
Speaker 1: Bloomberg Radio