YouSaid · the spoken record

Neil Dutta

lines on the record: 119
first: 2023-01-27
most recent: 2023-01-27
sittings or episodes: 1
sources: podcast

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“Well, I mean, they very much were anchored to. I mean, there's a recency bias in policymaking. You know, in the same way that fiscal policymakers were criticized for not doing enough during the financial crisis. Could make the argument that fiscal policymakers overreacted during the pandemic crisis”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, they're kind of playing catch up, right? I mean, I think based on their behavior over the last 12 months, it's pretty clear that they should have started sooner, otherwise they wouldn't have.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think that to me is sort of this interesting kind of dynamic is that it's just a lot easier politically, I think, to fight inflation.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Were people talking about let's go and like, um. Know stopgap the banks and like, even though no, they weren't right because, you know, it was like, oh, what had more public support? Suspending the gas tax or bailing out the banking industry at that time. Absolutely. No, there was very little.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“In 08, the bottom was falling out from the economy. I mean, we were having, you know, we had like five or six months of job losses, even as gas prices were going up. $150 barrel.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Inflation, then around unemployment because it's always, oh, it's like, oh no, I got to pay for that. You know what I mean? Like that's how, right? Because The baseline expectation like your social contract in America, I think, is oh, you got a job. Like to me, it's like, yeah, I got a job. Great. Good for you. Everyone has one. You know, whereas, oh, the prices for these things are going up like 6%. That's weird. So that's why I think politically it's much easier for politicians to address that than unemployment.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, I mean, it's one of the reasons why I think Reagan became president and Sanders never will, right? I mean, the fact, I mean, because I think it's much easier, I think, to form a political coalition around”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Very robust. And they're still an inflationary impulse from the labor markets. And, you know, look, I mean, I think that this is also, in some respects, maybe a... On our society? I mean, what do you think most people would prefer? Right? I mean, would you prefer 5% unemployment and 2% inflation or 3% unemployment and 4% inflation”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“They view the labor markets as the conduit to achieve their inflation goals. Can debate whether that's right or wrong. I mean, I'm not an academic economist, but that's what they're telling us. And so if that's the case, then... Unemployment is one way they're going to achieve the goal of getting inflation back to 2% in a sustainable way. Seems like a lot.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, think about capital spend. I mean, right? So capital deepening is what drives productivity. And that's basically CapEx relative to labor hours. And that hasn't been particularly strong either. So what's the, I mean, I get that there are interesting things going on. But I don't know that that's necessarily going to drive significant gains in productivity. And as I mentioned, labor quality is a lot worse now than it had been before. So I think it's a bit more, for me, it's a little bit more challenging to accept the idea that productivity is going to save you from the inflation.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know that the data is really missing that much. I mean, productivity has been weak, even in the areas where it's very easy to measure it, like manufacturing. So that to me is something that's important to point out.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“From their mind, remember, the one time you had a soft landing in the U.S. economy, right? So, this is one of the things. I do think we have an increasing odds of a soft landing right now, but that doesn't mean the odds are increasing permanently, right? Think about when we had a soft lining. The example that most people will remember is the 90s. So, what happened during that time? First of all, we didn't have a formalized inflation target of 2%. And number two, what was the call that Greenspan nailed? He got the productivity call right. At the time, I mean, Janet Yellen was telling him, you got to keep hiking. Like, look at how low the unemployment rate was getting. But what Greenspan came around and said was, well, look, productivity is taking off Probably don't need to be hiking as aggressively.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not about what's wrong with it or not. I mean, I'm a business economist. I don't have an opinion. For me, it's what are they telling me? You know what I mean? For whatever reason, the Fed views the labor markets as the conduit. And if compensation growth is running, Now, let's say it's 5%. And productivity is. One and a half. You're basically talking about an inflation environment of three and a half percent ish, which is not.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“But that is inflationary from the Fed's perspective. Remember, the sort of equation that Powell always references is compensation growth equals inflation plus productivity. That is sort of a identity that they use in macro.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, I mean, you can maybe see, I mean, I think part of the issue, though, is think about who's filling some of that vacuum. You are seeing participation rates rising for those aged 16 to 24 years old, not prime age workers, but younger people. And a lot of them are coming in. What does that mean? You're basically, you talked about retirements, you have a lot of inexperienced workers coming in. What does that mean? Those aren't the most productive people. So experienced people are leaving, inexperienced workers are coming in. That's not necessarily the best dynamic for labor productivity, right? I mean, it's going to take some time for those workers to kind of get up to snuff, right?”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“I just feel like financial conditions are easing too much. They shot their shot. And at the same time, fiscal policy tightened last year in 2022. And despite all that, The unemployment rate finished the year at dot dot dot 3.5%”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I mean, I'm of the view that they probably, I think the Fed will probably step back soon. I mean, they're basically telling you that they get rates up to something a little over 5% and stop. The question in my mind is whether they're stopping too soon. Really? I do think that you can make that argument because...”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'm certainly an economic optimist relative to the consensus. And I think the consensus is way off sides, as I think the Fed is way off sides right now on meaning.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“And until that changes, you can't really make that argument. And so for me, it's, why does the dollar move? The dollar basically moves because of policy and growth differentials. And so in the 2010s, the reason the dollar was doing so well is because US economic growth was a lot better than Europe. It was a lot better than Asia. I mean, we were talking about a China hard landing like literally every year following 2012. So China reflated and basically every year after that it was hard landing risk in China. So I think that's why the dollar moved. And right now what's going on is the dollar is, I think, losing steam. Because people are getting a little bit more optimistic about what's going on globally.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Like the gold bugs. And I mean, it's the same sort of thing, you know, and I think you can make that argument with the dollar. The dollar, I mean, there's no alternative, right, to the US dollar. It's still the reserve currency because we have the most liquid, the deepest capital markets in the world, right?”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, to me, it's actually kind of. Kind of shocking like how enamored people get with these doom and gloom sort of ideas because they don't pay at all. I mean like it's one of these things where one of the things I've learned is that the negative case always gets sounds a little bit more intellectual people give it a little bit more attention but one of the things that I've learned is that in this business people that get one call right tend to be wrong about most everything else. And I think this is You know, I mean, so as an example like”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, more recently, obviously, the dollar decline is, I think, an unambiguous positive for U.S. growth because it's going to juice exports, particularly of manufactured goods. But a lot of the rally in the dollar, say, from 2014 to up until recently, I mean, a lot of that was just growth differentials, right? I mean, think about why the dollar moves. The dollar moves really for, I think you could say two reasons. It's basically growth differentials and policy differentials.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Real Reds for Cratering, right? I mean, so the lags are not long and variable, they're short and predictable. And you're seeing that already, right? I mean, as an example, we just talked about how interest rates have been moderating. What have we also seen? We've seen mortgage purchase applications pick up. We've seen homebuilding stocks do better. We've seen builder sentiment pick up. It's instantaneous. And it's the same thing. I think you can make that argument with the dollar. I mean, everyone's kind of up in arms about, oh, the ISM manufacturing PMI is below 50. Yeah, and the dollar's off 10% from where it was in September. What do you think that does for factories? Obviously, it juices export.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“But I think the growth impulse from financial markets is already flipping positive. So how could it, I mean, the funny thing about this long variable lag argument, if it's an 18-month lag, so what was happening 18 months ago? The economy was ripping and the Fed was reiterating its low, low, lower for longer approach. So that means monetary policy was really, really easing. So are we still dealing with the easing of 18 months ago?”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, yeah, I mean, back in the 80s, I mean, research analysts would figure out what the Fed did three weeks ago, right? Based on what was going on in the money markets. Now they tell you what they're going to do and the markets price it in instantaneously.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“No recession. Yeah, growth at potential, if not little better. I mean I guess for me, it's, you know, what's the mechanism for the recession? Right? I mean, the argument now is what China's reopening and Europe is looking a little better and the U.S. economy is going into recession. I mean, in my experience, the causality never goes that way. It goes from the US to the rest of the world, not the rest of the world.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it means that they're going to push the economy into recession. I mean, I guess the one thing I would say about the bond market is that the bond market has a habit of pricing in tightening cycles. Way before they actually start, right? So there's always these sort of opportunities in the front end of the yield curve early on in an economic cycle. And they tend to price in the end of the tightening cycle after it starts too soon. Once the cycle starts, the bond market tends to price in the end too soon. And I think this is probably. Another one of those times because I don't think the Fed is going to cut. And one of the reasons why is because there's just too much economic momentum behind the U.S. economy”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I mean, how bad can the stock market be? How dumb can that money be if that's what's driving a lot of the Fed's reaction function at times?”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, there was the great Samuelson quote that we all know of, right? Like the stock markets predicted nine of the last five recessions, right? But in reality, the stock market has probably predicted. Four of the last five Fed pivots.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a great question. I mean, as you know, there's this sort of thing that goes around Wall Street where the equity guys are the dumb guys and the bond guys are the smart guys, right? I don't believe that.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“And the thing is that it never got as low as it did in 2014, despite 7% mortgage rates, right? So, what does that tell you about underlying demand? So I think to me, that's an interesting kind of development here. And obviously, if you have a pickup in housing That's going to provide some tailwind to things like household durable goods, furniture, carpets, appliances, stuff like that.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“And you're also in a very strong demographic patch for housing, right? I mean, people are, you know, we're sort of in our prime marriage years as a country. And so that. That helps as well. I mean, one of the interesting developments out of the pandemic is just we have a bit of a mini baby boom going on, right? And so what does that, I mean, so people are not only going to buy a home for that Zoom room, now they're buying a home for that nursery. And I think people figure it out. I mean, one of the things people will be surprised to see is just look at what the incremental drop in rates will do for housing activity, right? I mean, so.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Does that tell you? I mean, a lot of these growth pessimists that we're talking about, oh, housing is the leading indicator. Well, where are they now? I mean, housing is starting to revive. And what do you think that means for durables?”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and that probably overstates things, right? I mean, we know that looking forward, auto sales will probably be running better than 13.5 million SAR over the next several months. We already see”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Obviously, we know that motor vehicle assemblies are picking up some steam here. But demand is still very, very strong. I mean, If you look at something like real consumer spending of goods, Relative to its pre-pandemic trend. I mean, there's been no big sort of collapse to trend. I mean, it's sort of working itself out through time, right? Right”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. That's got to be a little bit of both. I guess in terms of where we stand right now, clearly there's a lot of improvement on the supply chain side. We're seeing delivery times come down.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in this business, it's always nuance never gets enough attention, but that's usually where the answer is. I mean, on inflation, is it supply driven? Of course it is. Is it demand driven? Yes, it is. I mean, it's both.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“So you have to be very, very sure about the macro environment before you make a down payment on a home. So the fact that people are willing to do that, I think kind of led me to believe, okay, if housing is historically a good leading indicator for the economy, and that's what's really surging right now, what does that mean for everything else? And obviously, if you're going to buy a home, you have to fill it with stuff. And we had a huge boom in stuff. Right. And that to me is what did it. So, you know, to me, the V-shaped recovery and the good side of the economy, I think, was an important development.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the thing that really got it for me was what was going on in the housing market, right? I mean, if you have this sort of pandemic event, And people go out, and what's the thing that pops first is residential investment and home sales. That to me is a huge issue, totally opposite from the last crisis. And what do we know about housing? It is like an irreversible.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“If they always? I mean, you could make that argument. But in this case, they were kind of very much keying off of labor market dynamics for their reaction function. And the unemployment rate was falling very, very rapidly. And so that's what started it”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“And unemployment was falling more rapidly than people thought. So, what do you expect the Fed to do at that point? And oh, by the way, they're behind, right?”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think the first thing to do in this business is you want to make sure you have the now cast right, right? Forget the forecast. Let's just figure out what's going on right now and what's been happening. And at the time, what did we know? Inflation was coming in a little bit firmer.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“And at the time, remember, Barry, I mean, there was a legit debate going on Are we going to have an L shaped recovery? Are we going to have a U-shaped recovery? And I think a lot of the issues around the Fed trajectory was just... A function of that. And we basically had a V shape recovery, and that Warren did a very aggressive response from the Fed.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“We threw a lot of money at the problem on top of that, right? I mean, a lot of we turned the lights off, we turned it back on. You had a V-shaped recovery plus all the stimulus. Plus, you know, paycheck protection. I mean, when we had that first employment number that sort of knocked the lights out, everyone was kind of surprised because we were all keying off the initial claims data, right? And so we had seen that maybe these companies were hiring people back pretty quickly.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think you just have to go back to the initial reopening of the economy, right? And in hindsight, We basically had a V shape recovery.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. Right. And so you have to just pick your battles wisely. And I think in that case, I mean, Four was conservative. I mean, in hindsight, that was, I mean, at the time it sounded sort of radical, but in hindsight, it was obviously not enough. So I think that to me kind of set the sort of stage for me at Renmeck, and I think it was very helpful to sort of come up under those two guys.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so, I mean, I think, again, one of the best things that Ethan Harris actually ever told me was, in this business, it's about picking, like weighing probabilities. And then picking your battles with the consensus wisely. Like, I'm not the kind of person that's just going to be contrarian for the sake of being so. Like that to me doesn't really make sense.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Just leave me alone. No, yeah. I mean, for me, it was a great education. I think those first seven or eight years at Merrill because I had Rosie. I was fortunate enough to work with two greats, right? I mean, I think Ethan Harris is sure. Is one of the best. I mean, he had a great call this year. I mean, in the last year, I mean, he was the first one to basically say, you know what, the Fed's going to go every meeting. And at the time he said it,”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know. John Inch, who was, I think, the industrial analyst at the time. Here's what he's saying about Caterpillar and deer and so on and so forth. Whenever you have that, it makes a very good morning call. And it makes a very good marketing tool. So I would try to do that a lot. And as I did more of that, I would be asked by the Salesforce on the equity side at Merrill to kind of. Can you come on the road with me? Can you come out to California and talk to so and so? Can you Texas and so forth? And so I would do a lot of marketing for equity accounts at Merrill. And I was really only like a VP at the time. I was a pretty junior level person. And so that. Got me going, and then I got approached by Renmec in 2012, and now I've been doing it for them for this last decade.”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source
“Right? So, if you think inventories are done clearing out, what does that mean? Well, it should be good for manufacturing. Now, let me call, I mean, and you have all these analysts that are covering all these companies. So why don't you go pick up the phone and talk to them and see what they say? And then for an equity sales force, that is a great thing because when you have your macro guy talking to your analyst, you can pitch that to your clients. Like, okay, my macroeconomist is telling me that inventories have bottomed out. And here's what...”
2023-01-27 · Masters in Business · Neil Dutta on Economic Research · IDENTIFIED FROM THE TRANSCRIPT · source