YouSaid · the spoken record

Patrick Perret-Green

lines on the record: 125
first: 2024-06-06
most recent: 2024-06-06
sittings or episodes: 1
sources: podcast

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“Yes, we saw that in the Federal Reserve in the US that as inflation fell last year, the real inflation adjusted rate of interest increased so that central bankers saw that as inflation falls, keeping the nominal rate level at 5.3%, let's say in the US, the real rate of interest rises, i.e. becomes more restrictive, so then it causes a need to cut. And that's why the Fed penciled in three dot plots this year.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“If you think about, for example, the ECB and the Bank of England when they were hiking rates, ECB went last hike was in September, which is completely unnecessary. And the UK, I think, was August. But even the mid-year hikes, were they really necessary? Because they were based on inflation forecasts that proved to be way too high. So they're affected. They had real interest rates they were thinking they would have had are actually much greater than they are now. So they over tightened because they're scarred by their experience. I think they're looking in the rearview mirror. So they will become data independent rather than forward looking, which is, well, we're always told that central bankers were meant to be forward-looking because of the lags of monetary policy. Now it's basically they're like a racetrack driver. They're just going down the road and they're looking ahead of themselves. And they're thinking, oh, wow, suddenly they're going to have to do a sharp U-turn or a right turn.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Well, sadly indeed, you know, to the biggest private, you know, but they're hiring, indeed hiring lab, and people can find that just Google Indeed Hiring Lab and it's all out there. But you can see the rates of pay are now, according to Indeed, all down to around about 3% in the UK, or pretty much 3% everywhere. So that says that what we're seeing in wage data is certainly in Europe, in the UK, which were worse hit by the Ukraine crisis. So we obviously got, you know, because of energy, we got a bigger hit. But that's all very encouraging. And I think when it comes to central banks, my general view is that when we look at what central banks are thinking in the middle of last year, when they were doing their last, let's call it the last 50 or 75 basis fights on hikes, and they were fatal forecasts, were much more negative as a whole, much higher than reality has proved to be.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Obviously, there's a large amount of wage catch up, but then we look at, and it doesn't matter if it's the US or the UK or Europe. If you look at the, and it was notable, I found that Powell is last in a press conference. He actually talked about E&D labour market, normally very rare for a fed chair to actually talk about a non-official data series. Now, we look at wage growth on those.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Labour market conditions index has really started to deteriorate quite rapidly and it tends to lead the way. U6 has risen more than U3 so that's mark you know people who are marginally attached to labour force and they always tend to be the ones who lose their jobs first so there are these cracks out there yes inflation has been sticky but the question is how much how sticky it will be going forward i mean i yes because of the surge of inflation we saw in 21-22”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“How is that going to income overall consumption going forward? And then even on the anecdotal stuff, we're saying target coming out and saying that they were saying people even reducing spending on essentials. So it's like, no, right, I'm going to start counting out the pieces of paper before you go to the bathroom. We're going to hit ration. But you know what I mean? It's that sort of element. So people go, oh yeah, but they don't, you know, it's the wealthy who are responsible for bulk consumer spending. Yes, they are. They always are. But it's the cracks at the edges. Ultimately, when we talk about economies with growth of 2%, well, if a big enough proportion of people, even on low incomes start to suffer, unemployment starts to rise and there's that. So we look at all the arguments going on about the rise in unemployment in various states, things like U6. The Kansas Feds.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, within the commercial banking system. And commercial banks are actually retreating quite rapidly and auto lending and stuff like that. They're being very cautious about that sort of things. And we've actually seen consumer growth. So we had a surge of confidence, everyone coming out of their debts amounts had fallen down. So they thought, oh, I've got space to spend and very strong employment market. And now we're seeing the rate of consumer borrowing or bank borrowing is down to over the past three and six months it's virtually zero and the year on year rate is down to less than three percent which is historically low you know we never it never grew that slowly in the previous in the last decade so we're seeing a thing that consumers are sort of getting tapped out on their credit cards on their ability to borrow and lenders have been more cautious”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Ground to a halt. So lower incomes are increasingly stretched and strains. Credit standards are still tightening. If anything, interest rates on things like credit cards. And they've been the reals. When we look at consumer loans, they've been the driving rise in consumer loans over recent times. So they're now like 55% of consumer loans, oh 55%, which is the highest level since.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Actually, we think we lost 192,000 jobs. And are we going to get these revisions going backwards? So we obviously had these very strong employment numbers at the start this year. And it does leave everyone scratching. But also it's the quality of employment that's going on. So we're now at levels, when you look at it and you can do like simple ratios, for example, of the percentage of jobs being created that are government and healthcare. And we're now back, they're about 60% of jobs. And you go back into history and you look back at the data that we had when you look at Osata series. And that's what we saw going into 2007-2008. It's what we saw into 2001. So it's a qualitative element, so high paying jobs in Bloomberg actually has a series for high paying jobs where you take it and you look at that employment creation of better paying jobs has virtually”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“The surge was seen. It's becoming almost exponential, which is get, and this is, and don't forget, this is against the background of supposedly good employment. And there's a whole debate out there as well. So how strong is the US labor market really? There's a lot of problems with the data, a lot of questions about the data. So, I mean, up until, you know, I think through my career, I mean, we've generally taken BLS employment numbers at face value. And then how can we get all of a sudden, you know, you have other guests on here like Danielle, the Martina booth. And we've all talked about, well, we get these final revisions for the third quarter of last year. And the BLS says, oh, non-farm payroll data, look at Bloomberg, even now. But non-farm payroll data for Q3 shows 561,000 jobs created. And the BLS comes back and said,”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“But there was the underlying other elements of the cares which had lasted up until now. They lasted for like three years. And they are like they're dead. They're finished. They've ended effectively. So we are going into a tight fiscal environment. And also it looks like it's very clear that we're seeing it from the certainly middle to lower incomes definitely now started struggling. We could see that from this surge in delinquencies that a lot of people, because they got their income went up and they were owing like moratoriums on, well, you couldn't get evicted or you were having a student moratorium and all this sort of stuff, your credit score went up. They borrowed more. And then classically, they're going bust. And when we look at the pace of delivery.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“The huge fiscal stimulus and the long running effect of the CARES Pact, which most people don't tend to realize that a lot of that lasted until very recently, be it money that went to state and local governments. You've got to spend it or healthcare subsidies and the number of people who are now how enrollments are falling off Medicaid because those freebies are disappearing.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“And there seems to be people bringing forward normally the seasonal demand gets really strong about July and people bringing forward that demand because they're concerned about inventories. Even though many inventories, if you look at the broader merchant wholesaler inventories versus sales ratios, they're still pretty high. And the top end of their ranges by historical standards. But in terms of what has been the marginal source of demand for inflation, you probably say the US consumer because he's had his”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Just as off the top of my head, you know, when the BLS talks about new car prices, how much does it factor in the incentives? Or it's just taking list prices or stuff like that. But as a minor old thing in terms of, I think goods price inflation is going to remain soft overall. And you've just got to compete, haven't you? You have to take the margin pressure. I mean, I suppose on the other side of it, we have seen a concentration of powers in industries. We used to talk about in tech. We were talking about food manufacturing. We talk about shipping, where I personally feel like all the global shipping lines should be taken to, but they've got various exemptions because of their weird status. And there's a lot of stuff if you follow freight waves or the lowest start at the moment where it seems like, okay, there are disruptions at the moment.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I think there's a broader issue there is one we're seeing for example already what's going on in auto so the great auto shortages dead we could see that from inventory numbers okay there are certain brands who's the guy who's the guy all the stuff car dealership guy who's just like become this brand in next to no time because such great stuff but um you know so there's still demand for your toyotas and things like that but if you're you want an f150 or stuff like all big truck the inventory is a way out now and also what we're seeing is i saw something else earlier on today that buick are bringing out a new car and it's like the prices are really coming down as well so and the discounts we can see the incentives all of a sudden we're back to zero interest rates for 72 months and the incentives are really massive which is an interesting one because i was trying to figure out”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Before we go to geopolitics, China is a deflationary force and deflation prices going down. It exports that deflation around the world, that could moderate inflation around the world in the US and Europe. So call it disinflation, help inflation return to the Feds 2% mandate. We see that today, for example, BYD, the Chinese largest electrical vehicle manufacturer making a fifth generation hybrid that's under $14,000. So definitely very cheap. So what do you think the impact of Chinese deflation will be on the rest of the world? Do you think it could cause a global slowdown? For example, if the US has a slowdown because the US consumes so many things, the saying is if the US catches a cold, the rest of the world catches a flu or something.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Utilities because AI is so energy intensive that it also raises the question of how many of these AI businesses or anything AI related is actually economically feasible if they need so much energy is it going to be like a railway boom of stuff like that or airline booms you can talk about all these various past historic where you go vast influx of capital you know so we could talk about NVIDIA although this there's a lot of stuff talking about the way Nvidia books is revenues and had you know it's sort of this I'll leave it to others but there's plenty of stuff there out on Twitter and I will call it continue to call it Twitter I'm never going to call it the eck give it the X word and it's just no one talks about it or IX someone yeah well that normally you know no so I think China remains an economic problem”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Yes, as Horace speculates, and to my mind, as a lot of speculation going on there. So we're seeing inventories in China, copper and iron ore rise. And some people say, oh, let's stop panning because they're afraid of inflation and all this sort of stuff. Well, no, actually, I prefer to look at the iron ore side of things and the steel industry. And what China's doing with his exports. And also Chinese copper is trading a discount. So normally when demand is high in China for it, really, there's a premium and that's not. So we're going to talk about the EVs and the green generation and all this sort of stuff. The real substantive demand, to my mind, remains weak. So I'm very cautious about this sort of commodities frenzy that's going on. And you can tell you the same about AI. And all of a sudden everyone loves you.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Takes 50 over half of world's copper, of which the real estate industry took about 50% of that, mostly you divide it up, it's about 70% of that would go into power lines and transmission, et cetera, and the other bit would go into buildings. You've got housing starts down by 50%. So that's 50% of 30 or so 7.5% of global copper demand isn't there anymore. It's disappearing.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“So if you follow Lacey Hunt school of thought, that's very deflationary. And we've seen it in other bus, you can talk about a post-GFC era, that overall consumer saver behavior operates like a supertanker. It's hard to see anything rebounding very soon. So China's domestic demand is going to remain soft. How Chinese exports do going forward is with more sort of trade arguments that's put that politely and the sheer excess capacity there. It just says to me that it's going to be a very deflationary force. And it's interesting. So I think we talk about commodities. And it does seem to me, and there's not a bit of froth going on. So China, for example, China is the world's biggest consumer.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“About 15 years or so, just with, and that's what consider that's the site, the economy was so much smaller. And there were some very powerful deflationary impacts. So you can look at what households are doing. We've seen household borrowing has slowed to a snail space and basically household deposits have absolutely surged. So one of the ways I look at it is this equivalent alone deposit ratio of household loan deposits. And it's had a dramatic fall. So early 21, it's about 70%. Now we're down about 56%. It says, you're not getting rid of the debt. Obviously some people are. But overall, that's an effective deleverage. It means money. Money supply growth has slowed to historic lows. But not only that, the velocity of money is slowed too.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Enthuse consumers. Whereas in the past, if you go back to 2015, big stimulus, get the housing market going again. This time around, debt metrics and the sheer scale of the problems mean that's very difficult. And we're seeing that with... Despite all the news and all the excitement that people have had recently, which has also been a big factor behind the rise in Chinese equity since February, the reality is that people's hands are still staying in their pockets and that while there might be a small uptick in housing activity, if you look at residential, just the latest data for the tier one cities, which are actually doing better, floor space sales are down at historic lows. And if you do national levels, they're back to level of sales is back to sort of...”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Lower inflation is good. I mean, China is the global producer. And we can look back at long-run charts of China producer prices. And it's very hard for other producers, certainly of manufactured goods, to break against that trend. We see that China leads producer prices. It did it in the last decade. It did it. It was the first to see producer prices really come tumbling down. Obviously, they didn't get hit to the same degree by the Ukraine war and energy prices because they were getting cheap energy from Russia. But overall, and then we've got the other side of it of the ongoing property bust, which, for my mind, it could almost become a generational issue when you add in not only excess supply, but demographics, the inability of the Chinese state to”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“Away. On the other side of the equation, we've clearly got a very deflationary China. And I still think that the world as a whole is not giving that enough credit in terms of the positive outlook for inflation.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT
“I mean, the biggest thing is there's not really a clear narrative. I mean, I've been in this business far too long. As I was saying to you earlier, I started in classic timing two weeks before Black Monday. So people could look that up and then start to calculate how unfortunately old I am. We've got so many different conflicting forces, man. So we can talk about an ostensibly strong US economy that's still going. Is there inflation threats there? And then the other extreme you've got what's going on in Asia, okay, JDB yields a surging now. There's a few charts we can look at on that. Certainly when you look on a shorter term chart, it looks like JTB is thriving. Are the bond markets yields higher? And they are having an impact. However, if you look back on the 20-year chart, it looks like JTB yields are actually playing catch up. So maybe we should be cautious.”
2024-06-06 · Forward Guidance · Patrick Perret-Green: China Will Export Deflation, The U.S. Labor Market Is Softening (For Real This Time) · IDENTIFIED FROM THE TRANSCRIPT