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This podcast was originally published by BFM 89.9 The Business Station. Find it here: https://www.bfm.my/podcast/morning-run/market-watch/magnificent-seven-us-fed-cpi
Guest speaker Tony Nash, CEO of Complete Intelligence, offers his insights on the market trends, particularly focusing on the impact of interest rates on sectors like banking, real estate, and construction. He discusses the potential outcomes of the earnings season, emphasizing the significance of passive investments in shaping market movements, especially in tech sectors and commodities like oil and gold.
Nash also touches upon the implications of decelerating inflation in the US on Asian markets, pointing out the role of international trade in influencing inflation rates. He underscores the importance of understanding market dynamics beyond mere forecasts, highlighting the interplay between global demand, asset valuation, and inflation expectations in shaping market outcomes.
The podcast emphasizes the resilience of markets amidst various uncertainties, showcasing the complexities of factors like interest rates, earnings reports, and commodity prices. The discussion sheds light on the nuanced relationship between market trends, economic indicators, and geopolitical dynamics, offering a comprehensive overview of the current market landscape.
Transcript
BFM
This is a podcast from BFM 89.9, The Business Station. Bfm 89.9. It’s 07:06. It’s Friday, the 12th of April, and you’re listening to The Morning Run. And in front of me is Philip Sea. I got your name right this time. And I’m Wong Shauwning. Do I get a medal? In about 30 minutes, we’ll take a look at the performance of the Asian Pacific Aviation Sector. But let’s recap how global markets closed yesterday.
BFM
Tell you who deserves a medal, US markets, because They are on a tear this year. The DAO was flat, but the S&P 500 up 0.7 %, and the Nasdaq up 1.7 %. Over across in Asia, the Nikkei was down 0.4 %, Hangseng down 0.3%, Cheungai Composite up 0.2%, Singapore’s STI down 0.3%. Back home, FBM, KLCI, DC also deserves a medal. It was closed for the Raya holiday, closed on Wednesday at 1,553, down 0.6%..
BFM
Okay, but still up 6.8% on a year-to-date basis, so a little bit of cheer there. For some insights on where international markets are heading, we speak to Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Always good to speak to you. Tony, please tell me what is happening in US markets because PPI numbers, US producer price increased in March from a year earlier by the most in 11 months, but yet markets rallied. What’s What’s happening?
Tony
Yeah, I think from the quant trading perspective, the PPI looked muted. And part of the reason was energy costs looked like they fell, which is not what we’re seeing on the ground in the US. So some of these government data, when they come out, the algos trade these based on the data that come out, but the actual data on the ground is different. So what we’re seeing is algos trading because they believe other algos will be trading. You have to look at today as one of those potentially strange trading days. Friday in the US, we’ll start to really understand what people see through the PPI data. Obviously, we saw CPI come out on Wednesday in the US, and it was elevated compared to what people thought. It’s possible that we see inflation peaking, but the real question there is, how many rate rises will there be? Expectations are now down to one or two, where it was something like five just two months ago. It’s puzzling when we see, like today, we see tech rally, tech shares rally, when the interest rate cuts are being put further off, and there are fewer. So markets are a little bit out of balance right now, and we’ll only know in the next few sessions where things really start to settle.
BFM
In the meantime, US earnings season starts in full swing. Friday your time. I think we’ve got J. P. Morgan, we’ve got Wells Fargo, we’ve got Citigroup reporting their numbers. How do you think results will be this quarter?
Tony
Yeah, I think with trading being active and with interest rates rising, that leaves more than an interest margin for banks. So I think banks will report well. I don’t think there’s been a huge rise in bad debt. There’s definitely been a rise in bad debt, but it hasn’t been huge. Banks will probably report fairly well. The larger banks, the regional banks, they’re still having trouble. With the removal of the Treasury program to fund those regional banks, they’re going to have difficulty for the next few quarters.
BFM
Well, talking about then the sensitivity to interest rates, I wonder what’s your take on sectors like real estate and construction, where they were hoping for perhaps some relief there, but that might not eventually happen now, Well, yeah, it’ll take a while.
Tony
The problem is these are sectors that got used to low interest rates, abnormally low interest rates. We’re actually in a more normal interest rate environment. In the US, you have things like housing, which is largely undersupplied. You have commercial real estate, which is oversupplied. The commercial side is facing serious headwinds, probably for years. The residential side will see strength for years. So it’s a little bit mixed, but with interest rates not coming down at the rate that people had hoped a few months ago, it’s going to present a challenging environment.
BFM
And, Tony, looking at earnings specifically, according to Bloomberg Intelligence, the Magnificent Seven, the likes of Apple, Microsoft, Alphab, Amazon, NVIDIA, Meta, and then finally, Tesla, apparently are on course to rise 38 8 %. These are profits in the first quarter. What happens if it doesn’t? Does it mean that there will be sharp corrections in the magnificent seven, which will in turn bring down the overall broader market?
Tony
Well, it depends on a number of things. Yes, it would definitely turn things around, but the magnitude really depends on the passive income investment. So ETFs, say technology ETFs and other ETFs that people are invested in, those are passive instruments. And so people don’t necessarily have to pay attention to say NVIDIA every day when they’re investing in a passive instrument. But when people start to see their technology returns declining, they’ll rotate into other sector ETFs. We can’t underestimate the power of those ETFs, which are fairly passive. That’s actually more powerful than individual stock buys and sells.
BFM
Can we just have your perspective on commodities, particularly oil? I mean, it’s up around 17% this year. Just now you were already mentioning that the algos are not reflecting that accurately. What’s your take and prognosis on the future? If all continues to rise, what’s the broader implications to the global economy then?
Tony
If oil continues to rise, I saw somebody put forward a potential oil price of $1,000 a barrel a a few days ago. When we get to the point of the cycle where people are putting forward those types of ridiculous forecasts, we know we’re getting, I feel like we’re getting toward the end of that. We’re not there now, but it’s the beginning of the end when we start to see these ridiculous forecasts. If you remember in, say, 2020 when Crude was, obviously it went negative one day, but generally in the ’20s or ’30s, Citibank came out and said it would be at $10 when it trading, say, in the ’30s. So you know things are getting toward the end of that, either high or low cycle, when we start to see these extreme forecasts. So do I think we’re going to see $1,000 oil? No. I actually believe it’s going to trade sideways to slightly down for the next few months based on what we’re forecasting a complete intelligence. And we’ve been pretty right for the last year or so. So I’m not expecting to see, say, $130 a barrel of or something. I think we’re in the zone for the next few months.
BFM
But, Tony, we have seen a lot of other commodities, hard commodities, actually, Raleigh, Beat, Copper, Iron. Are those all indications of global demand improving, or is it just basically money chasing assets that hadn’t gone up so much?
Tony
Yeah, well, you see things like gold. You’ve seen the pop in gold because people are afraid that inflation is going to continue to to accelerate, which we’re seeing inflation rise, but it’s not necessarily accelerating. You see copper popping because people believe that that’s an extension of the AI boom and so on. So I think to some extent People are seeing what they want in markets, and that’s great. That’s how markets work. People come up with a hypothesis. But if inflation doesn’t continue to grow at a very rapid rate, we’re going to see gold slow pretty quickly. If things like, say, NVIDIA and other chips, Intel just came out with a competitive chip yesterday. If we start to see some of those AI names mute, we’ll also see copper mute a little bit. Some of these are self-fulfilling hypotheses, and those things will tail off as that hype declines.
BFM
Which then begs the question, I think what you’re saying is inflation is decelerating, right? It’s just not moving in the fast pace. What does decelerating inflation the US mean for Asian markets then?
Tony
Yeah, that’s a great question. I think, well, if we look at China, for example, there was an issue a few days ago where Janet Yellen was in China and scolding the Chinese about exporting Chinese electric vehicles at below cost or something. Now, for the US and Europe, and Southeast Asia for that matter, China exporting deflation is helpful for consumers. So that helps reduce inflation in the US. And the US benefited from China exporting deflation for 20 some years. So it could potentially bring down the cost of EVs, EV components, and so on, if China is incentivized to subsidize those goods and export them at below their cost. I’m not necessarily saying that’s the right policy move or the wrong policy move. I’m just saying the The reality of trade in markets is that international trade helps to bring down inflation. And if we see China and other places with a devalued Japanese Yen, we see Japanese products coming to market at much lower prices with a devalued JPY. Why? So these sorts of things help out consumers in the US, where we’re seeing persistent inflation, helps those consumers out over time.
BFM
All right. Thank you very much for your time. That was Tony Nash, CEO of Complete Intelligence giving us his views on markets, saying that, oh, looks like gold is ripe for a correction. And results, he didn’t pay attention to that, although he doesn’t think that even if the Magnificent Seven disappoint, there might be a correction across the board because there’s just so much passive money in those seven names.
BFM
Yeah, he’s, I think, emphasizing the resilience of the markets, right? I mean, he’s saying, look, the bank earnings are going to be projected quite good. As you said, there’s still quite a lot of flood, cash, flood, flood, Floating around.
BFM
Yes, flushed. We’re just flushed. Flushed with cash. I personally know, but markets are.
BFM
I think all of us in the studio are not necessarily flushed with cash. So I think that’s interesting. The interesting thing also is about oil, I think, where there are all these outlandish forecast there, but it’s not about- Thousand.
BFM
I was like, Is that for real?
BFM
Yeah, but it’s not the actual forecast that matters, but it’s the trigger, what it means, right? That actually you’re near the specific cycle there.
BFM
Yeah, because all is one of those things. When prices go up, there is natural demand destruction. So there seems to be a ceiling. The ceiling can shift a little bit depending on geo-politics, global economy, but it doesn’t shift that much. You have been listening to a podcast from BFM 89.9, The Business Station. For more stories of the same kind, download the BFM app.
This podcast was first and originally published by Peter Lewis’ Money Talk. Find the Substack here:
https://peterlewismoneytalk.substack.com/p/peter-lewis-money-talk-friday-22-6c2
Topics discussed:
- Federal Reserve Chair Jerome Powell’s perceived dovish stance is critiqued for potentially leading to increased inflation and discontent among voters.
- Market reactions to the Federal Reserve meeting were positive, resulting in a broad rally across various asset classes.
- Concerns are expressed about the impact of new legislation in Hong Kong, particularly on foreign investors and the perceived shift towards authoritarianism.
- The potential implications of stricter laws on data privacy and state secrets in Hong Kong are discussed, raising concerns about its impact on the region’s business environment.
Transcript
Peter Lewis
Tony, what are your thoughts? I mean, it’s interesting, isn’t it, because he’s raised the inflation forecast. He’s raised his growth forecast quite considerably, but no change to the number of rate cuts this year, although we did get one taken off for next year, didn’t we? There was going to be four next year. Now they’re only talking about three year. So I suppose one of the rate cuts has come out for next year. But what are your thoughts?
Tony Nash
I think it’s silly, Peter. We can’t be raising our economic expectations, seeing wages rise, seeing prices rise, raising our inflation expectations and saying, oh, yeah, we’re going to make money easier. Right. And he even said during the meeting that they were going to slow the pace of the offtake from the fed balance sheet. They’re cultivating an environment for pretty easy money where demand seems to be right now. And that’s how markets took it. Markets took it after the meeting and they just ran with it because he came across as very dovish. In fact, Powell has a way of coming across either way too hawkish or way too dovish. And then other Fed speakers have to course correct in the following days. So I think he probably came off way too dovish. And I think we’re going to see fed speakers over the next week. Correct. More on the hawkish side to say, whoa, that’s not really what we meant. And I really think that that’s what’s going to happen is they’ll make the three interest rate cuts seem more questionable than they are. Although the vote was unanimous, we did see a slightly more hawkish trend in the dots.
Tony Nash
Not a lot, but slightly more hawkish.
Peter Lewis
And what was also interesting was out of the 19 FOMC members, nine of them, so a minority, but a substantial minority, actually think the Fed is going to cut less than three times this year. So I think that’s maybe Jerome Powell is sort of out on a bit of a limb there, isn’t he?
Tony Nash
Yeah, I think you’re right. I do think that he does over calibrate either hawkish or dovish, depending on the direction, and I think he’s trying to signal the direction, but I think he always overdoes it just a little bit. He doesn’t have an easy job. Everyone reads everything into the way he holds his papers, the way he clears his throat or whatever. Right. I mean, everything is overly analyzed with him. But again, we have seen this where he comes out and he’s overly one way or the other. And I think, yeah, seeing those nine voters say hey, we’re not going to have three this year. I think as we’ve been talking about, my team has been talking about a resurgence in inflation for over a year, and we’ve seen it over the past couple of months, and we’re going to see that accelerate. They try to present Jan, Feb as just an aberration, but it’s not. And so it’s going to accelerate. Their expectations are going to be probably even exceeded. And it’s very difficult to have an interest rate cutting environment when you have inflation rising because it’s an election year.
Tony Nash
And consumers love, and voters love to complain justifiably about prices and prices keep rising. What did we see after the Fed meeting? We saw commodity prices soar. A lot of commodity prices soared after the Fed meeting, and that’s going to hit consumers within two. You know, this very unnecessarily dovish talk out of Powell has resulted in inflation definitely being locked in for at least two months.
Peter Lewis
Tony, I’m wondering what you think about this. Is the Fed taking a risk here? Because they basically seem to be saying the economy can run faster without generating significant overheating pressures and they’re willing to cut even while they’re still away from their target.
Tony Nash
Well, this is very similar to like a 2020 2021 argument when things were actually doing okay in the middle of COVID at least in the US, and people kept saying, hey, let it run hot. Let it run hot. Right. And it seems like we’re replaying that again, where, although people may not be using those words, the subtext is let it run hot. And I think the problem is, as Andrew was talking about GDP, the quality of that GDP is not great. It’s overwhelmingly government spending in terms of the growth areas. Okay, so we’re not having private sector growth as a contribution of GDP in the US. We’re having government spending as a growth area in GDP. And so what we’re seeing is heavy fiscal and we’re seeing dovish monetary. And so that’s great, but it just means that we’re going to see more inflation. Inflation is going to come back. Well, it already has, but it’s going to continue to accelerate. If this is the world that policymakers are comfortable with and if this is the world that policymakers are comfortable with, it makes us voters very unhappy because their pay rises are not keeping up with inflation.
Tony Nash
Now, what’s interesting, public sector pay rises are something like twice the size of private sector pay rises. So public sector wages are keeping up with inflation, but private sector wages aren’t and so this is the problem with an election year. American voters are really tired of it and inflation comes up in almost every discussion I have.
Peter Lewis
And I wonder what American voters also think about what he said about labor supply. He sort of mentioned the strength of the data on labor supply, but then he pointed to the strong pace of immigration as helping on that front. That’s rather a hot political topic to.
Tony Nash
It’s a lightning rod, and it’s not a very positive discussion in most parts of the US, even in very heavily democratic parts of the US, which favor inflation in state Massachusetts, New York, it is just a sour topic for people and it’s a very sensitive topic. So when the Fed chair gets up and says immigration is helping the labor market, it makes Americans very uncomfortable and it makes them not really like him.
Peter Lewis
Tony, what do you make of the market reaction to this? Jerome Powell didn’t talk down the rally at all, did he? In his press conference in either stocks or risk assets. He didn’t even acknowledge that this is easing financial conditions and maybe making their job a bit harder.
Tony Nash
He did not. And I think he turned it from a tech rally to an everything rally. If you look across markets at the close in the US today, and as you mentioned at the top of the program with Hong Kong was coming on strong this morning, international markets coming on strong this morning. I think with this, I think overly dovish Fed meeting, he turned the rally from a tech rally to an everything rally.
Peter Lewis
Do you think this is going to continue?
Tony Nash
It’s possible. I think we have to see how things go into the end of the week. If things stay strong into the end of the week, then look out. But I think if we start to see things stall out Thursday and Friday in the US, then we could see things settle back to the levels we had seen a few days ago.
Peter Lewis
Tony, if you look at the reaction of the yen to this, clearly the currency traders don’t think that this is the start of a sustained period of rate increases in Japan. And there’s still going to be that wide yield differential between US rates and Japanese rates.
Tony Nash
Yeah, it wasn’t a big statement. ET seems to be very conservative. He doesn’t want to be seen as shaking things up at the BOJ. He almost acts like a caretaker. And so I think currency traders expected something a little bit more. They want a little bit more in the end, want a little bit more. In terms of markets being slightly tighter, he’s not a big bold move maker and this just wasn’t it. So to see the end continue to weaken on this was just really interesting for me to watch this.
Peter Lewis
Okay. Okay, Tony, what are your thoughts? You’re obviously looking at this from overseas. As Andrew says, it’s no surprise it passed, and it passed with unanimous vote in ledge coat. But now that it has passed, and foreign investors are going to have a chance to scrutinize it and see the impact of it, is there anything to worry them?
Tony Nash
Oh, sure there is. I think the law allows trials without a jury. It allows trials behind closed doors. It allows handpicked judges. So anybody forming a company, anybody who’s a board member, anybody who’s an officer in a company, in a jurisdiction like Hong Kong, you have to worry. Why don’t you have a lot of international companies centered in Beijing because of laws like this, right? So Hong Kong, which 1020 years ago, 30 years ago, was the place to have a company because it was the most business friendly city in the world. Today it’s not that way. And if you’re an officer or director in a company, it’s got to be a little know, give you second. You know, one of the attractors for Hong Kong for a few decades has been media. There is great media in Hong Kong, but it’s no longer a media center, it’s no longer an arts center. And the sad part about that is a lot of that stuff is moving, or has moved to Singapore, which is a pretty strong state in terms of control of messages. So people are so worried about the impact of this new law on Hong Kong that they’re moving to Singapore and seeing it as a freer place than Hong Kong, completely 180 degrees from the way things were ten years ago?
Peter Lewis
John Lee and the government will say, what this Article 23 legislation does is it brings stability to Hong Kong. So will foreign investors look at that and say, yes, Hong Kong is more stable as a result of that, and that’s a positive.
Tony Nash
No, it brings opacity and it brings authoritarianism, in truth. And authoritarianism generally is stable until it. And so, you know, Singapore is an authoritarian place and it’s stable. It’s marginally freer than Hong Kong now, I guess. But no, authoritarianism doesn’t bring stability necessarily, or the stability it does bring is short lived. And again, Hong Kong was very vibrant, very creative, very interesting business hub. And I don’t think it’s totally gone, but I think the risks to officers, investors, board members and so on are much, much higher than they were before.
Peter Lewis
Tony, you are a financial analyst. If you were based in Hong Kong, would you be worried about this state secrets legislation or this state street secrets article that includes economic information, technological information on Hong Kong?
Tony Nash
Yeah, absolutely. So I used to be with a company called IHS, and it’s since been bought by S and P. But twelve or 15 years ago, there was an IHS analyst who lived in China who had some information on crude output or something like that, crude storage. And this person, from what I understand, got it from an industry association or something because they used it in a business environment. The chinese authorities prosecuted him and put him in jail for a long, long time. And at the time, I was working with the economist, but we were shocked at what was happening, because you used to be able to do research, find information, and if you could find information, you could use it to your advantage. And part of using things to your advantage is to trade on it. Right. And so if Hong Kong is to remain a vibrant financial center and a vibrant trading hub, you have to be able to dig for information. But if the Chinese authorities are going to prosecute people for finding information, then Hong Kong as a competitive center is no more. It just isn’t.
Peter Lewis
I mean, that’s what some people are worried about is that Hong Kong is becoming more like mainland China in terms of things like data privacy, state secrets, and what constitutes state secrets?
Tony Nash
Well, there are huge data centers in Hong Kong, right? I mean, there have been for 30 years. And so those data centers, I don’t know, a lot of foreign companies that people have their servers outside of China for a reason, and they have their data stored outside of China for a reason. These new laws allow the government to look into whatever they. So, you know, that stuff that has remained in Hong Kong, I’m sure at some point will move elsewhere if it’s remotely confidential.
Peter Lewis
Okay, well, thank you very much for your thoughts this morning. Great to hear you. That’s Tony Nash over in Texas, USA, who is the founder of Complete Intelligence.
This podcast is originally published by BBC Business Matters in this link with title “Hong Kong’s lawmakers pass tough security bill”: https://www.bbc.co.uk/programmes/w172yzs33f96cxs.
BBC’s Description:
The new law broadens the definition of state secrets in a way that could scare away investors. Will the city be able to maintain its place as a top financial hub?
The British band Chumbawamba is trying to prevent its biggest hit from being used by a politician in New Zealand. The lead singer tells us why.
And Star Wars creator George Lucas steps into the boardroom power battle at Disney to support the firm’s CEO, Bob Iger. Will the Force be with him?
Transcript
BBC
The new law also broadens the definition of state secrets to include information about the economic, technological and scientific development of Hong Kong or mainland China. And this has caused concerns among investors. Tony Nash is the CEO of AI forecasting platform complete intelligence. He also ran the Economist’s research business and their Asia headquarters in Hong Kong.
Tony Nash
Do I think first, we’ve seen legal agreements move to other jurisdictions, so that’s an easy thing to do. They can write it with UK law or something like that. We’ve also seen financial services staff and multinational staff move to other locations, like Singapore. I lived in Singapore for 15 years, and it’s a great place, but Hong Kong always had a very special buz. It had a level of hard work, creativity, intelligence. That Singapore, although it’s a really great pace, it didn’t have that special buz that Hong Kong had. So this stuff has people moving, it has business moving, and sadly, that specialness of Hong Kong is going with it.
BBC
Do you think there might be some businesses that might stick around in Hong Kong, or do you think that the rules are just too much for them?
Tony Nash
Sure, Hong Kong’s not dead. Companies still need people to do work in Hong Kong, but I think the decision makers and the people who are, say, the regional heads or the sea levels or the board members, those people will want to be in other places because of the potential liability that they have. Traders can trade on all kinds of information, and so if something is deemed a state secret and a trader uses some information that they’ve heard, there could be criminal prosecution for that. And so this was never a part of Hong Kong. Of course, things like insider trading are illegal, but I’ve been in the research business for a long time, and there’s a company called IHS that probably ten to twelve years ago had one of their researchers in China put in jail for getting some information that was relatively easy to get. It wasn’t hidden, but it was later deemed a state secret, and that person was put in was.
BBC
Sorry to interrupt you, Tony, but that uncertainty is just going to make it very difficult to do any business out there.
Tony Nash
That’s right, it is. And especially if decisions are made after the fact. Right. So this person had this information, it was deemed a state secret after this person had it, and that person went to jail for a long time. So these are the difficulties that executives and business leaders and researchers and media people face as and if they stay in Hong Kong.
This podcast was originally and first published by Business Matters.
BBC Description
Polls are beginning to close across the 15 primary states in the U.S as Super Tuesday comes to an end. Our presenter Roger Hearing will be bringing us up to date on what the polls are saying.
We’ll be hearing from voters who have made up their minds and those who are still considering.
And we find out if the fact that the US economy is beginning to show signs of strength, will affect the outcome in November.
Roger will be joined throughout the programme by two guests: Tony Nash, Chief Economist, Complete Intelligence who’s in Houston and Laura Schwartz, former Advisor to Bill Clinton and democratic strategist, who’s in Chicago.
Transcript
BBC
Hello, and welcome to Business Matters. I’m Roger Herring. Coming up on the program today, millions of voters in the US choose their party’s candidate for the November presidential election on what’s called Super Tuesday. But how are they feeling about the prospect of Biden versus Trump round two?
BBC
Well, we’re going to be hearing from those who have made up their minds and those who are still considering and ask if the fact that the US economy is beginning to show signs of strength will affect the outcome in November. And I’ll be joined throughout the program by two guests, Tony Nash, chief economist, Complete Intelligence, who’s joining us on the line from Houston. Tony, I should say hello to you.
Tony
Hello, Roger.
BBC
Good to have you there with us. And, Tony, I mean, for the Republicans, it is pretty much a coronation, wouldn’t you say?
Tony
Overall, yeah, there’s nobody left. I mean, you may have the four republican voters in Vermont vote for Nikki Haley, but aside from that, I really don’t think she’s going to win much today.
BBC
All right. Fair point. Well, we shall see. She hasn’t said her campaign is over yet. We’ll talk about that. But let’s just bring ourselves up, just be, to what has been happening, because it has been the biggest day so far in the US election year. Millions of people voting in what’s known as Super Tuesday. And the idea is you decide who should be the Republican and who should be the Democrat candidate for November’s presidential election. Now, polling has been taking place in more than a dozen states. The results are only expected to reinforce, as we said, the near certainty that Joe Biden and Donald Trump will face each other again in November. Well, speaking to reporters a little bit earlier, President Biden was pretty defiant about his polling. All right. Well, thanks very much for the moment, Michel. We’ll come back to you in a little while, a little bit later in the program to get an update and see what’s happening and perhaps get some sense of other issues that may be working their way through this election year. But now let me come to my guests, Tony and Laura. So, Tony, first of all, let me come to you.
BBC
Do you get the sense then that this process, this primary process, isn’t really what we’ve had in the past, what we’ve expected, where there’s been at least an element of doubt as to the outcome? And so for that reason, is it more of a drama? Have any issues come up in the process that have been useful?
Tony
Well, one thing about your earlier conversation, there are states where you vote in a partisan primary, but you don’t necessarily have to be a member of that party. So we have, like in Virginia, according to Exopolan, I was just looking at half of the people who voted for Nikki Haley were Democrats. And so this is how the different parties game some of these. And I would say this is a pretty big issue, especially in this primary.
BBC
Sorry, just run that one past me. You’re saying that the Democrats, people who are registered Democrats, can vote for the Republican candidates in some states.
Tony
So I live in Texas. In Texas, you do not have to be a registered Republican to vote in the republican primary. And so this is something that’s been happening for, I don’t know, the past three, four election cycles where party members will go in and vote in the other party’s primary to kind of try to push things one way or another. So since there is really nobody running against Joe Biden because he’s the incumbent, it really is kind of open and fair game for Democrats to try to change the republican primaries. So I voted here in Texas. I’m a Republican. And there were all of the previous names on the ballot. It wasn’t just Donald Trump. There were, I think, seven or eight Republicans to choose from. So just so your listeners understand, Republicans don’t just walk in the door, and Donald Trump is the only name on the ballot. There are many names. If those names are submitted to the state and qualify in time for the primary.
BBC
Interesting. We’ll see about that. Tony, let me bring you in on this, because that point that Laura was making about the court case, and we do know that one criminal trial will happen at least before the election. How much do you think that actually will matter in terms of voters, particularly GOP voters?
Tony
Obviously, it won’t matter. I mean, honestly, I live in the suburbs. I know both men and women. I’m a relatively social person, and I don’t know a single person who that matters for. And so we see this as responses, but I haven’t heard of a single person. Donald Trump being a dog is. I mean, that’s old news, so nobody really cares. I think that the biggest issue that people are facing right now is immigration, and that’s what everybody’s talking about. And that will weigh on Biden more than anything else. More than his corruption, his son’s corruption, his brother’s corruption. Immigration will weigh on Biden. And that campaign more than anything else, because there was some news, I think, out today saying the administration flew 300,000 illegal immigrants into the US. They flew them in to avoid the optics of them crossing the border. And so american citizens are paying for that. They’re paying for these people to be illegally transported and to reside illegally in the US. So we see what’s happening in New York City. We see what’s happening outside of Boston. We see what’s happening in Chicago. These very traditionally democratic cities are having to contend with the things that people like me in Texas on the border.
BBC
Because, I should say, of the movement of people coming over the border, often by republican governors in the south up to these cities.
Tony
Yes and no. Yes. I mean, our governor in Texas has done a lot of that to start that, to bus people up to DC and New York and Boston and Chicago and other places. But the Biden administration itself has flown in 300,000 illegal immigrants into the US. This was just a story out today. So they’re paying airfare, they’re taking Americans off of planes, they’re flying on flights, and then they’re getting vouchers and debit cards once they arrive here. And that’s a massive, massive issue for.
BBC
So you think that will actually dictate where a lot of people go in November will be that issue more than anything else?
Tony
Yes. Especially as we see more layoffs from companies. The displacement that that cohort has for, say, inner city and lower wage workers is huge. And so, again, these are traditionally Democrat voters. And so that immigration issue, it just won’t stop and everybody is talking about it.
BBC
Well, we shall see. That’s a very interesting line that you put there and one I have heard as well before. Anyway, we’re going to move on to the next part of the program. We’re going to be looking at some of what the economy might do to that vote in November. We’re going to say, Tony, let me pick that theme up with you, because do you feel, as someone working in the US economy, do you feel that things are getting better? I mean, you can see, I guess, from the stock market is certainly seeming to reflect that.
Tony
Yeah. So there are a couple of different things. First is inflation. It’s undoubtedly, on average, things are, I think, 24% more expensive today than they were in 2019. So inflation is without a doubt another massive issue this year. The stock market is really about four concentrated stocks, okay? It’s about Microsoft, it’s about Nvidia, it’s about Amazon and it’s about Apple. So when we see the general indices move up and down every day. Money is so concentrated in Nvidia, Microsoft and so on, that’s not necessarily impacting the stock market as a whole. So these are people betting on artificial intelligence. If you look at general stock market performance on the year, it’s down, I think, high single or low double digits so far this year. The general stock market, if you take out those four stocks, and we do see a lot of layoffs, other things. So it’s hard to argue that we’re in a terrible economy. I’m not saying that’s the case at all. But when we look at inflation and when we look know if people are standing still, they’re losing money. Right. Why is that happening? Well, it initially happened because of Fed policy.
Tony
Loose fed policy. Right. And so today it’s happening because Janet Yellen is using the treasury general account as her own personal kind of campaign funds. She’s spending the treasury general account like wildfire. And that is helping to sustain the prices in the US and keeping things up. So Congress has very limited power to stop her from doing that. But Yellen spending from the TGA is one of the biggest issues that nobody talks about, and it’s really keeping inflation up in the US.
BBC
Okay, well, listening to all that, Tony Nash. Tony, I guess that didn’t really surprise you, the kind of things we were hearing there.
Tony
No, it completely validated things that I’ve been telling you for the last 45 minutes. I mean, people on the ground are feeling it. If you’re sitting in New York or Boston or DC, and if you, Roger, are interviewing a talking head sitting in one of those places, they’re not going to tell you this stuff. But you just interviewed two people on the ground and they’re telling you exactly the stresses that they’re feeling.
BBC
Okay, well, let’s. Nash in Houston. It is interesting to hear where these things are going and interesting that John Zogby certainly seemed to think that the legal troubles of Trump may be actually quite instrumental. And I know you disagree with that. You’re not convinced, are you?
Tony
I’m not. I really think inflation and immigration and the people I talk to, and they’re across, I have 20 somethings who work for me and I have a 60 year old who works for me and I talk to, of course, people who don’t work for me. But I get a cross section across every day and I’m not hearing Trump’s legal concerns as an issue. But I’m sure in places like New York or San Francisco or DC, it’s a major issue where media is. But I think, Roger, the major, I think issue this November will be who will show up to vote. And if people are ambivalent about Biden and they don’t show up, then Trump’s going to win. If people are ambivalent about Trump and they don’t show up, then Biden’s going to win. I think that’s a bigger fact than anything because we got a couple of 80 year olds running. It’s really hard to get enthused. You can’t have like an Obama wave.
BBC
Well, I think we seem to have.
Tony
2008 or even a Trump wave.
BBC
We’re just losing the line a little bit to you there, Teddy.
Tony
And with all this other stuff and.
BBC
The partisanship, people, I think we’re just losing the line to you slightly there. But yeah, just a final thought. Does it matter very briefly in a word, or could, we heard you there a little bit there, Tony, thanks very much there. The line getting in the way of that at the end. But I hope we got a decent picture there of Super Tuesday and what it means, just to let you know that at the top of the hour, polls will close in Colorado, Minnesota and Texas. And we’ll bring you up to speed, of course, with projections from that. But that’s it from this special edition of Business matters on super cheesy bye.