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Speaker 1: We were talking last week about how the US had

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Speaker 1: been sprinting while New Zealand was on the stretcher and

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Speaker 1: Australia was stuck on a bit of a treadmill. Last night,

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Speaker 1: the FED held the state the rates steady, but there

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Speaker 1: was a bit going on under the hood, so let's

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Speaker 1: delve into that with Sam Dickey who was with us,

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Speaker 1: obviously from Fisher Funds. Hi Sam hey either. So the

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Speaker 1: Fed kept the rates on hold, which was expected. What's

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Speaker 1: the headline do you think from Jerome Powell?

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Speaker 2: I think it was the uncertainty, So no surprise on rates.

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Speaker 2: The more interesting thing was what they call the dot plot,

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Speaker 2: where every FED governor is a dot. It's really their

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Speaker 2: own forecast, consensus forecasts where rates are heating. And then

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Speaker 2: there's still penciling just one rate cut this year, but

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Speaker 2: half of the committee now sees no cuts at all,

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Speaker 2: or even hike. So that really makes that one projected

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Speaker 2: cut look quite precarious. And Powell was pretty candid. He said,

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Speaker 2: we basically said, I'm paraphrasing here, if we were ever

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Speaker 2: going to skip publishing forecasts, this would be the meeting.

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Speaker 2: Nobody knows on Iran or oil.

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Speaker 1: Now the point that you make is that the FED

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Speaker 1: is caught between two fires. One fire is inflation and

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Speaker 1: the other fire is the softer labor market. What's the

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Speaker 1: dilemma and how does that differ from Aussie?

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Speaker 2: Well, it is a bit of a policy trap. We

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Speaker 2: definitely don't want to use that word stagflation. We can

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Speaker 2: talk about that in a minute. But oil is pushing

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Speaker 2: inflation back up, but the labor market is softening, and

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Speaker 2: Power said, risks to jobs point to lower rates and

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Speaker 2: that's why overall they're still penciling in one rate, more

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Speaker 2: rate cut, but they're really sitting on a knife edge there.

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Speaker 2: And the RBA, we talked about it last week. Australia

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Speaker 2: they have seen a more inflationary environment and since we

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Speaker 2: last talked they've raised rates and that cash rate now

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Speaker 2: over there is within a whisker of the highest scene

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Speaker 2: in twenty twenty three. So it really shows you how

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Speaker 2: different these two economies are tracking, and the two sort

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Speaker 2: of overnight rate trajectories are tracking now.

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Speaker 1: He was asked directly about stagflation and his own future.

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Speaker 1: What did you make of what? He said?

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Speaker 2: Two pretty tough questions for central bankers to x. Stagflation

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Speaker 2: is the nightmare scenario, and clearly his succession has caught

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Speaker 2: a lot of headlines with him and President Trump, but

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Speaker 2: on stagflash, he really did push back firmly. It is

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Speaker 2: a scary word for central bankers, and he said he'd

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Speaker 2: reserve that word for the nineteen seventies where we saw

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Speaker 2: double digit unemployment and double digit inflation, and that's not

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Speaker 2: where we are today, where at a slightly uncomfortable position,

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Speaker 2: but nothing like that on a succession we know as

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Speaker 2: term ends. On May the fifteenth, Trump's nominated Wash to

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Speaker 2: replace him, but that's been blocked in the Senate over

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Speaker 2: an investigation into the Fed's building renovations. Really and how

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Speaker 2: said he will stay on temporarily if Wash isn't confirmed,

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Speaker 2: which was actually appreciated by the market because a leadership

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Speaker 2: vac hum of the world's most powerful central bank is

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Speaker 2: not what anyone wants.

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Speaker 1: Yeah, what does this all mean? Do you think for investors?

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Speaker 2: Power essentially validated the stagflation light frame? Any pushed back

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Speaker 2: on getting two over our skis on how severe it's

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Speaker 2: going to be. And again, just like last week, broken recor,

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Speaker 2: We're going to keep an eye on that oil because

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Speaker 2: the longer it gets entrenched. The longer, the more likely

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Speaker 2: it gets entrenched, and inflation expectations that the countertuitive. But

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Speaker 2: though is market's ready a little bit after power spoke

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Speaker 2: because the feed didn't panic, they didn't high can they

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Speaker 2: seed it signal steady hands? So sometimes no news really

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Speaker 2: is good news for investors.

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Speaker 1: Sam as always, thank you so much mate that Sam

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Speaker 1: Dickie for your funds.

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