Speaker 1: From the Bloomberg Interactive Brokers Studios. This is Bloomberg day
Speaker 1: Break for Wednesday, May seventeen.
Speaker 2: Coming up today, Debt ceiling talks could get more intense.
Speaker 2: With just fifteen days till potential defaults.
Speaker 1: President Biden cuts short his overseas trip to focus on negotiations.
Speaker 3: The Fed pause, debate heats up, and.
Speaker 1: Elon Musk may turn to advertising to sell more Tesla's New.
Speaker 4: York City is looking at standalone school gyms to house migrants.
Speaker 4: Plus a major ruling in North Carolina on an abortion band.
Speaker 4: I'm Michael Barr.
Speaker 5: More ahead, I'm John Stanshdaron Sports Another Aaron Judge, Homer
Speaker 5: to Yankee Wain.
Speaker 6: Another loss for the Mets. The Nuggets took Game one
Speaker 6: from the Lakers.
Speaker 7: That's all straight ahead on Bloomberg day Break, The Business
Speaker 7: News You need to sturn your day in just one
Speaker 7: fifteen minute podcast each morning on Apples, Spotify, the Bloomberg
Speaker 7: Business app, and everywhere you get your podcasts.
Speaker 3: Good morning, I'm Nathan.
Speaker 1: Hager and I'm Karen Moscow. Here are the stories we're
Speaker 1: following today, Karen.
Speaker 2: Debt ceiling talks in Washington are about to get more intense.
Speaker 2: The earliest state for a possible government default is now
Speaker 2: just fifteen days away, and President Biden and House Speaker
Speaker 2: Kevin McCarthy have agreed to keep talking. They'll have a
Speaker 2: smaller group of negotiators in the room to try to
Speaker 2: reach a deal. The President is sounding cautiously optimistic.
Speaker 8: Well, there's still work to do, but I made it
Speaker 8: clear to the Speaker and others that will speak regularly
Speaker 8: over the next several days, and the staff's going to
Speaker 8: continue meeting daily to make sure we do not default.
Speaker 2: And Speaker McCarthy says it is possible a deal can
Speaker 2: get done by the end of the week.
Speaker 3: It's not that.
Speaker 9: Difficult to get to an agreement when you think about limits.
Speaker 9: Save grow the bill we passed, We raise the debt ceiling,
Speaker 9: we cap future spendings.
Speaker 2: So far, there's one thing both sides agree on. They
Speaker 2: say default is not well.
Speaker 1: As talks drag on, Nathan, the President is shortening his
Speaker 1: trip Overseas to focus on negotiations.
Speaker 8: I'm cutting my trip short. I'm postponing the Australia Portional trip,
Speaker 8: and I've tripped my stop in Papua New Guinea in
Speaker 8: order to be back for the final negotiations with congressional leaders.
Speaker 1: President Biden had hoped to use those stops to counter
Speaker 1: Shounas influence in the Asia Pacific region. The White House
Speaker 1: says it looks forward to finding another way to engage
Speaker 1: with those countries in the coming year.
Speaker 10: Well.
Speaker 2: Meantime, Karen, a potential GOP presidential contenders, weighing in on
Speaker 2: monetary policy. Former Vice President Mike Pence is calling for
Speaker 2: an end to the Fed's dual mandate. He says the
Speaker 2: central Bank should focus only on fighting inflation and leave
Speaker 2: job creation to Congress and the President. Pence tells Bloomberg
Speaker 2: the FED should return to its historic mission of ensuring
Speaker 2: sound monetary policy.
Speaker 1: Meantime, Nathan, the debate on what the FED should do
Speaker 1: right now appears to be heating up, and we get
Speaker 1: the details from Bloomberg's John Tucker.
Speaker 11: John and Karen. Investors bet the FED will pause their
Speaker 11: cycle of inter straight hikes next month, but the officials
Speaker 11: who make the decision sound more on the fence. We
Speaker 11: spoke with Richmond FED President Tom Barkin.
Speaker 2: Put me down as tracking the information, tracking the death sailing,
Speaker 2: tracking credit tightening, and we'll make a call when we get.
Speaker 11: Closer to the meeting at the same time, the Chicago
Speaker 11: Fed President, Austin Gulesby says it's too premature to talk
Speaker 11: about cutting rates. He tells Bloomberg decision makers need more
Speaker 11: data and more time.
Speaker 12: Inflation is down and continues to make progress. It's not
Speaker 12: as fast as we wanted it to or we expected
Speaker 12: it to be, and therein lies the that's the note
Speaker 12: of the of the issue of can you get it
Speaker 12: down more without starting a recession?
Speaker 11: Gulesby says, when you have financial stress like the bank
Speaker 11: turmoil plus big rate increases that take a while to
Speaker 11: have their full impact, you want to take those into
Speaker 11: account when you're looking to land the plane. Barking and
Speaker 11: Gulesby spoke to Bloomberg at a Fence symposium in Florida.
Speaker 11: I'm John Tucker, Bloomberg Daybreak.
Speaker 2: Okay, John, thanks and stay tuned for more from Austin Golesby.
Speaker 2: Will bring you our interview with the Chicago Fed president
Speaker 2: coming up shortly on Bloomberg Day Break.
Speaker 1: Well, we moved to corporate news now. Nathan and Elon
Speaker 1: Musk is poised to make another strategy shift at Tesla,
Speaker 1: and now he's eying an advertising strategy to sell more cars,
Speaker 1: and Bloomberg's Ed Baxter has the details.
Speaker 13: Musk says Tesla will dabble in some advertisements. This is
Speaker 13: a major departure for the twenty year old company. At
Speaker 13: the annual shareholders meeting, he said, quote, we'll try a
Speaker 13: little advertising and see how it goes. Tesla has prided
Speaker 13: itself on word of mouth and not needed the cost
Speaker 13: of advertising, Musk says, now it is worth a try.
Speaker 13: He says he's already tipped a toe in the water
Speaker 13: on Twitter, and also the move is not fully formed strategy,
Speaker 13: but a bit of a foot on the accelerator, if
Speaker 13: you will. In San Francisco, I'm at Baxter Bloomberg day Break.
Speaker 3: Okay, Ed, Thanks so.
Speaker 2: Wal Musk may change the way he sells cars, he
Speaker 2: is not changing stands when it comes to working from
Speaker 2: home and Bloomberg.
Speaker 3: Steve Rappaport joins us with more on that.
Speaker 14: Steve, Good morning, Nathan. In Karen Elon, Musk continues his
Speaker 14: crusade against the virtual commute, telling CNBC it's not just
Speaker 14: bad for productivity, it's also morally wrong.
Speaker 11: You're going to make the people who make your food
Speaker 11: that gets delivered that they can't work from home.
Speaker 15: You know, for the people that come fix your house,
Speaker 15: they can't work from home, but you can.
Speaker 3: Does that seem Marley Wright.
Speaker 14: Musk, speaking after Tesla's annual shareholder meeting, also lambasted tech
Speaker 14: workers as the laptop class living in La La Land,
Speaker 14: live in New York. I'm Steve Rappaport Bloomberg Daybreak.
Speaker 1: All right, Steve, thanks well. In banking news this morning,
Speaker 1: we're seeing the former CEO of First Republic Bank blaming
Speaker 1: others for his company's collapse and prepared testimony to be
Speaker 1: delivered to a House committee hearing. Michael Roefler said his
Speaker 1: bank's collapse was due to contagion from other regional bank failures.
Speaker 1: Jpmoregan agreed to buy First Republic earlier this month, after
Speaker 1: it became the second largest bank failure in US history.
Speaker 3: And in Europe.
Speaker 2: Karen UBS estimates the nearly thirty five billion dollar gain
Speaker 2: as a result of its emergency takeover of Credit Suisse.
Speaker 2: At the same time, the Swiss bank warns it faces
Speaker 2: billions in potential legal and regulatory costs from the acquisition.
Speaker 2: UBS stands to benefit from the combined firm's negative goodwill.
Speaker 3: And straight ahead.
Speaker 1: We have your latest local headlines, plus a check of sports.
Speaker 3: And this is Bloomberg.
Speaker 2: I'm how to take a look at some of the
Speaker 2: other stories making news in New York and around the world.
Speaker 3: For that, we are joined by Bloomberg's Michael Barr. Good morning, Michael,
Speaker 3: Good morning, Nathan.
Speaker 4: New York City is looking it up to twenty schools
Speaker 4: with standalone gyms to house migrants. Mayor Eric Adams told
Speaker 4: Fox five about sixty five thousand asylum seekers have come
Speaker 4: through the city so far, including forty two hundred last
Speaker 4: week alone.
Speaker 16: I'm really calling on all of us who take notice
Speaker 16: that this is going to impact every city service that
Speaker 16: we deliver to the people of this city.
Speaker 3: And it's just wrong.
Speaker 16: A New York City should not be carrying a burden
Speaker 16: of a national problem.
Speaker 4: Mayor Adams and the city expects as may the fifteen
Speaker 4: buses this weekend. Today is sentencing day for the ices
Speaker 4: inspired terrorists who carried out a deadly attack with the
Speaker 4: truck in New York City. The jury deadlocked on the
Speaker 4: death penalty, so Saifulu Saipov will be sentenced to life
Speaker 4: in prison for killing eight people when he sped down
Speaker 4: a bike path in a rented truck. North Carolina enacted
Speaker 4: a twelve week abortion ban last night. Republicans banded together
Speaker 4: to override Democratic Governor Roy Cooper's veto of the legislation.
Speaker 4: GOP North Carolina Representative Kirsten Baker is a medical doctor.
Speaker 17: This bill represents consensus position of North Carolina's citizens, the
Speaker 17: vast majority of whom support limitations to abortion after twelve weeks.
Speaker 4: This abortion right supporter was also in a rally.
Speaker 17: These legislators are arrogant, shortsighted, ignorant, oh unkind.
Speaker 13: Infuriates.
Speaker 4: The new ban from twenty weeks has exceptions like medical emergencies,
Speaker 4: cases of rape and incest. Tuesday was primary day in
Speaker 4: some states. Voters in Philadelphia have chosen Scherrell Parker as
Speaker 4: the Democratic nominee for mayor. Parker, who got the most
Speaker 4: votes at thirty three percent, will go up against Republican
Speaker 4: David Ow in the November seventh general election. Democrats maintain
Speaker 4: their narrow Pennsylvania House majority by winning a special election,
Speaker 4: and along with it, continue control over how the Chamber
Speaker 4: will handle abortion, gun rights, and election law legislation. Hither
Speaker 4: Boyd won a seat in the Philadelphia suburbs with more
Speaker 4: than sixty percent. Democrat Dan McCaffrey with sixty percent and
Speaker 4: Republican Carolyn Kurt Carluccio with fifty four percent won their
Speaker 4: party's primaries for a vacant seat on the Pennsylvania Supreme Court.
Speaker 4: Attorney General Daniel Cameron has won the Republican primary for
Speaker 4: Kentucky governor with forty eight percent and will face Democratic
Speaker 4: Governor Andy Basheer with over ninety one percent. In November,
Speaker 4: Global News twenty four hours a day, powered by more
Speaker 4: than twenty seven hundred journalist and analysts in over one
Speaker 4: hundred and twenty countries. I'm Michael Barr, and this is
Speaker 4: Bloomberg ninth.
Speaker 2: Thanks Michael, I'm now for the Bloomberg Sports Up Day,
Speaker 2: brought to you by Tri State Outy.
Speaker 3: Good morning, John's stashout.
Speaker 6: Good morning Nathan.
Speaker 5: There was much discussion about Aaron Judge's eighth inning home
Speaker 5: run Monday in Toronto. Cameras caught his eye drifting to
Speaker 5: the Yankee dugout during the at bat, speculation that the
Speaker 5: Yanks may have been relaying signs to him. Judge clearly
Speaker 5: unhappy with the accusation. He came up last night. This
Speaker 5: was also eighth inning.
Speaker 18: Swinging a high drive center field. It is deep here
Speaker 18: by are looking back looking up it. He's got a
Speaker 18: home run off the batter's eye. Aaron Judge is gone yard.
Speaker 18: He says, hey, look at me now, two run shut.
Speaker 18: Yankees take the lead. They're in front five to three,
Speaker 18: and they.
Speaker 6: Beat the Blue Jays six to three.
Speaker 5: Call on wfan Judge is hitting now five home runs
Speaker 5: the last four games. The win went to Ryan Weber's
Speaker 5: getting seven outs out of the bullpen. Yanks had to
Speaker 5: replace Domingo Herman starting the fourth inning because umpires injected him.
Speaker 5: The ump later said Herman's hand was so sticky he
Speaker 5: had trouble removing it from his own palm. Herman likely
Speaker 5: hit it for a ten game suspension for the Mets,
Speaker 5: their sixteenth lost the last twenty two games Tampa Bay one,
Speaker 5: eight to five. Justin Verlanders first city field start as
Speaker 5: a Met did not go well.
Speaker 6: Gave up six runs in five innings.
Speaker 5: NBA Playoffs, Denver won Game one for the Lakers, one
Speaker 5: thirty two one twenty.
Speaker 6: Six for Nikoliokuds thirty four.
Speaker 5: Points, twenty one rebounds, fourteen assists. The San Antonios first
Speaker 5: won the draft lottery and the prize that comes with it.
Speaker 5: Victor wembin Yama, the seven foot four inch nineteen year
Speaker 5: old Frenchman, the best NBA prospect since Lebron James, two
Speaker 5: days after he lost a Game seven for the tenth time.
Speaker 6: Doc Rivers fired by the Philadelphia seventy six ers. John
Speaker 6: Stash Edward Bloomberg.
Speaker 7: Sports Live from coast to coast, from New York to
Speaker 7: San Francisco, Boston to one nationwide on Siriusxam, the Bloomberg
Speaker 7: Business Appen Bloomberg dot Com.
Speaker 2: This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Starting
Speaker 2: to feel like crunch time in Washington, d C. With
Speaker 2: the possible default deadline for the US government now as soon.
Speaker 3: As fifteen days away.
Speaker 2: House Speaker Kevin McCarthy has said past meetings but the
Speaker 2: White House haven't gone anywhere.
Speaker 3: Now, he says, he sees a hint of progress.
Speaker 9: This one was a little more productive. We're a long
Speaker 9: way apart, but what changed in this meeting was the
Speaker 9: President has now selected two people from his administration to
Speaker 9: directly negotiate with us.
Speaker 2: That was Speaker McCarthy after yesterday's White House talks with
Speaker 2: President Biden and other congressional leaders for more. We were
Speaker 2: joined once again by Julie Norman, co director of the
Speaker 2: Center for US Politics at University College London.
Speaker 3: Juliet's great to speak with you.
Speaker 2: As always, it seemed like both sides made it seem
Speaker 2: like it was a pretty big deal that they've got
Speaker 2: a narrower set of negotiators for the debt sealing talks.
Speaker 3: Is this a big deal?
Speaker 19: Well, there was definitely more of a sense of optimism
Speaker 19: coming out of yesterday's meeting from the congressional leaders who
Speaker 19: are part of that, and that is a definite change
Speaker 19: in tone from where things started over a week ago,
Speaker 19: where I think things are going to start getting difficult.
Speaker 19: Now is the deal that's starting to take shape that
Speaker 19: we're getting some hints of how that is going to
Speaker 19: be received by members of both parties who are going
Speaker 19: to act to vote on this in both the Senate
Speaker 19: and the House. We've already heard some grumbling, some pushbacks
Speaker 19: to some of the measures that are involved in terms
Speaker 19: of actually getting over the line. But the good news
Speaker 19: is things are moving forward. The uncertainty is if it's
Speaker 19: going to be enough to get the votes.
Speaker 2: What provisions are you looking at that might have the
Speaker 2: most difficulty on Capitol Hill.
Speaker 19: Yeah, so the main sticking point will likely be increasing
Speaker 19: work requirements for different kinds of aid, for a medicaid
Speaker 19: for snaps sometimes known as food stamps, and for other
Speaker 19: assistance to needy family. So this is an area that
Speaker 19: Republicans really want to see a budget decrease and to
Speaker 19: see stricter requirements. Many progressive Democrats are digging in and
Speaker 19: saying this is something they will not vote for. So
Speaker 19: I think this is where the compromises are going to
Speaker 19: need to be hashed out over the next couple of days,
Speaker 19: and where we probably will see some Democrats at least
Speaker 19: pushing back against this deal because of that provision, but
Speaker 19: they will probably Yeah.
Speaker 2: Sure, are they the kind of Are they the kind
Speaker 2: of negotiations that could lead to the possibility that we
Speaker 2: get something like a short term debt seiling increase to
Speaker 2: allow for those differences to be hashed out later. I mean,
Speaker 2: that's something that both McCarthy and Biden have said they
Speaker 2: don't want to have a short term debt sailing increase exactly.
Speaker 19: And so this is one of the tricky things right
Speaker 19: now is that some of the budget talks that are
Speaker 19: being discussed, I think in good faith by both sides,
Speaker 19: would usually need more time to actually figure out the
Speaker 19: details of what they would look like, especially these things
Speaker 19: that are going to have direct impacts on a lot
Speaker 19: of Americans. So one option would be to have a
Speaker 19: sort of pact that there would be a limit on
Speaker 19: domestic spending with maybe some short term things that do
Speaker 19: go through immediately, such as using unspent COVID funds, maybe
Speaker 19: speeding up permit processes, things where there's already some agreement,
Speaker 19: if you can get those on the table, get the
Speaker 19: debt ceiling passed, and work out some of these budget
Speaker 19: details in the future, that's one option. Again unclear if
Speaker 19: both parties would go for that in the Congress.
Speaker 2: It's pretty notable as well that President Biden is going
Speaker 2: to be cutting the Australia and Papua New Guinea portion
Speaker 2: of his seven day overseas trip short to focus on
Speaker 2: these negotiations. What's the potential geopolitical impact there for not
Speaker 2: visiting those countries.
Speaker 19: Yeah, so it's definitely unfortunate. I mean, it is notable
Speaker 19: and right I think that Biden is still attending the
Speaker 19: G seven, which is in Japan, notably this year Obviously,
Speaker 19: one of the big long term foreign policy challenges for
Speaker 19: the US and for Biden is the Pacific is China
Speaker 19: in particular, and that's going to be a big part
Speaker 19: of these G seven discussions. He had hoped to continue
Speaker 19: that with a high profile visit to both Australia, a
Speaker 19: meeting of the Quad, and then also importantly engaging with
Speaker 19: Pacific island groups with this first time visit to Papua
Speaker 19: New Guinea. So it's definitely a loss for Australia, definitely
Speaker 19: a loss for Papua New Guinea, and it does I think,
Speaker 19: you know, it's not great for Biden administration trying to
Speaker 19: get traction in the Pacific, But those allies, I think
Speaker 19: know that the commitment is there. They'll try and reschedule
Speaker 19: when they can. And the reality is that if the
Speaker 19: US doesn't get this debt sealing thing resolve, the whole
Speaker 19: world's going to be affected by it. So at the
Speaker 19: end of the day, it's sort of an everyone's interest
Speaker 19: to have the attention where it needs to be. Most
Speaker 19: pragmatically at the moment.
Speaker 2: You said it's a loss for Australia and Papua New Guinea,
Speaker 2: is it a gain for China.
Speaker 19: Potentially, Yes, I mean I think China and as well
Speaker 19: as Russia. I mean, they would probably like nothing more
Speaker 19: than to see this debts somethly thing blow up for
Speaker 19: the US to have a default. I think they will
Speaker 19: paint it as look, how much the US is in trouble.
Speaker 19: They can't even keep their own you know, government going
Speaker 19: their own budget together, so they will usually likely pounce
Speaker 19: on things like this and make a story out of it.
Speaker 19: So that's unfortunate. But again, at the end of the day,
Speaker 19: Biden probably does need to be here to get this
Speaker 19: thing over the line, and that's just the way it
Speaker 19: has to be at the moment.
Speaker 2: Yeah, it looks like we could potentially see the President
Speaker 2: with his mind on both sides of the Pacific as
Speaker 2: the debt ceiling fight goes on, and of course building
Speaker 2: up these relationships at the G seven in Japan.
Speaker 3: As always great to get your thoughts. Thanks again for
Speaker 3: being with us.
Speaker 2: Julie Norman, co director of the Center for US Politics
Speaker 2: at University College London with us this morning. Now let's
Speaker 2: turn our attention from the debt limit to monetary policy.
Speaker 2: In Washington at the Federal Reserve, some officials are signaling
Speaker 2: they'll take a pause when it comes to rate hikes,
Speaker 2: but they're not committing to one. Chicago Fed President Austin
Speaker 2: Goldsby discussed inflation and the impact of rates with Bloomberg's
Speaker 2: Michael McKee late yesterday.
Speaker 3: Let's listen to that conversation.
Speaker 15: Now, you've told people that you're a little nervous about
Speaker 15: where we are after five hundred basis points of increases,
Speaker 15: and you'd like to see how the economy is going
Speaker 15: to evolve, which everybody is sort of taking. As you're
Speaker 15: suggesting a pause in June, what would it take to
Speaker 15: get you to go the other way? Inflation is still high?
Speaker 15: Would it take much to convince you to vote for
Speaker 15: another rate increase.
Speaker 12: I don't get into the hypothetical, and I haven't committed
Speaker 12: or decided anything. I think it's a mistake for us
Speaker 12: to commit our our decisions weeks before the meeting when
Speaker 12: we're still going to get a lot more information. As
Speaker 12: I say it, I'm just like an old fashioned data dog,
Speaker 12: and the past evidence in the data has been that
Speaker 12: when you have financial stresses like the bank stresses we're
Speaker 12: going through now, and when you have big rate increases,
Speaker 12: that take a while to have their full impact, you
Speaker 12: at least want to take those into account when you're
Speaker 12: looking at landing the plane.
Speaker 10: I think the good news is you've seen some.
Speaker 12: Of the froth taken. The froth off in the labor markets.
Speaker 12: We've so far been doing pretty well that job vacancies
Speaker 12: are coming down without the unemployment rate going up. And
Speaker 12: the overriding goal is let's get the inflation back to
Speaker 12: target without generating recession. That's what I want, and that's
Speaker 12: kind of the FED mission.
Speaker 15: Well, you said that you almost dissented at the last meeting,
Speaker 15: but you were persuaded to go along.
Speaker 10: Was it a close call? I didn't say that I
Speaker 10: almost dissented.
Speaker 12: They someone asked me, was it a close call?
Speaker 10: And I said yes.
Speaker 12: I think I can't speak for anybody else, but for me,
Speaker 12: I felt it was a close call. Two meetings ago,
Speaker 12: the data had come in was looking pretty hot. We
Speaker 12: hadn't had any financial stresses, and the argument for the
Speaker 12: improved let's call it the improved economic outlook in the
Speaker 12: SEP was making people a little anxious on the side
Speaker 12: of how much inflation might might still be stored in there.
Speaker 12: Then one meeting ago before this past meeting, we got
Speaker 12: the bank stresses and incorporated that into our plan. So
Speaker 12: at the last meeting, you had not seen yet in
Speaker 12: the data, and in my conversations with financial market and
Speaker 12: bank participants, you had not yet seen credit crunch taking
Speaker 12: place in the data. So I felt that at the
Speaker 12: end of the day, staying on the plan that we
Speaker 12: had outlined, knowing that there was going to be some
Speaker 12: bank stress did make sense.
Speaker 10: Now you've seen more slowing coming in.
Speaker 12: You've seen even numbers that were relatively strong, like retail sales,
Speaker 12: they were lower than expected. And if in nominal terms,
Speaker 12: retail sales were up for tenths of a percent, but
Speaker 12: inflation was up four tenths of a percent, it's worth remembering,
Speaker 12: you know that what actually matters is the real economy.
Speaker 15: When the FED raises interest rates, banks always tighten their
Speaker 15: credit standards and loan demand goes down. So are you
Speaker 15: or the people in your district seeing something worse than
Speaker 15: what ordinarily would have happened.
Speaker 10: That's that's an important point to make.
Speaker 12: That one of the mechanisms a monetary policy when you
Speaker 12: raise the interest rate is lending standards go up.
Speaker 10: It's harder, it's harder to get credit. Businesses choose not
Speaker 10: to borrow as much because borrowing is more expensive.
Speaker 12: That's the key, that's the fundamental question is is there
Speaker 12: a reason to think that the financial can additions are
Speaker 12: tighter than just what the interest rate says. In previous
Speaker 12: times of bank stress, they definitely have been, And if
Speaker 12: you look at the Senior Lending Officer Opinion survey put
Speaker 12: out by the FED as rates went up, you did
Speaker 12: see tightening before there ever was the bank stress. But
Speaker 12: we definitely need to get a handle on how much
Speaker 12: on top of the interest rates this is doing. And
Speaker 12: you've seen throughout the market numbers that range from a
Speaker 12: what to be the Fed's fund equivalent of this bank
Speaker 12: stress kind of the lowest you've seen is that it's
Speaker 12: the equivalent of another twenty five basis points, and there's
Speaker 12: some saying it's like one hundred basis points one hundred
Speaker 12: and fifty basis points increase on top of monetary policy.
Speaker 12: So if that does some of the work of monetary policy,
Speaker 12: you just.
Speaker 10: Got to take that into account.
Speaker 15: Well, speaking of the work, you guys are focused entirely
Speaker 15: on inflation and bringing it down, but we haven't seen
Speaker 15: a lot of movement after a quick drop from nine
Speaker 15: to a round five, we haven't seen a lot of
Speaker 15: movement in inflation. Are you convinced that you've put enough
Speaker 15: restraint on the economy.
Speaker 10: I don't know if we've put enough restraint. That's what
Speaker 10: we got to watch.
Speaker 12: Inflation is down and continues to make progress. It's not
Speaker 12: as fast as we wanted it to or we expected
Speaker 12: it to be, and therein lies. That's the note of
Speaker 12: the issue of can you get it down more without
Speaker 12: starting a recession?
Speaker 10: Because we have a.
Speaker 12: Dual landing, we got to look at employment and inflation
Speaker 12: by law, both not just one. I think you've seen
Speaker 12: goods prices already come down as we shift back to
Speaker 12: spending our money on services. Housing inflation hasn't come down yet,
Speaker 12: but we expect it to because of the components, it
Speaker 12: kind of moves with a lag. And then this question
Speaker 12: of services has been more persistent than we thought it
Speaker 12: would be. But you've seen sprices coming down in that
Speaker 12: space as well. So I think those things, plus the
Speaker 12: fact that inflation expectations have remained pretty well anchored, tells
Speaker 12: you there is at least there are at least some
Speaker 12: forces that are going to keep moving in that direction.
Speaker 15: Well, your background suggests that you care a lot about employment,
Speaker 15: and obviously it is one of the mandates, as you mentioned,
Speaker 15: do you think that the data that we're seeing now
Speaker 15: and you could include retail sales today industrial production, suggests
Speaker 15: that the soft landing scenario is any stronger than it
Speaker 15: had been.
Speaker 10: So any more likely mean more strong.
Speaker 12: Yeah, I'm definitely hopeful in that there are one group
Speaker 12: that looks at the labor market and that its prized
Speaker 12: measure of tightness is the vacancies to unemployment ratio, and
Speaker 12: that ratio hit record highs and it's come down a lot.
Speaker 20: It's still the level is still higher than it was before, but.
Speaker 12: It's come down in a way that hasn't tanked the
Speaker 12: labor market.
Speaker 10: The danger, of course, is.
Speaker 12: If you get a recession and you try to land
Speaker 12: the plane nose down.
Speaker 10: Tends to be that the labor markets, when they deteriorate,
Speaker 10: they deteriorate rapidly. The unemployment rate goes way up.
Speaker 12: You see layoffs, and everybody's trying to avoid that if
Speaker 12: at all possible.
Speaker 15: You probably would see if you looked at a spread
Speaker 15: that you're but you've been put by Wall Street on
Speaker 15: the sort of the dubbish side at this point, whatever
Speaker 15: a dove means these days, what would you say to
Speaker 15: the idea of rate cuts in the sense that Wall
Speaker 15: Street is already thinking that you're probably going to have
Speaker 15: to do that.
Speaker 12: But yeah, look like the thing is, I've said the
Speaker 12: very first speech that I gave is when I took
Speaker 12: over in Chicago, emphasize I'm not a fan of setting
Speaker 12: monetary policy based on what the market says, or try
Speaker 12: to predict how the market's going to react. I think
Speaker 12: the overwhelming thing that the Fed's got to do is
Speaker 12: pursue the dual mandate. It's about the real economy. It's
Speaker 12: about inflation, which is too high, but at least we're
Speaker 12: making progress, and is about the employment mandate, where the
Speaker 12: job market remains quite strong. And so I think it's
Speaker 12: far too premature to be talking about rate cuts and
Speaker 12: premature to.
Speaker 10: Be saying, even for the next meeting, are we going
Speaker 10: to pause, are we going to raise? Are we going
Speaker 10: to cut? We got to get as much data.
Speaker 20: As we can, and it hooves us at a moment
Speaker 20: where we followed the strangest business cycle in history with
Speaker 20: one of the strangest credit conditions that we've.
Speaker 10: Seen in decades.
Speaker 12: We got to look at a lot more measures than
Speaker 12: just unemployment, inflation, and wages in the kind of the
Speaker 12: conventional box of numbers that we looked at in the
Speaker 12: well you get.
Speaker 15: Your next meeting is June fourteenth. The next CPI report
Speaker 15: is June thirteenth. Can we call you up in the
Speaker 15: Fed meeting room and ask you what you think? Austin Goilsby,
Speaker 15: thanks very much for joining us today, the President of
Speaker 15: the Chicago Federal Reserve.
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