1 00:00:02,840 --> 00:00:07,119 Speaker 1: Broadcasting live to New York Bloomberg eleven Brio to Washington, 2 00:00:07,240 --> 00:00:12,240 Speaker 1: d C. Bloomber to Boston, Bloomberg Well Under, to San Francisco, 3 00:00:12,360 --> 00:00:16,599 Speaker 1: Bloomberg to the Country, Shoe is ex General one nineteen 4 00:00:16,720 --> 00:00:20,240 Speaker 1: and around the globe the Bloomberg Radio plus Davin Bloomberg 5 00:00:20,239 --> 00:00:25,720 Speaker 1: got gone. This is taking Stock. I'm Kathleen Hayes in 6 00:00:26,079 --> 00:00:30,480 Speaker 1: Jackson Whole, Wyoming at the Kansas City Fed Reserves Annual Symposium, 7 00:00:30,720 --> 00:00:34,880 Speaker 1: a look at perhaps redesigning monetary policy this year Pim Fox, 8 00:00:34,920 --> 00:00:38,120 Speaker 1: of course in New York at Bloomberg World Headquarters. We're 9 00:00:38,120 --> 00:00:40,680 Speaker 1: going to be joined by Jacob Frankel. He's been coming 10 00:00:40,720 --> 00:00:44,599 Speaker 1: out this Jackson Hole Symposium PIM for more than thirty years. Yes, 11 00:00:44,680 --> 00:00:47,200 Speaker 1: we're gonna find out what he thinks about federal reserve policy, 12 00:00:47,280 --> 00:00:50,400 Speaker 1: but also whether the Federal Reserve can actually increase interest 13 00:00:50,479 --> 00:00:54,040 Speaker 1: rates despite or at least during the election cycle, maybe 14 00:00:54,120 --> 00:00:57,400 Speaker 1: even before December. We've got much more coming up right now, 15 00:00:57,440 --> 00:00:59,320 Speaker 1: Let's go to Charlie Pellett in the Bloomberg news room 16 00:00:59,400 --> 00:01:01,720 Speaker 1: for a Bloomberg Business Flat and I think you Pim 17 00:01:01,800 --> 00:01:05,120 Speaker 1: Fox traders pushing down the value of stock spawns and 18 00:01:05,240 --> 00:01:08,480 Speaker 1: the dollar ahead of tomorrow's speech by FED Shair Janet 19 00:01:08,520 --> 00:01:12,319 Speaker 1: yelling in Jackson Hole. The SMP five hundred index down 20 00:01:12,360 --> 00:01:16,280 Speaker 1: three now to a drop of two tenths of one percent. 21 00:01:16,600 --> 00:01:19,479 Speaker 1: The ten year down four thirty seconds yield one point 22 00:01:19,520 --> 00:01:23,640 Speaker 1: five seven percent. Dallas FED chief Robert Kaplan was interviewed 23 00:01:23,680 --> 00:01:27,080 Speaker 1: on Bloomberg Radio from Jackson Hole. He touched on a 24 00:01:27,200 --> 00:01:31,160 Speaker 1: number of topics, including the case for removing accommodation. I 25 00:01:31,200 --> 00:01:35,400 Speaker 1: think any removal of accommodation should be patient, slow, gradual, 26 00:01:35,600 --> 00:01:38,520 Speaker 1: because we've got a number of persistent headwinds that we 27 00:01:38,640 --> 00:01:40,880 Speaker 1: have to adjust to. But yes, I think the strength 28 00:01:41,000 --> 00:01:44,560 Speaker 1: the case for removing some amount of accommodation. It has 29 00:01:44,600 --> 00:01:47,920 Speaker 1: strengthened Sears Holdings. That's the retailer run by hedge fund 30 00:01:47,920 --> 00:01:52,040 Speaker 1: manager Edward Lampert posted a second quarter loss of sales 31 00:01:52,120 --> 00:01:56,320 Speaker 1: continued to shrink Sears holdings down four point four percent. 32 00:01:56,480 --> 00:02:00,280 Speaker 1: St Jude Medical shares plunging. Today, Carson blocked the down 33 00:02:00,520 --> 00:02:03,880 Speaker 1: short seller and founder research for Muddy Waters, warning the 34 00:02:03,920 --> 00:02:07,480 Speaker 1: tens of thousands of Americans are living with taking time bombs, 35 00:02:07,480 --> 00:02:10,799 Speaker 1: and that is St. Jude pacemakers and defibrillators that are 36 00:02:10,840 --> 00:02:15,919 Speaker 1: easily compromised, causing potentially fatal disruptions. The company says allegations 37 00:02:15,960 --> 00:02:20,480 Speaker 1: are quote absolutely untrue and several layers of security r 38 00:02:20,520 --> 00:02:23,320 Speaker 1: in place. St. Jude Chairs down now by five point 39 00:02:23,360 --> 00:02:27,240 Speaker 1: two percent, SMP five hundred index down to a drop 40 00:02:27,280 --> 00:02:30,320 Speaker 1: of one tenth of one percent down, Industrials down twenty 41 00:02:30,400 --> 00:02:32,760 Speaker 1: six also a drop of one tenth of one percent, 42 00:02:33,080 --> 00:02:37,080 Speaker 1: Gold down four ninety ounce one, a drop of four 43 00:02:37,120 --> 00:02:40,400 Speaker 1: tenths of one percent three thirty two on Wall Street. Now, 44 00:02:40,480 --> 00:02:43,280 Speaker 1: let's take a look at other news from around the world. 45 00:02:45,080 --> 00:02:47,840 Speaker 1: Thank you, Charlie from the Bloomberg newsroom. I'm John Lauder. 46 00:02:48,200 --> 00:02:49,920 Speaker 1: This news update is brought to you by the jeep 47 00:02:49,919 --> 00:02:53,720 Speaker 1: Grand Cherokee, the most awarded suv ever. The Grand Cherokee 48 00:02:53,760 --> 00:02:56,480 Speaker 1: continues to raise the bar with its luxurious interior and 49 00:02:56,600 --> 00:02:59,760 Speaker 1: legendary four by four capability. Drive on at your local 50 00:03:00,200 --> 00:03:03,640 Speaker 1: dealer today. Donald Trump is trying to woo minority voters, 51 00:03:03,919 --> 00:03:07,000 Speaker 1: promising his economic policies and hardline stance on a legal 52 00:03:07,000 --> 00:03:10,679 Speaker 1: immigration will benefit low income Americans and protect jobs. But 53 00:03:10,760 --> 00:03:14,440 Speaker 1: White House Press Secretary Josh Ernest says the Obama administration 54 00:03:14,440 --> 00:03:16,840 Speaker 1: and the Democratic Party beg to differ, it would have 55 00:03:17,000 --> 00:03:22,400 Speaker 1: a devastating impact fiscally and economically by doling out significant 56 00:03:22,400 --> 00:03:24,000 Speaker 1: tax cuts to those at the top of the income 57 00:03:24,040 --> 00:03:27,880 Speaker 1: scale UH and leaving the rest of us to pay 58 00:03:27,919 --> 00:03:31,760 Speaker 1: the tab. Meanwhile, Democrat Hillary Clinton speaks later today in Reno, Nevada. 59 00:03:31,960 --> 00:03:34,480 Speaker 1: She'll press her view that Trump is quote taking a 60 00:03:34,520 --> 00:03:37,800 Speaker 1: hate movement mainstream shall also try to link his candidacy 61 00:03:37,840 --> 00:03:40,680 Speaker 1: to the so called alt right wing of American politics. 62 00:03:40,840 --> 00:03:43,520 Speaker 1: A car bomber detonated a vehicle near the new Turkish 63 00:03:43,520 --> 00:03:47,440 Speaker 1: Embassy compound in the Somali capital of Mogadishu. Police opened 64 00:03:47,480 --> 00:03:49,560 Speaker 1: fire on the car when the bomber refused orders to 65 00:03:49,600 --> 00:03:52,640 Speaker 1: stop at a checkpoint near the beach side embassy. The 66 00:03:52,680 --> 00:03:55,680 Speaker 1: Arizona Coyotes are breaking new ground in the National Hockey League. 67 00:03:55,920 --> 00:03:57,960 Speaker 1: The team has hired what's believed to be the first 68 00:03:57,960 --> 00:04:01,280 Speaker 1: full time female coach, Dawn brey Will service skating coach. 69 00:04:01,320 --> 00:04:03,560 Speaker 1: She worked part time for the team last year, and 70 00:04:03,600 --> 00:04:06,160 Speaker 1: the city's Conflict of Interest Board has levied a fifteen 71 00:04:06,160 --> 00:04:09,440 Speaker 1: thousand dollar font on Brooklyn District Attorney Ken Thompson a 72 00:04:09,520 --> 00:04:12,400 Speaker 1: settlement over personal meals charged to the d a's office 73 00:04:12,840 --> 00:04:16,120 Speaker 1: Thompson admitted improperly billing more than five thousand dollars to 74 00:04:16,160 --> 00:04:19,159 Speaker 1: the King's County d A's Office, which he's repaid. The 75 00:04:19,200 --> 00:04:22,000 Speaker 1: sanctions among the largest in a decade. Global News twenty 76 00:04:22,040 --> 00:04:24,240 Speaker 1: four hours a day, power by more than twenty d 77 00:04:24,400 --> 00:04:27,200 Speaker 1: journalists and analysts in more than a hundred and twenty countries. 78 00:04:27,440 --> 00:04:31,320 Speaker 1: I'm John Lauder. This is Bloomberg, Charlie, and we thank you. 79 00:04:31,440 --> 00:04:36,159 Speaker 1: And that's a Bloomberg business flash. You're listening to Taking 80 00:04:36,200 --> 00:04:39,120 Speaker 1: a stock with Kathleen has fim Fox line from the 81 00:04:39,200 --> 00:04:44,760 Speaker 1: Jackson Hole Economic Symposium von Bloomberg Radio. The theme of 82 00:04:44,839 --> 00:04:48,440 Speaker 1: this year's a conference here in Jackson Hole, Wyoming is 83 00:04:48,480 --> 00:04:52,920 Speaker 1: designing resilient monetary policy framers for the future. Well, our 84 00:04:52,960 --> 00:04:56,040 Speaker 1: next guest says, you better not forget the past. Don't 85 00:04:56,080 --> 00:04:58,640 Speaker 1: throw out the old textbooks because they still have a 86 00:04:58,640 --> 00:05:02,000 Speaker 1: lot of lessons for cent old bankers today. Joining us 87 00:05:02,040 --> 00:05:04,440 Speaker 1: now is someone who I have to say is a fixture. 88 00:05:04,440 --> 00:05:07,360 Speaker 1: It wouldn't be Jackson Hall. About Jacob Frankel. First of all, 89 00:05:07,360 --> 00:05:11,800 Speaker 1: he's chairman of JP Morgan Chase International. He's the former 90 00:05:11,920 --> 00:05:14,800 Speaker 1: chief of the Bank of Israel, so he's been a 91 00:05:14,839 --> 00:05:17,479 Speaker 1: central banker who's all those decisions rested on his lab. 92 00:05:17,720 --> 00:05:19,760 Speaker 1: He's also chairman of the board of trustees of the 93 00:05:19,800 --> 00:05:21,880 Speaker 1: Group of Thirty. In fact, he has been a member 94 00:05:21,880 --> 00:05:24,760 Speaker 1: of that group for more than thirty years. So Jacob, 95 00:05:24,800 --> 00:05:27,400 Speaker 1: first of all, welcome, thank you. I'm pleased to be here. 96 00:05:27,680 --> 00:05:31,200 Speaker 1: So let's start by your view of this rethink of 97 00:05:31,240 --> 00:05:35,640 Speaker 1: that policy. You are saying, don't throughout the old textbooks. Why, well, 98 00:05:35,760 --> 00:05:40,800 Speaker 1: for several years we have been in an exceptional situation 99 00:05:40,960 --> 00:05:45,359 Speaker 1: where a new palladim was gaining hold, and that's the 100 00:05:45,680 --> 00:05:50,840 Speaker 1: unconventional monetary policy. It's very important to recognize that that 101 00:05:52,360 --> 00:05:56,960 Speaker 1: unconventional monetary policy in historical perspective should be viewed as 102 00:05:57,000 --> 00:05:59,680 Speaker 1: a de two at the end of which one returns 103 00:05:59,720 --> 00:06:04,400 Speaker 1: to the highway of normal monetary policy, rather than becoming 104 00:06:04,440 --> 00:06:08,080 Speaker 1: the new paradigm that will prevail for years to come. 105 00:06:08,760 --> 00:06:15,240 Speaker 1: The old central banking principles that are emphasizing the important 106 00:06:15,480 --> 00:06:21,240 Speaker 1: of price stability and more recently financial stability. That is 107 00:06:21,279 --> 00:06:26,279 Speaker 1: resting on the importance of independence of central banking, that 108 00:06:26,440 --> 00:06:33,920 Speaker 1: emphasizes clarity and transparency and recognizes that central banks mandates 109 00:06:34,040 --> 00:06:38,560 Speaker 1: are relatively limited. You cannot solve all the problems in 110 00:06:38,600 --> 00:06:43,240 Speaker 1: the world only by relying on monetary policy. For years, 111 00:06:43,279 --> 00:06:46,440 Speaker 1: we have seen a situation where monetary policy all of 112 00:06:46,520 --> 00:06:50,480 Speaker 1: the world has been overburdened. It has become the only 113 00:06:50,560 --> 00:06:53,240 Speaker 1: game in town. And the reason is that it has 114 00:06:53,279 --> 00:06:58,640 Speaker 1: been the only really well functioning um of economic policy. 115 00:06:58,880 --> 00:07:01,800 Speaker 1: But we should not get to the habit of basically 116 00:07:01,839 --> 00:07:06,840 Speaker 1: absolving the other important arms and assume away the possibility 117 00:07:06,920 --> 00:07:12,520 Speaker 1: of introducing structural policies flexibility of the economic system. That's 118 00:07:12,560 --> 00:07:15,360 Speaker 1: the only way in which you can really raise productivity 119 00:07:15,480 --> 00:07:20,640 Speaker 1: and contribute to sustainable growth. What about increasing interest rates? 120 00:07:23,800 --> 00:07:26,880 Speaker 1: When you're asking what about increasing interest rates, we need 121 00:07:26,920 --> 00:07:29,640 Speaker 1: to put it in perspective. We are now in an 122 00:07:29,840 --> 00:07:34,080 Speaker 1: unprecedented level of interest rates, let's call it close to zero. 123 00:07:34,640 --> 00:07:39,120 Speaker 1: Real interest rates are negative, So we need to ask ourselves, 124 00:07:39,240 --> 00:07:42,960 Speaker 1: is this the new long run? The answer is no. 125 00:07:43,640 --> 00:07:47,440 Speaker 1: Every central banker will tell you that the negative real 126 00:07:47,560 --> 00:07:50,760 Speaker 1: interest rates, or the very long run or the zero 127 00:07:50,880 --> 00:07:54,240 Speaker 1: practically zero nominal rates of the central bank in the 128 00:07:54,320 --> 00:07:57,880 Speaker 1: long run are not desirable and are not sustainable. So 129 00:07:57,960 --> 00:08:00,480 Speaker 1: it is in this context that we need to ask, 130 00:08:00,840 --> 00:08:04,920 Speaker 1: is this the time to move ahead with normalization? It 131 00:08:05,080 --> 00:08:08,800 Speaker 1: is not only my opinion. The Federal Reserve has told 132 00:08:08,920 --> 00:08:13,000 Speaker 1: us very clearly in the past that they are eager 133 00:08:13,040 --> 00:08:18,240 Speaker 1: to move towards normalization, that they were looking specifically at 134 00:08:18,640 --> 00:08:22,800 Speaker 1: the developments of the economy, at the developments of labor markets. 135 00:08:22,840 --> 00:08:26,880 Speaker 1: So when I follow that guideline, I conclude, and I 136 00:08:26,920 --> 00:08:31,160 Speaker 1: asked myself, where is the labor market today? Clearly improved dramatically. 137 00:08:31,640 --> 00:08:36,479 Speaker 1: Unemployment has declined to four point nine, Participation has improved, 138 00:08:36,880 --> 00:08:42,840 Speaker 1: duration of unemployment has declined. The situation of households has 139 00:08:42,920 --> 00:08:48,000 Speaker 1: improved dramatically. Spending is on the rise. We do have, 140 00:08:48,160 --> 00:08:53,400 Speaker 1: of course, a negative part of the corporate investment. But 141 00:08:53,600 --> 00:08:57,360 Speaker 1: I say that by and large, by these criteria, the 142 00:08:57,559 --> 00:09:01,079 Speaker 1: tests have passed and it's time the economy is strong 143 00:09:01,200 --> 00:09:05,800 Speaker 1: enough to move ahead with the normalization. Okay. Jacob Franco 144 00:09:06,080 --> 00:09:11,120 Speaker 1: uh rob Kaplan President Dallas FED sees there the fat 145 00:09:11,160 --> 00:09:14,600 Speaker 1: moving in act direction, But the patient patient no rush 146 00:09:14,720 --> 00:09:17,520 Speaker 1: to move you Are you in a different mode, would 147 00:09:17,520 --> 00:09:19,760 Speaker 1: you say, FED, think about doing an interest rate increase 148 00:09:20,040 --> 00:09:24,199 Speaker 1: at your next meeting in September. Well, I'm all for patients, 149 00:09:24,480 --> 00:09:28,600 Speaker 1: provided somebody is doing what needs to be done during 150 00:09:28,640 --> 00:09:33,000 Speaker 1: the patient's period. Does anyone really believe that Congress will 151 00:09:33,080 --> 00:09:36,880 Speaker 1: act get its act together in the coming three to 152 00:09:37,040 --> 00:09:40,360 Speaker 1: six months? Does anyone really believe that we will see 153 00:09:40,360 --> 00:09:43,679 Speaker 1: structural measures in the coming three to six months? And 154 00:09:43,760 --> 00:09:48,680 Speaker 1: if the idea of patients means allow Congress to do it, 155 00:09:48,920 --> 00:09:53,000 Speaker 1: then it means very long run. To me, I need 156 00:09:53,040 --> 00:09:55,960 Speaker 1: to ask myself not only what are the risks of 157 00:09:56,800 --> 00:10:00,600 Speaker 1: raising interest rates, but what are the costs of delaying 158 00:10:00,640 --> 00:10:04,600 Speaker 1: the normalization. We see today's situation where there are a 159 00:10:04,640 --> 00:10:08,920 Speaker 1: lot of this location. The price of risks has been distorted. 160 00:10:09,320 --> 00:10:14,640 Speaker 1: We are giving them superficial and artificial boost to financial markets. 161 00:10:14,679 --> 00:10:19,800 Speaker 1: By pushing interest rates down, we divert investment from plants 162 00:10:19,840 --> 00:10:24,040 Speaker 1: and equipment towards financial assets. People are happy because their 163 00:10:24,160 --> 00:10:27,440 Speaker 1: value of their wealth is rising as it is reflected 164 00:10:27,480 --> 00:10:32,000 Speaker 1: in prices of housing and the prices of their stocks. 165 00:10:32,080 --> 00:10:35,920 Speaker 1: And therefore we say wow, but let's not forget real 166 00:10:36,040 --> 00:10:38,800 Speaker 1: investment is a problem, and one of fit. One of 167 00:10:38,840 --> 00:10:43,760 Speaker 1: the reasons for it is uncertainty about many things, including 168 00:10:44,200 --> 00:10:47,200 Speaker 1: threat policy, Yes or no interest rate and increase in September, 169 00:10:47,320 --> 00:10:50,000 Speaker 1: you say yes. If you're asking me whether I would 170 00:10:50,000 --> 00:10:52,200 Speaker 1: recommend to raise I say yes. If you're ask me, 171 00:10:52,240 --> 00:10:54,640 Speaker 1: do I expect it to happen? I say no, thank you. 172 00:10:54,720 --> 00:11:03,120 Speaker 1: Jacob Frank of This is Bloomberg coming up on taking Stock, 173 00:11:03,120 --> 00:11:05,520 Speaker 1: will be speaking with Mark Gordon. He is the treasurer 174 00:11:05,559 --> 00:11:08,200 Speaker 1: of the state of Wyoming. He is a former member 175 00:11:08,240 --> 00:11:11,079 Speaker 1: of the Kansas City Federal Reserves Board of Directors. He's 176 00:11:11,080 --> 00:11:14,000 Speaker 1: going to talk about the challenges facing Wyoming and the 177 00:11:14,080 --> 00:11:14,880 Speaker 1: energy industry.