1
00:00:00,120 --> 00:00:03,080
Speaker 1: As we have been discussing this morning, three regional FED

2
00:00:03,160 --> 00:00:07,080
Speaker 1: presidents have reiterated and separate remarks today that curving inflation

3
00:00:07,320 --> 00:00:11,680
Speaker 1: is their top priority. Joining us now more bigger pattern.

4
00:00:11,760 --> 00:00:15,440
Speaker 1: To discuss this more, we have Steve Matthews, Bloomberg Economics reporter.

5
00:00:16,000 --> 00:00:19,200
Speaker 1: So Steve, just to set the scene, summarize the tone

6
00:00:19,560 --> 00:00:24,919
Speaker 1: for us from John Williams, Thomas Back, and Raphaelbustic. Well,

7
00:00:24,960 --> 00:00:28,680
Speaker 1: the tone, as you suggest, is very much, you know,

8
00:00:28,840 --> 00:00:32,720
Speaker 1: the same from all of them. They're basically echoing what

9
00:00:33,600 --> 00:00:37,680
Speaker 1: FED share, the FED shared Jerome Powell said on Friday

10
00:00:38,240 --> 00:00:41,120
Speaker 1: at the Jacks and the whole conference, which is that

11
00:00:41,159 --> 00:00:44,800
Speaker 1: they're going to do whatever it takes to to reduce inflation,

12
00:00:45,200 --> 00:00:48,360
Speaker 1: and if it causes some pain, they're okay with that.

13
00:00:48,760 --> 00:00:52,879
Speaker 1: And if it causes, you know, a period of below

14
00:00:52,920 --> 00:00:56,800
Speaker 1: trend economic growth, they're okay with that. And then you know,

15
00:00:56,880 --> 00:01:02,080
Speaker 1: while you sometimes here FED presidents talk and you know,

16
00:01:02,320 --> 00:01:05,160
Speaker 1: there's a lot of discussion from bed watchers about Okay,

17
00:01:05,160 --> 00:01:08,160
Speaker 1: there's a doublish wing that's worried about employment, and there's

18
00:01:08,200 --> 00:01:12,000
Speaker 1: a hawkish wing that's worried more about inflation. Right now,

19
00:01:12,120 --> 00:01:15,240
Speaker 1: it's really hard to separate the hawks from the doves,

20
00:01:15,319 --> 00:01:18,560
Speaker 1: because everybody is pretty hawkish, and everybody is pretty united

21
00:01:19,080 --> 00:01:25,640
Speaker 1: and behind the chairman, and so you know, we continue

22
00:01:25,680 --> 00:01:28,560
Speaker 1: to raise rights and and that kind of sets the

23
00:01:28,600 --> 00:01:32,640
Speaker 1: states for September. Yeah, and it's it seems tempting to

24
00:01:32,680 --> 00:01:35,360
Speaker 1: think that the Bears are going to win this battle

25
00:01:35,440 --> 00:01:38,640
Speaker 1: in the equity market. And the reason is is that

26
00:01:38,920 --> 00:01:41,840
Speaker 1: you know, the fit is is kind of defending its

27
00:01:41,840 --> 00:01:46,000
Speaker 1: manhood here and and really is going to stay higher

28
00:01:46,040 --> 00:01:48,880
Speaker 1: for longer. They've told us that, and they've rammed it home,

29
00:01:49,440 --> 00:01:51,880
Speaker 1: but they've also admitted that there's a lag effect to

30
00:01:52,000 --> 00:01:55,520
Speaker 1: raising interest rates, and so really this process puts us

31
00:01:55,520 --> 00:01:58,840
Speaker 1: in a position of just giving up on any hope

32
00:01:58,920 --> 00:02:01,720
Speaker 1: of threading the knee. They're not going to be nuanced.

33
00:02:01,920 --> 00:02:04,200
Speaker 1: They're not going to be able to be nuanced about

34
00:02:04,240 --> 00:02:07,320
Speaker 1: this and try to achieve a soft landing. It's going

35
00:02:07,360 --> 00:02:09,680
Speaker 1: to go. It's going to be a hard landing. So

36
00:02:09,760 --> 00:02:13,760
Speaker 1: be it. Well. I think I think that tried. Although

37
00:02:13,880 --> 00:02:19,120
Speaker 1: I think Neil cash Cars comments yesterday in the podcast

38
00:02:19,240 --> 00:02:24,639
Speaker 1: with with the the Odd Lots Crew was really interesting,

39
00:02:24,840 --> 00:02:29,120
Speaker 1: but perhaps you misinterpreted. I think that, you know, I

40
00:02:29,160 --> 00:02:32,680
Speaker 1: don't think that the FED is definitely trying to lower

41
00:02:32,720 --> 00:02:36,320
Speaker 1: stock prices. What they're trying to do is to have

42
00:02:36,480 --> 00:02:39,600
Speaker 1: the investment community aligned with their view of what's going

43
00:02:39,680 --> 00:02:43,840
Speaker 1: to happen with rights. And what they saw in July was,

44
00:02:44,360 --> 00:02:46,919
Speaker 1: you know, the the investment community was saying, the FED

45
00:02:47,080 --> 00:02:50,960
Speaker 1: is pivoting, the Fed's gonna cut rights and in early

46
00:02:51,040 --> 00:02:54,520
Speaker 1: next year or something. Some folks were saying as early

47
00:02:54,560 --> 00:02:56,320
Speaker 1: as the first half of next year. And there's still

48
00:02:56,800 --> 00:03:00,280
Speaker 1: rate touch that the markets are pricing in for next year,

49
00:03:00,840 --> 00:03:04,320
Speaker 1: and they're pushing back against that. I take that point,

50
00:03:04,400 --> 00:03:06,880
Speaker 1: and Steve, I take that point completely. I don't think

51
00:03:06,880 --> 00:03:09,640
Speaker 1: that it really addresses what I said, which is basically

52
00:03:09,680 --> 00:03:11,920
Speaker 1: that you know, we're going to we're going to have

53
00:03:11,960 --> 00:03:14,280
Speaker 1: to go through a lot of pain here because the

54
00:03:14,280 --> 00:03:17,040
Speaker 1: FED is telling you it can't afford to be nuanced

55
00:03:18,240 --> 00:03:21,320
Speaker 1: that that is correct, and they are willing to take

56
00:03:21,400 --> 00:03:27,440
Speaker 1: some pain. Uh, you know, at least publicly. Uh. For example,

57
00:03:27,440 --> 00:03:30,200
Speaker 1: the Richmond FED president was saying, was was asked about

58
00:03:30,240 --> 00:03:32,960
Speaker 1: recession and you know the risk of recession. He said, yeah,

59
00:03:32,960 --> 00:03:36,120
Speaker 1: there's a risk of recession, he said, but that's we're

60
00:03:36,160 --> 00:03:41,120
Speaker 1: not focused on that. We're focused on inflation and you know,

61
00:03:41,360 --> 00:03:44,680
Speaker 1: we're not trying to raise the unemployment, right, We're just

62
00:03:44,760 --> 00:03:49,040
Speaker 1: trying to lower the inflation, right. And he may be, uh,

63
00:03:49,080 --> 00:03:53,440
Speaker 1: you know, perhaps being diplomatic, but that's kind of the

64
00:03:53,560 --> 00:03:55,920
Speaker 1: view from a lot of the Fed folks is that

65
00:03:56,720 --> 00:03:59,960
Speaker 1: the goal is not really to raise the unemployment, right,

66
00:04:00,080 --> 00:04:06,880
Speaker 1: it's deuced inflation um and they're not necessarily the same thing.

67
00:04:07,000 --> 00:04:10,360
Speaker 1: Maybe it will be required that that unemployment has to

68
00:04:10,360 --> 00:04:13,360
Speaker 1: go up, but they're not willing to concede that that's

69
00:04:13,440 --> 00:04:16,120
Speaker 1: the only way it's going to happen. And nuance a

70
00:04:16,200 --> 00:04:18,120
Speaker 1: side though, the market is still going to try and

71
00:04:18,279 --> 00:04:21,320
Speaker 1: play the usual game of guessing what the next move

72
00:04:21,400 --> 00:04:23,839
Speaker 1: is going to be fifty or seventy five at the

73
00:04:23,880 --> 00:04:26,560
Speaker 1: next meeting in September twenty What are the odds saying

74
00:04:26,560 --> 00:04:29,960
Speaker 1: at the moment, what the odds of the markets are

75
00:04:30,000 --> 00:04:34,240
Speaker 1: saying seventy five is the is the high likelihood? It

76
00:04:34,279 --> 00:04:37,040
Speaker 1: was interesting, you know, if you're looking for some good

77
00:04:37,040 --> 00:04:40,919
Speaker 1: news out of the Fed talk today, Raphael Boston was

78
00:04:41,000 --> 00:04:43,839
Speaker 1: that if we get good inflation news, maybe we'll go

79
00:04:44,000 --> 00:04:49,599
Speaker 1: less than seventy five. So you know, and for that matter,

80
00:04:49,680 --> 00:04:53,560
Speaker 1: the Richmond Fed President Barkin was saying uh, you know,

81
00:04:53,920 --> 00:04:56,040
Speaker 1: he's not going to pre judge the meeting. It's all

82
00:04:56,080 --> 00:05:00,359
Speaker 1: dependent on the data. We'll get employment report, uh in

83
00:05:00,480 --> 00:05:04,360
Speaker 1: on Friday. In two weeks we get CPI. Those are

84
00:05:04,400 --> 00:05:08,080
Speaker 1: the two reports that are royally gonna matter. Yeah, it

85
00:05:08,240 --> 00:05:11,599
Speaker 1: is really interesting, Steve. I think we probably can sneak

86
00:05:11,640 --> 00:05:13,920
Speaker 1: this in. Do we need three prints in a row?

87
00:05:14,200 --> 00:05:17,839
Speaker 1: Is that what we need from the Fed in terms

88
00:05:17,920 --> 00:05:21,440
Speaker 1: of slowing growth? I think that, you know, you'll definitely

89
00:05:21,560 --> 00:05:25,560
Speaker 1: need several good inflation reports in a row before they're

90
00:05:25,600 --> 00:05:28,960
Speaker 1: going to start to you know, at least often the

91
00:05:29,040 --> 00:05:32,279
Speaker 1: language or something yeah, yeah, to blink a little um,

92
00:05:32,320 --> 00:05:35,520
Speaker 1: and who knows how they'll present that does Steve, great stuff.

93
00:05:35,520 --> 00:05:38,560
Speaker 1: Thank you very much for joining. Steve Matthews, Bloomberg Economics Reporter,