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Speaker 2: Matt Hornback joins Global ahead of macro Strategy at Morgan Stanley. Matt,
Speaker 2: good luck with the macro strategy. September twenty twenty five.
Speaker 2: When you sit at the table in a wonderfully collegially
Speaker 2: argumentative Morgan Stanley, how divisive is the debate? Hi?
Speaker 3: Hi, Tom, Thanks for having me on. It's a pleasure
Speaker 3: to be back. Well, we don't have divisive debates. We
Speaker 3: have collegial debates, and you know, I think in the end,
Speaker 3: we all try to come to an understanding of all
Speaker 3: of the very perspectives that are informing investments taking place
Speaker 3: in the markets every day. You know, it's it's obviously
Speaker 3: not just one perspective that ends up dominating the investment landscape.
Speaker 3: It's a collection of a multitude of perspectives, and so
Speaker 3: we we like having those debates internally, but.
Speaker 2: The debates here center around an absolutely original fed meeting.
Speaker 2: I mean it's I remember years ago talking to Richard
Speaker 2: Berner at a dinner former Morgan Stanley Giant about the dots.
Speaker 2: I mean, this is not a normal meeting of dots,
Speaker 2: is it, Matt.
Speaker 3: Hornback, It certainly is not, and it's it's perhaps a
Speaker 3: meeting of dots and dissents.
Speaker 4: If I can, if I can play on words.
Speaker 3: You know in the end that the dots are a
Speaker 3: device that the FED doesn't like to use as a
Speaker 3: guidance device, but unfortunately investors have become a customed to
Speaker 3: using the dot plot as just that, as forward guidance,
Speaker 3: and so this will be an important set of dots.
Speaker 3: As you know, we add an additional year to the
Speaker 3: dot plot in September, and we also focus very much
Speaker 3: on what the dot for twenty twenty five implies for
Speaker 3: the final two meetings of the year. You know, the
Speaker 3: consensus is that we will have a median dot somewhere
Speaker 3: between two or three cuts in total for twenty twenty five,
Speaker 3: including of course the cut that everyone expects at this meeting.
Speaker 4: But there's always surprises, and.
Speaker 3: When the dots move, they tend to move a lot,
Speaker 3: so that's will really be the main question I'll be
Speaker 3: trying to answer going into the meeting.
Speaker 5: Matt So as global head of macro Strategy, where's the
Speaker 5: waiting for you guys these days, US versus rest of
Speaker 5: the world, Because there was similarly a little bit of
Speaker 5: a c change there in the beginning of this year
Speaker 5: around the liberation today. Where are you guys right now?
Speaker 3: Yeah, you know, the dominance of the US and macro
Speaker 3: markets is something that has been around for quite some time.
Speaker 4: Of course, I think one of.
Speaker 3: The main reasons for that is because the central bank
Speaker 3: that most people in the world pay attention to more
Speaker 3: than any other is the FED, of course, and so
Speaker 3: when you have all of these eyes around the world
Speaker 3: focusing on the same event, it can dominate investment perspectives
Speaker 3: and actions. So we are certainly focused on the US
Speaker 3: at the moment. You know, the US economy is one
Speaker 3: where the labor market appears to be showing the most
Speaker 3: signs of strain. I don't want to use the word stress,
Speaker 3: but I think strain is an appropriate description of what
Speaker 3: we're seeing happen in the US labor market. And of course,
Speaker 3: if the strain turns into stress, then we can expect
Speaker 3: the central bank to act much more expeditiously, to use
Speaker 3: a word that Pal has used in the past. So
Speaker 3: I think right now we are focused on the US,
Speaker 3: but we'll see, We'll see what happens in the economy
Speaker 3: into the end of the year, and maybe it will
Speaker 3: then be appropriate to focus on other parts of other
Speaker 3: parts of the investment world.
Speaker 5: Matt, we got you on YouTube video. I see outside
Speaker 5: your office. I'm bet guessing some traders out there, and
Speaker 5: they're probably thinking about what they should be doing, how
Speaker 5: they should be positioned around two o'clock. How are you
Speaker 5: guys thinking about two o'clock in the two thirty conference.
Speaker 3: So our baseline view is that the FED will lower
Speaker 3: rates by twenty five basis points. We are expecting one
Speaker 3: dissent from a board governor, in this case the newly
Speaker 3: appointed Steven Myron, and so that's what we're expecting for
Speaker 3: kind of the main bits of the meeting. What, of course,
Speaker 3: people will be focused on quite a bit is number
Speaker 3: one the dot plot. As I mentioned earlier, does that
Speaker 3: median dot settle in at two three? How many if
Speaker 3: any dots are circling around four rate cuts for in
Speaker 3: total for the year, that would be one hundred basis points.
Speaker 3: I think very few people are expecting there to be
Speaker 3: a collection of dots showing one hundred basis points of
Speaker 3: rate cuts, but there certainly could be, and that will
Speaker 3: be a point of focus. And then, naturally, the press
Speaker 3: conference is an important part of the.
Speaker 4: F MC meeting now every six to eight.
Speaker 2: Matt, with all your heritage of decades in Japan, two
Speaker 2: o'clock today in the press conference today, is your own
Speaker 2: palse central banker to the world.
Speaker 6: Is he, frankly central banker to Tokyo.
Speaker 4: Well, he might be central banker to himself.
Speaker 3: In the sense that you know, we are now in
Speaker 3: the twilight period of his time as FED chair He has,
Speaker 3: you know, just a handful of important meetings left in
Speaker 3: his tenure. I imagine the closer that he gets to May,
Speaker 3: the more he will start to reflect on his own
Speaker 3: time as chairman of the Fed, and perhaps he will
Speaker 3: start to think about the books that may or may
Speaker 3: not be written about him after he bids farewell to
Speaker 3: the Federal Reserve. In that case, you know, he could
Speaker 3: be focused on doing what is certainly right for the economy,
Speaker 3: but also in doing what is right for the economy,
Speaker 3: he ultimately is going to be helping his own reputation
Speaker 3: moving forward.
Speaker 2: Matt thank you for your time. Matthew hornbackus with Morgan Stanley.
Speaker 2: We thank him here on a FED day. Stay with us.
Speaker 2: More from Bloomberg Survey on coming up after this.
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Speaker 2: Kaylie Cox joined chief market strategists Riddultswell's management. Kaylee, get
Speaker 2: us into earnings, but more importantly, get us beyond earnings
Speaker 2: into November and December.
Speaker 6: Is there going to be like a frenzy melt up?
Speaker 7: Well, I think before earnings we need to talk the
Speaker 7: FED and the government shutdown because those are the two
Speaker 7: most prominent Yeah, risk kind of risk catalysts that are
Speaker 7: coming over the next few weeks. But one quick thing
Speaker 7: about earnings. Q three earnings obviously Q two was a
Speaker 7: low bar. Companies hurdled that bar pretty easily, although I
Speaker 7: guess there are a few caveats because I think you
Speaker 7: need to be looking at earnings on a sector sector basis.
Speaker 7: The bar will be higher. I think analysts are still
Speaker 7: having trouble processing what tariffs could mean, especially with the
Speaker 7: new change that came at the beginning of August. But
Speaker 7: I'm really focusing on what the Fed will do as
Speaker 7: a precursor to what we'll see through the end of
Speaker 7: the year, and really the pushes and pulls and the
Speaker 7: government shut down, especially as we head into October.
Speaker 2: Yeah, but if we get past those, Paul, yep, I'm sorry,
Speaker 2: I got solid GDP. I understand the tensions out there,
Speaker 2: particularly in the labor market. But Paul, where are we
Speaker 2: October twenty fifth or something?
Speaker 5: I know it's time you talk about the resiliency, the
Speaker 5: courage to be in the market's CALLI I know you
Speaker 5: folks over Aberdhalt's Wealth Management are really long term. You
Speaker 5: try not to get tripped up by by the noise here.
Speaker 5: How is your kind of outlook kind of changed, if
Speaker 5: at all, during the course of twenty twenty five.
Speaker 7: Well, it's funny. Our clients are long term, but we
Speaker 7: don't pretend that the noise isn't there. Our clients are
Speaker 7: also hearing the noise. They have legitimate questions about the
Speaker 7: headlines that they see come across the tape where we sit,
Speaker 7: and you know, our outlook has been around leaning toward
Speaker 7: value for most of the year, especially because toward the
Speaker 7: beginning of the year, you know, we had Liberation Day,
Speaker 7: we had these tariff pressures that we had to think about,
Speaker 7: and labor markets weren't looking the strongest heading into the year.
Speaker 7: And you know, we believe that the consumer drives the economy.
Speaker 7: Consumers aren't making money then, you know, Americans aren't spending
Speaker 7: like they usually are, So you know, we've been encouraging value.
Speaker 7: We've been encouraging you know, rebalancing your book, understanding what
Speaker 7: you own. We still think that this is prudent heading
Speaker 7: into the end of the year, and honestly, we think
Speaker 7: it's prudent for most of the time for our investors
Speaker 7: who are prioritizing stability and consistency. But it is a
Speaker 7: tricky moment, especially with you know, economic projections pulling in
Speaker 7: one direction and then the labor market pulling in the other.
Speaker 7: It's tough to know where to prioritize.
Speaker 6: What are people actually doing.
Speaker 2: Forget about the theory of ridd Holt's, the theory of Kelly,
Speaker 2: the theory of Josh. Are they still scared stiff.
Speaker 7: There's some healthy skepticism out there. It's funny. You know,
Speaker 7: the fears were high heading into April, or excuse me,
Speaker 7: you know fears were to start the beginning of the year.
Speaker 7: I'll say confidence was high, and then it's slowly tailored
Speaker 7: off in the first few months of the year. Now
Speaker 7: investors have those scars. They're heading into the fourth quarter.
Speaker 7: They know that the ground is shifting underneath them. We're
Speaker 7: getting a lot of questions on how to capitalize on this.
Speaker 7: I mean, mortgage refis, for example, are one of the
Speaker 7: big questions that we're getting, you know, constantly, with the
Speaker 7: thirty year mortgage down near a three year low. And
Speaker 7: quite honestly, it's a hard question to answer because you know,
Speaker 7: the long term end of the long end of the
Speaker 7: curve is one of the hardest things to talk about
Speaker 7: at the moment.
Speaker 8: There are a lot of catalysts whipping Kelly.
Speaker 6: Cox staying with us here, when do you get the
Speaker 6: market open? Right now? The vics sixteen point one for it,
Speaker 6: here's Lisa Mateo.
Speaker 9: You got it, and we'll start with the S and
Speaker 9: P five hundred right now. As we get the markets open,
Speaker 9: it's little change, little movements still up about a point
Speaker 9: at six thousand, six hundred and eight. You have to
Speaker 9: point out the levels that now two ten percent, one
Speaker 9: hundred and nine points at forty five thousand, eight hundred
Speaker 9: and seventy seven. We get to the NASAC right now.
Speaker 9: Not much movement there as well, up about two points
Speaker 9: at twenty two thousand, three hundred and thirty seven.
Speaker 8: We go to the yield space.
Speaker 9: We have the two year at three point five one percent,
Speaker 9: that's little changed. The yield on the tenure four point
Speaker 9: zero two percent, and that is little changed as well.
Speaker 9: We have the Bloomberg Dollar Spot Index, not much movement there.
Speaker 9: We have bitcoined down about half percent at just above
Speaker 9: one hundred and sixteen thousand. That is your Bloomberg opening
Speaker 9: bell report all in time.
Speaker 2: Thanks so much, Liza, greatly appreciate it. Kelly Cox with
Speaker 2: us with Rufotes Wealth Management. I'm sure it's been a
Speaker 2: point of discussion there in debate, and I'm certain with Barry,
Speaker 2: and we've talked about it for years. Kelly Cox on
Speaker 2: John Deere, which is the great CFA company to study
Speaker 2: in the brutal level one accounting treatment of the CFA Institute,
Speaker 2: Kelly Cox should John Dear Should John Dee report four
Speaker 2: times a year or like sensible YEurope two times a year.
Speaker 7: It's funny so Trump brought this up a few days ago.
Speaker 7: I think this is the second time that he brought
Speaker 7: up the possibility of cutting earnings reports down to semi annual,
Speaker 7: or at least less frequent than quarterly. I'm a big
Speaker 7: believer in transparency. I think markets are more efficient with
Speaker 7: greater transparency.
Speaker 8: But you have to look at this on both sides
Speaker 8: of the equation.
Speaker 7: It's lower compliance costs for companies, it's lower it's lower
Speaker 7: operating costs in general, though I don't think it would
Speaker 7: make much of a mark. Investors are on the losing
Speaker 7: end though, and as we you know, for where we
Speaker 7: sit in the business, we're always on the side of
Speaker 7: the investor. The hardest person to ask is me because
Speaker 7: I love rifling through data, so I have a natural
Speaker 7: bias there.
Speaker 6: She's on the conference call.
Speaker 8: Great quarter, No, hey, Kelly, talk to us about it.
Speaker 3: No.
Speaker 8: I wish the courage.
Speaker 5: To be in the market right now. What's it take
Speaker 5: to get in the market today, That's the heart of
Speaker 5: the matter.
Speaker 7: I think it takes a strong stomach, but look, you
Speaker 7: have to do it. You can't predict where the bullmarket is,
Speaker 7: especially a bull market that's been driven by momentum and
Speaker 7: sentiment for most of this year. You know, we keep
Speaker 7: reminding people that things feel uncomfortable. Obviously, there are a
Speaker 7: lot of catalysts to consider at this moment. But as
Speaker 7: rake cuts come, you're going to be you're you will
Speaker 7: be paid less and less on cash. So cash management
Speaker 7: is key as we head into the end of the year.
Speaker 7: And look, nobody ultimately knows where this bull market heads.
Speaker 7: And you know, we could still be missing a lot
Speaker 7: of You could still be missing a lot of upside here,
Speaker 7: especially from those unloved sectors of the market that are
Speaker 7: more value oriented that we've seen shine over the past
Speaker 7: month or so with this rake cut rotation.
Speaker 6: Kelly, Thank you so much, Kelly Cosh for the west
Speaker 6: to management. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 2: This is well timed, to say the least. Randy Schummer's
Speaker 2: with us, who's been doing this a while, Vice chairch
Speaker 2: Churchill Asset Management and also chief investment strategists. Oh, chief
Speaker 2: investment strategists. Should my grandmother have private credit in our
Speaker 2: four oh one k?
Speaker 8: Look?
Speaker 10: Look at the rest of our investors. We have five
Speaker 10: million teachers through the TIAA retirement program, including my brother
Speaker 10: and sister in law, who every Thanksgiving ask about private credit,
Speaker 10: how how their portfolio is doing?
Speaker 3: Right?
Speaker 10: So you're in good company. Look what's interesting now, particularly
Speaker 10: my new role, is we're focused on one of the
Speaker 10: fastest growing channels out there, which is private wealth. What
Speaker 10: is private wealth?
Speaker 6: Right?
Speaker 10: Private wealth is pretty much everyone we all have of
Speaker 10: private wealth. We all are looking for yield and we're
Speaker 10: looking for income. You know, I'm at a softball game
Speaker 10: with my daughter watching your play. Somebody comes up and
Speaker 10: he says, Hey, I think I heard you on Bloomberg
Speaker 10: last time. With those guys, you seem pretty smart. How
Speaker 10: do I get into this assay class? That is what
Speaker 10: a lot of people are thinking about, particularly when you
Speaker 10: look at the sixty forty model, which you guys are
Speaker 10: experts on, But what's happening is the alternative model, which
Speaker 10: is including ten twenty thirty percent of non correlated assets
Speaker 10: that have longer yield less correlation, is getting a lot
Speaker 10: more action right now. And I haven't talked to you
Speaker 10: about this during most of our programming, but half of
Speaker 10: our committed capital is going to private equity and junior capital.
Speaker 10: Think about that. So we have probably our fastest growing
Speaker 10: products right now in private equity because the yields are better.
Speaker 10: And in the current environment when gps are trying to
Speaker 10: get more liquidity because the exits are slower, they're looking
Speaker 10: for more products that can help them get liquided, not
Speaker 10: just for them but for their LPs as well. So
Speaker 10: exits are a little slow, but for the best private
Speaker 10: equity firms, actually fundraising is pretty good. So you know,
Speaker 10: I like to come every morning with you with a
Speaker 10: fun fact. Fun fact for us, Our gps that have
Speaker 10: been raising money this year in new funds have all
Speaker 10: hit their hard caps. What does that mean? You have
Speaker 10: a target cap of funds you want to raise five
Speaker 10: hundred million billion, whatever it is, and then you have
Speaker 10: a hard cap above which you're not going to go
Speaker 10: because you don't want to dilute your existing investors. They've
Speaker 10: all hit their hard caps. That's different than the news
Speaker 10: you're hearing generally outside of Bloomberg about fundraising because people say, oh,
Speaker 10: fundraising is slow, not for the best.
Speaker 5: All right, So I'm on your distributional list. I get
Speaker 5: notes from you guys. You're all over the world. What
Speaker 5: are you doing when you go to Asia, when you
Speaker 5: go to the Middle East, when you go to the Europe?
Speaker 5: Are you looking for capital? Are you looking for deals?
Speaker 10: So doing these days in my new role, but even
Speaker 10: you know, when you can think of think of me as.
Speaker 5: Likeocus on the private wealth site, private wealthments, and.
Speaker 10: You know, we obviously have institutional clients. But the key
Speaker 10: to my friend Jess larsenal give him a tip of
Speaker 10: the hat, you know, over at Briarcliffe says that beta
Speaker 10: for private capital is performance. Alpha is education, because you
Speaker 10: need to explain to investors what this private credit, private
Speaker 10: capital opportunity really is. You guys have been helping me.
Speaker 10: Are so so grateful for that over the last several years,
Speaker 10: getting the message out, getting the gospel of private capital out.
Speaker 10: But what it means is that how do I get
Speaker 10: value out of an ill liquid asset class? What is
Speaker 10: the benefit to me if I can't sell?
Speaker 6: What do you think benefits.
Speaker 10: Correct? And the answer is less correlation when markets trade down,
Speaker 10: and more consistency and premium income when when rates go down,
Speaker 10: for example. So we're going to see some interesting turns
Speaker 10: over the next few months and next year as rates
Speaker 10: start to come down.
Speaker 2: You know, I got to get this question, and we're
Speaker 2: going to have to run here on an incredible FED day.
Speaker 2: But Randy, to me, what's a pard of the matter
Speaker 2: here is the big boys are going to come in.
Speaker 2: Churchill can manage its story, fine, I get it, I
Speaker 2: love it. But the big boys are going to show
Speaker 2: up in private equity and particularly conservative private credit where
Speaker 2: you can make a coupon blah blah blah. What's going
Speaker 2: to happen when Blackrock and the others send a wall
Speaker 2: of money right into this environment?
Speaker 10: So you know that are the way we do deals
Speaker 10: is that we're an investor in the GPS. We're an
Speaker 10: LP actually in four hundred roughly GP funds. So we're
Speaker 10: getting the best assets from those investors that we've already
Speaker 10: pre credentialed. We've already pre qualified. Portfolio quality is destiny
Speaker 10: in asset management. If your portfolio put if your portfolio
Speaker 10: is hied to high quality, then you are going to
Speaker 10: be able to satisfy the needs of your investors. In
Speaker 10: order for it to be high quality, you have to
Speaker 10: be super selected.
Speaker 2: How is our listeners and viewers going to do a
Speaker 2: credit analysis and quality analysis of the ginormous huge bank
Speaker 2: either Park Avenue or Downtown West Street ETF fund in
Speaker 2: their retirement.
Speaker 10: The beauty of retail investing is, if you're investing in
Speaker 10: our funds, you're investing in the same funds that the
Speaker 10: ginormous sovereign wealth funds, including our parent company, Trillion Dollar,
Speaker 10: TA and Euveen are investing in same deals.
Speaker 2: Are you?
Speaker 8: Are you in triple leverage?
Speaker 5: I got to take a Chase Man, hadn't bank credit
Speaker 5: training and going into private credit.
Speaker 8: You do that again?
Speaker 2: What was it like buying your first fancy white shirt
Speaker 2: and blue suit to do the folks? This is what
Speaker 2: Sweeney did. Was like gospel back then. It was like
Speaker 2: going to State department. You did private.
Speaker 5: We all came out of we all came out of
Speaker 5: NBA programs and they said, get what you've learned.
Speaker 8: Now we're going to tea. Now we're going to.
Speaker 11: Teach you how to do it.
Speaker 10: Was very good, by the way, he was very good.
Speaker 6: Well, Sir Randy Schummer, thank you so much.
Speaker 2: With Paul Sweeney looking down a whole new environment with
Speaker 2: private credit and private equity.
Speaker 8: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekdays.
Speaker 2: Were sitting where this is, Andrew Lloyd allenhursts that was
Speaker 2: City Bank, here.
Speaker 6: Circumstances at the table.
Speaker 2: I was trying to go back to the nineteen eighties
Speaker 2: and Wayne Angel and some of the fiery debates of monetorism.
Speaker 6: We've never seen this, have we end.
Speaker 8: It's going to be a big debate today.
Speaker 11: I think about not just what they should do at
Speaker 11: this meeting, although at this meeting we could have a
Speaker 11: couple of descents, but also where policies should be going,
Speaker 11: where the neutral rate is, with the balance of risks is,
Speaker 11: so every everything is on the table at this meeting.
Speaker 2: Paul Donovan at UBS, a student of the British process, said,
Speaker 2: we're becoming like the Bank of England, are we?
Speaker 11: It feels a little bit that way, where you have
Speaker 11: just this big divergence between some FED officials who didn't
Speaker 11: want to cut rates at all this year, other FED
Speaker 11: official those who wanted to cut more aggressively and dissented.
Speaker 11: Back in July, we had Waller and Bowman with those
Speaker 11: twenty five basis point cut VIEWA.
Speaker 2: But should we notice Paul that Andrew Hollenhorz absolutely nailed
Speaker 2: the higher rate environment we're talking two years ago.
Speaker 6: Yep, I mean just absolutely nailed.
Speaker 4: That, Andrew.
Speaker 5: I mean, we had some strong retail sales yesterday. I
Speaker 5: mean you could argue this FED could be as cautious
Speaker 5: as it wants to be when you're thinking about twenty
Speaker 5: five versus fifty.
Speaker 11: Well, if you look at the retail sales report, I
Speaker 11: think that's telling you this is an economy that's not
Speaker 11: going into recession. We have had a slow down in growth,
Speaker 11: We've had to slow down in consumer spending. Retail sales
Speaker 11: doesn't change that. And what retail sales really doesn't change
Speaker 11: is what's going on in the job market, and ultimately
Speaker 11: that's the Fed's mandate.
Speaker 8: You look at those payrolls numbers. We had negative job
Speaker 8: growth in June.
Speaker 11: I know, it was in a revision, so we don't
Speaker 11: really feel that way. But this is a FED that
Speaker 11: would have cut already if we had those jobs numbers
Speaker 11: in real time.
Speaker 5: So how do you think that cadence will go here
Speaker 5: for this better reserve? Starting this sea?
Speaker 11: So I think Powell, to Tom's point, has to bring
Speaker 11: together this committee, and I think he can bring them
Speaker 11: more or less together around a twenty five basis point
Speaker 11: rate cut today. But you do have people like Waller
Speaker 11: who are dissenting, wanting to cut back in July. How
Speaker 11: do you keep Waller on board with just twenty five
Speaker 11: basis points today? I think you have to be a
Speaker 11: little bit dubvish in the press conference. I think we're
Speaker 11: gonna hear Powell be a little bit dubish to kind
Speaker 11: of indicate that this is a FED that could be
Speaker 11: cutting at each meeting this year. I think we see
Speaker 11: that in the dot plot, and then continuing to cut
Speaker 11: next year.
Speaker 2: Okay, but that's where I wanted to go to cut
Speaker 2: this year. Some people are saying three this year. I
Speaker 2: don't want to do the parlor game, Andrew, you know,
Speaker 2: I hate it. But here's the reality. I've got nominal
Speaker 2: GDPQ three off Atlanta fed of at least four and
Speaker 2: a half five percent. Dare I say six percent? I
Speaker 2: don't think I can say that. But with the consumption
Speaker 2: and retail sales there there we are. Does that strengthen
Speaker 2: the one and done feel of today's meeting or is
Speaker 2: he really going to anticipate out a set of rate cuts.
Speaker 11: I think it's a set of ray cuts, and I
Speaker 11: think that's where cher Paul was starting to go at
Speaker 11: Jackson Hall. Remember back in late August we had policing.
Speaker 11: This balance of risks is starting to move more imbalance
Speaker 11: between downside risk to employment, upside risk to inflation. Now
Speaker 11: we have even more downside risk on the job side.
Speaker 8: You're right down.
Speaker 11: We've run very strong nominal growth through twenty twenty four.
Speaker 11: The first half of this year was slower nominal growth.
Speaker 11: What's your nominal growth twelve months forward? Twelve months forward
Speaker 11: from here will probably be four to five percent nominal growth,
Speaker 11: So not that six to seven percent.
Speaker 6: That's terrible color graz to me. I'm sorry, I'm lost
Speaker 6: on this, boss saying.
Speaker 5: Exactly, so, talk to us about this labor market. Let's
Speaker 5: dig a little little bit deeper in there. For the
Speaker 5: first time I saw recently, number of job openings versus
Speaker 5: the number of people kind of looking for jobs kind
Speaker 5: of a little bit more in balance now and it
Speaker 5: used to be poy. There's so many more job openings
Speaker 5: out there, and that gave you a sense of olders.
Speaker 5: This economy, the labor conmry is a lot stronger than
Speaker 5: me we think. Is that not the case anymore?
Speaker 8: It doesn't seem to be the case.
Speaker 11: We obviously have big differences between which labor market series,
Speaker 11: which job series you look at. But the payroll numbers
Speaker 11: look very concerning now after those revisions, that probably looks
Speaker 11: the most concerning of any series. But if you look
Speaker 11: at some of the survey data, if you look at
Speaker 11: in the consumer surveys, when you ask people are jobs
Speaker 11: hard to get? That number is going up. People are
Speaker 11: finding this to be a more difficult market to get
Speaker 11: a job. We're also seeing if you switch your jobs,
Speaker 11: how much is your pay going up when you switch
Speaker 11: your jobs. That's really not normalized. You used to get
Speaker 11: a big premium for switching your job. That would indicate
Speaker 11: it's a labor market more imbalanced. No, that was my
Speaker 11: game plan for twenty years of work.
Speaker 3: Just fine.
Speaker 8: So Andrew.
Speaker 5: If I'm the FED here, I mean, I'm looking at
Speaker 5: the labor market. Maybe why wouldn't I be a little
Speaker 5: bit more aggressive here with that signal? Oh there's something
Speaker 5: else under the hood the FED season. Maybe the market
Speaker 5: doesn't seem I think.
Speaker 11: There's nothing pushing them to be super aggressive at this meeting,
Speaker 11: when when you really have a big push to be aggressible,
Speaker 11: it's like what happened a year ago, where you had
Speaker 11: data that was coming in softer than expected, and you
Speaker 11: had the equity market selling off. You had risk assets
Speaker 11: that were performing poorly, and that that's part of what
Speaker 11: pushed the FED to deliver that fifty basis point rate
Speaker 11: cut back in September of last year. This year, as
Speaker 11: the FED is getting priced to cut, we're seeing equities rally.
Speaker 11: We're seeing very high prices for risk assets and looser
Speaker 11: financial conditions. So the FED isn't working against tightening financial
Speaker 11: conditions here. We actually have loosening financial conditions. BET cuts
Speaker 11: are going to feed into that. I think there's no
Speaker 11: pressure for fifty basis points today.
Speaker 12: The press conference today, what would be the question you
Speaker 12: would ask, I think the key question that I would
Speaker 12: want to know from share Powell is really what you
Speaker 12: were asking, Tom, which is should we be thinking about
Speaker 12: this as a adjustment.
Speaker 8: Are we just calibrating rate slightly lower?
Speaker 11: Or is this a real rate cut cycles at a
Speaker 11: rate cut cycle that started a year ago pause because
Speaker 11: we had care of uncertainty, inflation uncertainty, and now we're
Speaker 11: picking it up again.
Speaker 6: Lord Hollanders, thank you so much. I'm giving everyone a title.
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